Refusal to Terminate Pending Reexaminations Is Not Final Agency Action Subject to Immediate Appeal: Federal Circuit | Practical Law

Refusal to Terminate Pending Reexaminations Is Not Final Agency Action Subject to Immediate Appeal: Federal Circuit | Practical Law

In Automated Merchandising Systems, Inc. v. Lee, the US Court of Appeals for the Federal Circuit held that a patent owner could not challenge the US Patent and Trademark Office’s (USPTO) refusal to terminate pending reexaminations because the refusal was not a final agency action under the Administrative Procedure Act. 

Refusal to Terminate Pending Reexaminations Is Not Final Agency Action Subject to Immediate Appeal: Federal Circuit

by Practical Law Intellectual Property & Technology
Published on 13 Apr 2015USA (National/Federal)
In Automated Merchandising Systems, Inc. v. Lee, the US Court of Appeals for the Federal Circuit held that a patent owner could not challenge the US Patent and Trademark Office’s (USPTO) refusal to terminate pending reexaminations because the refusal was not a final agency action under the Administrative Procedure Act.
On April 10, 2015, in Automated Merchandising Systems, Inc. v. Lee, the US Court of Appeals for the Federal Circuit held that the patent owner cannot challenge the USPTO's refusal to terminate pending inter partes reexaminations because the refusal is not a final agency action (No. 2014-1728, (Fed. Cir. Apr. 10, 2015)).
Automated Merchandising Systems, Inc. (AMS) sued Crane Co. for infringement of four patents. In response, Crane requested inter partes reexaminations of the asserted patents. AMS and Crane later submitted a consent judgment dismissing the infringement suit and stipulating that the asserted patents are valid. AMS then petitioned the USPTO to terminate the reexaminations under 35 U.S.C. § 317(b), which precludes a reexamination after the entry of a final decision in a civil action that a party has not sustained its burden of proving invalidity of the relevant patent. After the USPTO denied AMS's petition to terminate the reexaminations, AMS challenged the USPTO's denial in the US District Court for the Eastern District of Virginia, relying on the Administrative Procedure Act (APA), 5 U.S.C. §§ 701-706. The district court held that the USPTO was not required to terminate the reexaminations because the consent judgment was not an actual adjudication on the merits concerning invalidity.
On appeal, the Federal Circuit affirmed the district court's decision on different grounds. The Federal Circuit held that the USPTO's refusal to terminate the inter partes reexaminations was not a reviewable final agency action under the APA, explaining that:
  • No statute makes the challenged refusal to terminate the inter partes reexaminations immediately reviewable.
  • The USPTO's refusal was not a final agency action because it was interlocutory and not did not determine AMS's patent rights.
  • AMS could challenge the USPTO's refusal to dismiss the reexaminations in an appeal from an adverse final action by the agency.
The Federal Circuit also rejected AMS's related mandamus and Declaratory Judgment Act challenges, explaining that AMS has an adequate legal remedy because it can appeal from an adverse USPTO final action.