Exela Pharma Sciences, LLC v. Lee

Addressing whether third parties have the right to challenge a patent revival ruling by the U.S. Patent and Trademark Office (PTO) under the Administrative Procedure Act (APA), the U.S. Court of Appeals for the Federal Circuit held that such challenges are not permissible.  Exela Pharma Sciences, LLC v. Lee, Case No. 13-1206 (Fed. Cir., Mar. 26, 2015) (per curiam) (Newman, J., concurring) (Dyk, J., concurring).

The application at issue was filed under the Patent Cooperation Treaty (PCT), claiming priority from a French application.  In order to enter national stage in the United States, the applicant had to fulfill certain U.S. documentary and fee requirements within 30 months.  The applicant did not file the required materials on time, and the application was deemed abandoned.  The applicant then filed a petition with the PTO to revive the application, stating that the delay was “unintentional,” which the PTO granted.  After the application issued as a patent, it was asserted against Exela.

Exela sought to reverse the PTO’s decision to revive the patent, arguing that “unintentional” delay was not a proper basis for revival of a PCT application.  According to Exela, the PTO should instead have applied the “unavoidable” delay standard for revival, which is the standard under the PCT statute.  The PTO declined to consider Exela’s petition, stating that no statute or regulation authorizes a third party to challenge the PTO decision to revive a patent application.  Exela then filed suit in district court under the APA, arguing that the PTO’s failure to apply the correct standard for revival has enabled the enforcement of a patent that should not have issued.  After the district court dismissed Exela’s action as time-barred by the statute of limitations, Exela appealed.

The Federal Circuit concluded that neither the Patent Act nor the APA provides a cause of action in which third parties may challenge the revival of a patent application by the PTO.  According to the Federal Circuit, the Patent Act’s “intricate scheme for administrative and judicial review of PTO patentability determinations” and “careful framework for judicial review at the behest of particular persons through particular procedures” demonstrate that that Congress did not intend to permit a third party to challenge and obtain judicial review of a PTO revival ruling.

In his concurrence, Judge Dyk took the opportunity to criticize the Federal Circuit’s Aristocrat Technologies Australia Pty Ltd. v. International Game Technology (IP Update, Vol. 11, No. 10) (barring the use of “improper revival” as a defense in infringement actions) and suggested that this case should be revised by an en banc panel.  Judge Newman wrote separately to address Judge Dyk’s criticisms, and defended the Aristocrat decision.