Japanese Found. for Cancer Research v. Lee

Addressing for the first time the issue of whether a terminal disclaimer filed without the client’s actual authority can be withdrawn, the U.S. Court of Appeals for the Federal Circuit reversed the district court’s ruling that the Patent and Trademark Office had acted arbitrarily and capriciously in refusing to withdraw a terminal disclaimer.  Japanese Found. for Cancer Research v. Lee, Case Nos. 13-1678, 14-1014 (Fed. Cir., Dec. 9, 2014) (Prost, C.J.).

Counsel for the Japanese Foundation for Cancer Research (the Foundation) filed a terminal disclaimer, stemming from a miscommunication between a Japanese licensee, the licensee’s Japanese patent counsel and the Foundation’s attorney of record, a U.S. law firm. The licensee’s in-house counsel had earlier contacted a paralegal who worked with their Japanese patent counsel to inquire as to whether a patent may be disclaimed before it lapsed because of non-payment of maintenance fees. The paralegal then sent a fax to U.S. patent counsel, arguably directing it to file a terminal disclaimer. Soon after, the March 2011 earthquake, tsunami and subsequent confusion that struck Japan prevented the paralegal from reporting to the licensee that she had sent the fax to U.S. counsel. Only upon receiving a copy of the disclaimer did the paralegal report to the licensee. The disclaimer had been filed notwithstanding that the licensee lacked authority to disclaim the patent and the Foundation had not requested or authorized a disclaimer. At the Foundation’s urging, U.S. counsel filed a petition to withdraw the disclaimer, asserting two grounds for withdrawal of the petition: 35 U.S.C. § 255 and the inherent power of the PTO.  The PTO denied the petition.  The Foundation then filed suit under the Administrative Procedures Act, and the district court action directed the PTO to withdraw the disclaimer.  The PTO appealed to the Federal Circuit.

On appeal, the Foundation argued that the filing of the terminal disclaimer was a clerical error, coming under the category of “clerical or typographical errors” that § 255 envisions as remediable. Distinguishing error in the filing from error on the face of a document (e.g., writing the wrong patent number), the Federal Circuit agreed with the PTO that § 255 was inapplicable.

The Foundation also argued that the PTO should use its inherent authority to review its own determinations to withdraw the disclaimer. The PTO countered that its only determination was whether the filed disclaimer met the requirements—which it had—and that it properly refused to exercise its authority first because the public may have relied on the disclaimer and, second, because the PTO was an improper forum for sorting out the intentions of the patentee because “miscommunications between attorneys and clients do not excuse the actions of the representative.”

Without resolving the first ground, the Federal Circuit blessed the PTO’s practice of binding patentees to their representatives’ actions, reasoning the policy is clearly articulated in the PTO’s regulations, a power of attorney authorized the attorney of record to prosecute the underlying application, the Federal Circuit should not substitute its policy for the PTO’s, and the patentee has recourse against its attorney.

Practice Note:  Always get authority directly from the client before filing anything that fundamentally affects a client’s rights.