Dominion Dealer Solutions, LLC v. Lee

Addressing whether a district court has subject matter jurisdiction over a decision to deny an inter partes review made by the United States Patent and Trademark Office (PTO) Patent Trial and Appeal Board (PTAB), the U.S. District Court for the Eastern District of Virginia granted the PTO’s motion to dismiss for lack of subject matter jurisdiction, finding that the language of the pertinent statute is “quite clear” that a determination not to institute an IPR is final and nonappealable. Dominion Dealer Solutions, LLC v. Lee, Civil Action No. 3:13CV699 (E.D. Va., Apr. 18, 2014) (Payne, J.).

Plaintiff Dominion Dealer Solutions (Dominion) was sued in a California district court by AutoAlert, Inc. for allegedly infringing five patents. In response, Dominion filed petitions seeking IPR for those five patents. Dominion also filed a motion to stay the patent infringement litigation in the California district court in view of the pending IPR petitions. The stay was granted “pending final exhaustion of all pending IPR proceedings, including any appeals.” Subsequently, the PTAB denied Dominion’s petitions for IPR. Dominion filed requests for rehearing on its petitions, which were also denied.

Dominion then filed an action in a Virginia district court under the Administrative Procedures Act (APA), alleging that the PTAB’s decisions were arbitrary, capricious, an abuse of discretion and contrary to law. The PTO filed a motion to dismiss for lack of subject matter jurisdiction.

In resolving the PTO’s motion, the Virginia district court interpreted two statutes: the portion of the APA that the Supreme Court has stated “confers a general cause of action” to object judicial review of agency action, and the portion of the Leahy-Smith America Invents Act (AIA) that governs the institution of inter partes review by the PTO.

While recognizing that the APA generally provides the ability to obtain judicial review of agency action, the court noted that the APA does set forth several limitations on the grant of judicial review. One such limitation is when other statutes preclude judicial review. Determining whether and to what extent a particular statute precludes judicial review, courts look at the express language of the statute, as well as the structure of the statutory scheme, its objections, its legislative history and the nature of the administrative action involved. The court found that there is a strong presumption under the APA that Congress intended to permit judicial review of agency actions.

The Virginia district court found that the AIA rebutted the strong presumption, and rejected Dominion’s arguments otherwise. The court found that the wording of the AIA—that “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable”—was “quite clear.”

The court rejected Dominion’s argument that its case in Virginia district court was not an appeal, in view of the fact that Dominion made the tactical decision to present its complaint as an “appeal” to avoid triggering the end of the stay in the California district court.

The court also rejected Dominion’s argument that the statute did not preclude an appeal to the Virginia district court of the PTAB’s construction of the relevant legal standards. The court noted that this argument was belied by the legislative history of the AIA, which indicates that Congress intended the AIA and the IPR process to decrease the volume of patent litigation in the federal courts and streamline the patent administration process.

The court further rejected Dominion’s argument that the “final and nonappealable” language only precluded decisions to grant IPR and was not applicable to decisions denying IPR. The court again relied upon the express language of the AIA itself, finding Dominion’s position “clearly untenable.”