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Withdrawal of Allowed Application Is Within PTO Discretion

June 28, 2002

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Last Month at the Federal Circuit - July 2002

Judges: Newman (author), Clevenger, and Schall

In Blacklight Power, Inc. v. Rogan, No. 00-1530 (Fed. Cir. June 28, 2002), the Federal Circuit affirmed a district court’s judgment that withdrawal of a patent application from issue following Notice of Allowance, payment of the issue fee, and notification of the issue date is within the scope of the Director’s authority.

Blacklight Power, Inc. (“Blacklight”) conducts research into new sources of energy. The application at issue, U.S. Patent App. No. 09/009,294 (“the ‘294 application”) relates to new energy technology derived from hydrogen compounds. In addition to the ‘294 application, Blacklight owns several other pending applications and issued U.S. Patent No. 6,024,935 (“the ‘935 patent”) relating to this technology.

The Examiner initially rejected the claims of the ‘294 application on various grounds, including operability under 35 U.S.C. § 101 and enablement and definiteness under § 112. After further prosecution, including discussions of experimental results and the submission of samples, the Examiner withdrew the rejection and allowed the claims.

Shortly before issuance of the ‘294 application, the Director of the Group that had examined the Blacklight applications became aware of both the ‘935 patent and the ‘294 application. The Group Director believed the ‘935 patent and ‘294 application were directed to subject matter contrary to the known laws of physics and chemistry. She then contacted the Director of the Special Program Law Office in the Office of the Deputy Assistant Commissioner for Patents, who issued a notification that the ‘294 application was being withdrawn from issue to permit reopening of the prosecution. Blacklight’s attorneys petitioned the Commissioner, requesting reversal of the withdrawal. Assistant Deputy Commissioner Kunin denied the request, stating that the PTO has an obligation to issue patents that meet the statutory requirements for patentability.

Blacklight also filed suit against the Director of the PTO in the United States District Court for the District of Columbia, charging that the withdrawal was contrary to law and in violation of the Administrative Procedure Act, 5 U.S.C. § 701 et seq. Blacklight argued that § 151 does not allow for withdrawal of an application by the PTO after the issue fee has been paid, and the PTO officials exceeded their authority when they withdrew the ‘294 application. Blacklight also argued that 37 C.F.R. § 1.313, the regulation cited by the PTO in withdrawing the application, violates the mandatory statutory language of § 151.

The district court held that the PTO’s interpretation of its statutory authority is entitled to deference in accordance with Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-44 (1984). The court concluded that the PTO’s action in withdrawing from issue the ‘294 application (and subsequently four related applications) was reasonable, concluding that 37 C.F.R. § 1.313(b) functions as a last-chance procedural measure to observe the PTO’s central mandate of issuing viable patents.

The Federal Circuit affirmed the district court’s holding, stating that the mission of the PTO requires the authority to take extraordinary action to withdraw a patent from issue when a responsible PTO official reasonably believes that the subject matter may be unpatentable and that the application may have been allowed in error. In Skidmore v. Swift & Co., 323 U.S. 134, 139-40 (1944), the Court observed that agency actions are entitled to judicial respect when they are reasonably taken and in accordance with the specialized experience of agency officials and the validity of its reasoning. The Group Director, who is presumed to be knowledgeable in the relevant scientific fields, upon review of the ‘935 patent and being advised as to the scope of the ‘294 application, took the only available action to return the ‘294 application to examination, the Court concluded. The Federal Circuit ruled that summary action was reasonably within the scope of the agency’s authority and was not an arbitrary or capricious action.