10 Cv 144 22_Schmirler Response

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IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

Dennis L. Schmirler Plaintiff, v. Hon. David J. Kappos, In his official capacity as Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office Defendant.

Case No. 10-cv-00144-LA

MEMORANDUM IN OPPOSITION TO

DEFENDANT’S CROSS-MOTION FOR SUMMARY JUDGMENT AND IN RESPONSE TO DEFENDANT’S OPPOSITION TO PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

Case 2:10-cv-00144-LA Filed 05/31/11 of 10 Document 22

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Now comes Plaintiff Dennis L. Schmirler, through his attorneys, Garet K. Galster

and Ryan Kromholz and Manion, S.C., and responds to Defendant’s Cross-Motion

for Summary Judgment and supporting memorandum (“Defendant’s

Memorandum”) and Defendant’s Opposition to Plaintiff’s Motion for Summary

Judgment.

Timeline

For reference, Mr. Schmirler respectfully maintains the following timing of

events, which remains uncontradicted by Defendant.

Argument

I. Mr. Schmirler is a patentee.

As admitted by Defendant, “The USPTO issued U.S. Patent No. 6,214,374 on

April 10, 2001.” (Defendant’s Memorandum at 15.) At that point, Mr. Schmirler

became a patentee, with a personal property interest in the patent. See 35 U.S.C. §

100(d) and 35 U.S.C. § 261.

Defendant’s entire argument rests on the assertion that Mr. Schmirler is a

patent “applicant” rather than a “patentee.” Defendant attempts to support such


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assertion on two primary bases: first, Defendant argues, “as a result of Dr.

Portman’s chargeback (SOF 16-18), the issue fee had never been paid, and thus the

patent did not validly issue[;]” and, second, Defendant argues, “the USPTO offered

the applicants, through their attorney of record, the opportunity to clear up the

situation[.]” Both of Defendant’s primary bases are flawed as ex post facto.

With respect to Defendant’s first argument, Defendant fails to explain how a

chargeback occurring after patent issuance effects a nonpayment of an issue fee on

the date on which a patent issues. Indeed, it is undisputed that on the day the ‘374

Patent issued, the USPTO had in its possession the issue fee for same. (See

Timeline, above.) Furthermore, it is axiomatic that a chargeback would only be

required if a fee had been paid. Conversely, if “the issue fee had never been paid,”

as asserted by Defendant, there would have been no need for a chargeback. In fact,

the Office admitted that the fee was paid. (A229, stating “[t]he credit card charge

was posted to applicant’s credit card account on October 13, 2000[.]”) Additionally,

Defendant fails to explain the basis for the Office’s purported authority to even

grant a refund in such a situation, or why American Express was allowed to take

back any fees paid. (See Plaintiff’s Memorandum in Support of his Motion for

Summary Judgment, Dkt. 17, Section III, at 21-22).

With respect to Defendant’s second argument, Defendant relies on the flawed

assertion that “Currently, the attorney of record for this patent application is Gary

Essman.” (Defendant’s Memorandum at 16.) This statement is unsupportable on

the face of the Administrative Record. While Mr. Essman assisted in getting the


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‘374 Patent allowed and issued, his power of attorney terminated promptly upon his

receipt of the issued patent. (See Revocation of Power of Attorney and Appointment

of New Attorneys, A208-209.) The power provided by Mr. Schmirler to Mr. Essman,

and the other attorneys of Mr. Essman’s firm, was “to prosecute the application to

issuance, to transact all business in the U.S. Patent and Trademark Office in

connection therewith, and to receive the issued patent[.]” (A208.) This power of

attorney was accepted by the Office on December 7, 2000. (A212.) Accordingly,

upon receipt of the issued patent, Mr. Essman’s power of attorney was terminated

with respect to the USPTO. On the basis of the Administrative Record, Mr. Essman

did not have any power to act on behalf of Mr. Schmirler after receipt of the issued

patent. There is no indication in the Administrative Record that the USPTO

verified that Mr. Essman was authorized to act on behalf of the inventors or

subsequent owners of the ‘374 Patent. Also, in the USPTO’s attempt to “clear up

the situation,” there is no indication in the Administrative Record that the USPTO

attempted to contact any of the listed inventors, nor did the USPTO publish

anything in its weekly Gazette. Indeed, the Office merely sent a letter to a

correspondence address and later confirmed that no reply to the Office’s June 7,

2004 notice had been filed. (A235, final two bullet points.) The record is devoid of

any authority for Mr. Essman to transact any business with the USPTO, post-

issuance, in connection with the issued ‘374 Patent. (See R.)

Because Defendant has relied upon only ex post factors in an attempt to

justify the USPTO’s actions in this case, has failed to provide any authority for the


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USPTO’s refund action, and has relied on communications with an attorney that

had no power to act after patent issuance, the USPTO’s actions should be declared

arbitrary, capricious, or otherwise not in accord with the law.

II. Even if Mr. Schmirler is a Patent “Applicant” at This Time, There is No Harm in Allowing Him Redress.

This case does not involve any change in scope—or breadth—of patent rights.

Understandably, all of the signature requirements in the Rules (37 CFR) cited by

Defendant involve situations in which there is a high likelihood of a change in scope

of patent rights. That is, during patent prosecution, and in reissue and

reexamination proceedings, the scope of rights defined by a patent is uncertain and

may be changed. Once a patent has issued, however, the scope of patent rights is

fixed by the issued patent claims. Though the Rules do not provide for changing a

power of attorney after patent issuance, Defendant provides only a unilateral

“dedication-to-public” rationale for requiring Mr. Schmirler to attempt to join other

patentees in the present matter.

The USPTO suggests that any other owner of the ‘374 Patent “may wish to

exercise its right to donate the disclosure to the public domain…and withdrawal of

the holding of abandonment, or revival of the application, therefore affects the

rights of all of the parties[.]” (A279.) However, where joint ownership is involved,

no joint owner has ever had the power to bind the others in a public disclaimer. To

the extent that any patentee or applicant wishes to disclaim or dedicate to the

public any claimed subject matter, such disclaimer “shall thereafter be considered


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as part of the original patent to the extent of the interest possessed by the

disclaimant and by those claiming under him.” 35 U.S.C. § 253 (emphasis added).

Thus, any public disclaimer extends only insofar as the joint owner’s interest in the

patent. There is no harm in allowing Mr. Schmirler to request reinstatement of the

‘374 Patent: if the other owner wishes to disclaim its extent of patent rights, it is

free to do so. See id.

Defendant seems to suggest that Mr. Schmirler is under a duty to attempt to

contact co-inventors/owners. (Defendant’s Memorandum at 18.) However, in a 31-

line “footnote,” the USPTO advised Mr. Schmirler that such attempt would be

insufficient in this case. (A274, n. 15, stating “While such evidence would not be

sufficient, in the present case, to show sufficient cause . . .” and proceeding to list a

litany of types of evidence that could be submitted.) Any imposition of a

requirement on Mr. Schmirler to attempt to contact co-inventors or a non-existent

corporation (DPI) would be fruitless, and the result would be the same: (i) if other

inventors/owners were located and found, the petition would be considered, or (ii) if

other inventors/owners were not located, but there was shown some unspecified

actions by Mr. Schmirler to so contact, the petition would be considered. Thus, any

imposition of a duty on Mr. Schmirler to contact any joint patent owner fails to

advance the ball, and serves only to form a proverbial hoop through which Mr.

Schmirler would need to jump, with the end result being identical.

Because patent rights were fixed in scope as of April 10, 2001, and because

any other purported patent co-owner could disclaim any patent rights that are


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reinstated by the Court, any reinstatement of the ‘374 Patent would be harmless.

III. “The USPTO rules are designed to prevent . . . every part-owner of a patent [from taking] unilateral and independent (and potentially conflicting) action before the USPTO . . . and properly so.”

The above heading (III) was stated by Defendant, (Defendant’s Memorandum

at 21), and Mr. Schmirler could not agree more. Mr. Schmirler disagrees, however,

with Defendant’s snowball argument that “unilateral and independent (and

potentially conflicting) action before the USPTO” is in any way a “logical

consequence” that would result if Mr. Schmirler’s contentions are adopted by the

Court. (Id.) Quite the contrary.

The first incident in connection with the ‘374 Patent involving “unilateral and

independent . . . action before the USPTO” was actually the USPTO’s unauthorized

grant of a refund after issuance of the ‘374 Patent, which refund was purportedly

based upon “unilateral and independent” action on behalf of Mr. Edward Portman.

However, at the time of any purported refund request, Mr. Portman did not have

authority to transact business with the USPTO in connection with the subject

patent application. At least as early as December 8, 2000 (A212) and arguably as

early as October 25, 2000 (A209), Mr. Portman assigned power of attorney to Mr.

Essman’s firm; therefore, he lacked authority to act in connection with the patent

application. The earliest date of record on which any refund request was made by

Mr. Portman to American Express (not to the USPTO) is December 17, 2000. (See

American Express Service Establishment Claim Form, Dkt. 12-1 at 5.) Clearly, by


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this date, Mr. Portman lacked any representative authority to make any request to

the USPTO that would bind any of the other inventors.

Accordingly, because Defendant has admitted that “the USPTO rules are

designed to prevent . . . every part-owner of a patent [from taking] unilateral and

independent (and potentially conflicting) action before the USPTO,” and because

the USPTO allowed an unauthorized inventor to unilaterally and independently

receive a refund, the proximate result of which was the vacation of the ‘374 Patent,

this Court should declare the USPTO’s actions arbitrary, capricious, or otherwise

not in accord with the law, and grant Mr. Schmirler’s motion for summary

judgment.

Conclusion

For the foregoing reasons, Mr. Schmirler respectfully requests that this Court

hold that the Office’s action in connection with the refund of the paid issue fee, the

withdrawal of the ‘374 Patent from issue, and/or the Office’s failure to consider Mr.

Schmirler’s petition filed with the Office, individually or collectively, constituted

agency action that was arbitrary, capricious, an abuse of discretion, or otherwise

not in accordance with law.

Respectfully submitted,

Date: 31 May 2011 Ryan Kromholz & Manion, S.C. By: s/Garet K. Galster Joseph A. Kromholz (State Bar No. 1002464) [email protected] Garet K. Galster (State Bar No. 1056772) [email protected] RYAN KROMHOLZ & MANION, S.C. P. O. Box 26618


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Milwaukee, Wisconsin 53226-0618 Attorneys for Plaintiff


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CERTIFICATE OF SERVICE

I hereby certify that I have this day caused copies of the foregoing document to be

served on the parties and counsel of record noted below by Court email and First

Class Mail:

By First Class Mail:

Frances M Lynch United States Patent & Trademark Office

PO Box 15667 Arlington, VA 22215

Thomas W Krause

United States Patent & Trademark Office PO Box 15667

Arlington, VA 22215

By Court Email:

Matthew V Richmond United States Department of Justice (ED-WI)

Office of the US Attorney 517 E Wisconsin Ave - Room 530

Milwaukee, WI 53202

Christian R Larsen United States Department of Justice (ED-WI)

Office of the US Attorney 517 E Wisconsin Ave - Rm 530

Milwaukee, WI 53202

Date: 31 May 2011 s/Peggy Pechulis Peggy Pechulis


10 Cv 144 22_Schmirler Response

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