10 Cv 144 26_PTO Response

8/6/2019 10 Cv 144 26_PTO Response

http://slidepdf.com/reader/full/10-cv-144-26pto-response 1/10

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF WISCONSIN

Dennis L. Schmirler,

Plaintiff, Case No. 10-C-144v.

Hon. David J. Kappos,In his official capacity as

Secretary of Commerce for

Intellectual Property and Director of theUnited States Patent and Trademark Office,

Defendant.

DEFENDANT’S REPLY MEMORANDUM IN SUPPORT

OF CROSS-MOTION FOR SUMMARY JUDGMENT

Defendant David Kappos, Under Secretary of Commerce for Intellectual Property and

Director of the United States Patent and Trademark Office (“Director”), by his undersigned

counsel, respectfully submits this reply memorandum in support of Defendant’s cross-motion for

summary judgment.

SUMMARY OF THE ARGUMENT

In his opening memorandum, the Director explained that Mr. Schmirler is not entitled to

relief from this Court because: (1) Mr. Schmirler’s petition failed to comply with USPTO

signature requirements; and (2) to the extent Mr. Schmirler is seeking “revival” of the vacated

patent or abandoned patent application at issue here, he has failed to exhaust administrative

remedies. Mr. Schmirler’s response fails to squarely address either the signature requirements or

the exhaustion issue, and instead raises several peripheral issues that merit only a brief response.

In short: (1) the Director’s statement that “a patent issued” does not make Mr. Schmirler a

Case 2:10-cv-00144-LA Filed 06/21/11 of 10 Document 26

8/6/2019 10 Cv 144 26_PTO Response


2

patentee; (2) even if it did, Mr. Schmirler would still not be entitled to proceed unilaterally

before the USPTO; (3) in the absence of a new correspondence address submitted by the

inventors, the USPTO’s mailing of the notice that the patent might be vacated to the official

correspondence address on file – Mr. Essman’s address – was consistent with Office procedure

and was neither arbitrary or capricious; and (4) the fact that Dr. Portman received a refund,

rendering the issue fee unpaid, was not the result of “arbitrary and capricious” USPTO conduct.

I. Mr. Schmirler Is an Applicant, Not a Patentee.

A. The Patent Did Not Validly Issue and Was Rendered Void Ab Initio When It

Was Vacated.

The Director’s position is that the ’374 patent never validly issued, and that when the

USPTO vacated it, it became void ab initio. As previously explained, this was the result of Dr.

Portman’s chargeback, which: (1) left the statutorily-required issue fee unpaid; and (2) caused

the USPTO to withdraw its prior petition decision reviving the previously-abandoned

application. Director’s S.J. Mem. at 15. Although the inventors might have been able to save

the patent had they responded to the USPTO’s June 7, 2004, Notice in a manner that cured or

otherwise addressed these defects (A230-31), the inventors did not so respond, and the USPTO

vacated the patent. Once the patent was vacated for failure to meet the preconditions for

receiving a patent, Mr. Schmirler and his co-inventors were returned to the status of applicants of

an abandoned application. As explained in the opening memorandum, the USPTO’s regulations

make clear that an applicant cannot proceed unilaterally without his co-inventors or co-owners.

Director’s S.J. Mem. at 15-19.

Mr. Schmirler contends that the Director has failed to explain how a chargeback

occurring after patent issuance “effects a nonpayment of an issue fee on the date on which a

patent issues.” Schmirler Reply Mem. at 3. This argument, however, is based on the flawed


8/6/2019 10 Cv 144 26_PTO Response


3

premise that an issue fee discrepancy will only be a problem if it exists on the date the patent

issues. As explained previously (Director’s S.J. Mem. at 11, 15, 24), 35 U.S.C. § 151 requires

that any “remaining balance of the issue fee shall be paid within three months of the sending of a

notice thereof,” and provides that “if not paid, the patent shall lapse.” 35 U.S.C. § 151. Dr.

Portman’s chargeback created a “remaining balance,” and the inventors’ failure to respond to the

June 7, 2004, Notice caused the patent to lapse.1

But the significance of Dr. Portman’s chargeback request is not limited to the issue fee

deficiency it created. It also raised questions about the inventors’ previous assertions that the

prior abandonment had been unintentional. Portman’s attempt to obtain a refund of the money

that was intended to cover the issue fee of the patent could well have reflected an intention that

the patent

The fact that the issue fee remained unpaid

after notice to the inventors gave the USPTO ample basis for voiding the patent and returning the

inventors to applicant status.

not

1 Contrary to Mr. Schmirler’s implication (Schmirler Reply Mem. at 3), the Director’s

statement that “as a result of Dr. Portman’s chargeback . . . , the issue fee had never been paid”

was not meant to suggest that the issue fee had not been paid at one time. Rather, as Mr.Schmirler acknowledges, the USPTO does not deny that the issue fee was paid. Schmirler Reply

Mem. at 3. The USPTO’s point is merely that the chargeback left the fee unpaid, as if it had

never been paid.

issue, and thus gave rise to the inference that the abandonment may not have been

unintentional after all. If that were the case, then the USPTO should not have revived the

underlying application in the first place. In light of this new information regarding the inventors’

intent, the USPTO withdrew its decision granting the revival request, thereby undercutting the

patent on a ground independent of the issue fee deficiency. The inventors’ failure to respond to

the USPTO’s June 7, 2004, Notice with an explanation of the chargeback provided an

independent ground for the USPTO to vacate the patent, and thereby restore the inventors to the


8/6/2019 10 Cv 144 26_PTO Response


4

position they were in prior to revival of the underlying application. Again, they were

applicants.2

B. The USPTO Acted Properly In Sending the June 7, 2004 Notice to Mr.

Essman.

The USPTO reacted to Dr. Portman’s chargeback by issuing a notice informing the

applicants: (1) that the issue fee was still outstanding; (2) that the Examiner’s December 21,

2000, decision reviving the patent application had been withdrawn; and (3) that a response

explaining the circumstances of the chargeback would be required to avoid vacation of the

patent. FF 19-24; A228-32. The USPTO mailed the notice to the correspondence address on file

for the application – that of Mr. Essman, the attorney of record for the patent application. FF19.

Prior to vacating the patent, the USPTO even spoke with Mr. Essman and confirmed with him

that no response from the inventors was forthcoming. FF 26.

Mr. Schmirler’s new argument that Mr. Essman had no valid power of attorney

(Schmirler Reply Mem. at 3-5) is without merit. Although the attorney-client relationship

between Messrs. Schmirler and Essman might have technically ended at the (invalid) issuance of

the ’374 patent, Mr. Essman remained the attorney of record on the application and his address

remained the official correspondence address for the application. Under the USPTO’s rules, Mr.

Essman had a continuing duty to keep the inventors informed of significant Office

correspondence. Indeed, an attorney receiving correspondence for a former client commits

misconduct if he “fail[s] to inform [the] former client . . . of correspondence received from the

Office . . . when the correspondence (i) could have a significant effect on a matter pending before

the Office, (ii) is received by the practitioner on behalf of a client or former client and (iii) is

2As explained in the Director’s opening memorandum, even if Mr. Schmirler were a

patentee, the USPTO’s rules do not permit him to proceed unilaterally before the Office.Director’s S.J. Mem. at 19-22.


8/6/2019 10 Cv 144 26_PTO Response


5

correspondence of which a reasonable practitioner would believe under the circumstances the

client or former client should be notified.” 37 C.F.R. § 10.23(8). Likewise, it is misconduct for

an attorney to fail to “timely notify the Office of an inability to notify a client or former client of

correspondence received from the Office.” Id.

Accordingly, even after a patent has issued upon an application, “[t]he Office will direct,

or otherwise make available, all notices, official letters, and other communications relating to the

application to the person associated with the correspondence address.” 37 C.F.R. § 1.33; see

also id. (specifying procedures for changing the correspondence address); accord Manual of

Patent Examining Procedure (“MPEP”) 2542 (“Unless a fee address has been designated,

notices, receipts, and other communications relating to the patent will generally be directed to the

correspondence address (37 C.F.R. § 1.33) used during the prosecution of the application.

Practitioners of record when the patent issues who do not wish to receive correspondence

relating to maintenance fees must change the correspondence address in the patented file or

provide a fee address to which such correspondence should be sent.”) (emphasis added);

MPEP 2222 (“If the patent owner desires that a different attorney or agent receive

correspondence [in a reexamination proceeding], then a new power of attorney must be filed.”).

The USPTO did not act arbitrarily and capriciously in following its own rules and mailing the

notice to the correspondence address associated with the application. Even if Mr. Essman failed

to notify Mr. Schmirler of the correspondence – and Mr. Schmirler has provided no evidence that

Mr. Essman in fact failed to do so – if Mr. Schmirler has a remedy in these circumstances, it is

against Mr. Essman, not the USPTO.3

3

Given the USPTO’s clear rules regarding the correspondence address, Mr. Schmirler’s

suggestion that the USPTO should have attempted to track down the individual inventors orpublish a notice in the USPTO’s weekly gazette (Schmirler Reply Mem. at 4) is without merit.


8/6/2019 10 Cv 144 26_PTO Response


6

II. The Reasons for Requiring the Inventors To Act With one Voice Apply With Full

Force to This Case.

Mr. Schmirler next argues that there would be “no harm” in allowing Schmirler

“redress,” by which Schmirler appears to mean that there would be no harm done if this Court

were to simply “reinstate[]” the patent as relief for Schmirler in this lawsuit. (Schmirler Reply

Mem. at 6-7). The Director has already explained that this Court does not have the authority to

reinstate the patent (Director’s S.J. Mem. at 23 n.7, citing Gould v. Quigg, 822 F.2d 1074, 1079

(Fed. Cir. 1987)), and that in any event Mr. Schmirler has failed to exhaust administrative

remedies (Director’s S.J. Mem. at 22-23). But apart from these threshold problems with Mr.

Schmirler’s requested relief, he is simply wrong in his allegation of harmlessness. The patent

should not be reinstated absent some consideration of the facts and circumstances surrounding

Dr. Portman’s chargeback. USPTO’s requirement that Dr. Portman participate in any

proceedings to revive the patent application ensures that this question would be answered prior to

any reinstatement. Mr. Schmirler’s proposed course of action would bypass this question

entirely (Mr. Schmirler has made no attempt to answer it in any of his pleadings so far), and thus

could result in a patent that did not meet the requirements for revival.

Mr. Schmirler goes too far in suggesting that any desire on the part of his co-inventors or

co-owners’ to donate the patent to the public domain could be satisfied by simply permitting

them to disclaim their own rights in the patent. Obviously, if Mr. Schmirler were left as the sole

patentee, the co-inventors’ purpose of donating the patent to the public domain would be

thwarted. This again illustrates the need for patent applicants and patentees to proceed with one

voice before the USPTO. The decision to donate to the public domain, or not to do so, is a

decision that can only be effectuated by all the inventors, acting in unison, as contemplated by


8/6/2019 10 Cv 144 26_PTO Response


7

the USPTO rules. The USPTO rules are designed to prevent it from having to mediate this kind

of conflict of interest between inventors.4

Mr. Schmirler also appears to have misread the Director’s discussion of Rule 1.183,

which permits the USPTO to waive its rules in an “extraordinary situation.” See Director’s S.J.

Mem. at 18 (discussing 37 CFR § 1.183). Mr. Schmirler reads this discussion as suggesting that

Schmirler is “under a duty to attempt to contact co-inventors/owners,” but complains that the

USPTO’s final decision suggested that merely doing so would not be sufficient to revive the

application. To clarify, as explained in both the Director’s memorandum and the final decision,

the rules provide that Mr. Schmirler cannot proceed without his co-inventors and/or co-owners.

Director’s S.J. Mem. at 16-22. An essential step for proceeding with those co-inventors/co-

owners would be to locate and contact them. Even after that, Mr. Schmirler would have to

persuade them to join in his attempt to revive the patent application. If they were amenable to

doing so, they could sign a power of attorney to Mr. Galster, after which Mr. Galster would have

(finally) addressed the basis for the USPTO’s dismissal of his petition to revive the patent

application, and proceedings in the USPTO could continue. With the other inventors involved in

the revival application, the USPTO would be in a position to evaluate the inventors’ explanation

of the chargeback, and to determine whether or not the chargeback fatally undermined the

inventors’ past representations of unintentional abandonment. Although it is difficult to envision

the precise circumstances under which it would be appropriate for the USPTO to waive its

signature rules in this case, Mr. Schmirler’s failure to take the elementary step of attempting to

4An equally serious post-issuance conflict could arise if the revived patent becomes the

subject of a reexamination under 35 U.S.C. § 302 et seq. A reexamination proceeds much likean initial examination (see 35 U.S.C. §§ 305, 314), and thus requires regular input from the co-

inventors and/or co-owners of the patent regarding prosecution arguments and claim

amendments. Not surprisingly, the USPTO’s rules require co-owners to proceed with one voicein a reexamination. 37 CFR § 3.71(b).


8/6/2019 10 Cv 144 26_PTO Response


8

contact his co-inventors and/or co-owners renders any “extraordinary situation” argument a non-

starter.

III. The Fact That Dr. Portman’s “Unilateral” Action Resulted in the Withdrawal of the

Patent Does Not Support Permitting Mr. Schmirler To Now Take Unilateral Action.

Mr. Schmirler’s final argument is that because the USPTO responded to Dr. Portman’s

“unilateral” action in initiating the chargeback, it should now respond to Mr. Schmirler’s

unilateral attempts to get the patent revived. Schmirler Reply Mem. at 7-8. The two situations

are not comparable.

Most obviously, the primary significance of the chargeback was that it appeared to show

an intent on the part of the inventors to abandon the application, and thus contradicted the

inventors’ joint representation to the USPTO that the abandonment was unintentional. This in

turn undermined the USPTO decision reviving the application, and was the basis for the

USPTO’s withdrawal of that decision. FF 19; A230. Thus, the facts of this case clearly

demonstrate that the action of a single inventor can affect the USPTO’s treatment of an

application (or even a patent issued on that application), even though to actually prosecute the

application, cooperation between all inventors is required.5

Likewise, for better or for worse, the attorney representing the inventors in the revival

petition (i.e. Essman) relied on Dr. Portman’s payment of the issue fee. FF 10. The inventors

thus ran the risk that Portman would attempt to obtain a refund, and thereby leave the issue fee

5Co-inventors Schmirler or Christensen could likewise have affected the USPTO’s

treatment of the application by unilaterally sending a letter to the USPTO stating that theabandonment was intentional. The fact that the USPTO would consider such a letter in the

course of determining whether the abandonment was unintentional does not mean that the author

of the letter would actually be prosecuting the application.


8/6/2019 10 Cv 144 26_PTO Response


9

unpaid. Had American Express sent the chargeback notice to the USPTO at the proper address,6

It thus strains credulity to argue that it was “arbitrary [and] capricious” for the USPTO to

“allow[] . . . [Portman] to receive a refund.” (Schmirler Reply Mem. at 8). As the record makes

clear, the refund occurred without any action being taken by the USPTO. FF 16-18. Dr.

Portman sent a letter to American Express, American Express erroneously sent a letter to the

USPTO at Dr. Portman’s address, and then, when it received no response from the USPTO,

American Express took the money out of the USPTO’s account. FF 16-18. Under these

circumstances, the USPTO cannot be said to have acted arbitrarily and capriciously; indeed, it

did not act at all.

the inventors would have been required to address the chargeback issue and any resultant fee

deficiency prior to patent issuance.

CONCLUSION

For the foregoing reasons, and for the reasons stated in the Director’s Opening

Memorandum, the Director’s Motion for Summary Judgment should be granted, and Mr.

Schmirler’s Motion for Summary Judgment should be denied.

6Mr. Schmirler has acknowledged that American Express erroneously sent the

chargeback form to Dr. Portman, and not the USPTO. See Petition Under 37 CFR § 1.182, Oct.16, 2007 (Doc. 21-1), at 3, ¶ 14.


8/6/2019 10 Cv 144 26_PTO Response


10

Dated this 21th day of June, 2011.

JAMES L. SANTELLEUnited States Attorney

By: /s/ Chris R. Larsen

CHRIS R. LARSEN

Assistant United States AttorneyEastern District of Wisconsin

517 E. Wisconsin Ave., Room 530

Milwaukee, WI 53202

(414) 297-1700Facsimile: (414) 297-4394

State Bar No. 1005336

[email protected]

Of Counsel:

Thomas W. Krause

Frances M. Lynch

Office of the SolicitorUnited States Patent & Trademark Office

600 Dulany St.

Alexandria, VA 22314571-272-9035

[email protected] [email protected]


mailto:[email protected]









10 Cv 144 26_PTO Response

Documents

Transcript of 10 Cv 144 26_PTO Response