2013-1206

United States Court of Appeals for the Federal Circuit

EXELA PHARMA SCIENCES, LLC, EXELA PHARMSCI, INC., and EXELA HOLDINGS, INC.,

Plaintiffs-Appellants,

v.

TERESA STANEK REA and UNITED STATES PATENT AND TRADEMARK OFFICE,

Defendants-Appellees,

v.

CADENCE PHARMACEUTICALS, INC. and SCR PHARMATOP,

Intervenors.

Appeal from the United States District Court for the Eastern District of Virginia in case no. 12-CV-469, Judge Liam O’Grady.

BRIEF OF INTERVENORS

(counsel listed on inside cover)

Charles A. Weiss HOLLAND & KNIGHT LLP 31 W. 52nd Street New York, NY 10019 charles.weiss@hklaw.com Counsel for SCR Pharmatop

Richard P. Bress Gabriel K. Bell LATHAM & WATKINS LLP 555 Eleventh Street, NW, Suite 1000 Washington, DC 20004 (202) 637-2200 Kenneth Schuler Marc Zubick LATHAM & WATKINS LLP 233 South Wacker Drive, Suite 5800 Chicago, IL 60606 (312) 876-7700 Stephen Swinton LATHAM & WATKINS LLP 12636 High Bluff Drive, Suite 400 San Diego, CA 92130 (858) 523-5400 Counsel for Cadence Pharmaceuticals, Inc.

i

CADENCE PHARMACEUTICALS, INC.’S CERTIFICATE OF INTEREST

Counsel for Defendant-Intervenor Cadence Pharmaceuticals, Inc. certifies

the following:

1. The full name of every party or amicus curiae represented by me is:

Cadence Pharmaceuticals, Inc.

2. The name of the real party in interest (if the party named in the caption is not the real party in interest) represented by me is:

N/A

3. All party corporations and any publicly held companies that own 10 percent or more of the stock of the party or amicus curiae represented by me are:

None.

4. The names of all law firms and the partners or associates that appeared for the party or amicus curiae now represented by me in the trial court or agency or are expected to appear in this court are:

Latham & Watkins LLP: Richard P. Bress, Stephen P. Swinton, Ken-neth G. Schuler, Gabriel K. Bell, Marc N. Zubick

Oliff & Berridge, PLC: Aaron L. Webb, Peter T. Ewald

Dated: September 27, 2013 Respectfully submitted,

/s/ Richard P. Bress

Richard P. Bress Counsel for Cadence Pharmaceuticals, Inc.

ii

SCR PHARMATOP’S CERTIFICATE OF INTEREST

Counsel for Defendant-Intervenor SCR Pharmatop certifies the following:

1. The full name of every party or amicus curiae represented by me is:

SCR Pharmatop

2. The name of the real party in interest (if the party named in the caption is not the real party in interest) represented by me is:

SCR Pharmatop

3. All parent corporations and any publicly held companies that own 10 percent or more of the stock of the party or amicus curiae represented by me are:

None.

4. The names of all law firms and the partners or associates that appeared for the party or amicus curiae now represented by me in the trial court or agency or are expected to appear in this court are:

Holland and Knight LLP: Charles A. Weiss

Morris Nichols Arsht & Tunnell: Thomas C. Grimm

Oliff & Berridge, PLC: Aaron L. Webb, Peter T. Ewald

Dated: September 27, 2013 /s/ Charles A. Weiss Charles A. Weiss

Counsel for SCR Pharmatop

iii

TABLE OF CONTENTS Page

CADENCE PHARMACEUTICALS, INC.’S CERTIFICATE OF INTEREST ....................................................................................................... i

SCR PHARMATOP’S CERTIFICATE OF INTEREST ......................................... ii TABLE OF AUTHORITIES ..................................................................................... v

STATEMENT OF RELATED CASES ..................................................................... 1

STATEMENT OF JURISDICTION.......................................................................... 1

COUNTERSTATEMENT OF THE ISSUES............................................................ 2

INTRODUCTION ..................................................................................................... 3

COUNTERSTATEMENT OF THE CASE ............................................................... 5

COUNTERSTATEMENT OF THE FACTS ............................................................ 9

A. Statutory and Regulatory Background .................................................. 9

1. Limited Grounds For Third-Party Challenges ............................ 9

2. Timing Rules For International Patent Applications, And Provision For Exceptions .......................................................... 11

B. The Patent-In-Suit And The Parties .................................................... 12

C. Exela’s Petition And The PTO’s Letter .............................................. 13

D. The District Court Proceedings ........................................................... 14

1. Exela’s Claims .......................................................................... 14

2. The PTO’s Motion To Dismiss ................................................. 14

3. Hire Order ................................................................................. 15

4. Reconsideration In Light Of Hire Order .................................. 16

SUMMARY OF THE ARGUMENT ...................................................................... 18

ARGUMENT ........................................................................................................... 22

I. STANDARD OF REVIEW ........................................................................... 22

II. EXELA’S APA ACTION WAS PROPERLY DISMISSED ........................ 22

A. Exela’s APA Action Against The PTO Is An Untimely Facial Challenge Under Controlling Precedent ............................................. 22

iv

Page

1. Fourth Circuit Law Governs Application Of The Statute Of Limitations ........................................................................... 24

2. Exela’s Suit Is, Under Fourth Circuit Precedent, A Facial Challenge To The PTO’s Revival Rule And Patent Issuance ..................................................................................... 25

3. Exela’s Suit Is Time-Barred Under The Fourth Circuit’s Holding In Hire Order .............................................................. 30

4. The PTO’s 2012 Letter Refusing To Act On Exela’s Petition Did Not Restart The Clock .......................................... 34

B. Exela’s APA Action Against The PTO Is Independently Foreclosed Under Pregis ..................................................................... 40

1. The Patent Act Precludes Exela’s APA Action Challenging The Patent-In-Suit’s Validity ............................... 41

2. The Patent Act Provides Adequate Remedies .......................... 45

3. Exela’s Attempts To Evade Pregis Are Unavailing ................. 46

III. THE MERITS OF EXELA’S APA ACTION ARE NOT BEFORE THIS COURT ................................................................................................ 49

CONCLUSION ........................................................................................................ 51

v

TABLE OF AUTHORITIES Page(s)

CASES Animal Legal Defense Fund v. Quigg,

932 F.2d 920 (Fed. Cir. 1991) ....................................................................... 43 Aristocrat Technologies Australia Pty. Ltd. v. International Game

Technology, 543 F.3d 657 (Fed. Cir. 2008) ................................................................passim

Association of Data Processing Service Organizations, Inc. v. Camp,

397 U.S. 150 (1970)....................................................................................... 41 Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp. of

California, Inc., 522 U.S. 192 (1997)....................................................................................... 33

Block v. Community Nutrition Institute,

467 U.S. 340 (1984)................................................................................ 41, 43 Bowen v. Michigan Academy of Family Physicians,

476 U.S. 667 (1986)................................................................................. 41, 43 Bray v. United States,

785 F.2d 989 (Fed. Cir. 1986) ....................................................................... 24 Dunn-McCampbell Royalty Interest, Inc. v. National Park Service,

112 F.3d 1283 (5th Cir. 1987) ....................................................................... 34 Forshey v. Principi,

284 F.3d 1335 (Fed. Cir. 2002) ..................................................................... 25 Functional Music, Inc. v. FCC,

274 F.2d 543 (D.C. Cir. 1958) ................................................................. 32, 33 Garcia v. Vilsack,

563 F.3d 519 (D.C. Cir. 2009) ....................................................................... 45

vi

Page(s) Gold Dollar Warehouse, Inc. v. Glickman,

211 F.3d 93 (4th Cir. 2000) ......................................................... 25, 26, 28, 29 GPX International Tire Corp. v. United States,

666 F.3d 732 (Fed. Cir. 2011) ....................................................................... 50 Hire Order Ltd. v. Marianos,

698 F.3d 168 (4th Cir. 2012) ..................................................................passim ICC v. Brotherhood of Locomotive Engineers,

482 U.S. 270 (1987)...............................................................17, 20, 35, 36, 39 Jersey Heights Neighborhood Association v. Glendening,

174 F.3d 180 (4th Cir. 1999) ................................................................... 34, 46 Landmark Screens, LLC v. Morgan, Lewis, & Bockius, LLP,

676 F.3d 1354 (Fed. Cir. 2012) ..................................................................... 24 Madey v. Duke University,

307 F.3d 1351 (Fed. Cir. 2002) ..................................................................... 22 Magnivision, Inc. v. Bonneau Co.,

115 F.3d 956 (Fed. Cir. 1997) ....................................................................... 49 Magnola Metallurgy, Inc. v. United States,

508 F.3d 1349 (Fed. Cir. 2007) .................................................................... 35 Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak,

132 S. Ct. 2199 (2012) ................................................................................... 41 MedImmune, Inc. v. Genentech, Inc.,

549 U.S. 118 (2007)....................................................................................... 42 NLRB Union v. FLRA,

834 F.2d 191 (D.C. Cir. 1987) ....................................................................... 33 Norton v. Southern Utah Wilderness Alliance,

542 U.S. 55 (2004)......................................................................................... 39

vii

Page(s) P & V Enterprises v. U.S. Army Corps of Engineers,

516 F.3d 1021 (D.C. Cir. 2008) ......................................................... 36, 37, 38 Pregis Corp. v. Kappos,

700 F.3d 1348 (Fed. Cir. 2012) ..............................................................passim Pupols v. U.S. PTO,

413 F. App’x 232 (Fed. Cir.), cert. denied, 131 S. Ct. 3009 (2011) ............. 44 Rozenblat v. Kappos, 345 F. App’x 601 (Fed. Cir. 2009) ................................................................ 44 Sackett v. EPA,

132 S. Ct. 1367 (2012) ................................................................................... 41 SmithKline Beecham Corp. v. Apotex Corp.,

439 F.3d 1312 (Fed. Cir. 2006) ............................................................... 25, 39 Spannaus v. U.S. DOJ,

824 F.2d 52 (D.C. Cir. 1987) ............................................................. 22, 33, 34 Syntex (U.S.A.) Inc. v. U.S. PTO,

882 F.2d 1570 (Fed. Cir. 1989) ............................................................... 43, 44 United States v. Fausto,

484 U.S. 439 (1988)....................................................................................... 41 Your Home Visiting Nurse Services, Inc. v. Shalala,

525 U.S. 449 (1999)................................................................................. 35, 39

STATUTES, REGULATIONS AND RULES 5 U.S.C. § 701 et seq .................................................................................................. 1 5 U.S.C. § 701(a)(1) ........................................................................................... 20, 40 5 U.S.C. § 701(a)(2) ................................................................................................. 35

viii

Page(s) 5 U.S.C. § 702 ......................................................................................................... 40 5 U.S.C. § 704 ................................................................................................... 20, 45 5 U.S.C. § 706(1) ..................................................................................................... 39 5 U.S.C. § 706(2)(C) ................................................................................................ 47 28 U.S.C. § 1295(a)(1) ............................................................................................... 1 28 U.S.C. § 1331 ........................................................................................................ 1 28 U.S.C. § 1338(a) ................................................................................................... 1 28 U.S.C. § 2201(a) ................................................................................................. 42 28 U.S.C. § 2401(a) ............................................................................... 2, 6, 7, 18, 22 35 U.S.C. § 1 et seq .................................................................................................... 9 35 U.S.C. § 2 ............................................................................................................ 38 35 U.S.C. § 3 ............................................................................................................ 38 35 U.S.C. § 101 ........................................................................................................ 10 35 U.S.C. § 102 ........................................................................................................ 10 35 U.S.C. § 103 ........................................................................................................ 10 35 U.S.C. § 111 .......................................................................................................... 9 35 U.S.C. § 132 .......................................................................................................... 9 35 U.S.C. § 133 .......................................................................................................... 9 35 U.S.C. § 134 .................................................................................................... 9, 42

ix

Page(s) 35 U.S.C. § 141 .................................................................................................... 9, 42 35 U.S.C. § 145 .................................................................................................... 9, 42 35 U.S.C. § 271 ........................................................................................................ 10 35 U.S.C. § 282 ........................................................................................ 5, 10, 42, 47 35 U.S.C. § 282(b) ................................................................................................... 11 35 U.S.C. §§ 301-307............................................................................................... 42 35 U.S.C. § 301 ........................................................................................................ 10 35 U.S.C. § 302 ........................................................................................................ 10 35 U.S.C. § 305 .......................................................................................................... 9 35 U.S.C. § 306 .......................................................................................................... 9 35 U.S.C. §§ 311-318............................................................................................... 42 35 U.S.C. § 311 .................................................................................................. 10, 42 35 U.S.C. § 314 .......................................................................................................... 9 35 U.S.C. § 315 .................................................................................................... 9, 10 35 U.S.C. § 321 .................................................................................................. 10, 42 35 U.S.C. § 351 et seq .............................................................................................. 11 35 U.S.C. § 371 .................................................................................................... 9, 14 35 U.S.C. § 371(c) ............................................................................................. 11, 12 35 U.S.C. § 371(d) ................................................................................. 11, 12, 23, 27

x

Page(s) 35 U.S.C. § 41(a)(7) ................................................................................................. 12 Pub. L. No. 112-29, 125 Stat. 284 (2011) ................................................................ 10 Pub. L. No. 112-211, 126 Stat. 1527 (Dec. 18, 2012; effective Dec. 18,

2013) .............................................................................................................. 49 37 C.F.R. § 1.17(l) ................................................................................................... 11 37 C.F.R. § 1.17(m) ................................................................................................. 11 37 C.F.R. § 1.137(a) ................................................................................................. 11 37 C.F.R. § 1.137(b) .................................................................................. 6, 8, 11, 24 37 C.F.R. § 1.181 ..................................................................................................... 13 37 C.F.R. § 1.181(a)(3) ............................................................................................ 38 37 C.F.R. § 1.182 ..................................................................................................... 13 37 C.F.R. § 1.491 ..................................................................................................... 11 37 C.F.R. § 1.495 ............................................................................................... 11, 12 47 Fed. Reg. 41,272 (Sept. 17, 1982) ...................................................................... 12 65 Fed. Reg. 57,024 (Sept. 20, 2000) ...................................................................... 12 Fed. Cir. R. 47.5(b) .................................................................................................... 1

OTHER AUTHORITY Gillian E. Metzger, Facial Challenges and Federalism, 105 Colum. L. Rev.

873, 881 (2005) .............................................................................................. 29

1

STATEMENT OF RELATED CASES

There are no other appeals arising from the district court action below. See

Fed. Cir. R. 47.5(a). The following cases may be directly affected by the outcome

in the present appeal: Cadence Pharmaceuticals, Inc. v. Exela Pharma Sciences,

LLC, No. 11-cv-733 (D. Del. filed Aug. 18, 2011); Cadence Pharmaceuticals, Inc.

v. Fresenius Kabi USA, LLC, No. 3:13-cv-139 (S.D. Cal. filed Jan. 17, 2013); and

Cadence Pharmaceuticals, Inc. v. Sandoz, Inc., No. 3:13-cv-278 (S.D. Cal. filed

Feb. 4, 2013). See Fed. Cir. R. 47.5(b).

STATEMENT OF JURISDICTION

Exela Pharma Sciences, LLC, Exela PharmSci, Inc., and Exela Holdings,

Inc. (collectively “Exela”) brought this suit against the United States Patent &

Trademark Office and its Director (collectively “the PTO”) in the Eastern District

of Virginia under the Administrative Procedure Act (“APA”), 5 U.S.C. § 701 et

seq., asserting jurisdiction under, inter alia, 28 U.S.C. §§ 1331, 1338(a). On

December 19, 2012, the district court held that the action was untimely and

dismissed it with prejudice. A1-6, A7. On February 8, 2013, Exela timely

appealed. ECF No. 57. This Court has jurisdiction under 28 U.S.C. § 1295(a)(1).

2

COUNTERSTATEMENT OF THE ISSUES

1. Whether the district court correctly dismissed Exela’s complaint as

untimely under the applicable six-year statute of limitations, 28 U.S.C. § 2401(a),

and the Fourth Circuit’s recent binding authority in Hire Order Ltd. v. Marianos,

698 F.3d 168 (4th Cir. 2012), because its complaint seeks to invalidate a PTO rule

and a U.S. patent each issued more than six years earlier.

2. Whether, in any event, dismissal was required under this Court’s

recent decision in Pregis Corp. v. Kappos, 700 F.3d 1348 (Fed. Cir. 2012), because

the Patent Act precludes an accused infringer from circumventing the Act’s

detailed and purposefully-limited framework for asserting defenses to patent

infringement by bringing a collateral APA suit against the PTO to challenge the

patent’s validity.

3

INTRODUCTION

Facing a patent infringement action in another district court, Exela brought

this collateral APA action against the PTO claiming that the patent-in-suit is

invalid because, during patent prosecution, the PTO applied an invalid procedural

rule. Two recent appellate decisions independently require affirmance of the

district court’s order dismissing this action.

First, as the district court held, Exela’s suit is untimely under Hire Order

Ltd. v. Marianos, 698 F.3d 168, 170 (4th Cir. 2012), a Fourth Circuit case

construing the governing six-year statute of limitations in remarkably similar

circumstances. Although Exela now argues that Fourth Circuit law does not apply

to this issue, Exela argued the exact opposite below. Exela was correct the first

time, and in any event it cannot change course on appeal. This is important

because, as the district court recognized, controlling Fourth Circuit precedent

requires dismissal of Exela’s suit as untimely.

In Hire Order, the Fourth Circuit held that a plaintiff’s facial challenge to

agency action accrues at the time of the agency action, even if the plaintiff is not

harmed until long after the limitation period ends. That holding is dispositive here

because all of the PTO’s relevant actions—implementing its revival rule (in 1982),

reviving the patent application (in 2003), and, ultimately, issuing the patent-in-suit

(in 2006)—occurred more than six years prior to Exela’s suit. Exela’s principal

4

argument is that its claims are timely because they accrued not when the PTO’s

actions occurred but only when Exela felt the effects of those agency actions—i.e.,

when Exela faced the infringement action. But Hire Order considered and

squarely rejected that position. Under Hire Order, Exela’s facial challenge was

untimely and properly dismissed for that reason.

Second, and even more fundamentally, Exela’s APA action must be rejected

under this Court’s recent decision in Pregis Corp. v. Kappos, 700 F.3d 1348 (Fed.

Cir. 2012). Pregis establishes that “a third party cannot sue the PTO under the

APA to challenge a PTO decision to issue a patent,” even in circumstances where

the third party ostensibly has no other way to raise its particular invalidity

challenge. Id. at 1357. That holding squarely forecloses Exela’s APA suit, which

seeks to invalidate the patent-in-suit based on the PTO’s allegedly improper revival

of the patent application. Just as Exela cannot raise the “procedural irregularit[y]”

of “improper revival” as a defense in the parallel infringement action, see

Aristocrat Techs. Australia Pty. Ltd. v. Int’l Game Tech., 543 F.3d 657, 663 (Fed.

Cir. 2008), it cannot do an end-run and seek to invalidate the patent on that same

ground in an APA suit against the PTO, see Pregis, 700 F.3d at 1357-61 (citing

Aristocrat, 543 F.3d at 662-63).

Under Exela’s contrary view, accused infringers could (and undoubtedly

would) pursue collateral actions against the PTO as a matter of course,

5

“inundat[ing] the courts with arguments relating to every minor transgression they

could comb from the file wrapper,” Aristocrat, 543 F.3d at 663, and forcing the

PTO to defend under APA standards any patent asserted in an infringement

action—often years after the patent issued. As this Court has explained,

“[a]llowing competitors to collaterally attack issued patents through suits under the

APA would destroy the Patent Act’s careful framework for judicial review at the

behest of particular persons through particular procedures.” Pregis, 700 F.3d at

1359. Although the district court reached a contrary conclusion prior to this

Court’s holding in Pregis, this Court subsequently has resolved the issue. Under

Pregis, it is clear that Exela’s APA suit cannot proceed.

The district court’s judgment dismissing Exela’s suit should be affirmed.

COUNTERSTATEMENT OF THE CASE

In August 2011, patent owner SCR Pharmatop (“Pharmatop”) and licensee

Cadence Pharmaceuticals, Inc. (“Cadence”) sued Exela in the United States

District Court for the District of Delaware alleging infringement of the patent-in-

suit, U.S. Patent No. 6,992,218 (“the ’218 patent”), A94-101, and another patent

not at issue here. Exela counterclaimed, asserting, among other things, that the

patent-in-suit is invalid. That infringement action remains ongoing and is not

under review here.

6

In November 2011, Exela petitioned the PTO to reconsider and withdraw its

decision (in 2003) to revive the unintentionally abandoned patent application that

ultimately issued as the ’218 patent (in January 2006). A64, 94. Shortly

thereafter, in February 2012, the PTO issued a letter observing that, as a third

party, Exela had no statutory or regulatory right to intervene in or challenge an ex

parte proceeding, and declining to reconsider its decision to revive the patent

application. A68-69.

In April 2012, Exela brought the present suit under the APA directly against

the PTO. A26-27. Exela sought a declaratory judgment that the PTO’s “rules and

regulations allowing for the revival of an international patent application under the

‘unintentional’ standard are unlawful” and that the patent-in-suit is “invalid.”

A40 ¶¶ b, e. The PTO moved to dismiss the action for lack of subject matter

jurisdiction or failure to state a claim. The PTO argued, inter alia, that Exela’s

complaint was an untimely facial challenge under the relevant six-year statute of

limitations, 28 U.S.C. § 2401(a), because it was filed more than six years after any

of the challenged agency actions—the PTO’s promulgation of its revival

regulation, 37 C.F.R. § 1.137(b), and the PTO’s 2003 revival decision that led to

the patent-in-suit’s issuance in early 2006. A332-35. The PTO also argued that, in

any event, the Patent Act prevents accused infringers from bringing collateral

challenges to patent validity under the APA. A342-49.

7

In August 2012, the district court denied the PTO’s motion to dismiss. A15.

The court held that Exela’s claims did not accrue until Exela faced the

infringement suit in 2011, and that, contrary to the PTO’s position, Exela’s suit

was therefore timely. A9-11. The court also rejected the PTO’s argument that the

APA suit was an improper “third-party collateral attack.” A13. In the court’s

view, “the presumption in favor of judicial reviewability of agency action has not

been overcome by a showing that Congress intended to preclude review in a

manner ‘fairly discernible in the [Patent Act’s] statutory scheme.’” A15 (citation

omitted). Pharmatop and Cadence then intervened, unopposed, as defendants.

A5001-02, A5032-33.

In October 2012, the Fourth Circuit held that a present-day facial attack on

an agency’s 1969 ruling (challenging the ruling on its face in some, but not all,

circumstances) was untimely under 28 U.S.C. § 2401(a), rejecting the plaintiffs’

argument that their action did not accrue until they were affected by the rule in

2008. Hire Order, 698 F.3d at 169-70. The PTO, Pharmatop, and Cadence

promptly asked the district court here to reconsider its timeliness ruling in light of

Hire Order. A462-63. Exela agreed with them that Fourth Circuit law is

“controlling” with respect to the proper application of the statute of limitations in

this case. A506; see also A494, 497, 500. But Exela maintained that, despite Hire

Order, Exela’s claims did not accrue until Exela was purportedly harmed by the

8

PTO’s actions—i.e., until Exela faced the private infringement action in 2011.

A501.

In a December 2012 order, the district court agreed that Exela’s claims are

barred under Hire Order. A4-6. As the district court explained, Hire Order

teaches that facial challenges must be brought within six years of the relevant final

agency action. The district court found that Exela’s suit is a facial challenge

because it seeks a declaration “regarding which standard to apply across the board,

rather than a determination regarding how to apply a standard” and claims that the

PTO’s “rules and regulations … are not in compliance with the authority granted in

the express language of the statute.” A4, 6. Then, applying Hire Order, the court

held that Exela’s claims are untimely because they came more than six years after

the PTO’s challenged revival rule, 37 C.F.R. § 1.137(b) (originally promulgated in

1982). A4-6. The court rejected Exela’s argument that the PTO’s 2012 letter—

which refused Exela’s request to reopen the PTO’s 2003 revival decision—is itself

a reviewable agency action, because the PTO merely refused to consider Exela’s

improper petition, rather than denying it on the merits. A2 n.1. Accordingly, the

district court dismissed Exela’s suit in its entirety.

Also in December 2012 (shortly before the district court’s decision on

reconsideration), this Court held that “a third party cannot sue the PTO under the

APA to challenge a PTO decision to issue a patent.” Pregis, 700 F.3d at 1357.

9

This appeal followed.

COUNTERSTATEMENT OF THE FACTS

A. Statutory and Regulatory Background

1. Limited Grounds For Third-Party Challenges

The Patent Act, 35 U.S.C. § 1 et seq., provides “an intricate scheme for

administrative and judicial review of PTO patentability determinations.” Pregis,

700 F.3d at 1358. The Act provides several avenues for patent applicants to

challenge adverse decisions in the course of ex parte patent prosecution. For

example, applicants can ask the examiner to reconsider a rejection, 35 U.S.C.

§ 132, seek to revive an abandoned application, id. §§ 111, 133, 371, appeal a

twice-rejected application to the Board of Patent Appeals and Interferences (now

the Patent Trial and Appeal Board), id. § 134, and appeal an adverse Board

decision to the Federal Circuit, id. § 141, or, alternatively, bring a civil action

within 60 days of the Board’s decision in the U.S. District Court for the Eastern

District of Virginia against the PTO to seek issuance of the patent, id. § 145.

Similarly, if the PTO conducts an ex parte or inter partes reexamination, the

patentee can participate in such proceedings and appeal adverse decisions. Id.

10

§§ 305-06, 314-15.1 And, once issued, patents are presumed valid and patentees

can enforce their patent rights in suits brought in civil actions. Id. §§ 271, 282.

In contrast to the extensive rights it affords patent applicants to challenge

adverse PTO decisions, the Patent Act strictly limits the extent of third parties’

involvement in patent prosecution and review—limiting both their opportunities

for participation and the issues they can raise. During a patent examination, third

parties can bring certain matters to the PTO’s attention, such as relevant prior art

references or the applicant’s prior written statements on the scope of the patent. Id.

§ 301. Third parties can also raise prior art by petitioning the agency to undertake

ex parte reexamination or inter partes reexamination, and can appeal a decision on

the latter. Id. §§ 302, 311, 315. But the Patent Act does not permit third parties to

raise any other validity concerns during a patent examination or reexamination.

The Patent Act also limits the defenses that an accused infringer can assert in

a patent infringement action, to four enumerated grounds: (1) noninfringement or

unenforceability of the patent, (2) invalidity of the patent “on any ground specified

in part II as a condition for patentability” (under §§ 101, 102, 103), (3) invalidity

1 Unless otherwise indicated, statutory citations are to the provisions in effect

when this suit was filed, before most of the changes in the Leahy-Smith America Invents Act (“AIA”), Pub. L. No. 112-29, §6, 125 Stat. 284, 299-313 (2011), took effect. Those amendments are not materially different for purposes of this appeal and reconfirm the comprehensive nature of the review scheme. For example, inter partes reexamination has been superseded by inter partes review and post-grant review. 35 U.S.C. §§ 311, 321 (effective Sept. 16, 2012).

11

of the patent for lack of adequate written description or enablement (under § 112)

or certain other errors (under § 251), and (4) “[a]ny other fact or act made a

defense by this title.” Id. § 282(b). Accused infringers are not permitted to raise

an invalidity defense on the basis of “prosecution irregularities” and “procedural

lapses,” such as the PTO’s “improper revival” of an abandoned patent application

under §§ 133 and 371. Aristocrat, 543 F.3d at 663.

2. Timing Rules For International Patent Applications, And Provision For Exceptions

A foreign inventor may file an international patent application and prosecute

the patent in the United States under the Patent Cooperation Treaty. 35 U.S.C.

§ 351 et seq. To do so, an applicant must submit certain documents and fees

within 30 months of the foreign application from which the international

application stems. See 35 U.S.C. § 371(c); 37 C.F.R. § 1.491, 1.495.2 Otherwise,

the application is considered abandoned, “unless it be shown to the satisfaction of

the Director that such failure to comply was unavoidable.” 35 U.S.C. § 371(d). In

1982, the PTO issued a regulation providing that an abandoned application can be

revived if the Commissioner finds that the abandonment was either “unavoidable”

or “unintentional,” 37 C.F.R. § 1.137(a), (b), and providing a different fee for

revival under each standard, id. § 1.17(l), (m). See also 35 U.S.C. § 41(a)(7); 47

2 The thirty-month period runs from the international application itself if it does

not claim priority to a foreign application.

12

Fed. Reg. 41,272, 41,277 (Sept. 17, 1982).3 Since then, the PTO has consistently

applied the alternative unavoidable and unintentional standards to requests for

revival.

B. The Patent-In-Suit And The Parties

On June 6, 2000, Pharmatop filed a French patent application for a “new

method for obtaining aqueous formulations with active principles susceptible to

oxidation and the aqueous solutions thus obtained.” A32 ¶ 31; A469. A year later,

Pharmatop filed an international patent application in the United States. A32 ¶ 32;

see No. PCT/FR01/01749 (international application); No. 10/332,060 (U.S.

application). Under PTO rules, Pharmatop had until December 6, 2002—30

months from the filing of the initial French application—to complete the necessary

requirements to enter the national stage. See 35 U.S.C. § 371(c); 37 C.F.R.

§ 1.495. When the deadline passed, the application was deemed abandoned. See

35 U.S.C. § 371(d); A32 ¶ 33. But less than a month later, on January 2, 2003,

Pharmatop filed a petition under 37 C.F.R. § 1.137(b) to revive the international

application because the delay had been unintentional. A33 ¶ 38. On April 25,

2003, the PTO granted Pharmatop’s petition and revived the application. A60;

A71.

3 The subsequent amendments to 37 C.F.R. § 1.137 do not affect this appeal, as Exela observes. See Br. 9 n.1. The version in effect at the time of the PTO’s 2003 revival decision is reproduced in the Addendum at ADD-7. See 65 Fed. Reg. 57,024, 57,057-58 (Sept. 20, 2000).

13

On January 31, 2006, the PTO issued the patent-in-suit, the ’218 patent, to

Pharmatop. A94. Cadence is the exclusive sub-licensee. A82 ¶¶ 28-29. The

commercial embodiment of the ’218 patent is OFIRMEV®, which was approved

by the FDA in 2010. See NDA No. 022450. OFIRMEV, the first intravenous

formulation of acetaminophen available in the United States, is a non-narcotic pain

reliever now commonly used, for example, to augment or replace narcotics (like

morphine) in the hours after a patient undergoes surgery. A82 ¶ 30; A5025.

OFIRMEV was added to the FDA’s book of approved drugs (the so-called

“Orange Book”) and was listed as being protected by the ’218 patent and another

patent not at issue here. A34; A82-82 ¶ 31.

On April 7, 2011, Exela sought approval from the FDA to make and sell a

generic copy of OFIRMEV and asserted that the ’218 patent is invalid. See A34

¶ 46; A85 ¶ 44; see ANDA No. 20-3092. That prompted Pharmatop and Cadence

to file an infringement action based on the ’218 patent (and another patent) against

Exela (and others) in the United States District Court for the District of Delaware.

A76, 90-92 (No. 11-cv-733). Exela counterclaimed for declaratory judgment of

noninfringment and invalidity.

C. Exela’s Petition And The PTO’s Letter

On November 30, 2011, Exela petitioned the PTO under 37 C.F.R. §§ 1.181

and 1.182 to “reconsider and withdraw its petition decision reviving [the]

14

abandoned U.S. patent application [that] ultimately issued as U.S. Patent No.

6,992,218.” A56-67. Exela argued that the PTO had no authority to revive an

international patent application based on the “unintentional” standard. A57.

Observing that the Patent Act and the PTO regulations do not provide for a

nonparty challenge to an ex parte patent proceeding, the PTO declined Exela’s

petition for reconsideration and issued a letter to that effect on February 17, 2012.

A68-69. The PTO also returned Exela’s petition fee. A69.

D. The District Court Proceedings

1. Exela’s Claims

On April 26, 2012, Exela filed the present suit against the PTO, styled as a

“Complaint For Declaratory And Injunctive Relief And Petition For Review Of

Rulemaking.” A26. Exela sought declarations that the Patent Act, 35 U.S.C.

§ 371, only permits revival “under the stringent ‘unavoidable’ standard”; that “the

USPTO rules and regulations allowing for the revival of an international patent

application under the ‘unintentional’ standard are unlawful”; that the ’218 patent is

“invalid” due to the PTO’s “improper” 2003 revival decision; and that the PTO

must address the merits of Exela’s 2011 petition. A40-41 ¶¶ b, d, e, f.

2. The PTO’s Motion To Dismiss

The PTO moved to dismiss Exela’s action under Federal Rules of Civil

Procedure 12(b)(1) and (6) for lack of jurisdiction and failure to state a claim.

15

A319, 330. The PTO argued that (i) Exela’s claims are untimely because they

accrued more than six years prior, when the agency itself acted (in 1982 or 2003),

not later when Exela faced suit (in 2011); (ii) Exela lacks standing; and (iii) Exela

cannot bring an APA action to collaterally attack the PTO’s revival decision or

patent issuance. On August 22, 2012, the district court denied the PTO’s motion

on all three grounds. A8-16. Shortly thereafter, the court granted the unopposed

motions of Pharmatop and Cadence to intervene as defendants. A5032-33.

3. Hire Order

On October 18, 2012, the Fourth Circuit held that, for a facial APA

challenge to an agency action, § 2401(a)’s six-year limitations period “‘begins to

run when the agency publishes’” the action—even if the plaintiff was not harmed

until well after the limitations period ended. Hire Order v. Marianos, 698 F.3d at

170 (citation omitted). In that case, two federally licensed gun dealers had sued

the Bureau of Alcohol, Tobacco, Firearms & Explosives and argued that a 1969

Revenue Ruling covering federal licensees could not, under the governing statute,

prevent them from making a certain transaction at a gun show in Chantilly,

Virginia. Id. at 169. The court rejected the plaintiffs’ contention that the limitation

period accrued in 2008, when they became federally licensed gun dealers. Rather,

it held that the limitations period for the plaintiffs’ facial challenge accrued in 1969

16

when the ruling was issued and had “long since expired,” and affirmed the district

court’s dismissal for lack of jurisdiction. Id. at 170.

4. Reconsideration In Light Of Hire Order

Shortly after Hire Order was decided, the PTO, Pharmatop, and Cadence

(collectively “Defendants”) asked the district court to reconsider its denial of the

motion to dismiss. A462-87. Defendants explained that, under Hire Order,

Exela’s suit was untimely because the limitations period began to run not on the

date of Exela’s alleged injury (as the district court initially had ruled) but instead at

the time of the PTO’s actions—either when the PTO implemented the regulation in

1982 or when it revived the patent application in 2003—each of which occurred

more than six years prior to Exela’s suit. Exela asserted that Hire Order was

inapposite because that decision involved a facial challenge whereas Exela’s is

(purportedly) only as-applied. A503-07. And, in any event, Exela argued that the

district court should review the PTO’s refusal to consider Exela’s 2011 petition

and order the PTO to consider the petition on the merits. A507-11.

The district court agreed with Defendants. A1-6. The court explained that,

although it “previously found that the PTO’s final agency action did not trigger the

running of the six-year statute of limitations,” Hire Order compelled the opposite

result. A3. The court recognized that, under Hire Order, “[i]f a party brings a

facial challenge against an agency’s regulation under the APA, it must do so within

17

six years of the final agency action,” even if the plaintiff’s claimed injury allegedly

does not occur until after the limitations period. A4. Applying that principle to

this case, the court first examined the four counts in Exela’s complaint and

concluded that each raises a facial challenge. A4-6. The court found that, at root,

Exela’s position is that “the USPTO has promulgated an improper regulation

whereby it applies the less stringent ‘unintentional’ standard to the revival of the

international patent application, when it should have applied an ‘unavoidable’

standard.” A4. And it concluded that “[t]his type of challenge to an agency’s

decision regarding which standard to apply across the board, rather than a

determination regarding how to apply a standard, is a facial challenge rather than

an as-applied challenge.” Id. Bound by Hire Order, the district court therefore

held that Exela’s complaint was untimely under § 2401(a) because it was filed

more than six years after any final agency action. A4-6.

The district court also rejected Exela’s request to review the PTO’s refusal

to act on Exela’s 2011 petition. It held that the PTO’s 2012 letter “did not

constitute an agency action because the agency did not deny, but rather refused to

consider, [Exela’s] request.” A2 n.1 (citing ICC v. Bhd. of Locomotive Eng’rs, 482

U.S. 270 (1987) (“Locomotive Engineers”)).

18

SUMMARY OF THE ARGUMENT

Under controlling precedent, the district court correctly dismissed Exela’s

APA suit against the PTO.

First, Exela’s suit is an untimely facial challenge under Hire Order. As

Exela expressly argued below, Fourth Circuit law governs the statute of limitations

issue. In Hire Order, the Fourth Circuit held that, under the applicable six-year

statute of limitations, 28 U.S.C. § 2401(a), a facial challenge to an agency’s ruling

accrues at the time of the final agency action—even if the challenger was not

affected by the ruling until after the limitations period expired. 698 F.3d at 170.

Exela’s principal argument is that its claims did not accrue—and thus the statute of

limitations period did not begin to run—when the agency actions occurred (in 1982

through 2006), but only when Exela felt the effects of those actions (in 2011, when

Exela faced the infringement suit in Delaware). However, Hire Order considered

and squarely rejected that approach as inapplicable to facial challenges.

Exela concedes that the complaint in Hire Order raised a facial challenge.

Br. 39-42; A503-07. And Exela concedes that the district court correctly

interpreted Hire Order. Br. 40. So the only contested issue is whether Exela raises

a facial challenge like the one in Hire Order. It does. Exela seeks a declaration

that the PTO’s “unintentional” standard is invalid across the entire range of cases

dealing with the revival of international applications because the “unintentional”

19

standard allegedly is inconsistent with the Patent Act provision that specifically

governs those cases—just as the plaintiffs in Hire Order argued that the agency

ruling prohibiting transactions at gun shows was categorically invalid across the

entire range of cases dealing with transactions between an in-state and out-of-state

dealers because the ruling was inconsistent with the statute that specifically

governed those cases. Moreover, none of the relief Exela seeks depends on facts

specific to its case or is related to any agency action against Exela—just as none of

the relief the Hire Order plaintiffs sought depended on facts specific to their case

or was related to any agency action against them. Therefore, the district court

correctly found that Hire Order controls here, and that under Hire Order, Exela’s

facial challenge is untimely because it arose more than six years after any final

agency action—more than six years after the rule’s promulgation (in 1982) and the

patent’s ultimate issuance (in 2006).

The district court also correctly held that the PTO’s 2012 letter refusing to

reconsider its earlier rulings did not restart the limitations clock because that

refusal was not a reviewable agency action in the first place—let alone a “serious”

and “substantive” reconsideration of those earlier rulings. Exela’s contrary view

would eviscerate the statute of limitations for agency actions, because any time a

challenger decided to file “a petition for reconsideration” of a longstanding agency

ruling, anything the agency did in response (even a refusal to respond) would

20

restart the clock for challenging the original ruling. That manifestly is not the law.

See Locomotive Engineers, 482 U.S. at 278-81. Thus, Exela’s reliance on the 2012

letter to extend the limitations period is unavailing. Importantly, Exela has not

appealed the district court’s refusal to order the PTO to consider Exela’s petition

on the merits. Any such argument is therefore waived. And, in any event, Exela

has identified no statute or regulation compelling the PTO to engage in the

substantive reconsideration that Exela’s petition requested.

The district court’s dismissal for untimeliness should be affirmed.

Second, Exela’s suit must be rejected because it is an improper APA action

under the recent Pregis decision of this Court. Pregis holds that the Patent Act

forecloses an accused infringer from using an APA suit against the PTO to

challenge an issued patent. This Court reached that conclusion on two independent

grounds. 700 F.3d at 1356-61; 5 U.S.C. §§ 701(a)(1), 704. The Court found

Congress’s intent to preclude collateral APA actions “‘fairly discernible’ from the

statutory scheme of the Patent Act,” which contains detailed provisions

circumscribing precisely how, when, where, and by whom a patent’s validity can

be challenged. Pregis, 700 F.3d at 1358-59 (citation omitted). And the Court also

found APA review of the PTO’s articulated rationale for finding a patent valid

foreclosed because the Patent Act already provides an “adequate remedy” to raise

21

fundamental invalidity challenges. Both of those holdings independently dispose

of Exela’s suit.

Exela’s attempt to side-step Pregis fails. Br. 50-54. Exela protests that

Pregis cannot apply here because Exela cannot raise improper revival via any of

the Patent Act’s available third-party review mechanisms. But that is precisely the

situation this Court addressed in Pregis. There the plaintiff sought to raise a

claim—challenging the PTO’s reasoning for issuing a patent over prior art—that

could only be raised in an APA action. Nonetheless, the Court found the claim

foreclosed. Indeed, when explaining that holding the Court expressly noted that

some PTO actions—such as an allegedly “improper revival of [an] abandoned

application”—are simply not reviewable. Pregis, 700 F.3d at 1360 (emphasis

added) (citing Aristocrat, 543 F.3d at 662-63). And that is not surprising, as this

Court previously refused to let improper revival, or any other “prosecution

irregularity or procedural lapse, however minor,” become “grist for a later

assertion of invalidity.” Aristocrat, 543 F.3d at 663. Exela’s contrary view would

invite accused infringers to bring APA actions against the PTO in response to

virtually every private infringement suit, “inundat[ing] the courts with arguments

relating to every minor transgression they could comb from the file wrapper.” Id.

Pregis rightly concluded that Congress foreclosed that avenue. The district court’s

dismissal may also be affirmed on this independent ground.

22

The district court’s dismissal should be affirmed.

ARGUMENT

I. STANDARD OF REVIEW

This Court reviews de novo the district court’s grant of a motion to dismiss,

under governing Fourth Circuit law. Madey v. Duke Univ., 307 F.3d 1351, 1358

(Fed. Cir. 2002); Fed. R. Civ. P. 12(b)(1), (6).

II. EXELA’S APA ACTION WAS PROPERLY DISMISSED

A. Exela’s APA Action Against The PTO Is An Untimely Facial Challenge Under Controlling Precedent

28 U.S.C. § 2401(a) provides that “every civil action commenced against the

United States shall be barred unless the complaint is filed within six years after the

right of action first accrues.” That mandate, which applies to APA actions, is a

jurisdictional limitation because timely filing under § 2401(a) is a condition to the

government’s limited waiver of sovereign immunity. See Hire Order, 698 F.3d at

171 (affirming dismissal for lack of jurisdiction under § 2401(a)); Br. 21 n.4; see

also Spannaus v. U.S. DOJ, 824 F.2d 52, 55 (D.C. Cir. 1987) (“Unlike an ordinary

statute of limitations, § 2401(a) is a jurisdictional condition attached to the

government’s waiver of sovereign immunity and, as such must be strictly

construed.”).

The district court correctly held that the Fourth Circuit’s recent decision in

Hire Order interpreting and applying § 2401(a) is controlling and dispositive of

23

that statute of limitations issue in this case. The plaintiffs in Hire Order (two

federally licensed firearms dealers) initiated a facial challenge in 2010 to a

Revenue Ruling issued in 1969 prohibiting licensed dealers from making sales at

gun shows. 698 F.3d at 169. They argued that the agency ruling was invalid under

an intervening statutory amendment insofar as it prohibited dealers like them (i.e.,

one in-state and one out-of-state) from making certain transactions at an in-state

gun show. Id. The court held that, under § 2401(a), their facial challenge was

untimely because it “accrue[d]” decades ago “at the time of ‘final agency action’”

(in 1969). Id. at 170 (citation omitted). The court rejected the plaintiffs’ argument

that the limitations period did not begin to run until the plaintiffs were injured in

2008, when they became licensed dealers and had to refrain from making the

prohibited sales. Id. The court distinguished cases cited by the plaintiffs involving

as-applied challenges to an agency’s later application of a rule in an agency

enforcement proceeding. See id. (distinguishing cases).

Hire Order equally compels dismissal of Exela’s challenge as untimely. As

with the plaintiffs’ claim in Hire Order, Exela’s challenge is a facial one because

Exela does not contend that the agency has applied any rule against Exela or that

Exela’s challenge depends on any facts specific to this case. To the contrary,

Exela seeks a declaration about the proper interpretation of the statute, 35 U.S.C.

§ 371(d) (which addresses abandoned international applications), and whether that

24

statute ever can lawfully be implemented per the agency’s regulation, 37 C.F.R.

§ 1.137(b) (which permits revival of any “unintentional[ly]” abandoned

application, whether domestic or international). And, as with the plaintiffs’ claim

in Hire Order, Exela’s suit is untimely under § 2401(a) because it facially

challenges agency action (issuance of the revival rule in 1982 and, ultimately,

issuance of the patent in early 2006) that occurred more than six years prior to the

suit. Hire Order teaches that Exela’s claims accrued at the time of those agency

actions regardless of Exela’s assertion that it was not harmed until it faced an

infringement action in 2011. Thus, under Hire Order, the district court properly

dismissed Exela’s suit under § 2401(a).

1. Fourth Circuit Law Governs Application Of The Statute Of Limitations

As this Court held just last year, it “defers to the law of the regional circuits

on matters of procedural law that do not implicate issues of patent law, such as

statute of limitations rulings.” Landmark Screens, LLC v. Morgan, Lewis, &

Bockius, LLP, 676 F.3d 1354, 1361 (Fed. Cir. 2012) (internal quotation marks and

citations omitted) (emphasis added). Accordingly, Fourth Circuit law governs the

timeliness of Exela’s complaint under § 2401(a).

Exela now contends for the first time (at 33 n.5) that, instead, Federal Circuit

law “should govern.” Exela is mistaken. Its sole support for that contention, Bray

v. United States, 785 F.2d 989, 991 (Fed. Cir. 1986), merely held that the Federal

25

Circuit (as opposed to a regional circuit) had jurisdiction over a particular appeal;

it did not address what circuit’s law applied. In any event, Exela affirmatively

argued below that “[t]he timeliness of Exela’s complaint under 28 U.S.C.

§ 2401(a) is controlled by prior Supreme Court and Fourth Circuit case law.”

A497; see also, e.g., A494, A500, A506. Exela is not free to change course now.

Forshey v. Principi, 284 F.3d 1335, 1358 (Fed. Cir. 2002) (en banc) (“[T]he fact

that the appellant specifically urged [below] the legal rule that he now challenges

counsels against consideration of the issue.”). For that matter, Exela has again

waived any objection to the application of Fourth Circuit law by objecting only in

a passing footnote in its opening appellate brief (at 33 n.5). SmithKline Beecham

Corp. v. Apotex Corp., 439 F.3d 1312, 1320 (Fed. Cir. 2006) (“[A]rguments raised

in footnotes are not preserved.”) (collecting cases).

For these reasons, Fourth Circuit law applies, and Exela has forfeited any

ability to argue otherwise.

2. Exela’s Suit Is, Under Fourth Circuit Precedent, A Facial Challenge To The PTO’s Revival Rule And Patent Issuance

Under Fourth Circuit law, an as-applied challenge is one in which a party

relies on facts specific to its particular case and challenges the agency’s application

of a rule against the party itself. See Hire Order, 698 F.3d at 170; Gold Dollar

Warehouse, Inc. v. Glickman, 211 F.3d 93, 100-01 (4th Cir. 2000). In contrast, a

26

facial challenge is divorced from the particular facts of the case and attacks an

agency’s authority—or seeks a regulatory or statutory interpretation—across the

board in a manner that would apply to an entire range of cases. See Hire Order,

698 F.3d at 169-70; Gold Dollar Warehouse, 211 F.3d at 98-99.

Under those principles, Exela’s complaint advances a facial challenge.

Exela seeks a declaration that “the USPTO rules and regulations allowing for the

revival of an international patent application under the ‘unintentional’ standard are

unlawful”; that failure to meet the § 371 requirements “can only be excused under

the stringent ‘unavoidable’ standard as expressly required by 35 U.S.C. § 371(d)”;

and that the ’218 patent is “invalid.” A40 ¶¶ e, d, b (emphasis added). Exela’s

arguments as to the appropriate “standard” plainly present a facial challenge.

Thus, each of the complaint’s four counts, at root, states a facial attack, as the

district court explained. A4-6. Exela’s complaint does not identify any facts

specific to this case that would distinguish it from any other patent that the PTO

issued after reviving an international application based on 37 C.F.R. § 1.137(b)’s

“unintentional” standard. Nor does Exela allege that the PTO applied any rules or

orders to Exela.

Even though it has not made its claim in defense of an agency enforcement

proceeding, and despite the plainly facial language of its complaint, Exela argues

that its challenge allegedly is as-applied because it is not seeking to strike down

27

§ 1.137(b) as a whole; Exela emphasizes that the rule is valid insofar as it

implements certain other statutory revival provisions, just not insofar as it

implements 35 U.S.C. § 371(d), the statutory provision for reviving international

applications. Similarly, Exela protests that it is not seeking “invalidation of

§ 1.137(b)” but rather just challenging “one specific revival decision in which the

PTO applied § 1.137(b), namely the revival of Pharmatop’s international

application.” Br. 42.

These arguments do not alter the facial nature of Exela’s claims. Exela is

not just saying that the PTO cannot revive the particular unintentionally abandoned

international application at issue for reasons particular to that application. It is

contending that § 1.137(b), which expressly permits revival of “unintentional[ly]”

abandoned applications generally, is incompatible with the specific statutory

provision that governs revival of international applications, 35 U.S.C. § 371(d).

According to Exela, there are no circumstances in which the PTO can lawfully

apply § 1.137(b) to international application governed by § 371(d). This is a facial

challenge to the compatibility of the agency’s regulation with a statute that it is

intended to implement, which affects an entire statutory class of cases. Nothing

about it is specific to Exela or related to the PTO’s application of any rule or order

to Exela.

28

Hire Order presented similar circumstances. The plaintiffs there argued

that, under the governing statute, the agency ruling at issue could not lawfully

prohibit a certain class of transactions—those between in-state and out-of-state

firearms dealers. 698 F.3d at 169; see also Hire Order Compl. 6, No. 10-cv-1464,

(E.D. Va. Dec. 30, 2010), ECF No. 1 (seeking “declar[ation] that [plaintiff 1, a

Virginia firearms dealer] may receive firearms at the Nation’s Gun Show in

Chantilly, Virginia from [plaintiff 2, an out-of-state firearms dealer] for subsequent

transfer at the Nation’s Gun Show in Chantilly, Virginia to non-federally licensed

Virginia residents”). The plaintiff firearms dealers did not argue that the ruling

was invalid in all of its applications. They did not contend, for example, that it was

invalid with respect to transactions between two out-of-state dealers. Nonetheless,

all of the parties agreed that the plaintiffs’ challenge was a facial one. And Exela

itself now concedes that it was facial. Br. 40 (“In a facial challenge, such as in

Hire Order ….”); see id. at 39-40, 42.

Similarly, in Gold Dollar Warehouse, the Fourth Circuit viewed as a facial

challenge tobacco warehouses’ claim that the agency exceeded its authority by

imposing personal liability for certain tobacco sales. 211 F.3d at 98-99. The court

held that the challenge was a facial challenge because “[i]f the warehouses are

correct that the statute does not permit the USDA to impose personal liability

against warehouses at all, there are no circumstances under which the regulations

29

could lawfully be applied so as to impose personal liability on the warehouses.”

Id. at 99. In contrast, the warehouses’ challenge to the penalties based on their

lack of knowledge of the source of the tobacco they sold was as-applied because it

was heavily dependent on several contested facts and framed “in terms specific to

the [agency’s] assessment of the penalties in their particular case.” Id. at 100

(emphasis added).

Here, Exela’s challenge is like the dealers’ facial challenge in Hire Order

and the warehouses’ facial challenge in Gold Dollar Warehouse because, if Exela

is correct, “there are no circumstances under which [the “unintentional” provision

of the regulation, § 1.137(b)] could lawfully be applied so as to [permit revival of

an international application under 35 U.S.C. § 371(d)].” Gold Dollar Warehouse,

211 F.3d at 99. Exela seeks a categorical declaration that any PTO regulations

allowing revival of an international application where the delay was merely

unintentional are “unlawful.” A40 ¶¶ b, d, e. Exela’s argument is that,

independent of the particular facts of this case, all such uses of § 1.137(b) are

impermissible.4 Exela’s challenge is no less facial merely because it is limited to a

specifically defined subset of the possible applications of § 1.137(b). If, for

4 Cf. Gillian E. Metzger, Facial Challenges and Federalism, 105 Colum. L.

Rev. 873, 881 (2005) (observing that a litigant can make “a partial facial challenge” by arguing that “a statute is unconstitutional in a particular range of applications, even if not unconstitutional in all or most”).

30

example, § 1.137(b) had separate subsections for each of the statutory

abandonment provisions that it implements, domestic and international, a challenge

to the regulation’s specific subsection relating to the abandonment of international

applications (under § 371(d)) would plainly be a facial challenge. The result

cannot be different just because the regulation does not separate into distinct

subsections the statutory abandonment provisions to which it applies. For that

reason, the district court rightly treated Exela’s suit as a facial challenge.

3. Exela’s Suit Is Time-Barred Under The Fourth Circuit’s Holding In Hire Order

Exela’s facial challenge is untimely under § 2401(a), because just like the

claims in Hire Order it “accrue[d] … at the time of ‘final agency action,’” 698

F.3d at 170 (citation omitted), and all of the challenged agency actions here

occurred more than six years before Exela’s suit. The PTO’s regulation,

§ 1.137(b), was initially issued in 1982 and, after reviving the patent application in

2003, the PTO ultimately issued the patent in January 2006. Because the statute of

limitations expired years ago (as to the regulation) or, at the latest, in January 2012

(as to the patent itself), Hire Order compels the conclusion that Exela’s April 2012

complaint is untimely.

Exela nonetheless asserts its claims are timely for two reasons. Neither has

merit. First, Exela insists that, in contrast to claims that an agency has violated

APA procedures, which are subject to strict statutory limitations periods, its claims

31

pose “substantive” challenges to ultra vires agency action and thus, by their nature,

are not subject any statute of limitations at all. Br. 26-29 (relying on out-of-circuit

precedent). But the Fourth Circuit squarely rejected that very position in Hire

Order.

The plaintiffs’ claim in Hire Order was unquestionably “substantive” and

was explicitly framed as an ultra vires challenge. The Hire Order plaintiffs

asserted that, contrary to the agency’s 1969 ruling, “the [statute] in fact permits a

dealer from one state to sell firearms at a gun show in another state to a dealer from

the state in which the gun show is located.” 698 F.3d at 169; see also Hire Order

Compl. 4 ¶ 15. The plaintiffs therefore contended that the agency “acted in excess

of its statutory authority.” Hire Order Opening Br. 10, 2011 WL 5040509 (4th

Cir. Oct. 24, 2011). The Fourth Circuit nonetheless held that the plaintiffs’ claim

accrued in 1969 and was time-barred when the plaintiffs asserted it in 2010.

Exela’s claims in this case—that the PTO regulations and actions applying the

“unintentional” standard are unlawful and exceed PTO authority (A40 ¶¶ d, e)—

are, for these purposes, indistinguishable from the claim in Hire Order and equally

time-barred under §2401(a)’s six-year statute of limitations.

32

Second, Exela insists that, as a matter of law, its claims did not accrue until

it purportedly suffered harm. Br. 33-39.5 But Hire Order explicitly rejected that

argument as well. The Fourth Circuit found the plaintiffs’ claim untimely even

though they did not suffer any harm until 2008—four decades after the final

agency action. The court stated emphatically that the plaintiffs’ contention “that

their cause of action did not accrue until they became federally licensed firearms

dealers in 2008 utterly fails.” 698 F.3d at 170 (emphasis added). Under Hire

Order, Exela’s claims likewise accrued at the time of the agency action and

likewise are untimely.

Exela would of course be correct in its arguments about “substantive” claims

and injury-based accrual if it were challenging an agency action against Exela.

When an agency applies a regulation in an enforcement action to the detriment of a

party, even if the enforcement action comes decades after the regulation was

enacted, the party can challenge the regulation in that context. Thus, Hire Order

expressly recognized that, where there is “‘further [agency] action,’” an as-applied

challenge would not be barred. 698 F.3d at 170 (quoting Functional Music, Inc. v.

FCC, 274 F.2d 543, 546 (D.C. Cir. 1958)). But, as discussed, Exela is raising a

5 To the extent Exela suggests that it did not exist or suffer any (alleged) harm

during any relevant limitations period, see Br. 13, 31-32, Exela is mistaken. Exela was founded in 2005, A34, the patent issued in 2006, and the infringement suit was five years later, in 2011. But, under Hire Order, all of this is in any event irrelevant.

33

facial challenge divorced from any particular factual circumstances specific to its

case and it was not advanced in response to any additional agency action against

Exela. Supra at 25-30. That is why Exela’s arguments miss the mark. And that is

also why Exela’s reliance on cases like Bay Area Laundry & Dry Cleaning

Pension Trust Fund v. Ferbar Corp. of Cal., Inc., 522 U.S. 192 (1997), NLRB

Union v. FLRA, 834 F.2d 191 (D.C. Cir. 1987), Spannaus, and Functional Music is

unavailing. E.g., Br. 28-29, 32-33, 36, 45. Hire Order found such cases

inapplicable precisely because “[n]one of [them] involve[s] a facial challenge.”

698 F.3d at 170 (rejecting plaintiffs’ reliance on Bay Area, NLRB Union,

Spannaus, and Functional Music).

In the end, Exela recognizes this. It ultimately concedes (with one caveat)

that, once this case is viewed as a facial challenge, the district court’s judgment

was correct under Hire Order. Br. 40 (“The error was not the district court’s

reading of the Fourth Circuit’s decision, but its mistaken belief that Exela’s

argument fell within Hire Order’s facial-challenge ambit.”). Exela’s only

remaining avenue is to construe the PTO’s 2012 letter as restarting the limitation

period. As discussed below, that argument also fails.

Moreover, even if Exela’s challenge could be characterized as “as-applied,”

it would still be untimely under § 2401(a). The limitations period for an APA

challenge to an agency’s application of a rule begins when the agency completes a

34

“final agency action” in which it applies the rule against the challenger. See

Jersey Heights Neighborhood Ass’n v. Glendening, 174 F.3d 180, 186-87 (4th Cir.

1999); see also Dunn-McCampbell Royalty Interest, Inc. v. Nat’l Park Serv., 112

F.3d 1283, 1288 (5th Cir. 1987) (“An ‘as applied’ challenge must rest on final

agency action under the APA. But absent some ‘final’ action, the APA will not

provide a cause of action to challenge agency decisions.” (citation omitted)). The

cases upon which Exela relies stand for nothing more than that general proposition.

See, e.g., Spannaus, 824 F.2d at 56-59 (suit based on agency’s action against

challenger). None of them lend any support to Exela’s view that the government

can be forced to defend final actions long after the statute of limitations on those

actions has expired, brought by a challenger against whom the action has never

been applied. That is precisely the situation here. Exela identifies no final agency

actions in which the PTO has applied anything against Exela, and the final agency

actions Exela does identify were applied (to others) more than six years before

Exela’s suit. Therefore, even construing Exela’s suit as an as-applied challenge, it

would still be untimely.

4. The PTO’s 2012 Letter Refusing To Act On Exela’s Petition Did Not Restart The Clock

To avoid Hire Order, Exela argues that the PTO’s 2012 letter refusing to

reopen the PTO’s 2003 revival of the patent application restarted the limitations

period, making Exela’s challenge to the revival decision timely. Br. 44-50.

35

According to Exela, “the PTO’s refusal to consider Exela’s petition is functionally

equivalent to a reopening of the issue of whether the unintentional standard of 37

C.F.R. § 1.137(b) validly applies to international applications.” Br. 48. Exela is

mistaken. The 2012 letter did not reopen the issue.

At bottom, the letter is not a reviewable “agency action” in the first place

because “the agency did not deny, but rather refused to consider, [Exela’s]

request,” as the district court correctly held. A2 n.1 (citing Locomotive Engineers).

Under the APA, an agency action is unreviewable “to the extent that … [it] is

committed to agency discretion by law.” 5 U.S.C. § 701(a)(2). Applying that

principle in Locomotive Engineers, the Supreme Court held that, when a party

petitions an agency for reconsideration on the same record that was before the

agency when it rendered its original decision, an order that merely declines to

reconsider the prior order is not itself reviewable. 482 U.S. at 278-80. A contrary

rule, the Court cautioned, would nullify the statute of limitations by allowing

“perpetual availability of review by the mere device of filing a suggestion that the

agency has made a mistake and should consider the matter again.” Id. at 281; see

also Your Home Visiting Nurse Servs., Inc. v. Shalala, 525 U.S. 449, 455 (1999)

(“[A]n agency’s refusal to reopen a closed case is generally committed to agency

discretion by law and therefore exempt from judicial review.” (internal quotation

marks and citations omitted)); Magnola Metallurgy, Inc. v. United States, 508 F.3d

36

1349, 1357 (Fed. Cir. 2007) (holding agency refusal to reconsider unreviewable

under Locomotive Engineers).

Locomotive Engineers forecloses Exela’s argument that the PTO’s 2012

letter triggers a new review period. Exela’s petition did not purport to raise any

“‘new evidence’ or ‘changed circumstances’ that rendered the agency’s original

order inappropriate.” Locomotive Engineers, 482 U.S. at 278. Instead, Exela

merely argued that the PTO had no authority to revive an international patent

application under § 371(d) based on § 1.137(b)’s “unintentional” standard and,

thus, that PTO’s 2003 revival decision was unlawful. And the PTO merely

declined to revisit its conclusion to the contrary, as embodied in § 1.137(b) of its

regulations and its 2003 revival decision. As in Locomotive Engineers, the PTO’s

“refus[al] to reopen [its earlier] proceeding[s]” is not reviewable. 482 U.S. at 278.

To be sure, as Exela observes (Br. 48), an agency’s substantive decision not

to revise an existing rule will be reviewable, and may in effect restart the

limitations clock, when the agency “undertake[s] a serious, substantive

reconsideration of [that existing] rule.” P & V Enters. v. U.S. Army Corps of

Eng’rs, 516 F.3d 1021, 1024 (D.C. Cir. 2008) (internal quotation marks and

citation omitted). But nothing in the PTO’s 2012 letter suggests any such

reconsideration—“serious” and “substantive,” or otherwise. To the contrary, the

PTO refused to act on Exela’s petition expressly because Exela had no right to

37

inject itself into ex parte examination proceedings. A68-69. Emphasizing that

point, the PTO returned Exela’s petition fee. A69. The “‘entire context’” of the

PTO’s action shows that the PTO did not “‘reconsider[]’” the merits of its

longstanding revival rule and, thus, did not restart the six-year limitations period.

P & V Enterprises, 516 F.3d at 1024 (citations omitted).

P & V Enterprises, upon which Exela primarily relies (at 45-46, 48),

confirms this conclusion. In that case, developers brought a facial challenge to a

1986 rule promulgated by the U.S. Army Corps that defines “waters of the United

States.” 516 F.3d at 1022. Because the challenge was otherwise untimely under

§ 2401(a), the plaintiffs argued that the agency reopened and reconsidered its rule

by issuing an Advance Notice of Proposed Rulemaking (“‘request[ing] public

input on issues associated with the definition of “waters of the United States”’” in

order “‘to develop proposed regulations’”), receiving 130,000 comments, and

ultimately stating in a press release that it had decided “‘not [to] issue a new rule.’”

Id. at 1022-23 (citations omitted). The court disagreed because the agency did not

offer its views on the existing rule, did not “suggest that [it] considered the

substance of the rule to be in doubt in any precise manner,” did not commit agency

resources to reconsidering the rule, and did not propose a new rule. Id. at 1024-25.

And the final press release “had none of the indicia of a specific statement

38

explaining the agency’s reasoning for retaining a particular rule or of new final

action taken regarding any existing rule.” Id. at 1025.

The PTO’s 2012 letter is even less “serious” and “substantive” than the

action in P & V Enterprises. The PTO never suggested that it was considering

revising its rule in any way and it took no comments. The letter “provided no

insight into whether [the PTO] had rethought the policy underlying the … rule”

and “did not purport to represent [the PTO’s] considered reevaluation and updated

judgment on the substance of the … rule”—or the patent-in-suit. Id. at 1025.

Thus, the 2012 letter does not save Exela’s “otherwise stale challenge.” Id. at

1023-24.

Nor can Exela paint the letter as functionally equivalent to substantive

reconsideration by arguing that the PTO’s refusal to consider Exela’s petition was

an abuse of discretion. Nothing in the three general provisions that Exela cites

suggests that the PTO is required to reconsider long-settled decisions anytime

anyone purports to “identif[y]” something “unlawful.” Br. 49; see 35 U.S.C. §§ 2-

3 (explaining powers of the PTO and Director); 37 C.F.R. § 1.181(a)(3) (party may

petition “[t]o invoke the supervisory authority of the Director in appropriate

circumstances” (emphasis added)). To the contrary, as the PTO letter explains,

under the statutory scheme Exela, a third party, had no basis to “demand” that the

PTO disturb ex parte prosecution proceedings from years ago. A68.

39

Notably, Exela has only invoked the 2012 letter as a means to extend the

limitations period for challenging the earlier agency actions; Exela has not

appealed the district court’s refusal to order the PTO to consider the merits of

Exela’s 2011 petition. See Br. 44-50. Thus, any such argument is waived.

SmithKline Beecham Corp., 439 F.3d at 1319 (“[A]rguments not raised in the

opening brief are waived.”). Regardless, the district court properly refused to order

the PTO to take further action because, as discussed, nothing in the statute or

regulations required such action and, thus, the PTO’s letter declining to act is

unreviewable. See Locomotive Engineers, 482 U.S. at 278; Your Home Visiting

Nurse Servs., Inc., 525 U.S. at 457.6

Contrary to Exela’s argument, the PTO’s 2012 letter communicating its

refusal to reopen its revival decision was not a reviewable agency action that is

“functionally equivalent to a reopening” (Br. 48) and accordingly did not extend

the original statutory limitations period. The district court rightly rejected Exela’s

attempt to make PTO orders “perpetual[ly]” reviewable and correctly dismissed

Exela’s suit as untimely.

6 Similarly, Exela could not—and has never purported to—argue that the PTO

“unlawfully withheld” agency action under 5 U.S.C. § 706(1). See Norton v. S. Utah Wilderness Alliance, 542 U.S. 55, 64 (2004) (“[A] claim under § 706(1) can proceed only where a plaintiff asserts that an agency failed to take a discrete agency action that it is required to take.”).

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B. Exela’s APA Action Against The PTO Is Independently Foreclosed Under Pregis

In addition to its untimeliness, Exela’s suit was improper for an even more

fundamental reason. In Pregis, this Court recently held unequivocally that “a third

party cannot sue the PTO under the APA to challenge a PTO decision to issue a

patent.” 700 F.3d at 1357. And Exela’s suit seeks to do precisely that. Pregis,

which was issued after the district court spoke to this issue below, A13-15, also

controls the outcome here and independently requires affirmance of the district

court’s dismissal.

In general, the APA permits parties to seek judicial review of adverse

agency actions. 5 U.S.C. § 702. However, that authorization is subject to

important limitations, two of which are relevant here. The APA does not provide

for judicial review if either (1) “statutes preclude judicial review” or (2) there is

another “adequate remedy in a court.” 5 U.S.C. §§ 701(a)(1), 704; see Pregis, 700

F.3d at 1356. Each of these limitations, Pregis teaches, provides an independent

ground for affirming the district court’s dismissal.

Exela attempts to evade Pregis’s holding by emphasizing that its claim

(improper revival) is that the agency exceeded its statutory authority, and arguing

that this is a type of claim that cannot otherwise be raised. Br. 50-55. But the

same things were true in Pregis.

41

1. The Patent Act Precludes Exela’s APA Action Challenging The Patent-In-Suit’s Validity

To determine whether a statute precludes APA review, this Court looks to

the statute’s language, structure, and legislative history and purpose, as well as the

nature of the administrative action involved. Block v. Cmty. Nutrition Inst., 467

U.S. 340, 345 (1984). Judicial review is precluded when Congress’s intent to

preclude review is “‘fairly discernible in the statutory scheme,’” even if not

explicitly stated. Id. at 351 (quoting Ass’n of Data Processing Serv. Orgs., Inc. v.

Camp, 397 U.S. 150, 157 (1970)); see also Bowen v. Mich. Acad. of Family

Physicians, 476 U.S. 667, 671 (1986) (“‘To preclude judicial review under [the

APA] a statute, if not specific in withholding such review, must upon its face give

clear and convincing evidence of an intent to withhold it.’” (citation omitted)). For

example, “when a statute provides a detailed mechanism for judicial consideration

of particular issues at the behest of particular persons, judicial review of those

issues at the behest of other persons may be found to be impliedly precluded.”

Block, 467 U.S. at 349; see also Match-E-Be-Nash-She-Wish Band of Pottawatomi

Indians v. Patchak, 132 S. Ct. 2199, 2208-09 (2012); Sackett v. EPA, 132 S. Ct.

1367, 1373-74 (2012); United States v. Fausto, 484 U.S. 439, 443-44 (1988).

Applying these well-established principles, this Court in Pregis held that the

Patent Act’s “intricate scheme for administrative and judicial review of PTO

patentability determinations … evinces a clear Congressional intent to preclude

42

actions under the APA” seeking review of the PTO’s reasons for allowing the

claims during examination and the issuance of the patent itself. 700 F.3d at 1358.

The Court reached that conclusion after thoroughly reviewing the statutory

scheme.

The Patent Act, the Court explained, permits extensive participation by

patent applicants and holders and establishes “specific procedures” for challenging

PTO rejections and prerequisites for obtaining judicial review. Id. (citing 35

U.S.C. §§ 134, 141, 145); see supra at 9-10. In contrast, the Patent Act provides

fewer and more restricted opportunities for participation by third parties. Pregis,

700 F.3d at 1358; see supra at 10-11. It provides only three avenues for third

parties to challenge an issued patent’s validity: participating in “carefully-

circumscribed” reexamination proceedings that can only address a narrow range of

issues (with appeals to the Board and then this Court)7; raising one of the defenses

enumerated in § 282(a) in an infringement suit (such as invalidity on the basis of

prior art); or raising those same defenses in an affirmative declaratory judgment

action against the patentee. Pregis, 700 F.3d at 1358-59 (citing 35 U.S.C. §§ 301-

307, 311-318, 282; 28 U.S.C. § 2201(a); MedImmune, Inc. v. Genentech, Inc., 549

7 As noted, in the current version of the statute, the available mechanisms for

third party participation are likewise carefully circumscribed, as inter partes reexamination has been replaced with inter partes review and post-grant review. 35 U.S.C. §§ 311, 321 (effective Sept. 16, 2012); see supra at 10 n.1.

43

U.S. 118, 127 (2007)). Although those paths are deliberately limited, this is not a

case in which “preclusion of a suit under the APA would leave an agency action

entirely free from judicial review.” Id. at 1358 (contrasting Bowen, 476 U.S. at

678). In short, “[t]he carefully balanced framework of the Patent Act specifies a

well-defined process for how, when, where, and by whom PTO patentability

determinations may be challenged.” Id. at 1359.

The Pregis Court recognized that “[a]llowing competitors to collaterally

attack issued patents through suits under the APA would destroy the Patent Act’s

careful framework for judicial review at the behest of particular persons through

particular procedures.” Id. Considering the language, structure, and purpose of the

statute as a whole, the Court concluded that Congress’s intent to preclude third

parties from seeking APA review of the PTO’s issuance of patents and the PTO’s

reasons therefor “is ‘fairly discernible’ from the statutory scheme of the Patent

Act” and overcomes the otherwise “strong presumption” in favor of review. Id. at

1359, 1358 (quoting Block, 467 U.S. at 351).8 The Court thus rejected the accused

8 Consistent with Pregis, this Court has previously (and repeatedly) emphasized

that “a potential infringer may not sue the PTO seeking retraction of a patent issued to another by reason of its improper allowance by the PTO” and a “remedy, if any, must await confrontation with the patent owner.” Syntex (U.S.A.) Inc. v. U.S. PTO, 882 F.2d 1570, 1576 (Fed. Cir. 1989) (emphasis added); see also Animal Legal Def. Fund v. Quigg, 932 F.2d 920, 938 (Fed. Cir. 1991) (noting that the Court has refused to “open[] the door to collateral attack on the validity of issued patents” by allowing “any competitor [to] simply file suit against the

44

infringer’s APA suit against the PTO challenging a patent’s validity and the PTO’s

reasons for issuing it.

That holding compels the same result here. The Patent Act’s preclusive

effect is especially apparent (and critical) where, as here, an accused infringer

attacks an issued patent based on what this Court has called “procedural minutiae,”

such as improper revival of international applications. Aristocrat, 543 F.3d at 663.

In Aristocrat, this Court held that accused infringers cannot assert improper revival

of an international application in defense of an infringement suit because “[i]f any

prosecution irregularity or procedural lapse, however minor, became grist for a

later assertion of invalidity, accused infringers would inundate the courts with

arguments relating to every minor transgression they could comb from the file

wrapper.” Id. (emphasis added). That concern is doubly applicable here, where,

under Exela’s view, each infringement action would spawn an additional collateral

action against the PTO. The PTO would be open to suit, and potentially forced to

defend, every patent asserted in private litigation, often years after it was issued.

This Court foreclosed that result in Pregis. 700 F.3d at 1357-59; see also id. at Commissioner challenging a patent’s validity” because “[t]he structure of the Patent Act indicates that Congress intended only the remedies provided therein to ensure that the statutory objectives would be realized”); Pupols v. U.S. PTO, 413 F. App’x 232, 234-35 (Fed. Cir.) (“‘[A] potential infringer may not sue the PTO seeking retraction of a patent issued to another by reason of its improper allowance by the PTO.’” (alteration in original) (quoting Syntex, 882 F.2d at 1576)), cert. denied, 131 S. Ct. 3009 (2011); Rozenblat v. Kappos, 345 F. App’x 601, 603 (Fed. Cir. 2009) (same).

45

1360 (citing Aristocrat, 543 F.3d at 662-63). For this reason, as in Pregis, Exela’s

collateral APA suit must be rejected.

2. The Patent Act Provides Adequate Remedies

Exela’s APA action is also barred under Pregis for the independent reason

that the Patent Act already provides an “adequate remedy.” 5 U.S.C. § 704. As

discussed, the Patent Act affords “three different adequate remedies in court for

competitors harmed by the PTO’s erroneous issuance of a patent”—inter partes

review with subsequent appeals to the Board and this Court, invalidity defenses in

an infringement action, and a declaratory judgment action affirmatively seeking a

declaration of invalidity against a patent owner. Pregis, 700 F.3d at 1360. Pregis

held that these mechanisms adequately permit third parties to challenge the

fundamental aspects of patent validity, such as patent-eligible subject matter,

anticipation, obviousness, and written description. See id. That holding equally

forecloses Exela’s APA suit attacking the patent-in-suit’s validity.

To the extent Exela protests that its particular claims cannot be asserted as

defenses to an infringement action, this Court has emphasized that the alternative

remedy need not be “‘identical to’” or “‘as effective as’” an APA suit, so long as it

provides “‘relief of the “same genre.”’” Id. (quoting Garcia v. Vilsack, 563 F.3d

519, 523, 525 (D.C. Cir. 2009)). That the Patent Act does not permit an invalidity

challenge on each and every aspect of patent prosecution—such as the PTO’s

46

reasoning for allowing the patent (in Pregis) or the propriety of the PTO’s revival

of a tardy patent application (here)—does not render the remedies afforded by the

Act inadequate. Id. at 1360-61; see also Jersey Heights Neighborhood Ass’n, 174

F.3d at 191-92 (holding remedy against private party is “adequate” and displaces

APA review under 5 U.S.C. § 704 even though it only allows different relief than a

direct suit against government agency). As in Pregis, the Patent Act’s provision of

an adequate remedy for assertion of an invalid patent displaces Exela’s suit.

3. Exela’s Attempts To Evade Pregis Are Unavailing

Exela invites this Court to revisit the issue of whether the congressional

intent to preclude APA review of the PTO’s issuance of a patent is “‘fairly

discernible in the [Patent Act’s] statutory scheme.’” Br. 52 (citation omitted); see

id. at 50-53. But, as discussed, Pregis answered in the affirmative and it is no

longer an open question. In addition, Exela seeks to distinguish Pregis because

(i) judicial review is “‘favored’” for claims like Exela’s that charge the PTO with

“‘acting beyond its authority’” in issuing a patent (id. at 51), and (ii) Exela’s

particular invalidity claim cannot be raised elsewhere (id. at 52-54). But those

were exactly the arguments that Pregis addressed—and rejected.

First, the challenger in Pregis likewise argued that the patent was invalid

because its issuance was “‘in excess of statutory jurisdiction, authority, or

limitations.’” Pregis Plaintiff-Cross-Appellant Opening Br. 61, 2011 WL 1352200

47

(Fed. Cir. Jan. 20, 2011) (“Pregis CAFC Br.”) (quoting 5 U.S.C. § 706(2)(C)).

The Court nonetheless found that the clear congressional intent in the Patent Act

overcomes the presumption in favor of judicial review. Pregis, 700 F.3d at 1357-

59.

Second, contrary to Exela’s mischaracterization, Pregis squarely held that

there was no APA remedy available—even though the plaintiff presented an

invalidity claim different from a defense that could be raised in an infringement

action under 35 U.S.C. § 282. The plaintiff sought, among other things, to

challenge the PTO examiner’s reasons for allowing the claim over the prior art,

which is different from the substantive argument that could be raised in defense—

i.e., that the claim is, in fact, invalid over the prior art. Pregis, 700 F.3d at 1356-

61. The plaintiff itself repeatedly insisted that it was pressing a distinct claim that

it could not raise in a suit brought under the Patent Act: the “legal error in the

PTO’s reasons for issuing a patent is not a defense to a claim for alleged

infringement” and the only possible avenue for challenging the PTO’s reasoning

was via suit under the APA. Pregis CAFC Br. 60 (emphasis added). An APA

action, the plaintiff stressed, would “review[] the work—the decisionmaking—that

the agency actually did; the § 282 defense does not.” Pregis Plaintiff-Cross-

Appellant Reply Br. 22, 2011 WL 3580507 (Fed. Cir. July 19, 2011); see also id.

at 21; Pregis Reh’g Pet. 3, 9, 12, 15, 2013 WL 1821850 (Fed. Cir. Feb. 21, 2013);

48

Pregis Mem. in Opp. to Fed. Defs.’ Mot. to Dismiss 23, No. 1:09-cv-467-GBL-

IDD (E.D. Va. July 30, 2009), ECF No. 53; Pregis Mem. in Opp. to Free-Flow

Packaging’s Mot. to Dismiss 26, No. 1:09-cv-467-GBL-IDD (E.D. Va. July 20,

2009), ECF No. 42. Therefore, the plaintiff argued, APA review must be available

to address claims that would not otherwise be redressable, such as the plaintiff’s in

that case, and others, like improper revival. Pregis CAFC Br. 60-61 (citing

Aristocrat).

The Court squarely rejected that argument as well. As the Court explained,

“[i]t is apparent that Congress decided not to provide for third parties to obtain

review of the reasons for allowance of claims.” Pregis, 700 F.3d at 1359. And

“the fact that the defenses available under 35 U.S.C. § 282, or in a challenge to a

patent through inter partes reexamination, are not identical to an APA suit does not

render the carefully-considered judicial remedies provided by the Patent Act

‘inadequate.’” Id. at 1360-61. The Court concluded that “the specific list of

defenses available under § 282 reflects the deliberate judgment of Congress that

not every error during prosecution should provide a defense to a claim of patent

infringement.” Id. at 1360.

Moreover, and importantly here, the Court specifically noted that one such

unavailable defense is “improper revival of [an] abandoned application.” Id.

(citing Aristocrat, 543 F.3d at 662-63). Thus, even if, as Exela contends, Pregis

49

somehow left room for an accused infringer to bring some other species of APA

suit (it does not), at a minimum the Court believed that infringers may not sue

under the APA pressing “procedural minutiae” such as alleged improper revival.

See id.; Aristocrat, 543 F.3d at 663; see also Magnivision, Inc. v. Bonneau Co.,

115 F.3d 956, 960 (Fed. Cir. 1997) (“‘[P]rosecution irregularities’ by the examiner

or the applicant are not relevant to patent validity.”).9

Exela’s attempts to distinguish Pregis are unavailing. That decision

provides an additional ground to uphold the district court’s dismissal.

III. THE MERITS OF EXELA’S APA ACTION ARE NOT BEFORE THIS COURT

Even if Exela could overcome the fatal untimeliness and preclusion of its

APA suit (and it cannot), the merits of its challenge are not ripe for adjudication by

this Court. Exela argues that “it is undisputed” that the PTO’s rule allowing it to

revive the international patent application where the abandonment is

9 In any event, Exela’s concern that the PTO’s (purportedly) improper lax

revival standard will remain “essentially … unreviewable” (Br. 52-53) has no long-term implications. Congress recently amended the Patent Act to ensure that, consistent with U.S. treaty obligations, the PTO does indeed have authority to revive applications—including international applications—based on the “unintentional” standard. Patent Law Treaties Implementation Act of 2012, Pub. L. No. 112-211, tit. II § 201(b)(1), 126 Stat. 1527, 1534 (Dec. 18, 2012; effective Dec. 18, 2013) (giving the PTO express authority to make rules for “reviv[ing] an unintentionally abandoned application”); id. § 202(b)(9), 126 Stat. at 1536 (striking “unavoidable” language in 35 U.S.C. § 371(d)).

50

“unintentional” is “not authorized by 35 U.S.C. § 371(d)” and urges this Court to

so hold. Br. 22-23. Exela’s assertion is incorrect and its request is premature.

The merits are not “undisputed.” On October 16, 2012, Exela filed a

summary judgment motion, arguing that, on the merits, the PTO’s “unintentional”

standard is unlawful under § 371(d) and, thus, that the patent-in-suit is invalid.

A435, A447-48. However, that merits briefing was suspended—at Defendants’

request and over Exela’s objection—so that Defendants could seek reconsideration

in light of Hire Order on the threshold timeliness issue. A5034. And the briefing

never resumed because the district court (correctly) dismissed the suit at the

threshold. Thus, Defendants have not yet briefed (but have certainly not conceded)

the merits of the PTO’s revival rule—including, for example, whether Congress’s

longstanding acquiescence has effectively ratified the rule. See, e.g., GPX Int’l.

Tire Corp. v. United States, 666 F.3d 732, 739 (Fed. Cir. 2011). Accordingly, as

the merits were not vetted or decided below, this Court should decline Exela’s

invitation to address them.

51

CONCLUSION

For the foregoing reasons, the district court’s judgment should be affirmed.

September 27, 2013 Respectfully submitted,

/s/ Charles A. Weiss /s/ Richard P. Bress Charles A. Weiss HOLLAND & KNIGHT LLP 31 W. 52nd Street New York, NY 10019 charles.weiss@hklaw.com Counsel for SCR Pharmatop

Richard P. Bress Gabriel K. Bell LATHAM & WATKINS LLP 555 Eleventh Street, NW, Suite 1000 Washington, DC 20004 (202) 637-2200 Kenneth Schuler Marc Zubick LATHAM & WATKINS LLP 233 South Wacker Drive, Suite 5800 Chicago, IL 60606 (312) 876-7700 Stephen Swinton LATHAM & WATKINS LLP 12636 High Bluff Drive, Suite 400 San Diego, CA 92130 (858) 523-5400 Counsel for Cadence Pharmaceuticals, Inc.

1

DECLARATION OF AUTHORITY PURSUANT TO FEDERAL CIRCUIT RULE 47.3

Pursuant to Rule 47.3(d) of the Rules of the Unites States Court of Appeals

for the Federal Circuit, I, Richard P. Bress of Latham & Watkins LLP, hereby

swear under penalty of perjury pursuant to 28 U.S.C. § 1746 that Charles A. Weiss,

counsel to SCR Pharmatop, has authorized me to sign the foregoing brief and SCR

Pharmatop’s Certificate of Interest on his behalf.

Executed: September 27, 2013 /s/ Richard P. Bress Richard P. Bress

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CERTIFICATE OF SERVICE

I hereby certify that on September 27, 2013, I electronically filed the

foregoing Brief of Intervenors with the Clerk of the United States Court of Appeals

for the Federal Circuit using the CM/ECF system, which will send notice of such

filing to all registered CM/ECF users.

/s/ Richard P. Bress Richard P. Bress

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CERTIFICATE OF COMPLIANCE

I hereby certify, pursuant to Federal Rule of Appellate Procedure

32(a)(7)(B) and the Rules of this Court, that the foregoing brief has been prepared

in a proportionally spaced typeface using Microsoft Word in Times New Roman

14-point font, and contains 11,795 words (excluding the parts of the brief

exempted by Federal Rule of Appellate Procedure 32(a)(7)(B)(iii) and by Federal

Circuit Rule 32(b)).

/s/ Richard P. Bress

Richard P. Bress