Callaway Golf Company v. Kappos et al
Filing
41
MEMORANDUM OPINION: For all of the above stated reasons, the Motion of Plaintiff Callaway Golf Company for Summary Judgment [Dkt. No. 10] will be denied and Defendants' Motion for Summary Judgment [Dkt. No. 22] will be granted by an Order to be issued with this Opinion.Signed by District Judge Leonie M. Brinkema on 07/27/11. (yguy)
;vj
IN THE UNITED STATES DISTRICT COURT FOR THI
EASTERN DISTRICT OF VIRGINIA
r
JUL 2 7 2
CLERK, U.S. DISTRICT COURT
Alexandria Division
_
ALEXANDRIA. VIRGINIA
CALLAWAY GOLF COMPANY,
Plaintiff,
l:llcv266
v.
(LMB/TCB)
DAVID J. KAPPOS, Under Secretary
of Commerce for Intellectual
Property and Director of the
United States Patent and Trademark
Office,
et al..
Defendants.
MEMORANDUM OPINION
Before the Court are the parties' cross-motions for summary
judgment [Dkt. Nos. 10 and 22] concerning plaintiff Callaway Golf
Company's ("Callaway") request to vacate defendant United States
Patent and Trademark Office's ("PTO")
of four of Callaway's patents.
inter partes reexaminations
For the reasons stated in this
Memorandum Opinion, Callaway's motion will be denied and
defendants' motion will be granted.
I. Background
A.
Statutory and regulatory background
A patenc's validity can be challenged either in a lawsuit
filed in federal district court or through a reexamination
conducted by the PTO.
Congress has created two types of patent
reexamination procedures: ex parte and inter partes.
created the ex parte reexamination in 1980.
Congress
Either the PTO on
its own initiative, or a third party, can request an ex parte
reexamination.
37 CFR § 1.520.
In 1999, Congress created the inter partes reexamination.
Unlike an ex parte reexamination, which allows the PTO to
initiate a reexamination, an inter partes reexamination must be
requested by a third party.
reexamination is made,
When a request for inter partes
the PTO must determine whether a
"substantial new question of patentability affecting any claim of
the patent concerned is raised by the request."
312(a).
35 U.S.C. §
If the PTO determines that such a question exists, the
PTO is required to begin the inter partes reexamination.
U.S.C. § 313.
35
After the PTO initiates an inter partes
reexamination, the patent owner may submit pleadings that support
the patent's validity.
The requestor may 1) submit written
comment to the patent owner's response, 2) appeal an adverse
reexamination decision to the Board of Patent Appeals and
Interferences ("BPAI"), and 3) brief and argue its position
before the board.
LEXIS 88046,
(Fed. Cir.
B.
Cooper Techs. Co. v. Dudas. 2007 U.S. Dist,
at *2 (E.D. Va. Nov.
30, 2007), aff'd 536 F.3d 1330
2008).
Callaway's patents and the 1996 settlement agreement
Callaway and its competitor, Acushnet Company ("Acushnet")
manufacture golf balls.
Callaway owns U.S. Patent Nos.
6,210,293; 6,503,156; 6,506,130; and 6,595,873 ("Sullivan
patents"), which claim a multi-layer golf ball.
PI.'s Statement
of Material Facts at 1 2.
On August 5, 1996,
Acushnet entered into an agreement with
Spalding and Evenflow Companies, Inc.,
interest, and Lisco,
Callaway's predecessor-in-
Inc., a wholly owned Spalding subsidiary, to
resolve various patent-related claims in various civil actions
then pending in the United States District Court for the District
of Delaware (Civil Action Nos. 95-CV-366 and 95-CV-640,
filed by
Spalding and Civil Actions 95-CV-10384 and 95-CV-10376,
filed by
Acushnet).
The agreement contained a "Dispute Resolution"
clause, which provides that:
[a]ny dispute arising out of or relating to patents,
including the above mentioned patents, other
intellectual property owned or controlled by the
parties, or claims relating to advertising shall be
resolved in accordance with the procedures specified in
this Section, which shall be the sole and exclusive
procedure for the resolution of any such disputes^
The agreement requires a series of settlement
A253-55.
discussions and mediation.
mediation,
If the dispute is unresolved after
"either party may initiate proceedings but only in the
United States District Court for the District of Delaware,
other.
Said court retains jurisdiction of the parties for such
purposes."
cases,
and no
A256.
The Stipulations of Dismissal of the Delaware.
filed under Fed.
R. Civ. P. 41,
stated that the United
States District Court for the District of Delaware "shall retain
jurisdiction to resolve any and all disputes arising out of the
Settlement Agreement in accordance with the terms of the
Settlement Agreement."
A258-59.
Problems arose between Callaway and Acushnet over Acushnet's
Titleist Pro VI line of golf balls, with Callaway alleging in
2005 that these golf balls infringe its Sullivan patents.
Throughout 2005, the parties tried to resolve their dispute, but
failed to do so.
C.
PL's Statement of Material Facts at H 3.
Acushnet's inter partes reexamination request
On January 17, 2006, Acushnet requested that the PTO conduct
inter partes reexaminations of Callaway's Sullivan patents.
2200, 2518, 2819.
On April 7, 2006,
A2,
the PTO determined that
Acushnet's request raised a substantial new question of
patentability and accordingly began inter partes reexaminations
of the Sullivan patents.
A187.1
On April 13, 2006, Callaway filed an administrative petition
to vacate the reexaminations, arguing that Acushnet had violated
the 1996 settlement agreement by requesting the reexaminations.
A231.
On June 7, 2006, the PTO denied Callaway's petition,
concluding that the reexamination statute requires the
PTO to
order and conduct inter partes reexamination when a substantial
new question of patentability is found and that an agreement
between parties does not relieve the PTO of that statutory duty.
xThe PTO conducted reexaminations on each of the four
Because the legal arguments apply equally to
the reexamination of each patent, this Memorandum Opinion will
Sullivan patents.
cite and quote only from the inter partes reexamination
Patent No.
6,210,293.
of U.S.
A436.
The PTO also noted that Congress passed the inter partes
reexamination statute in 1999, three years after the parties
entered their settlement agreement.
Id.
Moreover, the PTO
concluded that such a contractual provision that prohibits
challenges to patent validity would be contrary to public policy,
and reasoned that withdrawing the inter partes reexaminations
"would leave both the public and the patent owner with!an
unresolved request for reexamination and unresolved substantial
new question of patentability[.]" A437-38.
On June 16, 2006,
Callaway filed a petition for
reconsideration of the denial of its petition to vacat^.
A440,
On September 7, 2006, the PTO denied the petition for
reconsideration.
A551.
The PTO relied largely on the reasoning
of its earlier decision, concluding that Acushnet did not breach
the 1996 agreement, and that the agreement does not bind the PTO,
Id.
The PTO stated that its decision constitutes a "final agency
action" under 5 U.S.C. § 704, which would allow Callaway to seek
judicial review in federal court; however, Callaway did not seek
judicial review and the reexamination continued.
D.
A5651
Litigation in the United States District Court for the
District of Delaware
On February 9, 2006, shortly after Acushnet requested inter
partes reexaminations, Callaway sued Acushnet in the United
States District Court for the District of Delaware, alleging that
Acushnet's Pro VI golf balls infringe the Sullivan patents.
Callaway Golf Co. v. Acushnet Co.,
October 18, 2006,
l:06cv91 (D. Del.).
On
the Court granted Callaway's motion to amend
the complaint to add a breach of contract claim, which asserted
that Acushnet breached the settlement agreement by filing the
reexamination requests.
Both parties moved for partial summary judgment as to
whether Acushnet had. breached the settlement agreement
November 20, 2007, the Court granted Callaway's motion
Acushnet's motion,
On
and denied
finding that Acushnet "violated the Agreement
by filing the inter partes reexaminations to contest the validity
of the Sullivan patents."
Callaway Golf Co. v. Acushnet Co.. 523
F. Supp. 2d 388, 407 (D. Del. 2007).
On August 12, 2008,
Acushnet moved to vacate the breach of contract ruling, arguing
that the Delaware district court did not have jurisdiction to
enforce the settlement agreement because the Court did not
formally "so order" the stipulations of dismissal in 1996.
On
November 10, 2008, the Court granted Acushnet's motion,
concluding that "[d]espite the universal intention for the court
to retain jurisdiction over the performance of the Agreement,
this intent was not manifested in the court's order sufficient to
confer subject matter jurisdiction to enforce a settlement
agreement."
Callaway Golf Co. v. Acushnet Co.. 585 F. Supp. 2d
592, 599 (D. Del. 2008).
On June 29, 2009, after Callaway
refiled the breach of contract claim in the Delaware Court of
Chancery, the parties filed a joint motion to modify the 1996
stipulations of dismissal to allow the Delaware federal court to
i
have jurisdiction.
On July 23, 2009,
the joint motion was
granted, curing the jurisdictional defect.
Compl. HU 71-73.
On
January 13, 2011, the district court granted Callaway's motion
and reinstated the summary judgment ruling on the breach of
contract claim; however, because the court has yet to decide
damages,
it has not issued a final order and Acushnet is unable
to appeal.
Id. H 75; Am. Brief at 9.
While the breach of contract issues were being addressed,
the patent infringement portion of the Delaware civil action
continued.
On December 14, 2007, a jury found that all but one
of the claims in the Sullivan patents were valid.
Acushnet
appealed to the United States Court of Appeals for the Federal
Circuit, which reversed and remanded the action for a new trial
on invalidity.
Callaway Golf Co. v. Acushnet Co.. 576 F.3d 1331
{Fed. Cir. 2009).
In March 2010, the retrial of the validity
issue resulted in a jury verdict that the Sullivan patents were
invalid.2
E.
Board of Patent Appeals and Interferences proceeding
While the Delaware litigation continued, the PTO proceeded
with the inter partes reexaminations, which concluded with the
2On May 20, 2011, Callaway filed a Notice of Appeal of the
Court's judgment, 1:06-cv-00091-SLR (D. Del.), Dkt. NoJ 653.
Examiner finding that certain claims in the Sullivan patents were
not patentable.
A2168.
Callaway appealed that determination to
the BPAI, which scheduled a hearing on the appeal for January 19,
2011; however, on January 14, 2011, one day after it prevailed on
its breach of contract claim in Delaware, Callaway filed with the
BPAI a Petition for Temporary Relief in Light of New Court
Decision, in which it sought to postpone the BPAI hearing.
A2038.3 On January 18, 2011, the Acting Chief Administrative
Patent Judge denied Callaway's petition, holding that the
district court decision did not require termination of the
reexamination proceedings and that whether the "requester may
have breached a contractual obligation . . . does not necessarily
make the subsequent actions of the USPTO illegal or the
proceeding 'unlawfully initiated.'" A2162-2168.
On March 9, 2011,
unpatentability.
the BPAI affirmed the PTO's conclusion of
A2168-2194.
Also that day, the Acting Chief
Administrative Patent Judge denied Callaway's petition to vacate
the reexaminations, concluding that the "breach of a settlement
agreement by instituting a reexamination proceeding" does not
constitute "sufficient cause for vacating the reexamination
proceeding."
A2195-99.
On April 11, 2011, Callaway filed with
3Callaway also filed a Petition to Vacate Inter Partes
Reexaminations or, in the Alternative, to Postpone Oral Hearing,
in which it argued that the Delaware ruling requires the PTO to
vacate the reexaminations or postpone the BPAI hearing
8
the BPAI a request for rehearing of its decision on
unpatentability.
F.
The request was denied in June 2011
The present litigation
On March 15, 2011, Callaway filed this civil action against
David J. Kappos, Under Secretary of Commerce for Intellectual
Property and Director of the PTO, the PTO, and the United States,
i
for declaratory and injunctive relief, alleging that the PTO's
failure to vacate, suspend, or stay the inter partes
reexaminations was "arbitrary, capricious, an abuse of
discretion,
or otherwise not in accordance with law" and
therefore should be set aside under the Administrative Procedure
Act ("APA"),
5 U.S.C. § 706(2).
Callaway seeks a declaratory
judgment that the PTO's failure to vacate, suspend, or stay the
proceedings violated the APA, and it seeks an injunction vacating
the reexaminations and the BPAI's orders, and barring further
participation in any form by Acushnet in inter partes
reexaminations of the Sullivan patents.
Callaway also seeks a
writ of mandamus enjoining the PTO from further proceeding with
inter partes reexaminations of the Sullivan patents, or requiring
the PTO to stay or suspend the reexaminations until the validity
of the patents is finally determined in federal court.
Lastly,
Callaway seeks to recover the attorney's fees and costs incurred
in this litigation.4
II.
Standard of Review
Summary judgment is appropriate where the record
demonstrates "that there is no genuine issue as to any I
material
fact and that the moving party is entitled to judgment as a
matter of law."
Fed. R. Civ. P. 56(c).
A genuine issue of
material fact exists "if the evidence is such that a reasonable
jury could return a verdict, for the nonmoving party." Anderson v,
Liberty Lobby. Inc.. 477 U.S.
242, 247-48 (1986).
The Court must
view the record in the light most favorable to the nonmoving
party. See Bryant v. Bell Atl. Md..
Cir.
2002).
However,
Inc..
288 F.3d 124,
132 (4th
the "mere existence of a scintilla of
evidence in support of the [nonmovant's] position will be
insufficient; there must be evidence on which the jury could
reasonably find for the [nonmovant]."
Anderson, 477 U.S. at 252.
Thus, if a nonmoving party bears the burden of proof on a claim
at trial, the moving party may prevail on its Rule 56 motion by
showing that there is a lack of evidence to carry the other
party's burden as to any essential element of the cause of
action.
See Celotex .Corp. v. Catrett. 477 U.S. 317, 322-23
(1986). Once the moving party has met its burden of demonstrating
the absence of an issue of material fact, the party opposing
4 On May 11, 2011, Acushnet was granted leave to f Lie
amicus brief.
10
an
summary judgment may not rest on mere allegations or inferences,
i
but must instead proffer specific facts or objective evidence
showing that a genuine issue of material fact exists requiring
further proceedings. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp.. 475 U.S. 574, 586 (1986).
The APA, 5 U.S.C. § 701 et seq.. confines judicial review of
executive branch decisions to the administrative record of
proceedings before the pertinent agency.
See 5 U.S.C. § 706; see
also Camp v. Pitts. 411 U.S. 138, 142 (1973).
As such ,
there can
be no genuine issue of material fact in an APA action; rather,
it
is the legal questions presented in the civil action that are
ripe for resolution on cross-motions for summary judgment. See
Am. Forest Res. Council v. Hall. 533 F. Supp. 2d 84, 89 (D.D.C
2008)
(quoting Occidental Eng'g Co. v. INS. 753 F.2d 766, 769-70
(9th Cir. 1985))
("[I]t is the role of the agency to resolve
factual issues to arrive at a decision that is supported by the
administrative record,
whereas
*the function of the district
court is to determine whether or not as a
matter of law the
evidence in the administrative record permitted the agency to
make the decision it did.'").
III.
A.
Discussion
Jurisdiction
In an amicus brief, Acushnet argues that the PTOJs denial
of the petitions to vacate the inter partes reexaminations are
11
not subject to judicial review because the PTO's determination
that a substantial new question of patentability exists is "final
and non-appealable" under 35 U.S.C. § 312(c).
Am. Brief at 10.5
Callaway responds that review of the PTO's denial of a petition
to vacate inter partes reexaminations is subject to judicial
review because the petition did not dispute whether a substantial
new question of patentability exists. Callaway Opp. at 17.
Callaway's argument is correct.
Section 312(c) only exempts
from judicial review the PTO's substantive determination that a
reexamination application raises "a substantial new question of
patentability."
The statute does not divest the courts of
jurisdiction over all decisions related to inter partes
reexaminations.
See, e.g.. Cooper Techs. Co.. 2007 U.S. Dist
LEXIS 88046 (reviewing whether the PTO should have granted the
petition to terminate an inter partes reexamination)
Similarly,
Callaway's challenge does not address whether Acushnet's
reexamination applications raised a substantial new question of
patentability; instead, Callaway challenges the PTO's decision
that it was not required to terminate the inter partes
reexaminations in light of the settlement agreement or the
i
finding in the Delaware litigation that Acushnet had breached
that agreement by requesting the inter partes reexamination.
Accordingly, this Court has jurisdiction to review the PTO's
5The government does not challenge the Court's jurisdiction.
12
denial of the petition to vacate the inter partes reexaminations.
B.
Administrative Procedure Act claim
Under the APA,
the Court may set aside the PTO's decisions
not to vacate the reexaminations of the Sullivan patents only if
those decisions were "arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law."
706(2).
5 U.S.C. §
This standard does not allow the Court "to substitute
its judgment for that of the agency."
Overton Park.
Citizens to Preserve
Inc. v. Volpe. 401 U.S. 402, 416 (1971). The PTO's
denials of Callaway's petitions to vacate the reexaminations were
not arbitrary or capricious because neither the 1996 settlement
agreement to which the.PTO was not a party, nor the breach of
contract ruling in the Delaware litigation, in which the PTO did
not appear, has any binding effect on the PTO.
1.
Effect of the 1996 settlement agreement on the inter
partes reexaminations
After reviewing the inter partes reexamination statute, the
PTO concluded that the 1996 settlement agreement could not
abrogate its ability to reexamine the Sullivan patents,
The PTO
also concluded that a contractual provision that absolutely
prohibits reexamination would violate the strong public policy
interest in ensuring valid patents.
A433-39.
The PTO's decision is grounded in basic contract law.
The
1996 settlement agreement cannot restrict the PTO's participation
in the reexaminations unless the PTO was a party to the
13
agreement.
See Showmaker v. Advanta USA.
Inc..
411 F.3d 1366,
1369 (Fed. Cir. 2005) (stating that a contract's terms "bind only
the parties.") .
The PTO was not a party to the 1996 settlement
agreement and therefore cannot be bound by any of its provisions.
Moreover,
the PTO correctly concluded that the inter partes
reexamination statute provides a nondiscretionary duty, requiring
i
the PTO to conduct a reexamination once it receives a request and
makes the initial finding that a substantial new question of
patentability exists.
A436.
This conclusion is based;on
Congress's inclusion of "shall" in §313, which provides that "the
determination shall include an order for inter partes
reexamination!.]"
35 U.S.C.
§ 313
the PTO to begin reexamination.
Johnson.
The word
"shall"
requires
See, e.g.. Sierra Club v
541 F.3d 1257, 1265 (11th Cir. 2008)
(holding
that
"'shall' creates a nondiscretionary duty for the Administrator")
The PTO also argues that the inter partes statute allows
"[a]ny" third party to request an inter partes reexamination "at
any time,"
35 U.S.C. § 311.
The statute does not require the
PTO to first determine whether the third-party requester is
contractually prohibited from requesting a reexamination, nor
does the statute even allow the PTO discretion to consider that
issue.
Callaway has not cited any caselaw or statute that would
allow the PTO to disregard its nondiscretionary duty to begin
reexaminations once a third party makes a request and the PTO
14
makes its initial finding.
The PTO also correctly argues that a private contractual
agreement that would prohibit reexamination would be contrary to
public policy.
A437.
Patents are government-granted monopolies
that provide the patent holders with tremendous power to suppress
competition. See American Steel Foundries v. Robertson,, 262 U.S.
209, 215 (1923).
Accordingly, there is a strong public interest
in ensuring that patents are valid.
Lear v. Adkins. 39 U.S.
As the Supreme Court held in
653 (1969), prohibitions on challenges to
patent validity violate public policy which favors "permitting
full and free competition in the use of ideas which are in
reality part of the public domain."
Id. at 670.
The patent
reexamination process helps ensure such full and free
competition.
Because the purpose of reexaminations "is to
correct errors made by the government . . . and if need be to
remove patents that never should have been granted,"
Corp. v. Mossinghoff.
758 F.2d 594,
604
(Fed.
Cir.
Patlex
1985),
a
private contract that prevents reexamination is void as a matter
of public policy.
Callaway responds that the PTO's actions compromise an even
stronger policy interest: the need to enforce obligations under
settlement agreements.
Callaway Summ. J. Mot. at 17, citing
Flex-Foot.
Inc..
2001)
Inc. v. CRP.
238 F.3d 1362,
1370 (Fed.
Cir.
("Settlement agreements must be enforced if they are to
15
remain effective as a means for resolving legal disagreements.").
Although there is a strong public interest in enforcing
settlement agreements,
that is precisely what the Delaware
federal district Court did when it granted Callaway summary
judgment on its breach of contract claim.
liable for damages for that breach.
Acushnet may well be
Callaway, however, has cited
no caselaw that requires the PTO to independently enforce
Callaway's private contract.
Nor has Callaway demonstrated that
the public interest in enforcement of settlement agreements
outweighs the public interest in patent validity.
Callaway's argument rests largely on the unsupported
assumption that the inter partes reexamination is a judicial
proceeding.
caselaw,
A review of the statutes, legislative history, and
however,
reveals that the PTO is not a neutral
adjudicator in an inter partes reexamination.
In both ex parte
and inter partes reexaminations, the PTO determines whether it
correctly approved the patent during its initial examination of
the patent's application.
The statutes creating both ex parte
and inter partes reexaminations state that the reexaminations
must "be conducted according to the procedures established for
initial examination[.]" 35 U.S.C.
§§ 305 and 314(a).
The Federal
Circuit summarized the PTO's role in reexaminations:
In a very real sense, the intent underlying
reexamination is to
'start over'
in the PTO with
respect to the limited examination areas involved, and
to reexamine the claims,
and to examine new or amended
16
claims, as they would have been considered if they had
been originally examined in light of all of the prior
art of record in the reexamination proceeding.
In re Etter. 756 F.2d 852, 857 (Fed. Cir. 1985).
Although In re
Etter involved an ex parte reexamination, the PTO's role is
identical in an inter partes proceeding.
Congress created the
inter partes reexamination "to further encourage potential
litigants to use the PTO as [an] avenue to resolve patentability
issues without expanding the process into one resembling
courtroom proceedings."
145 Cong. Rec. H6929, H6944 (daily ed.
Aug. 3, 1999) (statement of Rep. Rohrabacher).
As such, it is
clear that the inter partes reexamination is not a judicial
proceeding.
At oral argument and in its briefs, Callaway relied heavily
on dicta in Joy Manufacturing Co. v. National Mine Service Co..
810 F.2d 1127 (Fed. Cir. 1987) for its argument that a
forum
selection clause in a contract can prevent reexamination.
In Joy
Manufacturing. the plaintiff alleged that when the defendant
requested a reexamination,
the defendant had breached the
provision in their contract that provided that the defendant
would not "file any suit in any United States Court" contesting
the validity of the plaintiff's patents.
Id. at 1129.
In
holding that the literal terms of the settlement agreement did
not prohibit the defendant from seeking reexamination tecause the
PTO is not a "United States court," the Federal Circuit also
17
stated that, "[i]n view.of the new reexamination procedure,
parties would be well advised to draft agreements, where
appropriate, to encompass this new facet of patent law."
1130.
Id. at
Callaway argues that this dicta stands for the proposition
"that a properly worded forum-selection clause could preclude a
reexamination at the PTO."
Callaway Opp. at 7 (emphasis in
original).
Callaway's interpretation of Joy Manufacturing is
incorrect.
Nowhere in the opinion did the Federal Circuit state
that a forum selection clause could prevent the PTO from
reexamining a patent.
To the contrary, the Federal Circuit
stated that a breach of such a
forum selection clause aoes not
require the PTO to cease reexamination:
In this connection, we also note that the principeil
relief which Joy seeks -- namely, stopping the
reexamination of its patent --is not available in
these proceedings . . . The decision by the
Commissioner to institute reexamination is not subject
to review; and the injunction sought against National
would have no effect on reexamination since National,
as the requestor, has no future role to play in that ex
parte proceeding.
Id. at 1130 (citations omitted).
Therefore, Joy Manuf4cturing
does not support the proposition that a forum selection clause
can prevent the PTO from conducting a reexamination.
Accordingly, the PTO's initial denial of Callaway's request
to vacate the reexaminations was not arbitrary, capricious, an
abuse of discretion,
2.
or otherwise not in accordance with law,
Collateral estoppel from the Delaware proceedings
18
Callaway's second line of argument is that the
cone lusion of
the Delaware court as to Acushnet's violating the sett
agreement collaterally estops the PTO from proceeding
reexamination.
ement
With the
This entire line of argument fails for multiple
reasons.
Collateral estoppel prevents "the relitigation of
issues of
fact or law that are identical to issues which have be4n actually
determined and necessarily decided in prior litigation
in which
the party against whom [collateral estoppel] is asserted had a
full and fair opportunity to litigate." Ramsay v. INS.
14
F.3d
206, 210 (4th Cir. 1994), quoting Virginia Hosp. Ass'n
Baliles. 830 F.2d 1308, 1311 (4th Cir. 1987) .6
For the! doctrine
to apply, the party asserting it must establish:
(1) the issue precluded must be identical to one
previously litigated;
(2) the issue must have been actually determined ^.n the
prior proceeding;
(3) determination of the issue must have been a
critical and necessary part of the decision in th^
prior proceeding;
(4) the prior judgment must be final and valid; and
(5) the party against whom estoppel is asserted mvist
have had a full and fair opportunity to litigate the
issue in the previous forum.
6In patent actions, collateral estoppel claims are analyzed
"under the law of the regional circuit."
Deepwater Drilling. Inc. v. Maersk Contrs.
1296, 1311 (Fed. Cir. 2010).
19
Transocean Offshore
USA.
Inc..
617
F.3d
Ramsay. 14 F.3d at 210.
Obviously,
the issue before the PTO was not identical to
the issue before the Delaware federal district court, which
addressed only whether Acushnet had breached its agreement with
Callaway by requesting the reexamination.
See Callaway Golf Co.
v. Acushnet Co.. 523 F. Supp: 2d 388, 405 (D. Del. 2007) (holding
that Acushnet "violated the Agreement by filing the inter partes
reexaminations to contest the validity of the Sullivan
patents.").
The Delaware court did not hold that the PTO was
precluded from conducting reexaminations.
In fact, the Delaware
court actually recognized the PTO's authority to proceed with the
reexaminations:
The reexamination at issue having been filed, and
substantial new question of patentability recognised,
the PTO was clearly within its jurisdiction to dismiss
plaintiff's request to halt the proceedings. It does
not follow,
however,
that defendant was not in breach
when it filed its inter partes reexamination request in
the first instance.
Id. at 405.
Because the PTO's decision to reexamine the Sullivan
patents is an entirely separate matter from the issue of whether
Acushnet breached its contract with Callaway by requesting
reexamination, there is not collateral estoppel effect]7
Callaway's collateral estoppel argument also fails because
7Even if the Delaware court barred Acushnet from any further
participation in the reexamination, which has not happened, the
PTO could continue the process as an ex parte reexamination,
which does not require the involvement of a third-party
requester.
20
the PTO was not a party to the Delaware litigation, and the PTO
did not have a "full and fair opportunity" to litigate;the breach
of contract issue in Delaware.
Moreover,
the Federal Circuit has
held that a district court's rulings in patent infringement
lawsuits do not bind the PTO's later reexamination of the same
patents.
See In re Trans Tex. Holdings Corp..
1298 (Fed. Cir. 2007),
498 F.3cl 1290,
(affirming the PTO's refusal to apply a
district court's claim construction to the PTO's later ex parte
reexamination of the same patent, holding that "[i]ssue
preclusion is not warranted in this case because the PTO was not
a party to the earlier litigation");
Houston Atlas. Inc. v. Del
Mar Scientific,
LEXIS 10046
Inc.,
1982 U.S.
Dist.
(N.DJ Tex. June
16, 1982) (rejecting patent holder's argument that alleged
infringer's breach of a consent decree by filing a request for an
ex parte reexamination collaterally estopped the PTO from
reexamining the patent, holding that "the Patent Offices was not a
party to the original proceeding and . . . the consent judgment
is not binding on the Patent Office or the public which it
represents").8
Lastly, the text of the inter partes reexamination statute
8Although both decisions involved ex parte
reexaminat ions,
Callaway has pointed to no material difference between ex parte
and inter partes reexaminations that would require a different
outcome in this case. Similarly, Callaway has not ci_
ted any
caselaw in which collateral estoppel has precluded the PTO from
conducting inter partes reexaminations.
21
supports the conclusion that the PTO is not bound by general
collateral estoppel principles.
The statute contains only a
narrow collateral estoppel provision, limited to instances in
which a party loses a challenge to patent validity in a civil
action or an inter partes reexamination,
then neither that party nor its privies may thereafter
request an inter partes reexamination of any suchj
patent claim on the basis of issues which that party or .
its privies raised or could have raised in such civil
action or inter partes reexamination proceeding, and an
inter partes reexamination requested by that party or
its privies on the basis of such issues may not
thereafter be maintained by the Office, notwithstanding
any other provision of this chapter[.]
35 U.S.C.
§ 317(b).
Under a statutory interpretation canon,
expressio unis est exclusio alterius, "where a law expressly
describes a particular situation to which it shall apply, what
was omitted or excluded was
intended to be omitted or excluded."
Reyes-Gaona v. North Carolina Growers Ass'n. 250 F.3d $61, 865
(4th Cir. 2001), Congress's failure to include a more general
collateral estoppel provision supports the conclusion ifhat
Callaway's collateral estoppel has no statutory basis
In addition to invoking collateral estoppel, Callaway tries
to rely on section 2646 of the Manual of Patent Examining
Procedure ("MPEP"), which allows the PTO to vacate an Inter
partes reexamination that is ultra vires,
such as where there is
"no discretion to grant a request for reexamination."
in original).
Callaway's Mot. for Summ. J. at 25.
22
(emphasis
This argument
fails, however, because it relies on the unsupported assumption
that the 1996 settlement agreement and the Delaware court's
breach of contract ruling divest the PTO of any statutory
authority to reexamine the Sullivan patents.
Once again,
Callaway cites no caselaw or statutes that would lead to the
conclusion that a breach of contract ruling against a third party
divests the PTO of any discretion to reexamine patents,
Moreover, Callaway's MPEP argument is undercut by the PTO's
determination that neither the forum selection clause nor the
Delaware court's ruling renders the PTO's decision to conduct the
reexamination ultra vires.
An agency's interpretation of its own
regulations is "controlling unless plainly erroneous or
inconsistent with the regulation."
452, 461 (1997)
Auer v. Robbins. 519 U.S.
(internal citation and quotation marks omitted).
At oral argument, counsel for Callaway implied that Auer is no
longer good law, alluding to Justice Scalia's recent statement
that he has "become increasingly doubtful" of Auer's veilidity.
Talk Am.•
Inc. v. Mich.
Bell Tel. Co..
2011 U.S.
LEXIS 4375 (U.S
June 9, 2011) (Scalia, J., concurring); however, this cLrgument
ignores the majority's opinion, which applied Auer and stated
that it has "reaffirmed" the rule.
under Auer.
Id.. at *15.
Therefore,
we must defer to the PTO's decision that the
reexamination is not ultra vires because the decision is neither
plainly erroneous nor inconsistent with the agency's regulations.
23
It was perfectly reasonable for the PTO to conclude that a
court's finding that one private party breached a contract by
requesting reexamination did not divest the PTO of its ability to
reexamine the patent.
Therefore, under Auer, the Court will
defer to the PTO's interpretation of its regulations
In sum, Callaway has failed to demonstrate that the PTO's
denial of the petitions to vacate the inter partes reexaminations
were "arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law."
Therefore, Callaway's recnaest for a
declaratory judgment and injunction under 5 U.S.C.
§ 706(2) will
be denied.
C.
Mandamus
Although Callaway also seeks a writ of mandamus enjoining
the PTO from conducting the reexaminations and requiring the PTO
to stay or suspend the reexaminations, it does not address
mandamus relief in its Motion for Summary Judgment.
Callaway's
reply brief only mentions mandamus briefly in a footnote,
stating
that the relief is proper "because the PTO is required
to vacate
proceedings over which it has no statutory authority."
Callaway
Reply at 17, n. 11.
Callaway cannot satisfy the requisite
elements for mandamus.
Am.
Brief at 27.
For a writ of: mandamus
to issue, the plaintiff must establish: "(1) the plaintiff has a
clear right to relief;
(2) the defendant has a clear duty to act;
and (3) there is no other adequate remedy available to
24
plaintiff."
2007)
Burandt v. Dudas. 496 F. Supp. 2d 643, 653 (E.D. Va.
(internal citations omitted).
Callaway has not demonstrated that it has a clear right to
the relief that it seeks.
Specifically, it has not pointed to a
single statute or binding precedent that would require the PTO to
vacate the inter partes reexaminations.
Nor has Callaway
established that the PTO has a clear duty to vacate the
reexaminations.
As discussed above, the PTO reasonably construed
the settlement agreement and the Delaware court's decision as not
precluding the PTO from conducting the reexaminations.
Finally, Callaway has adequate remedies through the APA.
The PTO's refusal to vacate an inter partes reexamination is
subject to judicial review.
Moreover, Callaway may also seek
judicial review of the PTO's decision to invalidate the Sullivan
patents by appealing to the Federal Circuit under 35 U.S.C.
141 and 315(a)(1).
§§
Accordingly, Callaway's mandamus claim fails.
IV.
Conclusion
For all of the above stated reasons,
the Motion o:: Plaintiff
Callaway Golf Company for Summary Judgment [Dkt. No. 10] will be
denied and Defendants' Motion for Summary Judgment [Dkt. No. 22]
will be granted by an Order to be issued with this Opinion.
Entered this Jl
day of July, 2011.
Alexandria, Virginia
/s/
Leonie M. Brinkems
25
United States District Judge
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