Arrow International, Inc. et al v. Spire Biomedical, Inc.,MEMORANDUM OF LAWD. Mass.July 13, 2006 345536.2 UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS - - - - - - - - - - - - - - - - - -x ARROW INTERNATIONAL, INC., and ARROW INTERNATIONAL INVESTMENT CORP., Plaintiffs, v. SPIRE BIOMEDICAL, INC., Defendant. : : : : : : : : : : : : Civil Action No.: 05-10671 DPW ECF Case - - - - - - - - - - - - - - - - - -x Plaintiffs’ Brief Responding to the Court’s Questions Regarding Procedural Issues Arising from Defendant’s Motion For Summary Judgment Of Invalidity Due To Abandonment Plaintiffs Arrow International, Inc. and Arrow International Investment Corp. (collectively “Arrow”) submit this brief in response to questions raised by the Court on June 21, 2006 regarding procedural issues arising from Defendant Spire Biomedical, Inc.’s Motion For Summary Judgment Of Invalidity Due To Abandonment.1 I. Additional Factual Background On June 20, 2006, counsel for Arrow received a copy of a Decision Granting Petition Under 37 CFR 1.137(b) in connection with U.S. Patent No. 6,921,396 (the ‘396 Patent) (copy attached as Exhibit A).2 The ‘396 Patent is one of the patents acquired by Arrow in the Diatek transaction. Similar to the ‘198 Patent-in-suit, a nonpublication 1 Arrow maintains its opposition to Spire’s summary judgment motion and continues to assert that it provided timely notice to the Patent Office of its PCT filing, as reflected by the records of the Patent Office showing actual notice by Arrow of the PCT application (Silfin Ex. 2 to Plaintiffs’ Memorandum in Opposition to Defendant’s Motion for Summary Judgment). 2 Counsel involved in this Action were not aware of the Decision Granting Petition Under 37 CFR 1.137(b) until after the hearing. Case 1:05-cv-10671-DPW Document 43 Filed 07/13/2006 Page 1 of 9 345536.2 -2- request had been submitted in the initial filing of the application for the ‘396 Patent. Concurrent with Arrow’s petition to the Patent Office with respect to the alleged failure of notice of foreign filing in the ‘198 Patent, Arrow submitted substantially similar petitions for the ‘396 Patent and two other patents. For reasons unknown, the Patent Office acted on the petition for the ‘396 Patent first. To date, Arrow has not received decisions on the petitions filed for the ‘198 Patent-in-suit or the other two patents. As set forth in the Decision, the Patent Office treated the petition as one made pursuant to 37 CFR § 1.137(b). Section 1.137(b) covers petitions to revive patent applications which have become abandoned due to unintentional delay. The Patent Office accepted Arrow’s petition as notice of a foreign filing which was unintentionally delayed and noted that “[t]his application matured into Patent No. 6,921,396 on July 26, 2005.” This brief has been prepared based on the assumption that the Patent Office will treat Arrow’s petition for the ‘198 Patent in the same manner as the petition for the ‘396 Patent. II. Responses to the Court’s Questions A. Can a district court review a decision by the Patent Office on a Petition to Revive? Yes. A decision on a petition by the Patent Office is an administrative decision, reviewable by a district court. Suntiger, Inc. v. Telebrands Advertising. Inc., No. Civ. A. 97-423-A, 1997 WL 855581, *1 (E.D. Va. July 11, 1997) (Patent Office grant of petition for revival of abandoned patent to be reviewed under the “arbitrary, capricious, abuse of discretion, or otherwise not in accordance with the law” standard). Case 1:05-cv-10671-DPW Document 43 Filed 07/13/2006 Page 2 of 9 345536.2 -3- B. Who should make the determination regarding Arrow’s notice of foreign filing in the first instance? As a practical matter, the Court should defer to the Patent Office in the first instance. In general, when an administrative agency has special expertise in an area, a court should wait until the administrative agency has ruled on an issue. Pejepscot Indus. Park v. Me. Cent. R.R. Co., 215 F.3d 195, 205 (1st Cir. 2000) (Courts should defer to an agency when (1) the issue is within the role assigned to the agency, (2) the agency’s expertise will allow the agency to best determine the issue raised, (3) the agency’s determination will resolve the issue); Palmer Foundry, Inc. v. Delta-HA, Inc., 319 F. Supp. 2d 110, 113 (D. Mass. 2004). This is particularly true in this instance where the issue revolves around whether an administrative agency received notice. The Patent Office is best able to make that determination. Similarly, if the notice was not sufficient, the controlling statute, 35 U.S.C. § 122(B)(2)(b)(iii), states that a determination as to whether the application was abandoned should be made based on whether the “Director” of the Patent Office is “satisfied” that the delay was unintentional. In this case, when Arrow was advised of the potential notice issue, Arrow immediately petitioned the Patent Office. Given the Patent Office’s recent decision regarding the similarly-situated ‘396 Patent, the Patent Office is expected to decide Arrow’s petition regarding the ‘198 Patent-in-suit within the next several weeks. Therefore, waiting for the Patent Office’s decision will not unduly delay the resolution of the lawsuit. Case 1:05-cv-10671-DPW Document 43 Filed 07/13/2006 Page 3 of 9 345536.2 -4- C. If Arrow’s Petition is granted, does it relate back to the time of the alleged abandonment? Yes. Based on the plain meaning of the statute, if it is found that Arrow unintentionally delayed providing notice of its PCT application to the Patent Office, then the original application for the ‘198 Patent-in-suit was never abandoned. Therefore the Patent Office’s grant of Arrow’s petition acts retroactively. The relevant statute reads: A failure of the applicant to provide such notice within the prescribed period shall result in the application being regarded as abandoned, unless it is shown to the satisfaction of the Director that the delay in submitting the notice was unintentional. 35 U.S.C. § 122(B)(2)(b)(iii) (emphasis added). Once the Director of the Patent Office is satisfied that any delay in Arrow’s submission of notice to the Patent Office was unintentional, the application for the ‘198 Patent is no longer “regarded as abandoned.” This conclusion is supported by the general practice in the Patent Office in the case of revived applications. Revival of abandoned applications is controlled by 37 CFR 1.137. Section 1.137(f) relates to applications abandoned for failure to notify the Patent Office of a foreign filing. Subsection (f) states that the practice set forth in section 1.137(b) should be applied. 3 Subsection (b) is used for revival in cases in which the determination to be made by the Patent Office is “unintentional delay.” Revival under section 1.137(b) has been found to be retroactive. In Suntiger, Inc. v. Telebrands Advertising. Inc., No. Civ. A. 97-423-A, 1997 WL 855581, *1 (E.D. Va. July 11, 1997), the patent owner filed a continuation application claiming priority from an earlier application. Id. at *1. By some mistake, the earlier application had been abandoned prior to the filing of the continuation application. Id. 3 As indicated above, the petition for the ‘396 Patent was granted under section 1.137(b). Case 1:05-cv-10671-DPW Document 43 Filed 07/13/2006 Page 4 of 9 345536.2 -5- at *1. For this reason, the patent owner failed to satisfy the requirement for copendency. See 35 U.S.C. § 120. The patent owner filed a petition for revival of the earlier application under 37 CFR 1.137(b). Suntiger, 1997 WL 855581 at *1. The district court stayed the patent infringement case to allow the Patent Office to decide the petition. Id. The Patent Office granted the petition reviving the application, thereby retroactively correcting the copendency problem. Id. The Court affirmed the Patent Office’s administrative decision reviving the patent application. The defendant’s final argument was that there was no “retroactive validity.” The district court rejected this argument stating: The strong presumption of validity attaches to a patent upon its issuance, and no tribunal has ever declared the Johansen patents invalid. All the PTO has done is correct an unintentional oversight in the patent application process; the PTO has not retroactively validated a previously invalid patent. Id. at *4. Likewise, revival of the application for the ‘198 Patent is not validating a previously invalid patent. Typically, revival occurs with respect to pending applications. Hence, the statute speaks in terms of an “application being regarded as abandoned.” A revived patent application relates back to the original filing date of the application. Otherwise revival would have no benefit to the applicant. The relation back permits the applicant to claim the benefit of his or her original filing date without having to overcome any new prior art that may have been published prior to the revival. In the instance where a patent application that has not issued as a patent is revived pursuant to section 1.137(b), the Patent Office simply continues the prosecution of the application; since the revival relates back there is no interruption in the prosecution of such an application. See, e.g., Case 1:05-cv-10671-DPW Document 43 Filed 07/13/2006 Page 5 of 9 345536.2 -6- Manual of Patent Examining Procedure § 711.03(c)(II)(A)(2)(b) (copy attached as Exhibit B). Arrow’s research has not revealed a single instance in which a patent or patent application, revived by the Patent Office, did not relate back to the original date of the alleged abandonment. D. If the revival does not relate back, does the Court have subject matter jurisdiction? No. If the revival does not relate back to the date of the alleged abandonment, Plaintiffs did not have standing on the date the suit was filed. Therefore the Court would not have subject matter jurisdiction. E. If the case is dismissed, will it reappear? Probably yes. If the Court were to determine that there was a lack of subject matter at the time it was filed and dismissed this action, Arrow would have a right to file another lawsuit making the same allegations against Spire. At this time, Arrow expects that if this scenario were to take place, it would refile the lawsuit. F. If the revival does not relate back, can the patent owner collect past damages? No. This is the same issue as the question of subject matter jurisdiction. If the revival does not relate back to the date of the alleged abandonment, then Arrow cannot enforce the ‘198 Patent prior to the date of revival. Once revival is effective, Spire would be liable for damages for infringement from the date of the revival. Therefore, if the case is dismissed for lack of subject matter jurisdiction, Arrow could refile and sue for those damages stemming from Spire’s actions after the date of the revival. Case 1:05-cv-10671-DPW Document 43 Filed 07/13/2006 Page 6 of 9 345536.2 -7- G. Does the Court have to wait for administrative remedies to be exhausted before making a decision? Yes. Decisions by the Patent Office fall under the aegis of the Administrative Procedure Act (APA). Dickinson v. Zurko, 527 U.S. 150, 152 (1999). The APA allows courts to review final Patent Office decisions under the standard of “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). Agency actions are reviewable when they are made reviewable by statute and final agency action for which there is no other adequate remedy in a court. 5 U.S.C. § 704. An agency decision is final when it is the end of the agency’s decisionmaking process and legal consequences flow from that decision. Sony Computer Entmt. Am. Inc. v. Dudas, Civ. No. 1:05cv1447, 2006 U.S. Dist. LEXIS 36856, *14 (E.D. Va. May 22, 2006) (citing Bennett v. Spear, 520 U.S. 154, 177-178 (1997)). The grant of Arrow’s petition, as anticipated, would be a final decision subject to district court review. Denial of Arrow’s petition is subject to additional administrative remedies, including appeal up to the United States Court of Appeals for the Federal Circuit. 35 U.S.C. § 141. Therefore, denial of Arrow’s petition would not be reviewable by the district court. Grasty v. United States Patent & Trademarks, Civ. No. 03-6839, 2005 U.S. Dist. LEXIS 9175, *6 (E.D. Pa. May 12, 2005). H. Can the Court decide claim construction before summary judgment? Yes. In most patent infringement cases, defendants’ summary judgment motions raise issues of either non-infringement or invalidity based on prior art. Such motions typically require that the Court first make a claim construction determination. A subsequent summary judgment in defendants’ favor results in the case being dismissed Case 1:05-cv-10671-DPW Document 43 Filed 07/13/2006 Page 7 of 9 345536.2 -8- with the claim construction decision having some collateral estoppel effect on the patent owner in any future case. In this case, although Spire’s summary judgment motion is not based on a claim construction issue, the Court controls the sequencing of its rulings. If the Court renders a claim construction decision, and then decides that the case should be dismissed for lack of subject matter jurisdiction, the claim construction decision would not simply be an advisory ruling but would have collateral estoppel effect when Arrow refiles the suit. III. Conclusion Arrow respectfully requests that Defendant’s motion for summary judgment be denied. Respectfully submitted, ARROW INTERNATIONAL, INC. and ARROW INTERNATIONAL INVESTMENT CORP. By their attorneys, /s/ Brian E. Whiteley Brian E. Whiteley (BBO #555683) SCIBELLI, WHITELEY AND STANGANELLI, LLP 50 Federal Street, 5th Floor Boston, MA 02110 Telephone: (617) 227-5725 Facsimile: (617) 722-6003 Kenneth P. George (Pro Hac Vice) Ira E. Silfin (Pro Hac Vice) AMSTER, ROTHSTEIN & EBENSTEIN LLP 90 Park Avenue New York, NY 10016 Telephone: (212) 336-8000 Facsimile: (212) 336-8001 Dated: July 13, 2006 Case 1:05-cv-10671-DPW Document 43 Filed 07/13/2006 Page 8 of 9 345536.2 CERTIFICATE OF SERVICE I hereby certify that, on July 13, 2006, I caused a true copy of Plaintiffs’ Brief Responding to the Court’s Questions Regarding Procedural Issues Arising from Defendant’s Motion For Summary Judgment Of Invalidity Due To Abandonment to be filed and served electronically upon the following counsel: Thomas J. Engellenner, Esq. Daniel J. Gleason, Esq. Michelle Chassereau Jackson, Esq. Heather B. Repicky, Esq. Nutter, McClennen & Fish, LLP World Trade Center West 155 Seaport Boulevard Boston, Massachusetts 02210-2604 Telephone: (617) 439-2000 Fascimile: (617) 310-9000 Attorneys for Defendant Spire Biomedical, Inc. /s/Carolyn A. Marcotte Carolyn A. 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