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Dominion Dealer Solutions, LLC v. Lee

United States District Court, E.D. Virginia, Richmond Division

April 18, 2014

DOMINION DEALER SOLUTIONS, LLC, Plaintiff,
v.
MICHELLE K. LEE, Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the USPTO, Defendant.

MEMORANDUM OPINION

ROBERT E. PAYNE, Senior District Judge.

This matter is before the Court on Defendant Lee's MOTION TO DISMISS (Docket Nos. 7-8). For the reasons set forth below, the Motion will be granted.

BACKGROUND

Dominion Dealer Solutions ("Dominion") instituted this action against the Acting Director of the United States Patent and Trademark Office ("USPTO") as an appeal of five USPTO decisions to deny inter partes review ("IPR") of five contested patents that are the subject of litigation in the United States District Court for the Central District of California. Pursuant to Fed.R.Civ.P. 25(d), the Deputy Director of the USPTO, Michelle K. Lee, was substituted as the named defendant in this action. (Docket No. 29).

On October 1, 2012, Dominion was sued in the Central District of California for allegedly infringing upon four patents held by AutoAlert, Inc. ("AutoAlert"). On April 23, 2013, AutoAlert amended its complaint to alllege that a fifth patent had been infringed. Dominion then sought IPR of those five patents pursuant to 35 U.S.C. § 311(b), which permits a third party to "request to cancel as unpatentable 1 or more claims of a patent on a ground that could be raised under [35 U.S.C] section 102 or 103 and only on the basis of prior art consisting of patents or printed publications."

Dominion filed with the USPTO five separate petitions for IPR on March 28, 2013, and filed a motion to stay patent infringement proceedings in the Central District of California. As part of each petition for review, Dominion submitted an Expert Declaration of Ward A. Hanson, Ph.D., which offered factual testimony regarding three instances of prior art. This prior art purportedly taught all of the elements of the claims of the AutoAlert patents or rendered the claimed inventions obvious. On May 22, 2013, the trial court in California entered an order granting a stay "pending final exhaustion of all pending IPR proceedings, including any appeals."

During the period August 12-15, 2013, the USPTO's Patent Trial and Appeal Board ("PTAB") issued a series of decisions denying all five petitions for review. Dominion filed a Request for Rehearing on all five petitions, which were each denied by the PTAB on October 10, 2013.

Dominion then filed this action alleging that the PTAB's decisions were arbitrary, capricious, an abuse of discretion, and contrary to law, in violation of 5 U.S.C. § 706(2) (A), and in excess of statutory authority, in violation of 5 U.S.C. § 706(2) (C). The USPTO filed a Motion to Dismiss for lack of jurisdiction and failure to state a claim. Docket Nos. 7, 8. The parties have fully briefed the motions and are awaiting oral argument.

DISCUSSION

Fed.R.Civ.P. 12(b)(1) enables a party to move for dismissal by challenging the Court's jurisdiction over a subject matter. Fed.R.Civ.P. 12(b)(1). In the absence of subject matter jurisdiction, the action must be dismissed. Arbaugh v. Y & H Corp. , 546 U.S. 500, 514 (2006). A plaintiff bears the burden to prove that federal subject matter jurisdiction exists. Warren v. Sessoms & Rogers, P.A. , 676 F.3d 365, 371 (4th Cir. 2012).

There are two ways to challenge subject matter jurisdiction. First, the defendant may assert a facial challenge to jurisdiction by arguing that the complaint does not allege facts that permit the exercise of federal subject matter jurisdiction. See Kerns v. United States , 585 F.3d 187, 192 (4th Cir. 2009). In a challenge of that sort, a court must assume that all of the plaintiff's alleged facts are true. Id . Alternatively, a defendant may contend that a complaint's assertion of subject matter jurisdiction is not true. Id . (quoting Adams v. Bain , 697 F.2d 1213, 1219 (4th Cir. 1982)). In a challenge of that sort, a court may consider evidence outside the pleadings in order to determine whether subject matter jurisdiction exists. Id . Accordingly, the plaintiff's allegations will not receive a blanket presumption of truth, and a dispute of material fact will not prevent a court from evaluating the claims underlying jurisdiction. U.S. ex rel. Vuyyuru v. Jadhav , 555 F.3d at 347 (4th Cir. 2009). The challenge here is of the first sort.

The resolution of the motion is principally a matter of interpreting two statutes. The relevant provisions are set forth below.

35 U.S.C. § 314, which was enacted as part of the Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284 (2011) (hereinafter "AIA"), governs the institution of inter partes review by the USPTO. Subsection (a) states that an inter partes review may not be instituted unless the Director of the USPTO determines that the information presented in a petition shows that "there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition." Subsection (d) states that, "The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable."

In this action, Dominion has invoked the provisions of the APA, which, of course, "is not a jurisdiction-conferring statute." Lee v. U.S. Citizenship and Immigration Services , 592 F.3d 612, 619 (4th Cir. 2010) (quoting Trudeau v. FTC , 456 F.3d 178, 183 (D.C. Cir. 2006)). "Rather the jurisdictional source for an action under the APA is the federal question' statute, which confer[s] jurisdiction on ...


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