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Synopsys, Inc. v. Lee

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

October 9, 2014

SYNOPSYS, INC., Plaintiff,
v.
MICHELLE K. LEE, Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office, serving in the Acting Capacity as Director of the United States Patent and Trademark Office, et al., Defendants.

MEMORANDUM OPINION

JAMES C. CACHERIS, District Judge.

Plaintiff Synopsys, Inc. ("Synopsys") filed this declaratory judgment action pursuant to the Administrative Procedure Act ("APA") against Defendants Michelle K. Lee, the Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office ("USPTO"), serving in her acting capacity as Director of the USPTO ("the Director"), and the USPTO (together with the Director, collectively, "Defendants"). This matter comes before the Court on the Defendants' Motion to Dismiss pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure ("Motion"). [Dkt. 20]

Defendants' Motion concerns this Court's jurisdiction to review a USPTO post-patent-grant patentability decision. The issue before the Court is whether the Leahy-Smith America Invents Act ("AIA"), Pub. L. No. 112-29, 125 Stat. 284, precludes this Court's review of a USPTO decision to institute "partial" inter partes review proceedings, and to ultimately issue a final written decision on some, but not all, of the challenged claims originally raised by the petitioner. The Court holds that it lacks jurisdiction to review Plaintiff's APA claims because Congress vested exclusive jurisdiction over such judicial review in the United States Court of Appeals for the Federal Circuit. For the reasons discussed below, the Court will dismiss Synopsys's Complaint pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure.

I. Background

On May 29, 2001, the USPTO granted Patent Number 6, 240, 376 ("the 376 patent") to assignee Mentor Graphics Corporation ("Mentor"), an intervening Defendant in this matter. (Compl. [Dkt. 1] ¶¶ 13, 14; Order Granting Mot. to Intervene [Dkt. 25].) Under the AIA, there are two administrative mechanisms by which the USPTO reviews the patentability of issued patents: inter partes review, 35 U.S.C. §§ 311-319, and post-grant review, 35 U.S.C. §§ 321-329. On September 26, 2012, Synopsys filed a petition for inter partes review of the 376 patent challenging claims 1-15 and 20-33 of the 376 patent as allegedly "invalid due to anticipation (lack of novelty) and obviousness." (Compl. ¶ 15.)

On February 22, 2013, the Patent Trial and Appeal Board ("the Board") granted Synopsys's petition for inter partes review, but only as to claims 1-9, 11, 28, and 29, because the Board found that Synopsys had "demonstrated that there is a reasonable likelihood of prevailing on its challenge to the patentability [of those claims]." (Compl. ¶ 16; Institution of Inter Partes Review ("Institution Decision") [Dkt. 1-3] at 43.) The Board did not institute inter partes review proceedings as to the remaining claims challenged by Synopsys: 10, 12-15, 20-27, and 30-33. (Compl. ¶ 17; Institution Decision at 43.)

On April 29, 2013, Mentor, the owner of the patent, filed suit against the USPTO in this Court. Mentor sought (1) judicial review of the Board's decision to institute partial inter partes review and (2) to enjoin the partial inter partes review proceeding. Synopsys intervened in that lawsuit as a defendant, opposed Mentor's requested relief, and filed a motion to dismiss, as did USPTO. The Court granted the motion to dismiss. The Court found, first, that the Board's decision to institute inter partes review was not a final agency decision and thus not reviewable under the APA. Second, the Court found that it lacked jurisdiction to review the Board's decision because Mentor had another adequate remedy available in the Federal Circuit. See Mentor Graphics Corp. v. Rea, No. 1:13-cv-518, 2013 WL 3874522 (E.D. Va. July 25, 2013).

The Board issued the final written decision on Synopsys's inter partes petition on February 19, 2014 and cancelled claims 5, 8, and 9 of the 376 patent as unpatentable. (Compl. ¶ 18.) Otherwise, the Board found that Synopsys failed to show that claims 1-4, 6, 7, 11, 28, 29, were unpatentable, and did not address Synopsys's challenge to claims 10, 12-15, 20-27, and 30-33. (Id. ¶¶ 18, 19.) On April 22, 2014, Synopsys noticed an appeal of the Board's final written decision to the Federal Circuit.[1] (Defs.' Mem. in Supp. of Mot. to Dismiss ("Defs.' Mem.") Ex. C [Dkt. 21-3].) On June 5, 2014, Synopsys filed this Complaint, alleging Defendants violated the APA. (Compl. ¶¶ 23-40.)

Specifically, Synopsys claims that the Director exceeded the statutory authority prescribed by Congress in 35 U.S.C. §§ 314(a), 318(a) when she promulgated 37 C.F.R. § 42.108 ("the regulation"), which authorizes the Board to institute inter partes review "on all or some of the challenged claims and on all or some of the grounds of unpatentability asserted for each claim." (Compl. ¶ 32.) Synopsys argues that under AIA, if the Board "determined that Synopsys had a reasonable likelihood of success as to at least one claim challenged in the petition... the Board was required to institute inter partes review of the petition as a whole... [and] issue a written decision that addresses the patentability of all claims challenged by the petition, not just a subset of those claims." (Id. ¶ 30 (citing 35 U.S.C. §§ 314(a), 318(a)).) By partially granting petitions for inter partes review, and by issuing final written decisions that only address some, but not all, of the petitioner's challenged claims, Synopsys contends that the Director acted unlawfully in excess of statutory authority.[2] For relief, Synopsys asks this Court to declare the regulation, and any actions taken in accordance with the regulation, including the final written decision, invalid pursuant to 5 U.S.C. § 706. Synopsys also asks for a declaration that the Board may only grant or deny inter partes petitions in whole, and only issue final written decisions that address all challenged claims raised by the petitioner. (Id. ¶¶ 32, 36, 38, 40, at 11.)

Defendants argue that the Complaint should be dismissed pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure because this Court is without jurisdiction to consider those claims. Synopsys filed a memorandum in opposition to Defendants' Motion, (Pl.'s Opp'n. [Dkt. 24].), and Defendants replied, (Defs.' Reply [Dkt. 28].). Thus, the Motion is fully briefed and ripe for disposition.[3]

II. Standard of Review

A. Rule 12(b)(1)

Federal Rule of Civil Procedure 12(b)(1) governs the dismissal of an action where the Court lacks subject matter jurisdiction. Defendants may attack subject matter jurisdiction in one of two ways. First, defendants may contend that the allegations in the complaint are insufficient to show that the federal district court has jurisdiction over the subject matter of the case. See Adams v. Bain , 697 F.2d 1213, 1219 (4th Cir. 1982); King v. Riverside Reg'l Med. Ctr. , 211 F.Supp.2d 779, 780 (E.D. Va. 2002). In such instances, all facts alleged in the complaint are presumed true. Adams , 697 F.2d at 1219; Virginia v. United States , 926 F.Supp. 537, 540 (E.D. Va. 1995).

Alternatively, defendants may argue, as is the case here, that the jurisdictional facts alleged in the complaint are untrue. Adams , 697 F.2d at 1219; King , 211 F.Supp.2d at 780. Stated differently, defendants may attack "the existence of subject matter jurisdiction in fact, quite apart from any pleadings, " White v. CMA Const. Co., Inc. , 947 F.Supp. 231, 233 (E.D. Va. 1996) (citations omitted), and claim that the district court actually lacks jurisdiction over the subject matter, an independent defect that may exist even with sufficient pleading. In that situation, "the Court may look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether ...


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