Hyatt v. U.S. Patent & Trademark Office

United States Court of Appeals

for the Federal Circuit

______________________

GILBERT P. HYATT, AMERICAN ASSOCIATION

FOR EQUITABLE TREATMENT, INC.,

Plaintiffs-Appellants

v.

UNITED STATES PATENT AND TRADEMARK

OFFICE, ANDREI IANCU, IN HIS OFFICIAL

CAPACITY AS UNDER SECRETARY OF

COMMERCE FOR INTELLECTUAL PROPERTY

AND DIRECTOR OF THE UNITED STATES

PATENT AND TRADEMARK OFFICE,

Defendants-Appellees

______________________

2017-1722

______________________

Appeal from the United States District Court for the

District of Nevada in No. 2:16-cv-01490-RCJ-PAL, Judge

Robert Clive Jones.

______________________

Decided: September 24, 2018

______________________

ANDREW M. GROSSMAN, Baker & Hostetler LLP,

Washington, DC, argued for plaintiffs-appellants. Also

represented by MARK W. DELAQUIL.

MOLLY R. SILFEN, Office of the Solicitor, United States

Patent and Trademark Office, Alexandria, VA, argued for

2 HYATT v. PATO

defendants-appellees. Also represented by THOMAS W.

KRAUSE, ROBERT J. MCMANUS.

______________________

Before REYNA, WALLACH, and HUGHES, Circuit Judges.

HUGHES, Circuit Judge.

Gilbert Hyatt sued the United States Patent and

Trademark Office alleging that the PTO acted unlawfully

in denying his petition for rulemaking. Mr. Hyatt now

appeals from the district court’s grant of the PTO’s motion

for summary judgment and dismissal of his claims for

lack of subject matter jurisdiction. We reverse the district

court’s dismissal for lack of subject matter jurisdiction.

Because Mr. Hyatt’s claims are either time-barred or

reliant on mistaken statutory interpretation, however, we

affirm on alternate grounds the district court’s grant of

summary judgment.

I

Mr. Hyatt is the named inventor on more than 70 is-

sued patents and approximately 400 pending patent

applications, all of which were filed before June 8, 1995.

Due to Mr. Hyatt’s numerous amendments, those pending

applications contained approximately 115,000 total claims

as of August 2015. Each of these applications incorpo-

rates by reference, and claims priority from, numerous

previously-filed applications dating back to the early

1970s. In October 2012, the PTO dedicated twelve full-

time patent examiners to the sole task of examining Mr.

Hyatt’s applications. By 2015, that number had increased

to fourteen.

The PTO’s examination of these patents has proven

slow going. Beginning in the mid-2000s, the PTO started

issuing final rejections for some applications, prompting

Mr. Hyatt to appeal the rejections to the Patent Trial and

Appeal Board (PTAB). Upon an applicant’s filing of an

HYATT v. PATO 3

appeal brief before the Board, the patent examiner may

file an examiner’s answer setting forth the grounds on

which the patent was rejected or adding a new ground of

rejection. 37 C.F.R. § 41.39(a). But there is no statutory

or regulatory deadline for filing an answer. In

Mr. Hyatt’s case, the examiners never filed answers to his

briefs, which prevented the PTAB from acquiring jurisdic-

tion over his appeals. See 37 C.F.R. § 41.35(a).

In 2013, the PTO issued a series of formal office ac-

tions, called “Requirements,” intended to accelerate

examination of Mr. Hyatt’s claims. These Requirements

instructed Mr. Hyatt to limit the number of claims from

each patent family to 600 absent a showing that more

claims were necessary, identify the earliest possible

priority date and supporting disclosure for each selected

claim, and present a copy of the selected claims to the

PTO. Although Mr. Hyatt challenged the PTO’s authority

to issue these Requirements, we held that the special

circumstances of Mr. Hyatt’s applications justified the

unique disclosure requirements. Hyatt v. U.S. Patent &

Trademark Office, 797 F.3d 1374, 1385 (Fed. Cir. 2015).

Following issuance of the Requirements, the PTO reo-

pened prosecution of 80 applications that its examiners

had previously rejected.

In February 2014, Mr. Hyatt responded to the reopen-

ing of his 80 applications with a suit in the U.S. District

Court for the District of Nevada alleging the PTO unrea-

sonably delayed examination of his applications by reo-

pening prosecution rather than letting the PTAB hear his

appeals. See Hyatt v. U.S. Patent & Trademark Office,

No. 2:14-CV-00311-LDG, 2014 WL 4829538, at *1 (D.

Nev. Sept. 30, 2014). The Nevada district court deter-

mined that it lacked jurisdiction over Mr. Hyatt’s claims

and transferred his case to the U.S. District Court for the

Eastern District of Virginia. Id. In November 2015, the

Eastern Virginia district court granted summary judg-

ment for the PTO. Hyatt v. U.S. Patent & Trademark

4 HYATT v. PATO

Office, 146 F. Supp. 3d 771, 787 (E.D. Va. 2015).

Mr. Hyatt did not appeal the court’s decision.

While his unreasonable delay case was pending before

the Nevada district court, Mr. Hyatt filed a petition for

rulemaking with the PTO pursuant to 5 U.S.C. § 553(e).

His petition requested that the PTO either promulgate a

rule repealing Manual of Patent Examining Procedure

(MPEP) § 1207.04 or declare that MPEP provision unen-

forceable. Section 1207.04 describes an examiner’s ability

to, “with approval from the supervisory patent examiner,

reopen prosecution to enter a new ground of rejection in

response to appellant’s brief.” This section provides an

alternative to MPEP § 1207.03, which allows examiners

to include new grounds of rejection in their answers to an

applicant’s appeal brief. To avoid abandonment of an

application following a reopening of prosecution, the

applicant must file a reply to the office action reopening

prosecution or initiate a new appeal to the PTAB by filing

a new notice of appeal. MPEP § 1207.04.

Mr. Hyatt’s petition raised three arguments in sup-

port of repealing MPEP § 1207.04. He argued that MPEP

§ 1207.04 (1) conflicts with 35 U.S.C. § 6(b)(1)’s creation of

a right for applicants to appeal rejections; (2) conflicts

with 37 C.F.R. § 41.39’s implicit disallowance of prosecu-

tion reopening after an applicant’s filing of an appeal

brief; and (3) was improperly adopted without notice-and-

comment rulemaking. In September 2014, the PTO

denied Mr. Hyatt’s petition. He subsequently requested

reconsideration of that denial, which the PTO denied in

December 2015.

In June 2016, Mr. Hyatt filed this suit challenging the

denial of his petition for rulemaking in Nevada district

court under the Administrative Procedure Act. See 5

U.S.C. §§ 701–706. Mr. Hyatt’s complaint primarily

alleges, for the same reasons raised in his petition for

rulemaking, that the PTO’s adoption of MPEP § 1207.04

HYATT v. PATO 5

was arbitrary and capricious, in excess of statutory au-

thority, and without observance of procedure required by

law. Accordingly, he alleges that the PTO’s denial of his

request to rescind MPEP § 1207.04 was similarly arbi-

trary and capricious, an abuse of discretion, or otherwise

not in accordance with law.

The district court granted summary judgment to the

PTO and dismissed all of Mr. Hyatt’s claims, determining

that it lacked subject matter jurisdiction over them. In

choosing to dismiss the case rather than transfer it to a

court with the requisite jurisdiction, the district court

reasoned that Mr. Hyatt’s challenges to MPEP § 1207.04

were “likely precluded” because he could have raised the

same arguments in his prior unreasonable delay suit.

J.A. 4. Mr. Hyatt now appeals. We have jurisdiction

under 28 U.S.C. § 1295(a)(1).

II

We review a district court’s grant of summary judg-

ment according to the law of the regional circuit. Teva

Pharm. Indus. Ltd. v. AstraZeneca Pharm. LP, 661 F.3d

1378, 1381 (Fed. Cir. 2011) (quoting Lexion Med., LLC v.

Northgate Techs., Inc., 641 F.3d 1352, 1358 (Fed. Cir.

2011)). The Ninth Circuit reviews such grants de novo.

Universal Health Servs., Inc. v. Thompson, 363 F.3d 1013,

1019 (9th Cir. 2004). Following the Ninth Circuit, “[w]e

must determine, viewing the evidence in the light most

favorable to the nonmoving party, whether there are any

genuine issues of material fact and whether the district

court correctly applied the relevant substantive law.” Id.

(quoting EEOC v. Luce, Forward, Hamilton & Scripps,

345 F.3d 742, 746 (9th Cir. 2003)).

“The district court’s conclusion that it lacks subject

matter jurisdiction is subject to de novo review.” Ip v.

United States, 205 F.3d 1168, 1170 (9th Cir. 2000) (quot-

ing Central Green Co. v. United States, 177 F.3d 834, 835

(9th Cir. 1999)). When an issue of claim preclusion is

6 HYATT v. PATO

“particular to patent law,” we analyze it under our own

law. Acumed LLC v. Stryker Corp., 525 F.3d 1319, 1323

(Fed. Cir. 2008) (quoting Hallco Mfg. Co. v. Foster, 256

F.3d 1290, 1294 (Fed. Cir. 2001)). We review de novo

whether claim preclusion bars a plaintiff’s claim. Faust v.

United States, 101 F.3d 675, 677 (Fed. Cir. 1996). Wheth-

er a claim is barred by a statute of limitations is also a

legal question subject to de novo review. Newby v. Enron

Corp., 542 F.3d 463, 468 (Fed. Cir. 2008). An agency’s

denial of a petition for rulemaking is reviewed for wheth-

er it is arbitrary and capricious. Preminger v. Sec’y of

Veterans Affairs, 632 F.3d 1345, 1353 (Fed. Cir. 2011).

A

As an initial matter, the district court had subject

matter jurisdiction over Mr. Hyatt’s challenge to the

PTO’s denial of his petition for rulemaking. Under 28

U.S.C. § 1331, district courts have “original jurisdiction of

all civil actions arising under the Constitution, laws, or

treaties of the United States.” The APA is a federal

statute that provides a cause of action for persons “suffer-

ing legal wrong because of agency action.” 5 U.S.C. § 702.

Subject to some exceptions inapplicable in this case, APA

challenges to federal agency actions usually fall within

the district courts’ § 1331 jurisdiction. See Califano v.

Sanders, 430 U.S. 99, 105–07 (1977). In addition, if a

plaintiff’s APA challenge raises a substantial question of

patent law, district courts have jurisdiction under 28

U.S.C. § 1338(a). Helfgott & Karas, P.C. v. Dickinson, 209

F.3d 1328, 1334 (Fed. Cir. 2000). Here, Mr. Hyatt chal-

lenges the validity of a PTO rule, in part on the basis that

it conflicts with statutes and regulations governing the

patent application process. We have held that “the ques-

tion of whether the [PTO] has violated the APA in apply-

ing . . . its own regulations . . . raises a substantial

question under the patent laws sufficient to vest jurisdic-

tion with the district court based in part upon 28 U.S.C.

HYATT v. PATO 7

§ 1338(a).” Id. Thus, the district court had original

jurisdiction over Mr. Hyatt’s case.

Although Congress has granted this court and the

Eastern Virginia district court exclusive jurisdiction to

review final PTAB application decisions, this grant does

not displace the district court’s jurisdiction in this case.

Under 35 U.S.C. § 141(a), if the PTAB affirms an examin-

er’s final rejection, the applicant may appeal the PTAB’s

final decision to this court. Under 35 U.S.C. § 145, an

applicant may alternatively challenge the PTAB’s deci-

sion by instituting a civil action against the PTO Director

in the Eastern Virginia district court. But here,

Mr. Hyatt’s petition for rulemaking was not an appeal

from an examiner’s rejection of his applications. Related-

ly, the PTO Director’s denial of Mr. Hyatt’s petition is not

a PTAB decision. Thus, Mr. Hyatt’s challenge to the

denial of his petition falls outside the exclusive zone of

jurisdiction created by § 141 and § 145.

The district court reasoned that, even though the de-

nial of Mr. Hyatt’s petition for rulemaking was not itself a

final PTAB decision within the scope of § 141 and § 145, it

lacked jurisdiction because an order invalidating MPEP

§ 1207.04 would indirectly affect our jurisdiction over

appeals from final PTAB decisions. This reasoning re-

flected the district court’s interpretation of Telecommuni-

cations Research & Action Center v. FCC, 750 F.2d 70

(D.C. Cir. 1984) (“TRAC”), a case in which the D.C. Cir-

cuit noted a “well settled” rule that “where a statute

commits review of agency action to the Court of Appeals,

any suit seeking relief that might affect the Circuit

Court’s future jurisdiction is subject to the exclusive

review of the Court of Appeals.” Id. at 76, 78–79.

The district court, however, read the TRAC rule too

broadly. The rule applies to cases concerning interlocuto-

ry challenges to agency proceedings that will culminate in

final agency actions exclusively reviewable by certain

8 HYATT v. PATO

courts. In those cases, the court with jurisdiction over the

final agency action also has exclusive jurisdiction over the

interlocutory challenges in order to “protect its future

jurisdiction.” In re Nat. Res. Def. Council, 645 F.3d 400,

405 (D.C. Cir. 2011). For example, in TRAC, public

interest groups petitioned the D.C. Circuit for a writ of

mandamus to compel the Federal Communications Com-

mission to resolve several matters pending before the

agency. 750 F.2d at 72. The court determined that

district courts would lack jurisdiction over this type of

unreasonable delay challenge because the final agency

action that the petitioners sought to compel would be

exclusively reviewable in the courts of appeals. Id. at 75,

77. Similarly, in Public Utility Commissioner of Oregon v.

Bonneville Power Administrator, 767 F.2d 622 (9th Cir.

1985), utility companies sued the Bonneville Power Ad-

ministration in district court to challenge the constitu-

tionality of the agency’s process for adjusting the way in

which it calculated certain electricity prices. Id. at 624–

25. The court determined that, because the agency’s final

decision on rate calculations would be exclusively review-

able in the court of appeals, an interlocutory challenge to

the process of making that decision could not be brought

in the district courts. Id. at 625–26.

In contrast to the agency actions challenged in those

cases, the PTO’s denial of Mr. Hyatt’s petition was not an

intermediate action taken in the course of proceedings

that would culminate in a final agency action exclusively

reviewable by this court and the Eastern Virginia district

court. The process for petitioning the PTO for rulemaking

is completely separate from the patent application exami-

nation process that culminates in final PTAB decisions.

Thus, we do not need to exercise exclusive jurisdiction

over denials of petitions for rulemaking in order to protect

our future jurisdiction. If another court granted Mr.

Hyatt’s requested relief and prohibited PTO examiners

from reopening prosecution of applications after an appeal

HYATT v. PATO 9

brief has been filed, the prosecution process would

change, but our ability to review final PTAB decisions

would remain unaffected.

Accordingly, the exclusive jurisdiction of this court

and the Eastern Virginia district court to review final

PTAB decisions under § 141 and § 145 does not displace

the district court’s jurisdiction over APA challenges to the

PTO’s denial of a petition for rulemaking.

B

The PTO argues that the judgment in Mr. Hyatt’s pri-

or unreasonable delay case bars his present claims under

the doctrine of claim preclusion. In his prior suit,

Mr. Hyatt challenged the PTO’s reopening of prosecution

for 80 of his pending applications. Hyatt, 146 F. Supp. 3d

at 773. He alleged that the prosecution reopenings

formed part of a pattern of unreasonable delay by the

PTO that included issuing repeated examination suspen-

sions and raising new grounds of rejection. Id. at 773,

780. He sought a declaration that the PTO had “unrea-

sonably delayed final agency action on the 80 patent

applications in issue” and injunctive relief “barring the

PTO from reopening prosecution on the PTO’s own initia-

tive once plaintiff files . . . an appeal brief.” Id. at 780.

The Eastern Virginia district court granted summary

judgment for the PTO on the grounds that Mr. Hyatt

lacked a remedy because the PTO had recommenced

examination of his applications. Id. at 787. Mr. Hyatt

does not dispute that he could have argued in his prior

suit that MPEP § 1207.04 is invalid.

For general principles of claim preclusion, we apply

the law of the regional circuit. But, for claim preclusion

issues “particular to patent law,” as is the case here which

requires an analysis of issues related to the prosecution

and examination of patents, we apply our own law.

Acumed LLC, 525 F.3d at 1323. Claim preclusion ap-

plies when “(1) there is identity of parties (or their priv-

10 HYATT v. PATO

ies); (2) there has been an earlier final judgment on the

merits of a claim; and (3) the second claim is based on the

same set of transactional facts as the first.” Jet, Inc. v.

Sewage Aeration Sys., 223 F.3d 1360, 1362 (Fed. Cir.

2000). Both parties agree that the prior unreasonable

delay case involved identical parties and reached a final

judgment on the merits. They only dispute whether the

prior case involved the same set of transactional facts.

To determine whether there is an identity of claims,

this court is guided by the Restatement (Second) of Judg-

ments. Foster v. Hallco Mfg. Co., 947 F.2d 469, 478 (Fed.

Cir. 1991). Under the Restatement approach, what

constitutes the same transaction of facts is “to be deter-

mined pragmatically,” considering “whether the facts are

related in time, space, origin, or motivation, whether they

form a convenient trial unit, and whether their treatment

as a unit conforms to the parties’ expectations or business

understanding or usage.” Restatement (Second) of Judg-

ments, § 24 (Am. Law Inst. 1982).

Consideration of these factors makes clear that

Mr. Hyatt’s claims in this case do not share an identity

with his unreasonable delay claims. First, the two sets of

claims relate to different sets of facts. Mr. Hyatt’s unrea-

sonable delay claims arose from the PTO’s reopening of

prosecution for 80 of his applications in 2013. In contrast,

his present claims arose from the PTO’s denial of his

petition for rulemaking in December 2015. This petition-

ing process is completely independent of the PTO’s appli-

cation examination process. In addition, the two sets of

claims could not have been conveniently tried together.

Mr. Hyatt’s petition for rulemaking was not denied until

December 2015, more than two years after the reopenings

of his applications and a month after the final decision in

his unreasonable delay case. Thus, even though

Mr. Hyatt could have raised the same arguments concern-

ing MPEP § 1207.04’s validity in his prior suit, his pre-

sent claims arise from a different set of facts unrelated in

HYATT v. PATO 11

time, origin, or motivation to his prior unreasonable delay

claims. Accordingly, claim preclusion does not bar his

present claims.

The PTO’s argument that the two sets of claims arise

from the same set of transactional facts relies on a mis-

understanding of Mr. Hyatt’s claims. The PTO frames

Mr. Hyatt’s suit as a collateral attack on the agency’s

reopening prosecution for the 80 applications at issue in

his unreasonable delay case. But Mr. Hyatt’s present suit

does not seek any relief related to those 80 applications.

His claims challenge the PTO’s denial of his petition for

rulemaking and his complaint only seeks forward-looking

relief such as “[a] declaration that MPEP § 1207.04 is

unlawful,” “[a] declaration that the PTO . . . unlawfully

denied the Director Petition,” and “[a]n order enjoining

the PTO . . . from enforcing MPEP § 1207.04.” J.A. 23–24.

The requested relief makes clear that Mr. Hyatt is not

collaterally attacking the PTO’s prior prosecution reopen-

ings. 1

C

The PTO next argues that Mr. Hyatt’s claims are

time-barred. In the absence of a specific statutory limita-

tions period, actions for judicial review against the United

States under the APA are subject to the statute of limita-

1 Although claim preclusion does not bar Mr. Hy-

att’s challenge to MPEP § 1207.04 in this challenge to the

PTO’s denial of his petition for rulemaking, he does not

have free reign to raise similar challenges in any future

proceeding. Because Mr. Hyatt undoubtedly could have

challenged the validity of MPEP § 1207.04 in his unrea-

sonable delay suit, claim preclusion would bar him from

doing so in any future case arising from the PTO’s reopen-

ing of prosecution for the 80 applications at issue in his

prior case.

12 HYATT v. PATO

tions in 28 U.S.C. § 2401(a). See Schwalier v. Hagel, 776

F.3d 832, 835 (Fed. Cir. 2015); Preminger v. Sec’y of

Veterans Affairs, 517 F.3d 1299, 1307 (Fed. Cir. 2008).

Section 2401(a) provides that “every civil action com-

menced against the United States shall be barred unless

the complaint is filed within six years after the right of

action first accrues.”

A procedural challenge to an agency rulemaking un-

der the APA accrues at the time of final agency action.

Preminger, 517 F.3d at 1307. The promulgation of a

regulation is a final agency action. Id. Although the

issue has not been directly addressed by this court, other

circuits apply a separate standard to accrual for substan-

tive challenges to agency rulemaking. See Wind River

Min. Corp. v. United States, 946 F.2d 710, 714–15 (9th

Cir. 2001); see also Pub. Citizen v. Nuclear Regulatory

Comm'n, 901 F.2d 147, 152 (D.C. Cir. 1990). A substan-

tive challenge alleges that the agency acted in excess of

its constitutional or statutory authority. Wind River Min.

Corp., 946 F.2d at 715. For substantive challenges, the

right of action accrues either when the agency makes its

initial decision or at the time of an adverse application of

the decision against the plaintiff, whichever comes later.

Id. An agency’s denial of a plaintiff’s petition for rule-

making qualifies as an adverse application of the existing

rule against the plaintiff. Nw. Envtl. Advocates v. EPA,

537 F.3d 1006, 1019 (9th Cir. 2008). We see no reason to

depart from this precedent regarding the accrual date for

a substantive challenge.

Here, Mr. Hyatt’s challenge to the PTO’s denial of his

petition for rulemaking is based on three challenges to

MPEP § 1207.04, two of which are time-barred. First,

Mr. Hyatt argues that the PTO promulgated MPEP

§ 1207.04 without providing public notice and an oppor-

tunity to comment. Because this challenge alleges a

procedural irregularity in the PTO’s adoption of the rule,

this right of action accrued at the time the agency made

HYATT v. PATO 13

its initial decision to adopt MPEP § 1207.04. The PTO

added MPEP § 1207.04 to the MPEP in 2005. See MPEP

§ 1207.04 (8th ed. , rev. 3, Aug. 2005). Mr. Hyatt filed his

complaint in 2016. Thus, his notice-and-comment claim

was filed outside of the six-year statute of limitations

period and is time-barred.

Mr. Hyatt argues that, although the PTO added

MPEP § 1207.04 to the MPEP in 2005, the PTO’s subse-

quent amendments to MPEP § 1207.04 in 2014 restarted

the statute of limitations. This court has not addressed

the impact of rule amendments on the statute of limita-

tions for procedural challenges to a rule. Mr. Hyatt urges

the adoption of the D.C. Circuit’s rule that treats an

amendment that “substantively alter[s]” the rule in a way

that “alter[s] the rights and obligations” of regulated

persons as restarting the statute of limitations. Mendoza

v. Perez, 754 F.3d 1002, 1019–20 (D.C. Cir. 2014).

Even under the D.C. Circuit’s rule, however, the stat-

ute of limitations would not be reset by the PTO’s 2014

amendment to § 1207.04 because the amendment did not

substantively alter the rule. In Mendoza, the D.C. Circuit

determined that the Department of Labor substantively

altered the foreign worker visa process by altering sub-

stantive rights (e.g., minimum wage rates for sheep

herders) as well as procedural rules governing the visa

application process. Id. at 1019–20. Here, the PTO added

language to MPEP § 1207.04 providing that a new ground

of rejection raised by the examiner to reopen prosecution

could “include[] both a new ground that would not be

proper in the examiner’s answer as described in MPEP

§ 1207.03, subsection II and a new ground that would be

proper.” Compare MPEP § 1207.04 (8th ed., rev. 9, Aug.

2012), with MPEP § 1207.04 (9th ed., rev. 1, Mar. 2014).

These changes clarified the meaning of a term that al-

ready appeared in the original rule. They did not alter

the procedures by which an examiner reopened prosecu-

tion or alter the substantive rights of the applicant. Thus,

14 HYATT v. PATO

the PTO’s amendments to MPEP § 1207.04 did not restart

the statute of limitations for Mr. Hyatt’s procedural

challenges.

Mr. Hyatt also argues that the PTO’s reconsideration

of the issue of reopening prosecution in 2011 and 2013

restarted the statute of limitations. When “an agency’s

actions show that it has not merely republished an exist-

ing rule . . . , but has reconsidered the rule and decided to

keep it in effect,” the agency’s “renewed adherence” to the

rule is “substantively reviewable” even if a challenge to

the agency’s original adoption of the rule would be time-

barred. See Pub. Citizen, 901 F.2d at 150 (quoting Ass’n

of Am. R.Rs. v. ICC, 846 F.2d 1465, 1473 (D.C. Cir. 1988)).

Here, the PTO’s actions do not show any reconsideration

of the practices codified in MPEP § 1207.04. In 2011, the

PTO declined to alter the level of supervisory approval

necessary for an examiner to reopen prosecution. Rules of

Practice Before the Board of Patent Appeals and Interfer-

ences in Ex Parte Appeals, 76 Fed. Reg. 72,287 (Nov. 22,

2011). In 2013, the PTO adjusted its appeal fee struc-

tures to limit fees when an examiner reopens prosecution

after an appeal brief has been filed. Setting and Adjust-

ing Patent Fees, 78 Fed. Reg. 4,230–31 (Jan. 18, 2013).

While these issues tangentially relate to prosecution

reopening, the PTO’s discussion of them does not suggest

that it reconsidered whether examiners should be able to

reopen prosecution of an application after an applicant

files an appeal brief before the PTAB. Accordingly, the

PTO’s 2011 and 2013 discussions of related issues did not

restart the statute of limitations for Mr. Hyatt’s challeng-

es to MPEP § 1207.04.

Mr. Hyatt’s argument that MPEP § 1207.04 conflicts

with 37 C.F.R. § 41.39 is also time-barred. This challenge

is not “substantive” because an agency can violate its own

regulations while remaining within its statutory and

constitutional authority. Nor is the challenge “procedur-

al” because an argument that two rules substantively

HYATT v. PATO 15

conflict does not challenge how the agency adopted the

rules. Thus, for the purpose of determining when a right

of action accrues under § 2401(a), we view a claim that an

agency’s action conflicts with a preexisting regulation as a

policy-based challenge. Because the right of action for a

policy-based challenge to an agency action accrues at the

same time as the right of action for a procedural chal-

lenge, see Wind River Min. Corp., 946 F.2d at 715, the

latest that this right of action could have accrued was also

2005, outside the six-year statute of limitations period.

Thus, Mr. Hyatt’s claim that MPEP § 1207.04 conflicts

with 37 C.F.R. § 41.39 is also time-barred.

Mr. Hyatt’s argument that MPEP § 1207.04 violates

35 U.S.C. § 6(b)(1), however, is timely. This claim con-

cerns the statutory authority of the PTO to adopt MPEP

§ 1207.04, which makes it a substantive challenge. The

PTO denied Mr. Hyatt’s petition for rulemaking in 2015,

which qualifies as an adverse application of MPEP

§ 1207.04 against him. See Nw. Envtl. Advocates, 537

F.3d at 1019. As a result, his right of action accrued in

2015, well within the limitations period.

D

Because his other claims are time-barred, we only

consider the merits of Mr. Hyatt’s claim that the PTO

unlawfully denied his petition for rulemaking because

MPEP § 1207.04 violates 35 U.S.C. § 6(b)(1). Section

6(b)(1) requires that the PTAB “shall — (1) on written

appeal of an applicant, review adverse decisions of exam-

iners upon applications for patents pursuant to section

134(a).” Under 35 U.S.C. § 134(a), “[a]n applicant for a

patent, any of whose claims has been twice rejected, may

appeal from the decision of the primary examiner to the

Patent Trial and Appeal Board, having once paid the fee

for such appeal.” Mr. Hyatt argues that an examiner’s

ability to reopen prosecution after an appeal brief has

been filed deprives applicants of their right to maintain

16 HYATT v. PATO

an appeal under § 6(b)(1). He contends that the statute’s

use of the term “shall” unambiguously requires the Board

to hear an appeal if an applicant files an appeal brief after

his claims have been twice rejected. He also contends

that the term “appeal” precludes PTO examiners from

unilaterally preventing review of their rejections.

“Statutory interpretation begins with the language of

the statute.” Norfolk Dredging Co. v. United States, 375

F.3d 1106, 1110 (Fed. Cir. 2004). “A court derives the

plain meaning of the statute from its text and structure.”

Id. When the language of the statute is clear and unam-

biguous, the plain meaning of the statute is conclusive

absent special circumstances. Id.

Here, the plain meaning of § 6(b)(1)’s text refutes

Mr. Hyatt’s arguments. Section 6(b) outlines the PTAB’s

duties. The statute’s mandatory language indicates that

the PTAB does not have discretion over whether to review

an examiner’s rejection of an application. But the text

does not require the PTAB to reach the merits of every

appeal that is filed. Section 134(a) explicitly conditions

an applicant’s ability to appeal on the payment of a fee.

Mr. Hyatt does not question the PTO’s authority to im-

pose procedural conditions that must be satisfied prior to

PTAB review, such as time limits and content restrictions

for the filing of an appeal brief. See 37 C.F.R. § 41.37.

Failure to comply with these procedural requirements can

result in dismissal of an appeal even after the applicant

has filed the written notice of appeal contemplated by

§ 6(b)(1). 37 C.F.R. § 41.37(c). Under current examina-

tion rules, an examiner’s decision not to reopen prosecu-

tion is another condition that must be satisfied before an

appeal reaches the Board. These conditions on the PTAB

reaching the merits of an appeal do not conflict with

§ 6(b)(1)’s requirement that the PTAB review rejections.

The inclusion of the term “appeal” in § 6(b)(1) does not

alter this analysis. Mr. Hyatt asserts that “appeal” is a

HYATT v. PATO 17

term of art that connotes an adverse party, here the PTO

examiner, cannot unilaterally prevent review. He cites

Black’s Law Dictionary, which defines “appeal” as “[a]

proceeding undertaken to have a decision reconsidered by

a higher authority; esp., the submission of a lower court’s

or agency’s decision to a higher court for review and

possible reversal.” Black’s Law Dictionary (10th ed.

2014). Even assuming Congress intended to adopt this

definition for § 6(b)(1), it does not support Mr. Hyatt’s

inference. The PTO’s rules allow applicants to seek

review of examiners’ final rejections before a higher

authority, the PTAB. Nothing in this definition of appeal

suggests the PTO cannot impose conditions on the PTAB’s

ability to reach the merits of an appeal or delay the ap-

peal. Allowing examiners to reopen prosecution does not

deprive applicants of their right to appeal final examiner

rejections because reopening prosecution cannot circum-

vent PTAB review. Once the examiner adds a new

ground of rejection, the applicant may immediately ap-

peal it along with the old grounds. MPEP § 1207.04.

Mr. Hyatt expresses concern that examiners could use

repeated prosecution reopenings to prevent the PTAB

from ever reviewing application rejections. But the

prospect that prosecution reopenings after the filing of an

appeal brief might be used abusively cannot override the

plain meaning of § 6(b)(1). Moreover, as Mr. Hyatt

knows, the APA offers a remedy for such situations by

enabling reviewing courts to compel agency actions un-

lawfully withheld or unreasonably delayed without ade-

quate reason or justification. 5 U.S.C. §§ 702, 706(1). Mr.

Hyatt’s prior petition for a writ of mandamus on the basis

of unreasonable delay failed because the PTO had already

recommenced its examination of his applications by the

time the district court reached the case’s merits. Hyatt,

146 F. Supp. 3d at 785–86. There is no evidence in the

record that, in the wake of that decision, PTO examiners

have repeatedly reopened prosecution of Mr. Hyatt’s

18 HYATT v. PATO

applications for the purpose of further delaying PTAB

review.

III

Mr. Hyatt’s petition for rulemaking relied on two

time-barred challenges to MPEP § 1207.04 and an errone-

ous interpretation of § 6(b)(1). The PTO’s denial of this

petition was not arbitrary and capricious. Therefore, we

affirm the district court’s grant of the PTO’s motion for

summary judgment. Because the district court had

jurisdiction over Mr. Hyatt’s claims, however, we reverse

the district court’s dismissal of Mr. Hyatt’s action for lack

of subject matter jurisdiction and remand for the court to

enter judgment in favor of the PTO consistent with this

opinion.

AFFIRMED-IN-PART AND REVERSED-IN-PART

COSTS

No costs.