Patent Baristas

In Corliss O. Burandt v. Jon W. Dudas, Director, United States Patent and Trademark Office (07-1504), the U.S. Court of Appeals for the Federal Circuit showed no mercy for a patentee that tried to reinstate his patent for failure to pay the maintenance fee a decade later.

Burandt designed internal combustion engines for Investment Rarities, Inc., and entered into an assignment agreement with IRI providing that IRI would fund Burandt’s research and get rights to any patent application or patent resulting from that research.  Burandt was entitled to receive a percentage of the profits derived from the patents and to repurchase the patents from IRI in the event IRI ceased funding Burandt’s research.

Burandt filed a patent application that issued as U.S. Patent 4,961,406 with IRI as the assignee.  Burandt tried to exercise his repurchase rights before the patent issued and claims that he gained equitable title to the patent.   IRI, as the legal title holder, was required to pay maintenance fees.

As you could guess, IRI failed to pay the first maintenance fee by the end of the six-month grace period, and the patent expired on October 9, 1994.  Then, according to Burandt, he became mentally disabled at some point before 1992.  Burandt submitted a declaration from his psychiatrist stating that Burandt had been suffering from an anxiety disorder.

Burandt learned of the expiration of the ’406 patent seven years after the patent had expired, when he contacted the PTO about his patent after reading an article about Honda’s introduction of a variable valve engine.  Burandt admits that he did not inquire about the ’406 patent at any point before then – over a decade of time.

Burandt filed a petition in the PTO under 37 C.F.R. § 1.378(b) for acceptance of a delayed maintenance fee payment, asserting that the failure to pay the maintenance fee was unavoidable arguing that he should not be bound by IRI’s actions because he held equitable title in the patent and he was excusably unable to pay the fee.  Burandt urged the PTO to consider the reasons for his inaction in deciding whether the delay in the payment of the maintenance fee was unavoidable.  The PTO said no.

Burandt brought an action against the Director under the Administrative Procedure Act and the district court granted summary judgment in favor of the Director.  The court determined that IRI was the party responsible for making payment here and that Burandt failed to proffer any evidence showing that IRI exercised due care in paying the maintenance fee.

On appeal, Burandt raises four primary arguments.  First, Burandt argues that the district court erred by giving deferential review to the PTO’s determination regarding unavoidable delay.  Second, Burandt asserts that the court erred by focusing on the actions of IRI as the legal title holder in determining whether there was unavoidable delay rather than focusing on the actions of Burandt as the equitable owner.  Third, Burandt contends that the court erred by failing to find that Burandt’s delay in paying the maintenance fee was literally unavoidable.  Lastly, Burandt argues that the court erred in sustaining the denial of the Rule 183 Petition.

The CAFC sided with the PTO:

We agree with the Director.  The Patent Act governs whether a patent that has expired due to nonpayment of maintenance fees can be reinstated.  Pursuant to 35 U.S.C. § 41(b), maintenance fees are to be paid at three different intervals during the life of a patent.  35 U.S.C. § 41(b).  In the event payment of a maintenance fee is not received in the PTO by the due date or within a six-month grace period, “the patent will expire as of the end of such grace period.”  Id.  The statute further provides that:

(c)(1) The Director may accept the payment of any maintenance fee required by subsection (b) of this section which is made within twenty-four months after the six-month grace period if the delay is shown to the satisfaction of the Director to have been unintentional, or at any time after the six-month grace period if the delay is shown to the satisfaction of the Director to have been unavoidable.

35 U.S.C. § 41(c)(1) (emphases added).  Thus, the statute provides the Director with the discretion to accept a late maintenance fee any time after the close of the grace period if the delay is shown to the satisfaction of the Director to have been unavoidable.

Here, IRI, as the legal title holder of the patent, was the party responsible for paying the maintenance fee and IRI allowed the ’406 patent to expire, as it had deliberately allowed three others of Burandt’s patents to expire.  See Ray, 55 F.3d at 609.

Burandt also cited Futures Technology, Ltd. v. Quigg, 684 F. Supp. 430, 431 (E.D. Va. 1988) that the relevant inquiry should have been whether Burandt, as the equitable owner, intentionally abandoned the patent but that also fell on unsympathetic ears

Here, unlike the plaintiff in Futures, the record shows that Burandt did not make repeated inquiries about the status of his patent.  Burandt conceded that he did not inquire about the ’406 patent at any point during the time period between when the patent issued in 1990 and when he read the Honda article in 2001—over a decade later.  Moreover, there is no evidence in the record that IRI made misrepresentations to Burandt about the status of the ’406 patent as the company had done in Futures.  Significantly, Burandt conceded that he was aware that IRI had previously allowed three of his other patents to expire; yet he continued to rely on IRI to make the maintenance fee payments.  Burandt’s reliance on Futures is therefore misplaced.

The lesson here is that if you have an interest in keeping a patent alive, don’t wait a decade to check on how things are going.  Unless you can get Congressional relief.  But, if it cost the Medicines Company $65,000,000 for just one day, imagine what it would cost for a decade.