Court Opinion: 10th Circuit Court of Appeals Opinion for July 10

The 10th Circuit Court of Appeals

Editor’s Note: Law Week Colorado edits court opinion summaries for style and, when necessary, length.

Hansen v. United States

Larry Hansen sued the U.S. under the Federal Tort Claims Act, seeking damages for delays during the processing of his patent application. The district court dismissed his claim and the 10th Circuit Court of Appeals affirmed. In reviewing the district court’s dismissal, the 10th Circuit accepted Hansen’s allegations as true. 

Hansen applied for a patent. The United States Patent and Trademark Office claimed to have sent him notice that his application lacked the required information and gave him two months to provide the missing information. According to the opinion, Hansen didn’t receive the notice so he didn’t respond to it. With no response from Hansen, the office sent him notice it had deemed his application abandoned. The opinion noted Hansen did receive this notice. Hansen filed several unsuccessful petitions to revive his application before the office eventually revived it about three years after deeming it abandoned. He received a patent.

Hansen sued the U.S. under the FTCA. He claimed the patent office wrongfully labeled his application incomplete, deemed it abandoned and dismissed his initial petitions to revive it. He sought more than $3 billion to compensate for “the lost portion of the patent term” starting when the office labeled his application incomplete and ending when it revived the application.

According to the opinion, Congress has created a different process to compensate applicants for delays occurring while the patent office processes applications. A patent term will usually end 20 years after the filing of the application, according to 35 U.S. Code § 154. That term will be extended, however, “if the issue of an original patent is delayed due to the failure of” the office to take certain actions within certain time frames. The term will also be extended, with some exceptions, if the office takes longer than three years after filing to issue a patent. An extension will in turn be reduced to account for any “period of time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application.” 

The patent office must determine “the period of any patent term adjustment” and “provide the applicant one opportunity to request reconsideration of any patent term adjustment determination.” The opinion noted the code said “an applicant dissatisfied with the” reconsideration decision “shall have exclusive remedy by a civil action . . . filed in the United States District Court for the Eastern District of Virginia.”

In district court, the government moved to dismiss Hansen’s operative complaint, arguing, among other things, 154 preempted his FTCA claim. The district court granted the motion. It concluded 154’s remedial scheme “has preempted the more general remedies available under the FTCA with respect to the relief” Hansen sought. He appealed.

“In a variety of contexts,” the Supreme Court “has held that a precisely drawn, detailed statute pre-empts more general remedies,” according to the decision Brown v. Gen. Servs. Admin. According to the 10th Circuit, the text of 154 makes clear that Congress intended to create a process to compensate applicants for delays in the processing of patent applications. The process starts with the patent office’s patent-term-adjustment determination. The applicant may then ask the patent office to reconsider its determination. 

If not unsatisfied, the applicant’s “exclusive remedy” is through a civil action in the U.S. District Court for the Eastern District of Virginia. If the applicant succeeds in that action, the patent office must “alter the term of the patent” according to the court’s judgment. This process prevents Hansen from seeking damages under the FTCA to compensate for a delay in the processing of his patent application. 

According to the 10th Circuit, the clear import of the statute is if the delay is not of the type that justifies a patent-term adjustment, then it is unworthy of compensation, whether it be a term adjustment, monetary damages or whatever; and if the delay does justify an adjustment, that adjustment should be awarded and any other compensation would be both unnecessary and duplicative.

Hansen argued his claim fell outside of the remedial scheme in 154. That is so, he said, because the patent office correctly determined his term adjustment, leaving him nothing to gain by challenging the determination. For purposes of whether the Patent Act prevented Hansen’s claim, the opinion noted it doesn’t matter whether the term-adjustment determination was right or wrong. What matters, the opinion noted, is Hansen sought compensation for the delay in the office’s processing of his application. 

According to the 10th Circuit, if he was to recover any compensation for that delay, it must have taken the form of a patent-term adjustment and it must have come through the process Congress prescribed in 154. He can’t seek damages under the FTCA for “the lost portion of the patent term.”

A 10th Circuit panel out of Salt Lake City, Utah, affirmed the district court’s judgment.

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