The Defense of Patent Invalidity In Tarrif Commission Patent Actions1973 – Journal of the Patent Office Society, Volume 55, No. 12, 1973, pages 791 794
by Charles L. Gholz
Messrs. Kaye and Plaia, the authors of the recent article entitled The Tariff Commission and Patents: Anatomy of a 337 Action, 55 JPOS 346, 412 (1973), indicated that the invalidity of the patent asserted in a 337 action has consistently been held not to be available as a defense before the Commission unless the patent has been so held by a court of competent jurisdiction. See particularly 55 JPOS at 416-21. While I do not question that that has been so, I question whether that should continue to be so for a reason other than those developed by Messrs. Kaye and Plaia.
The rule that the validity of a patent asserted in a 337 action can not be questioned before the Commission stems from the CCPA's opinion in Frischer & Co. v. Bakelite Corp., 17 CCPA 494, 39 F. 2d 247 (1930), cert. denied, 282 U.S. 852.1 The portion of that opinion which deals with this question is as follows:2
The United States Tariff Commission is, as we have noted, merely an administrative, fact-finding, body. It has no judicial powers. The right to pass upon the validity of a patent which had been issued by the Patent Office is a right possessed only by the courts of the United States given jurisdiction thereof by law. This original jurisdiction, formerly exercised by the Circuit Courts of the United States, is now enjoyed by the District Courts of the United States and the Supreme Court of the District of Columbia. * * * Even where jurisdiction is vested in the Court of Appeals of the District of Columbia, and now in this court, to review the proceedings of the Patent Office in the issuance of patents, it was and is expressly provided by law: "But no opinion or decision of the court in any such case shall preclude any person interested from the right to contest the validity of such patent in any court wherein the same may be called in question." Section 4914, Rev. St. (35 U.S.C.A. §62).
Nowhere in the act creating the United States Tariff Commission is there the slightest intimation that it was the purpose to confer jurisdiction upon it to pass upon the validity of patents, matters which are well understood to be cases and controversies within the meaning of section 2 of article 3 of the Constitution. The statute provides, section 316 (c), Tariff Act of 1992 (19 USCA §176), that the findings of the Commission, "if supported by evidence, shall be conclusive". It would hardly be contended that a finding by the Commission that a certain patent was or was not valid would be considered as res adjudicata. It may well be doubted whether the Congress could confer any such jurisdiction upon this administrative Commission -- certainly, it has not done so. The statement of Mr. Justice Curtis in Murray's Lessee v. Hoboken, etc., 18 How. 272, 284, 15 L. Ed. 372, is pertinent: "To avoid misconstruction upon so grave a subject, we think it proper to state that we do not consider Congress can either withdraw from judicial cognizance any matter which, from its nature is the subject of a suit at the common law, or in equity, or admiralty; nor, on the other hand, can it bring under the judicial power a matter which, from its nature, is not a subject for judicial determination."
In evaluating the strength of the above rationale today, at least three factors must be considered. In ascending order of importance, these factors are: (1) the patent laws no longer contain a provision similar to the portion of §4914 of the Revised Statutes quoted in the Frischer opinion, (2) the courts are now giving collateral estoppel effect at least to the decisions of the CCPA in inter partes cases,3 and it seems but a small and logical step to their giving collateral estoppel effect to the decisions of the Patent Office in inter partes cases and of the Tariff Commission in 337 actions,4 and (3) the CCPA itself has rejected the position it espoused in the Frischer case in a recent opinion involving a very similar issue in another contest.5 Since the latter is clearly the most important factor, I will state my basis for this assertion at some length.
In Knickerbocker Toy Co. v. Faultless Starch Co., 59 CCPA _____, 467 F.2d 501, 175 USPQ 417 (1972), the owner of a copyright on a doll had opposed registration of a trademark alleged to consist of a picture of the copyrighted doll on the ground that the use of the trademark was likely to cause confusion, etc., within the meaning of the trademark statute. The would-be registrant moved to strike virtually the entirety of the copyright owner's pleadings on the ground that the Trademark Trial and Appeal Board had no jurisdiction over their subject matter, and the Board granted the motion. According to the Court, it did so "apparently in considerable part" because it feared that to deny the motion would have gotten it involved in determining the validity of the copyright, the would-be registrant having indicated that, if its motion to strike were denied, it would seek to place the validity of the copyright in issue.
The Board's opinion stated from what it termed the "well settled" proposition that it "has no jurisdiction to determine the validity of or infringement of a copyright. That authority rests with the Federal courts." 59 CCPA at _____, 467 F.2d at 505, 175 USPQ at 420. However, the Court reversed, insofar as is relevant here, holding that the Board does have jurisdiction to pass on the validity of the copyright "if it is necessary to do so in the course of the exercise of its statutory jurisdiction. . . ." 59 CCPA at_____, 467 F.2d at 509, 175 USPQ at 423. In support of this position, the court cited two treatises dealing with the authority of the state courts to pass on the validity of copyrights when the issue is raised in the course of litigation over which those courts do have jurisdiction. However, the point made in those treatises, that the Federal district courts have exclusive original jurisdiction over actions "arising under" the copyright laws, but not of all actions "involving" the copyright laws, seems clearly equally applicable both to Federal administrative tribunals, as held in Knickerbocker, and to the patent laws.6f If so, it should follow that the assume-the-patent-valid rule of Frischer would no longer be followed by the CCPA in a 337 action.
In judging the continued strength of that rule from Frischer, it is also very interesting to note that the Frischer case itself is cited in the Knickerbocker opinion, 59 CCPA at ______, 467 F.2d at 505 n. 8, 175 USPQ at 420 n. 8, though for a different point. It would therefore appear that the court was not ignorant of its previous holding, but just chose not to follow it.
First published in the Journal of the Patent Office Society, Volume 55, No. 12, 1973, pages 791 794.
.The basic rule enumerated in the Frischer case was subsequently extended twice. In In re Northern Pigment Co., 22 CCPA 167, 71 F.2d 447, 21 USPQ 573 (1934), the court held that the validity of the patent couldn't be challenged on appeal to the CCPA either, and in In re Orion Co., 22 CCPA 149, 71 F.2d 458, 21 USPQ 563 (1934), the court held that a claim in one of the patents involved had to be assumed valid even though, subsequent to the issuance of a temporary exclusionary order, the Second Circuit had held it invalid. This was so, the court said, because a district court in the third circuit had earlier held the same claim to be valid and an appeal was then pending from the earlier decision to the third Circuit, so "[t]he legal status of that claim ... [could not] be said to be established." 22 CCPA at 165, 71 F.2d at 468, 21 USPQ at 572. While the latter point seems questionable, see Smith, The Collateral Estoppel Effect of a Prior Judgment of Patent Invalidity, Section VIII. B, "Appealed or Appealable Judgment of Prior Court," 55 JPOS 363, 391-97 (1973), neither opinion is germane here because neither opinion supplements the rationale of the Frischer case in support of the basic rule.
.17 CCPA at _____, 39 F.2d at 258.
.See, e.g., Flavor Corp. v. Kemin Industries, Inc., 358 F. Supp. 1114, 1117-19, 177 USPQ 658, 659-61 (S.D. Iowa 1973), which reviews the authorities and so holds.
.See generally Davis, Administrative Law Treatise (1958), Chapt. 18 "Res Judicata." The major impediments to a holding giving collateral estoppel effect to a decision of the Tariff Commission in a 337 action would seem to be the informality of the Tariff Commission proceedings and the lack of discovery procedures.
.Of course, the fact that the CCPA will presumably no longer take appeals in 337 actions in light of Glidden Co. V. Zdanok, 370 U.S. 530 (1962), reduces the relevancy of this factor. However, (1) the Tariff Commission does still look to the old CCPA opinions for guidance, so it might find more recent CCPA opinions to be persuasive as well, and (2) the administration-backed proposed amendments to section 337 summarized in Messrs. Kaye and Plaia's article at 55 JPOS 435 would give the CCPA normal, Article III jurisdiction over appeals from the Tariff Commission in 337 actions, so passage thereof would mean that the CCPA might well get a second crack at this question,
.See, e.g., Pratt v. Paris Gas Light & Coke Co., 168 U.S. 255 (1897).