Frilette v. Kimberlin

508 F.2d 205, 19 Fed. R. Serv. 2d 1108, 184 U.S.P.Q. (BNA) 266, 1974 U.S. App. LEXIS 5619

• Court: Court of Appeals for the Third Circuit
• Decided: December 16, 1974
• Docket: Nos. 73-1622, 73-1635 and 73-1695
• Status: Published

Opinions

OPINION OF THE COURT

WEIS, Circuit Judge.

To “bite the bullet” is an old phrase currently enjoying a revival in popularity. It aptly describes our action in these appeals as/we overrule our prior holding in In re Natta, 388 F.2d 215 (3d Cir. 1968), which erroneously gave a broad interpretation to 35 U.S.C. § 24 (1952)^ It is our conclusion that the statute does not grant broad discovery authorization to the district courts in patent interference cases but limits ancillary jurisdiction to the issuance of subpoenasi as permitted by prior practice.

These two appeals were argued together, and, while the fact situations differ, a common question of law governs the outcome of both cases. The relevant facts will be set out in abbreviated fashion, however, to give some background to the issues involved.

Both cases arise from interference proceedings filed in the Patent Office. This is an administrative process authorized by 35 U.S.C. § 135 (1962) to determine which of two or more applicants is the first inventor and thus entitled to a patent. The applicant first in time is called the senior party, and the other is designated the junior party. After all parties have filed preliminary statements presenting the grounds for their positions, a period of time is set by an examiner for the filing of motions. Thereafter, the Board of Patent Examiners establishes a time schedule designating when the parties must present their trial evidence by means of deposition, affidavit, or stipulation. The junior party is required to produce his evidence first, and the senior party follows.

In the preliminary stages of the Duffy case, the junior party, Barnes, et al., filed a motion ¹ supported by affidavits. The motion was denied by the patent examiner, and in due course the junior party sought relief from the Commissioner of Patents. In the interim, the senior party, Duffy, applied to the district court in New Jersey . . . for subpoenas duces tecum to compel discovery by depositions. After argument, the district court wrote an opinion

1a permitting discovery but limiting it to matters dealing with the veracity of the affidavits attached to the junior party’s motion.

In the Frilette case, the junior party filed a request for discovery with the Patent Office pursuant to its Rule 287(c).² The motion was denied by the Board as being premature since the time for filing documents by the senior party under Rule 287(a) had not yet expired. The junior party then applied to the district court in Delaware, which also denied discovery in an opinion holding that good cause had not been shown, and that the request was premature.³

This anomaly — permitting discovery in the district court while matters are still pending before an administrative agency — exists only in patent interferences. Generally, discovery is not available in administrative procedures. Davis, 1 Administrative Law Treatise § 8.15 at 588 says:

“The APA contains no provision for pre-trial discovery in the administrative process and, of course, the provisions of the Federal Rules of Civil Procedure for discovery do not apply to administrative proceedings. Therefore, in the absence of special statutory provision, and in the absence of special administrative regulation, no procedure for discovery is normally available in a federal administrative proceeding.” [Footnote omitted]

Though there has been much criticism directed toward the absence of these procedures in administrative matters, little has been done to cure it except in the Patent Office. See Davis, supra.

' The parties in these cases assert their right to secure discovery in the district court upon the authority of 35 U.S.C. § 24 which reads:

“The clerk of any United States court for the district wherein testimony is to be taken for use in any contested case in the Patent Office, shall, upon the application of any party thereto, issue a subpoena for any witness residing or being within such district, commanding him to appear and testify before an officer in such district authorized to take depositions and affidavits, at the time and place stated in the subpoena. The provisions of the Federal Rules of Civil Procedure relating to the attend-anee of witnesses and to the production of documents and things shall apply to contested cases in the Patent Office.”

This statutory provision was interpreted by this court in In re Natta, supra, to mean that Congress intended to include not only Fed.R.Civ.P. 45, pertaining to the attendance of witnesses and production of documents, but also the other rules of federal practice relating to discovery. The dissent by Chief Judge Seitz concluded that Congress had meant only to maintain the continuity of authority as granted to the courts under an earlier repealed statute pertaining to subpoenas and had not intended to incorporate the broad provisions relating to discovery generally. Essentially, the dissent reasoned that the courts were only to issue and enforce subpoenas in connection with the preparation of evidence for submission to the Board of Patent Interferences — the practice which had previously prevailed.

Prior to Natta, pretrial discovery, as such, was unknown in cases before the Board of Patent Interferences. The earlier cases of Gladrow v. Weisz, 354 F.2d 464 (5th Cir. 1965);⁴ Natta v. Zletz, 379 F.2d 615 (7th Cir. 1967),⁵ and Korman v. Shull, 184 F.Supp. 928 (W.D.Mich.1960),⁶ all involved instances where testimony was being prepared and subpoenas either had or could have been issued to compel production of documents. None of those cases actually involved pretrial discovery as that term is understood in the usual civil litigation.

The impact of the Natta decision was substantial. While the holding there, as in the earlier cases, applied to a situation where testimony was in progress, the dictum in that opinion was so broad that Applications were soon made and granted where pretrial discovery was sought.⁷ Because of the unique procedural posture of these cases, almost every order granting or denying discovery, no matter how routine in nature, became appeala-ble.⁸ ? The appellate bench thus was called upon to review, in this isolated field, discovery matters which would have been interlocutory in other fields of litigation] where they would probably never receive attention in an appellate brief.

In addition to this substantial burden which was placed upon the traditional process of judicial administration, the liberalization of discovery engendered an interference all its own — one between the procedures in the Patent Office and those in the courts. The traditional timetable for submitting a case in the Patent Office and its concern for limiting the scope to relevant evidence were effectively neutralized if either party resorted to the federal courts for discovery in any or all stages in the interference proceedings. Instead of a role of “co-operatively complementing”⁹ the Patent Office, the courts became the means through which the parties ranged far and wide, geographically as well as in terms of relevance, in search of evidence which, although not germane to issues in the Patent Office, might lead to other admissible evidence.¹⁰ This, of course, all took time and disrupted the schedules of the Patent Office with stays of proceedings in that agency while discovery proceeded in the courts.

Over the years the Patent Office has developed a procedure for handling these cases which required the junior party to present its evidence first. ^Discovery by the junior party in the district court pri- or to or while it presents its own case, /however^* frustrates the order of precedence which the Patent Office desires to utilize.¹¹ Whether that scheduling and priority are desirable is really not relevant, because they represent a choice by the agency responsible for processing these matters. The wisdom of the procedure is not entrusted to the courisi Additional areas of conflict arose when the Patent Office ruled that certain discovery evidence which was secured in the courts would not be received in the Patent Office proceeding.¹² These conflicts between the Board of Patent Interferences and the court system would be serious enough if only one court were involved, but when several district courts and courts of appeals are concerned with different phases of the same litigation, the aggravations and delays become compounded.

Within the court system itself, the usual rules of confining control of the litigation to the principal forum become obscured and unworkable. Each district court has only the same interest in the outcome of the case as another. None has the decisional power in the final analysis; no one can guide and direct the parties toward some definitive goal. Although the matter ultimately will be submitted to the Patent Office, that agency cannot limit the activities or scope of discovery in the courts until that process has run its course. Interference proceedings thus lose the rudder that the court or agency which should have control over the case can provide.

^Even if no discovery at all is permitted in the Patent Office, the parties are not without a remedy. They still have a right of appeal to a district court under 35 U.S.C. § 14^(1952).¹³ Such an appeal is de novo, and the full scope of discovery is permitted since the case then comes within the jurisdiction of the district court and the usual rules of procedure apply?) But in such a situation the forum district does control the case, and orders on discovery are not appealable as of right but rather are interlocutory. Since the district court is familiar with the case, it is in a position to rule intelligently and promptly on the necessity of limitation or expansion of the scope of discovery in a particular case. There is an obvious improvement in judicial efficiency by having one court control the litigation.

Thus, the broad interpretation of Section 24 adopted by this court in 1968 established a procedural system which violated such tenets of good judicial administration as centralization of the litigation, disallowance of appeals on interlocutory and collateral matters, and primary jurisdiction. All repercussions were not negative, however. Spurred, no doubt, by the effects of the Natta decision, the Patent Office in 1971 chose to exercise the power to promulgate its own rules of discovery under the authority granted by Congress in 35 U.S.C. § 23 (1952). The Patent Office discovery rules, being limited in time and scope, are not as liberal as the Federal Rules of Civil Procedure but do represent an improvement over prior administrative practice.

The obvious disadvantages of the Nat-ta discovery doctrine and the advent of the Patent Office discovery rules have prompted us to reconsider our holding in that case, rather than simply to accept it as binding precedent. Despite its drawbacks, we would be bound by that rule had Congress in fact conferred such jurisdiction upon the courts, because we must recognize such jurisdiction as is granted by the legislative branch. The question is, did Congress in fact grant the jurisdiction which Natta thought to exist or did that conclusion come about only by erroneous construction and interpretation. We conclude that the latter is true. __

In considering the words of fehe statute itself,/two points are readily apparent. It) does not use the word “discovery,” nor is there any effort made to incorporate all of the federal rules of procedure? /As Chief Judge Seitz pointed out in his Nat-ta dissent?' if Congress had meant to include discovery in its broad sense, such a substantial change in previous practice would naturally have been expected to be reflected in specific congressional recognition.¹⁴ Not even the most enthusiastic advocates of the broad discovery made possible by Natta assert that all of the Federal Rules of Civil Procedure are included by transfer under Section 24.

Little would be served by repeating the excellent historical analysis of Section 24 set out in the Natta dissent. We simply adopt it at this time as the correct interpretation of the statute noting that, as is not unknown in judicial history, the opinion which was a dissent when rendered now becomes the law.¹⁵

We do not lightly overturn precedent, and stare decisis must be treated with respect. But when on deep and mature reconsideration it becomes apparent that an error has been made by the court, the proper step is correction. This is particularly so in a matter of procedure where no substantive rights are vested as a result of the earlier decision.

We do not believe it is necessary to wait for Congress to take the corrective action because the error was judge-made and the correction should be made in the same fashion. We cannot escape the fact that what has been done is in the nature of what, in the words of Chief Justice Hughes, might be called a “self-inflicted wound.” We did not wait for congressional action to correct our mistake on “manufactured diversity” but took that step ourselves in McSparran v. Weist, 402 F.2d 867 (3d Cir. 1968), cert. denied sub nom., 395 U.S. 903, 89 S.Ct. 1739, 23 L.Ed.2d 217 (1969). The fact that Congress has under consideration several proposals to amend the patent statutes,¹⁶ including provisions relating to discovery, similarly should not cause us to delay setting our own house in order.

ÍWe hold that 35 U.S.C. § 24 in referring to “provisions of the Federal Rules of Civil Procedure relating to the attend-' anee of witnesses and to the production of documents” refers to the matters encompassed by Fed.R.Civ.P. 45(a), (b), (c), (d)(2), (e) and (fp

The order of the district court in Fri-lette v. Kimberlin will be affirmed.

The motions for attorneys’ fees and for dismissal of the appeals by the senior party, Duffy, will be denied.

The request by the junior party, Barnes, to impound or enjoin the use of the evidence obtained by discovery will be denied. At this stage, it is not practicable to attempt to unscramble the eggs. The question of whether the evidence is admissible in proceedings in the Patent Office or other forums is a matter for decision by the body which might be asked to consider the material. We express no views on admissibility.

In Duffy v. Barnes, the orders of the district court of July 24, 1973 at No. 73 — 1635 and of August 6, 1973 at No. 73 — 1695 will be reversed, each party to bear his own costs.

1 . The motion sought to amend the original application for the patent, which had listed Barnes and Preziosi as co-inventors, by deleting the name of Barnes. The purpose of the motion was to make the application for the patent consistent with the preliminary statement of the junior party which had shown Preziosi as the sole inventor,

. The court’s order was handed down on July 24, 1973, and an appeal was promptly filed in this court at No. 73 1635. A request for stay was filed on July 25, 1973 and denied on July 30, 1973. A second appeal was filed from the district court’s order of August 6, 1973 at No. 73-1695 together with a motion for stay and for clarification which was denied on August 22, 1973. Yet a third motion was filed in this court on October 12, 1973, seeking impoundment of or prohibition against the use of evidence obtained by discovery. After argument, the motion was denied. Cross motions by Duffy for attorneys’ fees and dismissal of the appeals were referred to the panel to which the appeals were to be assigned.

2 . Pursuant to the authority granted by 35 U.S.C. § 23, Patent Office Rule 287, 37 C.F.R. § 1.287 was enacted effective June 11, 1971. It provides as follows:

“287. Discovery.

“(a)(1) Each party who expects to take testimony must serve on each opposing party who requests service the following:

“(i) A copy of each document in his possession, custody, or control and upon which he intends to rely,

“(ii) A list of and a proffer of reasonable access to things in his possession, custody, or control and upon which he intends to rely, and

“(iii) A list giving the names and addresses of all persons whom he intends to call as witnesses and indicating the .relationships of each person to the invention in issue.

“(2) Dates for compliance with subpara-graph (1) of this paragraph will be set in accordance with the following:

“(i) The date by which all parties may request service shall be not less than 10 days from the date of the order setting testimony times;

“(ii) The date for service by all junior parties shall be not less than 30 days from the date of the order setting such times;

“(iii) The date for service by the senior party shall be not less than 10 days from the date set for the close of testimony in chief of all junior parties.

“(3) Where more than two parties are involved and one of the junior parties is not entitled to take testimony as to a more senior party, the requirements of subparagraphs (1) and (2) of this paragraph shall not be applicable as between such parties.

“(b) The provisions of paragraph (a) of this rule are without prejudice to the right of a party, where appropriate, to obtain production of documents or things during cross-examination of an opponent’s witness or during his own period for rebuttal testimony.

“(c) Upon motion (rule 243) brought by a party during the period for preparation for testimony, or thereafter as authorized under rule 245, and upon a showing that the interest of justice so requires, the Board of Patent Interferences may order additional discovery as to matters under the control of a party within the scope of the discovery rules of the Federal Rules of Civil Procedure, specifying the terms and conditions of such additional discovery. An order by the Board granting or denying a motion under this paragraph shall not be subject to review prior to a decision awarding priority.

“(d)(1) A party will not be permitted' to rely on any document or thing in his possession, custody, or control, or on any witness, not listed and served by that party as required by paragraph (a) of this rule, except upon a promptly filed motion accompanied by the proposed additional documents or lists together with a showing of sufficient cause as to why they were not served by the date set pursuant to paragraph (a) of this rule.

“(2) Any failure to comply with an order under the provisions of paragraph (c) of this rule may be considered by the Board of Patent Interferences as basis for applying appropriate restrictions against the party failing to comply, for holding certain facts to have been established, and in an appropriate case for awarding priority against him, or for taking such other action as may be deemed appropriate.

“(e) The parties may by agreement among themselves modify any of the foregoing requirements consistent with the schedule of times for taking testimony and filing the record. In the absence of such agreement, discovery will not be permitted prior to the period set for the preparation' for testimony. (Added June 11, 1971).”

3 . Frilette v. Kimberlin, 358 F.Supp. 493 (D.C. Del. 1973).

4 . The court held that a motion under Fed.R. Civ.P. 34 to produce documents by a party under cross examination would be allowed since the same result could be obtained by a subpoena duces tecum. The opinion did not purport to include all discovery rules.

5 . A motion had been made by a senior party under Rule 34 for documents to use in connection with a cross examination of junior party employees on rebuttal testimony. Presentation of testimony was in process though the witness was not yet on the stand. Relying on Gladrow v. Weisz, supra, the court ordered production under Rule 34. Again, it seems that the material could have been secured by a subpoena duces tecum.

6 . In this case a subpoena had been issued. By way of dictum and without any review of the history of 35 U.S.C. § 24, the district court held that Fed.R.Civ.P. 26, 30, 34, and 45 were applicable. Subpoenas were ordered quashed because good cause had not been shown. Apparently, the subpoenas were issued in connection with presentation of testimony. However, in the later case of Korman v. Nobile, 133 U.S.P.Q. 178 (W.D.Mich.1962), the same judge in passing upon another motion in the same interference proceeding said that the broad provision of the rules relating generally to discovery did not apply.

7 . The opinion contained the statement that “This statute manifests a clear congressional intent to make available to parties to patent interferences the broad discovery provisions of the Federal Rules of Civil Procedure.” 388 F.2d at 217.

In Sears, Discovery in Interferences, 53 Journal of the Patent Office Society 693 (1971), the author, one of the counsel appearing in the Natta cases, stated that “discovery” in proceedings before the adoption of the Federal Rules of Civil Procedure in 1937 was secured in connection with testimony to be presented as evidence at the trial. Since this evidence was in deposition form following the old equity practice, extremely wide latitude was extended to the concept of relevancy and materiality because the parties would not know in advance what rulings would be made at trial. This was a practical approach designed to avoid a remand for the taking of further testimony made necessary by unanticipated rulings at trial or on appeal and, of course,, allowed “discovery” of information arguably irrelevant and immaterial which led to other evidence of more value.

As the author states candidly, “Perhaps unfortunately, some practitioners were motivated to go much further than the Natta cases did, or were ever intended to go, and to seek so-called ‘pretrial discovery’ during the interference motion period regardless of their ultimate entitlement to present evidence in the interference.”

In both cases at bar, discovery was sought in advance of the time set either for testimony or discovery as permitted by the new Patent Office rules. In Duffy, application was not made to the Patent Office, and in Frilette, application had been made and refused as premature.

8 . The Natta case discussed here was but one of many growing out of discovery in Patent Interference 89,634. Not only was this circuit involved, but trial and appellate courts in other parts of the country were struggling with various aspects of discovery in that same interference proceeding, often at the same time. The following is a list, not warranted to be complete, of published opinions on various rulings: Montecatini Edison ..2d 633 (7th Cir. 1969); In re Natta, 410 F.2d 187 (3d Cir. 1969), cert. denied, 396 U.S. 836, 90 S.Ct. 95, 24 L.Ed.2d 87; Natta v. Zletz, 405 F.2d 99 (7th Cir. 1968), cert. denied, 395 U.S. 909, 89 S.Ct. 1753, 23 L.Ed.2d 223; Natta v. Hogan, 392 F.2d 686 (10th Cir. 1968); In re Natta, 388 F.2d 215 (3d Cir. 1968); Natta v. Zletz, 379 F.2d 615 (7th Cir. 1967); In re Hogan, 309 F.Supp. 945 (D.C.Del.1970); In re Natta, 48 F.R.D. 319 (D.C.Del.1969); Hogan v. Zletz, 43 F.R.D. 308 (N.D.Okla.1967), modifying Natta v. Hogan, 392 F.2d 686 (10th Cir. 1968); In re Natta, 264 F.Supp. 734 (D.C.Del.1967), aff’d 388 F.2d 215 (3d Cir. 1968); and In re Natta, 259 F.Supp. 922 (D.C.Del.1966), aff’d 388 F.2d 215 (3d Cir. 1968).

9 . Natta v. Zletz, 379 F.2d 615, 618 (7th Cir. 1967).

10 . Even in the most complex antitrust litigation filed in the district court, the overwhelming majority of the matters similar to those appealed in the various patent interference cases would have been considered interlocutory and would have been concluded by the trial judge. Judge Coolahan commented on another unsatisfactory aspect in Babcock and Wilcox Co. v. Foster Wheeler Corp., 173 U.S. P.Q. 480, 481 (D.C.N.J.1972), “A more undesirable plan for litigation could hardly be imagined, than that by which counsel must commute, often frantically and behind schedule, between the Patent Office and the federal district court in a time-consuming effort to exhaust discovery rights at the same time the interference trial has begun. When the district court decision is appealed, as it inevitably is, more delay occurs.

“The halving of legal decision-making between the Patent Office and the district courts has created friction between them.”

11 . Cf. Dunner, Gambrell, and Kayton, 3 Patent Law Perspectives, 1970 Developments § C.4.

12 . See Sears, Discovery in Interferences, supra at 701.

13 . The authors of Patent Law Perspectives argue that it might be better to transfer all the interference cases to the courts without going through proceedings in the Patent Office, unless adequate discovery means in district courts are made available. See 3 Patent Law Perspectives, 1973 Developments § C.4. Discovery in the Patent Office itself, however, seems to offer a more acceptable solution to the problem.

14 . 35 U.S.C. § 23 was passed by Congress on the same day as Section 24 and is part of the same statutory package. It defies reasonable principles of statutory construction to hold that Congress specifically granted the Patent Office authority to enact rules of discovery under Section 23, while at the same time only inferentially extending the broad gambit of the Federal Rules of Civil Procedure on discovery to the courts in interference cases under Section 24.

15 . Judge Seitz’s opinion in Natta reviews in detail the history of Section 24 and comes to a different conclusion than Judge Van Du-sen’s dissent in this case. It is because the majority believes that Judge Seitz correctly analyzed the statute that we now overrule Natta. The undesirable results of the Natta doctrine supply a background for reconsideration, not the reason for rejection of that case. If Natta had correctly interpreted § 24, the side effects would be worthy of note, but not grounds for disavowal of jurisdiction.

16 . 1321 and S. 2504 would give authority to the Patent Office to issue subpoenas and require the Commissioner of Patents to establish rules for discovery similar to those of the Federal Rules of Civil Procedure, S. 2930 requires issuances of subpoenas by the clerk of the District Court and provides that the Federal Rules of Civil Procedure as applicable to discovery shall applyTS