Valspar Sourcing, Inc. v. Ppg Industries, Inc.

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
VALSPAR SOURCING, INC.,
Appellant
v.
PPG INDUSTRIES, INC.,
Appellee
______________________
2018-1462, 2018-1463, 2018-2164, 2018-2165
______________________
Appeals from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in Nos. 95/001,950,
95/001,951.
______________________
Decided: September 9, 2019
______________________
ANDREW BALUCH, Smith Baluch LLP, Washington, DC,
argued for appellant. Also represented by MATTHEW A.
SMITH, Menlo Park, CA.
EDWARD ANTHONY FIGG, Rothwell, Figg, Ernst &
Manbeck, PC, Washington, DC, argued for appellee. Also
represented by BRETT ALAN POSTAL.
______________________
2 VALSPAR SOURCING, INC. v. PPG INDUS., INC.
Before PROST, Chief Judge, NEWMAN and STOLL, Circuit
Judges.
Opinion for the court filed by Circuit Judge STOLL, in
which Circuit Judge NEWMAN joins, and in which Chief
Judge PROST joins except as to part I of the Discussion
section.
STOLL, Circuit Judge.
Valspar Sourcing, Inc. appeals the Patent Trial and
Appeal Board’s application of our mandate from a prior ap-
peal, PPG Industries, Inc. v. Valspar Sourcing, Inc.,
679 F. App’x 1002 (Fed. Cir. 2017) (“Valspar I”). Because
the Board misinterpreted our mandate, we vacate the
Board’s decisions and remand for the Director of the Patent
Office and the Board to properly implement our mandate.
BACKGROUND
I
In March 2012, PPG Industries, Inc. requested inter
partes reexamination of two patents owned by Valspar,
U.S. Patent Nos. 7,592,047 and 8,092,876. In both the
reexaminations, the examiner rejected all the original,
amended, and new claims. Valspar appealed to the Board,
which reversed all the examiner’s rejections. PPG then ap-
pealed the Board’s reversals to this court, and the parties
briefed the merits.
During briefing in the original appeal, but before oral
argument, Valspar separately sued PPG in the District of
Minnesota for infringement of related patents. 1
1 Valspar originally filed in the District of Minnesota
as Case No. 0:16-cv-01429-SRN-SER, but the case was
later transferred to the Western District of Pennsylvania.
After filing suit, Valspar was acquired by The Sherwin-Wil-
liams Company. The case continued as Sherwin-Williams
VALSPAR SOURCING, INC. v. PPG INDUS., INC. 3
During oral argument in the original appeal, the panel
raised the issue of standing. The panel specifically ques-
tioned whether PPG had standing when it initiated the ap-
peal because PPG had not been sued by Valspar at that
time. This court ordered the parties to submit supple-
mental briefing on the standing issue.
Valspar included with its opening letter brief a unilat-
eral covenant not to sue PPG on the two challenged pa-
tents. Valspar explained that it had decided not to include
the two challenged patents in the parallel district court lit-
igation, and that the covenant was designed to simplify the
issues for this court and “to keep the Minnesota litigation
moving forward.” J.A. 4143.
The parties each submitted responsive letter briefs.
PPG argued that Supreme Court precedent—including
United States v. Munsingwear, Inc., 340 U.S. 36 (1950), and
its progeny—required this court to vacate the Board’s deci-
sions if it determined that the appeal was mooted by the
covenant. Valspar agreed that vacatur was an option, but
it argued that this court could not vacate the Board’s deci-
sions unless it determined PPG had standing to appeal in
the first instance.
In February 2017, this court issued an opinion address-
ing the standing issue without reaching the merits.
Valspar I, 679 F. App’x at 1004–06. We held that PPG had
standing at the time it filed its notice of appeal, but Valspar
had subsequently mooted the appeal by “tardily and uni-
laterally” granting the covenant not to sue. Id. at 1004–05.
Based on the circumstances, we determined that “vacatur
would be ‘most consonant to justice.’” Id. at 1006 (quoting
U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S.
Co. v. PPG Industries, Inc., No. 2:17-cv-01023-JFC
(W.D. Pa.).
4 VALSPAR SOURCING, INC. v. PPG INDUS., INC.
18, 24 (1994)). The opinion concluded with a statement
that
The Final Decisions of the PTAB in Reexamina-
tions Nos. 95/001,950 and 95/001,951 are
VACATED, and appeals No. 16-1406 and 16-1409
are DISMISSED.
Id. The opinion did not expressly remand to the Board to
take any further action, including dismissal of the under-
lying proceedings before the examiner.
II
On receiving our opinion and mandate from Valspar I,
the Board ordered the proceedings remanded to the exam-
iner with instructions to issue reexamination certificates
rejecting all the challenged claims. Valspar petitioned the
Chief Judge of the Board to revise the orders, arguing that
the Board had misinterpreted our mandate. Valspar ar-
gued that this court’s dismissal and vacatur without re-
mand effectively ended the case, and the only appropriate
action for the Patent Office would be an administrative ter-
mination of the reexaminations without any action on the
merits.
The Board rejected Valspar’s arguments, holding that
the applicable statute, regulations, and procedures re-
quired the challenged result. The Board reasoned that our
mandate from Valspar I vacated the Board’s reversal of the
examiner, but left the underlying office actions in place—
i.e., the examiner’s determinations that all the claims were
invalid. The Board further held that the applicable statute
and procedures required the examiner to issue reexamina-
tion certificates because the appeal had terminated. The
Board reasoned that the issuance of a reexamination cer-
tificate is required by law and, because it is a ministerial
act, would not constitute further prosecution on the merits.
The Board pointed out that if Valspar had any concerns or
disagreement with our mandate, then it should have
VALSPAR SOURCING, INC. v. PPG INDUS., INC. 5
requested rehearing from this court when the original opin-
ion issued. Valspar appealed the Board’s decisions to this
court. 2
DISCUSSION
At the outset, we briefly address our jurisdiction to re-
view the Board’s decisions interpreting this court’s man-
date from Valspar I. The America Invents Act provides the
Federal Circuit with jurisdiction over “any decision” of the
Board with respect to inter partes reexaminations. See
Leahy–Smith America Invents Act (“AIA”), Pub. L. 112–29
§ 7(e), 125 Stat. 284, 315 (2011). 3 The Board’s decisions are
final decisions because they provide the Board’s final de-
termination of the scope of this court’s mandate and make
clear that “no[] further prosecution on the merits” will oc-
cur in the reexaminations. See J.A. 12, 26.
I
We now turn to the merits. Munsingwear and its prog-
eny set forth the proper protocol for dealing with cases that
are mooted while on appeal. In Munsingwear, the Supreme
Court recognized that “the duty of the appellate court” is to
2 After the Board issued its decisions on Valspar’s
petitions, Valspar filed requests for reconsideration. The
Board dismissed Valspar’s requests for lack of jurisdiction
because Valspar filed the instant appeal while its requests
for reconsideration were still pending before the Board.
Nevertheless, the Board explained why it would have de-
nied the requests for reconsideration if it had jurisdiction.
The Board’s rationale is essentially the same as that of the
decisions that we review here, and for the same reasons
described herein, we also vacate the Board’s decisions on
reconsideration.
3 In general, the AIA is codified in various parts of
Title 35 of the U.S. Code. Section 7(e) of the AIA, however,
is not codified; it is found on page 315 of 125 Stat.
6 VALSPAR SOURCING, INC. v. PPG INDUS., INC.
“reverse or vacate the judgment below and remand with a
direction to dismiss” when a civil case becomes moot while
pending appellate review of the merits. 340 U.S. at 39–40
(first quoting Duke Power Co. v. Greenwood Cty., 299 U.S.
259, 267 (1936)). According to the Court, this procedure
“clears the path for future relitigation of the issues between
the parties,” id. at 40, and prevents “a judgment, unreview-
able because of mootness, from spawning any legal conse-
quences,” id. at 41. Through this approach, “the rights of
all parties are preserved” and “none is prejudiced by a de-
cision which in the statutory scheme was only prelimi-
nary.” Id. at 40. 4
The Supreme Court later explained in Bancorp that the
Munsingwear approach applies to situations where cases
are mooted by happenstance, or, as particularly relevant
here, by “the unilateral action of the party who prevailed
in the lower court.” Bancorp, 513 U.S. at 23. The Court
emphasized that vacatur (as opposed to remand) is the op-
erative action that “clears the path for future relitigation
of the issues between the parties and eliminates a judg-
ment.” Id. at 22 (quoting Munsingwear, 340 U.S. at 40).
The Court also underscored that, when a case is mooted on
appeal, it “may make such disposition of the whole case as
justice may require.” Id. at 21–22 (emphasis added) (quot-
ing Walling v. James V. Reuter, Co., 321 U.S. 671, 677
(1944)). Indeed, the Bancorp Court relied on equitable
principles when it declined to extend the Munsingwear ap-
proach to situations in which the parties had settled. See
id. at 23–29. The Court reasoned that vacatur is an equi-
table remedy, and the losing party forfeits its entitlement
4 The Supreme Court later acknowledged this partic-
ular passage in Munsingwear as dictum, Bancorp, 513 U.S.
at 23, but numerous opinions have since confirmed this ap-
proach and refined it further.
VALSPAR SOURCING, INC. v. PPG INDUS., INC. 7
to equitable relief when it voluntarily surrenders its claim.
Id. at 25–26.
The Supreme Court has confirmed that the Mun-
singwear approach also applies to unreviewed administra-
tive orders. See A. L. Mechling Barge Lines, Inc. v. United
States, 368 U.S. 324, 329 (1961). In Mechling, the appel-
lants acknowledged that changed circumstances had ren-
dered the challenged administrative order devoid of any
practical effect. Id. at 328. But the appellants remained
concerned that the order, if not vacated, would have a col-
lateral effect on subsequent litigation. Id. at 328–29. The
Court agreed and modified the district court’s dismissal to
include a remand to the agency with instructions to vacate
the challenged administrative order. Id. at 331. In doing
so, the Court reiterated its view that “a party should not be
concluded in subsequent litigation by a District Court’s res-
olution of issues, when appellate review of the judgment
incorporating that resolution, otherwise available as of
right, fails because of intervening mootness.” Id. at 329
(citing Munsingwear, 340 U.S. at 36).
The Supreme Court has since repeatedly vacated deci-
sions of appellate courts and given instructions for vacatur
of the underlying administrative action. See, e.g., NTA
Graphics, Inc. v. NLRB, 511 U.S. 1124, 1124 (1994) (vacat-
ing the appellate court’s judgment and remanding “with in-
structions to remand the case to the [agency] to vacate the
Board’s order”); Bd. of Governors of the Fed. Reserve Sys. v.
Sec. Bancorp, 454 U.S. 1118, 1118 (1981) (vacating the ap-
pellate court’s judgment and remanding “with instructions
to remand the case to the [agency] to vacate the adminis-
trative decision”). The Court recently applied Mun-
singwear to vacate this court’s judgment and remand a
mooted Covered Business Method review to the Patent
Trial and Appeal Board for vacatur of the Board’s order.
PNC Bank Nat. Ass’n v. Secure Axcess, LLC, 138 S. Ct.
1982, 1982 (2018). This court has also repeatedly relied on
Munsingwear to vacate agency actions. See, e.g., Ebanks v.
8 VALSPAR SOURCING, INC. v. PPG INDUS., INC.
Shulkin, 877 F.3d 1037, 1040 (Fed. Cir. 2017); LSI Corp. v.
Int’l Trade Comm’n, 401 F. App’x 545, 546–47 (Fed. Cir.
2010); DiOrio v. Nicholson, 216 F. App’x 974, 975 (Fed. Cir.
2007); Lerman v. Nicholson, 125 F. App’x 997, 997
(Fed. Cir. 2005).
Thus, Munsingwear and its progeny instruct us to pre-
vent appellants from being forced to acquiesce in a judg-
ment that they can no longer challenge on the merits. They
further instruct us to protect all parties from the collateral
effects of a case that is mooted before an appellate determi-
nation on the merits. Accordingly, our duty is to use our
vacatur powers to dispose of the whole case, wiping the
slate clean for future relitigation of the issues without prej-
udice to either party.
PPG would have us go further, leaving in place certain
adverse determinations from the proceedings below be-
cause Valspar “should suffer the consequences” of its choice
to unilaterally moot the original appeal. Oral Arg.
at 37:18–41, http://oralarguments.cafc.uscourts.gov/de-
fault.aspx?fl=2018-1462.mp3. In support of its view, PPG
points to Walling, a pre-Munsingwear case in which the
Supreme Court vacated an appellate reversal but left the
district court’s injunction in place. 321 U.S. at 671. Wall-
ing is inapposite because there the Court expressly held
that the case was not moot. See id. at 673–74. Although
the Court could no longer rule on the merits because the
sole respondent corporation had been unilaterally dis-
solved, the Court explained that the challenged injunction
remained enforceable against other individuals not pres-
ently before the Court. Id. at 674–76. For the reasons set
forth above, Munsingwear and its progeny do not require
the result that PPG seeks. Nor did our opinion and man-
date in Valspar I order such a result.
II
The Board misinterpreted our opinion and mandate
from Valspar I. “Upon its determination the [Federal
VALSPAR SOURCING, INC. v. PPG INDUS., INC. 9
Circuit] shall issue to the Director its mandate and opinion,
which shall be entered of record in the Patent and Trade-
mark Office and shall govern the further proceedings in the
case.” 35 U.S.C. § 144 (emphasis added). “[B]oth the letter
and the spirit” must be considered in interpreting the scope
of our mandate. Engel Indus., Inc. v. Lockformer Co.,
166 F.3d 1379, 1383 (Fed. Cir. 1999) (citing Quern v. Jor-
dan, 440 U.S. 332, 347 n.18 (1979)). “[T]he opinion deliv-
ered by this court at the time of rendering its decree may
be consulted to ascertain what was intended by its man-
date.” Laitram Corp. v. NEC Corp., 115 F.3d 947, 952
(Fed. Cir. 1997) (quoting In re Sanford Fork & Tool Co.,
160 U.S. 247, 256 (1895)). “Unless remanded by this court,
all issues within the scope of the appealed judgment are
deemed incorporated within the mandate and thus are pre-
cluded from further adjudication.” Engel, 166 F.3d at 1383.
We review de novo the Board’s interpretation of our man-
date. Laitram, 115 F.3d at 950–51.
In these circumstances, the Board’s reinstatement of
the examiner’s rejections and effective cancelation of the
challenged claims stands contrary to the very purpose of
ordering vacatur following mootness on appeal. See Mun-
singwear, 340 U.S. at 39–41 (endorsing procedure that
“clears the path for future relitigation of the issues between
the parties”). Vacatur is an equitable remedy. Bancorp,
513 U.S. at 25. The Board’s interpretation of our mandate
produced an inequitable result. The ordered vacatur was
designed to protect the challenger from being forced to ac-
quiesce to an unreviewable adverse ruling by the Board.
But by effectively canceling all the challenged claims, the
Board’s approach unfairly converted the vacatur shield
into a sword for the challenger. That is an inequitable re-
sult—especially here, where the Board previously deter-
mined that the challenged claims are not invalid.
Had we intended such an incongruous result, we would
have made that intent explicit in our opinion. The Board
should have interpreted the scope of the vacatur based on
10 VALSPAR SOURCING, INC. v. PPG INDUS., INC.
the context provided by this court’s opinion. See Laitram,
115 F.3d at 952 (consulting opinion to ascertain intended
effect of mandate). Our opinion did not meaningfully dis-
tinguish between the Board’s decisions and the examiner’s
decisions. Neither party asked this court for the relief the
Board understood this court to have granted. Further-
more, the cases cited in this court’s opinion and by the par-
ties stand for the proposition of vacating the whole case
below, not a piecemeal approach. See, e.g., Bancorp,
513 U.S. at 21. With this context, it was clear that this
court’s intent was to nullify the entire inter partes reexam-
ination without any collateral effect on other litigation. See
Munsingwear, 340 U.S. at 41 (endorsing procedure that
prevents “a judgment, unreviewable because of mootness,
from spawning any legal consequences”).
PPG argues that had we intended to vacate the entire
Patent Office proceeding, we would have had to “vacate the
judgment below and remand with a direction to dismiss,”
as the Supreme Court stated in Munsingwear.
See id. at 39. We do not agree. See Bancorp, 513 U.S. at 22
(“[V]acatur ‘clears the path for future relitigation of the is-
sues between the parties and eliminates a judgment.’” (em-
phasis added) (quoting Munsingwear, 340 U.S. at 40));
Laitram, 115 F.3d at 951 (“[W]hile this court could have re-
manded with explicit instructions . . . the failure to do so is
not dispositive.”). Other appellate courts have used similar
language to ours to dispose of the entire proceeding without
remand. See, e.g., Sands v. NLRB, 825 F.3d 778, 781, 786
(D.C. Cir. 2016) (dismissing the petition for review as moot
and vacating the agency’s order without remand to address
underlying ALJ determination); Beethoven.com LLC v. Li-
brarian of Cong., 394 F.3d 939, 941–42, 954 (D.C. Cir.
2005) (vacating “the Librarian’s determination of the effec-
tive date for payment as moot,” without remand to address
underlying panel proceedings); Hollister Ranch Owners’
Ass’n v. FERC, 759 F.2d 898, 899–900, 903 (D.C. Cir. 1985)
VALSPAR SOURCING, INC. v. PPG INDUS., INC. 11
(vacating agency order as moot without remand to address
underlying ALJ determination).
In any event, for the reasons above, the Patent Office
erred in its application of our mandate. We vacated but did
not remand for any further adjudication by the Patent Of-
fice. See Engel, 166 F.3d at 1383 (holding that issues
within the scope of appeal but not remanded are precluded
from further adjudication). To the extent the Patent Office
interprets our mandate to require further action, such ac-
tion should be limited to concluding the reexaminations by
vacating the proceedings without any further adjudication,
and without the issuance of any reexamination certificate.
See Manual of Patent Examining Procedure § 2694(A)
(9th ed. 2018) (“The prosecution of the [inter partes] reex-
amination proceeding may be brought to an end, and the
proceeding itself concluded, by . . . vacating the examina-
tion proceeding. . . . (In these instances, no reexamination
certificate is issued).”).
CONCLUSION
We have reviewed PPG’s remaining arguments and
find them unpersuasive. Accordingly, we vacate the
Board’s decisions and remand for the Director and the
Board to properly implement our mandate in accordance
with the principles set forth above.
VACATED AND REMANDED
COSTS
Costs to appellant.