Invention Submission Corporation, a Pennsylvania Corporation v. JAMES E. ROGAN, Under Secretary of No. 02-2461  Commerce for Intellectual Property

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 INVENTION SUBMISSION CORPORATION,
a Pennsylvania Corporation,
Plaintiff-Appellant,
v.
JAMES E. ROGAN, Under Secretary of No. 02-2461  Commerce for Intellectual Property
and Director, United States Patent
and Trademark Office, U.S.
Department of Commerce, in his
official capacity,
Defendant-Appellee. 
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Leonie M. Brinkema, District Judge.
(CA-02-1038-A)
Argued: October 30, 2003
Decided: February 11, 2004
Before WILKINS, Chief Judge, and NIEMEYER
and SHEDD, Circuit Judges.
Vacated and remanded by published opinion. Judge Niemeyer wrote
the opinion, in which Chief Judge Wilkins and Judge Shedd joined.
COUNSEL
ARGUED: Edward B. Friedman, FRIEDMAN & FRIEDMAN, Pitts-
burgh, Pennsylvania, for Appellant. Rachel Celia Ballow, Assistant

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United States Attorney, Alexandria, Virginia, for Appellee. ON
BRIEF: J. Stephen Purcupile, Carolyn M. Corry, FRIEDMAN &
FRIEDMAN, Pittsburgh, Pennsylvania; Richard C. Sullivan, Jr.,
REED SMITH, L.L.P., Falls Church, Virginia, for Appellant. Paul J.
McNulty, United States Attorney, Alexandria, Virginia, for Appellee.
OPINION
NIEMEYER, Circuit Judge:
Invention Submission Corporation commenced this action under
the Administrative Procedure Act ("APA") against James E. Rogan in
his official capacity as Under Secretary of Commerce for Intellectual
Property and Director of the United States Patent and Trademark
Office ("PTO"), alleging that the PTO’s 2002 advertising campaign
to alert the public about "invention promotion scams" was aimed at
Invention Submission to penalize it and ultimately put it out of busi-
ness. Invention Submission alleged that the advertising campaign was
an illegal final agency action that was arbitrary and capricious and
exceeded any statutory authority conferred on the PTO.
On the PTO’s motion to dismiss the complaint under Federal Rule
of Civil Procedure 12(b)(1), based on the ground that the PTO adver-
tising campaign was not a "final agency action" and therefore that the
district court lacked subject matter jurisdiction, the district court dis-
missed the action. See Invention Submission Corp. v. Rogan, 229 F.
Supp. 2d 498 (E.D. Va. 2002). The district court, however, acted
under Federal Rule of Civil Procedure 12(b)(6), concluding that
"under any set of facts that could be proved consistent with the [com-
plaint’s] allegations," no relief could be granted to Invention Submis-
sion.
Reviewing the district court’s order de novo, we agree that the
complaint must be dismissed, but not under Rule 12(b)(6). As we
explain below, we conclude that because the PTO’s advertising cam-
paign was not a final agency action — a conclusion that the district
court also reached in its opinion — the district court had no subject
matter jurisdiction to review it. See 5 U.S.C. § 704. We must there-
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fore vacate the district court’s order of October 30, 2002, as well as
the supporting opinion, and remand with instructions to dismiss
Invention Submission’s complaint for lack of subject matter jurisdic-
tion.
I
Congress enacted the Inventors’ Rights Act of 1999, 35 U.S.C.
§ 297, to protect inventors from invention promotion scams and the
deceptive advertising related to them by authorizing the PTO to publi-
cize complaints that it receives against invention promoters. See 145
Cong. Rec. S14521 (Nov. 10, 1999). The Act and the regulations
adopted under it impose a duty on the PTO "to provide a forum for
the publication of complaints concerning invention promoters." 37
C.F.R. § 4.1; see also 35 U.S.C. § 297(d). The Act and regulations do
not, however, authorize the PTO to conduct any independent investi-
gations of invention promoters, authorizing instead enforcement by
injured persons through civil actions. See 35 U.S.C. § 297(b), (d); 37
C.F.R. § 4.1.
In connection with its duty to publicize complaints concerning
invention promoters, the PTO initiated an advertising campaign in
January 2002 to alert the public to "invention promotion scams," and
its advertisements stated, "Make sure your ideas — and your money
— don’t wash away. To learn more, call the U.S. Patent and Trade-
mark Office toll-free." In launching the media campaign, the PTO
stated in a press release:
This week, the United States Patent and Trademark office
(USPTO) unveils a television and radio campaign in five
media markets to counter the flood of deceptive advertising
aimed at America’s independent inventors. . . . The Agency
also will be placing print ads . . . .
"USPTO’s ads caution inventors that ‘if it sounds too
good to be true, it is,’" said James E. Rogan, Under Secre-
tary of Commerce for Intellectual Property. "Our ads offer
practical information, guiding inventors to USPTO’s Office
of Independent Inventor Programs, where they can get real
help with patenting and marketing their inventions."
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Every year invention promotion scams cost U.S. inven-
tors an estimated $200 million. The spots feature an actual
inventor, Edward Lewis, who lost several thousand dollars.
In the print advertising published by the PTO, Edward Lewis is
quoted as saying, "I spent $13,000 and three years ‘spinning my
wheels’ with a company that promised my idea would make lots of
money. They were right. It made lots of money . . . for them. I haven’t
seen a penny."
A journalist for a cable television network, who saw the PTO’s
advertising campaign, contacted the PTO and requested contact infor-
mation for Lewis. After the PTO provided the information, the cable
television network interviewed Lewis and published a story that
revealed that, in the PTO-published quotation of Lewis, Lewis was
referring to his relationship with Invention Submission Corporation,
an invention promoter. The article revealed that Lewis had filed a
complaint with the PTO in August 2001 that was "being processed."
The article also revealed that Invention Submission was one of sev-
eral companies investigated by the FTC in the 1990s "for misrepre-
sentation in patent marketing schemes." It stated that in 1994,
"without admitting or denying guilt, the company agreed to pay a $1.2
million settlement for refunds in the case, as well as change its busi-
ness practices." The article included Invention Submission’s response
to Lewis’ accusations that "it did nothing wrong, that neither its repre-
sentatives nor commercials misled Lewis or any other inventor."
Edward Lewis, from Sicklerville, New Jersey, who invented
"BodyGuard" to "shield automobile paint while tough wheel-cleaning
products do their work," had indeed filed a complaint with the PTO
against Invention Submission on August 1, 2001, and the PTO sent
a copy of the complaint for response to Invention Submission on
March 1, 2002. Sometime before March 26, 2002, Invention Submis-
sion and Lewis resolved Lewis’ complaint, and, on that date, Lewis
withdrew his complaint from the PTO. Accordingly, Invention Sub-
mission advised the PTO that it was not submitting a response to the
complaint, and the PTO did not post Lewis’ complaint on the agen-
cy’s web site.
A few months after Lewis withdrew his complaint from the PTO,
Invention Submission commenced this action against the PTO under
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the APA, alleging that because the PTO was authorized only to
receive customer complaints, provide invention promoters with notice
and reasonable opportunity to respond, and provide a forum to publi-
cize complaints and responses, the PTO exceeded its authority in pub-
licizing Lewis’ complaint in its media advertising and illegally used
the public media to single out Invention Submission to penalize it. As
it alleged:
[T]he PTO intentionally publicized ISC [Invention Submis-
sion] as the invention company which was the subject of the
Lewis complaint, for the purpose of stigmatizing ISC.
* * *
The PTO knew that, if the Lewis complaint was not with-
drawn, and was subsequently made publicly available on the
PTO’s web site under the [Inventors’ Rights Act], ISC
would be further identified with the PTO’s unfair and untrue
television and print advertisements, and an additional link
would be established between ISC and the PTO’s statements
about "scams" and false promises of money to Lewis.
* * *
The PTO thereby knowingly violated the [Inventors’
Rights Act’s] requirement that it make the Lewis complaint
publicly available only in a neutral forum, without comment
or judgment, together with ISC’s response.
In addition, Invention Submission’s complaint alleged that John Cal-
vert, the Acting Director of the Office of Independent Inventor Pro-
grams at the PTO, "demonstrated [an] animus of the PTO against ISC
when he stated an intention to solicit and investigate customer com-
plaints despite the PTO’s lack of authority to do this." Invention Sub-
mission’s complaint described a meeting of inventors at which
Calvert was alleged to have said:
The only way that we do not post it [a customer complaint]
is if you withdraw it, and we have one company that Bob
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. . . and I were talking about that has a tendency to settle
quickly . . . but we’re going to get them up there yet. We
got to find somebody that doesn’t want to settle and get their
name on our Internet, on the Internet site, and we will have
them up eventually. We have one up there now, and you can
look at it.
The complaint concluded with allegations that in pursuing these
actions directed against Invention Submission, the PTO "has taken
final agency actions in the nature of imposing sanctions and/or failing
to act in accordance with the [Inventors’ Rights Act] and the regula-
tions," and therefore, under the APA, the actions were "arbitrary,
capricious, an abuse of discretion[,] . . . contrary to constitutional
right[,] in excess of statutory jurisdiction, authority, or short of statu-
tory right." Invention Submission sought declaratory and injunctive
relief, as well as attorneys fees.
The PTO filed a motion to dismiss Invention Submission’s com-
plaint for lack of subject matter jurisdiction, asserting that the federal
courts could review only "final agency actions" and that the PTO’s
alleged conduct did not qualify as a final agency action. The district
court granted the PTO’s motion, but it did so under Federal Rule of
Civil Procedure 12(b)(6). The court assumed the facts of the com-
plaint to be true and concluded that "it is clear as a matter of law that
no relief could be granted under any set of facts that could be proved
consistent with the allegations." The court ruled first that because it
was Lewis, not the PTO, who identified Invention Submission, it
could only be speculation that the PTO was referring to Invention
Submission by quoting Lewis in the advertising. Focusing on Cal-
vert’s statements, the district court observed that they were merely
consistent with the congressional intent behind passage of the Inven-
tors’ Rights Act that "invention promotion scams harm individual
inventors and ought to be eliminated." In addition, the court con-
cluded that such statements could not be considered agency action.
The district court also found that any harm sustained by Invention
Submission was indirect because it was not based directly upon what
the PTO included in its advertising campaign. Therefore, the court
concluded, "The PTO’s publications in this case were merely generic
advertisements of agency programs not specifically naming the plain-
tiff. Any harm to the plaintiff was, at most, indirect." Finally, the dis-
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trict court rejected the plaintiff’s contention that PTO violated its own
regulations by using the media to enforce a private complaint. It con-
cluded:
Even if plaintiff could demonstrate that the defendant vio-
lated agency regulations, an agency’s failure to follow its
own regulations is only actionable under the APA if it
results in a final agency action. A violation of agency regu-
lations alone, absent some harm to the plaintiff, is not
reviewable. As discussed above, plaintiff has not alleged
any specific harm caused by the defendant’s actions.
Accordingly, the district court entered an order dated October 30,
2002, dismissing the complaint "with prejudice."
This appeal followed.
II
Invention Submission contends that PTO’s advertising campaign
was both false and unauthorized, targeting Invention Submission in
order to penalize it and put it out of business. It argues that the Inven-
tors’ Rights Act of 1999 granted the PTO only limited authority to
create a forum to publish complaints and responses to them and that
the PTO’s 2002 advertising campaign directed at Invention Submis-
sion went beyond this stated authorization. Therefore, it asserts that
the campaign was illegal agency action. Invention Submission relies
heavily on Industrial Safety Equipment Association, Inc. v. EPA, 837
F.2d 1115 (D.C. Cir. 1988), to justify court review of this agency con-
duct under the APA.*
*In its brief, Invention Submission also seeks to justify the federal
court’s jurisdiction on its general equity jurisdiction to review unlawful
actions of officials of an administrative agency, under the "McAnnulty
Doctrine," citing American School of Magnetic Healing v. McAnnulty,
187 U.S. 94 (1902), and a plurality opinion in Joint Anti-Fascist Refugee
Committee v. McGrath, 341 U.S. 123 (1951).
Invention Submission did not, however, bring this action against the
PTO under the "McAnnulty Doctrine," but rather relied exclusively on
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In Industrial Safety, the D.C. Circuit held that an agency’s publica-
tion of a report evaluating respirators for their effectiveness in pro-
tecting against asbestos exposure was not an "agency action," as used
in the APA, that was reviewable in court, even though the report rec-
ommended against using several respirators that had already been cer-
tified for use. Observing that its own precedent in Hearst Radio, Inc.
v. FCC, 167 F.2d 225 (D.C. Cir. 1948) (holding that "agency action,"
including its component term "sanction," does not include an agen-
cy’s publication of a report, even if the report is false and amounts
to libel causing actual damage), might be too restrictive, the D.C. Cir-
cuit explained that Hearst Radio created a problem because it failed
"to . . . protect[ ] parties from false or unauthorized agency news
releases." 837 F.2d at 1118. Inasmuch as the APA’s definition of
"agency action" includes agency sanctions, adverse publicity might be
a "sanction" and therefore an agency action in certain circumstances:
Thus, though adverse impact alone would not necessarily
make agency publicity reviewable as a sanction, an agency
intent on penalizing a party through adverse publicity, espe-
cially false or unauthorized publicity, might well merit a
review of its action. This conclusion would be especially
compelling if an information release caused "destruction
. . . of property," or "revocation . . . of a license."
the APA. In addition, it did not present this theory to the district court.
In its brief, it argues that its reliance in the district court on Industrial
Safety was the same as reliance on the "McAnnulty Doctrine," and
because it relied on Industrial Safety before the district court, it therefore
was, by implication, relying on the "McAnnulty Doctrine." But this syllo-
gism mischaracterizes Industrial Safety. The court in Industrial Safety
did not discuss the "McAnnulty Doctrine," a doctrine of equity jurisdic-
tion apart from the APA, but rather was construing the APA itself. The
discussion in Industrial Safety on which Invention Submission relied
related to whether an agency’s penalizing a party through adverse public-
ity was a "sanction" as defined by 5 U.S.C. § 551(10), which in turn was
included as a component of "agency action," defined in § 551(13).
For these reasons, we do not address whether the "McAnnulty Doc-
trine," which Invention Submission raises for the first time on appeal,
provides a basis for judicial review of unlawful agency action.
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Id. at 1119 (quoting 5 U.S.C. § 551(10)) (citation omitted). The court
found no facts in the record before it to justify an exploration of the
interpretation that adverse publicity might amount to a sanction, and
it concluded that the agency’s publication of the asbestos respirator
report was not an agency action under any other component of the
APA definition that would make it reviewable by a court. Id.
Invention Submission’s argument that the district court had juris-
diction thus rests on its advancement of an interpretation of "agency
action" that would include — through the "sanction" component of
the definition of agency action — false or unauthorized advertising
aimed at the plaintiff. See 5 U.S.C. §§ 551(10), 551(13).
The PTO argues that our recent decision in Flue-Cured Tobacco
Cooperative Stabilization Corp. v. EPA, 313 F.3d 852 (4th Cir. 2002),
which does not construe "agency action" so broadly as might be indi-
cated by Industrial Safety, controls the outcome of this case. In Flue-
Cured Tobacco, we held that publication of an EPA report that classi-
fied environmental tobacco smoke as a potentially harmful human
carcinogen was not an agency action reviewable under the APA, even
though the report was allegedly arbitrary and capricious and created
harm to the plaintiff. The PTO argues that even though Invention
Submission was displeased with the advertising campaign, it cannot
challenge the campaign in the courts because the campaign at most
produced only "coercive pressures on third parties" and did not signal
the "consummation of the agency’s decisionmaking process so as to
‘give rise to legal consequences, rights, or obligations.’" Addressing
Invention Submission’s reliance on Industrial Safety, the PTO argues
that the D.C. Circuit’s statements in that case were only posited as
potential holdings and were no more than dicta. In addition, the PTO
argues that our decision in Flue-Cured Tobacco followed the D.C.
Circuit’s decision in Hearst Radio, which the Industrial Safety deci-
sion criticized but did not overrule. For these reasons, the PTO con-
tends that Industrial Safety is hardly persuasive precedent in this
circuit.
Thus, the issue presented is whether the PTO’s advertising cam-
paign, allegedly aimed at Invention Submission to penalize it, consti-
tuted final agency action under the APA so as to be reviewable in
court. See 5 U.S.C. §§ 702, 704. As a question of subject matter juris-
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diction, see Flue-Cured Tobacco, 313 F.3d at 857, we must address
this issue before evaluating Invention Submission’s complaint for
whether it states a claim upon which relief can be granted, see Steel
Co. v. Citizens for a Better Env’t, 523 U.S. 83, 93-95 (1998), although
these questions are close to one another in circumstances such as are
presented in this case, see Montana-Dakota Utils. Co. v. Northwest-
ern Pub. Serv. Co., 341 U.S. 246, 249 (1951).
Section 704 of the APA provides that "final agency action for
which there is no other adequate remedy in a court [is] subject to judi-
cial review." 5 U.S.C. § 704. "Agency action" is defined to include
"the whole or a part of an agency rule, order, license, sanction, relief,
or the equivalent or denial thereof." Id. § 551(13). Although each of
the constituent elements of "agency action" are in turn defined in
§ 551, at bottom, a final agency action as used in § 704 must be the
"consummation of the agency’s decisionmaking process . . . [and]
must be [an action] by which rights or obligations have been deter-
mined, or from which legal consequences will flow." Bennett v.
Spear, 520 U.S. 154, 178 (1997) (internal quotation marks and cita-
tions omitted); Flue-Cured Tobacco, 313 F.3d at 858. In Flue-Cured
Tobacco, we explained that the persuasive value of agency reports or
publications did not create a reviewable agency action under the APA
because such reports or publications in themselves did not "create any
rights, obligations, or consequences." 313 F.3d at 860. As we summa-
rized it:
We do not think that Congress intended to create private
rights of actions to challenge the inevitable objectionable
impressions created whenever controversial research by a
federal agency is published. Such policy statements are
properly challenged through the political process and not the
courts.
Id. at 861. Those principles govern the disposition of this case.
In this case, the advertising material published by the PTO under
the Inventors’ Rights Act did not name or single out Invention Sub-
mission or any other invention promoter. The advertisements were
facially neutral, aimed at all invention promotion scams — scams that
the advertisements asserted were causing the public to lose $200 mil-
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lion each year. While the advertising did include a quotation from
"Edward Lewis, Inventor," it quoted his experience with an unidenti-
fied company. Lewis is quoted as saying that "I spent $13,000 and
three years ‘spinning my wheels’ with a company that promised my
idea would make lots of money." (Emphasis added).
Invention Submission argues that the advertising campaign linked
Invention Submission with Lewis because a journalist was able to
interview Lewis and obtain the details of his experiences with Inven-
tion Submission and because the PTO made that possible by provid-
ing the journalist with Lewis’ telephone number. Whether a third
person could obtain sufficient information to link the two, however,
does not taint the otherwise nonspecific advertising. The PTO did not
publish any material that linked Lewis with Invention Submission,
and it did not post Lewis’ complaint on its web site.
"[T]he Administrative Procedure Act does not provide judicial
review for everything done by an administrative agency," Hearst
Radio, 167 F.2d at 227, and the PTO’s advertising campaign, includ-
ing its conduct in giving a journalist Lewis’ telephone number, is not
the type of conduct that constitutes agency action that is reviewable
in court under the APA. Other than the administrative decision to con-
duct an advertising campaign at all — a decision that Invention Sub-
mission has not challenged — the content of the campaign was not
the consummation of any decisionmaking process that determined
rights or obligations or from which legal consequences flowed. See
Bennett, 520 U.S. at 178; Flue-Cured Tobacco, 313 F.3d at 858.
Moreover, by looking at the campaign material, the public would see
only that a consumer complained about an invention promoter and
that invention promotion scams are causing the public $200 million
in losses every year. Surely Invention Systems would not suggest that
the attribution in the advertisements of $200 million in losses to
patent scams was in any respect focusing the public’s eye on it. The
text of the advertising material can only be construed to be an effort
by the PTO to inform inventors of the perils and potential scams that
they might encounter during the patent process. Such advertising did
not create "legal consequences" for Invention Submission or any other
member of the public cognizable as final agency action, and the cam-
paign itself did not determine any right or obligation of any party.
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While Invention Submission points to the adverse effect it suffered
as a result of the campaign, that effect was based on the fact that a
journalist linked Invention Submission with Lewis, and such an indi-
rect impact does not transform the agency’s conduct into final agency
action under the APA. See Flue-Cured Tobacco, 313 F.3d at 860. If
the PTO’s advertising made business more difficult for Invention
Submission by raising the public’s awareness, the decisions of mem-
bers of the public "are attributable to independent responses and
choices of third parties" and cannot be imputed to the PTO for pur-
poses of determining whether its conduct was a final agency action.
See id. at 861.
Invention Submission argues that the advertising must not be con-
sidered only facially but also in light of the intent of PTO officials
whose purpose was more clearly focused on Invention Submission.
Such underlying intent of agency officials, however, does not convert
the PTO’s legal advertising material warning generally of invention
promotion scams — the purpose for which Congress enacted the
Inventors’ Rights Act — into a PTO sanction imposed on Invention
Submission that would be reviewable in court, especially when the
material itself does not reference an intent to penalize any particular
company. The measure of the advertising campaign must be made by
the information conveyed by it to the public. As we have noted, the
effect of the PTO’s campaign so measured was not a regulatory effect
reviewable in court, but at most an indirect effect from third parties
and market forces.
In short, the PTO’s advertising campaign warning the public about
invention promotion scams was consistent with the PTO’s commis-
sion granted by the Inventors’ Rights Act of 1999, and in the circum-
stances of this case, the decision to pursue such a campaign, as well
as its content, did not create a final agency action that is reviewable
in court. As we said in Flue-Cured Tobacco, this type of a campaign
is "properly challenged through the political process and not the
courts." 313 F.3d at 861.
III
Because the conduct of the PTO that is the subject of this action
did not constitute "final agency action" as used under the APA, the
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district court did not have subject matter jurisdiction to evaluate the
complaint under Rule 12(b)(6) and should have dismissed this case
under Rule 12(b)(1). We therefore vacate its order of October 30,
2002, as well as the supporting opinion, and remand with instructions
to dismiss this case under Federal Rule of Civil Procedure 12(b)(1).
VACATED AND REMANDED WITH INSTRUCTIONS
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