Odyssey Logistics & Technology Corp. v. Stewart, decided March 6, 2025
- Gary Morris
- Mar 27
- 5 min read
Updated: Apr 16
Case Name and Citation: ODYSSEY LOGISTICS & TECHNOLOGY CORP. v. STEWART, Appeal from the United States District Court for the Eastern District of Virginia in No. 1:22-cv-01061-PTG-WEF, decided March 6, 2025.
Court: United States Court of Appeals for the Federal Circuit (Before DYK, REYNA, and STOLL, Circuit Judges, opinion by DYK, Circuit Judge).
Date of Decision: March 6, 2025
Issue Presented: Did the Patent and Trademark Office (PTO) abuse its discretion by denying Odyssey Logistics & Technology Corp.’s ("Odyssey") request for Director review of a 2018 Patent Trial and Appeal Board (PTAB) decision, based on an Appointments Clause challenge raised for the first time over a year after the Federal Circuit affirmed the Board's decision, and subsequent to the Supreme Court's decision in United States v. Arthrex, Inc.?
Holding: No. The Federal Circuit affirmed the district court's dismissal of Odyssey's complaint, holding that the PTO did not abuse its discretion in denying the request for Director review because Odyssey had forfeited its Appointments Clause challenge by failing to raise it during its initial appeal despite having notice of the issue. The dismissal was based on a failure to state a claim for relief under Rule 12(b)(6) of the Federal Rules of Civil Procedure, rather than for lack of subject matter jurisdiction as the district court had held.
Facts:
Odyssey filed a patent application ("the '021 application") in 2007 related to a "Web Service Interface for Transit Time Calculation." The application described a method for exchanging real-time transit time information over the internet.
A patent examiner issued a Final Rejection of claims 3-13 in 2015, finding them directed to an abstract idea implemented with conventional computer functions.
The PTAB affirmed the rejection in 2018, stating the claimed system had no function beyond sending and receiving requests and responses and did not transform the method into eligible subject matter.
The Federal Circuit affirmed the Board's decision on February 7, 2020, in In re Tarasenko. Odyssey did not raise an Appointments Clause challenge in this appeal. The mandate issued on May 15, 2020.
On June 21, 2021, the Supreme Court issued its decision in United States v. Arthrex, Inc., holding that the unreviewable authority of PTAB administrative patent judges in inter partes review proceedings violated the Appointments Clause. The Court's remedy was to vest authority in the Director to review PTAB decisions.
On June 28, 2021, fourteen months after the Federal Circuit's mandate in Tarasenko, Odyssey requested Director review of the 2018 PTAB decision, arguing it was invalid under Arthrex.
The PTO denied the request, stating that it did not accept requests for Director review of ex parte appeal decisions at that time.
Odyssey filed a complaint in district court to compel the Director to consider its request. The district court dismissed the complaint for lack of subject matter jurisdiction.
Main Themes and Important Ideas:
1. Appointments Clause Challenge and Arthrex: The central issue revolves around Odyssey's attempt to retroactively apply the Supreme Court's Arthrex decision, which addressed the constitutionality of the appointment of PTAB administrative patent judges. The Court in Arthrex found a violation in the context of inter partes review due to the judges' unreviewable authority and provided a remedy involving Director review. Odyssey sought to apply this to its ex parte appeal.
The court notes that Odyssey "did not raise an Appointments Clause challenge on appeal in Tarasenko."
The Supreme Court in Arthrex held that "[t]he Director has the authority to provide for a means of reviewing PTAB decisions" and "accordingly may review final PTAB decisions and, upon review, may issue decisions himself on behalf of the Board."
2. Forfeiture Due to Failure to Raise the Issue Timely: A key theme is Odyssey's failure to raise the Appointments Clause challenge during its direct appeal to the Federal Circuit in 2019-2020, even after the Federal Circuit itself had found an Appointments Clause violation in a different case (Arthrex, Inc. v. Smith & Nephew, Inc.) during the pendency of Odyssey's appeal.
The court explicitly states, "Odyssey does not dispute that it failed to raise an Appointments Clause challenge on direct review from January 17, 2019, to May 15, 2020, even after this court, during the pendency of Odyssey’s appeal on October 31, 2019, determined that there was an Appointments Clause violation in Arthrex, Inc. v. Smith & Nephew, Inc."
The court cites precedent establishing that failure to raise an Appointments Clause challenge in an opening brief constitutes forfeiture, even if the argument was available before the termination of the direct appeal.
3. Reasonable Time for Reconsideration and Analogy to Rule 60(b): The court discusses the inherent authority of administrative agencies to reconsider their decisions but emphasizes that such reconsideration "must occur within a reasonable time." It draws an analogy to Rule 60(b) of the Federal Rules of Civil Procedure, which governs relief from final judgments.
"This court and others have repeatedly held that an agency’s re-consideration ‘must occur within a reasonable time.’"
"We have also explained in previous cases that the principles animating Rule 60(b) of the Federal Rules of Civil Procedure can be a useful guide in determining the scope of an agency’s inherent power to reconsider prior decisions."
4. Intervening Change in Law as Grounds for Relief: The court addresses Odyssey's argument that the Arthrex decision constituted an intervening change in law warranting relief. However, it rejects this argument, citing precedent that "[i]ntervening developments in the law by themselves rarely constitute the extraordinary circumstances required for relief under Rule 60(b)(6)." The court distinguishes the present case from situations where controlling precedent precluded raising the objection initially.
· "We reject Odyssey’s contention that the Supreme Court’s decision in Arthrex was an intervening change in the law such that it would be an abuse of discretion to not set aside the prior decision."
· The court clarifies that forfeiture can be set aside due to a change in law only in the limited circumstance "in ‘which controlling precedent pre-cluded the district court from adopting an objection . . . before the Supreme Court’ issued its decision."
5. Lack of Diligence: The court emphasizes that relief is particularly inappropriate when a party has displayed a "lack of diligence" by failing to raise an available argument during the initial proceedings or appeal.
The court cites the Ninth Circuit, concluding that granting Rule 60(b)(6) relief would be inappropriate "where a party has displayed a ‘lack of diligence’—in particular, by (a) failing to ‘raise[] [the] issue’ before the district court, (b) declining to lodge an appeal or ‘file[] a petition for rehearing,’ or (c) neglecting to seek ‘certiorari review.’"
6. Non-Jurisdictional Nature of Appointments Clause Challenge: The court clarifies that an Appointments Clause challenge is not jurisdictional and can be forfeited if not timely raised. This was a point of disagreement with the district court's reasoning for dismissal.
"Our previous decisions have recognized that an Appointments Clause challenge is not jurisdictional and must be timely presented and preserved."
"We disagree with the district court’s determination that it lacked subject matter jurisdiction to consider whether the Board could properly reopen its previous deci-sion because the issue is one of forfeiture, which is not ju-risdictional because it may be excused."
Conclusion:
The Federal Circuit concluded that Odyssey had ample opportunity to raise the Appointments Clause challenge during its direct appeal but failed to do so. Its delay of fourteen months after the Federal Circuit's mandate and its attempt to collaterally attack the final Board decision based on the subsequent Arthrex ruling were deemed insufficient grounds to warrant Director review. The PTO did not abuse its discretion in denying the request. The court affirmed the dismissal of Odyssey's complaint, but on the grounds of failure to state a claim for relief due to forfeiture, rather than lack of subject matter jurisdiction.
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