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OM AHUJA v. LAIRD

August 2, 1988

OM AHUJA AND OM ELECTRONIC SYSTEMS CORP., Plaintiffs,
v.
RICHARD LAIRD AND KEPTEL, INC., Defendants


Garrett E. Brown, Junior, United States District Judge.


The opinion of the court was delivered by: BROWN, JR.

GARRETT E. BROWN, JUNIOR, UNITED STATES DISTRICT JUDGE.

 Defendants' Motion to Hold Plaintiffs in Contempt

 The basis for defendants' motion concerns plaintiffs' abandonment of U.S. Patent Application Serial Number 051, 507 entitled "Polarity Ring Director." According to the Certification of Bruce J. Edington filed in connection with defendants' motion, defendants were granted an exclusive license of the patent in question pursuant to the Exclusive License Agreement, which plaintiffs failed to protect as it was ordered abandoned by the Patent Office on April 8, 1988. Thus, defendants allege that "the Om plaintiffs have failed to protect the application in accordance with the Exclusive License Agreement previously ordered enforced by [this] Court."

 In opposition, plaintiffs argue that the patent was "unintentionally abandoned" and that they have fully complied with 37 C.F.R. § 1.137(b), Revival of Abandoned Application. That regulation provides in relevant part that:

 
An application as unintentionally abandoned for failure to prosecute . . . may be revived as a pending application if the delay was unintentional. A petition to revive an unintentionally abandoned application must be filed within one year of the date on which the application became abandoned or be filed within three months of the date of the first decision on petition to revive under Paragraph (a) of this section which was filed within one year of the date of abandonment of the application. A petition to revive an unintentionally abandoned application must be accompanied by: (1) A statement that the abandonment was unintentional; (2) A proposed response unless it has been previously filed; and (3) A petition fee as set forth in § 1.17 m.

 The affidavit of Alton W. Payne, submitted by plaintiffs, states that reviving an unintentionally abandoned patent is purely an administrative matter, and that on September 9, 1987, the petition to revive was filed. In addition, the affiant states that he spoke to the examiner in the patent office responsible for this patent and was informed that the examiner "foresaw no problem with the present application being revived." Moreover, the affiant states that he received confirmation on May 31, 1988, and "that the Petition to Revive the unintentionally abandoned application has been granted." A copy of the confirmation is attached as Exhibit A to the affidavit. Thus, as the patent has been revived, the issue is now moot.

 Plaintiffs' Cross Motions for Sanctions and to Enforce Compliance with Section 3.9 of the Exclusive License Agreement

 Plaintiffs have cross moved for sanctions in connection with defendants' contempt motion. Plaintiffs argue that as revival applications are granted as a matter of course and as defendants knew that plaintiffs had filed all the necessary documentation for revival, defendants' motion is not well grounded in law or fact. Plaintiffs also argue that a reasonable investigation would have disclosed "that there was overwhelming legal basis upon which to base the revival of the present application."

 Defendants' actions in filing the contempt motion do not warrant sanctions. 37 C.F.R. § 1.137(B) does not state that petitions for revival are automatically granted once the required documentation is provided. For example, the provision provides in pertinent part: "The Commissioner may require additional information where there is a question whether the abandonment was unintentional." See also Manual of Patent Examinory Procedure (denoted as Exhibit E attached to plaintiffs' brief): " Generally, a statement that the abandonment was unintentional, plus the proper extension fee, and the proposed response is all that is required." (emphasis supplied). There is no time limit imposed upon the Commissioner to make his decision. Due to the chronological events outlined in Mr. Edington's Certification, the Court cannot conclude that it was unreasonable or frivolous for defendants to file their contempt motion.

 Plaintiffs' Motion to Enforce Section 3.9

 Section 3.9 of the Exclusive License Agreement, which this Court ordered enforced in an earlier opinion, provides:

 
Within thirty (30) days after the end of each consecutive three (3) month period beginning with June 30, 1987, KEPTEL SHALL FURNISH TO LICENSORS a written report setting forth the total NET SELLING PRICE of each LICENSED PRODUCT sold during each such consecutive three (3) months period by KEPTEL and any KEPTEL AFFILIATE, showing the number of each LICENSED PRODUCT sold, adjustments to the NET SELLING PRICE of each product, if any, the NET SALES for each country, the manner of calculating earned royalty due from sales in each country, the earned royalty due, and the balance of the advance payments, if ...

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