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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA
Alexandria Division

BLACKBOARD INC. )
)
Plaintiff, ) Case No. 1:08-cv-01216-GBL-TCB
)
v. )
)
JON W. DUDAS, )
Under Secretary of Commerce for )
Intellectual Property and Director of the )
United States Patent and Trademark Office, )
)
and )
)
THE UNITED STATES PATENT AND )
TRADEMARK OFFICE )
)
Defendants. )

FIRST AMENDED COMPLAINT

Plaintiff Blackboard Inc. (“Blackboard”) brings this amended complaint against

Defendant Jon W. Dudas, in his official capacity (the “Director”), and the United States Patent

and Trademark Office (the “PTO”) and avers as follows:

Nature of the Action

1. Blackboard seeks review of a ruling made by the Director declining to terminate

the PTO’s inter partes reexamination of certain claims of U.S. Patent No. 6,988,138 (the “’138

patent”), which is held by Blackboard. Blackboard seeks a declaratory judgment that the

Director’s decision is contrary to law and an injunction enjoining the PTO from maintaining the

inter partes reexamination of claims 36, 37, and 38 of the ’138 patent requested by Desire2Learn

Inc. (“Desire2Learn”), a Canadian competitor of Blackboard. Blackboard has obtained a final

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judgment of a United States District Court against Desire2Learn on Desire2Learn’s claim that

claims 36, 37, and 38 of the ’138 patent are invalid. Pursuant to 35 U.S.C. § 317(b), that final

judgment prevents the PTO from maintaining the reexamination of claims 36, 37, and 38.

2. This action is brought pursuant to the Administrative Procedure Act, 5 U.S.C.

§ 551 et seq., and the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq.

The Parties

3. Blackboard is a Delaware corporation with its principal place of business at 650

Massachusetts Avenue, N.W., Washington, D.C.

4. The Director is Under Secretary of Commerce for Intellectual Property of the

United States and is Director of the PTO. He is sued in his official capacity.

5. The PTO is an administrative agency with the United States Department of

Commerce charged with, among other things, examining applications for U.S. patents and

reexamining U.S. patents that have issued. The address of the PTO is 600 Dulany Street,

Alexandria, Virginia.

Jurisdiction and Venue

6. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C.

§§ 1331, 1338, and 1361.

7. Venue is proper in the Eastern District of Virginia pursuant to 28 U.S.C.

§ 1391(e).

Background

8. An inter partes reexamination of a patent is a procedure established by 35 U.S.C.

§§ 311-318 for review of already-issued patents. In an inter partes reexamination, a person other

than the patent owner, known as the “third-party requester,” may file “a request for inter partes

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reexamination by the Office of a patent.” 35 U.S.C. § 311(a). In response to the request, if the

Director “finds that a substantial new question of patentability affecting a claim of a patent is

raised,” then the Director orders an inter partes reexamination. 35 U.S.C. § 313. Unlike in an ex

parte reexamination, the third-party requester of an inter partes reexamination can participate in

the inter partes reexamination process by, inter alia, submitting written comments and appealing

decisions of the patent examiner.

9. If a “final decision . . . in a civil action arising in whole or in part under section

1338 of title 28” has been entered against a party finding that the party has failed to prove the

“invalidity” of a “patent claim in suit,” then the PTO is prohibited from maintaining an inter

partes reexamination requested by that party as to that claim. 35 U.S.C. § 317(b). Specifically,

35 U.S.C. § 317(b) states:

Once a final decision has been entered against a party in a civil

action arising in whole or in part under section 1338 of title 28,
that the party has not sustained its burden of proving the invalidity
of any patent claim in suit or if a final decision in an inter partes
reexamination proceeding instituted by a third-party requester is
favorable to the patentability of any original or proposed amended
or new claim of the patent, then neither that party nor its privies
may thereafter request an inter partes reexamination of any such
patent claim on the basis of issues which that party or its privies
raised or could have raised in such civil action or inter partes
reexamination proceeding, and an inter partes reexamination
requested by that party or its privies on the basis of such issues
may not thereafter be maintained by the Office, notwithstanding
any other provision of this chapter.

10. This case turns on the meaning of “final decision . . . in a civil action arising in

whole or in part under section 1338 of title 28” in 35 U.S.C. § 317(b). The Director’s

interpretation of the statute, as reflected in the agency decision of which review is sought, is that

a “final decision . . . in a civil action arising in whole or in part under section 1338 of title 28” is

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a decision “occurring after all appeals are over.” The Director’s interpretation is contrary to the

statute. A “final decision” is a final judgment of a district court, regardless of any appeals.

Facts

11. The PTO issued the ’138 patent on January 17, 2006.

12. On July 26, 2006, Blackboard sued Desire2Learn in the U.S. District Court for the

Eastern District of Texas (the “Texas district court”). The case was styled Blackboard Inc. v.

Desire2Learn Inc., No. 9:06cv155 (E.D. Tex.). Blackboard alleged that Desire2Learn infringed

the ’138 patent.

13. Desire2Learn brought a counterclaim alleging that the claims of the ’138 patent

are invalid.

14. On December 1, 2006, Desire2Learn filed with the PTO a request for inter partes

reexamination of claims 1-44 of the ’138 patent.

15. On February 26, 2007, the Director found that a substantial question of

patentability was presented with respect to claims 1-44 of the ’138 patent and ordered an inter

partes reexamination.

16. In February 2008, the Texas district court conducted a two-week jury trial. The

jury found that Desire2Learn infringed claims 36, 37, and 38 of the ’138 patent, which were the

only claims that were tried. The jury also found that claims 36, 37, and 38 are not invalid.

17. On March 17, 2008, the PTO merged the inter partes reexamination requested by

Desire2Learn with a pending ex parte reexamination of the ’138 patent requested by Richard

Fontana. The PTO ordered that the merged reexamination be conducted under the inter partes

rules.

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18. On May 7, 2008, the Texas district court entered final judgment. The final

judgment confirmed an earlier judgment entered against Desire2Learn on its counterclaim that

claims 36, 37, and 38 were invalid.

19. Desire2Learn timely appealed the final judgment of the Texas district court to the

U.S. Court of Appeals for the Federal Circuit. The appeal is pending as No. 2008-1368.

20. On September 3, 2008, Blackboard petitioned the Director to terminate the inter

partes reexamination of claims 36, 37, and 38 on the basis that the inter partes reexamination of

those claims could not be maintained in light of the district court’s final judgment, pursuant to 35

U.S.C. § 317(b).

21. On November 18, 2008, the Director, acting through duly authorized subordinate

officials, denied Blackboard’s petition. See Exhibit A (the “Director’s Decision”). The Director

stated that “final decision” in 35 U.S.C. § 317(b) means a decision “occurring after all appeals

are over.” Exhibit A at 6. According to the Director’s Decision, because of Desire2Learn’s

pending appeal in the Federal Circuit, the final judgment of the Texas district court is not a “final

decision.”

Cause of Action

The Director’s Decision Is Contrary to Law.

22. Blackboard incorporates by reference all preceding paragraphs as if set forth

herein.

23. The Decision constitutes a final agency action within the meaning of 5 U.S.C.

§ 704.

24. The Texas district court entered final judgment against Desire2Learn on its

counterclaims of invalidity of claims 36, 37, and 38 of the ’138 patent. The final judgment

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constitutes a “final decision . . . in a civil action arising in whole or in part under section 1338 of

title 28” under 35 U.S.C. § 317(b). Consequently, the final judgment prevents the PTO from

maintaining an inter partes reexamination requested by Desire2Learn of those claims.

25. The holding of the Decision that inter partes reexamination of claims 36, 37, and

38 of the ’138 patent may be maintained notwithstanding the final judgment entered by the

Texas district court is contrary to law and is arbitrary and capricious and an abuse of discretion

under 5 U.S.C. § 706(2)(a).

Request for Relief

Blackboard requests the following relief:

a. An order holding unlawful and setting aside the Director’s Decision;

b. An order enjoining the PTO from maintaining an inter partes reexamination of

claims 36, 37, and 38 requested by Desire2Learn and directing the Director to terminate the

pending inter partes reexamination of claims 36, 37, and 38;

c. A declaratory judgment that the final judgment of the Texas district court is a

“final decision” for purposes of 35 U.S.C. § 317(b); and

d. All other such relief as this Court may deem necessary and just.

Respectfully submitted,

/s/
Jeffrey W. Mikoni (VA #71275)
Of counsel: MCDERMOTT WILL & EMERY LLP
Paul D. Thompson 600 Thirteenth Street, N.W.
Michael S. Nadel Washington, D.C. 20005
MCDERMOTT WILL & EMERY LLP Telephone: (202) 756-8000
Washington, D.C. Facsimile: (202) 756-8087
E-mail: jmikoni@mwe.com

Attorney for Plaintiff Blackboard Inc.

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CERTIFICATE OF SERVICE

I hereby certify that on the 1st day of December, 2008, I will electronically file the

foregoing with the Clerk of Court using the CM/ECF system. I further certify that I will mail the

document by U.S. certified mail to the following non-filing users:

General Counsel
U.S. Patent and Trademark Office
P.O. Box 15667
Arlington, VA 22215

Service address for Jon W. Dudas and U.S. Patent and Trademark Office

Dana J. Boente
Acting United States Attorney
Eastern District of Virginia
Justin W. Williams United States Attorney’s Building
2100 Jamieson Avenue
Alexandria, VA 22314

U.S. Department of Justice

Michael Mukasey
Office of the Attorney General
950 Pennsylvania Avenue, N.W.
Washington, DC 20530-0001

/s/
Jeffrey W. Mikoni (VA #71275)
MCDERMOTT WILL & EMERY LLP
600 Thirteenth Street, N.W.
Washington, D.C. 20005
Telephone: (202) 756-8000
Facsimile: (202) 756-8087
E-mail: jmikoni@mwe.com

Attorney for Plaintiff Blackboard Inc.

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EXHIBIT A
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