injunction-reexaminationFinal Patent Reexamination Result to Dissolve Injunction 

 

A defendant’s request to delay entry of a permanent injunction until reexamination concludes is more likely to be well-taken by a district court when the reexamination is near conclusion and rejecting the patent owner’s claims.  Depending on the length of time that passes before a litigant requests reexamination of a patent, either party could argue that the timing of the request supports its own interests under the four factor P.I. test and the balancing of the equities.

 

This tension played out recently in Inventio AG v. Otis Elevator Co. (SDNY)

 

In Otis, the Court found that entry of a permanent injunction was against public interest (i.e., P.I .fourth factor) where a patent reexamination existed Continue Reading Permanent Injunction Status Linked to Patent Reexamination

Is a Preliminary Injunction Ever Proper Parallel to Patent Reexamination?Over the past week I have discussed the interplay between a parallel patent reexamination and requests for a preliminary injunction. On Monday I pointed out that if a request for injunctive relief remains outstanding courts are very reluctant to stay an ongoing litigation pending a parallel patent reexamination. Last week I explained that a defendant’s ability to argue prejudice, to fend off a stay pending patent reexamination, may very well hinge on the pursuit of a preliminary injunction. Left to explore this week is the impact of the parallel reexamination on the preliminary injunction equities ultimately weighed by the court.To date, a parallel patent reexamination has been the “silver bullet” for defeating requests for such preliminary injunctive relief. Yet, as one defendant found out recently, perceived gamesmanship in patent reexamination tactics may re-direct that very same bullet to one’s foot.In the case of Celsis In Vitro Inc., v. CellzDirect Inc., & Invitrogen Corp. (N.D. IL), the court agreed to enter an injunction. In doing so, the court rejected certain invalidity evidence presented by the defendant for purposes of demonstrating that the plaintiff was unlikely to succeed on the merits. Upon losing their argument, the defendant filed a request for inter partes patent reexamination. The request included much more art than was presented to the court.Around the same time, the plaintiff beat the defendant to the punch by using the same art in their own ex parte request. The ex parte patent reexamination request was granted. In view of the same or cumulative art before the USPTO in the ex parte request, the defendant’s inter partes request was denied shortly thereafter. By employing  this “first to file” strategy, the plaintiff effectively shut out the defendant from participating in the patent reexamination. (See first to file strategy discussion here)Nevertheless, once a first office action was issued in the ex parte patent reexamination, the defendant sought dissolution/modification of the injunction. The defendant argued that a preliminary injunction has never been maintained in view of a parallel patent reexamination that rejected claims. Yet, this otherwise compelling argument was offset by the perceived bad faith in the defendant’s actions. The court questioned the defendant on the issue as follows:THE COURT:Good morning. I would be remiss, I think, if I didn’t comment that I find defendant’s actions here very troubling. You know, if your — I know you are a newcomer here for this purpose. But if your people wanted to have reexamination of plaintiffs’ ‘929 patent, why wasn’t that done before our hearing and the entry of the preliminary injunction order? That I believe casts a serious cloud on the good faith of the defendants and defense counsel.What is conspicuously absent from this motion to stay is even a whisper of an explanation for doing battle before me, occupying a great deal of time and effort on my part, as well as the part of the litigants, and then when you have lost, tendering the issue of patent validity to the Patent & Trademark Office.And it is not just a matter of lack of consideration for an imposition on what is really — although lawyers don’t think about this a lot — the most limited resource in the justice system, that is, the judge’s time. So before you started to lecture me about something I was well aware, that is, the power to stay and the need for the exercise of discretion, it seems to me I am entitled to an explanation. (Plaintiff’s motion in Opposition to Dissolve or Modify Preliminary Injunction, January 4, 2011)Thereafter, the court did agree to modify the injunction as to certain products already in existence for purposes of inventory liquidation. (order here) However, the court refused to modify the injunction for prospective sales and the manufacture of new product. In other words, based upon the court’s inference of bad faith, the very first defendant was preliminarily enjoined in view of a parallel patent reexamination that rejected asserted claims. (Discussion on permanent injunction equities and parallel patent reexamination here)It may be that the new art in the defendant’s request was more of a response to the “use it or lose it” estoppel provision of inter partes patent reexamination (as opposed to a lack of bad faith). Still, delaying the filing of a patent reexamination parallel to patent litigation rarely makes sense.This case was brought to my attention by the great Docket Navigator.

Over the past week I have discussed the interplay between a parallel patent reexamination and requests for a preliminary injunction. On Monday I pointed out that if a request for injunctive relief remains outstanding courts are very reluctant to stay an ongoing litigation pending a parallel patent reexamination. Last week I explained that a defendant’s ability to argue prejudice, to fend off a stay pending patent reexamination, may very well hinge on the pursuit of a preliminary injunction. Left to explore this week is the impact of the parallel reexamination on the preliminary injunction equities ultimately weighed by the court.

To date, a parallel patent reexamination has been the “silver bullet” for defeating requests for such preliminary injunctive relief. Yet, as one defendant found out recently, perceived gamesmanship in patent reexamination tactics may re-direct that very same bullet to one’s foot.

In the case of Celsis In Vitro Inc., v. CellzDirect Inc., & Invitrogen Corp. (N.D. IL), the court agreed to enter an injunction. In doing so, the court rejected certain invalidity evidence presented by the defendant for purposes of demonstrating that the plaintiff was unlikely to succeed on the merits. Upon losing their argument, the defendant filed a request for inter partes patent reexamination. The request included much more art than was presented to the court.

Around the same time, the plaintiff beat the defendant to the punch by using the same art in their own ex parte request. The ex parte patent reexamination request was granted. In view of the same or cumulative art before the USPTO in the ex parte request, the defendant’s inter partes request was denied shortly thereafter. By employing  this “first to file” strategy, the plaintiff effectively shut out the defendant from participating in the patent reexamination. (See first to file strategy discussion here)

Nevertheless, once a first office action was issued in the ex parte patent reexamination, the defendant sought dissolution/modification of the injunction. The defendant argued that a preliminary injunction has never been maintained in view of a parallel patent reexamination that rejected claims. Yet, this otherwise compelling argument was offset by the perceived bad faith in the defendant’s actions. The court questioned the defendant on the issue as follows:

THE COURT:Good morning. I would be remiss, I think, if I didn’t comment that I find defendant’s actions here very troubling. You know, if your — I know you are a newcomer here for this purpose. But if your people wanted to have reexamination of plaintiffs’ ‘929 patent, why wasn’t that done before our hearing and the entry of the preliminary injunction order? That I believe casts a serious cloud on the good faith of the defendants and defense counsel.

What is conspicuously absent from this motion to stay is even a whisper of an explanation for doing battle before me, occupying a great deal of time and effort on my part, as well as the part of the litigants, and then when you have lost, tendering the issue of patent validity to the Patent & Trademark Office.

And it is not just a matter of lack of consideration for an imposition on what is really — although lawyers don’t think about this a lot — the most limited resource in the justice system, that is, the judge’s time. So before you started to lecture me about something I was well aware, that is, the power to stay and the need for the exercise of discretion, it seems to me I am entitled to an explanation. (Plaintiff’s motion in Opposition to Dissolve or Modify Preliminary Injunction, January 4, 2011)

Thereafter, the court did agree to modify the injunction as to certain products already in existence for purposes of inventory liquidation. (order here) However, the court refused to modify the injunction for prospective sales and the manufacture of new product. In other words, based upon the court’s inference of bad faith, the very first defendant was preliminarily enjoined in view of a parallel patent reexamination that rejected asserted claims. (Discussion on permanent injunction equities and parallel patent reexamination here)

It may be that the new art in the defendant’s request was more of a response to the “use it or lose it” estoppel provision of inter partes patent reexamination (as opposed to a lack of bad faith). Still, delaying the filing of a patent reexamination parallel to patent litigation rarely makes sense.

This case was brought to my attention by the great Docket Navigator.

Monsanto Co. v. Geerston Seed Farms

In the recent Supreme Court case of Monsanto Co. v. Geertson Seed Farms, the Court shed some additional light on how district courts should assess the factors required to determine whether to impose an injunction.  The Monsanto decision did not concern patents, however it raises some interesting issues that would apply to injunctions in the patent context, particularly when a patent is found to be infringed in a district court litigation, but is also under concurrent reexamination.  See our earlier discussion of the use of patent reexamination to defeat an injunction for more information on this issue. 

Specifically, the Monsanto decision noted that “[a]n injunction is a drastic and extraordinary remedy, which should not be granted as a matter of course.  If a less drastic remedy … was sufficient to redress respondents’ injury, no recourse to the additional and extraordinary relief of an injunction was warranted.”  Monsanto Co. v. Geertson Seed Farms, 130 S. Ct. 2743, 177 L. Ed. 2d 461, 481 (June 21, 2010).

In Monsanto, applying the traditional four-factor test for injunctions, the Supreme Court found that the District Court had abused its discretion in enjoining a federal administrative agency from deregulating a species of plant pending the completion of an environmental impact statement.  Id. at 481.  The Court felt that simply vacating the federal administrative entity’s decision could redress Respondents’ injury, thus it was unnecessary to resort to the “additional and extraordinary relief of an injunction.”  Id.

The potential effect of Monsanto on patent litigation involving concurrent reexamination was not lost on patent practitioners.  Just a few short weeks after the decision in Monsanto, in an amicus brief to the Federal Circuit, Verizon Communications, called attention to Monsanto’s aversion to injunctions.  Br. for Verizon Commc’n at 4, Tivo, Inc. v. Echostar Corp., No. 2009-1374 (Fed. Cir. July 2, 2010). In particular, Verizon applied the concepts of Monsanto to injunctions issued in connection with a patent pending reexamination, stating that “[c]ourts must ensure that injunctive remedies are imposed only where no legal remedy is adequate and that the public interest — including the interest in continuing innovation — is taken fully into account in crafting any injunctive remedy.”  Id. at 2.  Bearing in mind the point-of-view expressed by the Court in Monsanto, Verizon likewise questioned the appropriateness of permanent injunctions where a patent is undergoing concurrent reexamination.  Id. at 3-11.

With respect to the four factor test for determining whether a permanent injunction is warranted, and specifically the first factor, irreparable harm, Verizon’s amicus brief makes a compelling argument that a party found to infringe a patent may suffer irreparable harm when a permanent injunction goes into effect prior to the conclusion of the reexamination of the patent-in-suit.  “[T]he defendant – if a patent is invalidated – has no remedy against the patent holder as a result of losses occasioned by successful (though unjustified) patent enforcement.”  Id. at 9.  Verizon added that “defendant’s harm may stem from the plaintiff’s ability to strengthen its relative market position by improperly excluding the defendant from use of non-proprietary technology.”  Id.  This argument also finds support in Federal Circuit dicta that considers a patent “void ab initio” when found unpatentable as a result of reexamination.  Standard Havens Products Inc. v. Gencor Industries Inc., 996 F.2d 1236 (Fed. Cir. 1993) (per curiam).

The second factor of the four-factor test, the inadequacy of remedies available at law, mimics very closely the proposition that injunctions are harsh and should not be issued where a lesser remedy would be sufficient.  Especially where a patent is subject to pending reexamination proceedings, a lesser remedy of monetary damages may prove more appropriate.  Where monetary damages are not sufficient, a preliminary injunction should be imposed, if the reexamination proceedings have not reached their final stages and the patent owner is likely to prevail on the merits.

The harshness of injunctions may also play a part in balancing hardships between the parties, the third factor of the four-factor test.  Clearly, the Monsanto Court felt that an injunction, being such an extraordinary remedy, would present a great hardship for the party enjoined.  Especially where the party enjoined is an alleged infringer of a patent undergoing reexamination, and thus there are questions about the validity of the patent, a permanent injunction may prove too great a hardship for the enjoined party.

In connection with the last factor, public interest, it is often argued in patent cases that the public interest serves to uphold valid patents, eliminate invalid patents, and preserve innovation.  As Verizon stated, “[t]o ensure that patent law promotes rather than discourages innovation, it must calibrate infringement remedies to reflect the value of patents and the societal interests in continuing innovation and competition.”  Br. for Verizon at 1.  Where the validity of a patent is in question, enjoining the public from making, using, or selling the patented invention may not serve the public interest to uphold only valid patents or to preserve innovation.

Clearly, an infringer’s request to delay entry of a permanent injunction until reexamination concludes is more likely to be well-taken by a district court when the reexamination is near conclusion and rejecting the patent owner’s claims.  Depending on the length of time that passes before a litigant requests reexamination of a patent, either party could argue that the timing of the request supports it’s own interests under the four factor test and the balancing of the equities, as always, the earlier the filing the better.

Inter Partes Patent Reexamination is Not Always the Best Choice

In the case of Inventio AG v. Otis Elevator Co. (SDNY), the Court found that entry of a permanent injunction was against public interest where a pending ex parte patent reexamination of the USPTO seemingly demonstrated the potential invalidity of the subject patent. Interestingly, this type of strategic, post-trial benefit of a concurrent patent reexamination is not available if the parallel patent reexamination were an inter partes patent reexamination.

That is to say, in considering the choice between ex parte and/or inter partes patent reexamination, post trial, or late stage litigation strategies must take into account the unique estoppel provisions of inter partes patent reexamination.

Of course, when implementing a patent reexamination strategy, a threshold determination is whether or not to initiate ex parte or inter partes patent reexamination, or both. This decision is very straight forward for older patents (i.e., those patents that did not mature from an application filed on or after November 29, 1999). This is because applications filed prior to the 1999 date are not eligible for inter partes patent reexamination.

Yet, as the years progress, fewer and fewer patents are outside of the inter partes date provision. So, where both options are available, which is the better option?

Like most legal inquiries, the answer is “it depends.” One factor that will greatly impact the choice between ex parte and inter partes patent reexamination is whether or not the requesting party is embroiled in a parallel infringement litigation.

Depending upon the litigation strategy, the court, and/or judge, the choice between reexamination types may vary significantly. For late stage litigations, such as the Otis “injunction hedge” strategy noted above, ex parte patent reexamination is the only viable choice. Statistically speaking, inter partes patent reexamination is more likely to lead to claim cancellation/amendment, and as such, seems the clear choice. Yet, unlike ex parte patent reexamination, inter partes patent reexamination may be “turned off” at some point by the USPTO by operation of estoppel.

Inter partes patent reexamination is subject to statutory estoppel provisions not applicable to ex parte patent reexamination. Once a final validity determination is entered (i.e., all appeals exhausted) 35 USC § 317 (b) is triggered, effectively forcing the USPTO to vacate the proceeding by operation of estoppel.

35 USC § 317 (b) provides:

(b) FINAL DECISION.- 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. This subsection does not prevent the assertion of invalidity based on newly discovered prior art unavailable to the third-party requester and the Patent and Trademark Office at the time of the inter partes reexamination proceedings.

(emphasis added)

Thus, in the Otis “injunction hedge” example above, once a validity determination of the court becomes final, the USPTO would be forced to vacate any inter partes patent reexamination proceeding requested by Otis with respect to the enumerated claims of the final Court holding. See Also Sony Computer Entertainment America Inc. v. Dudas (E.D. Va 2006) (inter partes patent reexamination suspended pending CAFC appeal). Note that currently, the inter partes reexamination estoppel provisions do not apply to ITC proceedings. This will change upon enactment of the Leahy-Smith America Invents Act.

While the court may still weigh the vacated/suspended proceeding in balancing equities in the injunction hedge context, penalizing the Patentee as to an incomplete proceeding would seem inequitable. To be sure, the opportunity to appeal an incomplete, adverse reexamination result would be cut off by the USPTO.

On the other hand, an ex parte patent reexamination would continue uninterrupted by court actions, as is the case in Otis.

For additional considerations in choosing between ex parte and inter partes patent reexamination proceedings concurent to litigation, see my previous Therasense discussion and motion to stay discussion.

Parallel Patent Reexaminations Given Little Weight at ITC

As detailed in past posts, an ongoing patent reexamination may help defendants stave off an injunction in district court. For example, in Flexiteek v. Plasteak,  (S.D. Fla. 2010) (Cohn, J.), the district court opted to stay the enforcement (order here) of the permanent injunction based upon the status of the related patent reexamination. At the ITC however, patent reexaminations are viewed as a routine occurrence.

As explored in the ITC action initiated by Tessera Inc., In the Matter of Certain Semiconductor Chips with Minimized Chip Package Size and Products Containing Same, Inv. No. 337-TA-605, 2008 WL 2223426 (Int’l Trade Comm’n May 27, 2008), it is next to impossible to stay an ITC proceeding pending an ongoing patent reexamination. This is due to the ITC’s statutory mandate to conclude investigations within a strict time frame.

Having lost the battle to stay the case, the remaining Tessera defendants cited the existence of the ongoing patent reexamination as a basis to avoid an exclusion order. The defendants asserted, that the public interest analysis required by 19 U.S.C. § 1337 (d)(1) was akin to the factors enumerated in eBay Inc. v. Mer-cExchange, L.L.C., 547 U.S. 388 (2006). In arguing for the Ebay factors, the defendants emphasized that money damages may be more appropriate for a “licensor” such as Tessera and that there would be no irreparable harm.

Yesterday, the CAFC contrasted the principles of equity applied in district courts to the statutorily mandated exclusion order of the ITC in Spansion v. ITC, and affirmed the ITC’s treatment of the ongoing patent reexaminations as largely irrelevant.

In explaining the inapplicability of the Ebay factors to the ITC’s calculus, the CAFC summarized:

As contrasted with the remedial scheme established by Congress for proceedings before the Commission, the statutory remedies available in proceedings before the district courts are quite different. In addition to the remedy of damages under 35 U.S.C. § 284, Congress gave district courts the discretion to grant injunctive relief and in doing so made explicit that such discretion is to be exercised “in accordance with the principles of equity . . . on such terms as the court deems reasonable.” 35 U.S.C. § 283. In eBay, the Supreme Court explained that Section 283 did not endorse or establish a categorical grant of injunctive relief following a determination of infringement. Rather, the decision whether to grant or deny injunctive relief under Section 283 depends on traditional principles of equity, applying the four-part test for permanent injunctive relief in patent disputes no less than in other cases governed by such standards. See eBay, 547 U.S. at 391 (discussing the four-factor test for injunctive relief).

Given the different statutory underpinnings for relief before the Commission in Section 337 actions and before the district courts in suits for patent infringement, this court holds that eBay does not apply to Commission remedy determinations under Section 337. The Commission is not required to apply the traditional four-factor test for injunctive relief used by district courts when deciding whether to issue the equitable remedy of a permanent injunction. Unlike the equitable concerns at issue in eBay, the Commission’s issuance of an exclusion order is based on the statutory criteria set forth in Section 337. Spansion’s argument that the term “public welfare” is so “broad and inclusive” that Congress must have intended it to include the traditional equitable principles reflected in the eBay standard is unpersuasive when viewed in the context of Section 337.

Clearly, the surge in popularity of the ITC is due in part, to the ability to more readily secure injuctive style relief post-Ebay relative to that of the district courts. However, the dim view of patent reexamination at the ITC may also lead to an increase in ITC actions. Indeed, defendants already under a stay pending patent reexamination in a district court have effectively created an end-around the stalled case via the ITC.  For those defendants most suscpetible to patent reexamination complications (i.e., trolls) that are also capable of satisfying the domestic industry requirement, the ITC may soon rank right up ther with Marshall Texas (perhaps outrank should the venue transfer trends continue). While an exclusion order is not $$$…it is as good as gold for settlement purposes, especailly as compared to a stayed district court litigation.

Inventor Alleges AIA Unconstitutional

Back during the drafting of the America Invents Act (AIA), some questioned whether the switch to a “first-inventor-to-file” system was constitutional. The argument was that the Intellectual Property Clause of the U.S. Constitution (Article I. Sec. 8) guaranteed the exclusive rights of inventions to “inventors,” and that this term could not embrace another, later in time filer, in the interests of administrative expediency. That is to say, the AIA was criticized as providing a “first-person-to-file” system, which awards the label “inventor” to the first person in the door at the USPTO.

Last month, a small Florida business, MadStad Engineering, filed suit against the U.S. government & USPTO to block implementation of the first-inventor to file system based on the above theory of uncostitutionality. The declaratory judgment action seeks a permanent injunction against implementation of the AIA, and an opinion that the entirety of the AIA is unconstitutional (based on a lack of severability clause).

A copy of the compliant is found (here)

Reexamination Disclaimer Effectively Amends Claims Surrendering $29 Million Damage Award

During a post grant proceeding, an amendment of an originally issued claim could create an intervening rights defense for infringers. That is to say if the amended or new claim introduced by the post grant proceeding is not substantially identical in scope relative to a previously issued claim, potential infringers of the amended/new claims may be provided with an absolute and/or equitable intervening rights defense (35 USC § 252). Of course, the conclusion as to whether or not a claim change in patent reexamination/reissue will result in the an intervening rights defense is far from a straightforward determination.

Yesterday, the CAFC considered whether or not intervening rights are created for a claim that is not literally amended in a post grant proceeding by a change in verbiage, but instead, changed in scope by operation of Patentee disclaimer. This “amended in effect” theory has shown up in at least one other case as of late and is likely to gain considerable traction going forward thanks to yesterday’s CAFC decision.

In Marine Polymer Technologies, Inc. v. HemCon, Inc. (here), the CAFC Court considered the patent reexamination of 6,864,245. The claims of the ‘245 Patent relate to a polymer useful in the treatment of wounds. The base claims of the patent recited that the claimed polymer be biocompatible. The specification explained four tests that would aid in determining an acceptable degree of biocompatibility, the test results ranging from zero (no detectable biological reactivity) to two (mild reactivity).

The claims were initially rejected in reexamination on the basis that the claim terminolgy biocompatible embraced a range that included no detectable biological reactivity (zero) to mild reactivity (1-2). The USPTO explained that several dependent claims recited the explicit range (1-2) for mild activity.

In response, the Patentee cancelled the dependent claims, and the USPTO confirmed the base claim without amendment. Prior to the termination of the reexamination, a parallel litigation concluded in a permanent injunction and a $29 million dollar damage award for the Patentee. 

In determining that interveing rights applied, the CAFC explained: 

We see no reason why this rule, giving effect to disclaimer of claim scope during reexamination or reissue, should not also apply in the context of intervening rights. In fact, a contrary rule would allow patentees to abuse the reexamination process by changing claims through argument rather than changing the language of the claims to preserve otherwise invalid claims and, at the same time, avoid creating intervening rights as to those claims. Therefore, if the scope of the claims actually and substantively changed because of Marine Polymer’s arguments to the PTO, the claims have been amended by disavowal or estoppel, and intervening rights apply. This is so even though Marine Polymer did not amend the language of its claims on reexamination.

In his dissent, Judge Lourie advanced a strict view of the statute, and argued that the statutory language is limited to actual changes in claim language.

Going forward, it is expected that this “amended in effect” theory will become a favorite of defendants on the wrong side of a post grant outcome of the USPTO. Whether or not the case will be found to apply outside of the unique circumstances (dependent claim cancellations) considered to date is an open question.

 

24529214er6Threat of Injunction Dissolves in Flexiteek Litigation

The initiation of patent reexamination for patents subject to concurrent litigation can provide strategic benefits independent of the ultimate outcome of the reexamination. These litigation inspired applications of patent reexamination can be thought of as falling into one of two categories, namely, pre-trial maneuvers or post-trial, damage control.

Pre-trial Maneuvers are those patent reexaminations initiated to potentially enhance a defendant’s battle in the district court.  For example, patent reexamination may be sought as an avenue to establish objectively reasonable behavior for use in preventing a willfulness finding. (see e.g., the yesterday’s Fairchild Semiconductor press release). Still other defendants initiate patent reexamination concurrent with litigation as a mechanism to leverage more acceptable settlement terms, provide additional fodder for claim construction, or to demonstrate the materiality of a reference subject to an inequitable conduct defense.

Post-trial (damage control) on the other hand, is a litigation inspired use of patent reexamination that seeks to undo the damage inflicted by the ruling of the district court. One of the more well known uses of a patent reexamination filed after a district court judgment was illustrated in In re Translogic Tech., Inc., 504 F.3d 1249, 1257 (Fed. Cir. 2007). Translogic had secured an earlier verdict for significant damages against Hitachi, the appeal reached the CAFC at the same time as the appeal rejecting all claims in reexamination, as a result, the infringement verdict was vacated.

Others have sought to leverage patent reexamination to get out from under, or to prevent an injunction. Recently, Apotex was enjoined from sale of a generic Plavix® until after the patent expires. In attempt to dislodge the injunction, Apotex has sought patent reexamination. The first reexamination was terminated favorably to the Patentee and the second was recently denied; Apotex has been unable to dislodge the injunction to date. Yet, last week, a defendant successfully leveraged a final rejection in patent reexamination to stay the enforcement of a permanent injunction.

Enforcement of Injunction Stayed in View of Patent Reexamination

In Flexiteek v. Plasteak,  (S.D. Fla. 2010) (Cohn, J.), the district court opted to stay the enforcement (order here) of the permanent injunction based upon the status of the related patent reexamination. At trial, Plasteak was found to infringe the subject patent (6,895,881), and held liable for a paltry $79K in damages, but was to be enjoined from further infringement by operation of permanent injunction.

Currently, the original claims of the ‘881 Patent stand finally rejected, however, new claims added during prosecution of the reexamination stand allowed (Advisory Action of 7/1/10).  (As an aside, this reexamination has proceeded faster than almost any I have seen to date, request was filed July 20, 2009, Advisory Action issued June 4, 2010)

In arguing against staying the injunction, Flexiteek pointed out that the patent was not “declared invalid” as stated by the defendants and that years of appeal lay ahead. Flexiteek also noted the existence of the allowed, new claims, and explained that as these new claims contained only minor changes, there would be no intervening rights — thus– Flexiteek argued that the injunction should be entered since the specific rejected claims are largely irrelevant. Not surprisingly, the defendants argued the exact opposite, taking the position that intervening rights would be found based upon the claim changes.

In deciding to stay the enforcement of the injunction, the court labeled the new claim issue as “speculative” and noted the unfairness of enjoining the defendant from infringing a patent “declared invalid,” holding:

The Court finds that the arguments set forth above are speculative. The current circumstances before this Court are that Defendants’ actions are being restrained by a patent which has been declared invalid by the PTO. Accordingly, the Court will not entertain arguments now based on what the parties believe the future may hold. Should the circumstances change in the future, the Plaintiffs make seek relief on the basis of such facts. Defendants are aware of the reexamination proceedings as well as the proposed amendments. The Court concludes that the PTO’s proceedings should govern Defendants’ actions rather than the Court’s Permanent Injunction which is based on a patent which has been declared invalid.

As the damages for past infringement are $79k, the real value to the plaintiff seems to be the keeping the defendant out of the market going forward (injunction). Thus, whether or not the new claims would be entitled to past damages (i.e., no intervening rights) seems largely unimportant for such an inconsequential dollar amount. However, should the court deem that the new claims require further construction the basis for the injunction may be undermined, requiring a new trial, discovery, etc. (the true rationale behind the intervening rights argument in the briefing)

The rejection of the original claims of the ‘881 Patent in patent reexamination seem reasonably based. Assuming the appeal goes forward, the appeal delay will prevent issuance of the new claims. This delay will allow the defendants the freedom to enter the market and practice the invention of the ‘881 patent for the next several years unabated. Thus, going forward with the appeal does not seem like a worthwhile gamble for Flexiteek.

Clearly, the court’s position that the new claims are “speculative” is a bit short sighted. Indeed, the court’s decision to stay the enforcement of the injunction may very well force Flexiteek to simply cancel the rejected claims and return to court with their new claims, in very short order.