ITC Invalidity Holding Reversed in Patent Reexamination

ITC Invalidity Holding Reversed in Patent ReexaminationFunai Electric’s U.S. Patent 5,329,369 was previously asserted in the International Trade Commission (ITC) and the Central District of California against a group of TV manufacturers including Vizio. (As per usual, the district court actions were stayed in favor of the ITC action).The Administrative Law Judge (ALJ) of the ITC determined that claims 19 and 21 (along with others) of the ‘369 Patent were invalid. The Commission declined to review the ALJ’s findings and the matter was not appealed to the CAFC (although Vizio did appeal issues relating to another Funai patent). Also, in the European Patent Office (EPO), the foreign counterpart was likewise invalidated.Yet, in a parallel ex parte patent reexamination of the ‘369 Patent, claims 19 and 21 were found valid by the USPTO. (appeal decision here referencing confirmed claims). But how can claims found invalid by one government agency be resurrected from the dead by another?Clearly, the USPTO is bound by a final Federal District Court holding of patent invalidity, as such, reexamination and/or reissue of such a patent will not be ordered. MPEP 2242 (III (C)). However, the MPEP makes no mention of any binding effect of an ITC determination. Therefore, to understand the impact of an unfavorable ITC determination on other forums, one must look to the Commission’s congressional mandate.In 1974, the ITC mandate was revised to include the ability to analyze the validity of patents before them. In the Senate Report that accompanied this legislative change it was emphasized that:The Commission’s findings neither purport to be, nor can they be, regarded as binding interpretations of the U.S. patent laws in particular factual contexts. Therefore, it seems clear that any disposition of a Commission action by a Federal Court should not have a res judicata or collateral estoppel effect in cases before such courts.Consistent with the above identified mandate and legislative intent, decisions of the CAFC have consistently made clear that decisions of the ITC on patent issues have no preclusive effect in other forums.  Texas Instruments Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558, 1568 (Fed. Cir. 1996).  Thus, the USPTO action in the Funai patent reexaminations is consistent with CAFC precedent.By choosing to proceed at the USPTO despite an adverse ITC invalidity holding, Patentee’s have the option to revisit any such holding in this increasingly popular forum through patent reexamination. By creating evidence of a contrary opinion, for example, future defendants would be unlikely to rely on the ITC holding alone as evidence of objectively reasonable behavior to fend off a charge of willful infringement.I will discuss the substance of the Funai BPAI appeal decisions in more detail tomorrow. (See itcblog.com for more background on the affect of ITC determinations

Funai Electric’s U.S. Patent 5,329,369 was previously asserted in the International Trade Commission (ITC) and the Central District of California against a group of TV manufacturers including Vizio. (As per usual, the district court actions were stayed in favor of the ITC action).

The Administrative Law Judge (ALJ) of the ITC determined that claims 19 and 21 (along with others) of the ‘369 Patent were invalid. The Commission declined to review the ALJ’s findings and the matter was not appealed to the CAFC (although Vizio did appeal issues relating to another Funai patent). Also, in the European Patent Office (EPO), the foreign counterpart was likewise invalidated.

Yet, in a parallel ex parte patent reexamination of the ‘369 Patent, claims 19 and 21 were found valid by the USPTO. (appeal decision here referencing confirmed claims). But how can claims found invalid by one government agency be resurrected from the dead by another?

Clearly, the USPTO is bound by a final Federal District Court holding of patent invalidity, as such, reexamination and/or reissue of such a patent will not be ordered. MPEP 2242 (III (C)). However, the MPEP makes no mention of any binding effect of an ITC determination. Therefore, to understand the impact of an unfavorable ITC determination on other forums, one must look to the Commission’s congressional mandate.

In 1974, the ITC mandate was revised to include the ability to analyze the validity of patents before them. In the Senate Report that accompanied this legislative change it was emphasized that:

The Commission’s findings neither purport to be, nor can they be, regarded as binding interpretations of the U.S. patent laws in particular factual contexts. Therefore, it seems clear that any disposition of a Commission action by a Federal Court should not have a res judicata or collateral estoppel effect in cases before such courts.

Consistent with the above identified mandate and legislative intent, decisions of the CAFC have consistently made clear that decisions of the ITC on patent issues have no preclusive effect in other forums.  Texas Instruments Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558, 1568 (Fed. Cir. 1996).  Thus, the USPTO action in the Funai patent reexaminations is consistent with CAFC precedent.

By choosing to proceed at the USPTO despite an adverse ITC invalidity holding, Patentee’s have the option to revisit any such holding in this increasingly popular forum through patent reexamination. By creating evidence of a contrary opinion, for example, future defendants would be unlikely to rely on the ITC holding alone as evidence of objectively reasonable behavior to fend off a charge of willful infringement.

I will discuss the substance of the Funai BPAI appeal decisions in more detail tomorrow. (See itcblog.com for more background on the affect of ITC determinations)