English
District Court Rejects USPTO Analysis in Patent Reexamination
Determination of Non-Obviousness by USPTO Disregarded by Court
Last week’s CAFC decision in In re Construction Equipment decided the validity of U.S. Patent 5,234,564…..again. In the first appeal, decided in 2001, the CAFC upheld the validity determination of the District Court. In the second appeal, decided last week, the CAFC considered an appeal from the USPTO rejecting the claims of the ‘564 patent in ex parte patent reexamination. In their second decision, the CAFC found the ‘564 Patent invalid in light of some of the very same prior art references at issue in the first appeal.
In her dissent Judge Newman questioned the constitutionality of the USPTO looking over the shoulder of the CAFC.
In a case of “turnabout is fair play,” last Friday, a United States District Judge for the District of Connecticut considered, and disregarded, the USPTO’s reexamination analysis of the same prior art in Jacobs Vehicle Equipment Co. v. Pacific Diesel Brake Co. et al. (D.Conn).
The Court decided that the earlier ex parte patent reexamination analysis of U.S. Patent 4,848,289, which confirmed the validity of the ‘289 Patent, was flawed in two major respects.
First, the Court explained that the non-obviousness determination of the USPTO in 2005 predated KSR. In this regard, the Court determined that the patent reexamination analysis that confirmed the claims of the ‘289 Patent may have been too rigid an application of the teaching/suggestion/motivation test (TSM).
The second, and perhaps more troubling rationale, was that the USPTO simply did not have the time or robust record to consider the issues in full during patent reexamination as compared to that of the District Court.
The Court noted in footnote 8 of the decision that:
The record before me on issues relating to obviousness is far more complete than the one before the PTO. The ex parte reexamination interview lasted about forty-five minutes. The trial, which was more about invalidity than infringement, lasted several weeks. Nearly all the prior art was before the examiner. But he did not have the benefit of the extensive evidence and arguments submitted to me.
(decision here)
Under the above rationale, a Patentee can either lose their patent in ex parte patent reexamination outright, or simply survive to fight the very same battle on another day, at additional expense. All the while, an ongoing infringement action may even be stayed pending the outcome of the reexamination for seemingly no good reason.
The new proceedings of the America Invents Act (AIA), Inter Partes Review and Post Grant Review will provide for limited discovery, estoppel to prevent duplicative proceedings, and provide adjudicative processing. These more robust proceedings will prevent such inconsistent outcomes going forward.
Unfortunately, ex parte patent reexamination was left largely untouched by the AIA.
Re: “First, the Court explained that the non-obviousness determination of the USPTO in 2005 predated KSR. In this regard, the Court determined that the patent reexamination analysis may have been too rigid an application of the teaching/suggestion/motivation test (TSM).” ??
[This is the first time I have ever heard anyone ever suggest that the Sup. Ct. KSR decision made a 103 obviousness finding harder, rather than easier.]
Paul,
I think the Court is agreeing with you.
The concern was that the previous TSM analysis (reexam) may have been to high a standard, thus the patent survived…..as compared to the more liberal KSR framework used by the Court to kill the patent.
Scott —
I think the interesting question will be what happens to the injunction on remand to the district court. I think Newman’s arguments will likely be more persuasive at that stage with respect to the injunction–i.e., the patent might be essentially dead to everyone except the petitioner here because an executive agency cannot constitutionally overrule an Article III court.
This also raises an interesting question with respect to your post at http://www.patentspostgrant.com/lang/en/2011/09/new-inter-partes-review. If I understand correctly, under the AIA, an IPR proceeding will not terminate even after a final judgment of validity with respect to the petitioner (contrary to the current 317(b)).
So what happens if if the IPR proceeding reaches the opposite result and invalidates the patent? It’s invalid as to all third-parties, but I’m not sure that it can change the result with respect to the damages / injunction from the district court case without running afoul of the constitution and separation of powers.
Tony,
I agree that the injunction analysis will be very interesting. In the Standard Havens case a patent invalidated by reexamination is deemed void ab initio, if that reasoning is adopted, I don’t see how the injunction can stand.
As to IPR, the estoppel is one sided, as you point out. I am not sure why Congress chose to set up the system this way, perhaps to encourage judges to stay cases. If the IPR proceeding concludes within the designed time frame, it seems likely that the USPTO will beat all but the ITC to a conclusion. If I were a judge (as demonstrated by Newman’s position) I would not want someone undoing my work, different standards or not.
Things will become very interesting once IPRs start to be filed concurrent to litigation.
Scott