By Scott A. McKeown
| December 11, 2011
CAFC Appeal Result Undone 11 Years Later

CAFC Appeal Result Undone 11 Years Later


Patent reexamination is often initiated in parallel with an ongoing infringement litigation. In the case of a parallel inter partes proceeding (IPX), the first of the proceedings to conclude (litigation or IPX) controls the outcome of the other by operation of statutory estoppel. As such, a final holding in the parallel court proceeding will end an ongoing IPX. Moreover, the losing party would be precluded from seeking IPX at a later date.


On the other hand, ex parte patent reexamination (EXP) has no such statutory "shut off valve." Thus, even a party that was bound by IPX estoppel could file a request for ex parte patent reexamination. In this way, the infringer could attempt to "undo" the effect of the earlier, final, court judgement by invalidating the patent via the EXP filing.


As I explained this past August, the CAFC questioned this "do-over" practice during the oral argument of In re Construction Equipment. Last week the CAFC issued a decision in this case. In the process, the CAFC disturbed the holding of their first decision, issued some 10 years earlier.


In 2001 the validity of the Construction Equipment Patent at issue was upheld by the CAFC.


Last week's CAFC decision, like their 2001 effort, considered the validity of U.S. Patent 5,234,564 in light of certain prior art references under 35 U.S.C. 103. The recent appeal stemmed from a USPTO ex parte patent reexamination decision of the BPAI. The BPAI rejected the claims of the '564 Patent based upon some of the same art of the earlier decision, albeit under the more liberal preponderance of the evidence standard of the USPTO (and perhaps to a lesser extent by applying the KSR precedent not in existence in 2001).


While the majority affirmed the USPTO rejection, thus reversing the outcome of their earlier decision, Judge Newman issued a strongly worded dissent.



In addition to the principles of finality based on separation of powers, the principles of litigation repose are violated by the reopening in an administrative agency of issues that were litigated to finality in judicial proceedings. Throughout the evolving reexamination statutes, no legislation suggested that reexamination might overtake a final judicial decision, or that the preclusive effect of such decision may be ignored. The reexamination statutes do not purport to grant to the PTO the authority to ignore final judgments. Such an adjudicatory structure would not have been contemplated by the Congress, and is improperly accepted by this court.

.           .           .           .           .           .           .

Powerscreen requested reexamination on the ground of obviousness, citing the same references and additional references, placing strongest reliance on the same references that had been cited in the litigation. However, when an issue has been litigated and judgment entered in a court of last resort, “[t]he underlying rationale of the doctrine of issue preclusion is that a party who has litigated an issue and lost should be bound by that decision and cannot demand that the issue be decided over again.” In re Freeman, 30 F.3d 1459, 1465 (Fed. Cir. 1994) (in a reexamination completed after litigation, the PTO gave preclusive effect to the district court’s ruling on claim scope, although the Board stated that it did not agree with the district court). These fundamentals of judicial authority and administrative obligation are not subject to the vagaries of shifts in the burden or standard of proof in non-judicial forums, as the panel majority proposes. Although this aspect was weighed in In re Swanson, 540 F.3d 1368 (Fed. Cir. 2008), a lower standard of proof in an administrative agency cannot override the finality of judicial adjudication. The burden of proof assigned to administrative bodies is a matter of policy and procedure, not a change in substantive law. Administrative burdens do not override the Judicial Power of dispositive judgment.

(emphasis added, decision here)

Judge Newman also cited to the concern of the drafters of the America Invents Act (AIA) in providing certainty and finality with respect to the validity of issued patents in support of her policy arguments. Yet, the ability to file an ex parte patent reexamination request after losing in the district court remains an unchecked practice under the America Invents Act.

(Note in some cases a later EXP filing may be precluded under the IPR provision of AIA. However, this new form of EXP estoppel is not triggered by court decisions)


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