Increasingly, courts are presented with evidence of a parallel patent reexamination and must determine whether/when such evidence is admissible.

Admissibility of evidence is governed by the Federal Rules of Evidence (“FRE”).  In recent cases, where the admissibility of evidence of concurrent reexamination proceedings has been offered with respect to the ultimate question of validity, patentees have attempted to use three rules of evidence to exclude such evidence, FRE 402, FRE 403, and FRE 802.

FRE 402 excludes irrelevant evidence.  Patentees, hoping to keep evidence of concurrent reexamination proceedings out of the litigation and away from the jury, have argued that this evidence is irrelevant and should be excluded under FRE 402.  Several courts have agreed.  For example, in the Northern District of Iowa, where reexamination had been granted but no office action had issued, the court stated that “evidence of incomplete patent reexamination proceedings is not admissible to prove invalidity of a patent, because it has no probative value on that issue.”  Transamerica Life Ins. Co. v. Lincoln National Life Ins. Co., 597 F. Supp. 2d 897, 907 (N.D. Iowa 2009) (citing Fed. R. Evid. 402).  Likewise, in the District of Utah, the court held that “evidence concerning the reexamination proceedings is likely irrelevant because it does not have the tendency to make any fact more or less probable than it would otherwise be.” Edizone, L.C. v. Cloud Nine, 2008 U.S. Dist. LEXIS 41258, at *4 (D. Utah, May 22, 2008).  Even where reexamination proceedings resulted in the rejection of claims and the issuance of  actions closing prosecution, the Southern District of Texas still found that such evidence was irrelevant.  Tesco Corp. v. Weatherford Int’l, Inc., 2010 U.S. Dist. LEXIS 121054 (S.D. Tex., Sep. 27, 2010).  The Tesco court stated that “[u]nlike in reexaminations, those challenging the validity of a patent in litigation must overcome a presumption of validity by proving by clear and convincing evidence that a patent is valid.  The conclusions of examiners as to whether a claim should be confirmed or rejected using a completely different standard have no probative value in this context.”  Id. at *27.  Nonetheless, the Tesco court held that evidence of concurrent reexamination proceedings was relevant to the issue of willful infringement.  Id. at *29-30.

However, even where such evidence has been found to be relevant, some courts have found that it fails the test of FRE 403.  FRE 403 states that “evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.”  Patentees, hoping to exclude evidence of concurrent reexamination proceedings have argued that the probative value of such evidence would be far outweighed by the danger of its prejudice.  Several courts have agreed.  Where the PTO had granted a request for reexamination, the Eastern District of Texas held that “[t]he simple fact that a reexamination decision has been made by the PTO is not evidence probative of any element regarding any claim of invalidity. . . . Even if it was, its probative value is substantially outweighed by its prejudicial effect in suggesting to the jury that it is entitled to ignore both the presumption of validity and the defendant’s clear and convincing burden at trial.” i4i L.P. v. Microsoft Corp., 670 F. Supp. 2d 568, 588 (E.D. Tex. 2009).  The Northern District of Illinois similarly held that “telling the jury that the patent has been called into question by the Patent Office may significantly influence the jury’s application of the presumption of validity and significantly prejudice [the patentee]. The prejudicial potential of this evidence far outweighs any probative value it may have.” Amphenol T&M Antennas, Inc. v. Centurion Int’l, Inc., 2002 U.S. Dist. LEXIS 822, at *5 (N.D. Ill., Jan. 17, 2002).  Even where final rejections had been made during reexamination, the District of Delaware held that “[a]bsent unusual circumstances… non-final decisions made during reexamination are not binding, moreover, they are more prejudicial (considering the overwhelming possibility of jury confusion) than probative of validity.” SRI Int’l Inc. v. Internet Security Sys., Inc., 647 F. Supp. 2d 323, 356 (D. Del. 2009).

FRE 802 ensures the inadmissibility of hearsay evidence.  Hearsay is defined as “a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.”  Fed. R. Evid. 801(c).  In Fresenius Medical Care Holdings, Inc. v. Baxter International, Inc., the patentee argued that the alleged infringer was offering several PTO documents, including the grant of a request for reexamination, to prove the truth of the matters asserted therein.  No. 03-cv-1431 (N.D. Cal. May 15, 2006).  According to the patentee, such documents were hearsay.  In response, the accused infringer asserted that this evidence fell within the public records exception to the hearsay rule, FRE 803(8), and was admissible.  Id.  FRE 803(8) creates an exception for “[r]ecords, reports, statements, or data compilations, in any form, of public offices or agencies, setting forth (A) the activities of the office or agency, or (B) matters observed pursuant to duty imposed by law as to which matters there was a duty to report…, or (C) in civil actions…, factual findings resulting from an investigation made pursuant to authority granted by law, unless the sources of information or other circumstances indicate lack of trustworthiness.”  Fed. R. Evid. 803(8).  In Fresenius, the court found that evidence of a grant of reexamination fell within this exception and was not excludable as hearsay.  Id., slip op. at 4-6.  Specifically, it found that the PTO is a public office or agency, that the determination that a substantial new question of patentability exists is a final decision, and that PTO documents are trustworthy. Id. at 5.

For purposes of proving invalidity, evidence of concurrent reexamination proceedings is almost certainly to be excluded as lacking relevance under FRE 402 and/or as being more prejudicial than probative under FRE 403.

For the above reasons, parallel patent reexamination filings are almost never filed for the purpose of convincing a fact finder that a patent should be found invalid at trial.

Instead, the benefits of parallel patent reexamination have been discussed at great length here as potentially impacting other aspects of litigation, “Is Evidence of Parallel Reexamination Proceedings Admissible at Trial?” (Parts I, II, III, and IV). In past posts, we have explained the benefits of parallel patent reexamination evidence as: aiding an inequitable conduct defense, impacting claim construction,  rebutting allegations of willful infringement, obtaining patent owner admissions to support a non-infringement defense, obtaining an intervening rights defense, providing grounds to stay a district court proceeding, and supporting/opposing injunctive relief.

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.

In our February series on the use of reexamination evidence in concurrent litigation, specifically “Is Evidence of a Concurrent Reexamination Admissible in Litigation? (Part III of IV),” we observed that some courts are, at best, ambivalent about the presentation of evidence pertaining to a related patent reexamination for rebutting a charge of willful infringement. Those courts typically express concern that juries may become prejudiced or confused if they learn that the same agency that originally issued the patent — the PTO — has declared that a substantial new question patentability exists or has rejected the patent’s claims.

Notwithstanding those potential problems, a jury in the Eastern District of Texas may soon hear that three claims of the patent-in-suit currently stand rejected in reexamination proceedings. In an Order dated June 8, 2010, Judge T. John Ward (Tyco Healthcare Group LP v. E-Z-EM, Inc., No. 2:07-cv-262) granted a motion for reconsideration that will permit the jury to hear evidence that the patent-in-suit is under reexamination, and that the PTO has rejected patent claims 9-11. The defendants may only introduce the evidence for the limited purpose of rebutting the plaintiffs’ claim for willful infringement, but the practical impact of that limitation on jury deliberations on other issues (e.g., validity) remains to be seen. The plaintiffs are now in the position of having to decide whether they want to prevent the jury from learning that some claims of their patent stand rejected at the cost of dropping their willful infringement allegations.

Additionally, this result demonstrates the desirability of filing for reexamination sooner rather than later when the target patent is involved in concurrent litigation. A judge is more likely to allow a jury to hear evidence of reexamination when the proceedings have matured to the point where the PTO has actually rejected the claims of the patent in an office action.

Admissibility in Litigation?

Courts have recently been faced with the issue of whether evidence of parallel reexamination proceedings should be considered at trial.  In our prior posts, “Is Evidence of Parallel Reexamination Proceedings Admissible at Trial? (Parts I, II and III)”, we discussed using pending reexamination proceedings to support invalidity contentions, prove inequitable conduct, and rebut allegations of willful infringement.  Accused infringers have also attempted to use evidence of parallel reexamination proceedings to support and oppose motions for preliminary injunction.

Reexamination Evidence Used to Support or Oppose Motions for Preliminary Injunction

When deciding to grant or deny a preliminary injunction, the courts consider four factors: (1) the likelihood of success on the merits; (2) the irreparable harm if the injunction is not granted; (3) the balance of hardships between the parties; and (4) the public interest.  Procter & Gamble Co. v. Kraft Foods Global Inc., 459 F.3d 842, 847 (Fed. Cir. 2008).  To defeat a showing of likelihood of success on the merits, alleged infringers will attempt to attack the infringement, validity, or enforceability of the patent at issue.  Specifically, to diminish likelihood of success on the merits with regard to a patent’s validity, accused infringers have attempted to introduce evidence that the patent is undergoing parallel reexamination proceedings.

It is not only accused infringers who have attempted to benefit from parallel reexamination proceedings in this way.  Some patentees have been successful in introducing evidence of reexamination as well.  Where a reexamined patent has issued and the reexamination was favorable to the patentee, such evidence has been used to bolster the patentee‘s likelihood of success on the merits, and thereby obtain a grant of a preliminary injunction.  See Procter & Gamble Co. v. Kraft Foods Global Inc., 549 F.3d 842 (Fed. Cir. 2008).

The decision in In re Seagate seems to have spurred many of these recent attempts to use evidence of parallel reexamination proceedings in this way.  Seagate primarily discusses willfulness and attorney client privilege, however, the Federal Circuit made a handful of observations regarding preliminary injunctions.  One observation favored by accused infringers is that “a substantial question about invalidity or infringement is likely sufficient … to avoid a preliminary injunction” 497 F.3d 1360, 1374 (Fed. Cir. 2007).  The phrasing of this statement, “substantial question about invalidity or infringement,” rings very similar to the “substantial new questions of patentability,” standard required for granting requests for reexamination.  Herein lies the tension between some district courts — when is a “substantial new question of patentability” (required to obtain a grant of a request for reexamination) sufficient to indicate a “substantial question about invalidity” (required to defeat a motion for preliminary injunction)?

As discussed in a previous post, in Lucent Technologies, Inc. v. Gateway, Inc., the Southern District of California found the grant of a request for reexamination was sufficient to create a “substantial question about invalidity.”  2007 US. Dist. LEXIS 95934, at *18-19 (S.D. Cal. Oct. 30, 2007).  Although this was a case discussing willfulness, the court placed heavy weight on the aforementioned Seagate language: “The Seagate court observed that a substantial question about invalidity or infringement is likely sufficient not only to avoid a preliminary injunction, but also a charge of willfulness based on post-filing conduct…. To the extent the Court accepts the PTO’s determinations that there are substantial questions of validity, the Court grants partial summary judgment of no willful infringement with respect to post-filing conduct.” Id.

In Procter & Gamble Co. v. Kraft Foods Global Inc., the Federal Circuit agreed.  In the Procter & Gamble case, the district court had denied the patentee a preliminary injunction.  The patentee appealed.  In reviewing the denial, the Federal Circuit noted that the patentee had previously obtained a reexamination certificate confirming the patentability of all the claims in the patent.  Procter & Gamble, 549 F.3d at 844.  In light of this information, the Federal Circuit vacated the denial of the preliminary injunction and remanded to the district court. Id. at 850.  The Federal Circuit instructed, “on remand, the district court should consider the current posture of the inter partes reexamination proceedings at the PTO when evaluating [the patentee’s] likelihood of success on the merits.  To the extent that the [alleged infringer] would challenge the validity of the claims of the [patent at issue] in the district court on the same bases it raised in the reexamination, the examiner’s confirmation of the patentability of every claim in the [patent at issue] may be relevant to [the patentee’s] likelihood of success.”  Id. at 847-848. Thus, at least under these circumstances, the Federal Circuit felt that the outcome of the reexamination was probative to the patentee’s “likelihood of success on the merits.”  The court cautioned, however, that “the PTO does not appear to equate the ‘substantial new question of patentability’ standard for whether reexamination should take place, see 35 U.S.C. §312(a), with the ‘substantial question of validity’ standard by which a defendant may prevent a patentee from demonstrating a likelihood of success on the merits….” Id. at 848.

District courts have also held that the grant of a request for reexamination is probative to the likelihood of success on the merits.  See, e.g., Pergo, Inc. v. Faus Group, Inc., 401 F. Supp. 2d 515, 524 (E.D. N.C. 2005) (“[W]hile the grant of a motion for reexamination is not conclusive as to the issue of validity, it is probative to the issue of whether defendants have raised a substantial question of validity.”).  Even more courts have done so when, during reexamination proceedings, the patent office issued a rejection.  In Power Integrations, during the reexamination of the relevant patent, the patent office had issued a rejection based on prior art.  Power Integrations, Inc. v. BCD Semiconductor Corp., 2008 U.S. Dist. LEXIS 108333, at *24 (D. Del. Nov. 4, 2008).  The patentee voiced concern that if courts began denying preliminary injunctions based on pending reexamination proceedings, the result would be that every defendant would file a reexamination request and no preliminary injunctions would issue in patent infringement cases.  Id. at *31.  The court responded, “it is the PTO’s Office Action rejecting claim 1 of the [patent at issue], and not merely the grant of the reexamination request, that I find raises a substantial question of validity which has not been rebutted here.”  Id.  The court then found that the grant of the request for reexamination and subsequent rejection of the relevant claim in the patent at issue raised a substantial question of validity, and therefore, the patentee failed to prove likelihood of success on the merits.  Id. at *33.

Other district court cases have come to similar conclusions.  See DUSA Pharm., Inc. v. River’s Edge Pharm., LLC, 2007 U.S. Dist. LEXIS 16005 (D.N.J. Mar. 6, 2007); Ohio Willow Wood Co.v. Alps S. Corp., 2009 U.S. Dist. LEXIS 87543 (S.D. Ohio Sep. 8, 2009).  In Avery Dennison, Corp. v. Alien Technology Corp., an initial rejection had also been issued in a pending reexamination proceeding.  626 F. Supp. 2d 693, 700 (N.D. Ohio Mar. 18, 2009).  There, the court noted that “[t]here is, admittedly, some practical appeal to the argument that the Court should assess the validity of the patent independent of PTO actions taken as a matter of course.  ‘Substantial question,’ however, is a relatively low standard that… merely requires [the alleged infringer] to engender ‘doubt’ regarding the validity of the [patent at issue].”  Id. at 702.  The court found that it “could not simply ignore” the grant of the reexamination request and the initial rejection — that “the PTO’s action [was] an important consideration in this case.”  Id. at 704-707.

Not every district court has found that “substantial questions about invalidity” are satisfied by the grant of a request for reexamination.  See Safoco, Inc. v. Cameron Int’l Corp., No. H-05-0739 (S.D. Tex. Jul. 31, 2009).  In Safoco, the court cited Procter & Gamble’s cautionary language, stating “[t]he USPTO’s ‘substantial new question of patentability’ standard for granting a reexamination is not equivalent to and is less stringent than the ‘substantial question of  validity’ standard that a defendant may satisfy to prevent the court from imposing a preliminary injunction.” Id. at 57-58.  The court thus concluded that the grant of reexamination was “only a single factor to consider.” Id. at 58.

The Eastern District of Texas agreed, coming to a similar conclusion in Fiber Systems International, Inc. v. Applied Optical Systems, Inc. No. 2:06-cv-473 (E.D. Tex. Mar. 31, 2008) (order adopting the report of the Magistrate Judge).  The Fiber Systems court found that although reexamination had been granted, this was not equivalent to the finding of a “substantial question about invalidity” for the purposes of a preliminary injunction.  Fiber Sys. Int’l, Inc. v. Applied Optical Sys., Inc., No. 2:06-cv-473, at 5 (E.D. Tex. Mar. 12, 2008) (report and recommendation of the Magistrate Judge).

Recently, the Federal Circuit again considered the issue.  See Automated Merch. Sys., Inc. v. Crane Co., 2009 U.S. App. LEXIS 27667 (Fed. Cir. Dec. 16, 2009).  In that opinion there is some indication that the Federal Circuit will continue to lean toward considering grants of requests for reexamination in the context of preliminary injunctions.  In the Automated Merchandising Systems case, the Federal Circuit found that the district court erred in granting both a stay pending the outcome of reexamination and a preliminary injunction.  Id. at *14-16.  In an doing so, the court found that “a stay pending reexamination is appropriate only if there is a substantial issue of patentability raised in the reexamination proceeding, while the injunction against the accused infringer is appropriate only if there is no substantial issue of patentability.”  Id, at *14-15.  The Federal Circuit then concluded, “Because it logically seems that there cannot simultaneously be a substantial issue of patentability and no substantial issue of patentability, stays pending reexamination are typically inappropriate in cases in which preliminary injunctions are appropriate.” Id.   Notice, that in the former quotation, the court did not say “the injunction against the accused infringer is appropriate only if there is no substantial issue of validity,” as is the usual standard for finding a likelihood of success on the merits.  Rather, the Federal Circuit cited something much more related to the reexamination standard — “substantial issue of patentability.”  Unless this was a mere oversight, it appears to indicate that the Federal Circuit considers the two standards at least very closely related.

Admissibility in Litigation?

As a result of the popularity of reexamination, courts are frequently faced with the issue of whether evidence of parallel reexamination proceedings should be considered at trial.  In our previous posts, “Is Evidence of Parallel Reexamination Proceedings Admissible at Trial? (Parts I and II),” we discussed using pending reexamination proceedings to support invalidity contentions and prove inequitable conduct.  Accused infringers have also attempted to use evidence of parallel reexamination proceedings to rebut allegations of willful infringement.

Reexamination Evidence Used to Rebut Willfulness

Willful infringement exists where an accused infringer acted “despite an objectively high likelihood that its actions constituted infringement of a valid patent” and the “objectively defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer.”  In re Seagate Technology, LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007).  Thus in order for willful infringement to be found, the accused infringer must have known or should have known that the relevant patent was valid.  Willfulness is to be evaluated “under the totality of the circumstances.” Id. at 1369.  Thus, alleged infringers accused of willful infringement have asked the court to consider the existence of pending reexamination proceedings.  The theory asserted by alleged infringers is typically a variant of the following: where the PTO has granted a request for reexamination, and thus concluded that substantial questions of patentability exist, an alleged infringer could not have acted “despite an objectively high likelihood that its actions constituted infringement of a valid patent.”  In other words, where the PTO has called into question the validity of the patent by granting reexamination, any infringement thereafter could not have been willful.

In  Lucent Technologies, Inc. v. Gateway, Inc., the court agreed with that theory, granting summary judgment of no willful infringement based on the existence of a pending request for reexamination.  2007 US. Dist. LEXIS 95934, at *18-19 (S.D. Cal. Oct. 30, 2007) (citing In re Seagate Tech., LLC, 497 F.3d 1360, 1374 (Fed. Cir. 2007)).  The Lucent court observed that a substantial question of invalidity or infringement is likely sufficient to avoid a charge of willfulness based on post-filing conduct.  Id.  The court noted that, although a grant of reexamination would not always prevent summary judgment of willful infringement, the recognition of a substantial question of patentability by the Patent Office was one factor among the totality of the circumstances.  Id.

A similar decision was reached in TGIP Inc. v. AT&T Corp., 527 F. Supp. 2d 561, 579 (E.D. Tex. 2007).  There, the court considered evidence of a pending reexamination in granting judgment as a matter of law on the issue of willfulness.  The court felt it was of particular significance to the lack of willfulness that “the patentee was concerned enough to ask for reexamination of the [patent].”  Id.  This seems to imply that especially where a patentee files for reexamination, difficulty may arise in later asserting willful infringement.

Despite the pro-defendant rulings in the previous two cases, not every court has concluded that evidence of a grant of a reexamination request is relevant in determining willfulness.  This is particularly true where the evidence would be presented to a jury.  In Presidio Components Inc. v. American Technical Ceramics Corp., the court found that because the reexamination proceedings were still incomplete and based solely on evidence provided by the alleged infringer, the proceedings — even if relevant — were unfairly prejudicial and the potential for jury confusion was great.  No. 08-CV-335, at 3 (S.D. Cal. Nov. 13, 2009) (granting motion in limine to exclude reexamination evidence); see also Intel Corp. v. Commonwealth Scientific and Industrial Research Organisation, No. 06-cv-551 at 4 (E.D. Tex. April 9, 2009) (“[W]ithout any conclusions of the PTO to rely upon, evidence that the PTO is currently reexamining the patent may work to unduly alleviate Defendants’ ‘clear and convincing’ burden for both invalidity and willfulness in front of the jury….”).  The Presidio court differentiated itself from Lucent, noting that Lucent dealt with the grant of reexamination at the summary judgment stage, where the evidence would not be presented to the jury.  Id. at 4.  Thus, the risk of jury confusion was lesser in Lucent than it would be in Presidio.

The court in Realtime Data, LLC v. Packeteer, Inc., further contemplated the difference in prejudice between reexamination evidence as considered by a judge and the same evidence considered by a jury.  No. 6:08-cv-144 (E.D. Tex. Dec. 30, 2009).  The Realtime court concluded, “although an ongoing reexamination proceeding and the USPTO’s actions therein could be considered by the court as a factor in a willfulness determination at the summary judgment stage, during trial in a request for judgments as a matter of law as to willful infringement, and/or post-verdict, it should not be introduced before the jury due to the highly prejudicial effect the USPTO’s actions would have on the jury.  Id. at 4.

While the previous courts were concerned with the entity who would be considering the evidence (judge or jury) in evaluating potential prejudice, the primary concern of other courts is the status of the reexamination proceedings.  Reexamination proceedings, like litigation, take time.  Thus, at the moment the court assesses the reexamination evidence, the reexamination may or may not have progressed beyond the mere grant of the request for reexamination.  Non-final or final rejections may have been issued.  The reexamination may even be complete.

In Ultratech Int’l, Inc. v. Swimways Corp., the relevant reexamination proceedings were complete and the examiner found all relevant claims patentable.  2009 U.S. Dist. LEXIS 80997 (M.D. Fla. Mar. 3, 2009).  After the certificate of reexamination had issued, confirming the validity of the suit patent, the patentee sought to amend the complaint to assert willful infringement.  The court, considering the stage of the reexamination, allowed the patentee to supplement the complaint.  However, the court limited the willful infringement claim to acts occurring after the conclusion of the reexamination.  Id. at *8-9.  In differentiating infringement before the conclusion of the reexamination and infringement afterward, the court reasoned “before the Reexamination Certificate issued, allegations that the Defendant’s actions were deliberate or reckless would not have provided sufficient factual or legal grounds because the validity of the [patent at issue] remained questionable.”  Id.  The Ultratech decision was later cited by St. Clair Intellectual Property Consultants, Inc. v. Matsushita Elec. Indus. Co., for the proposition that continued infringement after the issuance of a reexamination certificate could be considered objectively reckless.  2009 U.S. Dist. LEXIS 49882, at *7 (D. Del. Jun. 10, 2009); see also St. Clair Intellectual Property Consultants, Inc. v. Palm, Inc., 2009 U.S. Dist. LEXIS 49922, at *5-6 (D. Del. Jun. 10, 2009).

Safoco, Inc. v. Cameron Int’l Corp., a more conservative opinion, disagreed with Ultratech. No. H-05-0739 (S.D. Tex. Jul. 31, 2009). In Safoco, the PTO had reexamined the patents at issue, and although some changes were made, the court noted that the examiner had not required any “substantive” changes to be made.  Id. at 59-60.  Thus, when the alleged infringers, attempted to obtain summary judgment of no willful infringement, based on evidence of reexamination, the court did not react favorably.  Unlike the court in Ultratech, the Safoco court concluded that, regardless of whether the infringing activity occurs before or after the reexamination certificate issues, “the granting of a reexamination request by the USPTO is only a single factor to consider and is not dispositive as to the objective prong of the willful infringement standard.” Id. at 58.  It noted that, compared to the mere fact that a reexamination proceeding has occurred, “the outcome of a reexamination proceeding is far more persuasive, though again not necessarily dispositive, as to whether the defendant acted ‘despite an objectively high likelihood that its actions constituted infringement of a valid patent.’” Id.  In the Safoco defendant’s case, the court did not find the outcome of the reexamination proceeding dispositive, and denied the summary judgment motion.

As will be discussed in a subsequent post, alleged infringers have also recently attempted to use evidence of granted reexamination requests to oppose or support motions for preliminary injunction.

Admissibility in Litigation?

 

Courts have recently been faced with the issue of whether evidence of parallel reexamination proceedings should be considered at trial.  In our prior post, “Is Evidence of Parallel Reexamination Proceedings Admissible at Trial? (Part I of IV)”, we discussed using pending reexamination proceedings to support invalidity contentions.  Accused infringers have also attempted to use evidence of parallel reexamination proceedings to prove inequitable conduct on the part of the patentee.

Reexamination Evidence Used to Prove Inequitable Conduct

To prove inequitable conduct, the infringer must show evidence that the patentee either misrepresented a material fact, failed to disclose material information, or submitted false material information with the intent to deceive the Patent Office.  Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1365 (Fed. Cir. 2008) (quoting Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1363 (Fed. Cir. 2007)).  Additionally, at least a “threshold level” of both materiality and intent to deceive must be proven by clear and convincing evidence.  Star Scientific, 537 F.3d at 1365.

Information is considered material where “a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent.’”  Star Scientific, 537 F.3d at 1367 (quoting Symantec Corp. v. Computer Assocs. Int’l, Inc., 522 F.3d 1279, 1297 (Fed. Cir. 2008)).  Similarly, the Manual of Patent Examining Procedure § 2642 instructs examiners to apply nearly the same standard in determining whether a substantial new question of patentability exists: “A prior art patent or printed publication raises a substantial question of patentability where there is a substantial likelihood that a reasonable examiner would consider the prior art patent or printed publication important in deciding whether or not the claim is patentable.”  Accordingly, where an examiner determines that prior art presents a substantial new question of patentability in granting a request for reexamination, accused infringers assert that such consideration proves the prior art’s materiality.  This argument is enhanced when, during reexamination, the examiner issues a rejection based on that information.  The Federal Circuit itself has stated that “the result of a PTO proceeding that assesses patentability in light of information not originally disclosed can be of strong probative value in determining whether the undisclosed information was material.”  Molins PLC v. Textron, Inc., 48 F.3d 1172, 1179 (Fed. Cir. 1995).  See also 3M Innovative Properties Co. v. Dupont Dow Elastomers, LLC, 2005 U.S. Dist. LEXIS 44877, at *6-7 (D. Minn. Sept. 8, 2005) (“Evidence of the result of the completed reexamination proceedings could be highly relevant to … inequitable conduct allegations at trial . . . .   On the other hand, admission of evidence of an incomplete reexamination would have low probative value, would distract from the core issues of the case, and would be highly prejudicial”).  Thus, at least where reexamination is complete, the results of that reexamination may be important in determining the materiality of a reference.  What is not clear is when the proceedings of a reexamination which is not yet complete can help determine materiality.

In a recent case considering this issue, the defendants took a cue from the Federal Circuit and attempted to apply the idea behind Molins where a request for reexamination had been granted, but no final decision had been made.  In Intel Corp. v. Commonwealth Scientific and Industrial Research Organisation, after the USPTO granted the relevant request for reexamination, the defendants sought to supplement their summary judgment motions with evidence of the grant.  They argued that the grant of the request was probative to an inequitable conduct analysis, specifically to the element of materiality.  No. 06-cv-551 (E.D. Tex. April 9, 2009) (order denying motion to supplement).  The outcome however, was not as the defendants would have hoped.  The court was critical of the defendants’ delay in filing for reexamination and of defendants’ delay in moving to supplement their summary judgment motions, noting that such delays “weigh[ed] heavily against supplementation.”  Id. at  4.  It then distinguished Molins based on the status of the reexamination proceedings.  The court determined that the mere grant of a request for reexamination was not probative of either willfulness or inequitable conduct.  Id.

As will be discussed in subsequent posts, alleged infringers have also recently attempted to use evidence of granted reexamination requests to rebut charges of willful infringement and to oppose motions for preliminary injunction.

Admissibility in Litigation?

Several courts have recently been faced with the issue of whether evidence of parallel reexamination proceedings should be admissible at trial. Parties in these cases have attempted to use the existence of pending reexamination proceedings to prove or disprove invalidity, inequitable conduct, and willful infringement. Opponents generally argue that evidence of parallel reexamination proceedings is irrelevant, unfairly prejudicial, and/or contrary to the statutory presumption of validity under 35 U.S.C. § 282.

Presented with both points of view, the rulings of courts vary, and whether this evidence is allowed tends to depend on the circumstances of the case. Many courts quickly reject the evidence; however, there appears to be a trend of courts giving reexamination evidence more consideration. Of those courts that seriously contemplate admission of the evidence, many place significant weight on the stage of advancement of the reexamination proceeding – ranging from a simple grant of reexamination, to rejections of the reexamined patent’s claims, to completion of the reexamination proceedings. The stage of the litigation also plays an important role, as this determines whether the evidence will be considered by a judge or a jury. More than one opinion distinguishes admission of reexamination evidence for summary judgment purposes from admission for jury consideration. Whether the entity requesting reexamination is the patentee or the accused infringer can also influence admissibility of reexamination evidence in litigation. See, e.g., TGIP, Inc. v. AT&T Corp., 527 F. Supp. 2d 561, 579 (E.D. Tex. 2007).

Reexamination Evidence Used to Support Invalidity

Generally, when reexamination evidence is used to support contentions of patent claim invalidity, the alleged infringers do not simply attempt to equate the grant of a request for reexamination with patent claim invalidity. Patent owners could rebut that argument merely with statistics showing that there is little correlation between the Patent Office’s grant of reexamination and the ultimate patentability of the claims under reexamination. See Hoechst Celanese Corp. v. BP Chemicals Ltd., 78 F.3d 1575, 1594 n.2 (Fed. Cir. 1996) (noting that in 1994, 89% of reexamination requests were granted, but only 5.6% of the reexamined patents were completely rejected with no confirmed or allowed claims remaining after reexamination; Presidio Components, Inc. v. American Technical Ceramics Corp., 2009 U.S. Dist. LEXIS 106795, at *4-5 (S.D. Cal. Nov. 13, 2009) (stating that, according to 2007 data, the USPTO grants 92% of requests for reexamination, but in only 12% all claims are subsequently canceled).

Instead, accused infringers often attempt to use the grant of reexamination to substantiate their invalidity contentions. The argument is that an alleged infringer’s invalidity contentions are entitled to more weight where the Patent Office has found at least some substantial new question of patentability based on those same arguments. This argument has been largely unsuccessful. “The grant of a request for reexamination, although surely evidence that the criterion for reexamination has been met … does not establish a likelihood of patent [claim] invalidity.” Id. at 1584. See also Procter & Gamble Co. v. Kraft Foods Global, Inc., 549 F.3d 842, 848 (Fed. Cir. 2008) (cautioning that “a requestor’s burden to show that a reexamination order should issue from the PTO is unrelated to a defendant’s burden to prove invalidity by clear and convincing evidence at trial.”); Amphenol T&M Antennas Inc. v. Centurion Intern. Inc., 2002 U.S. Dist. LEXIS 822, at *4-5 (“As a probative matter, the Patent Office’s decision to grant reexamination casts the validity of the patent into some doubt, but only to a small degree . . . . The likelihood that some or all of the patent claims will be invalidated as a result of the reexamination proceedings is impossible to calculate with any reasonable degree of certainty, but statistically, it is not great.”)

In disallowing this attempt to support patent claim invalidity arguments with an order granting reexamination, many courts weigh the potential prejudice of the reexamination evidence against its probative value under Federal Rule of Evidence 403. More often than not, these courts determine that the probative value is far outweighed by the potential prejudice. See, e.g., Amphenol, 2002 U.S. Dist. LEXIS 822 at *5 (“[T]hat the patent has been called into question by the Patent Office may significantly influence the jury’s application of the presumption of validity and significantly prejudice ATM. The prejudicial potential of this evidence far outweighs any probative value it may have.”); SRI Intern., Inc. v. Internet Sec. Sys., Inc., 2009 U.S. Dist. LEXIS 73981, at *86 (D. Del. Aug. 20, 2009) (“Absent unusual circumstances … non-final decisions made during reexamination are not binding, moreover, they are more prejudicial (considering the overwhelming possibility of jury confusion) than probative of validity; i4i Ltd. P’ship & Infrastructures for Info. Inc. v. Microsoft Corp., 2009 U.S. Dist. LEXIS 70104, at *53-54 (E.D. Tex. Aug. 11, 2009) (“Even if [the grant of a request for reexamination] was [probative], its probative value is substantially outweighed by its prejudicial effect in suggesting to the jury that it is entitled to ignore both the presumption of validity and the defendant’s clear and convincing burden at trial.”). At least one court, however, found that the prejudicial effect of reexamination evidence might be neutralized by an appropriate jury instruction. Fresenius Medical Care Holdings, Inc. v. Baxter Intern., Inc., No. 03-cv-1431, Order Denying Motion to Strike at 6 (N.D. Cal. May 15, 2006). That court did not, however, provide an example of an acceptable jury instruction.

Recent cases in this area, although continuing to weigh probative value against prejudicial effect, have taken an interesting twist. These courts are now focusing more on the presumption of validity, found in 35 U.S.C. § 282, and have shown some indication that patentees may not always be able to tout this presumption where reexamination is ongoing.

In the district court case of Callaway Golf Co. v. Acushnet Co., Callaway, the patent owner, boasted in its opening statement that three patent examiners had concluded the asserted patents were valid by virtue of their allowance and issue. Callaway Golf Co. v. Acushnet Co., 576 F.3d 1331, 1342 (Fed. Cir. 2009). Callaway did not mention that a reexamination was pending and that the Patent Office had rejected each of the patent claims asserted at trial. Id. The accused infringer, Acushnet, sought to introduce evidence of the parallel reexamination proceeding. The district court refused to allow Acushnet to mention the reexamination proceeding but also precluded any further similar statements by the patent owner concerning the conclusions of the Patent Office in allowing the asserted patents. Id. On appeal to the Federal Circuit, Acushnet requested a new trial based on the district court’s prohibition of the reexamination evidence. The Federal Circuit agreed that Callaway’s opening statement was potentially misleading: “Acushnet is correct that Callaway’s opening statement, while truthful, nevertheless had potential to mislead the jury by implying that every expert examiner to have considered the patents had concluded that they were valid.” Id. The Federal Circuit ultimately found that the district court had not abused its discretion, however, because, Acushnet did not object during Callaway’s opening statement and the district court disallowed repetition of similar statements. Id. at 1342-1343.

More recently, in Presidio Components, Inc. v. American Technical Ceramics Corp., a district court found evidence of reexamination proceedings unfairly prejudicial. 2009 U.S. Dist. LEXIS 106795 (S.D. Cal. Nov. 13, 2009). At the outset of trial, however, the court prohibited the patent owner from referencing the presumption of validity. “With any reference of the ‘presumption of validity’ excluded, allowing the jury to hear about incomplete USPTO proceedings will be unfairly prejudicial to [the patent owner], and could potentially confuse the jury as to who has what burden throughout the trial.” Id. at *6, n.1. The court emphasized that the reexamination proceedings were still incomplete and distinguished cases at the summary judgment stage, where admission of the evidence would not result in jury confusion. Id. at *7.

As will be discussed in subsequent posts, alleged infringers have also recently attempted to use evidence of granted reexamination requests to prove inequitable conduct, rebut charges of willful infringement, and/or oppose motions for preliminary injunction.