The seemingly never ending saga of the NTP patent reexaminations took yet another interesting turn yesterday. The BPAI issued revised decisions on remand that reversed the earlier rejections of some of the NTP claims. As a reminder, the reexamination of the NTP patents began during the litigation between NTP v. RIM.  The reexaminations continued at the USPTO in parallel with the then ongoing, and now infamous, litigation.  However, the co-pending litigation continued on to the settlement, narrowly avoiding a disruption of RIM’s business in the U.S via court imposed injunction.

Now, some 6+ years later, the reexaminations may be close to a conclusion (absent further appeal by NTP).

The revised decisions stem from the CAFC remand on claim construction issues relating to the definitions of “electronic mail” or “electronic mail message.” As a result of the revised construction, NTP has manged to claw back some of their previously rejected claims.The chart below shows the current status of the NTP portfolio as of yesterday, the decisions are linked here: 5,436,960; 5,438,611; 5,479,472; 5,625,670; 5,631,946; 5,819,172; 6,067,451; and 6,317,592 (not yet issued)

LEGEND:

-Green claims were newly confirmed/allowed as a result of yesterday’s decisions

-Black claims have been confirmed/allowed since the first decision of the BPAI

-Underlined claims are confirmed/allowed, but were added as new claims during the reexamination.

(CLICK TO ENLARGE)

NTP entered the patent reexamination process with over 2200 claims. The underlined claims were added in patent reexamination, which means they do not exist until printed at the conclusion of the reexamination. For many, if not all of these newly added claims, it is simply too late. This is because some of the underlying patents expired in May of 2011. Once a patent expires, new claims cannot be added….however existing claims can be enforced by proving that the claims were infringed prior to expiration. So, at the end of the day, assuming the surviving, original claims are infringed, NTP may be able to restart their stalled infringement campaign, against Apple, Yahoo, Sprint and others. (Virginia District Court stayed case pending USPTO reexamination)

While further appeals are also possible from the latest decision of the BPAI, it seems that NTP may have reached the point of diminishing returns and will instead allow the patent reexamination proceedings to finally end after 6+ years.

As injunctions in patent disputes have become more difficult to obtain since the earlier dispute with RIM, and the portfolio is expired/expiring, the previous leverage of NTP is significantly diminished.

Going forward, new NTP targets may find relief from a new provision of the America Invents Act (a.k.a recently enacted patent reform legislation, effective next September 16th) that will permit an inter partes style challenge (in this case Inter Partes Review) of these patents for the first time….the saga continues.

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.

Therasense Decision to Influence the Choice Between Ex Parte vs. Inter Partes Patent Reexamination?

On May 25, 2011, the Federal Circuit issued its the long awaited en banc decision in Therasense, Inc. v. Becton, Dickinson & Co. 2008-1511.  The majority opinion authored by Chief Judge Randall Rader established a single new standard for determining materiality in inequitable conduct cases. This new “but for” standard defines material information as any non-cumulative information which, had it been disclosed prior to patent issuance, would have prevented the patent from issuing.

Unlike the prior standard used in determining materiality of undisclosed information, the new standard assesses materiality on a preponderance of evidence burden of proof standard giving the patent claims their broadest reasonable construction in light of and consistent with the supporting patent specification. Presumably, because the majority opinion rejected the applicability of the USPTO’s materiality standard under 37 CFR § 1.56(b)(1), the new “but for” standard will take into account any rebuttable evidence that is proffered by the patent owner such as antedating non-statutory bar prior art and objective indicia of non-obviousness, irrespective of the fact that none of such rebuttal evidence was ever submitted to the USPTO for consideration prior to patent issuance.

A consequence of the new “but for” test for materiality is that, at least for those filings that include art forming the basis of an inequitable conduct defense to infringement, inter partes patent reexamination is now the more attractive option. 

With the “important to a reasonable examiner” standard and the “prima facie unpatentable” standards eliminated in Therasense as materiality standards for proving inequitable conduct, ex parte reexamination becomes less attractive for use in corroborating an inequitable conduct defense. Previously the reasonable examiner standard was at least arguably evidenced upon a mere decision to reexamine/reject claims in either form of patent reexamination. However, Post-Therasense, the new goal is for the reexamined patent claims to be canceled or amended based on the undisclosed patents and printed publications, such would be dispositive that the original claims should not have issued in their original form.

Because the new “but for” standard allows the patent owner to submit rebuttable evidence, the third party requester needs to be cognizant that patents and printed publications that qualify as prior art under 35 U.S.C. §§ 102(a) or (e) may be vulnerable to antedating by the patent owner. Moreover, if the bases for the rejections are solely under 35 U.S.C. § 103, the patent owner may be able to rebut the prima facie case of obviousness through proof of objective indicia of non-obviousness, such as proof of unexpected results.

Particularly, in inter partes reexamination where the third party requester may participate at every stage of the proceedings, including independent rights to appeal the BPAI and Federal Circuit, the third party is provided with the most effective tool to prove materiality. USPTO statistics (here) demonstrate that challengers are far more successful in forcing claim amendment/cancellation in an inter partes patent reexamination.

Akin to the new “but for” materiality standard of the district courts, in patent reexamination, claims are also a broadest reasonable construction. Likewise, prior art is also evaluated under a preponderance of evidence standard in patent reexamination. See for example, MPEP §§ 2258(I)(G) and 2658(I).

Where the third party requester has a strong case of unpatentability of original patent claims based undisclosed prior patents and printed publications previously known by the patent owner, reexamination, preferably inter partes reexamination may be a tool of choice, if filed promptly, to prove the “but for” test for materiality Post-Therasense.

For further insight into factors that may influence the selection of one form of patent reexamination over another, see Scott’s BNA videos on the topic (here)

Previously, Voda v. Medtronic Inc., et. al. (OKWD) examined the impact of multiple requests for patent reexaminationin the context of a motion to stay. Early in the case the defendant Medtronic was able to secure a stay pending a first request for patent reexamination. Shortly thereafter, the reexamination concluded favorably to the Patent Holder and the stay was lifted. Next, the defendants filed a second request for ex parte patent reexamination, and then a third request along with a second motion to stay the case. The court denied the second motion explaining that the case schedule had already been delayed for some two years.

In a more recent decision (here), the plaintiff was able to add a further patent to the dispute by way of amended complaint. In permitting the amendment of the complaint, the judge once again explained that the defendants reexamination delay worked against them.

In considering the plaintiffs request to amend the complaint to add an additional patent, the court characterized the defendants delay argument as follows:

Defendants’ delay arguments are not well-taken, given that much of the delay that has occurred to date is the result of their filing serial reexamination requests before the PTO. 

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

Yesterday, the Board of Patent Appeals & Interferences (BPAI) heard oral arguments in the longstanding dispute between Callaway Golf and Acushnet. Acushnet is the parent company of Titleist, maker of the ProV1 family of golf balls. Callaway asserts that the ProV1 balls infringe several of their patents (6,210,293, 6,503,156, 6,506,130, 6,595,873)

In 2006, Acushnet sought inter partes patent reexamination of the Callaway patents. To date, all claims of the Callaway patents were rejected by the USPTO. These rejections were considered by the Board yesterday.

In the co-pending litigation the patents were also found invalid. (March 2010 D.Del). Interestingly, despite a 1996 contractual agreement between the companies that mandated all proceedings be conducted in the Delaware court, Acushnet sought patent reexamination at the USPTO anyway. Late last week, the court reinstated a decision determining that the pursuit of patent reexamination by Acushnet was a breach of the contract. As a result of that decision (here) Callaway feverishly petitioned to delay the Board hearing, arguing that the Board should not help Acushnet break their contractual obligations; not surprisingly, the Board declined that invitation.

So, yesterday, the Board learned all about Acushnet, a company known for their balls.

The majority of the debate related to whether or not a certain hardness range recited in the claims referred to a characteristic of the material, used to construct the ball, or the ball itself. Callaway argued that the claims were directed to a ball, not ingredients. It was also argued that since a Markman Order on the meaning of the claim terms had been considered by the BPAI that this claim interpretation should be controlling on the USPTO. Callaway also referenced secondary indicia of non-obviousness that pointed to the sales success of the ProV1 golf balls.

Callaway emphasized to the Board that the claims reciting a polyurethane embodiment were of primary importance. When prompted by the Board as to whether or not Callaway was intending to waive the claims not including this feature, Callaway agreed to waive those claims on the spot. I am guessing the Board probably would have preferred that happen before reading all of the briefs and associated examiner positions.  Strange.

In rebuttal, Acushnet explained that the specifications of the patents were broad enough to cover a ball hardness interpretation and an ingredient hardness interpretation, thus the PTO was correct in rejecting the claims. Acushnet then explained that they (Titleist) sell more balls than anyone else because they are the market leader and that the Callaway evidence of secondary considerations had no meaningful nexus to the patented claims.

The dispute will inevitably head on to the CAFC no matter the decision of the Board. If the claims ultimately fall at the CAFC (my guess), I will be very interested in the outcome of the breach of contract issue. Can Acushent really breach the contract in view of CAFC indications that a patent is “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). In other words, if the patent never existed….what about that contract?

The affirmative defense of inequitable conduct is commonplace in most patent disputes. Indeed, many have labeled this defense a “plague” due to its over-use by defendants. The prevalence of inequitable conduct before the district courts is especially debated on the eve of the CAFC en banc review in Therasense, Inc. v. Becton Dickinson and Co. At issue in Theresense is the very foundations upon which an inequitable conduct defense is built. The CAFC will consider the degree of materiality necessary, as well as the degree to which intent may be inferred.

A key issue under consideration by the CAFC in Therasense is:

What is the proper standard for materiality? What role should the United States Patent and Trademark Office’s rules play in defining materiality? Should a finding of materiality require that but for the alleged misconduct, one or more claims would not have issued?

As an affirmative defense inequitable conduct must be plead with particularity, no matter what the CAFC decides in Theresense.  Likewise, materiality is determined from the perspective of a reasonable examiner …..so, why not just have the USPTO demonstrate what they would have done in the form of an office action in patent reexamination?

As Judge Folsom explained in striking an inequitable conduct defense in TiVo v Verizon Communications on October 28th (here), the perspective of what might have happened in examination can be fairly detailed:

the Federal Circuit held that for “pleading inequitable conduct in patent cases, Rule 9(b) requires identification of the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.” Id at 1327. The “who” of the material omissions and misrepresentations concerns those individuals with a duty of candor and good faith in dealing with the Patent and Trademark Office (“PTO”). Id. at 1329. The “what” and “where” of the material omissions relate to “which claims, and which limitations in those claims, the withheld references are relevant to, and where in those references the material information is found[.]” Finally, a pleading needs to state the “particular claim limitations or combination of limitations that are supposedly absent from the information of record. Such allegations are necessary to explain both ‘why’ the withheld information is material and not cumulative, and ‘how’ an examiner would have used this information in assessing the patentability of the claims.” (citing Exergen Corp. v. Wal-mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009)).

As pointed out in past posts, the filing of a request for patent reexamination parallel with litigation provides significant benefits aside from simply attacking the validity of an issued patent. With Theresense perhaps making the defense of inequitable conduct a bit more challenging in the near term, it may be that office actions in patent reexamination will be increasingly valued as road maps to demonstrating materiality.

]]> http://www.patentspostgrant.com/lang/en/2010/11/demonstrating-materiality-through-patent-reexamination/feed 0 http://www.patentspostgrant.com/lang/en/2010/08/patent-owner-preemptive-strikes-to-stymie-inter-partes-reexamination http://www.patentspostgrant.com/lang/en/2010/08/patent-owner-preemptive-strikes-to-stymie-inter-partes-reexamination#comments Mon, 16 Aug 2010 10:10:36 +0000 Stephen G. Kunin http://www.patentspostgrant.com/?p=2513 USPTO statistics demonstrate that Patent Owner’s fair much better in ex parte patent reexamination as opposed to inter partes patent reexamination. Current statistics indicate that all claims are canceled in patents subject to ex parte reexamination in 12% of cases, while the same statistic stands at 49% for patents subject to inter partes reexamination.

Of course, the number of concluded inter partes reexamination as compared to ex parte reexamination is still relatively small, likely skewing the statistics. Yet, it is quite clear that eliminating the active voice of the third party requester, as well as avoiding third party appeal of confirmed/allowed claims is highly desirable from a Patent Owner perspective.

Knowing that ex parte patent reexamination presents the most favorable odds to a Patent Owner, is there a preemptive strategy a patent owner can employ to diffuse the risk of inter partes patent reexamination?

In deciding to grant or deny a request for reexamination, the USPTO analyzes the proposed Substantial New Questions of Patentability (SNQs) presented with respect to previously considered art of the original prosecution, as well as concluded/ongoing reexamination proceedings. Where an earlier initiated ex parte reexamination includes the same, or cumulative art, a later request for inter partes reexamination that is based on such art and presented in the same light, must be denied MPEP 2642. Thus, by “front loading” prior art in a patent owner initiated ex parte reexamination request the opportunity to seek inter partes reexamination based on the same art may be foreclosed to a third party.

For example, Forecast Consoles filed an April 2005  request for ex parte reexamination of its own patent (U.S. Patent No. 6,857,712) which the USPTO assigned Reexamination Control No. 90/007,706.  An SNQ was established based on a Catta patent and an Evan printed publication. Subsequently, in August 2005, third party requester TBC sought inter partes reexamination of this same patent. In addition to the Catta patent and the Evan publication used to establish an SNQ for the independent patent claims, other references were included to establish an SNQ, however, these other references were only used in connection with dependent claims.

In Reexamination Control No. 95/000,106 the USPTO did not order inter partes reexamination, finding that because the Catta and Evans references were used as the basis for an SNQ in the ex parte reexamination filed by the patent owner (i.e., presented in the same light), they could not be used as a basis for an SNQ by the third party requester against the independent claims in the IPR proceedings. Furthermore, TBC’s failure to raise an SNQ against the independent claims prevented them from presenting an SNQ against the dependent claims, although additional prior art was used with Catta and Evans against the dependent claims.

Subsequently, the ex parte reexamination proceeding terminated with all original patent claims confirmed; resulting in a true victory for Forest Consoles in preempting TBC’s inter partes reexamination efforts.

To be sure, a preemptive ex parte reexamination filing by a Patent Owner is a bold step, unlikely in many concurrent litigation contexts. Still, the lesson to be learned for third parties is to initiate inter partes reexamination promptly, especially in highly specialized technologies that have a limited universe of available prior art.

Yesterday, the rejection of issued claims 1-14 was reversed at the BPAI (decision here). The refusal to adopt a rejection of claim 6 and 13 was also affirmed. Thus, the Third Party, Rexnord Industries, may find itself on the wrong side of the estoppel equation of 35 USC 315 (c) very shortly.

More importantly, will the court recognize the significant delay to date, and the appeal reversal as justification enough to lift the stay?

To be sure, estoppel does not attach until a “final” determination (i.e., CAFC). Still, with the CAFC reviewing the BPAI fact finding on the Zurko standard (substantial evidence), and claim interpretation only for lack of reasonableness, perhaps the writing is already on the wall for Judge Farnan. Unfortunately, these cases have a way of settling before anything interesting happens…stay tuned.

A threshold issue in patent reexaminations concurrent with litigation is whether or not the declarant should be the same expert who is expected to testify at trial, or a new expert retained for reexamination purposes only. This decision is affected by several factors, including the risk of two experts taking inconsistent positions and the likelihood that the declarant in the reexamination will be deposed.

Federal Rule of Civil Procedure 26(b)(4) normally operates to protect experts expected to testify at trial from being deposed until they have been identified to all parties and have submitted written reports pursuant to Rule 26(a)(2). The written reports, often referred to as an “expert reports,” contain all opinions the experts will express at trial. The Federal Rules of Civil Procedure do not specifically contemplate, however, the effect of declarations submitted in support of reexamination proceedings before the USPTO. If such declarations contain the experts’ opinions on the validity of the patents involved in reexamination, are the experts subject to being deposed in concurrent litigation involving the same patents?

Only “[t]o the extent that the witnesses are later identified as ‘testifying experts’” determined a magistrate judge in granting a protective order motion in the case of Roy-G-Biv v. Fanuc. Civil Action No. 2:07-cv-418 (E.D. Tex. Jul. 9, 2009). Reaching the same conclusion, the district court judge subsequently denied a motion for reconsideration of the protective order and expressly declined to “displace the normal protections of Rule 26(b)(4) and allow such depositions to take place prematurely.” In essence, the Court ruled that the mere submission of an expert’s declaration to the USPTO during reexamination does not satisfy the Rule 26(a)(2) requirement for a party to identify all experts who may be used at trial.

It follows from the Court’s logic, then, that an expert employed for both reexamination and the concurrent litigation can only be deposed after being identified as an expert expected to testify at trial. If it is desirable to shield from deposition an expert who prepares a declaration for reexamination proceedings, then counsel should retain separate experts for reexamination proceedings and trial.

Absent evidence of control and contribution with respect to an inter partes reexamination request, the USPTO has taken the position that cooperation for litigation purposes via JDA does not equate to privity for reexamination purposes pursuant to 37 C.F.R. §1.915(b)(7-8). Yet, in arriving at such a determination, the USPTO cautions that this conclusion is largely based on their administrative mandate, which does not provide for investigative resources and discovery power in this regard. As such, perhaps of greater concern to co-defendants is whether or not a court would find privity once a an inter partes reexamination concludes and estoppel attaches to the Requester.

Of course, due to the longevity of inter partes reexamination proceedings to date, the privity issue has yet to play out in a district court. Still, should a plaintiff recover a valid claim from an inter partes reexamination co-defendants will almost certainly be subject to a privity attacks in an attempt to enforce the estoppel provision of 35 USC § 315(c). 

For example, consider the case of a single defendant of a JDA that requests an inter partes reexamination, then settles with the Patent Holder early in the reexamination process. The Requester, as a term of the settlement, agrees not to participate any further in the inter partes reexamination process. In such a case, the Patent Holder may have an easier time recovering their patent from inter partes reexamination due to the lack of active opposition. Once a litigated claim of the patent is recovered, the Patent Holder may seek to enforce the estoppel provision of 35 USC § 315(c) against the remaining defendants. Such would effectively remove the reexamination art and any art that “could have been raised” in the reexamination from the district court proceedings.

Here, the court is likely to look much closer at the privity situation than the USPTO. Likewise, as the settling Requester is certainly a competitor of the remaining defendants, there may be motivation on behalf of the Requester to cooperate with the plaintiff in their fact finding.    

In such situations, co-defendants that have joined in motions with the settling Requester to stay the litigation, have submitted invalidity pleadings that look very similar to claim charts of the request for reexamination, and that have coordinated and discussed reexamination issues with the settling Requester may find themselves on the wrong side of a district court privity determination.