In 2006, a New Zealand actor appearing in such films as Lord of the Rings, decided to go on a quest to invalidate the 1- click patent (I’m picturing Frodo, I don’t know about you) requesting ex parte reexamination of all claims. The request for reexamination was granted with respect to the claims of the patent (1-26). Claims 6-10 recited a shopping cart component and were confirmed.

Not surprisingly, the shopping cart feature of the confirmed claims was later introduced by Amazon into rejected claims 1-5 and 11-26 by amendment.  This amendment was submitted to the USPTO in 2007.  It is unclear why the USPTO took so long to terminate the reexamination, however, the termination is not the least bit surprising as the writing has been on the wall for several years now. So, one would expect that the conclusion of this reexamination would be rather uneventful right? 

Wrong

Yesterday the typical “sky is falling” stories began to emerge, some from the usual anti-patent suspects, decrying systemic failure, while others were from more informed legal commentators.  It is especially disappointing to see more informed IP blogs identify this reexamination as “the poster child for patent reform.”  I am left scratching my head at such statements.  In fact, this reexamination worked EXACTLY as it should (amendment delay aside).

Don’t take my word for it, read what Frodo had to say about it, taken from the reexamination requestor’s blog:

On 29 November, Amazon have amended the claims as agreed to in their interview. In doing so (in particular, in their amendment to claim 11), they give up their absolute monopoly on the idea of one-click shopping.

The claim used to read:

11. A method for ordering an item using a client system, the method comprising:
displaying information identifying the item and displaying an indication of a single action that is to be performed to order the identified item; and
in response to only the indicated single action being performed, sending to a server system a request to order the identified item
whereby the item is ordered independently of a shopping cart model and the order is fulfilled to complete a purchase of the item.

Now it is restricted to items “purchasable through a shopping cart model”.

As I mentioned in my previous post, I think the “shopping cart model” is well past its use-by date so this kind of amendment is precisely what I was after.

While the Amazon patent was not invalidated, the broadest claims were amended.  Let me say this again, THE BROADEST CLAIMS WERE AMENDED.  While the uninformed, anti-software patent fringe only see the fact that the 1-click patent still exists, what is lost on them is that the broadest claims cannot be applied against infringers for past damages under the doctrine of intervening rights. In fact the amended claims will not even exist until published (likely late May 2010).  In essence, reexamination worked for the broadest claims, the SNQs of the request were analyzed and claim scope was surrendered as a result.

Of course, critics will argue that the amendment adds a “trivial feature” that everyone uses, and that some claims were not amended.  As can be seen from above, the requestor does not agree with respect to the amendment.

Moreover, all of this was public record for the last three years.  How many new requests were filed to let the USPTO know about this alleged “trivial feature” or to submit stronger art against the confirmed claims?

Answer: ZERO

Patent reexamination is a cooperative exchange between the USPTO and the public, it is not a re-working of the original examination process.  In other words, if the USPTO does not have the best art, they do not go looking (i.e., no searching) for it unlike typical examination (as reexamination is accorded special dispatch).  Instead, the USPTO relies on the public to focus their analysis and request reexamination.  In this case the submitted art was avoided by amendment, that is how the system works. To the extent anyone failed, it is the very people now complaining, not the USPTO. 

Criticism on the timeliness of the Office is valid as the reexamination should have terminated in 2007.  However faulting the Office for not killing the patent based on art it did not have or did not appreciate is beyond silly.  Anyone at anytime could have filed, and still can file a new reexamination showing all of these claim elements (if indeed they are so well known) including use of the art already submitted if overlooked; yet the silence from the public has been deafening.

Every hobbit needs a good wizard. Unfortunately, the wizards seem content to simply complain on the Internet.

Her slides provide examples of how to properly amend claims in reissue applications emphasizing the need to amend original patent claims using brackets and underlining of original patent claim text. She reminded applicants that changes to the written description of a reissued patent must be made by submission of the entire text of an added or rewritten paragraph. Amendments to the drawings are done by way of replacement sheets with Figures identified as (Amended) or (Canceled).

Certificate of correction changes are considered as part of the patent as issued. The certificate of correction changes must be made to the patent in the description, abstract, or claims without underlining or bracketing. This procedure also applies to certificates of correction approved during the pendency of the reissue application. The changes are deemed retroactive to the date of the patent so the changes are not to be shown in italics or bracketing in the specification of the reissue application. Unless the patent examiner require a replacement specification in a reissue application, replacement specifications cannot be submitted without a petition under 37 CFR 1.183 for waiver of the requirements of 37 CFR 1.125(d) and 1.173(a)(1).

The USPTO recommends use of its inventor and assignee forms (PTO/SB/51 (05-08) and PTO/SB/52 (05-08)) for reissue applications. Ms. Vollano provides examples of how to properly specify at least one error in a reissue oath/declaration. Lack of specificity has been a common problem leading not only to treatment of the reissue oath/declaration as defective, but also rejection of all reissue applications under 35 U.S.C. § 251 based on the defective reissue oath/declaration. She reminded applicants regarding the need to file a supplemental oath/declaration for any error corrected, which is not covered by the original reissue oath/declaration.

For amendments in a reissue application for a reissued patent double underlining and double bracketing is used. Italics shown in the original patent should remain in such format when filing the reissue application.

It should be noted when reviewing slide 32 of her presentation, that the Ex Parte Tanaka precedential BPAI decision has now been appealed to the Federal Circuit.

“If I had more time, I would have written less.”  There is some question about who authored this famous quote, but one thing is sure: the folks drafting S515 didn’t do it.   Five years in the making, the pending patent legislation is getting longer and more complex with each iteration.  Last week, the Senate Judiciary committee released its latest version, which adds a number of new twists.  In particular, the damages provision, which takes up 15 lines under current law (35 USC 284), would now be governed by over 100 lines of statute!  Given that any single word of a statute can give rise to decades of interpreting jurisprudence (e.g., “process,” “printed publication,” “on sale” “obvious,” “reasonable royalty”), the entire 21^st century might be dedicated to interpreting the new statute, unless another reform is enacted before that.

So, what does the new version of S515 provide with respect to damages?  It maintains from the earlier version the so-called “gatekeeper compromise” previously struck between opposite sides of this controversial issue.  Under this compromise, the court “shall identify the methodologies and factors that are relevant to the determination of damages.”

Prior to trial, unless otherwise ordered by the court, the parties shall state, in writing and with particularity, the methodologies and factors proposed for instructions to the jury in determining damages.  Only those methodologies and factors for which “there is a legally sufficient evidentiary basis” shall be considered by the court or jury in making the determination of damages.  This provision follows the requirement of showing substantial evidence set forth by the CAFC in recent series of cases, including Lucent Technologies Inc. v. Gateway et al., 580 F.3d 1301 (Fed. Cir. 2009).

The new version adds a new “sequencing” provision, wherein “any party may request that a patent-infringement trial be sequenced so that the trier of fact decides questions of the patent’s infringement and validity before the issues of damages and willful infringement are tried to the court or the jury.”  “The court shall grant such a request absent good cause to reject the request.”  The sequencing provision “does not authorize a party to request that the issues of damages and willful infringement be tried to a jury different than the one that will decide questions of the patent’s infringement and validity.”

With respect to increased damages, the new version continues to tie this measure only to willful infringement, whereas current law is broader since 35 USC 284 does not mention willful infringement.  Further, the new version essentially codifies the “objective recklessness” standard set forth by the Federal Circuit in In re Seagate Technology, 497 F.3d 1360 (Fed. Cir. 2007) (en banc).  As such, a claimant must prove “by clear and convincing evidence that the accused infringer’s conduct was objectively reckless.   An accused infringer’s conduct was objectively reckless if the infringer was acting despite an objectively high likelihood that his actions constituted infringement of a valid patent, and this objectively-defined risk was either known or so obvious that it should have been known to the accused infringer.”

The new statute would also specify that the court shall not increase damages if it determines there is “a close case” as to (1) infringement; (2) validity; or (3) enforceability.  “Once the court determines that such a close case exists, the issue of willful infringement shall not thereafter be tried to the jury.”

S515 is also amended to codify that “[i]nfringement of a patent may not be found to be willful solely on basis that infringer had knowledge of the infringed patent.”   The new version further states that a claimant seeking to establish willful infringement cannot use pre-suit notification of infringement unless notification identifies “with particularity” the asserted patent, the product or process accused, and explains “with particularity” how the product or process infringes one or more claims of the patent.

Continuing on its “particularity” theme, the new version of S515 adds the pleading requirements “set forth under Federal Rule of Civil Procedure 9(b).”  Under this rule, willful infringement must be pled “with particularity.”  Here, the drafters of S515 take another page out of the CAFC, which held last year that inequitable conduct must be pled according to Rule 9(b).  See Exergen Corp. v. Wal-Mart Stores Inc., 575 F.3d 1312 (Fed. Cir., 2009).  Under this rule, “the who, what, where, and when” of the alleged willful infringement would have to be made explicit in the pleadings.

Finally, the new version of S515 specifies that if a court or jury finds willful infringement, “the court may increase only those damages that accrued after infringement became willful.”

The possibility for a court to award increased damages in cases of willful infringement is a unique feature of U.S. patent law.  The underlying policy, i.e. to dissuade parties from willfully infringing others’ patents, is logical and equitable.  Overall, the proponents of a reform weakening this policy seem to have won the battle in the Senate Judiciary Committee since the deck would be stacked against patent owners under the new law.  Over the next few weeks, we shall see if the opponents of such a reform have better luck with the House judiciary committee.

The above comments capture the main points relating to damages from the new version of S515.  With patent reform, one often struggles in deciding how much efforts to spend studying any new version, since it is likely to be amended.  The above comments may be too lengthy in that respect.  If the author had more time, he would have written less.

With patent reform changes being considered to introduce a new Post-Grant Review proceeding, a review of existing systems employing similar style mechanisms may be instructive.

European Patent Convention (EPC), Articles 99-105 provide for a post-grant opposition procedure at the European Patent Office (EPO).  Any third party natural or legal person may, without identifying the real-party-in-interest, file with the EPO a post-grant opposition to a granted patent within 9 months of the publication of the granted patent from the EPO.  This is in contrast with Post-Grant Review that while including the same time window requires identification of the real-party-in-interest.  As can be appreciated, the revisions to S.515 for Post-Grant Review closely track the EPO model in many respects.

In the EPO proceeding, if there is an ongoing opposition proceeding, a third party may within 3 months of litigation intervene if accused of infringement, or is a declaratory judgment plaintiff against the patent owner.   The proposed revisions to S.515 does not include such a provision.

Similar to the proposed Post-Grant Review of S.515, EPO opposition is also expanded to most grounds of invalidity other than patents and printed publications.  EPO oppositions may be based on lack of novelty, inventive step or industrial applicability; non-patentable subject matter; subject matter offensive to public interest or morality; and insufficient disclosure, including lack of written description and enablement.

Opposition Divisions (OD) at the EPO comprise 3 patent examiners, at least 2 of which did not take part in the examination of the original patent.  The Chairman must be an examiner who did not take part in the examination of the original patent.  Prior to taking a final decision the OD may have one member handle the opposition.  Oral proceedings are conducted by the OD.  If necessary the OD is expanded to include a legally qualified examiner who did not take part in the grant of the original patent.  In such case, if there is a tie vote, the Chairman’s vote is decisive.  In contrast, the proposed legislation would require that Post-Grant Review be decided by APJs of the Patent Trial & Appeal Board.   Currently, there is no provision for leveraging the CRU examiners in the proposed Post-Grant Review.

In both EPO opposition and the proposed Post-Grant Review proceeding, after an initial determination that the request meets requirements, the patent owner has a right to file narrowing claim amendments and arguments;  the third party participates at each stage.

The proposed Post-Grant Review proceeding is fixed in duration to between 12 and 18 months.  In the EPO opposition proceedings there is no fixed schedule of pleadings and counter pleadings and time limits can be extended for cause.  Oral proceedings at the EPO are public with a prohibition against submission of new facts or evidence, unless allowed by the OD.

The outcome of an EPO opposition proceeding, similar to the proposed Post-Grant Review, may be the revocation of the European patent, confirmation of the original patent claims or amendment of the patent claims.  The opposition applies to the European patent in all designated offices.  However, the specific outcome’s effect on the different designated states may differ as a result of differences in claims, differences in amendments and differences in designated States where the patent is revoked.

The appeal from the OD must be made with 2 months of its decision and the grounds of appeal must be filed within 4 months of the OD decision.  The appeal is to the EPO Board of Appeal.  Either party may appeal.  This is similar to the proposed appeal proceedings for Post-Grant Review.  Yet, unlike in the U.S. there is no judicial recourse to an adverse EPO Board of Appeal decision.

In EPO oppositions 35% have all claims confirmed, 35% have all claims canceled and 30% have claims amended.  As the proposed Post-Grant Review provides for a settlement between parties, it remains to be seen if the USPTO proceedings will track the EPO numbers.

 A.  Post-Grant Review

Post-Grant Review, is procedurally similar in many respects to Inter Partes Review, but, is not limited to patents and printed publications, but any ground that could be raised under paragraph (2) or (3) of  § 282 (b).  Post Grant Review may be initiated ONLY within 9 months of grant or issuance of a broadening reissue.  The Patent Owner may file a Preliminary Response within two months of the Third Party Request to set forth reasons why the Request should be denied.  The Director will authorize Post-Grant Review if the information presented in the petition, if not rebutted, would demonstrate that “it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable.” As with Inter Partes Review, the familiar SNQ standard has been replaced.  Note that the standard for Post-Grant review is different than the standard for Inter Partes Review discussed yesterday. The Director has 3 months to grant or deny the petition after the Preliminary Response (if any).

PPG Comment:  The 9 month window is down from the previously proposed 12 months of S.515.  The proposed standard for Post-Grant Review does not use the “reasonable likelihood of prevailing” language of Inter Partes Review, it is not clear why this is the case, or how the standards truly differ.  Perhaps an argument can be made that Post-Grant Review is the more liberal of the two standards. 

        1. Estoppel

As with Inter Partes Review, the estoppel provision of 35 U.S.C. § 315 is revised to “raised or reasonably could have raised” (emphasis added)

PPG Comment:  As noted yesterday, this language is an improvement, but still open to interpretation.

Further, 315 estoppel is extended to ITC proceedings (see our earlier discussion of this issue here) 

        2.   Timing

 Post-Grant Review may not be initiated or maintained if petitioned more than a few months after a concurrent litigation is filed. 

        3.   Discovery/Proceedings Conduct

The Director would establish rules for discovery of relevant evidence, including depositions of witnesses submitting declarations and affidavits. 

The Director may prescribe sanctions for abuse of discovery and process, or any other improper or harassing tactics.

The Director also would prescribe regulations to:

-Provide either party with the right to an oral hearing as part of the proceeding.

-Require the proceeding be concluded within 12 months, extendable to a maximum of 18 months.

-Allow for settlement of the proceeding, with no estoppel applied to the third party.

-Provide that the final determination be provided by the Patent Trial and Appeal Board.

One year subsequent to enactment, Post-Grant Review will apply to all patents issued on or after that date. (emphasis added). 

PPG Comment: The applicability of Inter Partes Review is retroactive, Post-Grant only applies to patents issued on or after a date linked to enactment of the legislation. 

Allowing 2 months for a Preliminary Response, followed by a grant or denial within 3 months builds in a 5 month delay on the front end of Post-Grant Review (likely the same delay for Inter Partes Review).   Assuming the USPTO takes the full 12 months plus 6 month extension, the proceeding would span 2 years in a worst case, 1.5 years in a best case scenario.  The major difference between Inter Partes Review and Post-Grant review appears to be grounds for invalidity, effective date provision, availability window, and standard for initiating.  Most other procedural mechanisms appear to be the same.

The Post Grant Review Proceedings being considered are believed to be segmented into two sections, namely, Inter Partes Review (formerly known as inter partes reexamination) and Post-Grant review.  Ex Parte reexamination would be changed to “Supplemental Examination.” The term “reexamination” would be used only with respect to supplemental examination, for reasons discussed next.

A.  Supplemental Examination (ex parte reexamination)

Supplemental Examination will like reissue be limited to Patent Owner requests.  Interestingly, the current proposal provides that “information” not submitted, incorrect, or inadequately considered  in the original prosecution may be submitted in the supplemental examination by the Patent Owner to cure inequitable conduct charges stemming from the earlier deficiency. Further, once Supplemental Examination is ordered, the claims would be examined on all conditions of patentability as they are in reissue.  This provision will take effect 1 year after enactment of the new legislation and apply to all patents in force. 

PPG Comment:  The distinction between this revised ex parte, supplemental examination and patent reissue would become less distinguishable, with the exception of broadening reissues and that an error made without deceptive intent need not be identified with respect to the original patent in supplemental examination.  It is anticipated that this aspect of the proposal would be welcomed by many practitioners as a mechanism to cure innocent prosecution oversights.

B. Inter Partes Review (inter partes reexamination)

As we understand the new proposals, one of the more striking changes to S.515 for Post-Grant Review Proceedings would be the replacement of the SNQ standard with a heightened standard to initiate the proceedings (based on patents and printed publications only — Post Grant Review providing expanded grounds).  The standard for granting Inter Partes Review would be whether or not the petition “shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”  This determination is made after the Director reviews the petition, and a “Preliminary Response” of the Patent Owner.  Thereafter, the Director has 3 months to grant or deny the request.

PPG Comment: Arguably, the SNQ standard of “important to an examiner” is lower standard than the new standard, which seems to be mirroring a standard for determining whether a preliminary injunction should be imposed.  This change in standard may have been added to appease the bio/pharma sector and should significantly reduce the IPR order rate from the >95% grant rate of today.  

         1.  Estoppel

The estoppel provision of 35 U.S.C. § 315 we understand would be revised to “raised or reasonably could have raised” (emphasis added)

PPG Comment:  This language, while certainly less vague than the previous version, still creates uncertainty.

Further, 315 estoppel is proposed to be extended to ITC proceedings. (see our earlier discussion of this issue here) 

          2.  Timing

Inter Partes Review may not be initiated or maintained if petitioned more than a few months after a concurrent litigation filed either by the patent owner or petitioner.

PPG Comment:  It appears that avoiding late filed challenges at the USPTO (late with respect to a concurrent litigation) will be avoided by these provisions, perhaps avoiding the perceived Translogic v. Hitachi problem of overturning a jury verdict.  Also, IPR could be instituted only after a post-grant review was terminated or when no post-grant review petition was filed. 

         3.  Discovery/Proceedings Conduct

The Director would establish rules for discovery of relevant evidence, including depositions of witnesses submitting declarations and affidavits. 

The Director may prescribe sanctions for abuse of discovery and process, or any other improper or harassing tactics.

The Director also would prescribe regulations to:

-Provide either party with the right to an oral hearing as part of the proceeding.

-Require the proceeding be concluded within 12 months, extendable to a maximum of 18 months.

-Allow for settlement of the proceeding, with no estoppel applied to the third party.

-Provide that the final determination be provided by the Patent Trial and Appeal Board.

One year subsequent to enactment, Inter Partes Review will apply to all patents. (emphasis added).  Inter partes reexaminations instituted prior to the effective date will continue unchanged.

PPG Comment: The changing of inter partes reexamination to an Inter Partes Review conducted before the Patent Trial and Appeal Board would seem to significantly diminish the role of the Central Reexamination Unit.  Although not spelled out in the legislation, it appears as though the Director will have significant latitude on how to leverage the expertise of the CRU in this new equation.  Perhaps, these experienced examiners, albeit some without law degrees, would be best utilized as advisors to the Patent Trial and Appeal Board, akin to a technical advisor at the International Trade Commission or Federal Circuit.

Tomorrow, conceptual changes to Post Grant Review will be detailed, stay tuned.

Two weeks ago, it was widely reported that the BPAI upheld the reexamination rejection of the broadest claim of Pfizer’s US Patent 6,469,012 relating to Viagra®. Lost in the outrage over the 7 year pendency of the reexamination proceedings was the degree to which the Pharma industry stacked the deck against Pfizer, and how special dispatch seemingly ends at appeal.

The reexamination of the ‘012 patent was kicked off by the USPTO in 2003, identifying four substantial new questions of patentability (SNQs).  It is worth noting that in 2003, there was no such thing as a Central Reexamination Unit (CRU).  Instead, this patent reexamination went to the patent examining corps.  As most practitioners are aware, while the patent examining corps certainly has the technical expertise to handle such issues, special dispatch was far from assured. This deficiency, in part, led to the creation of the CRU in 2005. The CRU implemented a coordinated management of the USPTO’s reexamination caseload, and staffed reexamination proceedings with teams of three experienced primary examiners.

In addition to the initiation of the Viagra® reexamination in this period of USPTO transition, the Pharma industry implemented a strategy of coordinated serial reexamination attacks further slowing the reexamination process to a crawl.

The main concern of the Pharma industry was that Pfizer would be able to overcome the various rejections applied under 35 U.S.C. § 103 by Order of the Director in 2003.  The fear was that Pfizer could attack any such obviousness rejections by presentation of secondary considerations of non-obviousness.  Although such secondary considerations are rarely effective in the majority of cases, here Pfizer’s claims were drawn to one of the most well known and lucrative drugs of all time.  Certainly, it was difficult to argue with a straight face that Viagra® was obvious over the prior art in view of the sales figures, not to mention the fact that the entire industry wanted the patent invalidated to secure some of the burgeoning market.  Had “horny goat weed” done the trick, it seems to me that someone would have figured it out about 100 years ago.  As such, the industry buried the USPTO in requests that included additional art, and expert declarations alleging a lack of novelty.

The industry filed requests for reexamination began after Pfizer provided an initial response to the Director’s reexamination order, thus these later filed requests were able to rebut Pfizer’s response and essentially provide a quasi inter partes flavor to the otherwise ex parte proceedings.

The serially filed industry reexamination requests, slowed the initial processing of the Pfizer reexamination to a virtual crawl.  Lilly filed the first on December 15, 2003 (granted on February 6, 2004) presenting an additional four SNQs; Bayer AG and Bayer Pharmaceuticals Corporation filed the second on July 7, 2004 (granted on September 13, 2004) presenting four more SNQs and supporting declaration evidence; and ICOS Corporation filed a third on March 23, 2005 (granted on May 16, 2005) presenting five more SNQs and supporting declaration evidence.  A fourth request was filed on July 5, 2005 by Lilly Corporation but denied as failing to present a SNQ.  Thus, the reexamination was unable to move forward until late 2005 when all requests were merged together; delaying examination processing for some two years.  Once all requests were merged into a single proceeding, sixteen different rejections were pending.

The USPTO substantively began the reexamination with a first action on September 15, 2005, the appeal to the BPAI was filed on July 8, 2006, some 10 months later.  During the reexamination, Pfizer was able to overcome the rejections of the claims, save one, the broadest claim (and naturally, the most valuable).  In terms of special dispatch, it is hard to fault the Office to this point.  Once entering the appeal realm however, the “wheels fell off.”

One year later, on July 20, 2007, the Appeal Brief was answered by the Office, creating another  significant delay. Pfizer’s Rely Brief was provided September 24, 2007.  On November 8, 2007 Pfizer provided a Supplemental Brief citing a recent Federal Circuit decision.  On September 24, 2008, the Appeal was removed from the appeal docket, and a new brief was requested to insert certain headings, this delayed the appeal for another 6 months.  The appeal was finally docketed in early 2009, and heard in June of 2009.  The Board Decision of February 12, 2010 capped a 43 month appeal pendency, some years longer than the actual reexamination.

While the BPAI is actively attempting to reduce pendency and is under the substantial weight of some 20,000+ pending appeals to date, special dispatch must be accorded reexaminations from start to finish.  While the USPTO should be lauded for a 10 month reexamination period (merger and multiple requests complications aside), this effort is wasted when important reexaminations are parked on the appeal docket for several years.  Unfortunately, this situation is perhaps worse today than it was at the outset of the Pfizer appeal.

In an effort to address this issue and others, the Board will hold its First Annual Conference on April 7, 2010 which will include, Gregory Morse (Director of the USPTO’s CRU); Chief Judge Michael R. Fleming (BPAI); The Honorable Paul R. Michel (CAFC) ; The Honorable Randall R. Rader (CAFC); W. Todd Baker (Contributing Editor of PatentsPostGrant.com and Partner at Oblon Spivak, McClelland, Maier and Neustadt, LLP) as well as other members of the bar.  The panel will discuss efforts and strategies to improve the USPTO inter partes reexamination processing in particular.  Stephen G. Kunin , Contributing Editor of PatentsPostGrant.com and a partner at Oblon Spivak, McClelland, Maier and Neustadt, LLP will moderate the panel.  More information on this important program can be found here.

Another week, another patent litigation stayed in a California court pending a concurrent USPTO  reexamination.  This week, Judge M. James Lorenz of the U.S. District Court for the Southern District of California has ordered a stay of the patent litigation between Synthes and GM Dos Reis Jr. Ind. Com. De Equip. Medico (“GMReis”) over Synthes’ U.S. Patent No. 7,128,744 (“the ’744 patent”) covering locking bone plates used in surgery to secure fractured bones.  In his Order Judge Lorenz stated that “[t]o proceed with the case during [inter partes] re-examination [of the ’744 patent] would needlessly duplicate the effort of the USPTO and forgo the benefit of its expertise and analysis.”  He noted that “if the USPTO cancels the patent’s claims the issue of infringement will be moot.”  On the other hand, if “the USPTO reaffirms the patent, the court will have the benefit of the agency’s analysis of the same prior art that GMReis is relying on to challenge the patent’s validity.”  Because the dates for discovery, the Markman claim construction hearing and trial had yet to be set, the judge indicated that these factors weighed in favor of granting a stay of the litigation pending the outcome of the inter partes reexamination proceedings.  The judge was unimpressed by the undue prejudice argument raised by the patent owner, since in the three years that the litigation was pending, “Synthes had not requested a preliminary injunction.”

The Order illustrates the value of an early filed reexamination.  In this case, Smith & Nephew employed a common third party tactic of quickly filing an ex parte reexamination request at the outset of a dispute to get the reexamination going, followed up by a later filed inter partes reexamination request.  This one-two-punch of ex parte and inter partes requests allow the requestor to initiate reexamination quickly, without having to worry about the comprehensiveness of the ex parte request, prior art search, etc.  As the later filed inter partes request is subject to the “could have been raised” aspect of the 35 U.S.C. 315(c) estoppel provision, the later requests is prepared more carefully.

Smith & Nephew filed their ex parte reexamination proceeding (Control No. 90/009,377) on January 8, 2009.  On May 5, 2009 the inter partes request was filed (Control No. 95/000,465).  On July 14, 2009, the USPTO merged the proceedings.  On November 5, 2009, the USPTO issued a non-final Office Action rejecting all of the ’744 patent claims for obviousness over a number of printed publications.

While details of the reported compromise are scant, it appears that USPTO Director Kappos, bar organizations, industry and several prominent senators have worked together to arrive at a new and improved S. 515.  It is expected that the details of the compromise bill will be released in the coming days.  In the meantime, if you want to become familiar with the history of legislation, provisions, and likely areas of compromise, see my colleague Philippe Signore’s paper on the subject here.

Likewise, I will be speaking on this topic along with Philippe this coming Monday at 4^th Annual Patent Law Institute NYC

Not surprisingly, earlier this week the issue was taken to the Federal Circuit on behalf of Koyo Seiko Co. Ltd.   Stay tuned for further updates.