One purpose for introducing evidence of an ongoing patent reexamination in a parallel litigation is to avoid a post filing (i.e., complaint) willfulness determination. The existence of an ongoing patent reexamination may be admitted to demonstrate that the accused infringer was not objectively reckless in its actions irrespective of its prior knowledge of the asserted patent.

Some courts have found that reexamination evidence defeats a finding of willfulness, these courts typically examine the status of the claims in the reexamination proceeding at the time of the willfulness determination, finding that the weight of the reexamination evidence depends on whether the reexamination proceedings are complete and whether the patent claims have undergone substantive changes in reexamination. When seeking introduction of such evidence, depending upon the court, the stage of the parallel litigation (Summary Judgment, JMOL, Pre-Trial Motions) may determine whether or not it is admissible.

In recent years, courts have been reluctant to admit evidence of an ongoing patent reexamiantion at trial. This is because the presumption of validity may be undermined by communicating to the factfinder(s) that the USPTO has changed their mind. This trend is especially prominent in plantiff forums such as Texas. 

Last week, in Imaginal Systematic, LLC v. Leggett & Platt, Inc., et. al., (CACD), the California court expressed a different perspective:

Plaintiff’s Motion in Limine No. 3 seeks an order excluding any evidence relating to the inter partes reexamination proceedings. Plaintiff contends that this evidence is irrelevant and unfairly prejudicial. To the extent the evidence is offered to refute willful infringement allegations, the Court disagrees with Plaintiff’s argument. The evidence relating to the reexamination involves more than the mere fact that the U.S. PTO is reexamining the patents-in-suit. Rather, the evidence includes the fact that the proceedings have reached a stage where U.S. PTO has made findings as to the validity of the subject claims. These findings are directly relevant to whether there was an objectively high likelihood that the patents-in-suit were valid.

As is always the case with patent reexamination and parallel litigation, depending upon the court, your mileage may vary.

Parallel Litigation Settles, Now What?

With the vast majority of patent reexaminations now being conducted concurrent to a district court or ITC proceeding, a common question of Patentees is “what becomes of the patent reexamination once the litigation settles?”

In the case of ex parte patent reexamination, the answer is simple: the reexamination continues unaffected. Indeed, as demonstrated a few weeks back (In Re Construction Equipment, CAFC (2011)), the ultimate outcome of the ex parte reexamination can even effectively reverse an earlier decision of the CAFC.

On the other hand, if the pending reexamination is an inter partes patent reexamination (IPX), the answer will depend on the nature of the terms of the settlement agreement. In a best case scenario for Patentee, the IPX proceeding may be vacated altogether by operation of estoppel. Of course, to trigger IPX estoppel, the settling defendant/requester must agree to a consent consent judgement in the district court (not effective in the ITC as estoppel does not apply) that they failed to prove invalidity. In most cases, defendants are loathe to publicly admit defeat. Still, unwary Patentes may be walking away from significant opportunity if just swinging for the fences.

Vacatur by Consent Judgement (Homerun)

A carefully worded consent judgment can be used to trigger 35 USC § 317 (b), 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)

With respect to district court proceedings, where parties agree to settle, and the Requester is also willing to accede to a consent judgment stating that they have failed to prove invalidity, such may serve as a final judgment. (once the 30 day time to appeal the consent order has passed). In considering the language of the consent order, the USPTO will look to whether or not the claims of the ongoing IPX reexamination are the same as that at issue in the litigation. For claims of the ongoing reexamination that are not subject to the consent judgment, the reexamination would continue as estoppel would not attach for these claims. (likewise for any newly added claims) Attached is a 2009 petition decision detailing a vacatur of an IPX. (here)

In practice, defendants rarely agree to such a consent order unless some aspects of a business are being merged or absorbed as part of the settlement.

Improving the Odds (Small Ball)

While Defendants typically do not agree to a consent judgement, there are still settlement terms that can be quite beneficial to Patentees.

Common sense dictates that if the fight between the Patentee and Requester has ended on the litigation side, the Requester will discontinue their participation in the IPX. Where the IPX is still being prosecuted before the examiner (i.e, prior to appeal), the filing of an express statement of non-participation with the USPTO can provide significant benefit to the Patentee even though such would seem to be unnecessary.

Historically, ex parte patent reexamination has been more favorable to Patentees as compared to IPX. The obvious reason for this difference is the lack of participation of an opposing party.(aside from the examiners). Yet, another major benefit of the ex parte proceeding is the ability to interview the examiner on the merits. Interviews are not permitted in IPX proceedings (37 CFR 1.955)

Once a statement of non-participation has been filed, it can serve as a basis for a petition under 37 CFR 1.183 to waive Rule 955 such that an interview may be conducted in the IPX proceeding. The argument being that the interests of special dispatch may be served by the interview, and, as there is no longer a participating Requester, the requested waiver of Rule 955 is appropriate under the circumstances. The petition must explain, in detail, the goal and agenda of the proposed interview.

Once granted the Patentee will have the full benefit of an ex parte proceeding. (assuming the petition is granted in time, which is another issue altogether).

]]> http://www.patentspostgrant.com/lang/ja/2012/01/settlement-agreements-patent-reexamination/feed 0 http://www.patentspostgrant.com/lang/ja/2011/12/ntp-patents-resurface-from-uspto-reexamination http://www.patentspostgrant.com/lang/ja/2011/12/ntp-patents-resurface-from-uspto-reexamination#comments Wed, 21 Dec 2011 09:10:12 +0000 Scott A. McKeown http://www.patentspostgrant.com/?p=7873 BPAI Reverses Rejections on CAFC Claim Construction

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.

Last week’s CAFC decision in In re Construction Equipment decided the validity of U.S. Patent 5,234,564…..again. In the first appeal, decided in 2001, the CAFC upheld the validity determination of the District Court. In the second appeal, decided last week, the CAFC considered an appeal from the USPTO rejecting the claims of the ‘564 patent in ex parte patent reexamination. In their second decision, the CAFC found the ‘564 Patent invalid in light of some of the very same prior art references at issue in the first appeal.

In her dissent Judge Newman questioned the constitutionality of the USPTO looking over the shoulder of the CAFC.

In a case of “turnabout is fair play,” last Friday, a United States District Judge for the District of Connecticut considered, and disregarded, the USPTO’s reexamination analysis of the same prior art in Jacobs Vehicle Equipment Co. v. Pacific Diesel Brake Co. et al. (D.Conn).

The Court decided that the earlier ex parte patent reexamination analysis of U.S. Patent 4,848,289, which confirmed the validity of the ‘289 Patent, was flawed in two major respects.

First, the Court explained that the non-obviousness determination of the USPTO in 2005 predated KSR. In this regard, the Court determined that the patent reexamination analysis that confirmed the claims of the ‘289 Patent may have been too rigid an application of the teaching/suggestion/motivation test (TSM).

The second, and perhaps more troubling rationale, was that the USPTO simply did not have the time or robust record to consider the issues in full during patent reexamination as compared to that of the District Court.

The Court noted in footnote 8 of the decision that:

The record before me on issues relating to obviousness is far more complete than the one before the PTO. The ex parte reexamination interview lasted about forty-five minutes. The trial, which was more about invalidity than infringement, lasted several weeks. Nearly all the prior art was before the examiner. But he did not have the benefit of the extensive evidence and arguments submitted to me.

(decision here)

Under the above rationale, a Patentee can either lose their patent in ex parte patent reexamination outright, or simply survive to fight the very same battle on another day, at additional expense. All the while, an ongoing infringement action may even be stayed pending the outcome of the reexamination for seemingly no good reason.

The new proceedings of the America Invents Act (AIA), Inter Partes Review and Post Grant Review will provide for limited discovery, estoppel to prevent duplicative proceedings, and provide adjudicative processing. These more robust proceedings will prevent such inconsistent outcomes going forward.

Unfortunately, ex parte patent reexamination was left largely untouched by the AIA.

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

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

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

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

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

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

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

.           .           .           .           .           .           .

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

(emphasis added, decision here)

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

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

]]> http://www.patentspostgrant.com/lang/ja/2011/12/judge-newman-questions-constitutionality-of-second-chance-patent-reexamination/feed 0 http://www.patentspostgrant.com/lang/ja/2011/12/record-patent-reexamination-filings-in-2011 http://www.patentspostgrant.com/lang/ja/2011/12/record-patent-reexamination-filings-in-2011#comments Tue, 06 Dec 2011 21:17:59 +0000 Scott A. McKeown http://www.patentspostgrant.com/?p=7726 USPTO Considers Record Number of Requests for Patent Reexamination 

In fiscal year 2011 the USPTO initiated a total of 1133 patent reexamination proceedings (both ex parte and inter partes). The 2011 tally represents an overall increase in filings of about 7% relative to 2010 numbers.

Interestingly, while ex parte filings receded slightly, inter partes filings surged by 33% relative to 2010. In FY 2011 374 requests for inter partes patent reexamination were filed.

USPTO statistics for 2011 are found (here)

Ex parte patent reexamination proceedings are typically disfavored over inter partes reexamination proceedings as being too one-sided, and historically biased in favor of patent holders. Likewise, as patent reexamination is increasingly employed as a litigation tool, it is not surprising that the more robust proceeding is now surpassing ex parte filings (especially now that most issued patents qualify by virtue of being filed as applications on or after 11/29/1999)

On the one year enactment anniversary of the America Invents Act (AIA), inter partes patent reexamination (IPX) will be replaced by Inter Partes Review (IPR). The USPTO will gradually implement Inter Partes Review over the first four years by limiting the proceeding to the first 281 filers. This limit was established by the AIA as a control to keep the Office from being overwhelmed in the early implementation stages of this new AIA proceeding.

The 281 filing cap is based upon the total inter partes patent reexamination filings for 2010. (fiscal year concluding before passage of the AIA)

Based upon the current market demand for IPX filings, the USPTO may find themselves up against the 2010 limit very quickly. 

This past Monday the USPTO released the final rule package pertaining to the Rules of Practice Before the Board of Patent Appeals & Interferences in Ex Parte Appeals. (here).

This final rule notification stems from the earlier notice of proposed rule making issued last November. The rules are limited to ex parte proceedings only and have no bearing on patent interferences, or inter partes patent reexamination. Likewise, the new rules will not control Inter Partes Review or Post Grant Review. The final rules become effective on January 23, 2012. (for appeals initiated on or after the effective date)

In response to the original publication of the rules, I pointed out that the proposal provides an interesting safeguard against new rejections in an Examiner Answer. Namely, the filing of a 1.181 petition challenging such a rejection tolls the period for filing a Reply brief. Thus an Applicant may await decision on the petition before filing the Reply. This provision will be very helpful in patent application prosecution, but may aggravate ex parte reexamination pendency if abused.

While there is little incentive for delay in application prosecution once reaching the Examiner Answer phase, such is not always the case for ex parte patent reexamination. For example, prosecution cannot simply be restarted by the filing of an RCE; likewise extensions of time are not available as a matter of right. So, once reaching the appeal phase, faced with the proposition of losing at the Board, initiation of the proposed petition procedure may be used as a de facto delay tactic. In my experience the pendency of a 1.181 petitions can be upward of 4-6 months, if not longer. Since most patent reexamination is now conducted concurrent with litigation, delay of an adverse decision can be very valuable to litigants in certain circumstances.

The PTO addressed this concern in its response to Comment 60 in the Final Rule publication. In the response the PTO acknowledges the potential for abuse in ex parte reexamination proceedings and states that internal controls will be put in place to manage such situations. However, the Office was not willing to commit to a hard deadline for deciding such petitions.

Generally speaking, the Final Rules are largely the same as that originally proposed and are applicant/patentee friendly. Assuming proper implementation and oversight, the new rules are a very positive development.

Interestingly, in responding to a comment pointing out the value of the pre-appeal brief conference (Comment 87), the Office indicated that different “rule making initiative” is currently under consideration for that proceeding. As I pointed out some time ago in a guest post for IPWatchdog, a few slight revisions to this proceeding would be highly beneficial.

Back in February, In re Stepan (or In re Side-steppin if it helps you remember the case) was argued before the CAFC. In a previous post, I explained how this case demonstrated a problem addressed by the 2010 proposed rule package for practice before the BPAI. Namely, the shifting in rejection grounds during appeal relative to that of the originally applied rejection. The newly proposed Rules attempt to liberalize the manner by which an Applicant/Patent Holder may challenge a “new ground of rejection” as presented in an Examiner Answer. The idea being, it is unfair for the Office to change course once prosecution is closed as no new rebuttal evidence may be entered.

Unchecked, a modification to the Office’s fact finding/legal theory in an Examiner Answer or BPAI decision can be quite prejudicial during patent reexamination. This is because, once on appeal, there is no RCE-like procedural mechanism by which a patent holder can unilaterally restart prosecution for the purpose of submitting new rebuttal evidence (unlike patent application prosecution).

At issue in Stepan was reexamination of U.S.Patent 6,359,022. During the reexamination, the USPTO disputed the priority right to a parent application under 35 USC  § 120. As the parent was a CIP, the examiner did not agree that certain claims were entitled to priority. Thus, under the examiner’s theory the applied art of the reexamination qualified under 102(b).

The Patentee argued that the priority claim was effective and that the art qualified as 102(a). Therefore, the Patentee asserted that declaration evidence (antedating) under 37 CFR § 1.131 was effective to “swear behind” the applied art. As the examiner maintained the 102(b) rejection, the sufficiency of the declaration evidence was not examined.

On appeal, the Board found that the Examiner was incorrect as to 120, and that some of the disputed claims were entitled to the priority date of the parent. However, the Board found that the declaration evidence was insufficient for these claims. In essence, the Board affirmed the examiner by changing the basis of the rejection from 102(b) to 102(a), but did not designate the 102(a) rejection as new. The Board sidestepped the new rejection issue by taking the position that the Patentee had anticipated the 102(a) rejection by submitting the declaration evidence, and that either rejection(102(a) or 102(b)) was still applied under 102.

As noted above, this change in grounds was significant as the Patentee never had an opportunity to address the perceived deficiencies in the declaration evidence, and has no ability to unilaterally reopen prosecution. In their analysis of the issues (here), the CAFC explained:

By making and relying on new fact findings regarding an issue the examiner did not raise, i.e., the sufficiency of Stepan’s Declaration to swear behind the Singh reference as § 102(a) prior art, the Board relied on a new ground of rejection. Kumar, 418 F.3d at 1367–68 (finding that a new ground of rejection exists when the Board relies on new fact findings which had not been previously advanced by the examiner about an existing prior art reference); see also In re Kronig, 539 F.2d 1300, 1302–03 (CCPA 1976) (noting there was no new ground of rejection when the Board used the same basis and the same reasoning advanced by the examiner). It is crucial that the examiner issue a rejection (even if that rejection is subsequently withdrawn) so the applicant is on notice that it is obligated to respond. Mere reliance by the Board on the same type of rejection or the same prior art references relied upon by the examiner, alone, is insufficient to avoid a new ground of rejection where it propounds new facts and rationales to advance a rejection—none of which were previously raised by the examiner.

(emphasis added)

.                .               .              .                .                 .

Notice does not focus on the applicant’s arguments divorced from the examiner’s rejections of record that are actually appealed to the Board. Instead, it focuses on the “adverse decisions of examiners” during prosecution which form the basis of the Board’s scope of review. 35 U.S.C. § 6(b). Because Stepan did not have prior notice of the Board’s intent to craft and rely on new findings of fact to support a §§ 102(a)/103(a) rejection and because it failed to identify this rejection as a new ground, Stepan’s notice rights were violated. 5 U.S.C. § 554(b)(3); 35 U.S.C. § 6(b). Had the Board labeled its rejection as a new ground of rejection, Stepan could have reopened prosecution to address the newly-alleged deficiencies in its Declaration with the examiner. We vacate the Board’s decision and remand with instructions to designate its rejection as a new ground of rejection.

Going forward it is expected that prosecution will be reopened in more appeals, especially appeals in patent reexamination as Patentees/Requesters have available no mechanism to reopen prosecution on their own to rebut new reasoning of the Board.

It is well established that the USPTO utilizes different standards of evidence and claim interpretation in patent reexamination. Likewise, there is no presumption of validity in patent reexamination. For this reason, district court/ITC claim construction findings (i.e., Markman Orders) are not binding on the USPTO. In re Trans Texas Holdings Corp., 498 F.3d 1290 (Fed. Cir. 2007). Yet, the findings of the USPTO with regard to claim construction can have significant impact on the court rulings.

For example, this past January, in St. Clair Intellectual Property Consultants, Inc. v. Canon Inc., (Fed. Cir. 2011, non-precedential), the CAFC reversed a lower court claim construction ruling, based in part, on the findings of USPTO examiners in patent reexamination, explaining:

Because an examiner in reexamination can be considered one of ordinary skill in the art, his construction of the asserted claims carries significant weight.

(See the earlier discussion of this case here)

Hoping to leverage this thinking, TDM America LLC, a plaintiff of the United States Court of Federal Claims, sought to undo an earlier adverse Markman Order and summary judgment of non-infringement. TDM sought relief under Fed. R. Civ. P. 60(b) arguing that a recently concluded ex parte patent reexamination of the patent at issue constituted new evidence requiring relief from the earlier judgment. TDM argued that, as in St. Clair, the claim scope statements of the reexamination record carry significant weight, and were contrary to the court’s earlier Markman and SJ findings.

Interestingly, the court agreed that a patent reexamination that concludes after judgement does qualify as “newly discovered” evidence (citing St Clair) under Fed. R. Civ. P. 60(b)., noting:

Defendant contends that TDM’s motion also should fail because it is not based upon “newly discovered evidence.” (Def.’s Opp’n, May 24, 2011, at 22.) Specifically, Defendant asserts that the PTO’s final determinations on the `614 and `862 patents did not occur until August 31, 2010 and February 21, 2011 respectively, well after the Court’s April 27, 2010 summary judgment decision. Id. Under Rule 60(b)(2), “newly discovered evidence” must exist at the time of the Court’s original decision. Yachts America, 8 Cl. Ct. at 281. TDM counters that, although the reexamination proceedings were not complete at the time of the Court’s summary judgment decision, the facts to which the reexamination pertained were in existence before the Court’s decision. (Pl.’s Reply Mem., June 29, 2011, at 15-16.) TDM relies on a Fifth Circuit case, Chilson v. Metropolitan Transit Authority, in which the court held that an audit completed after judgment but revealing facts that existed at the time of trial constituted “newly discovered evidence.” 796 F.2d 69, 73 (5th Cir. 1986). The Court also notes that the Federal Circuit has taken judicial notice of ex parte reexamination decisions. See St. Clair Intellectual Property Consultants, Inc. v. Canon, Inc., 2011 WL 66166, at *5 n1 (Fed. Cir. Jan. 10, 2011) (”[T]his court can take judicial notice of the reexamination record.”). On the basis of these authorities, the Court will treat the ex parte proceedings as “newly discovered evidence.”

Although accepting TDM’s Rule 60(b) patent reexamination theory, the court found TDM’s allegations of contrary claim scope findings sorely lacking, and improperly focused on positions that were later reversed by the examiners.

In the 1,226-page appendix, the PTO’s examiners made many observations about the Chemfix II process and the validity of the `614 and `862 patents, but in reversing course during the proceedings, the earlier examiner observations are not consistent with the later observations. Thus, in evaluating any of the PTO examiner statements, it is important to know when the statements were made. In its motion for relief from judgment, TDM habitually cites to many of the earlier examiner comments, which were later reversed and thus carry no weight. The final PTO position is consistent with the Court’s position, and would not cause the Court to alter the outcome of the case.

Although TDM was ultimately unsuccessful, the ability to introduce a favorable reexamination record under Fed. R. Civ. P. 60(b) appears to be a viable strategy for for patentees receiving adverse judgments concurrent to a pending patent reexamination proceeding.

The en banc CAFC decision in Therasense has recalibrated inequitable conduct jurisprudence. The decision effectively tightened the standard that is applied in judging materiality of information underlying an inequitable conduct defense. More specifically, the Court replaced the previous “reasonable examiner” standard with a new ”but for” materiality analysis. The “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.

As I discussed prior to the issuance of the Therasense decision, a “but for” materiality standard applies in Walker Process antitrust claims. Earlier this year, in U.S. Rubber Recycling, Inc. v. ECORE International Inc., et al.(CDCA), the California District Court considered whether or not prior art materials could satisfy a “but for” materiality standard where the USPTO had considered the very same information in a patent reissue proceeding, and had still reissued the patent. In deciding that this information could not be material as a matter of law, the Court explained that while a USPTO proceeding cannot cure fraudulent conduct, it can be dispositive of a “but for” materiality standard and that ”[b]ecause the PTO reexamines re-issuance applications as if being presented for the first time, the fact that the PTO did re-issue Defendant’s patent even with the prior art precludes Plaintiff from plausibly pleading [Walker Process].[1]

Since the court’s initial ruling on the Walker process claim, the Therasense decision issued.  Last week, the Court considered the applicability of the same art under an inequitable conduct theory. Not surprisingly, the court found that reissuance of the patent precluded a finding of “but for” materiality as a matter of law.

The Court explained (decision here):

Defendant argues that Plaintiff cannot prove “but-for” causation because the Examiner reviewed Plaintiff’s alleged prior art and still allowed the original claims to be reissued. (Mot. 6:7-19.) The Court agrees. Out of judicial economy, the Court refrains from repeating its analysis in its Order Denying Plaintiff’s Motion to Reconsider. In the July 8, 2011, Order, the Court explained that the “PTO undoubtedly considered most, if not all, of the alleged prior art.” (Order, July 8, 2011, at 6.) The Court listed the numerous prior art alleged by Plaintiff in its Complaint and systematically showed how each prior art is listed on the face of the RE41945 or was submitted in an IDS to the PTO. (See id.) Under the Federal Circuit’s recent en banc decision in Therasense, Plaintiff must show that “the PTO would not have allowed [the] claim[s] [of the '723 Patent] had it been aware of the undisclosed prior art.” 2011 WL 2028255, at *11. Because the PTO in the instant action allowed the claims after the disclosure of the alleged prior art, Plaintiff cannot prove “but-for materiality.” (Order, July 8, 2011, at 6-7.)

While the Therasense decision also provided that certain egregious conduct could qualify information as de facto material, such was not the case here.  (The USPTO has since attempted to codify the Therasense decision as proposed Rules 56 and 555 to provide a “but for plus” materiality standard). Going forward, it may be that USPTO post grant proceedings play a more prominent role in assessing the merits of an inequitable conduct charge.