When faced with the assertion of a patent of dubious validity, prospective defendants increasingly resort to patent patent reexamination. Once a suit is filed, the opportunity to obtain a stay of an ongoing district court infringement action pending a parallel patent reexamination is a major benefit of the USPTO proceeding. Courts have the inherent power to manage their dockets, including the authority to stay patent infringement litigation pending the conclusion of a USPTO patent reexamination. A stay of the court proceeding enables defendants to halt, or altogether avoid cost prohibitive litigation discovery, which can be rather lengthy and painful.

For this reason, patent reexamination parallel to a district court is often initiated in an attempt to stay the more cost prohibitive court proceeding. In deciding whether or not to stay the court proceeding the courts look to many factors. (See factor based analysis here) 

If the Court proceeding is not stayed, both proceeding will proceed on parallel tracks. Should the Court proceeding continue on to the CAFC, can you try to persuade the appellate court to stay the proceeding pending the outcome of the reexamination?

This situation was considered by the CAFC yesterday in Synqor Inc., v. Artesyn Technologies Inc., et al. At issue in the appeal are five patents relating to power converter circuitry. While the suit has been pending, inter partes patent reexaminations were initiated by the defendants at the USPTO. While the court upheld the validity of the patents, to date, the reexaminations proceedings have been quite unfavorable to the Patent Holder.

In considering whether or not to stay the appeal, the CAFC explained:

The power of the Court to stay proceedings is incidental to its inherent power to control the disposition of the cases on its docket. See Landis v. North Am. Co., 299 U.S. 248, 254 (1936). Here, we cannot say the appellants have shown that staying proceedings for such a lengthy period of time is warranted. [Defendants] reliance on this court’s decision in Standard Havens Prpds., Inc. v. Gencor Indus., 996 F.2d 1236 (Fed. Cir. 1993) to support a contrary conclusion is unpersuasive.

This court in Standard Havens directed the district court to stay its damages proceedings until the PTO reexamination proceeding became final. In that case, the PTO’s proceedings were complete and the decision of the BPAI was on appeal before another district court. Here, however, the court is being asked to stay proceedings at the relative end of the litigation process pending a lengthy administrative process that even the appellants predict will take at least 10-14 months to complete. Under these circumstances, we deem it appropriate to deny the motions to stay.

Going forward, with the accelerated schedule of Inter Partes Review & Post Grant Review (12-18 months in total), the ability to stay court procedings pending USPTO proceedings is likely to be greatly enhanced.

As previously discussed, the CAFC has agreed to reconsider Marine Polymer Technologies, Inc. v. HemCon, Inc. (here) en banc. The Court will reconsider whether or not intervening rights are created for a claim that is not literally amended in a post grant proceeding by a change in verbiage, but instead, by operation of prosecution disclaimer on the part of the Patentee. (earlier post here)

Interestingly, last week the Court considered a somewhat similar circumstance of claims that were confirmed in patent reexamination without amendment in Krippelz v. Ford Motor Company (here). In Krippelz, the Court considered an automotive mirror that emitted a “conical beam of light.” In patent reexamination the Patentee made statements pertaining to the shape of a light beam and it’s relation to reflecting elements, thus disclaiming arrangements that did not include these critical features. Based on these statements, the Court found that the Patentee disclaimed an interpretation of this language that could have impacted the Court’s claim construction, and as a result found the claims invalid.

The court’s application of prosecution disclaimer in Krippelz is straightforward, but an interesting contrast to the arguably innapropriate application of disclaimer in Marine Polymer.

As a reminder amicus briefing in Marine will be completed February 10th.

As mentioned on Monday, the proposed rule package for supplemental examination is expected this week; in fact, it will publish tomorrow. In addition to the expected rule package on the new supplemental examination proceeding, the USPTO has included proposed revisions to existing patent reexamination fees.

The existing fee for requesting ex parte patent reexamination is $2520. The Notice proposes to raise this fee, to account for actual agency costs for conducting the proceeding, to a whopping $17,750. The notice also raises the fees for filing a petition (using the same justification) in either ex parte or inter partes patent reexamination to $1932. This new fee will apply to any petition filed under Rules 181,182, or 183. (The petition fee increase excludes extensions of time and some other minor petitions). Current fees are on the order of $200-$400. It may be that the increase in petition fees will help reign in the abusive practices currently plaguing the Office.

Certainly the Office should raise reexamination fees as they are presently quite low, but the jump to the proposed levels, especially as it relates to the hefty request fees, is unlikely to be received very favorably by the public.

The fee for filing a request for supplemental examination, and the corresponding reexamination that follows will cost filers. $21,296 ($5,180 for the request and $16,116 for the reexamination, if instituted). The Office is also charging extra for the review of documents that exceed 20 and 50 pages; an extra $166 for the former and $282 for the latter.

As I mentioned months back, the rumored cost of Inter Partes Review and Post Grant Review is upward of $48K per filing. Looking at these revisions to patent reexamination filing fees, one can expect higher fees for these more labor intensive office proceedings.

Tomorrow’s Federal Register will detail these fee changes and the rules for supplemental examination. Attached is a copy of the rules that will publish tomorrow (here)…more thoughts tomorrow.

]]> http://www.patentspostgrant.com/lang/ja/2012/01/uspto-proposes-400-600-increase-in-patent-reexamination-fees/feed 0 http://www.patentspostgrant.com/lang/ja/2012/01/evidence-of-ongoing-patent-reexamination-at-trial http://www.patentspostgrant.com/lang/ja/2012/01/evidence-of-ongoing-patent-reexamination-at-trial#comments Wed, 18 Jan 2012 09:10:00 +0000 Scott A. McKeown http://www.patentspostgrant.com/?p=7963 Willfullness Determination Opens Door to Prejudice

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.

The new estoppel provisions of Inter Partes Review (IPR) and Post Grant Review (PGR) differ from the previous estoppel provisions of inter partes patent reexamination in that they not only prevent a subsequent request for IPR/PGR from the same requester (or privies) on issues that were raised or reasonably could have been raised in the first proceeding, but prevent the filing or maintenance of any other “office proceeding.”

By definition a Post Grant Review (PGR) can only be conducted prior to an IPR. This is because an IPR can only be filed once the 9 month PGR window has ended, or after any ongoing PGR concludes. As such, the primary office proceeding that can be requested, or maintained in this regard (i.e., after IPR/PGR estoppel attaches) is ex parte patent reexamination (EXP).

As pointed out previously, in order to properly estop an ongoing EXP proceeding or filing, the Office must implement a system to track EXP filings with respect to the real party in interest. This tracking is complicated by the fact that many EXP proceedings are filed anonymously. Last Thursday, the USPTO issued their plan.In the Notice of Proposed Rulemaking for Changes to Implement Miscellaneous Post Patent Provisions of the Leahy-Smith America Invents Act (here), the Office proposes the following mechanisms to track potential EXP estoppel.

(6) A certification that the statutory estoppel provisions of both inter partes review (35 U.S.C. 315(e)(1)) and post grant review (35 U.S.C. 325(e)(1)) do not prohibit the ex parte reexamination.

(7) A statement identifying the real party(ies) in interest to the extent necessary to determine whether any inter partes review or post grant review filed subsequent to an ex parte reexamination bars a pending ex parte reexamination filed by the real party(ies) in interest or its privy from being maintained.

In essence, EXP filers must, once the proposed rules become effective, certify that IPR and PGR estoppel do not apply to their filing. Likewise, anonymous filers must disclose their identity to the agency, under seal. The Notice provides in more detail that:

An ex parte reexamination requester has the option to remain anonymous. In order to do so, the requester must: (1) Submit the statement identifying the real party(ies) in interest as a separate paper; (2) title the paper as a statement identifying the real party(ies) in interest; (3) request in the paper that the Office to retain the paper in confidence by sealing it; and (4) include, in a clear and conspicuous manner, an appropriate instructional label designating the statement as a non-public submission, e.g., NOT OPEN TO THE PUBLIC FOR OFFICE USE ONLY. The Office will then maintain the real party(ies) in interest statement as a sealed, non-public submission

The Notice also clarifies that statements submitted under Rule 1.501(a)(2) (Patent Owner Statements and associated information on claims cope) may only be used to interpret claims once reexamination has been ordered, they may not be used to form an SNQ.

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/2012/01/2011-year-in-review-patent-reform-post-grant-landscape http://www.patentspostgrant.com/lang/ja/2012/01/2011-year-in-review-patent-reform-post-grant-landscape#comments Tue, 03 Jan 2012 09:10:51 +0000 Scott A. McKeown http://www.patentspostgrant.com/?p=7901 Top Stories of 2011

2011 was perhaps the most significant year to date in terms of post grant patent practice. The perennial legislative effort generally known as “patent reform” finally bore fruit as the Leahy-Smith America Invents Act (AIA); patent reexamination filings in 2011 reached an all time high; patent reissue practice was explored and clarified by the CAFC; and patent litigation parallel with patent reexamination continues to expand as a well established strategic practice.

As to the America Invents Act, several entirely new post grant patent proceedings have now been enacted into law (effective September 16, 2012).  A summary of these proceedings, and discussions of their expected impact are linked below (and throughout the blog).

Post Grant Review

Inter Partes Review

Supplemental Examination

Derivation

Transitional Business Method Patent Challenge

The USPTO is scheduled to issue a notice of proposed rule making on these proposed proceedings within the next 2-3 weeks. 2012 will bring much more detail to the broad legislative concepts found in the AIA.

As to patent reissue, the CAFC has clarified the scope of error necessary for patent reissue (Ex Parte Tanaka) and has addressed the complexities of the recapture doctrine (Ex Parte Mostafazadeh). The CAFC is expected to issue their decision in Ex Parte Staats, another important patent reissue case, in the coming weeks.

Patent reexamination has been impacted by the passage of the AIA in that the SNQ standard is now available only for ex parte patent examination. Likewise, the USPTO has proposed their own changes to patent reexamination practice to decrease pendency. With the passage of the AIA, it is unclear where this earlier proposal now stands.

2012 is expected to bring even further attention to post grant patent practice as it expands and matures under the new legislation. Stay tuned.

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)

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