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.

Estoppel, as it relates to inter partes patent reexamination (IPX) proceedings and the new inter partes review (IPR) of the AIA, has been a topic of discussion here over the past few weeks. As if on cue, the CAFC has chimed in with a bit of clarification on the topic of (IPX) estoppel as it relates to 35 USC § 315.

The USPTO has maintained the position that IPX estoppel (35 USC § 317) only attaches after all appeals are exhausted. That is to say, the USPTO will not honor an intermediate court result to for the purposes of vacating an ongoing IPX, or denying a new request, by operation of estoppel. Instead, the USPTO awaits a final appeal decision (or time for filing of such to pass). The Office has not had much opportunity to comment on the complimentary statute § 315 (c), which provides the estoppel effect of a USPTO decision on the district courts.  This analysis was performed this past week by the CAFC.

The timing of 315 estoppel attachment was explored in Bettcher Industries, Inc. v. Bunzl  USA, Inc., (Fed. Cir. 2011). During ther litigation dispute between the parties, Bunzl sought IPX of  U.S. Patent 7,000,325 (relating to a meat cutting assembly). In the reexamination, a Right of Appeal Notice was issued (RAN) confirming the patentability of certain claims at issue in the parallel litigation.

Bettcher took the position that the RAN was a final determination of patentability in accordance with 315 (c). In pursuing this argument before the district court, Bettcher convinced the court to refuse consideration of the prior art considered in the IPX based on an estoppel theory. For their part, Bunzl argued that IPX estoppel could not attach until the appeals process concluded, consistent with the USPTO interpretation of 317.

This dispute over the time of estoppel attachment was pursued to the CAFC, along with other issues.  Specifically at issue was the meaning of “final determination” as recited in 315 (c).

In deciding this issue of first impression, the CAFC examined legislative history of the IPX statutes and the language used across the various IPX statutes. The Court also considered the USPTO’s interpretation of 317, according Chevron deference. Ultimately, the CAFC held that the estoppel effect of a USPTO determination under 315 does not attach until all appeals are exhausted (consistent with the USPTO interpretation of 317), explaining that:

The relevant House and Senate records confirm that § 317(b) applies “after any appeals.” 145 Cong. Rec. 29276, 29973 (1999). And the Patent Office has interpreted § 317 consistent with this legislative history in M.P.E.P. § 2686.04 (emphases in original):

While Congress desired that the creation of an inter partes reexamination option would lead to a reduction in expensive patent litigation, it nonetheless also provided in the statute that a court validity challenge and inter partes reexamination of a patent may occur simultaneously; but once one proceeding finally ends in a manner adverse to a third party, then the issues raised (or that could have been raised) with respect to the validity of a claim in that proceeding would have estoppel effect on the same issues in the other proceeding.

. . .

The 35 U.S.C. 317(b) estoppel applies only in a situation where a final decision adverse to the requester has already been issued. If there remains any time for an appeal, or a request for reconsid-eration, from a court (e.g., District Court or Federal Circuit) decision, or such action has already been taken, then the decision is not final, and the estoppel does not attach.

While we believe that § 317(b) is clear, even if it were ambiguous, the Patent Office’s interpretation that § 317(b) does not apply “[i]f there remains any time for an appeal” would be entitled to deference. See Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1336 (Fed. Cir. 2008) (holding that the “Patent Office had the authority under 35 U.S.C. § 2 to interpret section [of the act creating inter-partes reexamination] because that interpretation both governs the conduct of proceedings in the Patent Office, not matters of substantive patent law, and is a prospective clarification of ambiguous statutory language.”).

The CAFC also justified the consistent interpretation of 315 and 317 on other statutory interpretation grounds, the full opinion (here) is worth a read.

Of course, once the case heads back down to the lower court for consideration of the IPX art, the IPX appeal will be before the CAFC. Absent a reversal of the USPTO determination in the IPX, this maybe a hollow victory for Bunzl as estoppel will attach upon such a final determination of the CAFC (barring further appeal).

As noted last week, the new estoppel provisions of IPR provide for estoppel attachment at the time of a written PTAB decision.

When pursuing inter partes patent reexamination, denial of a Substantial New Question of Patentability (SNQ) by the USPTO can be especially troubling to third party requesters. This is because a third party is estopped from asserting in litigation the “invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings.” 35 U.S.C. § 315(c).

Denied SNQs raise the fear of potential district court estoppel relative to the prior art underlying the denied SNQ. For this reason, third parties will almost always dispute such denials internal to the USPTO–even where the claims of the patent remain rejected based upon other SNQs of the same request.

But, what is the appropriate vehicle for such a dispute, petition or appeal? The answer to this question will depend upon whether or not the denied SNQ pertains to a claim that is being actively reexamined on other grounds.

As explained by an expanded panel of the Board of Patent Appeals & Interferences (BPAI) yesterday in Belkin International et al., v. Optimumpath LLC, the denial of an SNQ in inter partes patent reexamination is  petitionable, not appealable. In Belkin U.S. Patent 7,035,281 was reexamined (95/001,089). The request was granted as to claims 1-3 and 8-10, but denied as to claims 4-7 and 11-31.

The denial of the SNQs applied to claims 4-7 and 11-31 was petitioned to the Director of the Central Reexamination Unit. Upon reconsideration, the Director refused to reverse the examiner. 

During prosecution, the rejection of claims 1-3 and 8-10 was later withdrawn by the examiner. Thereafter, the third party appealed the withdrawn rejection and the denial of the SNQs. 

On appeal, the BPAI affirmed the examiner’s decision to withdraw the rejection and confirm the patentability of claims 1-3 and 8-10. As to the appeal of the denied SNQs, the BPAI explained that such issues may not be appealed to the Board.

 . . . 35 U.S.C. § 312 states that the Director makes such determinations (of whether a substantial new question of patentability exists) and that the determination “by the Director . . . shall be final and non-appealable.” Only when the Director makes the determination that a substantial new question of patentabilityaffecting a claim of a patent is raised (i.e., that a substantial new question of patentability exists for a particular claim) shall an inter partes reexamination of the claim(s) in question be performed for resolution of the question (35 U.S.C. § 313). Therefore, on the other hand, when the Director makes a determination that a substantial new question of patentability affecting a particular claim is not raised, the Director does not order inter partes reexamination of the patent with respect to those claims. Under those circumstances, no reexamination is performed with respect to those proposed substantial new questions of patentability. Also, as pointed out above, the Director’s determination that no substantial new question of patentability was established for any particular claim(s) is final and non-appealable (35 U.S.C. § 312(c)).

Since, under 35 U.S.C. § 312 and 35 U.S.C. § 313, reexamination of the patent claims in question cannot proceed when the Director makes a determination that a substantial new question of patentability has not been raised for those claims and that the Director’s determination is non-appealable, no final decision, whether favorable or unfavorable, can be rendered pertaining to those claims. Under 35 U.S.C. § 315(b), a third-party requester may appeal with respect to any “final decision favorable to the patentability” of disputed claims. However, as described above, if the Director makes the non-appealable determination that no substantial new question of patentability has been raised, then reexamination is not performed for those claims in question with respect to the corresponding prior art references. There cannot have been a final decision (either favorable or unfavorable) on the patentability of the claims in question under 35 U.S.C. § 315(b), the claims not having been reexamined in the first place for lack of a substantial new question of patentability. (emphasis added)

The decision continues on to explain that the denial of SNQs is propoerly pursued by petition to the Director (which Belkin filed to no avail; 37 C.F.R. § 1.927). Note that had an SNQ been found but the corresponding rejections not adopted, appeal of non-adopted rejections would have been appropriate.

Of course, a patent owner’s seeking to reverse an accepted SNQ in ex parte patent reexamination may pursue the matter to the BPAI.

When implementing a patent reexamination strategy, a threshold determination is whether or not to initiate ex parte or inter partes patent reexamination, or both. This decision is very straight forward for older patents (i.e., those patents that did not mature from an application filed on or after November 29, 1999). This is because applications filed prior to the 1999 date are not eligible for inter partes patent reexamination.

Yet, as the years progress, fewer and fewer patents are outside of the inter partes date provision. So, where both options are available, which is the better option?

Like most legal inquiries, the answer is “it depends.” For those seeking a stay of a parallel litigation, the answer will vary in accordance with the practice of the presiding judge.

As detailed previously, a Nevada judge found that ex parte patent reexamination pendency is controlled by the Patentee, and determined that a stay is appropriate. The judge reasoned that any potential delays in the ex parte proceeding could be controlled by the Patentee.

Last week, in eComSystems Inc., v. Shared Marketing Sevices Inc., and Ace Hardware Corp (MDFL), the judge found that the potential for an ex parte patent reexamination to simplify issues for trial was limited compared to inter partes patent reexamination. The judge explained that estoppel provisions of inter partes patent reexamination would prevent a defendant from arguing the same art in the parallel litigation.

Inter partes reexaminations provide a third party the right to participate in the reexamination process and, thus, have a res judicata effect on the third party requester in any subsequent or concurrent civil action. See 35 U.S.C. §§ 314-315. . . .. Ex parte reexaminations, on the other hand, do not bar the requestor from relitigating the exact same issues in district court.

Accordingly, the Court does not find that judicial economy will be served by a stay because the pending ex parte reexaminations of the patents-in-suit would still leave Shared Marketing and Ace free to relitigate the exact same issues before this Court.

In this case, the patents were subject to inter partes patent reexamination; yet the defendants opted for the lower risk, ex parte option. While the Order is silent as to the perceived  gamesmanship of this choice, the decision may be more about this choice then the loss of estoppel. Indeed, as pointed out by the judge, even had estoppel applied, patent reexamination will not defeat all invalidity defenses (e.g., public use, on-sale bar, inequitable conduct).

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

With most patent reexaminations now being conducted concurrent to a district court or ITC proceeding, a common question of such plaintiffs 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. On the other hand, if the pending reexamination is an inter partes patent reexamination, the answer will depend on the nature of the settlement.

In other words, inter partes patent reexamination is subject to statutory estoppel provisions not applicable to ex parte patent reexamination. Depending upon the manner in which the case settles, and whether or not the case is before the ITC, 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)

It is important to note that the estoppel provisions of inter partes patent reexamination do not apply to ITC proceedings, see our earlier discussion of this issue.

With respect to district court proceedings, where parties agree to settle, and the defendant 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 inter partes 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 inter partes patent reexamination. (here)

In practice, defendants rarely agree to such a consent order since such a public humliation is not all desirable. (e.g., especially if the defendant is frequently the target of patent trolls). Likewise, as noted in the petition decision linked above, although the reexamination is vacated by the estoppel as to the particular setttling defendant, the unfinished business of the reexamination may be easily “re-started” by another competitor. Still, in settling patent disputes concurrent with inter partes patent reexamination, plaintiffs may be amenable to such a consent judgement ….for the right price.

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

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

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

–Part I–

Since the storied emergence of the patent troll (non-practicing entity (NPE) for those preferring the multisyllabic, PC terminology), it is not uncommon for an entire industry to find themselves on the same side of the defendant fence of a patent infringement suit. Where the targeted industry includes a mixture of small to large competitors, it is especially common for smaller targets to form temporary litigation alliances amongst themselves, and with their larger, deep pocket competitors.

These alliances are memorialized as written contracts or “joint defense agreements” (JDA). The purpose of such agreements is to provide for a structured exchange of information for mutual defense benefit, and protect this communication from discovery requests under the auspices of the joint-defense privilege.

When such agreements are in place, and inter partes reexamination is sought as a concurrent litigation strategy, a common concern is the applicability of the estoppel provision of 35 USC § 315(c) to the co-defendants as participants of the joint defense.  As explained next, it is clear that the USPTO does not consider mere co-defendant status as being in “privity” pursuant to 37 C.F.R. §1.915(b)(7-8). However, once multiple parties are contractually bound as one, by JDA, for the purpose of sharing effort and resources for both reexamination and litigation purposes, the issue becomes less clear cut.

In other words, where one defendant of a multi-defendant group chooses to seek inter partes reexamination, are the otherwise unrelated, co-defendants now in “privity” by virtue of the JDA and subject to inter partes reexamination estoppel?

The answer to this question likely depends upon whether the USPTO or District Court is considering the issue, the content of the JDA, and conduct of the joint defendants relative to the reexamination.

1. USPTO

In the USPTO, the privity issue is presented when a Patent Holder challenges, by petition, the certification provided by the Requester in a request for inter partes reexamination. (Rule 915(b)(8))  In such a petition, the Patent Holder argues that the request for inter partes reexamination is defective and should be vacated for failing to properly identify the real-parties-in-interest (i.e., all privies). For example, in 95/000,166 (found here), the Patent Owner asserted that participation in a concurrent litigation as co-defendants, and as members of a joint defense group demonstrated privity between such defendants.

As noted in the ‘166 petition decision, whether or not co-defendants may benefit from a reexamination filing, does not make them privies in the eyes of the Office. In this regard, the Office specifically notes:

The above quote cites the General Comments in the Rules to Implement Optional Inter Partes Reexamination Proceedings, 65 FR 76759 (December 7, 2000).  The Petition Decision then goes on to note that participation in a joint defense group for the litigation does not, absent more, imply the “direction and control” necessary to establish privity for the purposes of the reexamination proceeding. Petition Decision at page 10.

More recently, a petition filed in 95/001,206 (found here) “challenged the accuracy of the certification,” using guidance provided by the Office in a recent Order to Show Cause involving the “TrollBusters” (TB) organization.  (See our previous post on this topic, TrollBusters decision).  In the TrollBusters decision, TB’s request for inter partes reexamination was denied a filing date, in doing so, the Office outlined a framework for analyzing the real party in interest under Rule 915(b)(7) & (8). The factors identified by the Office as tending to show that unnamed parties may be in privity with the Requester included:

-Technical oversight

-Financial Contribution

-Editorial control over strategic issues.

The recent ‘206 petition attempts to follow the TB framework, implying financial contribution between litigants, the use of common counsel, technical oversight, and overlapping work product allegedly leveraged to prepare the reexamination request. A decision on this petition remains outstanding.

While the Office may still be reluctant to disturb their “face value” analysis of the privity issue, in the ‘206 petition filing, a much closer call is presented.

In Part II of this series, we will explore the potential offensive use of JDA created privity in Federal District Courts with respect to reexamination estoppel, and offer suggestions in avoiding the issue.

Inter partes

For example, the inter partes reexamination statute burdens a requesting party with what some consider to be a significant estoppel provision.  Specifically, section 315(c) of title 35 of the United States Code provides that a third-party requester is estopped from asserting at a later time, in a civil action under 28 U.S.C. § 1338, the invalidity of any claim “finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings.”(emphasis added).

As the vast majority of patents involved in inter partes reexamination proceedings are involved in concurrent litigation, requesters realize that the statute provides a “use it or lose it” option with respect to available prior art.  Therefore, inter partes reexamination proceedings, unlike ex parte reexamination proceedings which have no such statutory estoppel provision, are far more likely to include a greater number of substantial new questions of patentability (“SNQ”). 

In other words, if a requester is aware of a single primary reference (A), and 20 interchangeable, cumulative secondary references all showing the same technical feature, the requester is practically obligated to present all 20 SNQs.  As such, it is not uncommon for an inter partes reexamination proceeding to include on the order of 20+ proposed grounds of rejection, all of which are virtually cumulative with respect to the other.  Furthermore, in a concurrent litigation, it is much more impressive to inform the court that a claim is rejected on 20 different grounds than say, a single ground.  Thus, while the “stacking” of cumulative SNQs is especially problematic in inter partes reexamination, there also exists motivation for the same overkill in ex parte reexamination proceedings concurrent with litigation.

As the need to actively consider all SNQs in some form or another falls on the Office, the burden being twice as oppressive in inter partes reexamination since both parties participate, it is easy to see how inter partes proceedings can slow to a crawl.

Indeed, in one recent inter partes reexamination proceeding the Examiner lamented:

Currently, Congress has proposed removal of the “could have been raised” language from the statute in the most recent version of the patent reform bills.  Such a change would be helpful in eliminating the estoppel liability for inter partes reexamination.  Yet, this legislation appears hopelessly stalled with Congress distracted with health care issues.

So, what can and should the USPTO do about SNQ stacking now?

MPEP § 2240 precludes the granting of a second reexamination request while a first inter partes reexamination proceeding is pending, if the second request presents the same SNQ as the first.  In other words, the Office will refuse to examine the same SNQ twice, simultaneously.  A proper SNQ analysis includes determining whether or not art is cumulative with respect to art previously considered.  MPEP 2240 alters this analysis slightly to include art currently being considered.  Why not consistently apply this analysis to SNQs of a single request?  

Stated differently, the stacking of SNQs as outlined above is nothing more that the presentation of cumulative SNQs in a single request; why should the USPTO examine cumulative SNQs of a single request, where if divided across multiple reexamination requests, such SNQs would be denied?

While one simple solution to SNQ stacking may be to simply deny the cumulative under a more rigid interpretation of the current guidelines, however, with the significant estoppel effect of inter partes reexamination in mind, perhaps application of a stringent view of cumulative art would have a chilling effect on filings. 

Instead, I propose that the Office revise the inter partes rules to effectively control the number of SNQs considered during inter partes reexamination. 

In operation, the rules would provide that after identifying all viable SNQs of a request, those that are arguably cumulative with respect to other SNQs would be grouped together.  Once grouped, the SNQs are presented to the requester for the purpose of electing a single, representative SNQ for reexamination on the merits, non-elected, cumulative SNQs being held in abeyance until and unless needed, if rejections based on the representative SNQ are overcome. 

Under such a system, the requester would have the right to petition to substitute a non-elected SNQ if the elected SNQ of record is overcome.  The petition would require a showing that the held in abeyance SNQ meets the claims limitations relied upon by the Office which overcome the elected SNQ.  For example, one could imagine a situation in which it is discovered during prosecution that the secondary reference of the elected SNQ teaches away from the applied combination of references while a non-applied reference does not provide such a teaching away.  If the elected SNQ is not distinguished, there would be no right of petition.

Upon issuance of an Action Closing Prosecution (ACP), the Examiner would indicate that all rejections have been considered for appeal purposes and that the non-elected SNQs are believed to stand or fall together with the elected SNQ.  Should the requestor choose, for a significant additional fee, the SNQs held in abeyance would become available for briefing during the appeal.  The examiner would not be obligated to address the cumulative SNQs, but would be permitted to do so at his/her option in the Examiner’s Answer. 

It is envisioned that the Office would require a substantial fee for the ability of the requestor to brief non-elected SNQs to offset the potential of an increased level of effort at the Board of Patent Appeals & Interferences (BPAI).  The level of the fee should increase proportionately to the number of non-elected SNQs desired for briefing to discourage abuse at the time of appeal.

If the requestor does not opt to have the non-elected SNQs considered, the Board would not review these SNQs should the elected SNQ be affirmed. Of course, if the elected SNQ is reversible, the non-elected SNQs would then be considered, as enlightened by any requester/patent holder briefing.

In this way, examiner review time would be significantly decreased by the omission of prior art stacking, and requesters would not be faced with estoppel on the non-elected rejections (unless they truly are cumulative, and inferentially distinguished during the reexamination proceedings).  Likewise, Patent Holders lose nothing as the substitution of a new rejection, if not cumulative with one previously distinguished, would be appropriate where the rejection of record has been overcome.

The above recommendations are believed to be a positive step toward streamlining the current de facto requirement that all possible grounds of rejection regardless of their redundancy be actively considered throughout every inter partes reexamination proceeding to avoid estoppel.  Likewise, as a sizeable portion of inter partes petition practice and informal filing delays relate to the exceeding of page limitations, the de-stacking of SNQs will enable participants to more readily meet page limitations, further enhancing Office efficiency.

What if a party is contemplating whether to suggest an interference with a patent or to request inter partes reexamination of the patent?  This may be the case, for example, where the party believes that it has a published application which (i) would sufficiently support at least one claim that would interfere with the targeted claims and (ii) has an earlier effective filing date for that claim than the effective filing date of the targeted claims.  In this scenario, the party’s application qualifies as 35 U.S.C. § 102(e) art against the targeted patent.  Should the party (applicant) conduct a thorough prior art search or merely rely upon its own published application as the basis for the reexamination request?  If a search is to be conducted, when?  And, how thorough should that search be?

In order to have an interference declared, an applicant must timely present at least one claim which interferes with one or more claims of the targeted patent.  Typically, a party will present in its application claims “copied” from the targeted patent in order to have interfering claims.  Consequently, any prior art discovered by a prior art search directed to the subject matter of the targeted claims will often be material to examination of the “copied” claims and, pursuant to 37 C.F.R. 1.56, must be disclosed to the PTO.  The disclosed art may delay or, in a worst case, derail an indication of allowability (a prerequisite to an interference being declared). 

If the ultimate goal of the party is to obtain its own patent protection for the subject matter claimed in the targeted patent, then the party should forego a prior art search pre-interference.  This reduces the likelihood that the copied claims will be rejected during the examination process.  However, if the party is more concerned with cancelling claims of the targeted patent, then reexamination may be the proper choice.  As discussed above, a thorough prior art search is foundational to the inter partes reexamination vetting process.

Estoppel does not apply to patent claims for which no request for reexamination was ordered.  Simply filing a request for inter partes reexamination, by itself, does not automatically trigger estoppel.  The language of § 315(c) does not trigger estoppel unless the “request for inter partes reexamination results in an order under section 313.”  For any request for which the Patent Office does not find a substantial new question of patentability, there is no estoppel.  Thus, estoppel still applies in situations where the Patent Office orders reexamination of a patent claim on the basis of some, but not all, of the prior art presented by the third-party requester as raising a substantial new question of patentability of that patent claim.

Estoppel only applies to the third-party requester.  The estoppel provision of § 315(c) applies not only to a “third-party requester” but also possibly those in privy with the third-party requester as a real party-in-interest.  The express language of § 315(c) is different from the estoppel provision of 35 U.S.C. § 317, which applies to third-party requesters and their privies with respect to subsequent requests for inter partes reexamination.  Thus, one might assume, that the § 315(c) estoppel applied to litigants is more limited than the § 317 estoppel applied to future requests for inter partes reexamination.  The problems with that assumption are exposed when one considers that a third-party requester acting for the benefit of a litigant is really placing the litigant in the position of the real party-in-interest.  Although § 315(c) literally applies only to the third-party requester, the provisions of § 315(c) could easily be subverted if the term “third-party requester” were limited to the particular attorney or entity making the request.  Thus, it is unlikely that a litigant can avoid estoppel if another entity makes a request for inter partes reexamination designed to benefit the litigant.  (See related blog post, discussing Troll Busters LLC.)  Practically speaking, courts should interpret “third-party requester” to include real parties-in-interest.

Another scenario that arises frequently is one in which there are multiple accused infringers in a litigation.  If some parties choose to participate in the filing of a request for inter partes reexamination while other parties opt out, do the parties opting out fall victim to the estoppel provision of § 315(c)?  In these situations, the parties should not be estopped from presenting any invalidity arguments in litigation merely because they made a strategic decision not to participate in inter partes reexamination.

Estoppel does not apply to invalidity grounds which the requester could not have raised in inter partes reexamination.  Because a request for inter partes reexamination can only be based on patents and printed publications, prior art that is neither a patent nor a printed publication is fair game in an invalidity defense in subsequent litigation proceedings.  This issue was analyzed in the case of ACCO Brands, Inc. v. PC Guardian Anti-Theft Products, Inc.  In that case, the court determined that “estoppel does not apply to grounds for invalidity based on prior art that was not and could not have been before the PTO.”  The plaintiff sought to prevent the defendant from using physical samples of computers as a basis for invalidity because the defendant had relied upon printed brochures for those computers as a basis for inter partes reexamination, which resulted in the confirmation of all claims of the plaintiff’s patent.  The court declined to invoke the estoppel provision of § 315(c) to prevent the defendant from relying on the physical computers as evidence of invalidity because the computers were not patents or printed publications – the only type of prior art that the Patent Office considers during reexamination – and they raised new issues with respect to the novelty of certain claim limitations.

Estoppel does not apply to prior art that was unavailable.  The language of § 315(c) prevents estoppel from operating with respect to “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.”  This exception can be viewed as a specific statutory example of invalidity grounds that fall outside the “could have raised” language in § 315(c), but it is significant enough to warrant separate discussion.  Clearly, there is no estoppel under § 315(c) if a particular patent or printed publication did not exist at the time of the inter partes reexamination proceedings, and clearly there is estoppel if the third-party requester had actual knowledge of a particular patent or printed publication.  In between those extremes, there is little guidance from the case law as to what constitutes “unavailable” prior art.

The conference reports pertaining to § 315 appear to impose an actual knowledge requirement for prior art to be considered unavailable:  “Prior art was unavailable at the time of the inter partes reexamination if it was not known to the individuals who were involved in the reexamination proceeding on behalf of the third-party requester and the US Patent Office.”  H.R. Rep. No. 106-464 (November 9, 1999).  The Patent Office however, has taken a view that is less accommodating to third-party requesters. Under the Patent Office view, a court, depending on the particular facts and circumstances, can exclude prior art that could have been discovered through a diligent search for prior art. USPTO Report to Congress on Inter Partes Reexamination at 6; Official Gazette 1234:97 (May 23, 2000).

In practice, a court is more likely interpret the phrases “could have raised” and “unavailable” broadly to include prior art that could have been discovered through a diligent search.  Such a policy serves to conserve judicial resources by reducing the number of invalidity issues that can be raised in litigation and serves to provide a quid pro quo for an accused infringer seeking to stay litigation pending the results of inter partes reexamination.  If a third-party requester is permitted to deliberately remain ignorant of patents and printed publications that would otherwise be discovered through a diligent search, then there is less incentive for the court to grant a stay of litigation because inter partes reexamination could not eliminate from the litigation the patents and printed publications that the accused infringer uncovers at the conclusion of the inter partes reexamination proceedings.  Thus, as recommended in part 1 of this series, a third-party requester is well-advised to perform an exhaustive search for prior art prior to requesting inter partes reexamination or risk being estopped from relying on late-discovered prior art in litigation.

Estoppel does not apply until a claim is finally determined to be valid and patentable.  The statutory phrase “finally determined” is subject to interpretation because § 315(c) does not expressly state whether estoppel attaches when a final office action issues or when a certificate of reexamination issues, for example.  Because a final office action does not necessarily preclude a patent owner from amending claims, the practical application of the phrase “finally determined” will most likely mean when a certificate of reexamination issues, or after a notice of intent to issue a certificate of reexamination issues and all appeals have been exhausted.  See, e.g., Safoco, Inc. v. Cameron Int’l Corp., No. 05-0739 (S.D. Tex. July 31, 2009) (concluding that § 315(c) estoppel does not attach until the Office issues a reexamination certificate).  Thus, when patentability is not “finally determined,” a third-party requester may be able to present in a parallel litigation the same invalidity arguments that it has presented in a parallel inter partes reexamination proceeding.

CONCLUSION

The estoppel provision of § 315(c) should not, by itself, scare a party away from inter partes reexamination.  A party must give thorough consideration to all of the potential exceptions to estoppel and whether they apply in any particular situation.  Lastly, if an exhaustive search of prior has been performed, then inter partes reexamination proceedings should be viewed as an alternative to litigation for having issues of invalidity determined.