Third party use of patent reexamination can be thought of as both a “sword” and a “shield.” In the “shield context”, patent reexamination may function to shield an infringer from litigation costs if the reexamination filing results in the stay of a federal district court infringement litigation. Likewise, the reexamination of a patent immediately prior to an imminent litigation may cast enough of a cloud over a patent to avoid litigation altogether, or to re-calibrate the licensing expectations. In this way, the shielding of unwarranted litigation expenses gains the infringer significant settlement leverage. Conversely, the use of a patent reexamination may also serve as a “sword”, providing offensive value. Aside from the obvious intervening rights, prosecution estoppel, and non-infringement positions that may be created by ongoing reexamination prosecution, a timely initiated reexamination proceeding may utilized in a more generic fashion to demonstrate a perceived weakness with respect to patent validity. For example, at the preliminary injunction stage of a litigation, even an early rejection of a litigated patent by the USPTO (i.e., first official action) may indicate a low likelihood of success on the merits. As this factor is a crucial component of a preliminary injunction determination, the well timed reexamination filing may provide dividends even at this early stage. Depending on the respective stages of the reexamination and district court litigation proceedings, a district court judge may be strongly discouraged from imposing a preliminary injunction against an accused infringer. For example, if the reexamination proceeding a reached a final action by the USPTO rejecting the asserted patent claims. A final Office action rejecting patent claims casts enough doubt on the validity of a patent to warrant denial of a preliminary injunction. In opposing a preliminary injunction, one need only to establish a substantial question as to invalidity of asserted patents claims requiring less proof than the clear and convincing showing necessary to establish invalidity itself. Amazon.com v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1359 (Fed. Cir. 2001). On the other hand, too early in the proceeding, the mere granting on a reexamination order may not suffice to avoid a preliminary injunction. The USPTO orders 92% of ex parte reexamination requests and 95% of inter partes reexamination requests. The order is not a merits determination, not does it suggest what the ultimate outcome of the reexamination will be. Erico Int’l Corp. v. Doc’s Mktg., Inc., 2007 U.S. Dist LEXIS 1367 (N.D. Ohio Jan. 9, 2007) When faced with imminent or recently initiated infringement litigation, timely reexamination filings can provide both offensive and defensive benefits to defendants.
