Hedging Against a Willfulness Finding in Litigation Parallel to Patent Reexamination

Demonstrating Objectively Reasonable ConductThe admissibility of evidence relating to an ongoing patent reexamination in a parallel patent litigation is often times a question of both purpose and timing. Last January, we presented a four part series on this topic. These earlier posts compared the attempted litigation purpose (i.e., willfulness, inequitable conduct, claim construction, etc) of patent reexamination evidence relative to the stage of the patent reexamination (i.e., grant, first action, final action, etc).In addition to these two factors, consideration must also be given to the litigation forum.As mentioned above, 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. Although 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.While evidence of a concurrent patent reexamination is consistently admitted at the summary judgment stage to demonstrate objectively reasonable behavior, certain courts are often times reluctant to admit such evidence for jury consideration. When it comes to jury exposure some courts find reexamination evidence prejudicial to the Patentee, even for a limited purpose of demonstrating objectively reasonable conduct. Since courts have wide discretion in admitting evidence that is more prejudicial than probative, it is not surprising that different courts espouse different theories on what constitutes prejudicial evidence.In Real Time Data LLC. v. Packeteer Inc., et al. (EDTX, ORDER September 30, 2009), the court explained:After reviewing the arguments of both parties, the Court agrees with Plaintiff that evidence of an incomplete reexamination proceeding is unduly prejudicial in relation to the probative value contained therein. See FED. R. EVID. 403. As this Court observed in i4i v. Microsoft Corp., even if a reexamination proceeding is somewhat probative of invalidity, the probative value of this evidence is “substantially outweighed by its prejudicial effect.”  . . . Federal Rule of Evidence 403 gives the Court broad discretion to exclude evidence where its probative value is substantially outweighed by the danger of unfair prejudice. An Office Action, such as the USPTO’s preliminary findings of invalidity of the ‘104 patent, carries with it a substantial risk that the jury will give its conclusions undue deference. See Pharmastem, 2003 WL 22244704, at *3 (finding that an opinion from a quasi-judicial or administrative body increases the likelihood that a jury will give its conclusions deference). Furthermore, even if the jury is instructed to consider the Office Action for the limited purpose of assessing objective recklessness, there is a strong likelihood that the jury would be confused as to its relevance and use this evidence in considering the validity of the ‘104 patent. In sum, although an ongoing reexamination proceeding and the USPTO’s actions therein could be considered by the Court as a factor in a willfulness determination at the summary judgment stage, during trial in a request for judgment as a matter of law as to willful infringement, and/or post-verdict,  it should not be introduced before the jury due to the highly prejudicial effect the USPTO’s actions would have on the jury.However, not every court follows the Texas model.On September 1, 2010, Judge Roslyn O. Silver of the United States District Court for the District of Arizona denied a motion to exclude evidence of the patent reexamination of the ’894 patent-in-suit in Integrated Technology Corp. v. Rudolph Technologies, Inc., Civil Action No. CV-06-02182-PHX-ROS.  Judge Silver, simply concluded that the USPTO’s action is relevant, at the very least, to the issue of willful infringement citing Lucent Tech., Inc. v. Gateway, Inc., 2007 WL 6955272 (S.D. Cal.).As demonstrated by the considerable difference in opinion here, not to mention the different attitudes as to whether or not to stay a case pending patent reexamination, the practices of particular jurisdictions are a critical factor in assessing patent reexamination strategi

The admissibility of evidence relating to an ongoing patent reexamination in a parallel patent litigation is often times a question of both purpose and timing. Last January, we presented a four part series on this topic. These earlier posts compared the attempted litigation purpose (i.e., willfulness, inequitable conduct, claim construction, etc) of patent reexamination evidence relative to the stage of the patent reexamination (i.e., grant, first action, final action, etc).

In addition to these two factors, consideration must also be given to the litigation forum.

As mentioned above, 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. Although 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.

While evidence of a concurrent patent reexamination is consistently admitted at the summary judgment stage to demonstrate objectively reasonable behavior, certain courts are often times reluctant to admit such evidence for jury consideration. When it comes to jury exposure some courts find reexamination evidence prejudicial to the Patentee, even for a limited purpose of demonstrating objectively reasonable conduct. Since courts have wide discretion in admitting evidence that is more prejudicial than probative, it is not surprising that different courts espouse different theories on what constitutes prejudicial evidence.

In Real Time Data LLC. v. Packeteer Inc., et al. (EDTX, ORDER September 30, 2009), the court explained:

After reviewing the arguments of both parties, the Court agrees with Plaintiff that evidence of an incomplete reexamination proceeding is unduly prejudicial in relation to the probative value contained therein. See FED. R. EVID. 403. As this Court observed in i4i v. Microsoft Corp., even if a reexamination proceeding is somewhat probative of invalidity, the probative value of this evidence is “substantially outweighed by its prejudicial effect.”  . . .

Federal Rule of Evidence 403 gives the Court broad discretion to exclude evidence where its probative value is substantially outweighed by the danger of unfair prejudice. An Office Action, such as the USPTO’s preliminary findings of invalidity of the ‘104 patent, carries with it a substantial risk that the jury will give its conclusions undue deference. See Pharmastem, 2003 WL 22244704, at *3 (finding that an opinion from a quasi-judicial or administrative body increases the likelihood that a jury will give its conclusions deference). Furthermore, even if the jury is instructed to consider the Office Action for the limited purpose of assessing objective recklessness, there is a strong likelihood that the jury would be confused as to its relevance and use this evidence in considering the validity of the ‘104 patent. In sum, although an ongoing reexamination proceeding and the USPTO’s actions therein could be considered by the Court as a factor in a willfulness determination at the summary judgment stage, during trial in a request for judgment as a matter of law as to willful infringement, and/or post-verdict,  it should not be introduced before the jury due to the highly prejudicial effect the USPTO’s actions would have on the jury.

However, not every court follows the Texas model.

On September 1, 2010, Judge Roslyn O. Silver of the United States District Court for the District of Arizona denied a motion to exclude evidence of the patent reexamination of the ’894 patent-in-suit in Integrated Technology Corp. v. Rudolph Technologies, Inc., Civil Action No. CV-06-02182-PHX-ROS.  Judge Silver, simply concluded that the USPTO’s action is relevant, at the very least, to the issue of willful infringement citing Lucent Tech., Inc. v. Gateway, Inc., 2007 WL 6955272 (S.D. Cal.).

As demonstrated by the considerable difference in opinion here, not to mention the different attitudes as to whether or not to stay a case pending patent reexamination, the practices of particular jurisdictions are a critical factor in assessing patent reexamination strategies.