Inter Partes Patent Reexamination is Not Always the Best Choice

In the case of Inventio AG v. Otis Elevator Co. (SDNY), the Court found that entry of a permanent injunction was against public interest where a pending ex parte patent reexamination of the USPTO seemingly demonstrated the potential invalidity of the subject patent. Interestingly, this type of strategic, post-trial benefit of a concurrent patent reexamination is not available if the parallel patent reexamination were an inter partes patent reexamination.

That is to say, in considering the choice between ex parte and/or inter partes patent reexamination, post trial, or late stage litigation strategies must take into account the unique estoppel provisions of inter partes patent reexamination.

Of course, 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.” One factor that will greatly impact the choice between ex parte and inter partes patent reexamination is whether or not the requesting party is embroiled in a parallel infringement litigation.

Depending upon the litigation strategy, the court, and/or judge, the choice between reexamination types may vary significantly. For late stage litigations, such as the Otis “injunction hedge” strategy noted above, ex parte patent reexamination is the only viable choice. Statistically speaking, inter partes patent reexamination is more likely to lead to claim cancellation/amendment, and as such, seems the clear choice. Yet, unlike ex parte patent reexamination, inter partes patent reexamination may be “turned off” at some point by the USPTO by operation of estoppel.

Inter partes patent reexamination is subject to statutory estoppel provisions not applicable to ex parte patent reexamination. Once a final validity determination is entered (i.e., all appeals exhausted) 35 USC § 317 (b) is triggered, 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)

Thus, in the Otis “injunction hedge” example above, once a validity determination of the court becomes final, the USPTO would be forced to vacate any inter partes patent reexamination proceeding requested by Otis with respect to the enumerated claims of the final Court holding. See Also Sony Computer Entertainment America Inc. v. Dudas (E.D. Va 2006) (inter partes patent reexamination suspended pending CAFC appeal). Note that currently, the inter partes reexamination estoppel provisions do not apply to ITC proceedings. This will change upon enactment of the Leahy-Smith America Invents Act.

While the court may still weigh the vacated/suspended proceeding in balancing equities in the injunction hedge context, penalizing the Patentee as to an incomplete proceeding would seem inequitable. To be sure, the opportunity to appeal an incomplete, adverse reexamination result would be cut off by the USPTO.

On the other hand, an ex parte patent reexamination would continue uninterrupted by court actions, as is the case in Otis.

For additional considerations in choosing between ex parte and inter partes patent reexamination proceedings concurent to litigation, see my previous Therasense discussion and motion to stay discussion.