Patent Reexamination Short Circuits Decade Long Litigation

Post grant patent proceedings at the USPTO are often initiated in parallel with an infringement action in the district court. Prior to September 16, 2012, when the speedier and more robust post grant options of the America Invents Act (AIA) first became available, patent challengers relied solely on patent reexamination. As patent reexamination proceedings were notoriously slow, many courts would proceed in parallel despite the conflicting actions of the USPTO that often times would tend to demonstrate the unpatentability of the disputed patent claims.

Recognizing the long pendencies of patent litigation and patent reexamination proceedings, patent challengers may file a patent reexamination as an “insurance policy” to effectively undo the effect of an interim court judgment. Over the past few years, many of these reexaminations have been making their way to the Court of Appeals of the Federal Circuit (CAFC). Back in 2012 the Court considered this practice in both In re Construction Equipment and In re Baxter. Yesterday, the Baxter dispute was again at issue, and again, Judge Newman decried the potential undermining of previously settled court rulings via USPTO decision.

The majority opinion in yesterday’s Baxter decision (here) did not consider the merits of the reexamination, which concluded months earlier in a certificate cancelling all claims of the patents, but instead, the impact of the reexamination certificate on the pending district court appeal. In finding the appeal moot, the majority emphasized that the district court judgment was not truly “final.” Based upon this perceived lack of finality the Court found that the USPTO’s cancellation of the patent claims in patent reexamination rendered them void ab initio. Thus, the court concluded that Baxter had simply lost their cause of action on appeal.

In her dissent, Judge Newman mostly reiterated the points made in the previous decisions. She also pointed out the gamesmanship of pursuing such post grant challenges after an adverse court judgment as seemed to be the case here.

It is difficult to imagine a scenario in which a dilatory motive could be more apparent. . . . Fresenius should not have waited until it had had a trial, had litigated motions for judgment as a matter of law and for a new trial on the merits, and then had a favorable PTO action to request a stay. Any irreparable harm that Fresenius will suffer will be of its own making, attempting, as it did, to “game the system” by playing both fields simultaneously. . . . [T]o allow Fresenius to now derail this litigation would be to sanction the most blatant abuse of the reexamination process.

This commentary of the dissent emphasizes some of the controls built into the new AIA proceedings, which mandate that patent challengers must pursue Inter Partes Review (IPR) proceedings within 12 months of service of the complaint. This control, coupled with the speed of the new AIA proceedings, and increased  willingness of courts to stay their proceedings will result in relatively few if any such situations in the IPR context. Yet, covered business method challenges (CBM) have no such control. (and the court may see a similar argument  in the SAP CBM).

blatant abuse of the reexamination process.