Court Finds Clear & Convincing Invalidity Despite Previous USPTO Review

The USPTO applies the preponderance of the evidence standard in post-grant patent proceedings to assess patentability relative to applied prior art. For at least this reason, it is far easier to demonstrate unpatentability of a patent claim at the USPTO as compared to invalidity in the district court, which applies the clear and convincing evidentiary standard. As pointed out last week, art failing the lower threshold of the USPTO may even result in summary judgment of no invalidity in the district court

Applying the above logic then, it would seem imprudent to argue invalidity in the district court based upon art explicitly considered, and rejected by the USPTO in a post-grant proceeding. That is, unless you can convince the court that the earlier USPTO proceeding was incompetent.

In Kyle Broussard et al., v. Go-Devil Manufacturing Co.(LAMD, Order July 10, 2014), the court considered the validity of two, related patents for shallow water boat motors (mud motors). (Lousiana, not being a hot bed of patent litigation, is arguably, a hot bed of those skilled in the art of this particular technology). During the litigation, Defendants sought ex parte reexamination of the patents, however, the Patentee was successful in demonstrating patentability of the claims before the USPTO.

At issue in the reexamination proceedings, and the litigation proceeding, was a common reference known as “Saito.” The Court found this reference critical in its invalidity determination despite the fact that the reexaminations concluded that the claims were non-obvious over this very same reference. In justifying the seeming inconsistency the Court explained: 

The PTO’s opinion regarding the validity of the ‘340 Patent loses much of its persuasive force in light of the evidence presented at trial. The PTO’s Statement of Reasons for Patentability and/or Confirmation indicates that the examiner relied heavily on “paragraphs 11- 15” of [the declaration].

The court took issue with the declarant’s (perceived) limited analysis of the Saito reference. That is, the court believed that the declarant analyzed Saito too narrowly, labeling the review a “blinders on” approach to the art. For this reason, the Court found that the USPTO did not have all of the requisite facts before it. (and presumably, the expert agency was incapable of figuring it out for themselves)

To repeat: “if the PTO did not have all material facts before it, its 

considered judgment may lose significant force. And, concomitantly, the 

challenger’s burden to persuade the [factfinder] of its invalidity defense by clear and 

convincing evidence may be easier to sustain.” Microsoft Corp., 131 S. Ct. at 2251.
Next, the court faults the PTO analysis as failing to consider KSR:


Finally, there is little in the ‘340 Patent’s prosecution and reexamination history to convince the Court that the PTO Examiner applied the proper legal standard in its determination that the material disclosed in the ‘340 Patent is not obvious-specifically. the standard reiterated by the Supreme Court in KSR. . . . the PTO’s Statement of Reasons for confirmation of the ‘340 Patent fails to reference any legal standard, relying instead on the “patent owner’s response of August 26, 2010 and paragraphs 5-16 of the [declaration], neither of which discusses KSR. . . . In sum, based on the evidence received at trial, the Court finds that the PTO’s confirmation of the ‘340 Patent was based on incomplete evidence. Further, the Court lacks any assurance that the PTO’s obviousness determination was made according the controlling legal standard. Accordingly, because the PTO lacked the “material facts” required to make its validity determination in light of KSR, the Court finds that “its considered judgment … lose[s] significant force” and will not prevent Defendants from proving their “invalidity defense by clear and convincing evidence.”
(Emphasis added)
The court seemed to pay particular interest to the lack of reference to KSR in USPTO communications, probably because the defendants played this non-event up in their briefing. Basically, the Court found that the examiner took the word of the declarant without performing any independent factual or legal analysis. It will be interesting to see whether the Federal Circuit agrees with the Court’s second guessing of the expert agency— given 

the presumption of validity is grounded in the basic proposition that the USPTO is presumed to do its job. 

Patent reexamination is the least preferred route for challenging a patent in litigation now that Inter Partes Review (IPR), Covered Business Method (CBM) Challenge, or Post-Grant Review (PGR) are available. This is because inter partes challenges are far more effective. Still, Patentees should be mindful of the above outcome especially those seeking reissue, reexamination, or supplemental examination of a patent immediately prior to litigation.