Ex Parte Reexamination

PTAB Precedent (Not Surprisingly) Embraces CAFC Precedent

As I pointed out last week, it is a heavy lift for the Patent Trial & Appeal Board (PTAB) to designate a precedential decision.  For this reason, nothing but the most straightforward of issues can be decided and designated “precedential.”

The PTAB issued a prime example of a seemingly straightforward precedential decision a few days ago in Ex parte McAward, Appeal 2015-006416 (PTAB Aug. 25, 2017), Section I.B. (here). This PTAB precedent makes clear that the USPTO assesses indefiniteness pursuant to the Federal Circuit’s guidance in In re Packard, 751 F.3d 1307, 1310 (Fed. Cir. 2014).

While some have expressed shock at the PTAB pronouncing a different standard than that expressed in Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014), this is just a restatement of the Board’s status quo since the Packard decision. (It is not exactly shocking that the Board is following the guidance of its reviewing court).

The more interesting issue is whether the Court’s reasoning in Packard is equally applicable to AIA trial proceedings? Continue Reading New PTAB Precedent Endorses In re Packard….But For How Long?

USPTO Revisits 2011 Rule Proposal (Rules 56(a) &555(a))

In the wake of the Federal Circuit’s 2011 decision in Therasense Inc. v. Becton Dickinson and Co., the USPTO quickly moved to revise the Duty of Disclosure to align with the Court’s new, but-for materiality standard—perhaps too quickly.  The 2011 proposal sought to update the relevant rules (1.56 and 1.555) by explicitly adding a short hand, reference to the Therasense case itself. The earlier proposal also intertwined the the “egregious conduct” exception of the Therasense holding (Duty of Candor & Good Faith) with the Duty of Disclosure.

At the time, I questioned whether it was unnecessarily confusing to mix together concepts of conduct and disclosure given the agency’s historical segregation of such. Others found it odd that the rule would reference the name of the case as opposed to spelling out the “but-for” materiality standard of its holding.

Today, the USPTO has revisited this earlier proposal, and issued a new proposal.  
The new proposal modifies Rules 56(a) for patent applications and Rule 555(a) for patent reexamination. The new proposal removes the explicit reference to Therasense, and adds in its place an explanation of but-for materiaility. The proposal also correctly separates the egregious conduct exception of Therasense from the Duty of Disclosure sections of these Rules (here).

The newly proposed Rule 56 is reproduced below:

§ 1.56 Duty to disclose information material to patentability.
(a) A patent by its very nature is affected with a public interest. The public interest is best served, and the most effective patent examination occurs when, at the time an application is being examined, the Office is aware of and evaluates the teachings of all information material to patentability. Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability under the but-for materiality standard as defined in paragraph (b) of this section. The duty to disclose information exists with respect to each pending claim until the claim is cancelled or withdrawn from consideration or the application becomes abandoned. Information material to the patentability of a claim that is cancelled or withdrawn from consideration need not be submitted if the information is not material to the patentability of any claim remaining under consideration in the application. There is no duty to submit information which is not material to the patentability of any existing claim. The duty to disclose all information known to be material to patentability is deemed to be satisfied if all information known to be material to patentability of any claim issued in a patent was cited by the Office or submitted to the Office in the manner prescribed by §§ 1.97(b) through (d) and 1.98. However, no patent will be granted on an application in connection with which affirmative egregious misconduct was engaged in, fraud on the Office was practiced or attempted, or the duty of disclosure was violated through bad faith or intentional misconduct. The Office encourages applicants to carefully examine:
(1) Prior art cited in search reports of a foreign patent office in a counterpart application, and
(2) The closest information over which individuals associated with the filing or prosecution of a patent application believe any pending claim patentably defines, to make sure that any material information contained therein is disclosed to the Office. 

(b) Information is but-for material to patentability if the Office would not allow a claim if the Office were aware of the information, applying the preponderance of the evidence standard and giving the claim its broadest reasonable construction consistent with the specification.

Rule 555(a) includes substantially similar language but removes the “patents and printed publications” limitation of the previous version of 555(a) to encompass disclosure of information as to any matter that is appropriate for consideration in a reexamination proceeding (e.g.,admissions by patent owner), as opposed to being limited to patents and printed publications.

USPTO Releases Petition Timelines

The Office of Petitions has launched a new USPTO Patents Petitions Timeline that provides information on petition types that can be filed throughout each stage of the patent prosecution, and reexamination process. For each petition type, users can easily access information on average pendency over the past 12 months of decided petitions, the deciding office, petition grant rates, and link to specific sections of the Manual of Patent Examining Procedure (MPEP) or other parts of the USPTO website that relate to each petition type. (here)

Given the pro forma nature of many prosecution related petitions, of most interest are the more unusual filings, such as petitions to revive abandoned applications.

Of perhaps the greatest interest is the pendency information pertaining to petitions filed during patent reexamination. I have often referred to this practice as the “black arts” as such practice is fraught with uncertainty, and pendency can be quite significant.
The statistics for both ex parte patent reexamination and inter partes patent reexamination are provided below.  While the pendencies are significant for Rule 181-183 filings, keep in mind that since inter partes reexamination requests are no longer accepted. Inter Partes petition workflow (which has always been very significant) should be slowing down. Going forward, I would expect reexamination petitions under Rules 181-183 to improve in timeliness. 

Reexamination Related Petitions

CRU – Central Re-Examination Unit
OPLA – Office of Patent Legal Administration

Petition Type

Avg. Days Pending of Decided Petitions

Grant Rate Percentage

Deciding Office

Extension of time in Ex Parte reexamination under 37 CFR 1.550

        1 88% CRU
Extension of time in Inter Partes reexamination under 37 CFR 1.956

        2 100% CRU
To expunge under 1.59

       77 27% CRU
OPLA
To review denial in Ex Parte reexamination under 1.515

       66 4% CRU
To the Director under 1.181

      150 38% CRU
OPLA
Under 1.182

      151 16% CRU
OPLA
For suspension of the rules under 1.183       78 66% CRU
OPLA

Improved Speed For Overlooked Post-Grant Patent Options

Once upon a time, patent reexamination was the only mechanism to challenge a U.S. patent at the USPTO.  First introduced as an ex parte proceeding in the 1980s, patent reexamination was expanded to include an inter partes option in 1999.  Thereafter, patent reexamination became a popular adjunct to patent litigation. Yet, increased popularity of patent reexamination led to significant delays and increased pendency. The expanding timelines, among other shortcomings, prevented inter partes patent reexamination from serving as a true alternative to patent litigation. Not until the patentability trial mechanisms of the America Invents Act (AIA) did Congress finally succeed in providing a true alternative to patent litigation at the USPTO

Once the AIA patentability trials were introduced, inter partes patent reexamination was discontinued.  Still ex parte patent reexamination remains an option.  Not surprisingly, reexamination decreased in popularity post-AIA.  The reasons for the decrease in popularity is straightforward.  First, an inter partes AIA challenge option will almost always be preferred over an ex parte option for high-value disputes (where available).  Second, a large number of ex parte reexaminations were pursued, pre-AIA, out of necessity.  That is, older patents were not date-eligible for inter partes reexamination.  Of course, all issued patents are date-eligible for AIA review.  For at least these reasons, the current filing rate of  ex parte reexamination is roughly 50% of the 2008 filing numbers.

The falling numbers for ex parte reexaminations, coupled with the elimination of inter partes patent reexamination has, in limited respects, made ex parte reexamination a more attractive option as compared to 2008.

in 2008, the time from filing of a request for ex parte patent reexamination until receiving a First Action on the Merits (FAOM) was 12 months. Now, the time from filing of a reexamination request to a FAOM is roughly 5 months.  That is, within 5 months of filing a request for ex parte patent reexamination, the USPTO will issue both a determination, and an office action rejecting/allowing the claims.  Similar advances in speed are reported across all aspects of ex parte reexamination processing. The increased speed is a natural consequence of the reduced workload of the Central Reexamination Unit (CRU) (i.e., no more inter partes patent reexaminaiton and a 50% drop in ex parte filings).  

This new found speed, which shaves about a year off of reexamination processing, is helpful to both patentees and potential challengers.

As to patentees, post-AIA, addressing claim over breadth prior to litigation has become critical since almost every patent litigation is now accompanied by a Patent Trial & Appeal Board (PTAB) challenge. The patentability determinations of the PTAB will occur prior to trial in all but the fastest district court venues and the ITC.  Since PTAB determinations, assess patentability and not invalidity, patentees cannot seek refuge in a presumption of validity, or clear and convincing evidentiary standard to save over broad claims. Patentees looking to adjust their claim scope, or diversify claim coverage prior to suit — a clear trend given the current assertion climate— can do so in a patent owner initiated patent reexamination. Given the enhanced speed of post-AIA patent reexamination, if amending, patentees can usually conclude the reexamination proceeding in a few months’ time. This allows the patentee to exit the proceeding quickly, with (theoreteically speaking) an stronger claim set for assertion.

Further options for patentees include Supplemental Examination (SE), which are also processed by the CRU on a similar schedule to ex parte patent reexaminations (although unnecessarily complex due to rules for accompanying information submissions) . A further option is patent reissue, also now assigned to the CRU. While public data on patent reissue is not available, I have also seen marked improvement to the speed at which patent reissue filings are processed.

On the other hand, patent challengers still seek out ex parte reexamination for a variety of strategic purposes the most common of which is to maintain anonymity.  Ex parte patent reexamination is the only patent challenge mechanism that permits anonymity. These challengers will also see results faster, at least on the examination side of the house (appeal processing remains largely unchanged, absent expediting). While patent reexamination will not rival the aggressive timeline of AIA proceedings, it is also free of statutory estoppel risks. For these reasons, in the months ahead, I would expect the filing rate to trend upward.

Finally, the new PTAB rule package is expected to address the management of co-pending PTAB, reissue, SE, and reexamination proceedings. Depending upon these changes, additional strategic uses of patent reissue, SE, and reexamination may emerge in the months ahead.  

 

PTAB Claim Analysis Can Serve as Persuasive Authority

Inter Partes Review (IPR), Post-Grant Review (PGR) and Covered Business Method (CBM) proceedings of the Patent Trial & Appeal Board (PTAB) begin with a Trial Order that includes substantial guidance on matters of claim construction. Typically, key terms at issue in the proceeding are expressly construed by the panel of administrative patent judges (APJs). While such constructions are not binding on a parallel litigation proceeding due to the use of a different claim construction rubric by the USPTO, in some circumstances such findings can be devastating to a litigation campaign — well in advance of the typical Markman Order.

For example, in many cases involving non-practicing entities (NPE), an overly broad claim construction is advanced for the purpose of capturing the products/processes of an entire industry. At the PTAB, the broadest reasonable interpretation is applied. Naturally, if the PTAB does not agree with the NPEs claim interpretation (some 5-6 months after petition filing), such is strong evidence that the plaintiff’s claim scope is over-reaching. In fact, the CAFC has found the USPTO’s “broadest reasonable interpretation” to be persuasive evidence in this regard. See St. Clair Intellectual Property Consultants, Inc. v. Canon Inc., (Fed. Cir. 2011, non-precedential)

In other contexts, such as ascertaining the proper support for a claim term under 35 U.S.C § 112, the analysis of the PTAB’s technically trained judges can amplify perceived ambiguities. 

Yesterday, the CAFC leveraged the PTAB’s 112 analysis on subjective claim terminology in Interval Licensing LLC v. AOL, Inc. (Fed. Cir. 2014) (here). In Interval, the Court reviewed the specification of the subject patent for support for the claim terminology “in an unobtrusive manner.”  The patentee argued that a wallpaper embodiment of the specification provided the objective boundaries of the subjective scope, but that a screensaver embodiment should be excluded from the analysis. In reviewing this issue the Court pointed to a concurrent patent reexamination record and a statement made during an oral hearing at the PTAB.

The statements of Interval, and the responses of the USPTO, reflect considerable uncertainty about which embodiments were tied to the “unobtrusive manner” language. . . .[I]n a recent decision addressing the scope and validity of the ‘314 patent, the Patent Trial and Appeal Board . . .concluded that, in light of “the ambiguous nature” of the specification, “the claim term ‘unobtrusive manner’ includes the screensaver embodiment.”After reviewing the specification and prosecution history, we find that the “unobtrusive manner” phrase has too uncertain a relationship to the patents’ embodiments.

In a footnote, the CAFC cited to the transcript of the PTAB oral argument. 

At the hearing before the Board, counsel for Interval acknowledged the lack of clarity in column 3 of the specification: “I would say in this summary location within the specification [the drafters] were a little bit less precise, a little bit sloppy here . . . it might seem less precise or even possibly contradictory. . . . My point is simply that at best it’s ambiguous.”

In the hearing explanation noted above, patentee was hoping to divorce the language of column 3 from the analysis by labeling it as ambiguous (since it arguably showed a connection to the screensaver embodiment). The patentee also cancelled claims that seemed to also show a connection to the screensaver embodiment. (Note: 112 was not at issue in the patent reexamination directly,support was analyzed only as it related to claim interpretation)

Interestingly, the Courts apply the more forgiving Nautilus standard for 112 as opposed to that pronounced in Ex parte Miyazaki and, more recently In re Packard (CAFC 2014) for the USPTO. Had the terminology not been subjective (i.e., requiring objective boundaries for the recited standard of degree), and the question just whether one or both of the screensaver or wallpaper embodiments were covered by the claim, the CAFC may have found that degree of ambiguity still “reasonably certain.” On the other hand, under Packard, a standard that favors amendment, the PTAB would have found such different interpretations as failing to “particularly point out and distinctly claim” the invention— but, that disparity in 112 standards is left for a PGR or CBM decision to come.

Many perceive the value of PTAB filings solely as a vehicle to stay a parallel court proceeding. Cases like Interval prove that view to be especially short-sighted.

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.

Decrease in Patent Reexamination Docket Leads to Faster Orders

Back on September 16, 2012, the America Invents Act (AIA) replaced the old inter partes patent reexamination system with a new proceeding, known as Inter Partes Review (IPR). Since petitions for IPR are not handled by patent examiners, but instead, the judges of the Patent Trial & Appeal Board (PTAB), the USPTO’s Central Reexamination Unit (CRU) has experienced a significant cut to their incoming workflow. This change in workflow, coupled with the fact that requests for ex parte reexamination are also off by roughly 50% of pre-AIA filing rates, has resulted in an apparent benefit for patent challengers.

Ex parte patent reexamination requests are being processed faster.

As shown in the chart below requests for patent reexamination (made in the last 3 months) are being granted in roughly 43 days on average, some as fast as 29 days. As a reminder, the USPTO has 90 days, by statute to grant such requests. Historically, the average time to an Order has been about 60 days. (Click to Enlarge)

reexamination orders 2013

The above charts correspond to those reexamination filings made on or after December 16, 2012. This date was chosen to study a steady state of operations at the CRU post-AIA. Keep in mind that leading up into the September 16 change in the law there was a significant bolus of reexamination filings that had to be ordered within 90 days (i.e., prior to 12/16/12)

While it is true that the CRU is also responsible for a new stream of work, Supplemental Examination (SE), the volume of this work has been negligible with fewer than 10 such filings to date. Simply stated, post-Therasense, many inequitable conduct defenses are falling at the summary judgement stage. Thus, Therasense has largely eliminated the need for this proceeding outside of the most limited of circumstances.

Going forward, the CRU will be left with a much smaller docket. Absent a reduction in head count at the CRU, it is expected that the pendency of new proceedings will necessarily decrease. This is because the existing inventory of legacy inter partes reexamination prosecution will soon be exhausted and examiners will increasingly turn to new ex parte patent reexamination filings.

Should patent reexamination pendency drop in a significant manner going forward it may become a more attractive option for real time business disputes.

Ex Parte Patent Reexamination Filings Fall by 50% After AIA

Prior to September 16, 2012, ex parte patent reexamination was the only USPTO option for challenging the validity of patents that issued from patent applications filed before November 29, 1999. This is because the inter partes patent reexamination statutes excluded those patents that issued from applications of the pre-1999 vintage. So, for those patent challengers hoping to take advantage of the lower cost USPTO proceeding as an alternative to patent litigation, ex parte patent reexamination was the only show in town— albeit, statistically speaking, a less than ideal option for patent challengers.

Further, ex parte patent reexamination provided the only manner by which a patent challenger could remain anonymous. This feature was especially important for those challengers hoping to test the mettle of an issued patent without inviting a retaliatory law suit from the Patentee.

Of course, the post grant patent world changed forever on September 16th 2012. On this date inter partes patent reexamination was discontinued in favor of the more robust Inter Partes Review (IPR) proceeding. Unlike its predecessor proceeding, IPR proceedings may be used to challenge any patent, regardless of vintage. In addition to this important expansion in inter partes applicability, the USPTO fee to request an ex parte patent reexamination soared from $2520 to $17,750.

So, with the availability of the more robust IPR option, and the attendant price increase to ex parte reexamination, is there still value in pursuing an ex parte patent reexamination proceeding?

Let’s start by looking at the market reaction by comparing the current, steady state filing rate compared to that before September 16, 2012. To avoid any skew caused by the surge of filings made in the weeks before September 16th to avoid the price increase, I chose January 2012 as an exemplary steady state month under the old system. Likewise, January 2013 is significantly distanced from the September 2012 surge to serve as a current, steady state reference point. (Click to Enlarge)

expAlthough month-to-month samples will vary somewhat, it seems the current filings have dropped roughly 50% from 2012 numbers. This drop is likely due to the combination of the price increase and/or availability of IPR for older patents; still even with the more robust IPR option, some challengers are still opting for the Patentee friendly proceeding.

Why would any current patent challenger opt for this seemingly antiquated and Patentee friendly option?

First, this proceeding is still the only anonymous mechanism that may be employed at the USPTO to challenge an issued patent. Anonymity can be important, especially when the relative financial strength of the challenger is dwarfed by the resources of a much more powerful competitor.

Second, in some cases, where the technology is simple, and the prior art substantial, the ex parte option will enable the challenge to move forward with a minimum of investment in attorney and USPTO fees. While IPR is certainly far superior to ex parte patent reexamination in terms of ability to participate and demonstrate unpatentability, the cost of such participation is not insubstantial. Indeed, where a minor amendment or expansion of prosecution history could benefit the challenger in terms of a non-infringement defense, ex part patent reexamination can still serve as a wise investment.

Finally, as the Central Reexamination Unit (CRU) works through their current docket, the lower filing rates of ex parte proceedings may lead to significantly enhanced processing speeds, perhaps even rivaling that of the PTAB in the years to come.

For these reasons, ex parte patent reexamination will continue to serve a supporting role in the post grant challenge arsenal.

CAFC Denies En Banc Review of In Re Baxter Decision

Earlier this year, the CAFC decided In re Baxter International Inc. (here). As a reminder, in Baxter, the CAFC considered an appeal from the Board of Patent Appeals & Interferences (BPAI) that found certain claims of U.S. Patent 5,247,434 unpatentable in an ex parte patent reexamination.

The request for patent reexamination was filed by Fresenius USA Inc. in 2007 during a patent infringement litigation with Baxter. Interestingly, the Court first considered the validity of the ‘434 patent on appeal from that litigation. In that first appeal, based on some of the very same art applied in the reexamination, the Court found the patent not invalid in 2009. In the second appeal, decided in May of 2012, the same art was presented to the Court. Viewing the same art in 2012, on appeal from the BPAI, the Court affirmed the determination of the BPAI that the claims were obvious over the applied prior art.

Judge Newman issued a strong dissent to the second outcome, explaining that “[t]he validity of the Baxter patent was resolved upon litigation in the district court and on appeal to the Federal Circuit. This judgment cannot be “revised, overturned or refused full faith and credit by another Department of Government. . . .. Nonetheless, the court again departs from this principle, trivializes our prior final judgment, and simply defers to the conflicting agency ruling. This is improper.”

Not surprisingly, Baxter petitioned for rehearing and en banc review of the earlier decision.

This week, the Court denied the petition. The concurring opinion noted the philosophy of the majority as follows:

. . .In a court proceeding, a patent is not found “valid.” A judgment in favor of a patent holder in the face of an invalidity defense or counterclaim merely means that the patent challenger has failed to carry its burden of establishing invalidity by clear and convincing evidence in that particular case—premised on the evidence presented there. . . . If the PTO later considers the validity of that same patent, it does so based on the evidence before it and under the lesser burden of proof that applies in reexamination proceedings. As the majority notes, Congress granted the PTO the right to act within the realm of its authority. . . ..

These conclusions do not mean, however, that, when the PTO does act in the context of a reexamination proceeding, its conclusions can alter the binding effect of a prior judgment in a judicial proceeding. They cannot, and the PTO concedes as much in its response to the petition for rehearing en banc when it states that “[i]f a federal court awards relief to a patent holder against an infringer, a subsequent reexamination decision that the patent is invalid does not disturb the judgment of the court or alter its binding effect on the parties.” . . .

As the patent reexamination was ex parte, Fresenius could not participate in the appeal. Here, the court seems to reason that yes, the patent can fall in reexamination, but Fresenus will still be bound to the first result. Arguably, this line of reasoning does not comport with the earlier decisions of the Court in the Translogic or Standard Havens cases.

Judge Newman was quick to point out this inconsistency, noting:

It is time for this court to confront its conflicting precedent, founded in Standard Havens Products, Inc. v Gencor Industries, Inc., 996 F.2d 1236, 1993 WL 172432 (Fed. Cir. May 21, 1993), where this court held that “contrary to the assumption of the trial court, the reexamination proceeding ‘would control’ the infringement suit.” Id. See also In re Translogic Tech., Inc., 504 F.3d 1249 (Fed. Cir. 2007); Translogic Tech., Inc. v. Hitachi,Ltd., 250 Fed. Appx. 988 (Fed. Cir. 2007).

In Standard Havens, the Court explained that a patent lost in patent reexamination is void ab initio; perhaps the majority can distinguish this discussion as dicta. As to Translogic, the BPAI and district court appeals arrived at the CAFC at the same time, so, it could be reasoned that res judicata was not an issue.

One issue that I found confusing in the Order was the repeated reference to USPTO proceedings as examining “patent validity.” The USPTO does not assess patent validity at all….the agency assesses patentability. The reasoning of the majority would have been  easier to digest had the Order made this distinction. As to Fresenius….although the reexamination killed the patent, the Court seems to reason that the earlier judgment still stands.

Revised Rule on Anonymous Requests Subject to Practitioner Interpretation

The estoppel provisions of Inter Partes Review (IPR), Post Grant Review (PGR), and the Transitional Program for Covered Business Method Patents (TPCBMP) will impact related court proceedings involving the same patent, and USPTO validity proceedings relating to the same patent.

The aspect of the IPR/PGR estoppel that applies to USPTO proceedings is codified below:

315 (e)(1) Estoppel (applies to IPR; 325(e)(1) codifies the same for PGR & TPCBMP)

PROCEEDINGS BEFORE THE OFFICE- The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

(emphasis added)

Taking the example of 315(e)(1) estoppel, this estoppel applies not only to a subsequent request for IPR from the same requester (or privies), but to any “office proceeding.” The primary USPTO proceeding that will be impacted by 315(e)(1) will be ex parte patent reexamination (EXP). This is because, by definition, a Post Grant Review (PGR) can only be conducted prior to an IPR. Likewise, inter partes reexamination (IPX) will no longer be an option in a few weeks, ending on September 16th. While theoretically there may still be some IPX proceedings that are being “maintained” by the time the first IPR is concluded, it is more likely that the Patent Trial & Appeal Board (PTAB) would consolidate or stay such parallel Office proceedings. (325(e)(1) will not impact office proceedings for PGR for some years, but will apply in the short term to TPCBMP)

As pointed out previously, in many cases EXP is requested anonymously. (MPEP 2213). To account for this practicality the USPTO issued proposed rules requiring that anonymous filers disclose their identity to the Office so the applicability of estoppel could be assessed relative to EXP filers. In the final rules issued this past Monday the USPTO dropped the identity requirement in favor of a simple practitioner certification; but is the final rule enough to protect Patentees from harassment?

In the previous Notice of Proposed Rulemaking for Changes to Implement Miscellaneous Post Patent Provisions of the Leahy-Smith America Invents Act (here), the Office proposed the following rule to track potential EXP estoppel, 37 C.F.R § 1.510(b).

(6) A certification that the statutory estoppel provisions of both inter partes review (35 U.S.C. 315(e)(1)) and post grant review (35 U.S.C. 325(e)(1)) do not prohibit the ex parte reexamination.

(7) A statement identifying the real party(ies) in interest to the extent necessary to determine whether any inter partes review or post grant review filed subsequent to an ex parte reexamination bars a pending ex parte reexamination filed by the real party(ies) in interest or its privy from being maintained.

In proposing 510(b)(7), the USPTO explained that those filers wishing to remain anonymous, were to (1) Submit the statement identifying the real party(ies) in interest as a separate paper; (2) title the paper as a statement identifying the real party(ies) in interest; (3) request in the paper that the Office to retain the paper in confidence by sealing it; and (4) include, in a clear and conspicuous manner, an appropriate instructional label designating the statement as a non-public submission, e.g., NOT OPEN TO THE PUBLIC FOR OFFICE USE ONLY.
The Office will then maintain the real party(ies) in interest statement as a sealed, non-public submission.

Comments to the proposed rule criticized the “sealed submission” provision as a strong disincentive to those filers wishing to protect their anonymity. That is to say, the proposed mechanism for maintaining anonymity was not viewed as being very secure. In the final rules issued this past Monday, the USPTO dropped the requirement to identify the real party in interest. The USPTO explained that 510(b)(7) was not adopted and that instead, the Office would simply rely upon the practitioner certification of 510(b)(6).

Generally speaking, I agree that 510(b)(7) was not a very robust mechanism for protecting anonymity, and thus should have been dropped. However, I am not sure the final rule accounts for the reality of high stakes patent disputes.

First, I don’t see the need at all for a certification unless the subject patent has been through an IPR/PGR/TPCBMP.

Second, assuming the patent has been the subject of an unsuccessful PTAB challenge, and as demonstrated recently in the case of In re Baxter, there will a significant incentive to continue a reexamination attack. Where significant commercial interests are at stake, practitioners often interpret privy/real-party-in-interest quite “creatively.” Take the recent example of inter partes patent reexamination 95/001,893 (here). In that filing, a second reexamination filing of a wholly owned subsidiary of the parent company (that filed the first request), were both being sued on the same patent. In submitting the second filing, the subsidiary took the position that it was not in privity with the parent (despite sharing a CEO); not surprisingly, the USPTO vacated the filing, determining that the two filers were in privity for purposes of 317(a).

Under final rule 510(b), the USPTO has stated that [i]f the Office becomes aware of facts that call the certification into question, the Office will determine, on a case-by-case basis, whether the request for ex parte reexamination is prohibited by statute. Yet, it is unclear how the Office would ever become aware of such facts in an anonymous filing. For example, the above filing, if filed anonymously as an EXP after an unsuccessful PTAB challenge, would have undoubtedly been permitted to proceed under the new, final rule.