Intervening Rights and Survival of Claims

Walker Process Allegation Defeated by Re-issuance of Original Patent ClaimsPost grant proceedings before the USPTO cannot cure inequitable conduct. This is because the inequitable conduct inquiry centers on the patentee’s intent during the prosecution of the original application. Still, a finding that a reference lacks materiality by the USPTO in a post grant proceeding can be quite useful to a patentee for rebutting a charge of inequitable conduct. Likewise, a finding of materiality by the USPTO in a post grant proceeding can be quite useful to defendants for bolstering a charge of inequitable conduct. In this same vein, a recent case has demonstrated that a favorable post grant result at the USPTO may be used to completely preclude allegations of fraud that rely upon the “but for” test, such as a Walker Process claim.A Walker Processclaim seeks to strip a patentee of its exemption from the antitrust laws. Several factors must be present to prove such a claim, one of which is “a clear showing of reliance, i.e., that the patent would not have issued but for the misrepresentation or omission.”In U.S. Rubber Recycling, Inc. v. ECORE International Inc., et al.(CDCA), plaintiff, U.S. Rubber, alleged that Ecore’s U.S. Patent 6,920,723 was fraudulently procured and wrongfully enforced to monopolize the rubber acoustical underlayment market. The fraud allegations were based on the theory that, during the prosecution of the ‘723 Patent, Ecore intentionally withheld material prior art from the USPTO. (inequitable conduct). U.S. Rubber also alleged that Ecore threatened litigation to competitors, distributors, architects, and end-users, and communicated to them that they may not sell or purchase rubber acoustic underlayment from anyone else due to the ‘723 Patent. U.S Rubber asserted that  these threats were baseless, made in bad faith, and for anti-competitive purposes. (Walker Process Claim); other torts and unfair competition theories were also alleged.Prior to the suit, Ecore sought a broadening reissue of the ‘723 Patent. During the patent reissue proceedings, Ecore provided to the USPTO the allegedly withheld prior art materials. The ‘723 Patent was successfully reissued in November of 2010 with all original claims, and additional, broader claims. Shortly thereafter, Ecore moved for judgement on the pleadings (Rule 12 (c)) with respect to the Walker Process claim.In deciding the issue the court held:The MPEP states that “[a] reissue application will be examined in the same manner as a non-reissue, non-provisional application, and will be subject to all the requirements of the rules related to non-reissue applications.” MPEP § 1440 (8th ed. 2010); see also 37 C.F.R. §1.176(a). In other words, the PTO fully examines a re-issuance as if it were presented for the first time. See Nupla Corp. v. IXL Mfg. Co., 114 F.3d 191 (Fed. Cir. 1997); see also (Pl.’s Resp. 2:14-16 (stating that “the reissue process is an entirely new application process based on the scope of claims, which was the basis of Defendant’s reissue application”).) Here, Defendant submitted its reissuance application with the allegedly invalidating prior art. (See RJN Exs. 2-8.) Even with the contentious prior art, the PTO issued RE41945 to Defendant, and did so after reviewing the patent as if for the first time. (RJN Ex. 1.) The re-issuance does not cure the alleged fraud, but it is dispositive of whether the PTO would have issued the original ‘723 Patent.Because the PTO reexamines re-issuance applications as if being presented for the first time, the fact that the PTO did re-issue Defendant’s patent even with the prior art precludes Plaintiff from plausibly pleading Claim One.Interestingly, the “but for” test has been proposed as a standard for inequitable conduct pleadings. Therasense, Inc. v. Becton Dickinson and Co. (CAFC 2011). (Note: Ecore is represented by Oblon Spivak)

Post grant proceedings before the USPTO cannot cure inequitable conduct. This is because the inequitable conduct inquiry centers on the patentee’s intent during the prosecution of the original application. Still, a finding that a reference lacks materiality by the USPTO in a post grant proceeding can be quite useful to a patentee for rebutting a charge of inequitable conduct. Likewise, a finding of materiality by the USPTO in a post grant proceeding can be quite useful to defendants for bolstering a charge of inequitable conduct. In this same vein, a recent case has demonstrated that a favorable post grant result at the USPTO may be used to completely preclude allegations of fraud that rely upon the “but for” test, such as a Walker Process claim.

A Walker Processclaim seeks to strip a patentee of its exemption from the antitrust laws. Several factors must be present to prove such a claim, one of which is “a clear showing of reliance, i.e., that the patent would not have issued but for the misrepresentation or omission.”

In U.S. Rubber Recycling, Inc. v. ECORE International Inc., et al.(CDCA), plaintiff, U.S. Rubber, alleged that
Continue Reading Patent Reissue Disproves Fraud Allegation

Equitable Intervening Rights a Function of USPTO Delay?

Whether a narrowing patent reissue application or broadening patent reissue application, USPTO pendency delay is significant. As discussed yesterday, narrowing reissue applications appear to  fare no better than regular U.S. applications, and broadening reissue applications have been known to take as long as 10 years to complete.

Of course, amendments made during patent reissue will result in absolute intervening rights defense for potential infringers. As damages for such amended/new claims will not begin to accrue until issued, Patentees have nothing to gain by dallying during patent reissue prosecution. In fact, as demonstrated by a recent district court ruling, significant pendency delay may in fact create a further limit on available damages for amended/new claims under the doctrine of equitable intervening rights.
Continue Reading Practical Impact of Patent Reissue Pendency

Safety-Signs-1065A-lg1-300x300Previously, we explored what types of amendments to claims under post-grant review can trigger intervening rights.

As you may recall, claim amendments in current post grant proceedings at the USPTO (i.e., reexamination/reissue) create intervening rights. 35 U.S.C. 307 (ex parte) and 35 U.S.C. 316 (inter partes) describe the impact of amending claims in patent reexamination, incorporating 35 USC 252 (relating to intervening rights in reissue applications). In essence, the doctrine of intervening rights forecloses the recovery of past damages for patent infringement if a claim is amended after issuance of the patent.

The case of Kim v. The Earthgrains Co., k/n/a Sara Lee Bakery Group Inc., 01-cv-3895 (N.D. Ill.), presented the issue of whether a change in the transitional phrase (i.e., legally operative terms) of a patent claim could trigger intervening rights.
Continue Reading Change in Transitional Phrase Can Trigger Intervening Rights

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— Reducing  Infringement Liability Via
         Intervening Rights (PART I)–

As reported last week, USPTO reexamination of Amazon’s “1-click patent” concluded with the amendment of the broadest claims. In response, many Internet news sources, and IP blogs decried the reexamination process and the USPTO as a failed system. Yet, lost in the hysteria and naiveté is a very fundamental concept of post-grant proceedings at the USPTO, namely, the doctrine of intervening rights.

USPTO statistics very clearly bear out that complete cancellation of ALL patent claims via ex parte reexamination, such as was conducted of Amazon’s 1-click patent, is the exceptional case, not the rule.  Indeed, as of December 2009, only 11% of ex parte reexaminations conclude with all claims cancelled. Yet, roughly 600 requests for ex parte reexamination have been filed every year since the inception of the Central Reexamination Unit (CRU). With only 11% of patents having all claims cancelled over a 20+ year period, clearly the strategy behind ex parte reexamination requests is something other than outright cancellation.[1]

Certainly, a third party requestor would be pleased with the cancellation of all claims of a patent in reexamination, however
Continue Reading Flicking the Patent Reset Switch