Reexamination Disclaimer Effectively Amends Claims Surrendering $29 Million Damage Award

During a post grant proceeding, an amendment of an originally issued claim could create an intervening rights defense for infringers. That is to say if the amended or new claim introduced by the post grant proceeding is not substantially identical in scope relative to a previously issued claim, potential infringers of the amended/new claims may be provided with an absolute and/or equitable intervening rights defense (35 USC § 252). Of course, the conclusion as to whether or not a claim change in patent reexamination/reissue will result in the an intervening rights defense is far from a straightforward determination.

Yesterday, the CAFC considered whether or not intervening rights are created for a claim that is not literally amended in a post grant proceeding by a change in verbiage, but instead, changed in scope by operation of Patentee disclaimer. This “amended in effect” theory has shown up in at least one other case as of late and is likely to gain considerable traction going forward thanks to yesterday’s CAFC decision.

In Marine Polymer Technologies, Inc. v. HemCon, Inc. (here), the CAFC Court considered the patent reexamination of 6,864,245. The claims of the ‘245 Patent relate to a polymer useful in the treatment of wounds. The base claims of the patent recited that the claimed polymer be biocompatible. The specification explained four tests that would aid in determining an acceptable degree of biocompatibility, the test results ranging from zero (no detectable biological reactivity) to two (mild reactivity).

The claims were initially rejected in reexamination on the basis that the claim terminolgy biocompatible embraced a range that included no detectable biological reactivity (zero) to mild reactivity (1-2). The USPTO explained that several dependent claims recited the explicit range (1-2) for mild activity.

In response, the Patentee cancelled the dependent claims, and the USPTO confirmed the base claim without amendment. Prior to the termination of the reexamination, a parallel litigation concluded in a permanent injunction and a $29 million dollar damage award for the Patentee. 

In determining that interveing rights applied, the CAFC explained: 

We see no reason why this rule, giving effect to disclaimer of claim scope during reexamination or reissue, should not also apply in the context of intervening rights. In fact, a contrary rule would allow patentees to abuse the reexamination process by changing claims through argument rather than changing the language of the claims to preserve otherwise invalid claims and, at the same time, avoid creating intervening rights as to those claims. Therefore, if the scope of the claims actually and substantively changed because of Marine Polymer’s arguments to the PTO, the claims have been amended by disavowal or estoppel, and intervening rights apply. This is so even though Marine Polymer did not amend the language of its claims on reexamination.

In his dissent, Judge Lourie advanced a strict view of the statute, and argued that the statutory language is limited to actual changes in claim language.

Going forward, it is expected that this “amended in effect” theory will become a favorite of defendants on the wrong side of a post grant outcome of the USPTO. Whether or not the case will be found to apply outside of the unique circumstances (dependent claim cancellations) considered to date is an open question.

Upcoming CLE to Focus on Post Grant Practice & Litigation Impact

I will be speaking in an upcoming live phone/web seminar entitled “USPTO Post-Grant Proceedings After New Patent Reform Law” scheduled for next Wednesday, September 28, 1:00pm-2:30pm EDT.

Today the Leahy-Smith America Invents Act (AIA) becomes law, the most significant revamping of the patent system in decades. This legislation will bring immediate changes to patent practice in the U.S. The AIA will introduce new post-grant mechanisms that provide strategic opportunities for Patentees and third party challengers alike. These changes will be especially dramatic for patent litigants as the legislation aims to transfer patent validity challenges from district courts to the USPTO, automatically stay some disputes, and place time limits on their initiation.

Topics to be discussed include:

  • How will current reexamination practices evolve?

  • What are the new post grant options, how will they be implemented, and when?

  • How do the changes of the AIA alter litigation strategies, and the strategic use of patent reexamination parallel to litigation?

  • What are the relevant deadlines and best practices?

Registration remains open.

Draft Rules Released by USPTO to Transition to New Inter Partes Review Proceeding

Upon enactment of the America Invents Act on September 16, 2011, the USPTO was forced to change their previous SNQ based analysis for granting a request for inter partes patent reexamination.  The new standard for any such request filed on or after September 16, 2011 is a reasonable likelihood that the requester would prevail with respect to at least 1 of the claims challenged in the request.  This new standard will apply to all inter partes patent reexamination filings going forward.  (See  6(c)(3)(C) of H.R. 1249.

On the one year anniversary of enactment, Section 314 of the AIA will go into effect to apply the same standard for Inter Partes Review. That is to say, inter partes patent reexamination filings will no longer be accepted on September 16, 2012. (existing proceedings will continue through to completion)

A copy of the draft rule package to implement these changes is found (here).

Additional memos to the Examining Corps on newly effective  provisions of the AIA were distributed this past Tuesday.

Tax Strategies Memo (here)

Best Mode Memo (here)

Patenting of Human Organism Memo (here)

Key Facts & Dates for all Post Grant USPTO Proceedings

While the America Invents Act (AIA) provides many new post grant proceedings, it also introduces changes to existing proceedings. While I have written about these changes previously, it would seem helpful to condense the important facts all in one place. Thanks to Paul Morgan for his suggestion for this post, and contributions to the content.

1. Ex Parte Patent Reexamination (existing proceeding) — The AIA precludes appeals by Patentees to the District Court in ex parte patent reexaminations. (to the extent that right ever existed, previous post (here). That is to say 35 U.S.C § 306 was amended to reference 144 instead of 145. H.R. 1249 at page 29.

Effective Date: Enactment

Side Notes: The SNQ standard, which is no longer used in inter partes patent reexamination is still used in ex parte patent reexamination. Ex parte patent reexamination practice remains largely unchanged by the AIA.

2. Inter Partes Patent Reexamination (existing proceeding, to be replaced) — The AIA replaces the SNQ standard with a new standard, namely a reasonable likelihood that the requester would prevail with respect to at least 1 of the claims challenged in the request. H.R. 1249 at page 22.

Effective Date: Enactment

Side Notes: Inter Partes patent reexamination is to be replaced by a new proceeding, discussed below, Inter Partes Review upon the one year anniversary. Current defendants that have been sued on a patent stemming from a post November 29, 1999 application need to be mindful of the anniversary. Defendants that are sued on older patents (pre 11/29/1999) may be better served waiting for the anniversary so that these patents are eligible for an inter partes proceeding for the first time. (see above link for further explanation)

3. Inter Partes Review (new proceeding) —Inter Partes Review is an evolution of inter partes patent reexamination from an examiner based proceeding to a proceeding of the new Patent Trial and Appeal Board (PTAB). The proceeding will allow for limited discovery, settlement, oral hearings, protective orders and many litigation style mechanics. H.R. 1249 at page 16.

Effective Date--One year anniversary of enactment, September 16, 2012

Side Notes: There will be a limit of 281 proceedings (based on FY, 2010 inter partes reexamination filings), per year, until 2016 (See Graduated Implementation).  This proceeding will be available for ANY patent issued, before, on, or after the anniversary date. Filing ability may be limited by operation of estoppel, litigation status, or if within 9 months of issuance (so as not to conflict with the Post Grant Review window discussed below).

4. Post Grant Review (new proceeding)– Similar in some procedural respects to Inter Partes Review, but having an expanded scope (i.e., not limited to patents and printed publications) and a limited, 9 month filing window. This will also be a new proceeding of the PTAB.  H.R. 1249 at page 22.

Effective Date--One year anniversary of enactment, September 16, 2012

Side Notes: As the grounds for potential challenges are broader, the potential estoppel is also significant. As patents eligible for this proceeding must have been filed on or after March 16, 2013, use of this proceeding will slowly ramp up over time.

5. Transitional Program for Business Method Patents (new proceeding)– This proceeding is Post Grant Review without the 9 month filing window, or limitation with respect to patent filing dates. Any covered business method patent defined by the statute (i.e., not a technological invention) issued before, on or after the effective date is subject to review if the petitioner is sued for infringement or charged with infringement.

Effective Date--One year anniversary of enactment, September 16, 2012

Side Notes: The estoppel provision for this proceeding is narrower than Post Grant Review as it is limited to issues actually raised. To avoid opening a can of worms, it is expected that the USPTO will have a very narrow view of covered patents under this proceeding, which sunsets in 8 years time.

6. Supplemental Examination (New Proceeding) — The AIA provided this proceeding as an avenue to cure inequitable conduct before the USPTO. Upon submission of SNQs that explain potential issues for supplemental examination, the Office may initiate a type of “re-examination” that follows the procedures for ex parte patent reexamination with some modification. In essence this proceeding was based on a “but for” theory later adopted in Therasense. Applies to all patents once effective.

Effective Date–One year anniversary of enactment, September 16, 2012.

Side Notes: Would appear to be of limited value after Therasense. May have some applicability for egregious cases.

7. Patent Reissue (existing proceeding)– The AIA has deleted the language of 35 U.S.C § 251 requiring that an error correctable by patent reissue be made “without deceptive intent.” AIA, Technical Amendments Sec. 20

Effective Date– One year anniversary of enactment, September 16, 2012.

Side Notes: This change was also trying to aid practitioners with respect to inequitable conduct charges prior to Therasense.

8. Patent Interferences (existing proceeding, ending) — The AIA has switched to a first inventor to file system. Patent Interferences will eventually cease to exist going forward, but can still be commenced up to the one year anniversary of enactment. H.R. 1249 at page 28.

Effective Date– One year anniversary of enactment, September 16, 2012.

9. Derivation (new proceeding) — This proceeding is established to combat the unscrupulous filing of a first patent application, that is derived from the work of another applicant (later filed), without authorization. It would seem this proceeding will be exceedingly rare. H.R. 1249 at page 6.

Effective Date–March 16, 2013.

America Invents Act Raises USPTO Fees September 26th

Last Friday, President Obama signed the Leahy-Smith America Invents Act(AIA) into law. As discussed previously, one of the major changes that became effective immediately is the new standard for initiating inter partes patent reexamination. As the rush to beat the enactment deadline is now over, what other changes are on the immediate horizon at the USPTO?

Fee Increases.

For those with patent application filings of any kind due in the next few weeks, keep in mind that new 15% fee surcharge will take effect on September 26th (10th day after enactment). Note that the fees for filing a request for ex parte patent reexamination and inter partes patent reexamination remain unchanged. A schedule of the increased fees is found (here).

The USPTO has also posted a FAQ on the various provisions of the AIA. (here)

Pre-1999 Patent Filings No longer Immune to Inter Partes Challenge

Back in August, I explained the import of various effective date provisions of the Leahy-Smith America Invents Act (AIA) as they relate to current and future post grant USPTO challenges.

The AIA changes the USPTO standard for initiating inter partes patent reexamination; this change will take effect upon enactment, tomorrow.

A second important date provision is the one year anniversary of enactment as it may foreclose inter partes options altogether for defendants currently involved in suits pertaining to newer patents (i.e., patents that matured from applications filed on or after November 29, 1999). For such litigants, if an inter partes proceeding is desired, action must be taken before the anniversary.

Interestingly, for those defendants that will become involved in suits pertaining to older patents (i.e., pre- ’99 filings) after enactment, but before the anniversary, options at the USPTO will actually expand upon the one year anniversary. That is to say, defendants may choose to wait for new inter partes opportunities to challenge patents never before eligible for such scrutiny.

As previously discussed, some current defendants must be especially mindful of the one year anniversary of enactment. These are litigants served with a complaint on or before September 16, 2011, that are accused of infringing a patent that was filed as a patent application on or after November 29, 1999. These defendants will not be able to file an Inter Partes Review when it replaces inter partes reexamination on September 16, 2012. This is because the new statute precludes filings from defendants after the 12th month of litigation. So, those defendants wishing to pursue an inter partes challenge at the USPTO must file a request for inter partes reexamination before the anniversary, or lose the option altogether.  

For those defendants served with a complaint for infringement on or before September 16, 2011, that are accused of infringing a patent that was filed as a patent application before November 29, 1999, there is no inter partes patent reexamination option. This is because patents filed prior to November 29, 1999 are not eligible for such proceedings. Likewise, there can be no Inter Partes Review initiated by the defendant upon enactment due to the 12 month litigation history that will exist.

On the other hand, defendants served with a complaint after September 16, 2011, that are accused of infringing a patent that was filed as a patent before November 29, 1999, Inter Partes Review of that patent will be possible on or after the anniversary of enactment.

This is a very significant change.

In this regard Sec. 311 c (2) of the AIA provides:

(A) IN GENERAL- The amendments made by subsection (a) shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to any patent issued before, on, or after that effective date.

(emphasis added)

While, ex parte patent reexamination has always been available for any enforceable patent these proceedings are typically disfavored over inter partes proceedings as being too one-sided, and historically biased in favor of patent holders. Upon the coming anniversary, many well known, commercially valuable patents that were previously immune to an inter partes USPTO challenge are likely to be tested by Inter Partes Review.

The USPTO will gradually implement Inter Partes Review over the first four years, and may limit filings to roughly 281 per year based FY 2010 filings. In view of the growing demand that is likely to be pent up by that time, there may be a significant surge in filings this time next year.

Leahy-Smith America Invents Act To Be Signed Into Law Friday

Today, White House Press Secretary Jay Carney announced that the Leahy-Smith America Invents Act (AIA) will be signed by President Obama on Friday, September 16th.

Announcing the signing aboard Air Force One today, Carney stated, “The America Invents Act passed with the president’s strong leadership after a decade of effort to reform our outdated patent laws.”

Carney also announced to reporters that, at the signing event Friday, President Obama will announce new steps that the White House is taking to “convert ideas of American Universities and research labs into new products to expand our economy and create jobs.” It is not clear if this announcement is related to intellectual property protection, or some other government initiative.

What does this mean for you, right now?

For those in the process of finalizing a request for inter partes patent reexamination, you may want to file before Friday to avoid rewriting your request to comply with the new standard (effective Friday). While the new standard is stricter, it remains to be seen whether or not the change will have significant impact until rebuttal evidence of the Patetee may be considered (as will be the case under Inter Partes Review).

For those with patent application filings of any kind due in the next few weeks, keep in mind that new 15% fee surcharge will take effect on September 26th (10th day after enactment). The USPTO may be very busy on Friday, September 23rd. (meaning the EFS is almost sure to crash)

Of course there are other changes as well, here is a comprehensive chart of effective dates for the provisions of the AIA, shown at yesterday’s IPO meeting.

Going forward, the AIA will introduce many changes to the laws effective September 16, 2012, and some 6 months thereafter.

buzz

Changes & Funding Head to USPTO

With the imminent enactment of the Leahy-Smith America Invents Act (AIA) into law, the USPTO is preparing for a much needed  infusion of funding. Immediate funding relief comes by way of the 15% surcharge to patent fees included in the legislation. (See H.R. 1249, Sec. 11 Fees for Patent Services) The 15% surcharge will be implemented 10 days after enactment, the increased cash is immediately available to the agency.

Changes you will notice in the weeks ahead:

-Hiring, the USPTO is currently seeking Administrative Patent Judges (APJs) across all technologies.

-Additional patent examiner hires are expected in October.

-Examiner overtime was re-established yesterday (just in time for the end of fiscal year 2011).

-Prioritized examination, and other Office initiatives suspended/postponed back in April are expected to resume.

As to implementation of the AIA, the Office has been hard at work formulating rules for comment. The Office is scheduled to begin publishing the rules for comment in early to mid-December. Currently, the Office is working with the ABA, IPO and AIPLA on issue spotting to enhance the quality of the issued rule sets as there is little time for “town hall” or round table style meetings.

In re Staats Argued at CAFC

Last week, an important question relating to broadening patent reissue practice was argued before the CAFC. (In re Staats).

At issue in Staats is a third reissue patent application of Apple Computer Patent 5,940,600. The third reissue patent application was a continuation that claimed priority back to the original reissue application. (the original reissue application being properly filed within two years of issuance of the ‘600 Patent). During prosecution of the third continuation the examiner rejected the claims under 35 U.S.C. 251 as presenting broadening claims outside of the two year window for broadening reissue. The examiner reasoned that the error in the original reissue filing was allegedly unrelated to the error presented for correction in the third filing.

An expanded panel of the BPAI affirmed the rejection (Ex Parte Staats) characterizing the issue in dispute as:

This is a case of first impression. Resolution of the case hinges on one fundamental question: Can a continuing reissue application broaden patented claims beyond the statutory two-year period in a manner unrelated to the broadening aspect that was identified within the two-year period? Put another way, is it enough under the law to merely present an intent to broaden that is limited to a particular aspect (e.g., a particular embodiment of the invention) within the two-year period, yet broaden in unforeseeable ways (e.g., pertaining to other embodiments) outside the two-year period?

In last year’s BPAI decision, the Board analyzed the statute based upon their understanding of the equitable principles underlying the two-year limitation provided by the statute. In doing so, the BPAI relied heavily on the aspect of foreseeabilityemphasized in case law addressing prosecution laches. In affirming the rejection, the BPAI surmised:

Since this broadening was completely unforeseeable by the public within the two-year statutory period, a circumstance that is undisputed, it runs counter to the public notice function underpinning § 251 and is therefore improper.

With respect to forseeability, the CAFC appeared to recognize the impracticability of the USPTO’s “forseeability” test during last week’s oral argument. The bulk of the discussion during oral argument (audio here) related to whether or not earlier CCPA precedent controlled. In this regard, In re Doll 419 F.2d 925, 928 (CCPA 1970) was discussed extensively, as well as some early Supreme Court cases pertaining to patent reissue. The Court did not appear to accept the argument that the earlier Supreme Court cases supported the argument of the USPTO ( 21:40) and questioned whether or not Doll was truly distinguishable from the present facts.

The solicitor pointed out that the patent reissue statute has a limited two year window for broadening as a matter of public policy. The solicitor reasoned that the 2 year limit serves to enhance public’s reliance on issued claim scope and protect the public. The Court did not appear persuaded by public policy considerations, noting the seemingly “one-off” nature of the current fact pattern. Nevertheless, the Solicitor warned that a reversal of the agency would encourage filers to seek creative errors to broaden claims until patent term was exhausted.

Of course, most practitioners avoid broadening patent reissue practice altogether by simply maintaining a pending, regular continuation applications. The notion that anyone would pursue broadening patent reissue as a matter of course ignores the significant pendency problems, as well as thorny recapture and intervening rights issues.

Assuming this case were affirmed, is there now grounds to argue for “claim scope laches” vis-a-vis regular patent application continuation practice?

Senate Sends Patent Reform Bill to the White House

It only took 6 years, roughly the same time it takes many patent filers to navigate the USPTO. Nevertheless, a new chapter in U.S Patent law begins in a matter of days

Yesterday the Senate overwhelming endorsed the House version of the patent reform legislation known as the “Leahy-Smith America Invents Act” by a vote of 89-9. As discussed previously, while there were last minute amendment efforts, the Senate voted down all efforts to modify the legislation. Shortly thereafter President Obama addressed the nation identifying the passage of the legislation as “action we need.”

So, now what?   The bill will now be forwarded on the White House for signature, upon which the law is officially enacted. The day of enactment is important as some major changes to patent reexamination practices will become effective immediately. Likewise, on the 1 year anniversary of the date of enactment remaining provisions become effective.

The bill will now need to be formalized and enrolled for executive signature. It is difficult to estimate the exact day the bill will be signed, but I would expect enactment within 7-10 days.