Patent Reform Voted Out of Committee

In yesterday’s meeting of the Senate Judiciary Committee, the Patent Reform Act of 2011 (S.23) was voted out of committee to the Senate floor. This is the third time a patent reform bill has been moved to the full Senate since 2008. As the current reform bill is viewed as a compromise, not to mention politically hyped as an economic stimulus, it may be that the third time’s the charm. Certainly, not since since Star Wars Episode III have so many patent professionals (i.e., nerds) been interested in the actions of a Senate.

In yesterday’s webcast of the meeting, there was a significant amount of discussion on potential amendments to the current bill. The most discussed was the concept of a special proceeding to invalidate business method patents.  The business method proposal is to provide an efficient administrative mechanism by which business method patents can be easily invalidated. (As if the USPTO wont have enough to do in view of the significant post grant proposals already in the bill). It is unclear whether this amendment will provide an exception to the first window of the proposed post grant review, whereby current business method patents may be challenged under 35 U.S.C. sec. 101, or some other type of unique program.

Over the next few months, this legislation is likely to be vigorously debated, and perhaps significantly refined. In Yoda speak—- Begun, this patent reform war has.

Request Ex Parte Patent Reexamination, Lose, RepeatFor Patent Owners, one of the more frustrating aspects of ex parte patent reexamination is that the experience can be never ending. That is to say, even when an ex parte patent reexamination is favorably concluded, the same challenger can simply refile a second request to take another shot at the patent. Of course, the second request must present new, non-cumulative questions of patentability. Still, as the SNQ standard is a relatively low bar, seriatim filings are fairly commonplace. (In inter partes patent reexamination, estoppel provisions effectively prevent this tactic).Practically speaking, in the case of a parallel litigation, seriatim requests are not viewed favorably by courts. After all, you can’t simply present new invalidity contentions in court should the first set fail.Recently, in Voda v. Medtronic Inc., et. al. (OKWD) (here) the defendants were able to secure a stay pending a first request for patent reexamination. Shortly thereafter, the reexamination concluded favorably to the Patent Holder and the stay was lifted. Next, the defendants filed a second request for ex parte patent reexamination, and then a third request along with a second motion to stay the case. The court denied the second motion to stay, explaining: The court finds the first factor weighs against granting a stay. The first reexamination request resulted in a fourteen-month delay, and notice of the USPTO’s decision on that request was further delayed by defendants’ filing a second ex parte request for reexamination. Moreover, defendants’ filing of the third reexamination request and concomitant request for a stay has already resulted in additional delay as the court had to reschedule the status conference set for January 2011. Simplification of the issues to be tried in this action is likely to occur only if the USPTO issues a decision rejecting the patent’s claims. Given the recent confirmation of the ‘213 patent, that outcome is not certain and therefore this factor does not weigh in favor of granting a stay. Finally, defendants’ argument that this matter is in its early stages ignores the fact that the case has been pending for two years. This factor, therefore, also weighs in favor of denying defendants’ second motion to stay. (emphasis added)USPTO statistics indicate that inter partes patent reexaminations are far more effective for Requesters (i.e., claims amended and/or cancelled). Of course, such proceedings are not available for all patents, as was the case in Voda.The greater success rate of inter partes patent reexamination is often attributed to Requester participation; yet, this only be  part of the story. Due to the estoppel provisions of inter partes patent reexamination, the number of SNQs presented relative to ex parte patent reexamination tend to be higher. In other words, there is no “holding back” of art as is often the case with initial ex parte filings. Additionally, inter partes requests tend to be of a much higher quality due to the estoppel risk involved.For those Requesters seeking to employ an ex parte patent reexamination for stay purposes, the first shot might need to be your best shot.This case was brought to my attention by the great Docket Navigator.

For Patent Owners, one of the more frustrating aspects of ex parte patent reexamination is that the experience can be never ending. That is to say, even when an ex parte patent reexamination is favorably concluded, the same challenger can simply refile a second request to take another shot at the patent. Of course, the second request must present new, non-cumulative questions of patentability. Still, as the SNQ standard is a relatively low bar, seriatim filings are fairly commonplace. (In inter partes patent reexamination, estoppel provisions effectively prevent this tactic).

Practically speaking, in the case of a parallel litigation, seriatim requests are not viewed favorably by courts. After all, you can’t simply present new invalidity contentions in court should the first set fail.

Recently, in Voda v. Medtronic Inc., et. al. (OKWD) (here) the defendants were able to secure a stay pending a first request for patent reexamination. Shortly thereafter, the reexamination concluded favorably to the Patent Holder and the stay was lifted. Next, the defendants filed a second request for ex parte patent reexamination, and then a third request along with a second motion to stay the case. The court denied the second motion to stay, explaining: 

The court finds the first factor weighs against granting a stay. The first reexamination request resulted in a fourteen-month delay, and notice of the USPTO’s decision on that request was further delayed by defendants’ filing a second ex parte request for reexamination. Moreover, defendants’ filing of the third reexamination request and concomitant request for a stay has already resulted in additional delay as the court had to reschedule the status conference set for January 2011. Simplification of the issues to be tried in this action is likely to occur only if the USPTO issues a decision rejecting the patent’s claims. Given the recent confirmation of the ‘213 patent, that outcome is not certain and therefore this factor does not weigh in favor of granting a stay. Finally, defendants’ argument that this matter is in its early stages ignores the fact that the case has been pending for two years. This factor, therefore, also weighs in favor of denying defendants’ second motion to stay. (emphasis added)

USPTO statistics indicate that inter partes patent reexaminations are far more effective for Requesters (i.e., claims amended and/or cancelled). Of course, such proceedings are not available for all patents, as was the case in Voda.

The greater success rate of inter partes patent reexamination is often attributed to Requester participation; yet, this only be  part of the story. Due to the estoppel provisions of inter partes patent reexamination, the number of SNQs presented relative to ex parte patent reexamination tend to be higher. In other words, there is no “holding back” of art as is often the case with initial ex parte filings. Additionally, inter partes requests tend to be of a much higher quality due to the estoppel risk involved.

For those Requesters seeking to employ an ex parte patent reexamination for stay purposes, the first shot might need to be your best shot.

This case was brought to my attention by the great Docket Navigator.

You Are Not Special

Speed of Patent Reexamination Not So Special?

As most readers of this blog realize, patent reexamination parallel to a district court/ITC litigation is often initiated in an attempt to stay the more cost prohibitive court proceeding. Court’s will stay the ongoing litigation pending the patent reexamination outcome in the interests of judicial economy. Of course the ultimate determination of whether or not a stay is appropriate varies with the facts of each case, and attitudes toward such practices vary wildly across jurisdictions, and even across judges of the same court. 

Last week’s determination in Osmose, Inc. v. Arch Chemicals, Inc., et. al., 2-10-cv-00108 (VAED, Norfolk) was typical in many respects. With discovery coming to a close, Markman proceedings complete, and trial scheduled in three months time, it seemed the timing alone was enough to deny the motion to stay. While the stay was denied, the court took the opportunity to call out the special dispatch accorded patent reexaminations at the USPTO as….well, not so special. Continue Reading Virginia Court Derides USPTO’s Special Dispatch

S.515 Refined as to New Post Grant Options For those of you lying awake at night wondering what minor word changes have been made in the new patent reform legislation, you may now rest easy. Attached is a mark-up of sections 6 and 7 of S.23 relative ot S.515 (post grant aspects). Additions are shown in yellow, deletions in red. (markup here)Changes seem to be largely focused on refining the appeal statutes for the new Patent Trial & Appeal Board. Mostly, removing language relating to third party “reexamination” appeals. As only ex parte reexamination will exist should the bill pass, there is no need for third party reexamination appeal provisions. Lastly, 35 U.S.C. § 306 is amended to be consistent with the proposed changes to 35 U.S.C. §134. This last change would foreclose law suits such as recently brought by the California Board of Regents.Thanks to Jonathan Parthum for his efforts in creating the mark-up.  

For those of you lying awake at night wondering what minor word changes have been made in the new patent reform legislation, you may now rest easy. Attached is a mark-up of sections 6 and 7 of S.23 relative ot S.515 (post grant aspects). Additions are shown in yellow, deletions in red. (markup here)

Changes seem to be largely focused on refining the appeal statutes for the new Patent Trial & Appeal Board. Mostly, removing language relating to third party “reexamination” appeals. As only ex parte reexamination will exist should the bill pass, there is no need for third party reexamination appeal provisions. Lastly, 35 U.S.C. § 306 is amended to be consistent with the proposed changes to 35 U.S.C. §134. This last change would foreclose law suits such as recently brought by the California Board of Regents.

Thanks to Jonathan Parthum for his efforts in creating the mark-up.  

PLI-LogoAs a final reminder, registration remains open for PLI’s Reissue & Reexamination Strategies and Tactics with Concurrent Litigation 2011. The last stop on this year’s program is in New York this coming Friday, February 4, 2011.

I will co-chair both the event and speak on the topic of Pre-Trial and Post-Trial Reexamination Strategies Concurrent with Litigation.

In addition to an already stellar lineup of speakers and topics, including the Hon. Theodore R. Essex of the International Trade Commission, this year we are very excited to host Mr. Kenneth Schor of the USPTO’s Office of Patent Legal Administration (OPLA). You can find some background on Mr. Schor’s highly instructive presentation here. 

More information and registration information is found in the linked text above.

Stay of Parallel Litigation Denied Due to Lack of Estoppel?When implementing a patent reexamination strategy, a threshold determination is whether or not to initiate ex parte or inter partes patent reexamination, or both. This decision is very straight forward for older patents (i.e., those patents that did not mature from an application filed on or after November 29, 1999). This is because applications filed prior to the 1999 date are not eligible for inter partes patent reexamination.Yet, as the years progress, fewer and fewer patents are outside of the inter partes date provision. So, where both options are available, which is the better option?Like most legal inquiries, the answer is “it depends.” For those seeking a stay of a parallel litigation, the answer will vary in accordance with the practice of the presiding judge.As detailed previously, a Nevada judge found that ex parte patent reexamination pendency is controlled by the Patentee, and determined that a stay is appropriate. The judge reasoned that any potential delays in the ex parte proceeding could be controlled by the Patentee.Last week, in eComSystems Inc., v. Shared Marketing Sevices Inc., and Ace Hardware Corp (MDFL), the judge found that the potential for an ex parte patent reexamination to simplify issues for trial was limited compared to inter partes patent reexamination. The judge explained that estoppel provisions of inter partes patent reexamination would prevent a defendant from arguing the same art in the parallel litigation.Inter partes reexaminations provide a third party the right to participate in the reexamination process and, thus, have a res judicata effect on the third party requester in any subsequent or concurrent civil action. See 35 U.S.C. §§ 314-315. . . .. Ex parte reexaminations, on the other hand, do not bar the requestor from relitigating the exact same issues in district court.Accordingly, the Court does not find that judicial economy will be served by a stay because the pending ex parte reexaminations of the patents-in-suit would still leave Shared Marketing and Ace free to relitigate the exact same issues before this Court.In this case, the patents were subject to inter partes patent reexamination; yet the defendants opted for the lower risk, ex parte option. While the Order is silent as to the perceived  gamesmanship of this choice, the decision may be more about this choice then the loss of estoppel. Indeed, as pointed out by the judge, even had estoppel applied, patent reexamination will not defeat all invalidity defenses (e.g., public use, on-sale bar, inequitable conduct).This case was brought to my attention by the great Docket Navigator.

When implementing a patent reexamination strategy, a threshold determination is whether or not to initiate ex parte or inter partes patent reexamination, or both. This decision is very straight forward for older patents (i.e., those patents that did not mature from an application filed on or after November 29, 1999). This is because applications filed prior to the 1999 date are not eligible for inter partes patent reexamination.

Yet, as the years progress, fewer and fewer patents are outside of the inter partes date provision. So, where both options are available, which is the better option?

Like most legal inquiries, the answer is “it depends.” For those seeking a stay of a parallel litigation, the answer will vary in accordance with the practice of the presiding judge.

As detailed previously, a Nevada judge found that ex parte patent reexamination pendency is controlled by the Patentee, and determined that a stay is appropriate. The judge reasoned that any potential delays in the ex parte proceeding could be controlled by the Patentee.

Last week, in eComSystems Inc., v. Shared Marketing Sevices Inc., and Ace Hardware Corp (MDFL), the judge found that the potential for an ex parte patent reexamination to simplify issues for trial was limited compared to inter partes patent reexamination. The judge explained that estoppel provisions of inter partes patent reexamination would prevent a defendant from arguing the same art in the parallel litigation.

Inter partes reexaminations provide a third party the right to participate in the reexamination process and, thus, have a res judicata effect on the third party requester in any subsequent or concurrent civil action. See 35 U.S.C. §§ 314-315. . . .. Ex parte reexaminations, on the other hand, do not bar the requestor from relitigating the exact same issues in district court.

Accordingly, the Court does not find that judicial economy will be served by a stay because the pending ex parte reexaminations of the patents-in-suit would still leave Shared Marketing and Ace free to relitigate the exact same issues before this Court.

In this case, the patents were subject to inter partes patent reexamination; yet the defendants opted for the lower risk, ex parte option. While the Order is silent as to the perceived  gamesmanship of this choice, the decision may be more about this choice then the loss of estoppel. Indeed, as pointed out by the judge, even had estoppel applied, patent reexamination will not defeat all invalidity defenses (e.g., public use, on-sale bar, inequitable conduct).

This case was brought to my attention by the great Docket Navigator.

Unreasonable to Extend Claim Scope to Described Prior ArtPerhaps mindful of the last patent reexamination appeal that related to flooring technology, yesterday the BPAI reversed an Examiner claim construction as unreasonable. As a reminder, claims in patent reexamination are accorded a broadest reasonable interpretation (BRI) consistent with the specification, from the perspective of one of skill in the art. In re Yamamoto, 740 F.2d 1569, 222 USPQ 934 (Fed. Cir. 1984).Since the Suitco decision, (linked above), the Office has been making more of an effort to ensure that claims are not broadened to a point of inconsistency with the specification. There is a delicate balance between incorporating limitations from the specification to the claims, and reading claims consistent with the specification. Yesterday’s decision, illustrates one helpful constraint on BRI, namely, clear disavowal of the patent specification.The decision, ex parte Jorgen J. Muller Jr., (here) revolved around an injection molded floor panel. Specifically, the claims were directed to structure of the panel that helped eliminate undesirable “sink marks” of the tile that otherwise form when the tiles are curing. In this regard, the claims recited an area defined by each of the one or more structures is contained within and positioned directly above an area defined by the one or more support members.A figure of the patent is reproduced below showing the area defined by the support members.The area defined by the upper structures 220 are entirely contained within, and aligned with, an area defined by the lower support members 215 and 217.Yet, the Examiner interpreted the limitation, “an area” of the structure is “contained within” an area defined by the support member, as requiring that only a part of the structure be contained within the support member. Thus, the Examiner interpreted the claim to permit the top structures to extend outside the area of the bottom support members.The Board noted that the Examiner interpretation was inconsistent with the specification, and therfore, unreasonable as clearly embracing the prior art discussed in the specification of the patent. The prior art discussed as suffering from the “sink mark” problem was illustrated in the patent as Fig. 3B below.The Board noted that, with regard to Fig. 3B:[T]he Examiner’s interpretation of the disputed limitation corresponds to the configuration of the prior art tile depicted in Figure 3. This configuration is discussed above as resulting in sink marks. It is not reasonable to read the claims as reading on a prior art configuration which was expressly addressed and remedied by the ‘592 patent.The Board then continued to explain that one of skill in the art would understand the claimed area to be within the vertical alignment of the structures and support members.There are few bright lines in interpreting claims under the BRI standard. However, one seems to be that any interpreation embracing disavowed claim scope of a patent specification is unreasonab

Perhaps mindful of the last patent reexamination appeal that related to flooring technology, yesterday the BPAI reversed an Examiner claim construction as unreasonable. As a reminder, claims in patent reexamination are accorded a broadest reasonable interpretation (BRI) consistent with the specification, from the perspective of one of skill in the art. In re Yamamoto, 740 F.2d 1569, 222 USPQ 934 (Fed. Cir. 1984).

Since the Suitco decision, (linked above), the Office has been making more of an effort to ensure that claims are not broadened to a point of inconsistency with the specification. There is a delicate balance between incorporating limitations from the specification to the claims, and reading claims consistent with the specification. Yesterday’s decision, illustrates one helpful constraint on BRI, namely, clear disavowal of the patent specification.

The decision, ex parte Jorgen J. Muller Jr., (here) revolved around an injection molded floor panel. Specifically, the claims were directed to structure of the panel that helped eliminate undesirable “sink marks” of the tile that otherwise form when the tiles are curing. In this regard, the claims recited an area defined by each of the one or more structures is contained within and positioned directly above an area defined by the one or more support members.

A figure of the patent is reproduced below showing the area defined by the support members.

4b

The area defined by the upper structures 220 are entirely contained within, and aligned with, an area defined by the lower support members 215 and 217.

Yet, the Examiner interpreted the limitation, “an area” of the structure is “contained within” an area defined by the support member, as requiring that only a part of the structure be contained within the support member. Thus, the Examiner interpreted the claim to permit the top structures to extend outside the area of the bottom support members.

The Board noted that the Examiner interpretation was inconsistent with the specification, and therfore, unreasonable as clearly embracing the prior art discussed in the specification of the patent. The prior art discussed as suffering from the “sink mark” problem was illustrated in the patent as Fig. 3B below.

3bThe Board noted that, with regard to Fig. 3B:

[T]he Examiner’s interpretation of the disputed limitation corresponds to the configuration of the prior art tile depicted in Figure 3. This configuration is discussed above as resulting in sink marks. It is not reasonable to read the claims as reading on a prior art configuration which was expressly addressed and remedied by the ‘592 patent.

The Board then continued to explain that one of skill in the art would understand the claimed area to be within the vertical alignment of the structures and support members.

There are few bright lines in interpreting claims under the BRI standard. However, one seems to be that any interpreation embracing disavowed claim scope of a patent specification is unreasonable.

Patent Reform Amendments Begin to Circulate

Senator Leahy’s “Patent Reform Act of 2011” was only just introduced to the Senate yesterday, and today, the first amendment proposal has been circulated. As I mentioned in my post of a few weeks back, one of the more curious proposals rumored to be in the works was a pilot program to review the patentability of business method patents; yesterday, that rumor has now coalesced into an actual amendment proposal.

Legislative based news outlets report that Sen. Charles Schumer, D-N.Y., is circulating an amendment  to “authorize a pilot program for review of business method patents.” Of course, the Leahy bill already proposes Post Grant and Inter Partes Review proceedings that would embrace all patents. Thus, this amendment proposal seems more political statement than constructive addition.

Timing of Post Filing Conduct Deemed Crucial

As discussed previously, one purpose for seeking patent reexamination parallel to litigation is to avoid a post filing (i.e., complaint) willfulness determination. The existence of an ongoing patent reexamination may be admitted to demonstrate that the accused infringer was not objectively reckless in its actions irrespective of its prior knowledge of the asserted patent.

As Fairchild semiconductor learned the past week, it is probably best not to wait 5 years into a litigation and after a jury trial to showcase that objectively reasonable behavior.

In July of last year, a jury of the Delaware District Court found that Fairchild had willfully infringed several patents of their competitor Power Integrations. In a bench trial on the willfulness issue, the ongoing patent reexaminations were considered, but given little weight due to their belated pursuit by Fairchild. In a July press release Fairchild explained that it was “disappointed by the willfulness ruling because it is inconsistent with repeated rejections of Power Integrations patents by the U.S. Patent Office following re-examinations that were launched by Fairchild. In that process, Power Integrations has even cancelled one of the patent claims found to have been willfully infringed in the court process.”

Prior to appealing the issue to the CAFC, Fairchild sought to beef up the record on this point, arguing that recently retired Judge Farnan had failed to adequately develop the record in this regard. In a tersely worded opinion (here), Judge Stark was having none of it, explaining:

. . .Judge Farnan indisputably heard all of the reexamination evidence Fairchild believed to be relevant. The bench trial on willfulness focused almost entirely on the reexamination proceedings. (D.I. 740) On this record, Judge Farnan concluded that the timing of Fairchild’s behavior was crucial, and he relied most heavily on Fairchild’s pre-litigation conduct. (D.I. 750 at 13) (“The Court concludes that this evidence [pre-litigation conduct] weighs more heavily than the post-suit strategy developed by counsel to avoid a claim of willful infringement, after such infringement has already occurred.”) Fairchild did not initiate the reexamination proceedings until after a jury had returned a verdict finding that Fairchild infringed Power’s patents. It is plain that Judge Farnan deemed this post-suit conduct of Fairchild to be of limited relevance to the willfulness determination. (emphasis added)

Seems if you want to appear objectively reasonable post filing, you might want to get those reexamination requests in sometime before the 5 year mark of your “post filing” conduct.

This case was brought to my attention by the great Docket Navigator.

First CAFC Review of Inter Partes Patent ReexaminationIn inter partes reexamination 95/000,034,Vanguard Identification Systems Inc., v Bank of America Corporation, the BPAI reversed the examiners obviousness rejection, emphasizing the difference between a proper obviousness determination for design and utility patents. (previous discussion here) The BPAI determined that the prior art reference of record did not show a data card containing any type of aperture, but secondary references did.  Nevertheless, the BPAI determiend that it would not be obvious to modify the primary references to include one of the circular apertures of the secondary references.  The Board explained that obviousness of a design patent requires an analysis of whether the design would have been obvious to a designer of ordinary skill who designs articles of the type involved and that there must be a reference, a something in existence, the design characteristics of which are basically the same as the claimed design in order to support a holding of obviousness.  Vanguard then took the fight on to the CAFC in Vanguard Identification Systems Inc. v. David J. Kappos et al.Unfortunately for Vanguard, the reversal of the BPAI was affirmed without comment (Rule 36, here). Clearly, that not all inter partes patent reexaminations end in defeat for Patentees. Interestingly, this is the first inter partes patent reexamination to make it through the full process (i.e., from initial filing to CAFC appeal) some 11 years after enactment of the inter partes patent reexamination statutes. Also interesting in that the USPTO was supporting the patentability determination here, as opposed to their usual ro

In inter partes reexamination 95/000,034,Vanguard Identification Systems Inc., v Bank of America Corporation, the BPAI reversed the examiners obviousness rejection, emphasizing the difference between a proper obviousness determination for design and utility patents. (previous discussion here) 

The BPAI determined that the prior art reference of record did not show a data card containing any type of aperture, but secondary references did.  Nevertheless, the BPAI determiend that it would not be obvious to modify the primary references to include one of the circular apertures of the secondary references.   The Board explained that obviousness of a design patent requires an analysis of whether the design would have been obvious to a designer of ordinary skill who designs articles of the type involved and that there must be a reference, a something in existence, the design characteristics of which are basically the same as the claimed design in order to support a holding of obviousness.  

Vanguard then took the fight on to the CAFC in Vanguard Identification Systems Inc. v. David J. Kappos et al.

Unfortunately for Vanguard, the reversal of the BPAI was affirmed without comment (Rule 36, here). Clearly, that not all inter partes patent reexaminations end in defeat for Patentees. 

Interestingly, this is the first inter partes patent reexamination to make it through the full process (i.e., from initial filing to CAFC appeal) some 11 years after enactment of the inter partes patent reexamination statutes. Also interesting in that the USPTO was supporting the patentability determination here, as opposed to their usual role.