Dispute with USPTO Ripens for District Court?

As some may recall, in 2009 patent owner Sigram Schindler pursued a declaratory judgment action against the USPTO in the Eastern District of Virginia. (EDVA). The DJ action questioned the propriety of foreclosing district court review of USPTO action in the ex parte patent reexamination of Sigram’s U.S. Patent 6,954,453.

More specifically, the DJ action (previous discussion here) sought a determination as to whether the USPTO’s interpretation of 35 U.S.C. § 306, was proper.  The USPTO interprets 35 U.S.C. § 306 as prohibiting a Patentee in an ex parte patent reexamination from obtaining judicial review of a decision of the Board of Patent Appeals & Interferences (BPAI) by filing a civil suit against the USPTO in federal district court.

Rather than deciding the issue, the EDVA simply noted that the question was not yet ripe due to the absence of a BPAI decision. Yesterday, a decision issued (here) in the reexamination (90/010,017) affirming the examiners rejection of the reexamined claims. Seems like matters have ripened…..

Critics perceived the previous DJ  action as primarily a delay tactic for the purpose of allowing the co-pending Delaware litigation of the ‘453 Patent to advance. It is unclear whether or not Sigram will now head back to the EDVA, or simply follow in the footsteps of The Regents of the University of California v. Kappos 1:10-cv-02031 (D.D.C.) (previous discussion here).

Currently the validity portion of the Delaware case is stayed pending the outcome of the patent reexamination. (see previous discussion on the impact of the reexamiantion on the Markman Order here)

Substantial Evidence Found Lacking in Rejection of Means-Plus-Function ClaimYesterday, in In re Glatt Air Techniques, Inc (here), the CAFC reversed the rejection of claim 5 of U.S. Patent 5,236,503. The reversal held that the USPTO’s obviousness rejection was not based on substantial evidence. Moreover, the court reminded the USPTO that evidence of secondary indicia (past post on this topic here) need not cover every conceivable embodiment of a patent.The ‘503 Patent is directed to a spray nozzle technology which provides a circular shield about the spray nozzle to preclude certain particles from entering the spray field prematurely. Claim 5 is written in a Jepson format, and includes a means-plus-function element (don’t try this at home).  The MPF element is a “shielding means.” (read my earlier post on why MPF claims are very desirable in patent reexamination). The  shielding means recites a function of shielding the initial spray pattern developed by said nozzle against the entrance of particles moving upwardly . . . The structure of the specification included both a physical shield and an air barrier.In rejecting claim 5, the USPTO (Control No. 90/008,482) identified a prior art system which utilized a burst of air to clear clogged particles from a nozzle. Claim 5 was rejected as obvious in view of this system. Furthermore, Patentee’s evidence of secondary considerations of non-obviousness was rejected as being related only to the physical barrier embodiment.On appeal, the CAFC explained:The Board properly found that [the art reference] teaches modulating gas flow in the coating apparatus to control particle agglomeration. It is readily apparent, however, that this technique does not shield circulating particles from entering the initial spray pattern. [The art reference] teaches a way to remedy the blockage caused by particle agglomeration using bursts of air. In contrast, Glatt’s invention prevents the agglomeration from occurring in the first place. The Board’s finding that [the art reference] teaches shielding the nozzle to prevent particles from prematurely entering into the initial spray pattern is not supported by substantial evidence because [the art reference] does not teach shielding. [The art reference’s] air source can be used to (1) circulate particles and (2) clear blockages. The air source cannot perform both of these functions simultaneously, and more importantly, neither of these functions constitutes shielding.With respect to the secondary indicia, the CAFC additionally pointed out that,To the extent the PTO asserts that Glatt needed to submit commercial success evidence from multiple embodiments for that evidence to be commensurate in scope with claim 5, this position is not consistent with our precedent. It seems unlikely that a company would sell a product containing multiple, redundant embodiments of a patented invention. The fact that Glatt’s commercial products only contain one type of shielding means does not make its commercial success evidence irrelevant. Under the PTO’s logic, there would never be commercial success evidence for a claim that covers more than one embodiment. Rather, we have consistently held that a patent applicant “need not sell every conceivable embodiment of the claims in order to rely upon evidence of commercial success.” In re DBC, 545 F.3d 1373, 1384 (Fed. Cir. 2008) (quoting Applied Materials, Inc. v. Adv. Semi-conductor Materials Am., Inc., 98 F.3d 1563, 1570 (Fed. Cir. 1996)).Although Glatt was successful on appeal, the appeal delay is not without consequence. During the prosecution phase of the patent, while claim 5 was retained in original form, claim 8 was amended  (all other claims subject to reexamination were canceled). Claim 8 was originally indicated as allowable on May 20, 2008, but this claim will not exist in amended form until printed with the reexamination certificate. Thus, the appeal delay has effectively surrendered 3 years of patent term for claim 8 (the printing process will take at least another 12 weeks).

Yesterday, in In re Glatt Air Techniques, Inc (here), the CAFC reversed the rejection of claim 5 of U.S. Patent 5,236,503. The reversal held that the USPTO’s obviousness rejection was not based on substantial evidence. Moreover, the court reminded the USPTO that evidence of secondary indicia (past post on this topic here) need not cover every conceivable embodiment of a patent.

The ‘503 Patent is directed to a spray nozzle technology which provides a circular shield about the spray nozzle to preclude certain particles from entering the spray field prematurely. Claim 5 is written in a Jepson format, and includes a means-plus-function element (don’t try this at home).  The MPF element is a “shielding means.” (read my earlier post on why MPF claims are very desirable in patent reexamination). The  shielding means recites a function of shielding the initial spray pattern developed by said nozzle against the entrance of particles moving upwardly . . . The structure of the specification included both a physical shield and an air barrier.

In rejecting claim 5, the USPTO (Control No. 90/008,482) identified a prior art system which utilized a burst of air to clear clogged particles from a nozzle. Claim 5 was rejected as obvious in view of this system. Furthermore, Patentee’s evidence of secondary considerations of non-obviousness was rejected as being related only to the physical barrier embodiment.

On appeal, the CAFC explained:

The Board properly found that [the art reference] teaches modulating gas flow in the coating apparatus to control particle agglomeration. It is readily apparent, however, that this technique does not shield circulating particles from entering the initial spray pattern. [The art reference] teaches a way to remedy the blockage caused by particle agglomeration using bursts of air. In contrast, Glatt’s invention prevents the agglomeration from occurring in the first place. The Board’s finding that [the art reference] teaches shielding the nozzle to prevent particles from prematurely entering into the initial spray pattern is not supported by substantial evidence because [the art reference] does not teach shielding. [The art reference’s] air source can be used to (1) circulate particles and (2) clear blockages. The air source cannot perform both of these functions simultaneously, and more importantly, neither of these functions constitutes shielding.

With respect to the secondary indicia, the CAFC additionally pointed out that,

To the extent the PTO asserts that Glatt needed to submit commercial success evidence from multiple embodiments for that evidence to be commensurate in scope with claim 5, this position is not consistent with our precedent. It seems unlikely that a company would sell a product containing multiple, redundant embodiments of a patented invention. The fact that Glatt’s commercial products only contain one type of shielding means does not make its commercial success evidence irrelevant. Under the PTO’s logic, there would never be commercial success evidence for a claim that covers more than one embodiment. Rather, we have consistently held that a patent applicant “need not sell every conceivable embodiment of the claims in order to rely upon evidence of commercial success.” In re DBC, 545 F.3d 1373, 1384 (Fed. Cir. 2008) (quoting Applied Materials, Inc. v. Adv. Semi-conductor Materials Am., Inc., 98 F.3d 1563, 1570 (Fed. Cir. 1996)).

Although Glatt was successful on appeal, the appeal delay is not without consequence. During the prosecution phase of the patent, while claim 5 was retained in original form, claim 8 was amended  (all other claims subject to reexamination were canceled). Claim 8 was originally indicated as allowable on May 20, 2008, but this claim will not exist in amended form until printed with the reexamination certificate. Thus, the appeal delay has effectively surrendered 3 years of patent term for claim 8 (the printing process will take at least another 12 weeks).

DC Bar Program January 12, 2011Next week the DC Bar Association will host a “Patent Reform Update.” (details here). The panel will discuss the perceived needs for patent reform and the outlook for 2011. Speakers include:Paul R Michel, Federal Circuit Chief Judge (retired) Christal Sheppard, Chief Counsel for Patents and Trademarks and Chief Counsel for Courts and Competition Policy at United States    Congress, House of Representatives Committee on the Judiciary Sheryl Miller, Deputy Staff Director for Technology and Innovation, U.S. Senate Committee on Small Business and EntrepreneurshipPerhaps the panel will have some insight into the intentions of the incoming Congress. (not a CLE eve

Next week the DC Bar Association will host a “Patent Reform Update.” (details here). The panel will discuss the perceived needs for patent reform and the outlook for 2011. Speakers include:

Paul R Michel, Federal Circuit Chief Judge (retired)
Christal Sheppard, Chief Counsel for Patents and Trademarks and Chief Counsel for Courts and Competition Policy at United States   
Congress, House of Representatives Committee on the Judiciary
Sheryl Miller, Deputy Staff Director for Technology and Innovation, U.S. Senate Committee on Small Business and Entrepreneurship

Perhaps the panel will have some insight into the intentions of the incoming Congress. (not a CLE event)

Litigation Based Rationale Falls Flat Before USPTOAs the truism goes in patent litigation circles, “that which infringes if later, anticipates if earlier.” Yet, in the last patent reexamination decision of the Board of Patent Appeals & Interferences (BPAI) in 2010, the Board refused to adopt a proposed rejection in inter partes patent reexamination that was modeled on this very principle.In J.M. Smucker Company v. The Patent of Mac-Ray, Inc., (2010-011461 & 2010-011463) the Board affirmed the examiner’s refusal to adopt rejections proposed by the third party requester (i.e., Smucker) in requests for inter partes patent reexamination of Mack-Ray’s U.S Patents 7,314,328 and 7,325,994. The proposed rejections relied upon a prior art reference (Seaquist). Smucker argued that the embodiments of the Seaquist patent were virtually identical to the Smucker products (Nozzles for spreading jelly from squeeze bottles). In proposing the Seaquist rejections in their reexamination requests, Smucker cited a previously filed litigation complaint (Mack-Ray, Inc. v. The J.M.. Smucker Company, EDTX) that identified features of Smucker’s products in relation to the Mack-Ray patents. Smucker reasoned that since the earlier Seaquist reference covered their products, the complaint constituted an admission by Mack-Ray of anticipation.In rejecting Smucker’s rationale, the Board explained that patent reexamination does not work that way.As explained in previous posts, admission based theories are rarely of use in patent reexamination (See note 8). Yet this practice persists as requests for patent reexamination that are made concurrent with litigation are often written as much for the judge’s eyes than the PTO. Indeed, while Smucker’s inter partes requests were being considered a motion for stay was being pursued before the Texas court. However, in this case, there may have been another reason to present the Seaquist reference in a more “creative” manner.In an attempt to diffuse the Seaquist art, the Patent Owner employed a bold “first-to-file” strategy to undermine the use of this art by Smucker. Namely, knowing that ex parte patent reexamination presents the most favorable odds to a Patent Owner, a preemptive request for ex parte patent reexamination was filed by Mack-Ray based on Seaquist. In this way, any subsequent request for inter partes reexamination that was based on the Seaquist reference, like the ones eventually filed by Smucker, would need to present, a new non-cumulative SNQ. (past post on this strategy here). Interestingly, the Smucker’s requests were in fact initially denied as cumulative to the on-going ex parte reexaminations (reversed on petition, but a first action ACP refused to adopt the proposed rejections).In rejecting Smucker’s admission based theory, the Board rewarded Mack-Ray’s gamble, explaining:While the Patent Owner may have necessarily construed the asserted claims of the [Mack-Ray patents] in concluding that a particular commercialized dispenser infringes, claim construction is a matter of law. The fact that the Patent Owner may have construed the claims one way does not establish what the claims actually mean or that the advocated construction is correct as a matter of law. . . .The Appellant essentially requests us to make a factual finding that the commercialized dispenser is identical to that disclosed in [ Seaquist] with respect to the limitations at issue, based on general similarities of the dispenser and the drawings of [Seaquist], and without the Appellant specifying to the PTO and establishing through evidence, what the [Seaquist] shows with respect to the “key limitation.” We decline this request.Reexaminations are to be based on prior art patents or publications, not on devices such as the commercialized dispenser by Appellant. See §§ 301, 311. The Appellant’s request requires the PTO to examine the commercialized dispenser and conclude that the commercialized dispenser is the same as that shown in [Seaquist], that there are no additional features such as a convex curvature, and that the taper does not include some ancillary feature such as a curvature therein. It is not the PTO’s responsibility, nor does the PTO have the resources, to evaluate such factual matters.The Texas litigation related to these patents was dismissed without prejudice based upon a sealed filing. Yet, since Mack-Ray did not participate at all in the inter partes reexaminations (claims allowed in first action), those records will not provide any potentially damaging statements vis-a-vis the litigation. So, it will be interesting to see if the first litigation is re-started. While Smucker may ultimately be estopped from arguing the Seaquist reference as a basis for invalidity, physical product embodiments based on Seaquist may still be fair game. See ACCO Brands, Inc. v. PC Guardian Anti-Theft Products, Inc.3-04-cv-03526 (N.D. Cal., December 4, 2008)Finally, a second suit was filed against Smucker by Mack-Ray in July of 2010 based on another patent related to the same technology (7,645,08

As the truism goes in patent litigation circles, “that which infringes if later, anticipates if earlier.” Yet, in the last patent reexamination decision of the Board of Patent Appeals & Interferences (BPAI) in 2010, the Board refused to adopt a proposed rejection in inter partes patent reexamination that was modeled on this very principle.

In J.M. Smucker Company v. The Patent of Mac-Ray, Inc., (2010-011461 & 2010-011463) the Board affirmed the examiner’s refusal to adopt rejections proposed by the third party requester (i.e., Smucker) in requests for inter partes patent reexamination of Mack-Ray’s U.S Patents 7,314,328 and 7,325,994. The proposed rejections relied upon a prior art reference (Seaquist). Smucker argued that the embodiments of the Seaquist patent were virtually identical to the Smucker products (Nozzles for spreading jelly from squeeze bottles). In proposing the Seaquist rejections in their reexamination requests, Smucker cited a previously filed litigation complaint (Mack-Ray, Inc. v. The J.M.. Smucker Company, EDTX) that identified features of Smucker’s products in relation to the Mack-Ray patents. Smucker reasoned that since the earlier Seaquist reference covered their products, the complaint constituted an admission by Mack-Ray of anticipation.

In rejecting Smucker’s rationale, the Board explained that patent reexamination does not work that way.

As explained in previous posts, admission based theories are rarely of use in patent reexamination (See note 8). Yet this practice persists as requests for patent reexamination that are made concurrent with litigation are often written as much for the judge’s eyes than the PTO. Indeed, while Smucker’s inter partes requests were being considered a motion for stay was being pursued before the Texas court. However, in this case, there may have been another reason to present the Seaquist reference in a more “creative” manner.

In an attempt to diffuse the Seaquist art, the Patent Owner employed a bold “first-to-file” strategy to undermine the use of this art by Smucker. Namely, knowing that ex parte patent reexamination presents the most favorable odds to a Patent Owner, a preemptive request for ex parte patent reexamination was filed by Mack-Ray based on Seaquist. In this way, any subsequent request for inter partes reexamination that was based on the Seaquist reference, like the ones eventually filed by Smucker, would need to present, a new non-cumulative SNQ. (past post on this strategy here). Interestingly, the Smucker’s requests were in fact initially denied as cumulative to the on-going ex parte reexaminations (reversed on petition, but a first action ACP refused to adopt the proposed rejections).

In rejecting Smucker’s admission based theory, the Board rewarded Mack-Ray’s gamble, explaining:

While the Patent Owner may have necessarily construed the asserted claims of the [Mack-Ray patents] in concluding that a particular commercialized dispenser infringes, claim construction is a matter of law. The fact that the Patent Owner may have construed the claims one way does not establish what the claims actually mean or that the advocated construction is correct as a matter of law. . . .

The Appellant essentially requests us to make a factual finding that the commercialized dispenser is identical to that disclosed in [ Seaquist] with respect to the limitations at issue, based on general similarities of the dispenser and the drawings of [Seaquist], and without the Appellant specifying to the PTO and establishing through evidence, what the [Seaquist] shows with respect to the “key limitation.” We decline this request.

Reexaminations are to be based on prior art patents or publications, not on devices such as the commercialized dispenser by Appellant. See §§ 301, 311. The Appellant’s request requires the PTO to examine the commercialized dispenser and conclude that the commercialized dispenser is the same as that shown in [Seaquist], that there are no additional features such as a convex curvature, and that the taper does not include some ancillary feature such as a curvature therein. It is not the PTO’s responsibility, nor does the PTO have the resources, to evaluate such factual matters.

The Texas litigation related to these patents was dismissed without prejudice based upon a sealed filing. Yet, since Mack-Ray did not participate at all in the inter partes reexaminations (claims allowed in first action), those records will not provide any potentially damaging statements vis-a-vis the litigation. So, it will be interesting to see if the first litigation is re-started. While Smucker may ultimately be estopped from arguing the Seaquist reference as a basis for invalidity, physical product embodiments based on Seaquist may still be fair game. See ACCO Brands, Inc. v. PC Guardian Anti-Theft Products, Inc.3-04-cv-03526 (N.D. Cal., December 4, 2008)

Finally, a second suit was filed against Smucker by Mack-Ray in July of 2010 based on another patent related to the same technology (7,645,085).

Petition Filed to Reconsider Denial of 2nd Reexamination

As previously reported, the second attempt by Microsoft to invalidate U.S. Patent  5,787,449 failed on November 24, 2010. Since that time, the dispute involving this patent, (i4i Limited Partnership and Infrastructures for Information Inc v. Microsoft Corp, (E.D. Tx No. 07-CV-113)) has been accepted for review in the 2011 term by the Supreme Court (just like I always said it would..ahem).

In Microsoft”s petition for cert, they argue against the use of the clear and convincing evidentiary standard for proving a patent invalid. Microsoft argues that this standard should not apply when art is uncovered that was never before the PTO. In essence Microsoft argues that a lower standard, such as used by the USPTO during original prosecution (or patent reexamination) is more appropriate. The case may be the most closely watched patent law question in decades as the ruling could have a game changing impact on the value of patents and patent litigation practices.    

To date, however, Microsoft has not had any success invalidating the ‘449 Patent in patent reexamination. A first reexamination was favorably concluded to i4i without amendment to the original claims(90/010,347), and the second request was denied (90/011,198). The recent Rule 1.181 petition, filed this past Monday will seek Supervisory review of the examiner’s November denial. Typically, the Director of the USPTO delegates the authority to decide the petition to the Director of Central Reexamination Unit. 

It would seem illogical for Microsoft to pursue a claim to the Supreme Court that a lower standard is in order, having lost the fight at the USPTO when given that exact standard….twice.

Of course, a reversal of the examiner would not be an indication of a prima facie showing of invalidity. Instead, a reversal would be a determination that the submitted art would have been “important to a reasonable examiner.”  Microsoft may not get much mileage out of that determination, but it beats the alternative.

The content of the petition is not yet available on PAIR.

NTP Patent Reexaminations & Key Patent Reissue Cases

With not much going on between holidays, a look forward to 2011 shows some interesting post grant issues teed up at the CAFC.

Oral arguments have been scheduled for In re Tanaka (January 10), In re NTP (February 10), and In re Mostafazadeh (February 11). (CAFC schedule here)

As a reminder In re Tanaka, (on appeal from the BPAI decision of last December) will explore whether or not a reissue application is proper where the only defect identified in the issued patent is the failure to present additional dependent claims.  At the BPAI, the Board reasoned that the mere addition of new dependent claims did not identify any defect in the issued patent.

Of perhaps greater interest in the patent reissue area is In re Mostafazadeh. This case will explore the boundaries of the recapture rule as it relates to broadening reissues. Specifically, the CAFC will have an opportunity to provide feedback to the USPTO on the continued viability of Ex parte Eggert 67 USPQ2d 1716 (BPAI 2003) in view of North Am. Container, Inc. v. Plastipak Pkg., Inc., 415 F.3d 1335, 1349 (Fed. Cir. 2005). The USPTO has taken the position that Eggert is no longer binding on the Office. As a result, the Office has considered recapture to foreclose presentation of an intermediate claim scope in patent reissue where a broader claim limitation was surrendered in original prosecution.

Finally, the NTP patent reexaminations of NTP v. RIM fame finally get their day in court.

As discussed last year, the USPTO rejected almost all of the NTP claims. Specifically, the rejection of all claims was affirmed in 6,317,592, 5,819,172, and 6,067,451; Rejections  were affirmed-in-part in 5,436,960 and 5,625,670, (the surviving ‘670 claims appear to have been added in reexamination, claim 15 of the ‘960 appears to be the only surviving claim successfully asserted against RIM).

Most of the new claims added in these reexaminations are set to expire in 2012 (and not even enforceable until printed, likely mid-late 2011).  The CAFC has set aside an entire afternoon to hear these appeals en masse. It seem unlikely that the rejections will be reversed as NTP has relied on some fairly “controversial” theories to put it diplomatically. To date NTP has argued that a certain Telenor art reference was fabricated by the requester, and that Markman decisions are binding on the USPTO.

If I may steal a line from Terrell Owens, get your popcorn ready!

 Year in Review & 2011 Outlook

As I mentioned last week, nothing says “holiday spirit” like a podcast on patent reexamination/reissue.

Recently, I recorded a podcast for LexisNexis discussing the patent reexamination and patent reissue stories of 2010, and looked forward to prominent cases and expected changes in 2011.  Readers of the blog may recognize some highlights. Check it out at the LexisNexis Patent Law Community (here)

Happy Holidays!

Lear Doctrine Avoided by Metabolite?

In a post last week, it was reported that U.S. patent 4,940,658, the subject Lab. Corp. of Am. Holdings v. Metabolite Labs., 126 S. Ct. 2921, 2921 (2006) (dismissing the writ of certiorari as improvidently granted) had withstood an ex parte patent reexamination challenge at the USPTO. Specifically, the BPAI reversed the examiner rejection of claims 13, 15-17 and 33 and refused to reconsider their decision in the face of a rare patent examiner request for rehearing (90/008,305).

Aside from the ongoing patent battle raging between Lab Corp. and Metabolite, there is also a contractual dispute before the United States Court of Appeals for the Tenth Circuit involving these same companies. Metabolite is arguing that Lab Corp. unlawfully terminated an earlier licensing agreement. In order to have lawfully terminated their agreement, Metabolite argues that Lab Corp. must prove their products do not infringe the ‘658 Patent, but they have lost this battle at trial. Likewise, Metabolite argues that if Lab Corp is attempting to argue lawful termination based upon patent invalidity (i.e., Lear Doctrine), the BPAI has recently disproven this theory as well.

The Lear doctrine provides that a licensee which successfully challenges the validity of a patent is not obligated to pay royalties accruing from the date of the challenge.

In this case it seems that the license agreement was first breached as far back as 2001 (See Metabolite letter to the court dated 12/17/10).  Yet, the request for ex parte patent reexamination was not filed in October 2006, and the contract was terminated in October 2007. Based on the late filing of the patent reexamination, it may be that the Lear Doctrine was not  much of a real concern as compared to other contractual provisions that may have excused performance.

Nevertheless, a successful patent reexamination may satisfy the Lear Doctrine and excuse licensees from paying royalties. For example, the Fifth Circuit recently concluded in DuVal Wiedmann, LLC v. InfoRocket.com, Inc. that a licensee did not owe royalties for any activity after the licensee requested inter partes reexamination where the “validity challenge” ultimately proved to be successful.

Parallel Patent Reexaminations Given Little Weight at ITC

As detailed in past posts, an ongoing patent reexamination may help defendants stave off an injunction in district court. For example, in Flexiteek v. Plasteak,  (S.D. Fla. 2010) (Cohn, J.), the district court opted to stay the enforcement (order here) of the permanent injunction based upon the status of the related patent reexamination. At the ITC however, patent reexaminations are viewed as a routine occurrence.

As explored in the ITC action initiated by Tessera Inc., In the Matter of Certain Semiconductor Chips with Minimized Chip Package Size and Products Containing Same, Inv. No. 337-TA-605, 2008 WL 2223426 (Int’l Trade Comm’n May 27, 2008), it is next to impossible to stay an ITC proceeding pending an ongoing patent reexamination. This is due to the ITC’s statutory mandate to conclude investigations within a strict time frame.

Having lost the battle to stay the case, the remaining Tessera defendants cited the existence of the ongoing patent reexamination as a basis to avoid an exclusion order. The defendants asserted, that the public interest analysis required by 19 U.S.C. § 1337 (d)(1) was akin to the factors enumerated in eBay Inc. v. Mer-cExchange, L.L.C., 547 U.S. 388 (2006). In arguing for the Ebay factors, the defendants emphasized that money damages may be more appropriate for a “licensor” such as Tessera and that there would be no irreparable harm.

Yesterday, the CAFC contrasted the principles of equity applied in district courts to the statutorily mandated exclusion order of the ITC in Spansion v. ITC, and affirmed the ITC’s treatment of the ongoing patent reexaminations as largely irrelevant.

In explaining the inapplicability of the Ebay factors to the ITC’s calculus, the CAFC summarized:

As contrasted with the remedial scheme established by Congress for proceedings before the Commission, the statutory remedies available in proceedings before the district courts are quite different. In addition to the remedy of damages under 35 U.S.C. § 284, Congress gave district courts the discretion to grant injunctive relief and in doing so made explicit that such discretion is to be exercised “in accordance with the principles of equity . . . on such terms as the court deems reasonable.” 35 U.S.C. § 283. In eBay, the Supreme Court explained that Section 283 did not endorse or establish a categorical grant of injunctive relief following a determination of infringement. Rather, the decision whether to grant or deny injunctive relief under Section 283 depends on traditional principles of equity, applying the four-part test for permanent injunctive relief in patent disputes no less than in other cases governed by such standards. See eBay, 547 U.S. at 391 (discussing the four-factor test for injunctive relief).

Given the different statutory underpinnings for relief before the Commission in Section 337 actions and before the district courts in suits for patent infringement, this court holds that eBay does not apply to Commission remedy determinations under Section 337. The Commission is not required to apply the traditional four-factor test for injunctive relief used by district courts when deciding whether to issue the equitable remedy of a permanent injunction. Unlike the equitable concerns at issue in eBay, the Commission’s issuance of an exclusion order is based on the statutory criteria set forth in Section 337. Spansion’s argument that the term “public welfare” is so “broad and inclusive” that Congress must have intended it to include the traditional equitable principles reflected in the eBay standard is unpersuasive when viewed in the context of Section 337.

Clearly, the surge in popularity of the ITC is due in part, to the ability to more readily secure injuctive style relief post-Ebay relative to that of the district courts. However, the dim view of patent reexamination at the ITC may also lead to an increase in ITC actions. Indeed, defendants already under a stay pending patent reexamination in a district court have effectively created an end-around the stalled case via the ITC.  For those defendants most suscpetible to patent reexamination complications (i.e., trolls) that are also capable of satisfying the domestic industry requirement, the ITC may soon rank right up ther with Marshall Texas (perhaps outrank should the venue transfer trends continue). While an exclusion order is not $$$…it is as good as gold for settlement purposes, especailly as compared to a stayed district court litigation.

Intellectual Property Subcommittee Formed

Yesterday, House Judiciary Committee Chairman Elect Lamar Smith (R-Texas) announced the formation of an Intellectual Property Subcommittee. As pointed out last month, patent reform remains high on the Chairman Elect’s agenda.

In explaining the purpose of the subcommittee, Congressman Smith explained (announcement here):

One important change is the creation of a new intellectual property subcommittee. The protection of America’s intellectual property is critical to our economic growth, job creation and ability to compete in the global marketplace. A separate IP subcommittee will ensure that the Committee remains focused on all aspects of intellectual property, including patent reform and copyright protections.

Will 2011 bring another year of false starts?…hope springs eternal.