Giving Up What You Never Had

On September 20, 2010, Judge Ward of the Eastern District of Texas stayed the case of Microlinc LLC., v. Intel Corp et al. 2:07-CV-488. The patent at issue, 6,009,488 was asserted in 2005, but the action was voluntarily dismissed at the request of Microlinc to allow a first reexamination to conclude. Once this reexamination was terminated Microlinc reasserted the ‘488 Patent in 2007 against the same defendants. About the same time, Intel sought a second reexamination of the ‘488 Patent. A final rejection was issued in the second reexamination on May 26, 2010. On July 26, 2010, Microlinc filed a response adding 25 new claims.

Judge Ward stayed the case (decision here). While the case is now stayed, in his decision, Judge Ward offered the plaintiff an option to lift the stay that will necessitate the Patent holder give up, well….nothing.

In staying the case, Judge Ward seemed quite annoyed that Microlinc had pulled the plug on the case previously, and was now adding claims in the pending reexamination. Yet, in the decision, the judge provided an escape hatch to Microlinc, explaining:

[A]t the present time Microlinc seeks to further drag out the reexamination proceeding by filing twenty-five new claims. Thus, it is Microlinc that is delaying enforcement in this case. Finally, Microlinc expresses concern that since Intel has made multiple reexamination filings that it could continue to keep the ‘488 patent in reexamination proceedings and the action could take years to complete—thus prejudicing Microlinc. But Microlinc need not be so concerned. This Court chiefly finds that a stay is warranted in this case because Microlinc itself has amended many claims and asserted twenty-five new claims in reexamination. When the PTO takes action on these new claims this Court will consider lifting the stay. Or, alternatively, since Microlinc‟s amendments are minor, if Microlinc were to stipulate that it would not assert any of the twenty-five new claims against Defendants, then the Court would allow the case to proceed.(emphasis added)

Generally speaking, I believe stipulated stays are very helpful in managing the conditions of a stay pending patent reexamination. However, here the stipulation is largely meaningless. In other words, Patent Holder is given the option of a continued stay, OR, continuing to trial by relinquishing the right to assert claims that are unlikely to ever exist.

The 25 new claims were added after final rejection. Amendments after final in patent reexamination, like application prosecution, are governed by 37 CFR § 1.116. It is a near certainty that 25 new claims will be denied entry at this stage of the proceeding (the USPTO has yet to respond to the latest filing).

Unlike application prosecution there is no RCE option to pursue for entry of such claims after final rejection. This is why almost every first action includes the boilerplate:

boilerplate

If I am Microlinc I am rushing back to court to stipulate to non-assertion of these “new claims” before the USPTO makes it clear that my bargaining chips are illusory.

New Ex Parte Patent Reexamination Pilot Program a Tough Sell

Back in August, I reported on a new USPTO pilot program designed to decrease pendency in ex parte patent reexamination by seeking waiver of the right to file a Patent Owner Statement.

According to 2009 PTO statistics, Patent Owners filed statements in 10% of ex parte reexaminations. This is because filing of such a statement gives a Third Party a one-time rebuttal opportunity. Otherwise, Third Party participation is precluded by statute in ex parte reexamination. Therefore, by simply waiting for the Office to issue the first action, the Third Party is effectively silenced for the duration of the proceeding.

The new pilot program seeks to avoid the period of time the USPTO must wait to receive a Patent Owner Statement by requesting an early waiver of this right from the Patent Owner. Assuming the Patent Owner cooperates upon receiving notice of the initial request filing, the USPTO can reduce pendency by avoiding this front loaded, down time.

Since the program has been in operation for a few weeks now, it seemed like a good time to review the early results, and caution certain Patent Owners on how this seemingly trivial question of procedure may come back to haunt them. 

Based upon the preliminary data shown in PAIR, for those requests filed since August 5th, Patent Owners are currently deciding against waiver by about a 3-1 margin. (click to enlarge)

pilot

Of course, the data set is rather small at this point. Nevertheless, not surprisingly, the preliminary data indicates that few Patent Owner’s given the chance, will opt for a more streamlined proceeding.

This chart does not account for 6 cases in which the USPTO was unable to contact the Patent Holder. (As I pointed out in my earlier post, it is not uncommon for reexamination counsel to be different from the counsel listed on the face of a patent).

It is still too early to track the correlation between the refusal to waive the right to file, and ACTUAL statement filings. However, based on my experience, I would guess that most of those refusing to waive their right have no intention on exercising it. Only one case of the 15 declining waiver was a patent owner requested reexamination, thus, I would be surprised if more than one statement was ultimately filed of these 15 cases. Yet, for those Patent Holders conducting a concurrent litigation, refusing to accept the waiver followed by an non-filing may have collateral consequences.

It is just a matter of time before a refusal to accept the USPTOs waiver offer, followed up by the failure to file a statement is used against a Patent Holder in a motion to stay a parallel litigation. Third Parties seeking to stay the case would argue that the Patent Owner was asked by the USPTO to cooperate for the purposes of accelerating the proceeding by several months—but expressly declined, deliberately seeking delay as evidenced by the failure to ultimately file a statement. The argument would continue that this is evidence of the strength of the rejections (fear on the part of the Patent Owner) and, that such gamesmanship and circumstantial evidence of the likelihood of success, weigh in favor of staying the case.

While Patent Owner’s always had a right to waive the statement by simply filing a paper notifying the office (MPEP 2249), clearly this option was rarely exercised by evidence of the new telephone election procedure. Likewise, the interview summary in the record memorializing a lack of cooperation by the Patent Owner may be a bit more damaging in front of a judge….I guess we’ll find out soon enough.

I’ll follow up on the correlation between non-waiver and actual filing in a month or two.

Proposed Patent Reexamination Pilot Program Touted as Pro-Business

In Monday’s Federal Register, a pilot program entitled Incentivizing Humanitarian Technologies and Licensing Through the Intellectual Property System was introduced (here). The notice requests comments from the public on a newly proposed enhancement to ex parte patent reexamination that would allow certain Patent Holders to advance to the head of the USPTO line. The Patent Holders qualifying for this enhanced treatment would be those “demonstrating humanitarian practices with patented technologies.”

The notice primarily presents 12 questions proposed to the public, seeking guidance on a test that would properly identify a humanitarian practice stemming from a subject patent. Specifically, comment is sought on weighting and filtering factors that would best define the “humanitarian use” and  “humanitarian research” definitions that would entitle a patent to consideration under the pilot program.

The proposal appears modeled after an FDA program that provides “vouchers” to such patent holders for advancing them to the front of that agencies review line. The PTO proposes a similar system in which the ex parte reexamination of such patents would be completed (excluding periods spent by the Patent Owner to respond) within 6 months.

The USPTO is to be applauded for their efforts to address real world business realities, yet, in this instance, I am left wondering if this proposed program can meet its stated goals.

This program, practically speaking, appears limited to bio/pharma patents. Many such patents relate to products having well known names, such as Plavix. In such cases, evidence of non-obviousness is compelling. With the relative specificity of the claims of bio/pharma patents, the best third party defenses are not available in reexamination for original claims (i.e., enablement). Coupling these factors with the more favorable statistics for upholding claims in ex parte reexamination, challenging such patents in this manner is rarely advisable.

I acknowledge that the 12 questions of the notice are posed for comment/debate, and are not final requirements. Still, if these questions are exemplary of the analysis that would be required, a patent eligible for a voucher would arguably be awarded a de facto finding of secondary considerations of non-obviousness. Such a decision, prior to reexamination, may color the remainder of the proceeding to the benefit of the Patent Holder. (e.g., see questions 5 and 8).

In modeling the program on the FDA system, the USPTO is considering making the voucher transferable on the open market (question 2). I can already hear the independent inventors howling about big business being given special access, and gov’t services being sold to the highest bidder.

To me question 12 has nailed the true issue.  Isn’t this program more suited to initial application review, like the Green Tech Pilot Program rolled out earlier this year? The vast majority of patents subject to patent reexamination are important, in most cases subject to concurrent litigation. It seems to me that speeding up reexamination for all is a better pro-business goal than carving out exceptions for extra special dispatch.

As I will be involved in drafting comments for the American Bar Association on this proposal, I would welcome any commentary, especially from the bio/pharma community.

Paperwork

The Fruit of the Poisonous Inequitable Conduct Tree= Mammoth IDS Filings

Last week, I commented on a recent ruling in Bendix Commercial Vehicle Systems LLC, et al v. Haldex Brake Products Corp., 1-09-cv-00176 (N.D.O.H) relating to patent resissue/recapture. In addition to the interesting recapture issues presented, this case also demonstrates why the USPTO must be continually burdened with mammoth IDS filings in post-grant proceedings.

Last week a further ruling was issued in this case on a summary judgment motion. Plaintiff Bendix requested summary judgment of NO inequitable conduct based on a multitude of defendant accusations relating to the plaintiff’s conduct during the patent reissue proceeding. Despite the plaintiff’s disclosure of litigation materials, expert reports etc, as well as the defendant filing their own carefully worded protest in the patent reissue proceeding, the defendant pointed to a single sentence of a deposition as being withheld from the USPTO….I couldn’t make this up. Continue Reading Large Patent Reissue/Reexamination IDS Filings Driven By Inequitable Conduct Plague

horiz_2stepAs discussed previously, defendants accused of patent infringement that are hauled before a plaintiff friendly  Texas court, not surprisingly, tend to seek transfer to a less favorable venue where possible. Often times, the “favorability” of an alternative venue may be driven in part by the tendencies of the alternative venue to stay a litigation pending patent reexamination. I previously identified this tactic as the “New Texas Two-Step.”

After a few years of dancing around a first plaintiff initiated suit in Texas, followed by a second defendant initiated suit in Virginia (later consolidated to Texas), Juniper Networks was able to successfully execute the Texas Two Step.  On Monday, the Northern District of California (receiving the dispute by transfer from Texas) stayed the dispute between Juniper Networks and Graphon Corp pending the outcome of patent reexamination. Continue Reading Juniper Network’s Texas Two Step a Success

515

Managers Amendment S.515 Shows New Momentum

A letter was sent to Majority Leader Harry Reid today (here) by a bipartisan group of senators asking him to bring patent reform legislation to the Senate floor for a vote “as soon as possible.” The argument behind the push was that strengthening our patent system and spurring innovation and investment is an action we should take now to stimulate our economy.

An impressive 25 senators signed the letter, led by Senate Judiciary Committee chairman Patrick Leahy (D-Vt.) and Jeff Sessions (R-Ala.). As a reminder S.515 passed the Judiciary Committee last year.

With fall elections on the horizon, a no-cost stimulus may play to voters; of course we knew this was coming.The letter is closed with:

Patent reform is bipartisan legislation, supported by the Administration, that will improve the economy and create jobs without adding to the deficit.

Stay Tuned

Can Inconsistent Statements Made Outside of the USPTO Surrender Claim Scope for Recapture Purposes?

The recapture doctrine of patent reissue is often a subject of debate before the BPAI. As we discussed last week, the question of the propriety of an intermediate claims scope vis-a-vis recapture was recently decided by the BPAI, and briefing before the CAFC is near complete on the same issue (In re Mostafazadeh). A day after the BPAI decision of last week, the Federal District Court of Ohio considered recapture in the context of statements made outside of the USPTO in Bendix Commercial Vehicle Systems LLC, et al v. Haldex Brake Products Corp., 1-09-cv-00176 (N.D.O.H)

As a reminder, the recapture doctrine exists because a deliberate surrender of subject matter is not an “error” that is correctable by patent reissue. The recapture doctrine prevents Patent Holders from broadening claim scope in patent reissue that was deliberately surrendered during original prosecution. In Bendix, the defendant (Haldex) argued that the asserted broadened reissue patent, RE 38,874, (relating to automotive braking equipment) was invalid under 35 USC § 251 due to statements made during an earlier litigation and in a foreign patent office.

As one would expect, the defendant also argued traditional disclaimer/estoppel theories along with recapture, to no avail.

The recapture argument was the continuation of an earlier effort. During the patent reissue proceeding, the defendant filed a protest pointing out the alleged recapture issue to the USPTO, but the examiner sided with the Patent Holder explaining that [n]o rejection of the claims over the prior art of record was made in the application and therefore no arguments were made to distinguish the claims from the prior art of record.

Essentially siding with the earlier examiner’s position, the district court explained (decision here):

Haldex also points to statements made after the issuance of the original patent, during a prior litigation over that patent, claiming that these statements constitute the surrender of claims relating to anything other than a one-piece caliper. Acceptance of this argument would require an extension of the current law governing the recapture rule. Federal Circuit case law clearly holds that a surrender, for purposes of the recapture rule, can only be made through arguments, statements, and amendments made during the prosecution of the original patent. See, e.g., Hester Indust, Inc. v.Stein, Inc., 142 F.3d 1472, 1480 (Fed. Cir. 1998)(citing In Re Clement, 131 F.3d 1464, 1469 (Fed.Cir. 1997)(“To determine whether an applicant surrendered particular subject matter, we look to the prosecution history for arguments and changes to the claims made in an effort to overcome a prior art rejection.”).

PPG Comment: With respect to litigation statements, this decision is not at all surprising. Recapture answers the simple question of whether or not a surrender of claim scope was deliberate BEFORE patent issuance. (i.e., not a correctable “error” that can be corrected LATER by patent reissue). Since the error can only have happened before issuance, it follows that factors considered in a recapture analysis are also limited to pre-issuance conduct.

On the other hand, the court was able to dodge the more interesting foreign prosecution question. The defendants identified alleged surrender of claim scope based on statements made in the prosecution of the German priority application (occurring before the U.S. prosecution). The court was able to side step this issue based on the fact that different U.S. claims were introduced by preliminary amendment at the time of U.S. filing. (also noting that the appropriate PCT form box was NOT checked carrying over amendments from the earlier, German prosecution).

Aside from a 112 rejection (non-prior art), the U.S. application was allowed without discussion of prior art. What if the claims had remained the same, recapture?

Confidential Information & Claim Drafting

As we discussed last March, the Federal District Court of Delaware seems to have a different idea when it comes to patent reexamination concurrent with litigation. In our earlier post we explained that protective order issues can be quite contentious in litigation between direct competitors. In many district courts, the simple solution to this issue is to forbid trial counsel from participating in an ongoing patent reexamination. The concept is simple, since claims are being amended or added in reexamination, confidential product data of competitors can unfairly steer the claim drafting process, providing significant leverage to the Patentee. In Delaware, the protective order issue has been viewed differently. Last week, this trend continued in the case of Xerox Corp. v. Google, Inc. et al. In Xerox, the court once again cited the same familiar local decisions on the issue, all of which appear grounded on arguably flawed perceptions of patent reexamination.  At issue in Xerox, was the confidential materials of Google, Yahoo and YouTube relating to advertising and search query processing. In deciding to allow Xerox’s counsel to participate in the ongoing patent reexamination (accepting the Xerox version of the protective order language, decision here) the court acknowledged that there was a risk that this confidential information might be inadvertently disclosed. Yet, the court dismissed the risk as not worth the unfairness of taking away the plaintiff’s choice in counsel, explaining: Unlike patent prosecution, reexamination is a limited proceeding assessing only the patentability of existing claims against specific prior art references. Defendants’ confidential information is “basically irrelevant” to that particular determination. Moreover, while claims may be broadened during prosecution to support new, tailor-made infringement allegations, amendments made during reexamination can only serve to narrow the original claims. Hence, no product that did not infringe a patent before reexamination could ever infringe that patent following reexamination. Furthermore, to the extent additional details are added to a claim in reexamination to distinguish it from the prior art, those details must already exist in the original patent’s specification. In any event, plaintiff will certainly seek to preserve the broadest possible reading of its claims on reexamination regardless of any insight gleaned from defendants’ confidential information. Comment: First, the statement that no product that did not infringe a patent before reexamination could ever infringe that patent following reexamination seems off the mark. One of the purposes of filing a patent reexamination is to force an amendment to an issued claim that will result in non-infringement. The court arguably puts too much weight in the fact that claims cannot be broadened in reexamination, the problem with this thinking is that the Patent Owner already has a case for infringement, hence the litigation. There is no need to broaden claims, regardless of whether such is permitted in patent reexamination. Whether or not a third party infringes amended/new claims is the real calculus. Further, the court notes that the goal in reexamination is to argue the broadest interpretation, regardless of confidential insight; I can’t agree with this statement either. In patent reexamination the USPTO takes the broadest reasonable interpretation of the claims, which, coincidentally captures the prior art at issue in the patent reexamination.The goal of the Patent Owner is to budge the Office off that position by argument, to amend the claims, or add new claims distinguishing from the art. In either case, the interpretation sought is a narrower interpretation that avoids the art yet still reads on the target products of the parallel litigation. Especially here, where the query processing is highly complex and VERY confidential, it is significant advantage to have such details on hand should the claims need to be amended, or a fine distinction distilled between the art of record and the claims at issue.

As always, these are just my opinions based upon a cursory review of the issues, thrown out for debate. None of my musings are representative of the positions of my firm, or anyone else for that matter.

JetsThank god football is back, where else but NFL week 1 does blind faith reign supreme and delusional face painters make crazy predictions about future outcomes….but enough about Dallas Cowboy fans. Occasionally, in the otherwise mundane world of patent reexamination, a press release is issued that is so self serving one can only conclude the author spends time face painting on Sundays.

As discussed previously, with so many high profile patent litigations subject to concurrent patent reexamination, it is quite common for self serving press releases to be issued by the participating parties. For public companies, SEC oversight and shareholder law suits tend to keep the release very factual and straightforward. Other less accountable organizations, tend to be a bit more aggressive, like my new all time favorite, Mercury Cable.

Not only is Mercury Cable seemingly guaranteeing a win, they also curiously point out that most patent reexaminations result in confirmed claims. USPTO statistics to the contrary be damned! Continue Reading Mercury Cable & Patent Reexamination Trash Talk

Does Recapture Include an Intermediate Claim Scope?

In a nutshell, the recapture doctrine prevents Patentees from broadening claims via patent reissue to “re-capture” subject matter intentionally surrendered during original prosecution. The recapture doctrine exists because a deliberate surrender of subject matter is not an “error” that is correctable by patent reissue. MPEP § 1412.02 spells out the 3-part test to identify when subject matter claimed in reissue is subject to recapture.

In 2003, the BPAI issued Ex Parte Eggert, which indicated that an intermediate claim scope presented in reissue (i.e., somewhere between what was surrendered and what was ultimately claimed) would not constitute recapture. Thus for example, if the prior art showed a hard-wired communication and the claim that issued was amended during original prosecution to recite an infrared communication, the intermediate scope sought via a broadening patent reissue might be “wireless communication.”

Back in April of this year, we questioned the continued viability of Ex Parte Eggert in view of the CAFC’s decision in North American Container. While the USPTO had publicly taken the position that Eggert would no longer be followed, some wondered whether that decision was actually consistent with the holding of North American Container. Yesterday, a decision issued, amplifying the USPTO’s reading of North American Container.

A link to the decision, Ex Parte Roger Youman and Marney Morris is found (here). In Youman, the Patentee sought to broaden certain means-plus-function elements, and modify language relating to the selection of displayed character via remote control. In the issued claims a “cycling forward and backward” through displayed characters was added to distinguish over the art of record. In the reissue this language was broadened to “changing from a first to a second character.” This change was argued by the Patentee as intermediate with respect to the surrendered subject matter and the original claim. The Patentee argued that Eggert was controlling and consistent with North American Container. With respect to the Eggert/North American Container debate, the BPAI explained:

Eggert conflicts with the Federal Circuit rationale for it was this very “intermediate scope” rationale that formed the basis for the Eggert majority’s conclusion that there was no recapture in that case. See Eggert, 67 USPQ2d at 1717-18 (holding that broadening the scope of an issued claim via reissue to have a scope between that of the issued claim and the rejected claim does not impermissibly recapture surrendered subject matter under § 251). See also Ex parte Liebermann, No. 2007-0012, 2007 WL 5211672 (BPAI 2007) (informative), at *11-12 (noting that Eggert is inconsistent with the rationale expressed in North American Container and should no longer be followed or apply to USPTO proceedings). Accord Ex parte Mostafazadeh, 2009-004238, 2009 WL 5486107 (BPAI 2009) (non-precedential), at *4-7 (explaining underlying reasoning and policy considerations in abrogating Eggert).

Some commentators believe that North American Container may not expressly overrule Eggert.  This is because, based on the facts of North American Container, the Federal Circuit arguably did not address the “intermediate scope” issue of Eggert.  Instead, in North American Container, the limitation relied on during prosecution was omitted in its entirety.

PPG Comment: Should the Patentee decide to appeal to the CAFC this would be the third patent reissue question to head to the CAFC this year. (See Ex parte Staats and Ex Parte Tanaka discussions). I’d like to see this issue explored further by the CAFC as it presents an important question for Patentees.

Not discussed above is the shocking 10 year pendency of this case, which included an unexplained 3 year gap in prosecution. This is not an exception in my experience. ….but the broken state of patent reissue within the USPTO will be left for another day.