Courts have recently been faced with the issue of whether evidence of parallel reexamination proceedings should be considered at trial.  In our prior posts, “Is Evidence of Parallel Reexamination Proceedings Admissible at Trial? (Parts I, II and III)”, we discussed using pending reexamination proceedings to support invalidity contentions, prove inequitable conduct, and rebut allegations of willful infringement.  Accused infringers have also attempted to use evidence of parallel reexamination proceedings to support and oppose motions for preliminary injunction.

Reexamination Evidence Used to Support or Oppose Motions for Preliminary Injunction

When deciding to grant or deny a preliminary injunction, the courts consider four factors: (1) the likelihood of success on the merits; (2) the irreparable harm if the injunction is not granted; (3) the balance of hardships between the parties; and (4) the public interest.  Procter & Gamble Co. v. Kraft Foods Global Inc., 459 F.3d 842, 847 (Fed. Cir. 2008).  To defeat a showing of likelihood of success on the merits, alleged infringers will attempt to attack the infringement, validity, or enforceability of the patent at issue.  Specifically, to diminish likelihood of success on the merits with regard to a patent’s validity, accused infringers have attempted to introduce evidence that the patent is undergoing parallel reexamination proceedings.

It is not only accused infringers who have attempted to benefit from parallel reexamination proceedings in this way.  Some patentees have been successful in introducing evidence of reexamination as well.  Where a reexamined patent has issued and the reexamination was favorable to the patentee, such evidence has been used to bolster the patentee‘s likelihood of success on the merits, and thereby obtain a grant of a preliminary injunction.  See Procter & Gamble Co. v. Kraft Foods Global Inc., 549 F.3d 842 (Fed. Cir. 2008).

The decision in In re Seagate seems to have spurred many of these recent attempts to use evidence of parallel reexamination proceedings in this way.  Seagate primarily discusses willfulness and attorney client privilege, however, the Federal Circuit made a handful of observations regarding preliminary injunctions.  One observation favored by accused infringers is that “a substantial question about invalidity or infringement is likely sufficient … to avoid a preliminary injunction” 497 F.3d 1360,1374 (Fed. Cir. 2007).  The phrasing of this statement, “substantial question about invalidity or infringement,” rings very similar to the “substantial new questions of patentability,” standard required for granting requests for reexamination.  Herein lies the tension between some district courts — when is a “substantial new question of patentability” (required to obtain a grant of a request for reexamination) sufficient to indicate a “substantial question about invalidity” (required to defeat a motion for preliminary injunction)?

As discussed in a previous post, in Lucent Technologies, Inc. v. Gateway, Inc., the Southern District of California found the grant of a request for reexamination was sufficient to create a “substantial question about invalidity.”  2007 US. Dist. LEXIS 95934, at *18-19 (S.D. Cal. Oct. 30, 2007).  Although this was a case discussing willfulness, the court placed heavy weight on the aforementioned Seagate language: “The Seagate court observed that a substantial question about invalidity or infringement is likely sufficient not only to avoid a preliminary injunction, but also a charge of willfulness based on post-filing conduct…. To the extent the Court accepts the PTO’s determinations that there are substantial questions of validity, the Court grants partial summary judgment of no willful infringement with respect to post-filing conduct.” Id.

In Procter & Gamble Co. v. Kraft Foods Global Inc., the Federal Circuit agreed.  In the Procter & Gamble case, the district court had denied the patentee a preliminary injunction.  The patentee appealed.  In reviewing the denial, the Federal Circuit noted that the patentee had previously obtained a reexamination certificate confirming the patentability of all the claims in the patent.  Procter & Gamble, 549 F.3d at 844.  In light of this information, the Federal Circuit vacated the denial of the preliminary injunction and remanded to the district court. Id. at 850.  The Federal Circuit instructed, “on remand, the district court should consider the current posture of the inter partes reexamination proceedings at the PTO when evaluating [the patentee’s] likelihood of success on the merits.  To the extent that the [alleged infringer] would challenge the validity of the claims of the [patent at issue] in the district court on the same bases it raised in the reexamination, the examiner’s confirmation of the patentability of every claim in the [patent at issue] may be relevant to [the patentee’s] likelihood of success.”  Id. at 847-848. Thus, at least under these circumstances, the Federal Circuit felt that the outcome of the reexamination was probative to the patentee’s “likelihood of success on the merits.”  The court cautioned, however, that “the PTO does not appear to equate the ‘substantial new question of patentability’ standard for whether reexamination should take place, see 35 U.S.C. §312(a), with the ‘substantial question of validity’ standard by which a defendant may prevent a patentee from demonstrating a likelihood of success on the merits….” Id. at 848.

District courts have also held that the grant of a request for reexamination is probative to the likelihood of success on the merits.  See, e.g., Pergo, Inc. v. Faus Group, Inc., 401 F. Supp. 2d 515, 524 (E.D. N.C. 2005) (“[W]hile the grant of a motion for reexamination is not conclusive as to the issue of validity, it is probative to the issue of whether defendants have raised a substantial question of validity.”).  Even more courts have done so when, during reexamination proceedings, the patent office issued a rejection.  In Power Integrations, during the reexamination of the relevant patent, the patent office had issued a rejection based on prior art.  Power Integrations, Inc. v. BCD Semiconductor Corp., 2008 U.S. Dist. LEXIS 108333, at *24 (D. Del. Nov. 4, 2008).  The patentee voiced concern that if courts began denying preliminary injunctions based on pending reexamination proceedings, the result would be that every defendant would file a reexamination request and no preliminary injunctions would issue in patent infringement cases.  Id. at *31.  The court responded, “it is the PTO’s Office Action rejecting claim 1 of the [patent at issue], and not merely the grant of the reexamination request, that I find raises a substantial question of validity which has not been rebutted here.”  Id.  The court then found that the grant of the request for reexamination and subsequent rejection of the relevant claim in the patent at issue raised a substantial question of validity, and therefore, the patentee failed to prove likelihood of success on the merits.  Id. at *33.

Other district court cases have come to similar conclusions.  See DUSA Pharm., Inc. v. River’s Edge Pharm., LLC, 2007 U.S. Dist. LEXIS 16005 (D.N.J. Mar. 6, 2007); Ohio Willow Wood Co.v. Alps S. Corp., 2009 U.S. Dist. LEXIS 87543 (S.D. Ohio Sep. 8, 2009).  In Avery Dennison, Corp. v. Alien Technology Corp., an initial rejection had also been issued in a pending reexamination proceeding.  626 F. Supp. 2d 693, 700 (N.D. Ohio Mar. 18, 2009).  There, the court noted that “[t]here is, admittedly, some practical appeal to the argument that the Court should assess the validity of the patent independent of PTO actions taken as a matter of course.  ‘Substantial question,’ however, is a relatively low standard that… merely requires [the alleged infringer] to engender ‘doubt’ regarding the validity of the [patent at issue].”  Id. at 702.  The court found that it “could not simply ignore” the grant of the reexamination request and the initial rejection — that “the PTO’s action [was] an important consideration in this case.”  Id. at 704-707.

Not every district court has found that “substantial questions about invalidity” are satisfied by the grant of a request for reexamination.  See Safoco, Inc. v. Cameron Int’l Corp., No. H-05-0739 (S.D. Tex. Jul. 31, 2009).  In Safoco, the court cited Procter & Gamble’s cautionary language, stating “[t]he USPTO’s ‘substantial new question of patentability’ standard for granting a reexamination is not equivalent to and is less stringent than the ‘substantial question of  validity’ standard that a defendant may satisfy to prevent the court from imposing a preliminary injunction.” Id. at 57-58.  The court thus concluded that the grant of reexamination was “only a single factor to consider.” Id. at 58.

The Eastern District of Texas agreed, coming to a similar conclusion in Fiber Systems International, Inc. v. Applied Optical Systems, Inc. No. 2:06-cv-473 (E.D. Tex. Mar. 31, 2008) (order adopting the report of the Magistrate Judge).  The Fiber Systems court found that although reexamination had been granted, this was not equivalent to the finding of a “substantial question about invalidity” for the purposes of a preliminary injunction.  Fiber Sys. Int’l, Inc. v. Applied Optical Sys., Inc., No. 2:06-cv-473, at 5 (E.D. Tex. Mar. 12, 2008) (report and recommendation of the Magistrate Judge).

Recently, the Federal Circuit again considered the issue.  See Automated Merch. Sys., Inc. v. Crane Co., 2009 U.S. App. LEXIS 27667 (Fed. Cir. Dec. 16, 2009).  In that opinion there is some indication that the Federal Circuit will continue to lean toward considering grants of requests for reexamination in the context of preliminary injunctions.  In the Automated Merchandising Systems case, the Federal Circuit found that the district court erred in granting both a stay pending the outcome of reexamination and a preliminary injunction.  Id. at *14-16.  In an doing so, the court found that “a stay pending reexamination is appropriate only if there is a substantial issue of patentability raised in the reexamination proceeding, while the injunction against the accused infringer is appropriate only if there is no substantial issue of patentability.”  Id, at *14-15.  The Federal Circuit then concluded, “Because it logically seems that there cannot simultaneously be a substantial issue of patentability and no substantial issue of patentability, stays pending reexamination are typically inappropriate in cases in which preliminary injunctions are appropriate.” Id.   Notice, that in the former quotation, the court did not say “the injunction against the accused infringer is appropriate only if there is no substantial issue of validity,” as is the usual standard for finding a likelihood of success on the merits.  Rather, the Federal Circuit cited something much more related to the reexamination standard — “substantial issue of patentability.”  Unless this was a mere oversight, it appears to indicate that the Federal Circuit considers the two standards at least very closely related.

As a result of the popularity of reexamination, courts are frequently faced with the issue of whether evidence of parallel reexamination proceedings should be considered at trial.  In our previous posts, “Is Evidence of Parallel Reexamination Proceedings Admissible at Trial? (Parts I and II),” we discussed using pending reexamination proceedings to support invalidity contentions and prove inequitable conduct.  Accused infringers have also attempted to use evidence of parallel reexamination proceedings to rebut allegations of willful infringement.

Reexamination Evidence Used to Rebut Willfulness

Willful infringement exists where an accused infringer acted “despite an objectively high likelihood that its actions constituted infringement of a valid patent” and the “objectively defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer.”  In re Seagate Technology, LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007).  Thus in order for willful infringement to be found, the accused infringer must have known or should have known that the relevant patent was valid.  Willfulness is to be evaluated “under the totality of the circumstances.” Id. at 1369.  Thus, alleged infringers accused of willful infringement have asked the court to consider the existence of pending reexamination proceedings.  The theory asserted by alleged infringers is typically a variant of the following: where the PTO has granted a request for reexamination, and thus concluded that substantial questions of patentability exist, an alleged infringer could not have acted “despite an objectively high likelihood that its actions constituted infringement of a valid patent.”  In other words, where the PTO has called into question the validity of the patent by granting reexamination, any infringement thereafter could not have been willful. Continue Reading Is Evidence of a Concurrent Reexamination Admissible in Litigation? (Part III of IV)