CAFC: Intervening Rights for Claims Unamended During Reexam*

By Eric Guttag
September 27, 2011

CAFC Rules “Intervening Rights” May Be Based on Arguments Even Though Claims Unamended During Reexamination.

I like writing about esoteric patent law topics and the question of “intervening rights” in reexaminations/reissues is one of the more esoteric. See my 1998 JPTOS article entitledIntervening Rights: A Potential Hidden Trap for Reexamined Patent. The case of Marine Polymer Technologies, Inc. v. HemCon, Inc. is one of those rare instances in this esoteric area of patent law where the Federal Circuit announced a new “wrinkle” on when “intervening rights” apply in reexamination. Unfortunately, the rule announced by the majority in Marine Polymer Technologies (“intervening rights” apply to unamended claims based on statements made during reexamination) is squarely in conflict with the express language of 35 U.S.C. § 307(b), as Judge Lourie’s dissent vigorously (and more importantly, correctly) points out.

As my 1998 article notes, the evaluation of when “intervening rights” applies in reexamination requires a two step process. The first step is what 35 U.S.C. § 307(b) says:

Any proposed amended or new claim determined to be patentable and incorporated into a patent following a reexamination proceeding will have the same effect as that specified in section 252 of this title for reissued patents on the right of any person who made, purchased, or used anything patented by such proposed amended or new claim, or who made substantial preparation for the same, prior to issuance of a certificate under the provisions of subsection (a) of this section. (Emphasis added.)

The second step is what the relevant portion of 35 U.S.C. §252 (the reissue statute) says is meant by “same effect as that specified in section 252”:

No reissued patent shall abridge or affect the right of any person or his successors in business who made, purchased or used prior to the grant of a reissue anything patented by the reissued patent, to continue the use of, or to sell to others to be used or sold, the specific thing so made, purchased or used, unless the making, using or selling of such thing infringes a valid claim of the reissued patent which was in the original patent. The court before which such matter is in question may provide for the continued manufacture, use or sale of the thing made, purchased or used as specified, or for the manufacture, use or sale of which substantial preparation was made before the grant of the reissue, and it may also provide for the continued practice of any process patented by the reissue, practiced, or for the practice of which substantial preparation was made, prior to the grant of the reissue, to the extent and under such terms as the court deems equitable for the protection of investments made or business commenced before the grant of the reissue. (Emphasis added.)

Now that we’ve done the “two step,” a few further words of explanation are in order. Please note that 35 U.S.C. § 307(b) says “intervening rights” apply to “[a]ny proposed amended or new claim.” Put differently, 35 U.S.C. § 307(b) makes no reference to statements made during reexamination as causing “intervening rights” to apply, only “amended or new claim(s).”

Please also note the dichotomy in time periods to be considered in the portions of the reissue statute quoted above. The underlined portion of the reissue statute that says “the right… to continue the use of, or to sell to others to be used or sold… [a patented item]” refers to what is called “absolute intervening rights,” or that time period before reexamination ends. What “absolute intervening rights” means is that there is absolute right to continue to use or sell the patented item without payment of royalty if the patented item was “made, purchased or used” prior to the end of the reexamination. Put differently, there is no discretion for the court to exercise, the application of “intervening rights” being automatic.

The underlined portion of the reissue statute that says “the court… may provide for the continued manufacture, use or sale… [of the patented item]” refers to what is called “equitable intervening rights,” or that time period after reexamination ends. In this instance, the court may allow the continued manufacture, use or sale of the patented item (as well as the continued practice of any patented process) if: (a) there was “substantial preparation” prior to the end of reexamination; and (b) to the extent and under such terms as the court deems equitable for the protection of investments made or business commenced before the end of reexamination. (Please refer to my 1998 article for what “substantial preparation” is/might mean.) Put differently, the court does have “equitable” discretion to apply (or not apply) “intervening rights.”

With that brief “lesson” on the two flavors of “intervening rights,” I’ll now proceed to summarize the key facts (which are quite involved) in the Marine Polymer Technologies case. Marine Polymer Technologies, Inc. (“Marine Polymer”) asserted that its U.S. Pat. No. 6,864,245 (the ‘245 patent) was being infringed by HemCon, Inc. (“HemCon”). The ‘245 patent disclosed p-GlcNAc, a polymer extracted from chitin (a naturally occurring polysaccharide polymer that forms part of the hard outer covering of, for example, insects). The extracted polymer p-GlcNAc accelerates the process that stops bleeding (hemostasis), and is thus useful in treating wounds.

What was claimed by the ‘245 patent was a “biocompatible” version of p-GlcNAc (independent Claim 6 being representative). What became the primary focus of the dispute between Marine Polymer and HemCon was what does “biocompatible” mean. The patent specification disclosed four tests that could be used to determine “biocompatibility”: (1) an elution test; (2) an implantation test; (3) an intracutaneous injection test; and (4) a systemic injection test. Using the first (elution) test, the patent specification taught that “p-GlcNAc[ ] meets the bio-compatibility test if none of the cultures treated with [p-GlcNAc] show[s] a greater than mild reactivity” (i.e., has no more than a score of two on a reactivity scale going from zero (no reactivity) to four (moderate or severe reactivity). Three of the dependent claims (Claims 3, 12, and 20) required a specific elution test score of zero, six of the claims (Claims 4-5, 13-14, and 21-22) required elution test scores of one or two, but the remaining claims (including independent Claim 6) didn’t require a specific score based on the elution test or any other the other three biocompatibility tests.

Marine Polymer asserted that Claims 6-7, 10-11, 17 and 20 of the ‘245 patent were infringed by HemCon. During Markman claim construction proceedings, Marine Polymer argued that “biocompatible” meant “biomedically pure [p-GlcNAc] that reproducibly exhibits acceptably low levels of adverse bioreactivity, as deter-mined by biocompatibility tests.” By contrast, HemCon argued that “biocompatible” meant p-GlcNAc that was “harvested” from a particular source, or alternatively meant “suited for biomedical applications.” The district court rejected all of these suggested meanings, and instead adopting the following meaning: p-GlcNAc “polymers . . . with low variability, high purity, and no detectable biological reactivity as determined by biocompatibility tests.” (Emphasis in the original.) With this adopted meaning of “biocompatible,” the district court granted summary judgment of literal infringement of all of the asserted Claims.

Meanwhile, during the pendency of the district court proceedings, HemCon requested reexamination of the ‘245 patent. The patent examiner initially adopted a different meaning for “biocompatible” from that of the district court: “low variability, high purity, and little or no detectable reactivity.” (Emphasis in the original.) In adopting this new definition of “biocompatible,” the patent examiner noted his disagreement with the district court’s meaning of this term, and especially the alleged inconsistency of the district court’s adopted meaning relative to the specific elution test scores recited in dependent Claims 3-5, 12-14, and 20-22. The patent examiner then rejected all of the claims of the ‘245 patent based on his adopted meaning of “biocompatible” as “obvious” over three prior art references.

In response to the patent examiner’s rejection, Marine Polymer argued that the district court’s adopted meaning of “biocompatible” should be accepted during reexamination, and that “biocompatible” should be construed to mean “no detectable biological reactivity.” Marine Polymer also cancelled the six dependent claims (i.e., Claim 4-5, 13-14, and 21-22) that required an elution score of one or two. The patent examiner then approved the reexamined claims, observing that, with the cancellation of dependent Claims 4-5, 13-14, and 21-22, he “now agree[d] with the [district] court’s definition of the term biocompatible.” But the USPTO also didn’t issue its notice of intent to issue the reexamination certificate for the ‘245 patent until after the district court had issued its final judgment in favor of Marine Polymer.

On appeal, Judge Dyk (writing for the majority that included Judge Gajarsa) noted and explained the two different types of “intervening rights” discussed above, and then decided the “absolute intervening rights” question as a “pure question of law” in favor of HemCon, but remanded the “equitable intervening rights” question back to the district court as involving unresolved “fact questions.” Judge Dyk also observed that “we [the Federal Circuit] have not directly addressed whether arguments made to the PTO during reexamination can amend the scope of claims for purposes of the intervening rights doctrine.” But Judge Dyk then followed with “we have consistently held that arguments made to the PTO on reexamination can create an estoppel or disavowal and thereby change the scope of claims even when the language of the claims did not change,” citing primarily the 1996 case of Cole v. Kimberly-Clark Corp. (statements made during reexamination to distinguish prior art effectively narrowed the scope of reexamined claims), as well as the more recent 2011 case of American Piledriving Equipment, Inc v. Geoquip, Inc. (patentee disclaimed claim scope on reexamination by arguing that certain claims should be allowed over the prior art because the claimed “integral” components were comprised of “one piece.”). In fact, Judge Dyk opined that “[w]e see no reason why this rule, giving effect to disclaimer of claim scope during reexamination or reissue, should not also apply in the context of intervening rights,” further observing that a contrary rule “would allow patentees to abuse the reexamination process by changing claims through argument rather than changing the language of the claims to preserve otherwise invalid claims and, at the same time, avoid creating intervening rights as to those claims.” (Judge Dyk also asserted that the meaning adopted by the district court for “biocompatible” was erroneous, and that, instead, the specification of ‘245 patent indicated that “biocompatible” meant achieving an elution test scored of zero to two, especially in view of dependent Claims 4-5, 13-14, and 21-22 that were cancelled during reexamination.)

Whether patentees might “abuse the reexamination process” in this manner still doesn’t address how this rule opined by Judge Dyk comports with the express language of 35 U.S.C. § 307(b) as to when “intervening rights” applies. The express language this statute says “intervening rights” requires that the reexamined claims be “amended” or “new.” Statements relative to those unamended claims are just that, statements which might bear on claim scope for infringement purposes (as is clear from the cited Cole and American Piledriving Equipmentcases), but not for “intervening rights” purposes. Besides the inconsistency with the express language of 35 U.S.C. § 307(b) (which Judge Lourie duly noted in his dissenting opinion), Judge Dyk’s basis for permitting “intervening rights” to apply to Marine Polymer’s admittedly unamended Claims 3, 12, and 20 (by analogy to the doctrine of “disavowal of claim scope”) is, in my opinion, also legally flawed analogy. The doctrine of “disavowal of claim scope” is a corollary of the judicial doctrine of “prosecution history estoppel.” By contrast, “intervening rights” is not a judicial doctrine, but is, instead, a creation of the reexamination/reissue statutes. Any supposed basis for this “analogy” simply doesn’t pass muster in my book.

Besides questioning the new “intervening rights may apply by virtue of arguments made during reexamination relating to unamended claims,” dissenting Judge Lourie was also not happy that the Federal Circuit majority “preempted” the opportunity for the district court to weigh in with the reexamination results in view: “We should have the benefit of the district court’s view on the effect of the reexamination proceeding rather than review it ourselves in the first instance.” Judge Lourie’s dissenting opinion also makes an interesting assertion that the majority may have conducted the above noted “two step” review for “intervening rights” in the reverse (and thus incorrect) order, i.e., by first looking at the reissue statute (35 U.S.C. § 252), then the reexamination statute (35 U.S.C. § 307(b)). This observation by Judge Lourie does have some traction as Judge Dyk’s opinion refers (confusingly) to “intervening rights” not “apply[ing] if the accused product ‘infringes a valid claim of the reissued patent which was in the original patent.’” (Emphasis added.) Judge Dyk may have also conflated another issue in applying “intervening rights,” namely when are changes (amendments) to the claims deemed sufficient such that the amended reexamined claims are no longer “identical.” See the seminal 1984 Federal Circuit case of Seattle Box Co. v. Industrial Crating & Packing, Inc. (which defines “identical” for “intervening rights” purposes to mean “without substantive change”), which is discussed in my 1998 article.

No matter what justification Judge Dyk urges for the majority’s ruling in Marine Polymer Technologies to apply “intervening rights” to the unamended claims of the ‘245 patent, Judge Lourie’s is correct that 35 U.S.C. § 307(b) means what it says, and says what it means. The express language of 35 U.S.C. § 307(b) simply does not justify applying “intervening rights” to unamended claims based solely on arguments made during reexamination. While Judge Dyk may wish that the doctrine of “disclaimer of claim scope” should apply so that “intervening rights” might attach to unamended claims by virtue of statements made during reexamination, that’s Congresss call, not the Federal Circuit’s.

*© 2011 Eric W. Guttag

The Author

Eric Guttag

Eric Guttag  
Mr. Guttag has over 38 years of corporate and private intellectual property law experience on patent, trademark, copyright, trade secret and unfair competition matters, computer and Internet law, including patent application drafting, prosecution, and patentability studies; infringement and validity studies; international patent prosecution; patent and know-how licensing; consulting, confidentiality, clinical study and research agreements; trademark searches and opinions; trademark registration and prosecution; trademark freedom-to-use studies and trademark litigation and dispute resolution.

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