Companies accused of patent infringement are increasingly looking at patent reexamination at the Patent Office as an attractive avenue for challenging the patent’s validity. Reexamination offers a number of well-known advantages as a forum for such validity challenges over District Court, among them the absence of a presumption of validity and a lower burden of proof. Less well-known, however, is the potential for reexamination to eliminate an accused infringer’s liability for past damages – even if the PTO confirms the validity of a patent in reexamination, the accused infringer might be entitled to “intervening rights,” effectively eliminating past damages, if the patent owner amends its claims to distinguish its invention over the prior art. Even when the patent owner succeeds in the reexamination, if it also amends its claims, it can lose its right to collect damages for infringement occurring prior to the end of the reexamination.
This possibility of “intervening rights” received a big boost last week with the CAFC’s decision in Marine Polymer Techs. v. HemCon, finding that such rights may be created even without an amendment of the claims if the patent owner presents arguments in reexamination that “effectively amend” the claims.
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.
The America Invents Act, which just recently passed by the Congress and sent to the White House for President Obama’s signature, is the most significant patent reform legislation in decades, and it promises to change virtually all of patent practice as we know it over the next 18 months. Some pieces of the legislation will go into effect almost immediately, but other aspects of the legislation will become effective 12 months and 18 months after the bill becomes law. We are in for the largest set of changes anyone practicing has ever faced. The 1952 Patent Act codified what was in existence, the American Invents Act shakes the very foundation of patent law and patent practice.
Reexamination is a low-cost but seldom used alternative to litigation for determining the patentability of the claims in an issued patent. Despite what I write below, I am a fan of reexamination and I think that the fears associated with the process are largely unfounded. Reexamination could and should be used more often than it is, and if you are a defendant in an ongoing patent infringement litigation and you are not simultaneously involved in bringing a reexamination you need to ask yourself why not!
Yes, the reexamination process is slow. Yes, the reexamination process doesn’t work as well as it could or should. Yes, reexamination it adds extra cost. But the statistics don’t lie. In the right case reexamination is extremely effective. Unfortunately, some patent litigators counsel clients to steer clear of reexamination. This may be good advice, or it might just be because the litigator isn’t familiar with reexamination, or in some cases because you recommend what you know and do. The old saying — if you are a hammer all the world looks like a nail — comes to mind. So despite what follows relating to how Congress could and should make reexamination better, if you are on the wrong side of a patent infringement litigation you really should get some impartial advice about the pros and cons of pursuing a reexamination strategy before writing it off as a bad idea.
In view of Therasense, the Patent Office is proposing to revise the materiality standard for the duty to disclose information to the Office in patent applications and reexamination proceedings. It is the belief of the Patent Office that the Therasense standard will reduce the frequency with which applicants and practitioners are being charged with inequitable conduct, thereby reducing the incentive for applicants to submit marginally relevant information to the Office. Thus, the Therasense standard should curtail the practice of filing Information Disclosure Statements that refer to boxes full of prior art that is of marginal significance, allowing patent examiners to focus on that prior art that is most relevant. The USPTO adopting the Therasense standard could, as a result, lead to improved patent quality and even a streamlining of prosecution in at least some cases.
The vast number of America’s companies that need patents to prosper and grow should fear the post-grant provisions for challenging patents in H.R. 1249, the patent reform bill passed last month by the House of Representatives. In a system already plagued by delays in granting patents, they threaten to delay courts from enforcing patents once finally granted. This threat has received little attention, perhaps because advocates of the bill promise promptness that they cannot deliver.
Advocates’ promise of completion in one year rings hollow for several reasons. First, the one-year deadline does not count the year, on average, that the inevitable appeal will take. Second, the deadline is extendable to 18 months and, in any event, not enforceable. Third, the one year does not count the petition stage before the proceeding begins. That adds at least another 5 months—two months for the patent owner’s response plus three months, again unenforceable, for the patent office to decide whether the challenger’s petition warrants initiating such a proceeding. So, total elapsed time usually will be not one, but almost three years.
Article One Partners is at it again, this time with four patents in the cross-hairs owned by the company suing Apple App Developers for patent infringement — Lodsys. Article One Partners has made a name for itself as the premiere crowd sourcing, prior art locating company in the world. Now they have three different studies (see below) aimed squarely at the four Lodsys patents. In addition to being used against Apple App Developers, these four patents were also used earlier this week to sue the New York Times and others, and earlier still against Best Buy, Adidas, CVS and others. Indeed, it seems that Lodsys is becoming quite a nuisance for defendants, which places them at or near the top of the patent troll most wanted.
Paul Allen’s road to monetize his huge patent portfolio took an abrupt detour when Judge Marsha Peckham of the Western District of Washington stayed Allen’s eleven infringement cases, pending completion of reexamination proceedings for the patents-in-suit.
Allen, a co-founder or Microsoft, established Interval Research Corporation and then set about acquiring an enormous number of patents, assigning them to Interval Research. For years, his patents sat quietly as idle assets. The subject of constant speculation in the high-tech community, Allen’s patents remained untested. But on August 27, 2010, Allen, through corporate subsidiary Interval Licensing, sued a who’s-who of computer and Internet companies in the District Court in Seattle, notably AOL, Apple, eBay, Facebook, Google, Netflix, Office Depot, OfficeMax, Staples, Yahoo!, and YouTube. Apart from a minor hic-up in December, when Judge Peckham ordered Interval Licensing to state the basis for its infringement allegations with greater specificity, see Complaint Dismissed, the case proceeded smoothly.
The United States Patent and Trademark Office (USPTO) is seeking public comment on a proposal to streamline the procedures governing ex parte and inter partes patent reexamination proceedings. The timing of this announcement, which appeared in the Federal Register on April 25, 2011, seems curious to me. With patent reform circulating in the House of Representatives does this signal a belief that on the part of the Patent Office that patent reform is dead? The patent reform passed by the Senate and that being considered by the House has revised post-grant review proceedings, so wouldn’t it be wise to wait to revamp reexamination until after patent reform passes, that is if it seems likely to pass?