Dueling Press Releases Over Reexamination Ordered by USPTO

In September Silver Peak filed documents with the USPTO requesting Inter Partes Reexaminations of U.S. Patent No. 7,428,573 and U.S. Patent No. 7,849,134, which are owned by Riverbed Technology.  Riverbed has accused Silver Peak Systems of patent infringement associated with these patents.

On January 8, 2013, Silver Peak Systems, Inc. announced the United States Patent and Trademark Office (USPTO) granted Silver Peak’s requests to reexamine two Riverbed Technology (NASDAQ: RVBD) patents — Silver Peak also announced that the USPTO issued Office Actions rejecting all of the claims in each patent.  See Office Action in ‘573 and Office Action in ‘134.

Apparently believing that the press announcement by Silver Peak was not 100% forthcoming, Riverbed issued its own press release relative to the reexamination of the ‘573 patent and the ‘134 patent.

“Reexamination requests are often made, as they were in this instance, by parties accused of infringing the subject patents. And the USPTO has historically granted well over 90% of these reexamination requests, meaning this initial action has become somewhat routine,” said Brett Nissenberg, Riverbed’s general counsel and senior vice president. “It is not surprising that Silver Peak’s announcement today failed to mention that Silver Peak still faces the patent infringement trial this September, and the start of USPTO proceedings will have no bearing on the trial’s outcome or the validity of the patents at the trial. Unfortunately, Silver Peak’s most creative efforts seem to be concentrated in PR and blogging rather than its products.”

So what is the truth? Is this an important event for Silver Peak or is it a run of the mill occurrence of little consequence as explained by Riverbed? In reality it is both.

It is true that an overwhelming majority of reexamination requests are granted by the United States Patent and Trademark Office. Reexamination is ordered when there is a substantial new question of patentability presented by the requesting party, which occurs in over 90% of cases. However, the standard for initially rejecting claims as being unpatentable over prior art is whether the Examiner can establish a prima facie case of unpatentability. Thus, the standards for granting reexamination and for rejecting a claim or claims in reexamination are not the same.

The substantial new question of patentability standard is lower than the prima facie case of unpatentability standard needed for a patent examiner to make a valid rejection.  In other words, just because a prior art patent or printed publication raises a substantial new question of patentability does not necessarily mean that the prior art patent or printed publication can be used either alone or in combination with the other art of record to reject the claims.  Nevertheless, it is most common that a reexamination when ordered will result in the claims all being rejected. Thus, in the clear majority of cases a reexamination request is granted if the request will support a prima facie case of unpatentability.

In fact, while not unheard of that a reexamination will be granted and the first office action will affirm all claims, many practitioners complain that the first office action in a reexamination merely mimics the requesters view of the prior art. While few things can be said as being absolutely true or always true, it is frequently the case that patent examiners will be persuaded to grant reexamination and then simply parrot the reasoning of the requesting party when preparing the first office action. There is no great surprise then as to why claims typically get rejected once reexamination has been ordered.

An office action rejecting claims in a reexamination proceeding is just the first step in a process. The patent owner has an absolute right to respond and argue with the patent examiner, as well as amend claims. Amending claims to find something that can be allowed is a common, everyday practice in the pursuit of a patent, but it is not nearly as common in a reexamination proceeding. This is because if the claims change during reexamination the allegedly infringing party will obtain intervening rights, which essentially means that they can continue to engage in what would otherwise be infringing activity with impunity. The theory is that the claims are obtained were not valid so you cannot very well change the claims to something valid and capture activities of individuals who detrimentally relied on the invalid claims as issued in determining whether to engage in activities. Thus, a requesting party can prevail either by having the claims found unpatentable or by forcing the claims to be amended.

All things being equal, it would be better for the patent owner who is asserting the patent in an infringement lawsuit to not to have to deal with a granted reexamination. Obviously, if the reexamination were instituted it would be better for the patent owner if the patent examiner determined that the claims were patentable despite a substantial new question of patentability. Here, as is common, the examiner found a substantial new question of patentability and also rejected all the claims. Thus, this is a victory for Silver Peak, but it is an extreme overstatement to say this is any kind of conclusive victory. This reexamination process is far away from any conclusion, either interim or permanent. Reexamination determinations can be appealed to the United States Court of Appeals for the Federal Circuit, so even if Silver Peak were to prevail at the USPTO that would not be the end of the case. There is a long way to go and whenever there are many more battles to be fought it is impossible to say that any one battle has dealt a decisive blow. Still, all things being equal it is a win for Silver Peak.

Frankly, I don’t think Silver Peak oversold the importance of this event, although it seems clear that they pushed some buttons at Riverbed. Having said that, Riverbed is also correct when it points out the statistical realities and that Silver Peak seems to be using this reexamination victory as part of a PR campaign. The question, however, is how will the media portray this?

The reason that Riverbed accused Silver Peak of engaging in a PR campaign is undoubtedly because everyone in the patent industry knows that the general media universally misunderstands reexamination. They see that the claims one party is being sued on have been rejected. The media will then universally jump to the erroneous conclusion that the USPTO has declared the claims to be invalid. That is simply not true. Rejections are a part of patent prosecution, and they are a part of reexamination. There will be no final declaration from the USPTO until the process completely unwinds and Riverbed has yet to rebut the rejections, so that is a long way away. Then appeal is always a possibility.

I don’t know whether anyone in the media will be interested enough in Riverbed v. Silver Peak to get this reexamination story wrong, but virtually every reexamination news story you read in the popular press overstates the importance of a rejection and elevates it to a conclusive, decisive victory for the challenger. That is simply not correct. Thus, the moral of the story is that you must beware reexamination news.

Riverbed’s lawsuit against Silver Peak, which was originally filed by Riverbed in June 2011 in the United States District Court for the District of Delaware, is scheduled for trial in September 2013. At the trial, Riverbed says they intend to seek a permanent injunction against Silver Peak’s infringement of Riverbed’s pioneering technology. Time will tell what will happen, but there are many more legal battles to fight in this patent infringement war before a winner can ultimately be declared.