Petition Seeks Rare En Banc Review to Clarify Whether PTAB Can Overrule Article III Courts

By IPWatchdog
October 21, 2019

“The so-called ‘Fresenius / Simmons preclusion principle’ has received sharp criticism from academics and jurists. It is legally incorrect.” – Chrimar petition Systems, Inc. filed a petition for en banc rehearing with the Federal Circuit on October 21 asking the full Court to review the so-called Fresenius-Simmons preclusion principle. The petition has a high hurdle to meet, as the underlying Federal Circuit decision was nonprecedential, but the petitioners argue that the case qualifies as a rare exception warranting en banc review.

In Chrimar Systems, Inc. v. ALE USA, Inc. FKA Alcatel-Lucent Enterprise USA, Inc., a jury initially found U.S. patent No. 8,942,107 for A Piece of ethernet terminal equipment valid and infringed by ALE in 2016, and the Federal Circuit affirmed that decision in May 2018. The case was remanded on a claim construction error relating to a different patent, but the CAFC said that the partial remand was “immaterial to damages because any damages that would result from the alleged infringement of the [remanded] ’012 patent also results from the infringement of the ’107 and ’760 patents.”

Separately, the Patent Trial and Appeal Board (PTAB) held in proceedings between Chrimar and a different company that the claims at issue in the case with ALE were unpatentable (Chrimar Systems, Inc. v. Juniper Networks, Inc.). Chrimar pointed out in its petition that the PTAB made this determination under a lighter burden of proof than did the Article III courts, but the Federal Circuit nonetheless affirmed the PTAB’s decision in September 2019 under Rule 36 and separately vacated the May 2018 judgment and remanded to the district court for dismissal.

In vacating the May 2018 (amended June 1) judgment, the Court explained:

Our affirmance of the Board’s decisions of un-patentability of the patent claims at issue in the present case has “an immediate issue-preclusive effect on any pending or copending actions involving the patent[s].” XY, LLC v. Trans Ova Genetics, 890 F.3d 1282, 1294 (Fed. Cir. 2018). This is such a case under Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330 (Fed. Cir. 2013), and related cases. It does not involve the special circumstance of a “fully satisfied and unappealable final judgment” like the one in Western-Geco L.L.C. v. ION Geophysical Corp., 913 F.3d 1067, 1072 (Fed. Cir. 2019).

In their brief, Chrimar argued that “the so-called “Fresenius / Simmons preclusion principle” [deriving from John Simmons Co. v. Grier Bros. Co. and Fresenius USA, Inc. v. Baxter Int’l, Inc.] has received sharp criticism from academics and jurists. It is legally incorrect. And, this principle incentivizes unfairness for patentees, motivates gamesmanship by accused infringers, and leads to wasted judicial effort by trial and appeals courts.”

The petition for en banc rehearing makes six key points:

I. The Panel Decision Did Not Apply the Restatement (Second) of Judgments Because Fresenius Incorrectly Requires Ignoring the Restatement;

II. The Fresenius Panel Incorrectly Believed Itself Bound by Inapposite Supreme Court Authority;

III. The “Fresenius / Simmons Preclusion Principle” Violates Separation of Powers By Allowing Administrative Outcomes to Nullify Otherwise Final Article III Judgments;

IV. Expanding the “Fresenius / Simmons Preclusion Principle” Has Deepened the Circuit Split;

V. A Post-2014 Supreme Court Decision Undermines Freseniu; and

VI. Criticism of Fresenius Should Lead to En Banc Review.

With respect to point III, the petition notes that several judges of the Court have expressed concern over the constitutionality of allowing an administrative agency “to nullify a court judgment that has otherwise resolved the merits and damages of a patent infringement suit.” Judges O’Malley, Wallach, Rader and Newman have all made such statements in dissents or agreement with aspects of those dissents.

As to Chrimar’s argument for rehearing of a nonprecedential decision, the petition contends that this meets the standard set by the Federal Circuit’s Rule 35 Practice Note, which states that rehearing of nonprecedential decisions is “rarely appropriate”. Chrimar argues that this is that rare circumstance because members of the Court have “sharply criticized” the legal standard applied by the panel in the underlying case and because the Supreme Court reviews Federal Circuit decisions even when they aren’t precedential (citing cases such as Oil States and KSR v. Teleflex).

The petition concludes:

“As numerous Judges of this Court already recognize, the time has come to harmonize the Federal Circuit with Supreme Court precedent and the Restatement, unsplit the circuits, restore constitutional validity to our system of parallel track patentability litigation, and eliminate the waste and gamesmanship that current precedent incentivizes.”

Amicus briefs are due within 14 days (November 4). The request of even one judge would require a response from ALE USA, after which an internal vote on whether to go en banc will be held.

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Copyright: donscarpo 


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Discuss this

There are currently 16 Comments comments.

  1. Mike October 22, 2019 6:02 am

    The trial court held the patent was not invalid based on the arguments and evidence before it. It did not find the patent valid (how could it? Courts don’t have the resources to scour the earth for prior art or even to consider all invalidity possibilities.) The PTO found the patent invalid based on different arguments and evidence. Let’s assume the PTO got it right. Do we really want defendants to pay damages for infringing an invalid patent? Will that make the patent system seem fair to the public or will it draw more “patent troll” accusations and weaken public trust in the patent system?

  2. Bemused October 22, 2019 7:29 am

    Yet another trap/nail in the coffin for patent holders courtesy of the minefield called the AIA.

    If you’re successful against one infringer, it effectively prevents the assertion of the patent(s) against other infringers until the defendant/infringer in the first case has exhausted all appeals. If the patent holder doesn’t do that then you can end up like Chrimar Systems: having your victory in the first case wiped out by the PTAB in a subsequently-filed case.

    And during the time that you’re waiting for the defendant/infringer in the first case to exhaust all appeals (a process that can take several years AFTER the conclusion of a trial), your patent term is running out…

    Until the AIA is repealed and this abomination called the PTAB has been disbanded there will not be a U.S. patent system that protects inventors/patent holders.

  3. Bemused October 22, 2019 8:23 am

    Mike@1: Congrats, you win ignorant-post-of-the-day (maybe the-year).

    First, Courts don’t “scour the earth for prior art”. Defendants (and/or their legal counsel) do. And if you have had ANY experience in litigating patents you would know that defendants do a very good job in “scouring”.

    Second, Courts do not have to “consider all invalidity possibilities”. Only the invalidity arguments that defendants raise. And believe me, they raise them all.

    Third, why “assume the PTO got it right”? Why would you give more weight to the determination of a panel of administrative judges (who’s job security directly hinges upon attracting more filings by infringers) who review patents with no presumption of validity and who use a lower standard of invalidity (all of which skew PTAB decisions against patent holders).

    You asked “Do we really want defendants to pay damages for infringing an invalid patent”? Wrong question.

    Do we really want patents issued by the PTO and subsequently upheld (i.e. not invalidated) by a court, a jury AND a panel of judges on a federal appellate court to always be subject to subsequent challenges by an administrative tribunal that operates without the safeguards and protections which were promised to inventors when they disclosed their invention to the public?

  4. Jonathan October 22, 2019 11:18 am

    The cert petition is a good try. However, the problem with this cert petition is that the US Supreme Court has applied a more flexible approach to “finality” in the past 20 years and the separation of powers argument is not support by the Roberts Court’s recent opinions. I would have focused on the res judicata/preclusion issue, in this area the Court showed more interest in fine-tuning in the past 10 years.

  5. Pro Say October 22, 2019 11:28 am

    Well said Bemused.

    Well said.

  6. Paul Morinville October 22, 2019 11:50 am

    “Until the AIA is repealed and this abomination called the PTAB has been disbanded there will not be a U.S. patent system that protects inventors/patent holders.”

    No protection means no early stage investment in inventors and the death of American innovation. But we should be thankful. What’s good for big tech is good for China and since they are now the world’s manufacturing and innovation hub, we would harm global innovation by eliminating the PTAB.

  7. Jam October 22, 2019 11:58 am

    Mike @1

    Let’s assume the trial court got it right. Do we really want plaintiffs to receive no compensation for a valid and infringed patent? Will that make the system seem fair to the public or will it draw more “patent troll” accusations and weaken public trust in the patent system?

  8. Josh Malone October 22, 2019 10:47 pm

    What a heritage we have tossed out. Jury trials mean nothing in the USA? A kangaroo court can make up their own rules and procedures and an entire judicial system and over rule a real court? Can I have my country back now?

  9. Mike October 23, 2019 7:08 am

    Well, I spent most of my 20 year career as a patent lawyer litigating patent infringement on both sides. Bemused missed my point, which is it’s not up to trial courts to determine validity, just to determine the defendant didn’t carry its burden to prove invalidity. If someone else proves invalidity, nobody should pay damages for infringing an invalid patent. Comments on this page appear to be one sided either plaintiffs’ counsel or small client prosecutors. It’s a shame that alternative points of view that the system actually works are treated so disrespectfully.

  10. Disenfranchised Patent Owner October 23, 2019 10:01 am

    Thank you for eloquently describing the plight of patent owners in today’s anti-inventor legal environment. The AIA truly is the American Inventors’ Abomination.

  11. Anon October 23, 2019 7:43 pm


    Please clarify for me: when you say “20 year career as a patent lawyer litigating” do you mean that you are a litigating attorney who litigates patent matters or that you are an actual patent attorney (with registration number) that protects innovators (through prosecution and through litigation) and that you also litigate against innovators?

    The background of the registration number and working to protect innovation is something that most definitely bears distinguishing over a litigator that does not have such — no matter how many decades of litigation.

    But aside from that (and more to your point vis a vis “invalid patents”), I think that you are NOT being exactly consistent.

    Do you recognize that the different forums of the patent office and the courts operate under different sets of rules and that that just because the patent office find a patent invalid does NOT mean that they “got it right” when a court finds that same patent not invalid? – for this point, I would “change the situation” slightly and posit my counter with the goings-on being under the same evidence and arguments.

    If you are one with experience (reg number, prosecution) helping innovators, you would be aware that the presence and level of the presumption of validity stems from the fact that the situation IS a “one against many” and that the one cannot “prove a negative.”

    You seem to take affront too easily at those who react against your posts. Without recognizing some of the fundamentals, your over statements are NOT just “alternative points of view that the system actually works.”

    You seem to gloss over the facts that a large number of validly granted patents are being aimed at under vastly different sets of rules (and in one critical manner, the goings-on in the Office occur AFTER a taking of a stick in the bundle of property rights – the presence and level of presumption of validity).

    You over-state the “actually works” by ignoring the collateral damage and differences in forums.

    Are there granted patents that ARE invalid? Yes, without a doubt. But if you do not understand the presence and level of the presumption of validity and WHY such exists, your view of “actually works” is very much flawed.

  12. TFCFM October 23, 2019 8:15 pm

    What a waste of a petition.

    A stupid jury or poor patent challenger yielding a jury verdict of “not invalid” is not in any sense “overturned” by a PTAB determination that another validity challenge demonstrated the patent invalid.

    Were that my clients were so utterly dumb that I could bill them for pointless, wasteful work like this petition.

  13. Anon October 23, 2019 10:36 pm


    Maybe read the points presented before declaring that there are no such points (and only use that gloss of yours).

    Or is this more of your type of “engagement?”

  14. TFCFM October 25, 2019 10:01 am

    Anon: “Maybe read the points presented before declaring that there are no such points…

    Whatever you may be attempting to say, nothing that appears on this page above my comment #12 affects my opinion in comment #12.

    Commenter “Mike” is hardly the only one to have noticed the pro-patentee,-law-and-common-sense-be-damned bias of most commenters (and authors) here.

  15. Anon October 25, 2019 2:36 pm

    nothing that appears on this page above my comment #12 affects my opinion in comment #12.

    Clearly then, you did not read the article itself.

    Your statement is a condemnation of your position here. I am pretty sure that such was not your intent, but that IS the result.

    As for Mike, he has some decent points — and there were some decent rebuttals. You however, have made up your made without taking into regard ANY of the rebuttals, and (AGAIN) have dismissed things (even as you occasionally claim to be open to engaging). You have shown yourself to be the opposite.

  16. TFCFM October 30, 2019 12:11 pm

    Nothing that appears on this page above my comment #12 — including the article itself — affects my opinion in comment #12.

    That you disagree with my opinion is your prerogative.