Patent Law Blog (Patently-O)

Update on Supplemental Examination

by Dennis Crouch

Supplemental Examination has been available as a post-grant option since September 16, 2012.  I just received confirmation from the USPTO between Sept 16, 2012 and November 18, 2012, a total of four (4) request for Supplemental Examination have been filed, serial numbers 96/000,004 through 96/000,007.

I discussed the ‘007 application earlier. The remaining applications were apparently defective and thus have not yet been given a filing date. 

Tags: Supplemental+Examination

Harvard’s US OncoMouse Patents are All Expired (For the Time Being)

By Dennis Crouch

Harvard College v. Kappos, 12-cv-1034 (E.D.Va. 2012)

Harvard's patented OncoMouse has been a bestseller for cancer research here in the US. Two Harvard researchers took an available laboratory mouse and inserted a heritable cancer-causing gene into the creature's DNA. In the US, Harvard owns three patents covering aspects of the mouse and its creation that are exclusively licensed to Du Pont. U.S. Patent Nos. 4,736,866, 5,087,571, and 5,925,803. The patents were filed pre-1995 and thus have a term that lasts for 17 years from the patent issuance. The first two 17-year terms have expired, but the third could last until 2016 – except for the terminal disclaimer discussed below.

In 2010, an anonymous third party requestor (TPR) filed a reexamination request for the '803 patent. Last June, the USPTO confirmed the patentability of the challenged claims. However, the USPTO agreed with the TPR that a broadly worded terminal disclaimer filed in the parent '571 application meant that the'803 patent also expired in 2005. Thus, it doesn't matter whether the claims are valid over the prior art because they are expired. Because the patent had expired, the USPTO refused to allow Harvard to add additional claims to the patent during reexamination.

In the terminal disclaimer filed in the parent case, the patentee agreed to disclaim the term of the parent patent as well as any patent claiming benefit of the patent under 35 U.S.C. §120. Since the '803 patent claims priority to the parent under §120, that disclaimer seems to be effective to limit the '803's term as well. However, the disclaimer was never particularly filed in the '803 case (only its parent). Further, nothing in the record indicates that the examiner acknowledged receipt of the disclaimer in the parent case and there is no evidence that the terminal disclaimer fee was actually paid. The examiner did, however, remove the double patenting rejection had been blocking the issuance of the parent case and the filed terminal disclaimer authorized payment of the fee.

In the reexamination, the USPTO gave full support the examiner's decision that the terminal disclaimer limited the '803 patent term – finding that Harvard could have corrected the problems with the filing back when the patents were pending but that it is too late now.

It is only now that the non-standard disclaimer language of the terminal disclaimer filed in 1989 has an effect … [that] the patent owner [is] attempting to argue that ther terminal disclaimer had no legal effect. . . . [B]ecaues patent owner did not timely seek withdrawal of the terminal disclaimer from the parent patent as per the procedures in MPEP [at the time], patent owner cannot seek now to nullify the effect of the terminal disclaimer after the issued patent has reached its expiry date.

In response, Harvard has now filed a civil action in the Eastern District of Virginia asking the court to overturn the USPTO decision. For now, however, it appears that the mice are finally free although their title (OncoMouse) is still a registered trademark owned by DuPont.

Stay Pending Reissue: Timing and Blog Reliability

Tyco Fire Products LP v. Victaulic Co., 10-cv-4645 (E.D. Pa. October 4, 2011)

by Dennis Crouch

In September 2010, Tyco Fire filed suit against Victaulic alleging infringement of two fire sprinkler system patents. U.S. Patent Nos. 7,793,736 and 7,819,201. Almost one-year into the lawsuit, Tyco Fire filed a pair of reissue application with the PTO – admitting that that both patents have defects that need correcting. The reissue applications request that the PTO narrow the subject matter being claimed with the apparent hope of avoiding an adverse invalidity decision in court.

After filing the reissue applications, the patentee requested that the district court stay the litigation pending the outcome of the reissue. In response, Victaulic cited my post from January 2011 identifying the average five-year pendency for reissued patents. In a brief filed under seal, Tyco's attorneys from Morgan Lewis called my post "unreliable" and "unsubstantiated" because it was found in a blog.

In deciding the issue, the judge correctly found that the reissue will certainly take some time even if my post regarding the average delay does not exactly predict the path for Tyco's applications. A potential important difference is that my data reflects the average for all reissue prosecutions but does not separate-out cases going through expedited reissue. See MPEP § 1442.

In the end, the judge refused to stay the litigation based upon the potential delay and the fact that the reissue does not appear to be likely to narrow the issues in the litigation. In addition, the court found that the reissue was motivated by claim construction questions posed by the defendant in the litigation. This timing issue (first seeing the claim construction arguments, then filing for reissue) raised "alarm bells" with the judge who identified the move as a potential "litigation gambit" intended to give the plaintiff a tactical advantage.

Stay denied.

Note: I contacted the Morgan Lewis attorneys who submitted the brief for a comment on what was particularly unreliable or unsubstantiated regarding my post. They have not responded.

No Litigation Estoppel until All Appeals Exhausted in Inter Partes Reexamination

Bettcher Industries v. Bunzl USA (Fed. Cir. 2011)

by Dennis Crouch

For one summer during college, I worked in a meat packing plant. In one hand, I wielded a power-operated knife while the other, gloved in chain-mail, held thawing pork-bellies. This case involves litigation over a hand-held rotary blade used in the commercial food processing industries. As is now common, after Bettcher filed its infringement lawsuit, Bunzl, the defendant, requested the patent undergo inter partes reexamination at the USPTO. Bunzl asserted the same prior art in both its reexamination request and in its invalidity defense before the district court.

The issue on appeal is the timing of the estoppel provision associated with inter partes reexamination under 35 U.S.C. § 315(c). Under the statute,

"[a] third-party requester whose request for an inter partes reexamination results in a[ reexamination] order … is estopped from asserting at a later time, in any civil action [related to patent law] … the invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings.

As I read the statute, a reexamination requester is blocked from making particular invalidity arguments in court if certain conditions are met. These conditions include: (1) a final determination that the reexamined claim is valid; and (2) a finding that the invalidity argument is based on grounds that were or could-have-been raised by the requester during the inter partes reexamination.

In the case at hand, the USPTO had granted Bunzl's reexamination request, but the reexamination examiner had rejected Bunzl's position and issued a right-to-appeal-notice to Bunzl. Bunzl appealed to the BPAI, and recently lost the appeal, but had now requested rehearing by the Board. If Bunzl loses at the BPAI, it has a right to further appeal the reexamination to the Court of Appeals for the Federal Circuit.

In summary, at this point, the USPTO Examiner has made a "final" decisions that the claim is valid, and the BPAI has made a "final" decision that the claim is valid. However, Bunzl still has a right to appeal. The question from those facts is whether the claim is "finally determined to be valid" under the statute.

Deciding the issue, the Federal Circuit held that a claim is not "finally determined to be valid" under Section 315 until all appeals are exhausted.

[T]his court agrees with Bunzl that the estoppel provision of § 315 is triggered not when examination is completed but only after all appeal rights have been exhausted.

On remand, the district court will need to determine whether a new trial is necessitated by the additional prior art made available by the lack of estoppel.

Judge Reyna dissented – arguing that the estoppel issue is moot because the claim is anticipated as a matter of law.

The plain meaning of the claim language of the '325 patent reads on Bettcher's own prior art products, which include all of the structural features required by the claims, and which possess the capability of satisfying the functional or intended use limitations.

. . . .

No reasonable jury could conclude that the claims of the '325 patent were novel over the pre-1998 blades because none of the dispositive facts were disputed and the law is clear. I would reverse the district court and enter judgment as a matter of law of anticipation.

In reaching his outcome, Judge Reyna is finding that, as a matter of law, the wrong conclusion was reached by the trial jury, the district court judge, the original patent examiner, the reexamination examiner, the BPAI, and the other two judges on the court.

Comments by Crouch: This case is in tension with the recent Federal Circuit decision of Marine Polymer Tech. v. Hemcon, Inc. In that case, the court held that non-final arguments made during reexamination created intervening rights that relieved an accused infringer from liability, and that the intervening rights were created at the point of the arguments even though the reexamination was ongoing.

In re Glatt Air Techniques, Inc.: Single Embodiment Commercial Success

By Jason Rantanen

In re Glatt Air Techniques, Inc. (Fed. Cir. 2011)
Panel: Newman, Prost (author), Moore

Glatt Air Techniques involves the reexamination of Patent No. 5,236,503, relating to an improvement to an apparatus known as a Wurster coater used to coat particles such as pharmaceutical ingredients.  The improvement comprises a shield means, such as a physical shield or air wall, positioned adjacent the spray nozzle that prevents particles from prematurely entering the stream of the coating spray before the spray pattern has fully developed, thus causing blockages in the apparatus.  During reexamination, the examiner rejected the claim at issue as obvious in light of the prior art, a determination that was upheld by the Board of Patent Appeals and Interferences.  In reaching its conclusion, the Board also rejected Glatt's commercial success evidence because it related only to a single embodiment - a physical shield - and the claim also covered the use of an air wall.  Thus, the Board concluded, the evidence was not commensurate in scope with the claim.

On appeal, the CAFC first found that the Board had failed to establish a prima facie case of obviousness.  It also disagreed with the Board's rejection of Glatt's evidence of commercial success, expanding on its past holding that "commensurate" does not mean "every" embodiment.   "The fact that Glatt’s commercial products only contain one type of shielding means does not make its commercial success evidence irrelevant. Under the PTO’s logic, there would never be commercial success evidence for a claim that covers more than one embodiment."  Slip Op. at 10.  Citing past precedent, the CAFC went on to state that "we have consistently held that a patent applicant “need not sell every conceivable embodiment of the claims in order to rely upon evidence of commercial success.” Id. (quoting In re DBC, 545 F.3d 1373, 1384 (Fed. Cir. 2008).  Thus, "commercial success evidence should be considered should be considered 'so long as what was sold was within the scope of the claims.'” Id.

Comment: Note that simply being commensurate with the scope of the claim does not necessarily satisfy the nexus requirement, as illustrated by the outcome of In re DBC.

Update: PharmaPatents Blog provides a detailed discussion of the CAFC's reversal of the Board's prima facie case of obviusness, asking whether there was anything else the applicant could have done to avoid a rejection by the examiner and Board.   

Untouchable: Sham Reexamination Requests

Lockwood v. SHEPPARD MULLIN (Fed. Cir. 2010) (nonprecedential)

Last week, I wrote about the Lockwood case involving allegations that Sheppard Mullin should be held liable for filing a sham reexamination request.  The district court had dismissed Lockwood's complaint — holding that there could be no federal cause of action for filing a sham reexamination request because, inter alia, that area is preempted by Federal Patent Laws. 

The Federal Circuit (Judges Newman, Plager, and Prost) has now decided the appeal — affirming the district court decision without opinion. (Rule 36).  Federal Circuit Rule 36 indicate that a panel may “enter a judgment of affirmance without opinion . . . [if] an opinion would have no precedential value.”  Here, the Rule 36 opinion is surprising given the lack of precedent on this topic, the obvious third-party interest in the outcome of the case, and the dramatic rise in the use of reexaminations over the past decade.

In the appeal, briefs amici were filed by the TPL Group (arguing that “nothing in the reexamination law … indicates that Congress intended to prevent patent holders from [pursuing a state law claim of unlawful business conduct] when a baseless request for reexamination is filed for the purpose of harming a competitor); Professor Hricik (arguing that liability should be available); NDP Managed Security (arguing that the suit is not barred by California law); and O'Melveny & Myers (arguing that the reexamination statute preempts a court action for sham filing of a reexamination).  Raymond Mercado (who previously worked for Lockwood) has written an academic article explaining his findings of extensive “reexamination abuse” by third-party requesters.  Mercado argues that patentee's subject to sham reexamination requests should certainly be able to bring an action under the common law tort of malicious prosecution. In addition, Mercado argues for a new federal cause of action.

This case opens the door to some amount of bad-behaviour in the filing of reexamination requests.  Patent attorneys who file sham-requests  can be sanctioned through the USPTO's Office of Enrollment & Discipline. However, an anonymous third party requester may be untouchable.

–  Dennis 

Sham Reexamination Requests and Federal Preemption

Lockwood v. Sheppard Mullin (Fed. Cir. 2010)

This is an interesting case that is pending before the Federal Circuit. The focus of the appeal is whether a patentee has any cause of action for a third-party's baseless filing of a reexamination request. The patent laws themselves offer no remedy so Lockwood turned to California State Court – alleging that the Sheppard Mullin law firm should be held liable for Malicious Prosecution, Interference, and Fraud by filing their reexamination request. Lockwood argues that "[Sheppard Mullin lawyers] chose to violate the strict duty of candor required before the USPTO by making deceptive misrepresentations about the nature of purported 'prior art' in two Requests for Reexamination. Respondents filed the Requests to gain a tactical advantage during infringement litigation, in furtherance of their stated aim of putting Lockwood 'out of business,' and without any reasonable basis in patent law."

The District Court granted a 12(b)(6) motion to dismiss – holding that the Federal Patent Laws and administrative structure of the USPTO preempted any cause of action in court against a sham reexamination request filed by a third party. Several law professors are involved with the litigation. Professor Jay Thomas (Georgetown) testified on behalf of Lockwood (stating that the PTO is "an agency in crisis" whose examiners are "overworked, overextended, undertrained, and underpaid"), and Professor David Hricik (Mercer) led a group of law professors who filed an amicus brief supporting Lockwood's position.

The leading Supreme Court case on the merits is Buckman Co. v. Plaintiffs' Legal Committee, 531 U.S. 341 (2001). In that case, the Court held that Buckman's state-law claim for fraud on the FDA was preempted by the Food Drug & Cosmetics Act because the "federal statutory scheme amply empowers the FDA to punish and deter fraud against the Agency, and that this authority is used by the Agency to achieve a somewhat delicate balance of statutory objectives." The FDA holds and actually asserts relatively greater power than the USPTO with respect to fraud on the office. As Professor Hricik writes, "since 1992, the Patent Office has not investigated inequitable conduct, and … cannot award civil damages or recover damages caused to the Office by frivolous filings."

Off the Cuff: One aspect of the law that is unclear to me is how this case differs from the ordinary prosecution malpractice situation. If the USPTO administrative and disciplinary structure preempts a civil action for patent attorney bad-behavior in reexamination filings, it seems that it would also preempt a civil against by a former client against an attorney broke USPTO ethical rules and injured his client. What is the difference?

Update: Raymond Mercodo forwarded a copy of his academic article: The Use and Abuse of Patent Reexamination: Sham Petitioning Before the USPTO.

Bits and Bytes No. 136

• The new website Found Persuasive looks to be an excellent addition to the online patent discussion. The authors promise a practical discussion of "patent prosecution strategies and templates for the patent practitioner. Patent attorneys Michael Leonard, Jared Olson, and Sheetal Patel are the authors.
• The ReexamCenter is full of practical information about Reexamination Issues. The new site is run by Robert Sterne's team at Sterne Kessler.
• Professor Ho at Loyola (Chicago) sent in information about an upcoming event: IP Day in Chicago on November 3.
• The PTO Central Reexamination Unit (CRU) has a new website design and updated statistics.
• USPTO Ombudsman: The PTO has invited public comment on its Ombudsman Pilot Program. The program is intended to create a direct-line of communication for applicants who believe that their applications are being improperly examined. e9-25798.pdf.

Cooper Cameron: First Inter Partes Reexam Appeal to the Federal Circuit

Cooper Cameron v. SAFOCO (Fed. Cir. 2009) (2009-1435) (Reexam No. 95/000,017)

The Cooper Cameron case looks to be the first inter partes reexamination appeal heard by the Federal Circuit. In a recent filing to the Federal Circuit, PTO Solicitor Ray Chen filed an interesting brief - indicating that the PTO should be captioned as a party in the case under 35 USC 143. Federal Circuit Appeal No. 2009-1435.pdf . Substantive briefs have not yet been filed in the case.

In the parallel infringement litigation, the S.D. Tex. court recently held that the reexamination is not yet "finally determined" under the estoppel provisions of Section 315(c) because (1) a reexamination certificate has not yet issued and (2) all appeals are not final. CooperCameron.pdf

Notes: A parallel case with the same parties is also pending appeal for Reexam No. 95/000,015. The BPAI treated these cases jointly in a December 2008 decision. The patents cover a valve actuator for hydraulic systems.

Requester Success Rates In Inter Partes Reexamination

by Matthew A. Smith. Smith regularly updates his treatise entitled Inter Partes Reexamination (available online for free).

Much attention has been paid in the past week to the recently released PTO statistics on inter partes reexamination. These statistics show a high success rate for third party Requesters. In particular, 60% of all cases surveyed resulted in all claims being canceled.

As has been recognized by a number of observers, however, the PTO statistics are based on a sample population (the 77 issued inter partes reexam certificates) that is systematically biased. This is demonstrated by the absence of any Federal Circuit decision on the merits in an appeal from an inter partes reexamination. As a matter of logical necessity, every single one of the 77 reexam certificates resulted from a proceeding where someone either missed a hard deadline or gave up.

This has obvious implications for the PTO’s overall pendency statistics. Barring a change in the way reexams are handled, the average and median pendencies should rise as more certificates issue. The effect on Requester success rates is not so clear, however. Ideally, a potential Requester would like to have data that predict the outcome of cases that are fully contested. Do the PTO’s statistics provide that?

At the end of 2008, the author studied Requester success rates while attempting to avoid the systematic bias introduced through the use of reexam certificates. The study was done in two different ways, both of which yielded similar results. First, Right of Appeal Notices were examined. Right of Appeal Notices, although they reflect a result that is alterable on appeal, are a potentially more accurate predictor of the outcome of fully contested reexaminations. This is because the PTO will not issue a Right of Appeal Notice where there is no right to an appeal,i.e., where someone missed a hard deadline or gave up at the Examiner level.

At the time of the study, 99 such notices had issued. The results are detailed in the attached excerpt. Briefly summarized, about 47% of the cases resulted in all claims being rejected, with about 70% of all cases resulting in cancelation or amendment of all independent claims. Of course, the effect of an amendment on the Requester’s overall position is not easy to judge. An amended claim may be a victory for a Requester, but can also be a disaster if past damages are unimportant, and the Patent Owner manages amend the claims to preserve infringement while excluding prior art.

The second approach attempted to capture some of these subtleties by examining the respective probabilities that the Patent Owner and Requester will be the primary appellant. The “primary” appellant is one that files a Notice of Appeal, as opposed to a Notice of Cross-Appeal, or no notice at all. The status as the primary appellant tends to indicate a party’s subjective dissatisfaction with the result before the Examiner. This study demonstrated that appeals were initiated three times more often by the Patent Owner than by the Requester. In a significant number of cases (35%), however, no appeal was filed by either party.

The results of these studies tend to support the effectiveness of inter partes reexamination as a tool for the Requester. Such statistics may also ultimately have an impact on whether events from reexamination are admissible in court. For example, the Federal Circuit’s decision in Hoechst Celanese Corp. v. BP Chemicals Ltd.,78 F.3d 1575 (Fed. Cir. 1996), affirming a district court’s exclusion from evidence of a PTO grant of ex parte reexamination, was based on 1994 ex parte reexam statistics. This decision is still being followed by district courts, but a significant uptick in requester success rates may change the way such cases are decided.

===

Also on Patently-O: Inter Partes Reexamination Statistics (2009); Ex Parte Reexamination Statistics (2008)

Mexican Yellow Bean Patent Finally Cooked

In re POD-NERS (Fed. Cir. 2009)

Larry Proctor purchased a package of Mexican beans of various colors. He separated-out the yellow ones and spent three years selectively breeding the plants. He then named his line "Enola" and obtained utility patent protection for the bean, its plant, its pollen, and the method of producing it. Pat. No. 5,894,079. Proctor also obtained a US Plant Variety Protection Act (PVPA) Certificate.

Soon thereafter, Proctor's company POD-NERS wrote to importers of Mexican beans asking for a royalty of 6 cents per pound. Mexican government officials identified the patent as "Mexican bean biopiracy" and that they would "do everything necessary, anything it takes, because the defense of our beans is a matter of national interest." The not-for-profit International Center for Tropical Agriculture (CIAT) requested an ex parte reexamination in 2000 (Procter also filed for a reissue so that claims could be added). A non-final rejection was mailed in 2003, a final rejection in 2005, and a BPAI decision affirming the decision in 2008. Now, the Federal Circuit has affirmed the "decision of the Board that all the claims here would have been obvious and therefore that they are invalid."

This decision makes sense - a published article compared the DNA of Enola with ordinary mexican yellow-seeded beans and found them identical.

One of ordinary skill in the art seeking to reproduce (and hopefully improve) the yellow beans that Proctor brought back from Mexico would have done what he did: plant the beans, harvest the resulting plants for their seeds, planting the latter seeds, and repeat the process two more times.   

There is no indication that in taking these steps Proctor sought to provide beans of the particular narrow range of yellow that the claims specified. To the contrary, it appears that all Proctor was attempting to do was to reproduce the yellow beans he had acquired in Mexico, and hopefully to improve them.   

To do so he followed normal and well-established agricultural methods and techniques for doing that. See KSR Int’l v. Teleflex Inc., 550 U.S. 398, 418 (“a court can take account of the inferences and creative steps that a person of ordinary skill in the art would employ.”) He does not contend that he devised or applied new or unexpected techniques in reproducing the beans.   

Although happy with the outcome, public interest groups have labelled the process a "travesty." "In essence, the U.S. patent system allowed the owner of a flagrantly unjust patent to legally monopolize markets and destroy competition – for close to half the 20-year patent term." [Link]

OVERVIEW OF USPTO PROCEEDINGS FOR THE REEXAMINATION OF A U.S. PATENT

Effect of a Pending Reexamination -- Each claim of a patent is presumed valid under 35 U.S.C. 282 and may be enforced notwithstanding the presence of a pending reexamination proceeding. See Ethicon v. Quigg, 849 F.2d 1422, 1428, 7 USPQ2d 1152, 1157 (Fed. Cir. 1988); See also Viskase Corp. v. Am. Nat'l Can Co., 261 F.3d 1316, 1328, 59 USPQ2d 1823, 1831 (Fed. Cir. 2001); In re Etter, 756 F.2d 852, 857, 225 USPQ 1, 4 (Fed. Cir. 1985)(en banc). Although litigation may move forward in parallel with a reexamination proceeding, at the district court's discretion, the results of the reexamination proceeding may have an effect on the litigation. See e.g., In re Translogic, 504 F.3d 1249 (Fed. Cir. 2007). Under 35 U.S.C. 307, a patent is not revised by any amendment or cancellation of a claim made during a reexamination proceeding until a reexamination certificate is issued.

Ex Parte Reexamination - A proceeding in which any person may request reexamination of a U.S. Patent based on one or more prior patents or printed publications. A requester who is not the patent owner (i.e., a "third party requester") has only limited participation rights in the proceeding. [MPEP 2209]

Inter Partes Reexamination - A proceeding in which any person who is not the patent owner and is not otherwise estopped may request reexamination of a U.S. Patent issued from an original application filed on or after November 29, 1999 based on one or more prior patents or printed publications. Both patent owner and third party requester have participation rights throughout the proceeding, including appeal rights. [MPEP 2609]

Reexamination Granted - An Order Granting Reexamination is not a determination of claim patentability. An Order that one or more claims of a U.S. Patent will be reexamined because the request has established the existence of at least one SNQ based upon prior patents and/or printed publications. [MPEP 2247.01]

In ex parte reexamination, the Order, whether granting or denying reexamination, must be mailed within three months of the filing date of the request for reexamination. [MPEP 2241]

In inter partes reexamination, the Order must be mailed not later than three months after the request is filed.   [MPEP 2641]

Reexamination Denied - An Order Denying Reexamination is also not a determination of claim patentability. An order denying reexamination of any of the claims of a U.S. Patent because the Office has determined that no SNQ has been established in the request for reexamination. [MPEP 2247.01]

Substantial New Question of Patentability (SNQ) - A request for reexamination must establish the existence of at least one new technological teaching affecting any claim of the patent for which reexamination has been requested that was not considered by the Office in a prior Office proceeding involving the patent. The SNQ is established based on prior patents and/or printed publications. [MPEP 2242]

Notice of Filing of Request for Reexamination - Notice that a request for reexamination has been filed and accorded a filing date is published in the Official Gazette. [MPEP 2215]

Rejection (Non-Final) - The initial Office action on patentability.

In ex parte reexamination, the initial action is not mailed with the Order Granting Reexamination; the patent owner may file optional comments, to which the third party requester may respond, prior to the initial Office action. Therefore the Office must await the expiration of the periods for such comments and responses thereto before mailing the initial action. [MPEP 2262]

In inter partes reexamination, the initial action may optionally be mailed together with the Order Granting Reexamination, but even if not, no party comments are permitted prior the mailing of the initial action. Patent owner files a response to a non-final action that includes argument and/or an evidentiary showing and/or amendments, and the response will be entered as a matter of right. Third party requester may thereafter respond with written comments directed to the Office action and to the patent owner's response. [MPEP 2260]

Rejection (Final) - A second or subsequent action on patentability in an ex parte reexamination may be made "final." While responsive arguments may be considered, entry of an amendment or consideration of additional evidence is not a matter of right in a final rejection. Patent owner may appeal to the USPTO Board of Patent Appeals and Interferences (BPAI). [MPEP 2271]

Action Closing Prosecution (ACP) - The second or subsequent action on patentability in an inter partes reexamination proceeding. Patent owner may respond with argument and/or an evidentiary showing and/or amendments. Alternatively, patent owner may choose not to respond. If patent owner does file a response,
then third party requester may thereafter file written comments directed only to the patent owner's submission. Entry of the patent owner response is not a matter of right. Neither party may appeal at this point in the proceeding. [MPEP 2671.02]

Right of Appeal Notice (RAN) - After (1) considering any patent owner response to an ACP, and any third party requester written comments thereto, or (2) the expiration of the time for patent owner to file a response and no response has been filed, the examiner will either re-open prosecution if necessary, or issue a RAN. The RAN sets time periods in which the parties may appeal to the BPAI. The RAN also closes prosecution. Any amendment filed after a RAN will not be entered. [2673.02]

It is possible for the Office to issue a RAN after a patent owner response to the initial Office action on patentability if both parties stipulate that the issues are appropriate for a final rejection and or a final patentability determination.

Appeal to the BPAI - Ex Parte Reexamination - A notice of appeal is a proper response to a final rejection in an ex parte reexamination. Only patent owner may appeal. The appeal process is similar to that in a non-provisional patent application. [MPEP 2273]

Appeal to the BPAI - Inter Partes Reexamination - Either party may file a notice of appeal as a proper response to a RAN in an inter partes reexamination. If some clams are rejected and some claims are allowed or confirmed as patentable, both parties may appeal those determinations, file appeal briefs, respondent's briefs directed to the other party's appeal brief, and, after the examiner files the examiner's answer to those briefs, file a rebuttal brief directed to the examiner's answer. [MPEP 2674]

Subsequent (Court) Appeals - Ex Parte Reexamination - If the request for reexamination was filed prior to November 29, 1999, patent owner may appeal the decision of the BPAI to either the U.S. District Court for the District of Columbia, or to the Court of Appeals for the Federal Circuit. If the request for reexamination was filed on or after November 29, 1999, patent owner may appeal only to the Federal Circuit. [MPEP 2279]

Subsequent (Court) Appeals - Inter Partes Reexamination - Either party who was a party to an appeal to the BPAI and is dissatisfied with the result may appeal only to the Court of Appeals for the Federal Circuit. [MPEP 2683]

Concurrent Reexamination and Litigation - If there is concurrent litigation and reexamination on a patent, and the request for reexamination was filed as a result of court order, or the litigation has been stayed for the purpose of reexamination, the Office will expedite the proceedings by taking the case up for action at the earliest possible time, setting shorter response times, and permitting extensions of time only upon a strong showing of sufficient cause. [MPEP 2286]

Effect of Concluded Litigation on Reexamination

A court decision holding that a patent claim is valid will not preclude the Office from continuing to reexamine such claim in an ex parte reexamination proceeding, even if the court decision is final and non-appealable. The Office applies the "broadest reasonable interpretation" for claim language in a reexamination proceeding, because claims may be amended during the proceeding. Courts apply a less liberal standard of claim interpretation, and therefore, the Office may conclude that a claim held valid in a court proceeding is unpatentable or invalid in an ex parte reexamination proceeding. [MPEP 2286]

A final, non-appealable court decision holding that a patent claim is invalid will preclude the Office from ordering any reexamination proceeding for such claim, or, will result in termination of any reexamination proceeding previously ordered as to such claim. [MPEP 2286]

It should be noted that with respect to inter partes reexamination, a final, nonappealable holding in litigation that a patent claim is valid may operate to estop a party from even requesting inter partes reexamination of that claim, or from maintaining a previously ordered inter partes reexamination of that claim. Estoppel may also operate to preclude a party who has obtained an Order Granting Inter Partes Reexamination of a patent claim from asserting invalidity of that claim in litigation under Section 1338 of Title 28 on grounds that such party raised, or could have raised, during that inter partes reexamination, if that claim has been finally determined to be patentable in the inter partes reexamination proceeding. [MPEP 2686.04(V)]

Notice of Intent to Issue Reexamination Certificate (NIRC) - Reexamination proceedings do not become "abandoned." Rather, an NIRC is mailed to inform the parties that a reexamination proceeding has been terminated, whether by the failure of a party to timely file a required response, or by the natural resolution of all outstanding issues of claim patentability. The NIRC lists the status of all claims that were subject to reexamination, including any patent claims that have been canceled and any claims added during the proceeding that were not part of the patent that were reexamined and determined to be patentable. The NIRC also indicates which patent claims, if any, were not reexamined. An NIRC may include an examiner's amendment, and must include reasons for confirmation of any patent claims that were determined to be patentable without amendment, and reasons for allowance of any amended patent claims or any newly added claims. [MPEP 2287]

Reexamination Certificate - A reexamination proceeding is concluded by publication of a reexamination certificate. The certificate amends the text of the patent that was reexamined, in a manner analogous to a certificate of correction. The Reexamination Certificate will contain the text of all changes to the text of the patent that was the subject of the reexamination proceeding. [MPEP 2288 and 2290]

Notice to the Public of Reexamination Certificate - Publication of a reexamination certificate is announced in the Official Gazette. [MPEP 2691]

Inter Partes Reexamination Statistics

In August 2008, Messrs Baluch and Maebius of Foley & Lardner published an interim report on the results of inter partes reexamination proceedings. At the time of their writing, however, only 30 inter partes reexaminations had been pushed-through to conclusion with a reexamination certificate. In the past year, that total has more than doubled to 73 issued reexamination certificates.

Of course, the main point about inter partes reexaminations is that the process can be incredibly slow if either party pushes. Only about 50% of the inter partes reexaminations filed 2001-2005 have been completed either through issuance of a reexamination certificate (on the merits) or procedurally terminated. Overall, the reexamination certificates took an average of 37.5 months to issue (median of 34.4 months). When all is said and done, this pendency will be much longer since the slow and/or hotly disputed cases are all still pending. Only one (1) of the completed cases received a BPAI decision (all claims were cancelled after BPAI affirmed) and no completed cases have received a court decision.

Results of the reexamination certificates: Inter partes reexaminations continue to show promise as a mechanism for "killing" patent claims. Of the 73 issued reexamination certificates, 60% (44) cancel all the claims and only 12% (9) confirm all the original claims as patentable. The remaining 27% (20) change the claimset in some way. For the 19 inter partes reexamination certificates issued on patents with co-pending litigation, 42% (8) resulted in all claims being cancelled; 5% (1) confirmed all claims as patentable; and 53% (10) changed the claimset in some fashion.

    

Guest Post: Hot Topics in US Patent Reexamination

By Robert Greene Sterne. Rob Sterne is a founding director of the IP firm Sterne Kessler Goldstein & Fox. I asked him to write about current 'hot topics' in patent reexamination.

The marked increase in the use of reexamination has naturally caused more frequent and closer evaluation and scrutiny of its unique procedures by involved parties and the courts. In FY2008, according to official USPTO (PTO) statistics, 168 inter partes reexams and 680 ex parte reexams were instituted. Compare this to FY2005, where 59 inter partes reexams and 524 ex parte reexams were instituted just three years ago. In short, it is becoming one of the faster developing areas of intellectual property law and, in the words of top PTO officials, it is a true "work in progress."

Developed in conjunction with the Sedona Patent Litigation Conference and a team of my colleagues (and incorporating feedback of dozens of sources including judges, senior officials from the PTO, patent litigators, patent prosecutors, academics, bloggers, and interested members of the public), a comprehensive and neutral white paper overview of this subject matter provides an in-depth review of hot issues currently confronting parties that find themselves in the "parallel universe" of patent reexamination and concurrent litigation in the district courts and USITC. The hot topics addressed include (A) impact of PTO decisions on stock price, (B) reexamination pendency, (C) substantial new questions of patentability, (D) real party in interest, (E) duty of disclosure, (F) protective orders, (G) stay of litigation in view of reexamination, (H) appeals from the Central Reexamination Unit to the Board of Patent Appeals and Interferences, (I) the impact of reexamination on settlement, and (J) page and time limits in reexamination proceedings.

Here is a closer look at three of these topics:

• Litigation Stays: Reality or Myth – The percentage of reexams that are in the 'parallel universe' of district court or USITC patent litigation continues to climb. For example, in FY2008, 62% of current inter partes reexams and 30% of ex parte reexams were in parallel litigation. Judges have wide latitude in granting or denying stays and litigants must carefully evaluate prior stay decisions from their judge and the court they are in to effectively prognosticate how the judge will rule. Especially with respect to inter partes reexams, the grant of a stay can effectively be "game over" for the patent owner.
• Stock Fluctuation: Impact of PTO and Court Decisions on Stock Price – The practical impact of reexam on patent owners can be enormous. There are recent celebrated examples of stocks dropping 40% in hours after the release of a non-final office action rejecting claims in a suit, even though this development is not controlling on a court case because the reexam is not final. Third party requestors engage in litigation in the press by issuing inflammatory press releases that spin the truth. Patent owners need to be prepared for this media battle to protect their stock price. Moreover, the PTO mails decisions to parties in the reexam, putting the patent owner at a real disadvantage in dealing with the potential reexam media war.
• Reexamination Pendency: So How Long Does it Take? – The stated goal of the PTO CRU is 24 months from the time the reexam is instituted to a Final CRU office action or action closing prosecution. By statute, the CRU must handle reexams with “special dispatch.” However, there are no definitive statistics on how long it takes for a reexam to be handled to completion by the CRU and then through appeal at the BPAI. Our current best estimate is that it takes approximately two to four years for the CRU to complete a reexam, typically a little faster for ex parte reexams, and two to four years for the BPAI to complete a reexam appeal. Thus, the reexam process could take four to eight years before it arrives at the US Court of Appeals for the Federal Circuit on appeal. This is a significant amount of time and requires additional strategy and tactical decisions by the parties.

For additional insight into patent reexamination, download recent podcasts – "2008 Patent Reexamination Trends" (Episode #1) here and "The Parallel Universe of Patent Reexamination and Litigation" (Episode #2) here.Download the latest version of the Sedona Conference related paper referenced above here, where you can read in-depth about the full list of hot topics identified above.

Stays Pending Inter Partes Reexamination

In an earlier post I indicated my suprise that courts continue to “grant stays of litigation pending re-examination – especially inter partes reexaminations which tend to be incredibly slow.” In thumbing through Matthew Smith’s new book on Inter Partes Reexaminations, the following statements caught my attention and reaffirmed my conclusion that stays do not make sense here:

“A fully contested proceeding, therefore, could consume six to seven years. . . . [However t]here is as yet no reliable data available to estimate the total time of the proceeding. As of the end of 2008, the only cases with issued reexamination certificates were those in which technical mistakes were made, or in which at least one party chose not to contest the proceedings.”

The first request for inter partes reexamination was made in 2001 and still no contested inter partes reexamination has completed its course. Mr. Smith’s suggestion of “six to seven years” may well be optimistic.

Part of the Patent Reform Act of 2009 would be to take inter partes reexaminations out of the hands of the examination corps and put it under the direction of “an administrative patent judge.” Under the proposal, the PTO is given authority to spell out the actual procedures. Of course, the Board of administrative patent judges has been handling this sort of trial-in-the-first-instance for many years in the form of interference proceedings. The board already has a trial division that is ready to go. Although there are some outliers, interference proceedings are generally terminted within less than two years. For the Oct-Dec 2009 period, 13 interference proceedings were terminated with an average pendency of 9.5 months. 100% of those cases were terminated in less than two years. See 37 C.F.R 41.200(c) (“Patent interferences shall be administered such that pendency before the Board is normally no more than two years.”)

Notes:

• Matt Smith’s book is online and free (1.5 mb). Smith is a patent attorney at Foley & Lardner's DC Office.

Patent Reform Act of 2009

Patent reform legislation has now been introduced in both the House and the Senate. The provisions call for major reforms and mirror much of the proposed legislation from 2008. If anything, this is not a consensus Bill. File Attachment: SenateBill.pdf (116 KB) File Attachment: HouseBill.pdf (180 KB)

Proposed changes in the Senate Bill include:

• First to File: Moving to a first-to-file system that credits invention based on the filing date of the patent application rather than on the date of actual invention.   The provision eliminates the one-year grace period for most cases. Thus, any independent third-party publication prior to filing is considered prior art regardless of the date of invention. Likewise, secret prior art (102(e)) cannot be 'sworn behind' based on prior invention. This provision obviously hurts folks who delay in filing patent applications.
• Damages: Must look to the invention's "specific contribution over the prior art" to determine damages. There is an interesting provision that a reasonable royalty may be calculated as the price of licensing a "similar noninfringing substitute in the relative market." In some cases, this could push damages to zero if the noninfringing substitute is in the public domain. The provision also codifies that treble damages are limited to instances where a judge finds that an adjudged infringer recklessly continued to infringe after receiving particularly specified written notice sufficient to create declaratory judgment jurisdiction and without relying on reasonable advice of counsel.
• Expanded Reexamination Proceedings: Reexaminations may be requested based on published prior art, or evidence of prior public use or sale in the US. Inter partes reexaminations would begin to look more like court cases and would be heard by administrative patent judges. The Bill would clarify that parties would be estopped from filing inter partes reexamination requests after a district court judgment.
• Additional Post Grant Review: Within 12 months of issuance, a third party can file a cancellation petition based on any ground of invalidity (rather than simply prior art). The post grant reviews would also be conducted by the administrative patent judges.
• Pre-Issuance Submissions: Third parties can submit prior art during examination of the patent as well as a statement regarding the relevance of the art. The art should be submitted the latter of (1) six months after publication or (2) before the first office action on the merits.
• Patent Litigation Venue: "A party shall not manufacture venue by assignment, incorporation, or otherwise to invoke the venue of a specific district court." Venue is only proper were (a) defendant is incorporated; (b) defendant has its principle place of business; (c) where the defendant is permanently located and has committed substantial acts of infringement; or (d) where the plaintiff resides if the plaintiff is a nonprofit or individual inventor. The court should transfer venue to avoid evidentiary burdens when transfer can be accomplished without causing undue hardship to the plaintiff."
• Interlocutory Appeals: The Federal Circuit will have jurisdiction over interlocutory appeals of claim construction when approved by the lower court.
• Administrative Patent Judges: The BPAI would become the Patent Trial and Appeal Board (PTAB). Interferences would be gone, however they would be replaced by derivation proceedings as well as reexamination and post-grant trials.
• PTO Powers: The PTO has power to set its fees, including reducing fees.
• Oath: Easing the rules to more easily allow rights-holders to file patent applications on behalf of the inventor.
• Federal Circuit Judges: Making legal it for a Federal Circuit judge to reside more than 50 miles from DC.

As you can see, this is very much the type of reform that companies like Google would like to see. Google is regularly faced with charges of patent infringement and rarely sues for infringement. Some of these changes will benefit the system as a whole, but it is clear that this is not "balanced" reform. The damages provision will almost certainly reduce patent awards. And, perhaps equally important, the damages provision provides adjudged infringers a real cause to appeal jury awards if they did not directly follow the expert testimony.

I believe that the expanded use of reexaminations and post grant review and prior art submissions will be beneficial, and I have faith that the administrative patent judges will be able to handle their newfound responsibilities. That said, these provisions provide challengers with new ways to attack patent rights.

The plaintiff bar in the Eastern District of Texas is quite good, and defendants are doing what they can to escape from their grasp. The venue provision moves in that direction and would thus weaken the value of patents.

The trick with the first to file system is to realize that it is not about some mythical race to invent between competitors. Rather, it is about keying the priority on the date of filing the application rather than the date of invention or even one year prior to filing. This provision weakens patent rights because more materials will be considered prior art. It is possible to switch to a first-to-file system without eliminating the grace period so dramatically – this legislation does not, however meet that standard.

The Bill is sponsored by both Senators Leahy (D-VT) and Hatch (R-UT). Representative Conyers (D-Mich) introduced parallel legislation in the House, the legislation is largely similar, but does contain some differences. (I have not reviewed the House version in detail). Some opposition has already formed. Reps Manzullo (R-IL) an Michaud (D-ME) issued a joint press release titled "New patent bill encourages IP theft, destroys American jobs." Their focus was on the damages provision.

There are some changes from the 2008 legislation.

• The Bill does not require that all applications be published at 18 months.
• Applicants would not be required to search prior art.
• The 2009 Bill allows public use or sale in the US to be reasons for challenging patents.
• CHECK 21 provisions are gone.
• Fee Diversion is allowed in the 2009 Bill. (Oddly, Leahy explained that PTO Examiners perfer a system of fee diversion)
• The 2009 Bill does not address inequitable conduct.

Links:

• Stephanie Condon writes "Controversial provisions remain in patent reform bill."
• Diane Bartz writes "Congress takes up patent redo, damages fight looms."
• David Ingrim writes "Lawmakers Pledge Bipartisan Effort on Patent Changes."
• Zusha Elinson writes "Silicon Valley Raises Voice on IP Reform."
• Brent Kendall writes for Dow Jones "The patent system has not been overhauled in more than 50 years." [huh?]

Patently-O Bits and Bytes No. 93

Upcoming Events

• Northwestern Law School's Journal of Technology and Intellectual Property (NJTIP) is putting on a great event in Chicago on March 6, 2009 (Friday). Bob Irvine will be debating Bilski with Lauren Katznellenbogen. Irvine is a partner at my former firm, MBHB – He is amazingly smart and was my resource whenever I had difficulty understanding some complex technology. The debate is moderated by blogger R. David Donoghue. (The notice includes a disclaimer that the positions "are for advocacy purposes" and might not reflect the positions of the parties or their firms. Other speakers include Judge Holderman, Dr. Chris Singer (of Patent Docs and MBHB), Profs Seymore and Sag, and Mike Baniak (also of MBHB). [Symposium Website]
• The IP Law Summit - March 17-19 - hosted by the marcus evans company will be a nice event in Ponte Vedra, Florida. I will be speaking there along with Marc Began (Novo), Manny Schecter (IBM), Bruce Schelkoph (Cummins), Scott Kief (Wash U), Bruce Pokras (Pfizer), Colin Raufer (Boeing), Mony Ghose (BD), Ken Collier (Medtronic), Scott Reid (Lenovo), Chris Turoski (Cargill), Hope Mehlman (Regions Financial), Tom Boshinski (Mead), Wendall Guffy (Nestle), Tim Wilson (SAS), Robert Renke (Flashpoint), John Parrish (Sanofi), Mike Jaro (Medtornic), and Phyllis Turner-Brim (Intermec).

Stays pending reexamination:

• I continue to be surprised that courts grant stays of litigation pending re-examination – especially inter partes reexaminations which tend to be incredibly slow. In Wall Corp. v. BondDesk Group, LLC (D.Del. Feb. 24, 2009), district judge Gregory Sleet granted the defendant's motion to stay the litigation pending inter partes reexaminations. The fact that the reexamination was inter partes was especially important to the court since the potential "estoppel will resolve many of the invalidity issues and streamline the litigation." In a decision last week in Affinity Labs v. Dice Electronics, LLC, (E.D.Tex. February 20, 2009), the Texas-based Federal Court denied a stay pending ex parte reexam noting that the ex parte approach allows the "Defendant to lay behind the log, hoping for favorable developments with the passage of time. Instead of streamlining the process, Defendants' choice guarantees the imposition of additional costs … and indicates a lack of desire to resolve the issues in the case in a timely manner."

Late Patents:

• I recently discussed maintenance fees here, here, here, and here. An interesting website on the topic is latepatents.net. (Hat tip to John Spevacek)

Inter Partes Reexamination Estoppel and ITC Proceedings

One knock against the inter partes reexamination system is that it creates an estoppel. Under 35 USC 315(c), a third-party of requester is estopped from later asserting that a claim is invalid based on grounds that were "raised or could have been raised" during the reexamination. The 315(c) estoppel, however, is specifically limited to "civil action[s]" arising from 28 USC 1338 – i.e., those brought in district court. Similarly, under Section 371(b), an accused infringer cannot request an inter partes reexamination after losing a final decision in district court on any validity issues that the party "raised or could have raised" in the civil action.

In an e-mail earlier this week, Scott Kamholz of Foley Hoag raised the idea that the inter partes reexamination estoppel provisions do not apply to Section 337 investigations through the ITC. I believe Kamholz is correct. Thus, an ITC finding of validity does not estop the losing defendant from later requesting inter partes reexamination on the same grounds. Likewise, a defendant may raise invalidity issues in an ITC investigation that were previously addressed by an inter partes reexamination involving the same parties. Of course, the proceedings in the ITC and PTO are quite different and could readily lead to different outcomes. Perhaps most notably, patents are given a strong presumption of validity in ITC proceedings but are not presumed valid during reexamination.

In re Swanson: CAFC Allows Reexamination Based on Reference Previously Considered by PTO and Courts

In re Swanson (Fed. Cir. 2008)

Back in 1984, the patent examiner rejected Swanson's claim based on U.S. Patent No. 4,094,647 ("Deutsch"). The claims were then amended and the patent allowed. Later, in an infringement action involving the patent, the Federal Circuit affirmed a judgment that "Deutsch did not anticipate the asserted claims." Abbott v. Syntron, 334 F.3d 1343 (Fed. Cir. 2003). Surmodics is the patent owner, and the patent is licensed to Abbott.

After losing at the CAFC, Syntron filed for ex parte reexamination of the patent – asserting again that the claims were anticipated by Deutsch. As per usual, the PTO agreed to reexamine the patent – based on a "substantial new question of patentability." 35 USC §303. On appeal, Swanson argues that the Deutsch reference was considered in both the initial examination and the litigation – and thus cannot serve as the "new" basis for reexamination.

Third-party filed reexaminations provide a check on PTO power, but the SNQ requirement is designed to protect patentees from harassment.

This 'substantial new question' requirement would protect patentees from having to respond to, or participate in unjustified reexaminations. Further, it would act to bar reconsideration of any argument already decided by the Office, whether during the original examination or an earlier reexamination. House Report 96-1307, 96th Cong., 2d Sess. (1980).

In its 1997 Portola Packaging case, the CAFC gave teeth to the SNQ requirement – finding that a new question could not be presented by "prior art previously considered by the PTO in relation to the same or broader claims." Reacting to that decision, in 2002 Congress amended Section 303 and to ensure that a new question may be raised by prior art that was previously considered by the examiner:

35 USC §303 "The existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the Office or considered by the Office."

Pointedly, the House Report accompanying the 2002 legislation found that "the Federal Circuit incorrectly interpreted Congress' original intent." According to the House Report, "the appropriate test to determine whether a 'substantial new question of patentability' exists should not merely look at the number of references or whether they were previously considered or cited but their combination in the appropriate context of a new light as it bears on the question of the validity of the patent."

SNQ = Reference Never Considered by the PTO for the Particular Purpose: Based on the statutory change, the appellate panel found that a substantial new question is simply one that has never been considered by the PTO. Here, the record shows that the original examiner relied upon Deutsch only as a secondary reference in an obviousness rejection of a broader claim.

"In light of the extremely limited purpose for which the examiner considered Deutsch in the initial examination, the Board is correct that the issue of whether Deutsch anticipates the method disclosed in claims 22, 23, and 25 was a substantial new question of patentability, never before addressed by the PTO"

SNQ Relation to Court Proceedings: In court, the parties had battled out the exact anticipation argument presented in the reexamination. On appeal, the CAFC panel found that "the determination of a substantial new question is unaffected by these court decisions." According to the court this makes sense because "the two forums [Courts and the PTO] take different approaches in determining validity and on the same evidence could quite correctly come to different conclusions" based on the burden of proof. Quoting Ethicon (Fed. Cir. 1988).

Affirmed

Notes:

• Judges Gajarsa (Author), Lourie, & Bryson.
• This opinion gives further strength to ex parte reexamination requests.
• The CAFC has consistently required that a patent's presumption of validity be negated by "clear and convincing evidence." Here, the court made a minor slip by calling the standard 'statutory.'

"In civil litigation, a challenger who attacks the validity of patent claims must overcome the presumption of validity with clear and convincing evidence that the patent is invalid. 35 U.S.C. § 282. If this statutory burden is not met, "[c]ourts do not find patents 'valid,' only that the patent challenger did not carry the 'burden of establishing invalidity in the particular case before the court.'" Ethicon, 849 F.2d at n.3 (internal citations omitted) (emphasis in original)."

Thanks to Paul Morgan for noting this issue.

The Surprising Efficacy of Inter Partes Reexaminations

An Analysis of the Factors Responsible For Its 73% Patent Kill Rate And How To Properly Defend Against It

     By Andrew S. Baluch and Stephen B. Maebius, Foley & Lardner LLP[i]

INTRODUCTION

In creating inter partes reexamination, Congress hoped to provide a faster, cheaper alternative for resolving questions of patent validity in the U.S. Patent & Trademark Office (USPTO) rather than in the courts.  As a measure of the procedure’s growing popularity and availability, the rate of requests for inter partes reexamination has steadily increased each year, totaling over 308 since the procedure was created in November 1999.[ii]  But, while the pace of reexam requests continues to increase, the end results of completed proceedings have received relatively little attention.

Here, we report the outcomes of all inter partes reexaminations completed as of August 2008.  Surprisingly, the proceedings displayed a high 73% “kill” rate (complete elimination of all claims targeted by the requesters) — a rate which is far above that in litigation (33%)[iii] and ex parte reexamination (12%)[iv]. 

Is the high kill rate explained by the fact that especially weak patents were targeted?  Did the patent owners simply give up because the patents were commercially unimportant?  Or is inter partes reexamination truly the best procedure for a party to use in the U.S. to invalidate a patent? 

For both requesters and patent owners, the present study highlights the factors and strategies favoring success in inter partes reexaminations.  Although the reported statistics appear to favor requesters, a patent owner has unique procedural tools at its disposal both in the courts and at the USPTO.

KEY FINDINGS

·         Requester’s Success Rate:  Third-party requesters succeeded in having all claims cancelled or disclaimed in 73% (22) of the first 30 completed inter partes proceedings in which a certificate issued.  These early certificates are likely skewed in favor of quick dispositions in which the patent owner simply failed to respond to a first Office action, which occurred in 43% (13) of the proceedings.  However, when the patent owner did respond to the first Office action, the requester’s success rate fell to 53% (9 out of 17).  In any event, the requester’s likelihood of a complete victory in inter partes reexams is substantially greater than that in ex parte cases during the same period: only 12% of all ex parte reexams since January 2000 resulted in all claims being cancelled.[v]

·         Pendency:  The inter partes proceedings had an average pendency (measured from request date to certificate issue date) of 33.3 months.  Like the requester’s success rate, the overall pendency is skewed by the numerous early cases in which the patent owner simply failed to defend its patent.  Eliminating these uncontested cases dramatically increases the average pendency up to 42.5 months.

·         Grounds of Rejection:  In a first Office action, obviousness was the sole ground of rejection in only 20% (6) of the proceedings, whereas anticipation was a ground of rejection in 73% (22) of the proceedings.  Nevertheless, obviousness-only rejections did not improve the patent owner’s chances of success: 83% (5 out of 6 obviousness-only cases) resulted in all claims being cancelled or disclaimed.

·         No Board Decisions:  None of the first 30 inter partes reexamination certificates was the product of a Board decision.  Only one party, a patent owner, filed a notice of appeal, but then dropped the appeal by declining to file an appeal brief.  In all cases where examiners found claims to be patentable, the third-party requesters did not bother to appeal the finding.

·         Litigation:  Five (17%) of the 30 inter partes reexaminations involved concurrent litigation between the patent owner and third-party requester.  The causes of action were split:  2 declaratory judgment (DJ) actions brought by the third-party requester, and 3 infringement suits brought by the patent owner.  The only still-pending cases involve reexaminations favoring the plaintiff:  one DJ action in which all reexamined claims were cancelled, and one infringement suit in which all reexamined claims were confirmed.

[READ THE FULL REPORT]

---

[i]  The authors are patent attorneys at Foley & Lardner LLP and further acknowledge their past and current involvement in both ex parte and inter partes reexaminations.  The views expressed herein are solely those of the authors and should not be attributed to their firm or any of its clients.  Comments may be directed to smaebius@foley.com.

[ii] USPTO Inter Partes Reexamination Filing Data (Sept. 30, 2007).

[iii] See Kimberly A. Moore, Judges, Juries, and Patent Cases – An Empirical Peek Inside the Black Box, 99 Mich. L. Rev. 365 (2000) (between 1983 and 1999, validity was upheld in 67% of cases — 64% of bench trials; 71% of jury trials).

[iv] See Dennis Crouch, Ex Parte Reexamination Statistics II, Patently-O, available at http://www.patentlyo.com/patent/2008/06/ex-parte-reexam.html (posted Jun. 25, 2008) (between January 2000 and June 2008, all claims were cancelled in 12% of proceedings).

[v] See Crouch, supra.  See also USPTO Ex Parte Reexamination Filing Data (Dec. 31, 2007) (reporting 12% cancellation rate for all ex parte reexams initiated by third-party requester).

Ex Parte Reexamination Statistics II

To get some sense of the PTO’s current ex parte reexamination practice, I looked at the 2000+ reexamination certificates that have been published in the Official Gazette since January 2000.  There are three potential outcomes for any particular reexamined claim: validity affirmed; validity affirmed with an amendment; and cancelled. In addition, claims may be added. 

Outcomes: From my sample, 71% of the completed reexaminations resulted in claims that were either amended or cancelled while only the remaining 29% resulted in all claims being confirmed. A much smaller number – 12% – of the reexaminations resulted in all claims being cancelled. 

The middle ground: 59% had at least one independent claim confirmed while 50% included at least one amended claim.  For the 34 completed design patent reexaminations, the single claim was confirmed as valid 16 times and cancelled 18 times.

Timing: The reexamination certificates in my sample had an average pendency of 33.5 months (median 28.5 months).* The PTO's reported average and median are 24.0 months and 18.6 months respectively. The difference apparently comes from their inclusion of reexaminations from the 1980's and 1990's which had much lower pendency than more recent numbers. [PTO Data 1981-2007]. 

Outcome & Timing: Reexaminations that simply resulted in a confirmation that the the initial claims are valid were resolved more quickly (averaging 24 months) while those resulting in cancellation of all clams were much slower (averaging 45 months). Cases at the longer end of the spectrum often involved either BPAI appeals or lost files.

• Thanks to several Patently-O readers for showing me how to find reexamination certificates. I was able to use the Westlaw database for this search. (Remember law school and the free academic access). The data can be compiled from the PTO OG, but that would be a larger job. The PTO does maintain a list of all the issued reexamination certificates here.
• * I roughly calculated pendency by measuring the elapsed time from publication of a reexamination request to publication of the reexamination certificate.
• Reexamination Statistics I

Patently-O Bits and Bytes No. 42: Two requests for help

• What is the best way to search for reexamination certificates? Are these available through the PTO site?
• Does anyone have a good process flowchart for a university tech-transfer operation?
• Thanks! dcrouch@patentlyo.com

Ex Parte Reexamination Statistics I

Through its attorneys Microsoft requested ex parte reexamination almost thirty Avistar patents. In recent days, the PTO denied Microsoft’s request in 14 of those cases.

Standing alone, this denial does not appear to be big news — except for the fact that over 95% of requests for ex parte reexamination are granted. In FY 2003–07, for instance, the PTO reviewed 2389 requests for ex parte reexamination and only denied the request in 105 cases. (4.4%). (At this point, there is some possibility that the denials are procedural  as the documents are not yet available on PAIR).

To be granted, a reexamination request must present a “substantial new question of patentability” that affects at least one claim of a patent.  The request must be based on a prior art patent or publication.  Prior public use or sale are not admissible as evidence in an ex parte reexamination proceeding (although affidavits explaining the prior art publications is admissible).

In general, there has been a rise in requests for ex parte reexamination. As the chart below demonstrates, increase is entirely due to an increase in requests for reexamination that are filed by third parties.

• Statistics are from the USPTO Annual Report FY 2007 and other annual reports.
• Avistar News Story
• IPRIORI keeps ex parte reexamination data continually updated here [LINK]

Patently-O Bits and Bytes No. 36

• [Not a] Patent Race: IPO released its annualy survey of top utility patent assignees. IBM again leads the way with over 3,000 utility patents issued in 2007. The organization leads the report with the interesting statement: “IPO DOES NOT INTEND TO ENCOURAGE MORE PATENTING IN U.S.”. [LINK]
• Tafas v. Dudas: On May 19, the CAFC released its notice of docketing in the case — starting a 60 day clock for the PTO to submit its opening brief. I expect that they will take the entire time.
• Inter Partes Reexaminations: Joff Wild highlights a new report on PTO Inter Partes Reexaminations: “Without appeal, the average pendency period for inter partes re-exam is 43.5 months, much longer than the 28.5 months reported by the USPTO – a 95% confidence interval would put the pendency between 34 and 53 months….To date, there has never been a single inter partes re-examination that has gone through the entire re-examination process (including appeal) and made it to completion. Only three have ever received a decision by the Board of Patent Appeals and Interferences.” [LINK][Report][Zura comments]
• MBHB Snippets: In the past, I have published several practice focused articles in MBHB’s Snippets publication. The newest edition is now online. Articles include:
  • Aaron Barkoff, Patent Litigation Under a Future Biosimilars Act
  • Kevin Noonan, Follow-on Biologic Drugs and Patent Law: A Potential Disconnect?
  • Jim McCarthy & Marcia Ireland Rosenfeld, It’s Not Easy Selling Green
  • Benjamin Huber, Seagate: Reports of the Death of Opinions of Counsel Have Been Greatly Exaggerated
  • [Read Snippets]
    
    

RIM v. NTP Continues to Trouble Patent Office

Although NTP v. RIM settled years ago, the PTO’s reexamination of NTP’s patents have continued to plod along. In the background are allegations by NTP that PTO officials improperly (and covertly) met with RIM CEO Jim Balsillie and other RIM representatives regarding the ongoing (ex parte) reexaminations.

During ex parte reexaminatoin, third-party communications are strictly forbidden.  It is clear, however, that in the months leading up to the NTP settlement, the PTO was feeling a tremendous amount of political pressure from RIM as well as Congress and the Senate.

Now, Congressman Howard Berman has demanded information from the PTO regarding these meetings “hand-delivered” by “May 19, 2008.”

“Did this meeting [with Balsillie and counsel] take place? What was discussed at this meeting? What is the USPTO’s policy concerning ex parte communications between senior USPTO officials and parties who have an interest in the outcome of proceedings before the office? In what other instances, if any, did senior USPTO officials engage in similar ex parte communications with parties that had an interest in the outcome of a proceeding being conducted before the Office?”

Hopefully the Office will be able to provide Chairman Berman with a tidy set of evidence to clarify the rules and exactly what happened.

Documents:

• NTP’s Allegations (8 MB) Check out pp 74+ and also pp 61 – 74.
• Time Article by Daren Fonda.
• Thanks to Hal Wegner and Greg Aharonian for the tip.

PubPat: Proposed Post-Grant Review Cuts-Out Public Interest

There is a possibility that a passed Patent Reform statute would eliminate third-party-requested reexaminations (ex parte and inter partes) and yet fail to create any substantive third-party initiated post-grant procedure to replace the current options.

In addition, the proposed post-grant review procedure would block a non-threatened party from challenging the validity of a patent more than a year after its issuance. In a letter sent today to the Senate reformers, Dan Ravicher of PubPat asks that third-party reexamination be preserved.  The non-profit groups such as PubPat and EFF have filed dozens of reexamination requests asking the PTO to invalidate “wrongfully issued” patents.

• PubPat Letter

The Current Proposal Found in S.1145: The proposed system of post-grant review would have two windows for third-party filings:

• First Window: Post-Grant oppositions filed by anyone within one year of issuance.  Patents reviewed in the first window would not be given any presumption of validity.
• Second Window: Opposition must be filed by party who has a likelihood of feeling “significant economic harm” based on the patent. A presumption of validity would apply in reviews within the second window.

The PTO would be required to complete its review work within 18 months. Post grant reviews would be conducted by a three-member panel of administrative judges rather than by examiners. Parties to the review may settle the case.

• PubPat Recent Successes:
  • Forgent Networks '672 "JPEG" patent: Broadest claims finally rejected;
    Patentee abandoned assertion of patent.
  • Columbia '275 Axel Cotransformation Patent: All claims finally
    rejected; Patentee abandoned assertion of patent.
  • Microsoft '517 FAT Patent: Patentee modifies claims, which are allowed.
  • Pfizer '156 Lipitor Patent: Patentee modifies claims, which are allowed.
  • WARF Stem Cell patents and Gilead Tenofovir (AIDS drug) patents have had all claims non-finally rejected, but are still pending. 

In Reexamination, PTO is Not Bound by District Court Claim Construction

In re Trans Texas Holding Corp. (Fed. Cir. 2007)

Trans Texas holds two patents directed to a system of insulating both deposits and loans from inflationary and short-term interest rate fluctuations. In earlier litigation, a Texas district court construed various claim terms. Now, in reexamination, the PTO has taken a fresh look and offered its own interpretation of the claims.

Issue Preclusion (AKA Collateral Estoppel) traditionally blocks the same parties from relitigating the same issue in a later proceeding. CAFC caselaw has identified four elements of issue preclusion:

1. Identity of the issues in a prior proceeding;
2. The issues were actually litigated;
3. Determination of the issues was necessary for the prior judgment; and
4. The party defending against preclusion had a “full and fair opportunity to litigate the issues.”

Ex Parte Proceeding: Although reexamination is an ex parte proceeding, the CAFC considers the PTO to be a “party” as any other outcome “simply makes no sense.”

The PTO is plainly a party to these appeal proceedings, and if it were not treated as a party, there would be no basis for even considering the application of issue preclusion in the first place.

Since the PTO did not have an opportunity to litigate the issue in the Texas district court, it cannot be bound by that decision.

[T]he PTO was not even a party to the earlier district court litigation and cannot be bound by its outcome.

Obviousness affirmed.