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Patent Reexamination

For additional information on patent reexamination and post-grant review in light of the America Invents Act, please see www.fr.com/post-grant-practice.

Concurrent Litigation and Reexamination Proceedings

A defendant involved in patent litigation may ask the U.S. Patent and Trademark Office (“PTO”) to reexamine the patent being litigated. The defendant will generally bring to the PTO’s attention prior art that was not considered during the original examination of the patent. Because the PTO grants a large majority of requests for reexamination, and appears to be judging patents more strictly in reexamination proceedings than it had in the past, defendants are filing for reexamination with increasing frequency.

The existence of parallel litigation and reexamination proceedings raises an issue that will likely surface more often with increasing reexaminations – a patent that is invalidated during reexamination can vitiate a prior judgment in which a court awarded patent damages. In 2007, the Federal Circuit handed down Translogic Tech., Inc. v. Hitachi, Ltd., 2007 WL 2973955 (Fed. Cir. Oct. 12, 2007) (unpublished decision), a case that directly addresses this issue. The district court had entered judgment against Hitachi and another defendant for infringement of a patent owned by Translogic, imposing monetary damages and a permanent injunction. Concurrent with the litigation, the PTO reexamined the patent and rejected the asserted claims as obvious over prior art. The Federal Circuit was faced with parallel appeals – Translogic’s appeal from the reexamination and Hitachi’s appeal from the judgment. In the Translogic appeal, the Federal Circuit affirmed the PTO’s rejection and consequently vacated the district court’s judgment for damages and injunction in a two-page opinion.

The trumping effect of a reexamination on a district court judgment creates a race to the Federal Circuit. If the facts had been different in the Translogic case, the outcome could have been different. For example, if the Federal Circuit had decided the appeal from the district court’s judgment before the reexamination was appealed, the Federal Circuit could have affirmed the judgment and Translogic’s damages and injunction would have stood. The timing for filing a reexamination petition is thus a strategic issue.

Claim Amendments During Reexamination – Preclusion of Damages Prior to the Reexamination Certificate and Intervening Rights

During reexamination, a patent owner may be forced to amend the claims to avoid prior art cited by the PTO or for some other reason. In such a situation, if the patent eventually emerges from the reexamination with amended claims, the patent owner may be precluded from recovering damages for acts that may have infringed the original pre-examination. In addition, intervening rights may eliminate liability for acts that occur after issuance of the reexamination certificate.

The Patent Statute precludes damages arising before issuance of the reexamination certificate if the amended claims are not “substantially identical” to the original claims. See 35 U.S.C. §§ 251 and 252. An amendment that clarifies the text of the claim or makes it more definite without affecting its scope is generally viewed as satisfying the “substantially identical” standard. See Predicate Logic, Inc. v. Distributive Software, Inc., 544 F.3d 1298 (Fed. Cir. 2008). An amendment that is aimed at overcoming prior art, however, generally means that the claims are not substantially identical. See Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1348 (Fed. Cir. 1998) (noting that it is “difficult to conceive” of a situation when claims amended to avoid prior art would be substantially identical). Claims subjected to a broadening amendment during reexamination are invalid. Predicate Logic, 544 F.3d 1298 (Fed. Cir. 2008).

Two types of intervening rights may apply to a reexamined patent: absolute intervening rights and equitable intervening rights. Absolute intervening rights, granted by statute, preclude liability for post-reexamination sales, offers for sale, and importation of physical things that were in existence before issuance of the reexamination certificate. See 35 U.S.C. § 252, ¶ 2, sentence 1; Shockley v. Arcan, 248 F.3d 1349, 1360 (Fed. Circ. 2001). A court may invoke equitable intervening rights to protect pre-reexamination investments made in good faith on some perceived infirmity with the patent. 35 U.S.C. § 252, ¶ 2, sentence 2. One factor that may increase the likelihood of equitable intervening rights is reliance on an opinion of counsel indicating that the original claims are invalid based on the same prior art at issue during the reexamination. See Seattle Box Co. v. Industrial Crating & Packing, 756 F.2d 1574, 1579 (Fed. Cir. 1985) (reissue patent, rather than reexamination). Because in reexamination the amendment will generally narrow the claim (rather than broaden it, as is possible with a reissue patent), an opinion of counsel is likely to bolster a claim of equitable intervening rights because if the accused product infringed the original broader claim, it would also infringe the reexamined narrower claim. The same may not be true in a broadened reissue, where the argument for noninfringement may be vitiated by the broadening of claim scope.

Stay of Litigation Pending Reexamination – Impact on Damages

When a patent is the subject of pending litigation, the party accused of infringing the patent may seek reexamination of the patent in the PTO. At the same time, the accused infringer may also ask the district court to stay the litigation pending the outcome of the PTO’s reexamination. The accused infringer would argue, in essence, that the court should wait to see whether the PTO invalidates the patent during reexamination, obviating the need for further litigation.

The grant of a stay by the court will impact damages if the patent ultimately emerges from the reexamination and is then litigated. During the period of the stay, damages will have been mounting if the accused infringer continues to manufacture or sell the accused products. A reexamination can take several years, meaning that additional years of damages would accrue during the reexamination. One way the accused infringer can avoid accrual of damages would be to redesign the product to avoid infringement, rather than continuing sales of the accused product during the reexamination stay. Of course, if the case is stayed for reexamination and afterward the accused product is found not to infringe, then this issue would become moot.

SIGNIFICANT CASES:

Translogic Tech., Inc. v. Hitachi, Ltd., 2007 WL 2973955 (Fed. Cir. Oct. 12, 2007) (unpublished decision) (see above).

Seattle Box Co. v. Industrial Crating & Packing, 756 F.2d 1574, 1579 (Fed. Cir. 1985).

Predicate Logic, Inc. v. Distributive Software, Inc., 544 F.3d 1298 (Fed. Cir. 2008) (overturning district court judgment that amendments made during reexamination broadened the claims, thus invalidating the claims, and narrowed the claims, thus cutting off pre-reexamination certificate damages).

Standard Havens Prods., Inc. v. Gencor Indus., Inc., 1993 U.S. App. LEXIS 11963 (Fed. Cir. 1993) (unpublished decision) (“As a matter of law … if the reexamination decision of unpatentability is upheld in the court action … the injunction would thereby immediately become inoperative. In addition, if a final decision of unpatentablity means the patent was void ab initio, then damages would also be precluded.” “Reexamination proceedings would control the infringement suit.”).

MercExchange, L.L.C. v. eBay Inc., 500 F. Supp. 2d 556 (E.D. Va. 2007) (discussing stay of proceedings in the face of two reexaminations of two patents at issue in the litigation; granting motion to stay one patent and denying motion to the stay the other patent based on “vastly differing procedural postures” of the two individual patent disputes).