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IP Gespräche 2009
Frankfurt ● Karlsruhe ● Basel ● Zürich
Strategic Uses of U.S. Reexamination Proceedings –
Strengthen Your Market Position and Avoid U.S. Patent Litigation
Jonathan H. Spadt, Esquire
Glenn E.J. Murphy, Esquire
Reexamination vs. Litigation
Congress established reexamination to provide a quality check on issued patents. Patent validity can be challenged outside of court.
Reexamination is a way to challenge, or reaffirm, the validity of a patent claim.
Reexamination Is:
• Cheaper than litigation
• Sometimes quicker than litigation• More effective than litigation
(from the perspective of a patent challenger)
• A strategically useful tool that is effective either offensively or defensively, before or after litigation has begun
Cheaper Than Litigation
$13,000 $91,000
$767,000
$1,589,000
$0
$200,000$400,000
$600,000$800,000
$1,000,000$1,200,000
$1,400,000$1,600,000
$1,800,000
Ex Parte Inter Partes Litigation worthless than
$1,000,000
Litigation worthmore than$1,000,000
Sometimes Quicker than Litigation
Average and Median Pendency
24.9
34.9
19.5
32.5
25.9
0
10
20
30
40
Ex Parte Inter Partes Litigation
Procedure
Mon
ths Average Pendency
Median Pendency
More Effective Than Litigation(from the perspective of a patent challenger)
Results Comparison
25
9
67
11
70
33
64
21
0
10
20
30
40
50
60
70
80
Ex Parte Inter Partes LitigationType of Proceeding
Out
com
e Pe
rcen
tage
All Claims Confirmed
All Claims Cancelled
Claims Changed
Strategically Useful Tool
What are They? Ex Parte ReexaminationsInter Partes Reexaminations
How are they used?
Ex Parte Reexaminations
Anyone Can Request an ex parte Reexam:
1. The Patent Holder
2. A Challenging Entity
3. The Director of the PTO
Ex Parte Reexaminations
An explanation of how the prior art is relevant to each of the claims.
What is required for an ex parte Request?
A Challenging Entity may request an ex parte reexamination anonymously.
If there is a substantial new question of patentability a Reexamination proceeding will commence.
Ex Parte Reexaminations
For Ex Parte Reexam:
The reexamination takes place between only the patent owner and the PTO.
Only the patent owner may appeal an adverse decision from the reexamination.
Inter Partes Reexaminations
For Inter Partes Reexam:
The third party participates with the reexamination prosecution in the PTO.
The third party may file or be a part of an appeal by the patent owner.
There is an estoppel created.
Inter Partes Reexaminations
For Inter Partes Reexam:
The third party participates with the reexamination prosecution in the PTO.
The third party may file or be a part of an appeal by the patent owner.
There is an estoppel created.
Estoppel A third-party requester is estopped from arguing
during a subsequent litigation that a claim is invalid based on grounds that were “raised or could have been raised” during the reexamination.
The estoppel is specifically limited to “civil actions” in district court.
Similarly, 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.
Estoppel
The estoppel provisions do not on their face apply to Section 337 investigations through the ITC. 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.
Reexaminations
What are some tactical advantages?
1. Cost savings over litigation2. Focus on patent/publication prior art
validity arguments3. Other Validity attacks available for court
action (in addition to prior art) 4. Expertise of Examiners5. Comfort with Patent Office procedures6. Different presumption and burden of proof7. Clean up patents before litigation
Reexaminations
What are some tactical advantages?
1. Cost savings over litigation2. Focus on patent/publication prior art
validity arguments3. Other Validity attacks available for court
action (in addition to prior art) 4. Expertise of Examiners5. Comfort with Patent Office procedures6. Different presumption and burden of proof7. Clean up patents before litigation
Different presumption and burden of proof
Relevant legal standards that apply in Reexamination proceedings favor the patent challenger more than in Federal Court.
No presumption of validity. Lower burden of proof –
Mere preponderance of the evidence (vs. the higher clear and convincing evidence required in Federal Court).
Intervening Rights Absolute Intervening Rights
An accused infringer may use or sell a product that was made, used, or purchased before the grant of the reexamination certificate, as long as such activity did not infringe a claim of the reexamined patent that was in the original patent.
If a claim is amended during reexamination and the amendment substantively changed the claim, then absolute intervening rights apply.
An absolute intervening right only protects products that have already been made when the reexamination certificate is granted, and does not extend to infringing processes or methods.
Essentially, an infringer may sell off existing inventory of a product that infringes the reexamined patent claims without incurring liability for past damages. It is protection from past liability and damages.
Intervening Rights, cont. . .
Equitable Intervening Rights
Protection from future liability and damages.
Equitable intervening rights address the continued manufacture, use, or sale of additional/new products covered by the reexamined patent when the defendant made, purchased, or used identical products, or made substantial preparations to make, use, or sell identical products, before the date of issuance of the reexamined claims.
Equitable intervening rights are potentially much broader than absolute intervening rights, but they are discretionary. A court may provide for equitable intervening rights to protect investments made before the grant of a reexamination certificate, including the continuation of otherwise infringing activity after such time.
Interplay of Litigation and Reexamination
Complex strategic and tactical considerations
No hard and fast rules Timing and procedural posture are
important
Favorable Outcomes – Patent Defendant
Stay or termination of litigation Reversal of prior litigation Creation of intervening rights Reduction or elimination of royalty
payments Avoidance or lifting of injunction
Favorable Outcomes – Patent Owner
Affirm validity of patent Eliminate or minimize troublesome prior
art Rehabilitate patent Estoppel (inter partes)
Translogic Tech., Inc. v. Hitachi, Ltd. 2005-1387, 2006-1333, -1192 (Fed. Cir. 2007)
District court – damages and permanent injunction
Ex parte reexamination CAFC – vacated and ordered dismissal of
district court judgment Prior holding of no invalidity not binding on
PTO in reexamination
In re Trans Texas Holdings Corp.2006-1599, -1600 (Fed. Cir. 2007)
Prior litigation settled after claim construction
Patent owner filed for reexamination PTO invalidated claims based on broader
claim construction PTO not bound by court’s claim
construction
In re Swanson2007-1534 (Fed. Cir. 2008)
District court found patents not invalid but not infringed
Reexamination ordered based on reference from original prosecution considered in litigation
Later consideration of old reference not precluded unless prior consideration involved identical issues
Procter & Gamble v. Kraft Foods Global2008-1105 (Fed. Cir. 2008)
Inter partes reexamination Infringement litigation one month after
product launch P&G moved for preliminary injunction;
Kraft moved for stay pending appeal of reexamination
Stay not available where motion for injunction is pending
Inland Steel Co. v. LTV Steel Co.03-1483 (Fed. Cir. 2004)
Jury verdict of infringement dismissed with leave to re-file pending reexamination
Reexamination canceled patents Defendant sought fees as prevailing party
in district court PTO’s invalidity finding (after appeals)
binding on courts
Summary
Reexamination gaining importance as a strategic tool in patent disputes
Reexamination generally favors the patent defendant
Reexamination is not a guarantee against being sued or having to litigate, but may lead to more favorable outcome with relatively low risk
Thank YouJonathan H. Spadt, EsquireGlenn E.J. Murphy, Esquire
RatnerPrestia, P.C.Valley Forge Office
Street address Mailing addressSuite 301 Suite 3011235 Westlakes Drive 1235 Westlakes Drive, BerwynBerwyn, PA 19312 P.O. Box 980
Valley Forge, PA 19482 USA
Phone: 1-610-407-0700Fax: 1-610-407-0701 [email protected]@ratnerprestia.com