« Thicket Headed | Main | Japan Patent Office Update »

December 22, 2005

NTP on the ReExam Ropes

The NY Times reported that the patent office, in a letter dated November 30, sent along with a rejection of extension of time for reply, has already told both NTP & RIM that a reexamination final rejection of NTP's patents is pending. "The patent owner's arguments are deemed nonpersuasive... The next office action is expected to be a final rejection of all current claims."

The patent office telegraphing its move has emboldened the obstinate RIM, making the possibility of settlement more remote. RIM Chairman and co-CEO James Balsillie beamed, "The jig is up."

NTP co-founder Donald Stout publicly acknowledged the setback, but rightly noted that the reexamination and the court case are two separate matters.

A final reexamination rejection may just set the stage for an appeal, first to the Patent Board, then, if necessary, to the Federal Circuit Appeals Court (CAFC), a process that could take a few years, though with the visibility and political pressure as it is on this case, extraordinary time compression is practically assured, as has already been evidenced in the reexam process.

On its own track, the courts have already found the NTP patents enforceable, and so the court case proceeds towards a permanent injunction.

The patent office noted that outcome of validity for patent office reexamination may differ from that decided in the the courts. As the patent office wrote in its letter to NTP:

[I]n Ethicon v. Quigg, 849 F.2d 1422 (Fed. Cir. 1988), the Federal Circuit states: The awkwardness presumed to result if the PTO and court reached different conclusions is more apparent than real. The two forums take different approaches in determining invalidity and on the same evidence could quite correctly come to different conclusions. Furthermore, we see nothing untoward about the PTO upholding the validity of a reexamined patent which the district court later finds invalid. This is essentially what occurs when a court finds a patent invalid after the m0 has granted it. Once again, it is important that the district court and the PTO can consider different evidence. Accordingly, different results between the two forums may be entirely reasonable. And, if the district court determines a patent is not invalid, the PTO should continue its reexamination because, of course, the two forums have different standards of proof for determining invalidity. Cf. Stevenson v. Sears, Roebuck & Go., 713 F.2d 705, 710, 218 USPQ 969, 973 (Fed.Cir. 1983) ("prior holding of validity [by a court] is not necessarily inconsistent with the subsequent holding of invalidity [by a court]"); Allen Archeny, lnc. v. Browning Mfg. Co., 819 F.2d 1087, 1091, 2 USPQ2d 1490, 1493 (Fed.Cir. 1987) (a party charged with infringement may challenge "the validity of patent claims that were upheld in a prior infringement suit to which it was not a party").

As to its own standard of evidence, the patent office referred to 37 CFR 1.555(b), and a relevant CAFC ruling.

37 CFR 1.555(b) - A prima facie case of unpatentability of a claim pending in a reexamination proceeding is established when the information compels a conclusion that a claim is unpatentable under the preponderance of evidence, burden-of-proof standard, giving each term in the claim its broadest reasonable construction consistent with the specification, and before any consideration is given to evidence which may be submitted in an attempt to establish a contrary conclusion of patentability.

"During reexamination, claims are given the broadest reasonable interpretation consistent with the specification and limitations in the specification are not read into the claims (In re Yarnamoto, 740 F.2d 1569, 222 USPQ 934 (Fed. Cir. 1984))."

Reexamination has commonly been used as a last resort for litigation defendants. If NTP's patents are enforced, but later invalidated, anti-patent wailing aside, accused infringers might consider firing the reexam gun early on in the litigation process, thus running more of a parallel track. The standard of validity, even if similar, can result in different outcomes for several reasons, as the processes differ, with claim construction often preceding validity analysis in court, and court validity determination may be made by a jury. If the patent office kills a patent before a court can decide on it, it's a dead patent. Of course, if the patent is upheld in reexam, litigators commonly think that makes the patent practically invincible in court. But as the NTP v. RIM case may show, the gamble may be better taken of trying to invalidate through reexam if the technical merits warrant.

Here's Peter Zura on this.

Posted by Patent Hawk at December 22, 2005 11:02 AM | Prosecution


good explanation on this litigation versus reexamination subject.

If things were not complicated enough, consideration of 'stay of litigation pending reexamination granted/denied' and 'significant/insignificant amendments to claims during reexamination' outcomes also have bearing on this subject, correct me if I am wrong (IANAL).

Posted by: small inventor at December 22, 2005 11:38 AM