September 4, 2008
Old Art Never Dies
A common patent litigation strategy has been to seek reexamination after losing in court, as in the case herein. Defendant counsel has more rhetorical power before the court, as contrasted to a single injection to the PTO for reexam, after which the patentee tries to hold granted ground while an infringer watches from the sidelines. And a post-verdict reexam is as much for spite as anything, as it doesn't necessarily turn back the clock.
Today's CAFC ruling should flip the litigation-first/reexam-last-ditch strategy on its head: scorching prior art search to reexam first, pleading a stay of litigation pending reexam outcome. That's because court validation is not subject to reconsideration from PTO invalidation, but a PTO kill terminally damns. Further, previously cited art can be rehashed in reexam.
Laying yet another brick of fortification against junk patents, the CAFC clarifies the power of reexamination as a "quality check."
In re Melvin J. Swanson and Patrick E. Guire (CAFC 2007-1534)
5,073,484, claiming methods for analyzing biological fluids, was granted to Swanson and Guire over prior art, including obviousness rejection. A reference cited during prosecution was 4,094,647 (Deutsch).
'484 was assigned to Surmodics, who exclusively licensed to Abbott Laboratories. Abbott sued Syntron Bioresearch. Syntron counterclaimed invalidity, citing Deutsch. The trial jury disagreed. Validity was upheld on appeal.
Following appeal, Syntron filed a a request for an ex parte reexamination of the '484 patent, claiming that there was a substantial new question of patentability. The examiner granted the request.
Deutsch was a lead reference for some claims in reexam rejection. All claims rejected over prior art. The BPAI concurred. Surmodics appealed to the CAFC.
Reexamination is intended as a "quality check" on and by the patent office.
Any person may file a request for an ex parte reexamination of an issued patent based on prior art patents or printed publications. 35 U.S.C. § 302. Congress intended reexaminations to provide an important "quality check" on patents that would allow the government to remove defective and erroneously granted patents. H.R. Rep. No. 107-120 (2002); see also In re Recreative Techs. Corp., 83 F.3d 1394, 1396-97 (Fed. Cir. 1996) ("The reexamination statute's purpose is to correct errors made by the government . . . and if need be to remove patents that never should have been granted." (quoting Patlex Corp. v. Mossinghoff, 758 F.2d 594, 604 (Fed. Cir. 1985))).
The PTO has discretion to take a requested reexamination, and may initiate reexam on its own. Congress made clear in 2002 that previously considered art was not excluded, overriding the court on this point.
The PTO, however, may only grant a reexamination request if it determines that "a substantial new question of patentability affecting any claim of the patent concerned is raised by the request."4 35 U.S.C. § 303(a); see also id. § 304. The "substantial new question of patentability" requirement prevents potential harassment of patentees by "act[ing] to bar reconsideration of any argument already decided by the [PTO], whether during the original examination or an earlier reexamination." H.R. Rep. No. 96-1307 (1980). This court, in In re Portola Packaging Inc., 110 F.3d 786 (Fed. Cir. 1997), interpreted this statutory intent as precluding reexamination based on "prior art previously considered by the PTO in relation to the same or broader claims." Id. at 791. Congress disagreed with the restrictive scope of reexamination imposed by this court. See H.R. Rep. No 107-120, at 2 ("[T]he Federal Circuit incorrectly interpreted Congress' original intent underlying the reexamination statute and limited the application of the process."). In 2002 Congress amended § 303(a) to include an additional sentence, explaining that the amendment "overturns the holding of In re Portola Packaging Inc., a 1997 Federal court decision imposing an overly-strict limit that reaches beyond the text of the Patent Act." Id. The reexamination statute now provides, in pertinent part:
Within three months following the filing of a request for reexamination under the provisions of section 302 of this title, the Director will determine whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request, with or without consideration of other patents or printed publications. . . . 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.
35 U.S.C.A. § 303(a) (2002) (emphasis added). According to the House Report accompanying the Bill, under the amended § 303(a), "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." Id.; see also H.R. Rep. No. 107-120, at 3 ("While this bill clarifies that previously considered prior art will not necessarily bar a request for reexamination, the bill does not eliminate the requirement for a 'substantial new question of patentability' to be present for the agency to permit reexamination.").
4 The PTO may also instigate a reexamination proceeding on its own motion if it determines that prior art patents or printed publications raise a substantial new question of patentability. 35 U.S.C. §§ 303-04.
The statute does not define what constitutes a "substantial new question of patentability." However, the language added in the amended statute specifically discusses references "previously cited by or to the Office or considered by the Office," 35 U.S.C. § 303(a) (2002) (emphases added), but does not address any prior citation or consideration by courts. Similarly, the legislative history for both the original and amended reexamination statute suggest that Congress was concerned only with the consideration of issues in prior PTO examinations, not prior civil litigation.
A patent is presumed valid in litigation, a presumption overcome only "with clear and convincing evidence" of invalidity.
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). Therefore, "a prior holding of validity is not necessarily inconsistent with a subsequent holding of invalidity," Stevenson v. Sears Roebuck & Co., 713 F.2d 705, 710 (Fed. Cir. 1983), and is not binding on subsequent litigation or PTO reexaminations. See Ethicon, 849 F.2d at 1429 & n.3 (rejecting the PTO's argument that it was bound by a court's decision upholding a patent's validity); Mendenhall v. Cedarapids, 5 F.3d 1557, 1569-70 (Fed. Cir. 1993) ("A prior decision that a patent has previously survived an attack on its validity serves only to inform the district court . . . ."); cf. In re Trans Texas Holdings Corp., 498 F.3d 1290, 1296-97 (Fed. Cir. 2007) (holding that the PTO during reexamination is not bound by a district court's claim construction).
The PTO examination "standard of proof - a preponderance of evidence - is substantially lower than in a civil case." Further, "there is no presumption of validity."
In PTO examinations and reexaminations, the standard of proof--a preponderance of evidence--is substantially lower than in a civil case, In re Caveney, 761 F.2d 671, 674 (Fed. Cir. 1985); there is no presumption of validity, Etter, 756 F.2d at 856; and the "examiner is not attacking the validity of the patent but is conducting a subjective examination of the claims in light of prior art," id. at 857-58. And unlike in district courts, in reexamination proceedings "[c]laims are given 'their broadest reasonable interpretation, consistent with the specification . . . .'" Trans Tex. Holdings, 498 F.3d at 1298 (quoting In re Yamamoto, 740 F.2d 1569, 1571 (Fed. Cir. 1984)). Thus, considering an issue at the district court is not equivalent to the PTO having had the opportunity to consider it. See Ethicon, 849 F.2d at 1427 ("[P]recise duplication of effort does not occur because the PTO and the courts employ different standards of proof when considering validity . . . .").
The PTO may not stay a reexam, awaiting court decision. The standards of proof being different, orothgonal tracks are not duplicative.
In Ethicon, we held that because of these differences between reexaminations and court proceedings, the PTO did not have authority to stay a patent reexamination proceeding pending the outcome of a case in a district court given the requirement in 35 U.S.C. § 305 that all reexaminations be conducted with "special dispatch." 849 F.2d at 1425-29. We explained that "the suspension of PTO [reexamination] proceedings does not prevent duplication;" instead, it improperly "precludes access to the forum where there is no presumption of validity." Id. at 1427. In reaching this holding, we noted that "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." 849 F.2d at 1428-29. The PTO has recognized that while Ethicon did not directly interpret the meaning of a "substantial new question of patentability," its reasoning is directly applicable to the issue of whether district court proceedings affect the "substantial new question" inquiry. Thus, prior to Ethicon the PTO had held that a substantial new question of patentability would not be found if the same issue had been addressed by a federal court, see In re Wichterle, 213 U.S.P.Q. 868, 869 (Comm'r Pat. & Trademarks 1982), but it revised its position in the wake of Ethicon, instructing examiners that a final court decision of a claim's validity will not preclude a finding of a substantial new question of validity based on the same art "because of the different standards of proof employed by the Federal District Court and the Office," MPEP § 2242.
The focus on previous examinations rather than prior litigation follows from the fact that "reexamination[s are] conducted according to the procedures established for initial examination," 35 U.S.C. § 305, and PTO examination procedures have distinctly different standards, parties, purposes, and outcomes compared to civil litigation, In re Etter, 756 F.2d 852, 856 (Fed. Cir. 1985). In particular, "the two forums take different approaches in determining validity and on the same evidence could quite correctly come to different conclusions." Ethicon, 849 F.2d at 1428.
Thus, a court may find a patent valid, only for that patent to then succumb in reexamination.
Section 303's language and legislative history, as well as the differences between the two proceedings, lead us to conclude that Congress did not intend a prior court judgment upholding the validity of a claim to prevent the PTO from finding a substantial new question of validity regarding an issue that has never been considered by the PTO. To hold otherwise would allow a civil litigant's failure to overcome the statutory presumption of validity to thwart Congress' purpose of allowing for a reexamination procedure to correct examiner errors, without which the presumption of validity never would have arisen. See Patlex, 758 F.2d at 604 ("A defectively examined and therefore erroneously granted patent must yield to the reasonable Congressional purpose of facilitating the correction of governmental mistakes.").
Surmodics argued this arrangement was unconstitutional, a violation of the separation of powers, "allowing an executive agency to find patent claims invalid after an Article III court has upheld their validity."
The Supreme Court has repeatedly held that "Congress cannot vest review of the decisions of Article III courts in officials of the Executive Branch." Plaut v. SpendThrift Farm, 514 U.S. 211, 219 (1995) (citing Hayburn's Cases, 2 U.S. (Dall.) 409 (1792)); see also Chi. & S. Air Lines, Inc. v. Waterman S.S. Corp., 333 U.S. 103, 113-14 (1948) ("It has . . . been the firm and unvarying practice of Constitutional Courts to render no judgments not binding and conclusive on the parties and none that are subject to later review or alteration by administrative action.").
But patents are like jazz: the same song played in different variations are not duplicative. The PTO may invalidate a court-sanctioned patent. But the relation is not symmetrical - "an attempt to reopen a final federal court judgment of infringement on the basis of a reexamination finding of invalidity might raise constitutional problems."
[T]he court's final judgment and the examiner's rejection are not duplicative--they are differing proceedings with different evidentiary standards for validity. See Ethicon, 849 F.2d at 1427. Accordingly, there is no Article III issue created when a reexamination considers the same issue of validity as a prior district court proceeding.5 As properly interpreted a "substantial new question of patentability" refers to a question which has never been considered by the PTO; thus, a substantial new question can exist even if a federal court previously considered the question.
5 In contrast, an attempt to reopen a final federal court judgment of infringement on the basis of a reexamination finding of invalidity might raise constitutional problems.
Therefore, the CAFC ruled it proper that the PTO damn the patent based upon previously argued art during prosecution.
We, therefore, conclude the Board did not err in holding that the prior district court litigation did not prevent the Deutsch reference from raising a "substantial new question of patentability" under § 303(a). As properly interpreted a "substantial new question of patentability" refers to a question which has never been considered by the PTO; thus, a substantial new question can exist even if a federal court previously considered the question.
As the legislative history clarifies, to decide whether a reference that was previously considered by the PTO creates a substantial new question of patentability, the PTO should evaluate the context in which the reference was previously considered and the scope of the prior consideration and determine whether the reference is now being considered for a substantially different purpose. See H.R. Rep. No. 107-120, at 3 ("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."); see also 147 Cong. Rec. H5359 (statement of Rep. Berman) ("Ideally, a reexamination could be requested based on prior art cited by an applicant that the examiner failed to adequately consider . . . .").
Section 303(a) now mandates that "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." Thus, under § 303(a) as amended, a reference may present a substantial new question even if the examiner considered or cited a reference for one purpose in earlier proceedings.
The court reminds that consistency is the hobgoblin of small legal minds. The basis to appeal previously considered art as a "substantial new question of patentability" is a question of fact, and a question of law. In other words, the CAFC reviews reexamination however it likes.
Determining the scope of an examiner's previous consideration of a reference will generally require an analysis of the record of the prior proceedings to determine if and how the examiner used the reference in making his initial decisions. As we believe that this inquiry is most accurately viewed as a question of fact, we will review the Board's findings regarding the scope of consideration of a reference during prior examinations for substantial evidence. See also H.R. Rep. No. 107-120, at 3 (stating that there should be "substantial evidence" that the examiner "did not properly understand the reference, or did not consider a portion of the reference in making his decision."). However, the ultimate question of whether the reexamination is based on a substantial new question of patentability, in light of how a reference was previously considered, remains a question of law, which we review de novo. While the standard is more flexible than before, we are mindful that Congress intended that the courts continue to "judiciously interpret the 'substantial new question' standard to prevent cases of abusive tactics and harassment of patentees through reexamination." H.R. Rep. No. 107-120, at 3.
'484 reexam kill affirmed.
Posted by Patent Hawk at September 4, 2008 8:44 PM | Prosecution
Gee, I wish I would have thought of requesting a second reexam after the Eli Lilly v. Medtronic DC decision back in 1988. Later, the Mirowski (Lilly) patent was found not infringed per the CAFC & SCOTUS interprettion of 271(e)(1), but the DC opinion galled me because the judge read a limitation "implantable" into the claims to find them not infringed by the principal prior art reference introduced at trial. I had succeeded in an earlier reexamination in having the USPTO deny Lilly's attempt to put that word into the claims to define over the reexam prior art that I had asserted, so Lilly inserted another limitation that was not explicitly stated in that reference but would have been the way to use the device during open heart surgery. By chance, an acquaintance, Dr. Fred Zacouto, pointed me to another reference (a French language product manual of his automatic external defibrillator with electrodes placed on the heart) just months before trial that fully anticipated the claims allowed in reexam. It was introduced at trial and the judge read the claims right on the French reference and then proceeded to literally insert "implantable" into the claims to define over the French reference.
A second reexam to the same Examiner that refused to insert "implantable" into the claims would have been great fun since the French reference was not yet considered by the USPTO. But we thought that we had used up the reexam opportunity, and anyway it was all rendered moot by the 271(e) (1) decision and the expiration of the patent.
In this case, it is interesting that this fight is taking place just before the patent expires. Perhaps its term has been extended.
I wonder if anyone else has ever thought to reexam after an adverse court decision on the same or additional art. I wonder whether others have succeeded with serial reexams.
Posted by: Joe Breimayer at September 11, 2008 11:01 AM