Marine Polymer Technologies v. HemCon (CAFC 2010-1548) precedential; Judges Lourie (dissent), Gajarsa, Dyk (author)

HemCon argued that the reissue grant created intervening rights for the CAFC to consider the situation de novo. The majority took a bite of the bait.

Under the statute, there are two types of intervening rights: (1) absolute intervening rights, which bar claims for infringement based on specific products that were manufactured before the reissue or reexamination; and (2) equitable intervening rights, which bar claims for infringement for new products and newly manufactured versions of prior existing products made after the reissue or reexamination. See 35 U.S.C. §§ 252, 307. We think it appropriate to decide the question of absolute intervening rights without remand because it is a pure question of law. However, we conclude that the district court should consider the question of equitable intervening rights in the first instance since fact questions are involved. We consider first the issue of absolute intervening rights as a defense.

Intervening rights lets an infringer off the hook for products sold before claims are changed under reexam.

The doctrine of absolute intervening rights protects an accused infringer's right to continue using, selling, or offering to sell specific products covered by reissued or reexamined claims when the particular accused product had been made before the date of the reissue or reexamination and the scope of the claims is substantively changed. 35 U.S.C. § 252; see also 35 U.S.C § 307(b) (applying the provisions of § 252 to "amended or new claim[s] determined to be patentable and incorporated into a patent following a reexamination"). "The specific things made before the date of reissue, which infringe the new reissue claims, are absolutely free of the reissued patent and may be used or sold after the date of the reissue without regard to the patent." BIC Leisure Prods., Inc. v. Windsurfing Int'l, Inc., 1 F.3d 1214, 1220 (Fed. Cir. 1993). In other words, the statute "provides an accused infringer with the absolute right to use or sell a [specific] product that [it] made, used, or purchased before the grant of the reissue[d] [or reexamined] patent." Id.

However, intervening rights do not apply where the accused product "infringes a valid claim of the reissued patent which was in the original patent." 35 U.S.C. § 252. Therefore, intervening rights are available only if the original claims have been "substantively changed," and "in determining whether substantive changes have been made, we must discern whether the scope of the claims [has changed], not merely whether different words are used." Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1346 (Fed. Cir. 1998). Essentially, "the making of substantive changes in the claims [on reexamination] is treated as an irrebuttable presumption that the original claims were materially flawed." Bloom Eng'g Co. v. N. Am. Mfg. Co., 129 F.3d 1247, 1249 (Fed. Cir. 1997).

The basis for the claim of intervening rights here is that, on reexamination, Marine Polymer urged the examiner to adopt the district court's claim construction.

On that basis the majority found absolute intervening rights, reversing the district court's finding of infringement.

The inquiry as to whether equitable intervening rights should apply is a fact intensive one, involving consideration of numerous issues. For example, some relevant factors include: 1) whether non-infringing goods can be manufactured from the inventory used to manufacture the infringing product; 2) whether there are "existing orders" for the products; 3) whether the accused infringer made "substantial preparation" to manufacture the products before the reexamination or reissue; and 4) whether the accused infringer relied on the original patent scope in making these preparations. See Seattle Box Co. v. Indus. Crating & Packing Inc., 756 F.2d 1574, 1580-81 (Fed. Cir. 1985). The district court has made no factual findings related to these various fact-intensive inquiries. We therefore remand to the district court to determine in the first instance whether HemCon is entitled to equitable intervening rights.

Reversed and remanded.

Judge Lourie, in dissent, wanted to apply the law, not fabricate statute (at least in this case).

[I]ntervening rights should not apply here. Intervening rights under 35 U.S.C. §§ 307(b) and 316(b) apply only to "amended or new claims." Thus only "amended or new claims" have the effect specified in 35 U.S.C. § 252. Claims 12 and 20 were not new or amended. They are claims from the original patent and their language was not in any way changed. An unchanged original claim should not be considered to be changed for intervening rights purposes based in part on the cancellation during a separate reexamination proceeding of other claims in the patent.

The majority errs by relying on the language of § 252 that claims in a reissue and reexamination patent have the same effect as originally granted claims so as long as they are "substantially identical." Moving first to this analysis, however, misses the threshold requirement in §§ 307(b) and 316(b) that intervening rights apply only to amended or new claims.

This certainly encourages reexamination, which will now be able to reverse findings of infringement by district courts upon the flimsiest pretence.