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December 8, 2011

Patent Debris

Construction Equipment Company (CEC) sued Powerscreen for infringing 5,234,564, which claims a construction site debris sifter. "The district court ruled that the '564 patent was valid, enforceable, and willfully infringed by Powerscreen, and entered final judgment... The Federal Circuit affirmed the district court's judgment. Constr. Equip. Co. v. Powerscreen Int'l Distrib. Ltd., 243 F.3d 559 (Fed. Cir. 2000), cert. denied, 531 U.S. 1148 (2001)." That should have been the end of it, but it was only the beginning. The USPTO and CAFC demonstrate an abject disregard for the law and the constitution, as the anti-patent juggernaught rolls on, leaving only debris from intellectual property.

In Re Construction Equipment (CAFC 2010-1507) precedential; Judges Newman (dissent), Prost (author) and O'Malley

The majority ruled the patent invalid by PTO reexamination, after the courts had previously ruled, in final judgment, the patent valid via litigation.

Judge Newman, in dissent:

Res judicata and issue preclusion

Seven years later Powerscreen requested reexamination on the ground of obviousness, citing the same references and additional references, placing strongest reliance on the same references that had been cited in the litigation.  However, when an issue has been litigated and judgment entered in a court of last resort, "[t]he underlying rationale of the doctrine of issue preclusion is that a party who has litigated an issue and lost should be bound by that decision and cannot demand that the issue be decided over again." In re Freeman, 30 F.3d 1459, 1465 (Fed. Cir. 1994).

These fundamentals of judicial authority and administrative obligation are not subject to the vagaries of shifts in the burden or standard of proof in non-judicial forums, as the panel majority proposes.  Although this aspect was weighed in In re Swanson, 540 F.3d 1368 (Fed. Cir. 2008), a lower stan-dard of proof in an administrative agency cannot override the finality of judicial adjudication.  The burden of proof assigned to administrative bodies is a matter of policy and procedure, not a change in substantive law.  Administrative burdens do not override the Judicial Power of dispositive judgment. 

The public interest in finality is particularly compelling in the context of commercial investment and property rights.  The adverse effect on the patent incentive, due to uncertainty as to the validity of a duly granted patent, is notorious, and permeates the hearing record of the recently enacted America Invents Act.  The reexamination that is here sustained, after final judgment in the courts, contravenes the policy of the reexamination procedures that applied in this case.

Here, the question of obviousness had been finally decided, and Powerscreen is precluded from reopening the same issue in another forum.  Whether viewed as res judicata or issue preclusion, reexamination on this issue is not available.

The constitutional plan and the administrative state

The judicial power established in Article III, ยง1, is "an inseparable element of the constitutional system of checks and balances." N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 58 (1982). My colleagues on this panel object to the intrusion of the Constitution into this appeal, Maj. Op. at 5-6 n.3, arguing that the role of judicial rulings in administrative proceedings cannot be considered because the parties did not raise it in the Patent and Trademark Office.  However, the nation's fundamental law is not waivable.  The Court has reiterated that "[w]hen these Article III limitations are at issue, notions of consent and waiver cannot be dispositive because the limitations serve institutional interests that the parties cannot be expected to protect." Commodity Futures Trading Comm'n v. Schor, 478 U.S. 833, 851 (1986). 

The plan of the Constitution places the judicial power in the courts, whose judgments are not thereafter subject to revision or rejection.  Neither the legislative nor the executive branch has the authority to revise judicial determinations.  See Chi. & S. Airlines, Inc. v. Waterman S.S. Corp., 333 U.S. 103, 114 (1948) ("Judgments, within the powers vested in courts by the Judiciary Article of the Constitution, may not lawfully be revised, overturned or refused faith and credit by another Department of Government."); Gordon v. U.S., 69 U.S. 561, 561 (1864) (judgments of Article III courts are "final and conclusive upon the rights of the parties").  In Plaut v. Spendthrift Farm, Inc., 514 U.S. 211 (1995), the Court explained that: 

The record of history shows that the Framers crafted this charter of the judicial department with an expressed understanding that it gives the Federal Judiciary the power, not merely to rule on cases, but to decide them, subject to review only by superior courts in the Article III hierarchy--with an understanding, in short, that "a judgment conclusively resolves the case" because "a 'Judicial Power' is one to render dispositive judgments." 

Id. at 218-19 (quoting Frank H. Easterbrook, Presidential Review, 40 Case W. Res. L. Rev. 905, 926 (1990)). The Court traced the history of judicial finality to Hayburn's Case, 2 U.S. (2 Dall.) 409 (1792), which "stands for the principle that Congress cannot vest review of the decisions of Article III courts in officials of the Executive Branch." Plaut, 514 U.S. at 218. 

The Reexamination Statute

The reexamination statute, in its various evolving forms, did not and does not purport to authorize departure from the principles of judicial review and judicial finality.  The statute authorizes the return of an issued patent to the administrative agency so that the patent examiners can conduct a more thorough examination than may have occurred the first time around.  The purposes remain as initially conceived, to provide a less costly way of removing or restricting patents that should not have been granted or that were granted too broadly, to permit such challenge even before litigation-inducing controversy has arisen, and also to enable patentees to bring overlooked references into the examination process.

The reexamination statute seeks to replace or reduce the expense and encumbrance of litigation; but when the same issue has already been litigated and finally adjudicated, interested persons should be able to rely on the judicial decision. Throughout the legislative adjustments to reexamination, no one suggested that reexamination in the PTO could override a final judicial decision.  Such an unconstitutional act would not have been contemplated by the Congress, and is improperly endorsed by this court.  For the patent here at issue, the question of obviousness was litigated and decided in the district court, followed by decision on appeal to the Federal Circuit, and denial of certiorari.  The PTO on reexamination can no more invalidate an adjudicated valid patent, than can the PTO validate a patent that has been adjudicated invalid.  Nor does the reexamination statute purport to grant such authority.

The merits 

The panel majority decides the merits of this appeal as if there had been no litigation history, as if the issue of obvious-ness had not previously been fully adjudicated. As in the prior appeal to the Federal Circuit, the various ele-ments of the patented device were selected from various references, and the question is whether it would have been obvious to combine these elements, and in this way.

Precedent warns against hindsight combination whereby disparate elements are fitted into the template of the new device with the guidance of the patentee.  My colleagues present a classical illustration of judicial hindsight to construct a machine that was not previously known, a machine that achieved commercial success because it provided previously unavailable advantages.

See KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 418 (2007) ("[R]ejections on obviousness grounds cannot be sustained by mere conclusory statements; instead, there must be some articulated rational underpinning to support the legal conclusions of obviousness.").

The Court recognized in KSR that "inventions in most, if not all instances rely upon building blocks long since uncovered, and claimed discoveries almost of necessity will be combinations of what, in some sense, is already known." 550 U.S. at 419. See Ruiz v. A.B. Chance Co., 357 F.3d 1270, 1275 (Fed. Cir. 2004) ("Inventions typically are new combinations of existing principles or features.").  We are offered no rationale for the combination now deemed obvious, other than the patentee's achievement.  On any view of the posture in which this case reaches us, the panel majority errs in its decision. 


As a matter of constitutional plan, judicial power, legislative structure, and national innovation policy, a patent that has been held valid or invalid in court is not subject to administrative redetermination of the same issue.  On these premises, reexamination in the PTO is not generally available after the issue of patentability has been litigated to a final judgment from which no appeal can be or has been taken. The procedure here accepted is in violation of fundamental principles.

On a wider perspective: Rule of law in this country is a not-so polite fiction. America is a "might makes right" police-state plutocracy in operation, with a tiny steam valve called "democracy," where, if you have been paying attention, the vote and subsequent party in power makes little difference in outcomes. As keepers of the faith, the courts naturally embrace establishmentarian thought. The above ruling is merely exemplary of the present policy to eviscerate patent protection for all but large corporations. Whatever his supporters thought was going to happen in a new administration, Barack Obama has been a Demo Dubya with an extra heaping of hypocrisy. Under the current regime, the banks were bailed out; the insurance companies engorged on "health care"; the war on terror fueled; the unemployed and homeowners ignored in practice, albeit thrown bread crumbs by ineffectual legislation; the corporate patent act passed and signed into law. Regardless of party in power, all but the "citizen initiatives" (health care, unemployment, housing) ruses would have transpired. Unlike effete liberals, Republicans make no bones of being the plutocracy party, laced with Christian nutcake, unabashed supporters of the military-industrial complex, torture in all but name, xenophobia, and a raw police state.

Posted by Patent Hawk at December 8, 2011 9:13 PM | Prior Art