Other panelists:

Leora Ben-Ami, Kaye Scholer LLP, New York, NY

Tracy W. Druce, Novak Druce + Quigg LLP, Houston, TX

James W. Morando, Farella Braun + Martel LLP, San Francisco, CA

Loria B. Yeadon, Intellectual Ventures, Bellevue, WA

The Twelfth annual Sedona Conference^® on Patent Litigation again features a stellar faculty, including a judge from the CAFC, a 3rd Circuit judge, a Magistrate Judge from the ED of Texas, in-house counsel from Google and Bristol-Myers Squibb, and nationally renowned trial attorneys and patent counsel from coast to coast.

Click here for more information about this event.

Download Order: Motion for Preliminary Injunction; 2010-08-31; Denied; FLSD; District Judge Cecilia M. Altonaga; Fusilamp, LLC v. Littelfuse, Inc., et. al. (1-10-cv-20528) FLSD

Plaintiff Fusilamp, LLC’s filed a motion for preliminary injunction June 24, 2010 requesting the court to enjoin defendants, Littelfuse, Inc. and Catalina Performance Accessories, Inc. from infringing United States Patent No. 5,598,138 covering a fault-indicating blade fuse, typically used in automobiles. Fusilamp  initially filed its complaint alleging patent infringement, declaratory judgment, and breach of contract on February 19, 2010. Shortly thereafter, Littelfuse filed a request for an ex parte reexamination of the ‘138 Patent. On May 20, 2010, the PTO granted and ordered reexamination of all requested claims.

By the court’s standard, to prevail on a motion for preliminary injunction, the plaintiff must show: (1) a substantial likelihood of success on the merits of the underlying case, (2) the movant will suffer irreparable harm in the absence of an injunction, (3) the harm suffered by the movant in the absence of an injunction would exceed the harm suffered by the opposing party if the injunction issued, and (4) an injunction would not disserve the public interest. The failure of the movant to establish even one of the four factors “would, standing alone, make preliminary injunctive relief improper.” Siegel v. LePore, 234 F.3d 1163, 1176 (11th Cir. 2000). A plaintiff alleging patent infringement demonstrates a substantial likelihood of success by showing: (1) the patent is likely to withstand a challenge to its validity; and (2) the plaintiff will likely prove the defendant is infringing the patent. See Amazon.com v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001).

Fusilamp USA maintained the ‘138 Patent was likely to withstand a challenge to its validity because it is presumed valid, and this presumption exists at every stage of the litigation. In response, Littelfuse pointed to the reexamination order granted by the PTO and examples of prior art that it contended undermined the patentability of an integrated light-emitting fault indicator fuse.

The court acknowledged that, at a trial to determine the validity of a patent, a patent is presumed valid under 35 U.S.C. § 282 and the burden is placed on the alleged patent infringer to overcome the presumption by clear and convincing evidence. However, the court found that this is not the same burden an alleged infringer must meet when it defends against a motion for preliminary injunctive relief. That is, the alleged infringer must only establish the existence of a substantial question as to the invalidity of the patent.

On this issue, the court found that, while the PTO’s decision to reexamine the ‘138 Patent is not dispositive on the issue of validity, it is relevant to whether a substantial question of invalidity has been raised:

“In arriving at its reexamination decision, the PTO considered the prosecution history of the ‘138 Patent and recognized a lack of clarity regarding an amendment to the original application as well as certain statements made by the patent applicant as to the novelty of the incorporated light-emitting electrical device … That the PTO has ordered a reexamination of the ‘138 Patent on grounds of patentability supports Fusilamp’s assertion of a substantial question regarding the patent’s validity.” Order p. 7 (citations omitted).

Ultimately the court found that the presumption of validity does not relieve a patentee who moves for a preliminary injunction from carrying the normal burden of demonstrating it will likely succeed on all disputed liability issues at trial, even where the issue concerns the patent’s validity. The court concluded that, because Littelfuse met its burden in establishing substantial questions exist as to the validity of the ‘138 Patent and Fusilamp USA failed to establish a substantial likelihood of success on the merits of the underlying claim, plaintiffs’ motion for preliminary injunction was denied.

The USPTO recognizes the need to reduce the pendency of reexamination proceedings and improve the efficiency of the reexamination process. The USPTO is considering a number of short and long-range initiatives that can be implemented in three phases. In phase I, the USPTO will implement streamlined procedures, as well as optional programs in which patent owners and third party requesters may elect to participate in order to gain the benefit of shorter pendency. In phases II and III, the USPTO will consider the data gathered from phase I and the feedback from the patent owners and other stakeholders, and implement process changes that are likely to improve efficiency. Such changes may include internal procedural changes, rule making that includes opportunities for the public to comment, and/or administrative proposals for statutory changes to enhance the efficiency of the USPTO in conducting reexamination proceedings. As part of phase I to reduce pendency and improve efficiency in ex parte reexamination proceedings, the USPTO is implementing, in this notice, a pilot program in which patent owners may waive the right to file a patent owner’s statement upon a request made by the USPTO. This will enable USPTO in suitable cases to issue the first Office action on the merits together with or soon after the reexamination order, and thereby reduce the pendency of the proceeding by about three to five months.

The Advisory Action, which follows the patent owner’s response after a final rejection, stated that Flexiteek had failed to overcome all of the rejections of the patent-in-suit. After the Advisory Action issued, the defendant moved the district court to lift the permanent injunction, invoking language therein stating that “upon any decision by a court of the [PTO] that renders the ‘881 Patent invalid or unenforceable, [the defendants] may petition this Court to terminate this Permanent Injunction.” The plaintiffs argued that the Advisory Action was not a final PTO decision and that they had “additional challenges,” including a timely noted appeal to the BPAI. The Court sided with the defendants and terminated the permanent injunction: “the Court finds that the PTO’s Advisory Action is not only the most recent decision regarding the ‘881 Patent’s validity, it is a decision made after a thorough examination of the matter conducted by a body which holds particular expertise in such issues. The Court finds that the PTO’s determination should control and the Court will terminate the Permanent Injunction.” The plaintiff also pointed out its ability to amend its patent claims based on a reissue application of the same patent, and that even if the current claims were canceled defendants will infringe the reissued claims. The Court rejected that argument as speculative.

Some critics have argued that this decision is decided wrongly. The final Office action was on appeal to the BPAI and the claims of the patent had not been finally cancelled. The BPAI may reverse the CRU or the patent owner may seek additional appeals of the reexamination to the Federal Circuit. Simply put, these critics contend that the CRU’s determination is only the first step in determining patent validity in a reexamination. Indeed, it is not uncommon for the BPAI to reverse final CRU determinations. Statistics show that a sizeable number of appealed ex parte reexaminations result in reversal and issuance of reexamination certificates with one or more original claims confirmed. If this decision is widely adopted, and permanent injunctions can be routinely lifted based merely on a final Office action, tremendous uncertainty could result for patent owners. Critic’s views aside, the case underscores the significant impact that reexamination—even an ongoing one—can have on the remedies available in concurrent litigation. And, it highlights the need for parties to educate the court on the procedural nuances of reexamination so that well informed orders can be entered.

Read the full notice here: Clarification on the Procedure for Seeking Review of a Finding of a Substantial New Question of Patentability in Ex Parte Reexamination Proceedings

The notice clarifies that Director Kappos has delegated to the Chief Judge of the Board of Patent Appeals and Interferences (BPAI) the authority to review issues relating to the grant of the SNQ.  The Chief Judge can further delegate the SNQ review to a panel of Administrative Patent Judges who are deciding the appeal in the ex parte reexamination proceeding.  As is currently the case, the notice identifies that separate from the BPAI’s consideration of the SNQ issue, a patent owner may file a petition under 37 CFR 1.181(a)(3) to vacate an ex parte reexamination as “ultra vires.”

This right of appeal is not interlocutory.  Instead, for an ex parte reexamination proceeding ordered before June 25, 2010, the patent owner may include a challenge to the finding of an SNQ as a separate ground in an appeal to the BPAI, even if the patent owner did not request that the Central Reexamination Unit (CRU) reconsider the finding of the SNQ during prosecution.

For ex parte reexaminations proceedings ordered on or after June 25, 2010, the patent owner must request that the CRU reconsider the grant of the SNQ as part of a full response to the Office action in order to preserve the issue for appeal.

The notice procedures do not apply to inter partes reexamination proceedings.  A determination by the USPTO in an inter partes reexamination either that no SNQ has been raised or that a reference raises a SNQ is final and non-appealable.  See 35 U.S.C. 312(c).

This change is a good one for the reexamination system.  However, it can be argued that it does not solve the problem of serial ex parte reexaminations filed by third party requesters to harrass the patent owner because it does not provide an interlocutory appeal.  Moreover, it can also be argued that 35 U.S.C. needs to be amended to apply this procedure to a grant of an SNQ in an inter partes reexamination.

According to the Federal Register, the Chief Judge of the Board of Patent Appeals and Interferences (BPAI) or his designee (collectively “Chief Judge”), will have the sole responsibility for determining whether appeal briefs filed in ex parte reexamination proceeding appeals comply with the applicable regulations, and will complete the determination before the appeal brief is forwarded to the examiner for consideration.  The examiner will no longer review appeal briefs for compliance with the applicable regulations.  The USPTO expects to achieve a reduction in ex parte reexamination proceeding appeal pendency as measured from the filing of a notice of appeal to docketing of the appeal by eliminating duplicate reviews by the examiner and the BPAI.

Read the full notice at http://edocket.access.gpo.gov/2010/pdf/2010-12534.pdf.

The PTO’s construction here, though certainly broad, is unreasonably broad.  The broadest-construction rubric coupled with the term ‘comprising’ does not give the PTO an unfettered license to interpret claims to embrace anything remotely related to the claimed invention.  See Schriber-Schroth Co. v. Cleveland Trust Co., 311 U.S. 211, 217 (1940) (‘The claims of a patent are always to be read or interpreted in light of its specification.’)
 

The court’s holding is significant for reexamination practice because the CRU often fails to give the specification its proper weight in construing claim terms.  When the specification is given short shrift, or even ignored, the patent owner may be harmed irreparably because the resulting construction is often overly broad.  An overly broad claim construction can force otherwise unnecessary claim amendments, which in turn can greatly impact potential damages available to the patent owner.  An overly broad construction also can force unnecessary argument-based estoppels as the patent owner challenges the construction.  Finally, a broad construction could draw in more potentially invalidating references than would have been available under a narrower construction according to the claim construction principles used by district courts. 

The court declined to address an issue of critical importance where a reexamination proceeds in parallel to district court litigation — whether a federal court’s Markman ruling binds the PTO:

 With respect to the “material for finishing the top surface of the floor” limitation, Suitco contends that the Board should have been bound by this court’s earlier construction of “material for finishing.”  In the alternative, Suitco contends that the Board’s adopted construction is unreasonable.  This court need not address Suitco’s first argument because even under the broadest-construction rubic, the PTO’s construction is unreasonable.”

In our view, the failure of the Court to address this important reexamination issue is significant.  The issue is what role Markman rulings in parallel proceedings should play in PTO during reexamination.  This issue is ripe for treatment by the Federal Circuit and cuts to the larger issue of whether it is even appropriate to apply the broadest reasonable interpretation (“BRI”) standard during reexamination.  The premise for the PTO’s application of the BRI standard is that the applicant has the ability to amend claims.  But some argue this is not the case in reexamination with parallel district court proceedings.  The argument against the CRU applying the BRI standard is that the patent owner, from a practical perspective, does not have the same freedom to amend claims.  Claim amendments can significantly impact not only patent damages but the entire court proceeding and can lead to great waste.  By taking a broader claim construction at the CRU, the PTO effectively whipsaws the patent owner because the district court mandate to follow well established claim construction canons outlined in Philips.  This violates the basic patent law tenent that claims should be construed the same for validity and infringement.  Amgen Inc. v. Hoechst Marion Roussel, Inc., 314 F.3d 1313, 1330 (Fed. Cir. 2003) (“[i]t is axiomatic that claims are construed the same way for both invalidity and infringement.”)

Wednesday, March 3, 2010

Presented By

David Cushing, Sughrue Mion, PLLC
David Emery, Sughrue Mion, PLLC

An important webinar on the fundamentals of US reexamination practice and procedure before the USPTO, sponsored by the American Intellectual Property Law Association was held on Wednesday, March 3, 2010.  David J. Cushing and David Emery of Sughrue Mion, PLLC, of Washington, DC were the presenters. The seminar lasted for 90 minutes and was accompanied by a useful Powerpoint presentation and article. The seminar is available through the AIPLA website for a fee and can be accessed here.

David J. Cushing, Sughrue Mion, PLLC

David Emery, Sughrue Mion, PLLC

As summarized on the AIPLA website: “Ex parte and inter partes reexamination practice is an important tool for both patent owners and non-patent holders.  It is extremely important to anticipate how a reexamination will impact your intellectual property rights whether you are a patent owner engaged in a reexamination or a third party requestor challenging a patent.  The presenters, based on their extensive experience, will provide insights into ex parte and inter partes reexamination practice … Those new to reexamination and those wishing to keep pace with this evolving practice will benefit from this online program.”

Presentation Topics

• Introduction to reexamination;
• Tradeoffs between ex parte and inter partes reexamination;
• Reexamination in the context of litigation;
• Practical aspects of reexamination procedure at the USPTO.

Summary

David Emery begins the seminar with an overview of ex parte reexamination practice and procedure. It is a good basic tutorial that provides relevant statistics and practice tips. He then proceeds to discuss the basics of inter partes reexamination.  At various points in the program polls were taken to assess audience attitude about ex parte and inter partes reexaminations both before and after the Supreme Court KSR decision.  He presents USPTO statistics showing the rapid increase in filings of inter partes re-examinations since 2001. David Cushing is a noted reexamination attorney with considerable experience and the public is fortunate that he shares his practical insights in this seminar. These observations and others are important for successful reexamination practice.

David Cushing

The statistics posted on the USPTO web site show substantial year-over-year increases in reexamination filings as parties become increasingly wary of the very high cost and extremely low success rates for patent litigation.  The good news is that inter partes reexamination is an attractive enough alternative to cause that increase.  The bad news is that the same statistics show that there are 556 pending inter partes reexams (the net of reexamination orders less reexamination certificates) as of the end of 2009, 270 of those from reexamination orders issued in the previous 15 months.  This recent increase in the caseload is stressing the system.

David Cushing, then addresses important practice tips centered on inter partes reexaminations.  He warns practitioners to be careful with their reexamination requests to avoid an unintended “bounce” that could occur for mere administrative informalities. He comments that in his opinion the significant work overload at the Central Reexamination Unit is resulting in a very critical eye being brought to reexamination requests in terms of filing formalities. He also comments on the 50 page requirement for responses to inter partes office actions and how the use of declarations can count in the page limit when it is denominated as part of “attorney argument.”  He also addresses the role of the Substantial New Question (SNQ), particularly with regard to serial reexaminations.

David Cushing

Because the inter partes reexamination rules and proceedings are relatively new, there will be a lot of clarification occurring over the next decade, by interpretation and sometimes revision of the rules and MPEP, and perhaps some PTO policy changes as well.  While this is occurring, there will be frustrations.  But in the meantime, even with its imperfections, inter partes reexamination is a very attractive alternative to litigation. This seminar warrants review by anyone interested in a good overview of reexamination practice and procedure at the USPTO.

The statutory basis for appeals to the Federal Circuit for ex parte reexamination is 35 U.S.C. § 306.  Therein, the statute states that the patent owner may seek court review of Board decisions “under the provisions of sections 141 to 145 of this title.” (see 35 U.S.C. § 306)  Sections 141-144 deal with appeals to the Federal Circuit.  Section 145, on the other hand, appears to permit a civil action against the Director in the United States District Court for the District of Columbia.

However, allowing a civil action in ex parte reexamination appears to be inconsistent with Section 141 itself.  Specifically, Section 141 states that “[a] patent owner, or a third-party requester in an inter partes reexamination proceeding, who is in any reexamination proceeding dissatisfied with the final decision in any appeal to the [Board] under section 134 may appeal the decision only to the United States Court of Appeals for the Federal Circuit.” (See 35 U.S.C. § 141).  Section 141 thus appears to foreclose any civil action under section 145.

This anomaly is the result of amendments to the statutes as a result of passage of the American Inventors Protection Act of 1999 (“AIPA”).  The AIPA created the inter partes reexamination procedure.  The AIPA amended 35 U.S.C. § 141 to state that appeals from any reexamination may be taken only to the Federal Circuit.  Notably, it left unchanged § 306, which still permitted the patent owner in ex parte reexamination to seek review under § 145.  Thus, the cross reference in § 306 to § 145 is in tension with the AIPA amendment to § 141.

The PTO rules governing review of Board decisions are 37 C.F.R. §§ 1.301-304.  Notwithstanding the above noted anomaly, the PTO has interpreted the statutes to foreclose § 145 actions for any ex parte reexamination filed after November 29, 1999.  Specifically, Rule 303 states that “for an ex parte reexaminations filed on or after November 29, 1999, and for any inter partes reexamination proceeding, no remedy by civil action under 35 U.S.C. § 145 is available.”

The Rule 303 provision was recently challenged in the U.S. District Court for the Eastern District of Virginia in the case styled Sigram Schindler Beteiligungsgesellschaft MBH v. Kappos, No. 1:09cv935.  The plaintiff Sigram Schindler (“SSBG”) is a patent owner in the middle of an ex parte reexamination appeal to the Board.  It challenged PTO Rule 303 as being “in excess of [the PTO’s] statutory jurisdiction, authority, or limitations, or short of statutory right.”  Despite the fact that the Board had not yet rendered a decision in its appeal, SSBG sought a declaratory judgment action because the challenged Rule 303 currently purports to deprive SSBG of it right under § 306 to file a civil action in a D.C. District Court, thereby causing SSBG harm.  According to SSBG, it would have been forced to appeal to the Federal Circuit under § 141 and thereby waive its right to appeal under § 145, or file a civil action under § 145 and risk losing its right to appeal to the Federal Circuit under § 141 if the D.C. District Court determined that it lacked jurisdiction to hear the case after expiration of the sixty-day deadline for appealing to the Federal Circuit.

The PTO, on the other hand, challenged the ripeness of SSBG’s declaratory action because there was currently no justiciable “case” or “controversy” under Article III of the Constitution.  For instance, a favorable Board decision that reversed the examiner’s finding of unpatentability could preclude SSBG from seeking any review of the Board’s decision.  The PTO also challenged SSBGs standing to bring the suit.

In a memorandum decision dated December 18, 2009, the court ruled in favor of PTO, finding that SSBG’s request for judgment was “unripe because: (i) the BPAI has not yet rendered an adverse decision that would allow SSBG to seek court review of that determination, making the purported hardship contingent and speculative, and (ii) plaintiff has not demonstrated that the challenged regulation creates an immediate, direct, and significant hardship altering its day-to-day activities; and (iii) any hardship is remediable by 28 U.S.C. § 1631.”   28 U.S.C. § 1631 relates to “Transfer to cure want of jurisdiction.”  It provides a court finding that it has no jurisdiction to, in the interest of justice, “transfer such action or appeal to any other court in which the action or appeal could have been brought at the time it was filed or noticed, and the action or appeal shall proceed as if it had been filed in or noticed for the court to which it is transferred  on the date upon which it was actually filed in or noticed for the court form which it is transferred.”  Therefore, the court determined there was no “justiciable case or controversy, and thus no jurisdiction to reach the merits of whether 37 C.F.R. § 1.303 contravenes 35 U.S.C. § 306.”  (Id. at 22.)

Despite the fact that the court did not reach a decision on the merits, it appears clear that 2002 amendments to Section 141 did intend to foreclose Section 145 actions for ex parte reexaminations.  As noted above, this is how the Office construes these provisions.  Until such time as the issue is properly raised, it would behoove patent owners to assume that appeals in ex parte reexamination will go straight to the Federal Circuit.

The statutory basis for appeals to the Federal Circuit for inter partes reexamination is straightforward.  It is governed by 35 U.S.C. § 315.  Unlike the anomalous ex parte reexamination appeal statute, Section 315 states that the patent owner and the third party requester “may appeal under the provisions of sections 141-144.”  Thus, there is no ambiguity for inter partes reexamination and appeals from the Board may only be taken to the Federal Circuit.

Read the full motion here: Court Grants Motion In Limine to Exclude from Trial Evidence Relating to Pending Reexamination

In Presidio, the USPTO granted Defendant American Technical Ceramics’ (ATC) replacement request for reexamination of the patent-at-issue on October 20, 2009.  ATC intended to offer specific determinations and findings made by the USPTO in its order granting the reexamination as evidence at trial, although it did not intend to argue that the patent-at-issue was invalid because of the grant of reexamination.  ATC argued that the specific USPTO findings it sought to introduce as evidence “are directly relevant and highly probative of specific issues underlying ATC’s inequitable conduct and invalidity defenses.”  These include: (1) “non-cumulativeness of the reexamination references in the prior art in the original prosecution” and (2) “importance of their consideration to a reasonable examiner, i.e., their materiality to patentability.”

Plaintiff Presidio moved to exclude from trial evidence relating to that reexamination on the ground that it was unfairly prejudicial and not relevant to the lawsuit, citing Hoechst Celanese Corp. v. BP Chemicals Ltd., 78 F.3d 1575, 1584 (Fed. Cir. 1996) (”the grant by the examiner of a request for reexamination is not probative of unpatentability.”)

The court distinguished between pending reexaminations and concluded reexaminations, suggesting that concluded reexaminations may have probative value, citing Molins PLC v. Textron, Inc., 48 F.3d 1172, 1179 (Fed. Cir. 1995) (”the result of a USPTO proceeding that assesses patentability in light of information not originally disclosed can be of strong probative value in determining whether the undisclosed information was material.”) (emphasis added).   In this case, however, since the reexamination had only just been granted by the PTO, the court did not view the grant as having much probative value.  The court also relied on the USPTO’s 2007 ex parte reexamination statistics, stating “although it appears that the USPTO grants about 92% of the requests for reexamination, in only 12% of cases does that reexamination result in all claims being cancelled.”   It is unclear why the court relied on 2007 statistics, rather than the current PTO statistics.  Although the statistics are similar in this instance, the reliance on old data has the potential for decisions to be based on faulty premises.  That statistic led the court to conclude, “[t]here is thus a ’substantial likelihood’ that, despite the grant of reexamination, the USPTO will uphold the patentability of some or all of Presidio’s claims.’”  Despite ATC’s stated intention to use the USPTO’s determinations and findings for limited purposes, the court still excluded any reference of the reexamination from trial.