Effective Date: The procedure set forth in this notice is effective on August 17, 2010.

Applicability Date: The procedure set forth in this notice is applicable to any appeal brief (regardless of whether it is an appellant’s brief, a respondent’s brief, or a rebuttal brief) that is filed in an inter partes reexamination proceeding on or after August 17, 2010.

Brief Summary:  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 inter partes reexamination proceedings (i.e., appellant’s briefs, respondent’s briefs, and rebuttal briefs) 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.

SUPPLEMENTARY INFORMATION: Under the streamlined procedure, upon the filing of an appeal brief in an inter partes reexamination proceeding (i.e., an appellant’s brief, a respondent’s brief, or a rebuttal brief), the Chief Judge will review the appeal brief to determine whether the appeal brief complies with 37 CFR 1.943(c) and 37 CFR 41.67, 41.68, or 41.71 before it is forwarded to the Central Reexamination Unit (CRU) or other Technology Center examiner for consideration. The Chief Judge will endeavor to complete this determination within one month from the filing of the appeal brief. To assist parties in complying with 37 CFR 1.943(c), 41.67, 41.68, and 41.71, the BPAI has provided a checklist for notices of appeal and appeal briefs and a list of eight reasons appeal briefs have been previously held to be noncompliant on the USPTO Web site at: http://www.uspto.gov/ip/boards/bpai/procedures/guidance_noncompliant_briefs.jsp.

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.

Ultimately the PTO sided with i4i and confirmed the validity of its patent. The PTO issued A Notice of Intent to Issue a Reexamination Certificate (NIRC) on April 28, 2010; the Reexamination Certificate being issued today, July 27, 2010 in the eOfficial Gazette for Patents. The Reexamination Certification is the final step in the patent reexamination. Microsoft may not appeal the PTO’s decision.

In the i4i patent reexamination, i4i is represented by Sterne, Kessler, Goldstein & Fox P.L.L.C.  Before the U.S. District Court in the Eastern Distrct of Texas, i4i is represented by McKool Smith.  The company is also represented by Finnegan before the U.S. Court of Appeals for the Federal Circuit.

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.

Click here to view the video.

For several years now, both houses of Congress have debated legislation that would significantly increase a party’s ability to challenge its competitors’ patents in actions before the U.S. Patent and Trademark Office.  A newly-proposed proceeding, known as a Post-Grant Review proceeding will provide an early and comprehensive basis for challenging patents.  Additionally, the current inter partes reexamination process may be replaced by, or supplemented with, an Inter Partes Review proceeding for challenging patents. 

The National Law Review posted an article this week titled, “Challenging Patents Before the USPTO: Looking Ahead to a World of Patent Reexaminations, Post-Grant Reviews and Inter Partes Reviews” by Eldora L. Ellison and Robert Greene Sterne, both directors at Washington, DC-based IP specialty firm Sterne, Kessler, Goldstein & Fox P.L.L.C., that takes a closer look at this topic.  

Click here to read further about these mechanisms for challenging patents and their potential substantial impact on corporate competitors and patent rights.

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.

Read the full decision here: Blazek Sklo Poderady v. Burton International, (D. Minn., June 11, 2010)(CA 08-2342)

On June 16, 2008 Blazek brought a lawsuit against defendants asserting infringement of the patents-in-suit.  To avoid the expense of litigating the infringement suit, the defendants sought an ex parte reexamination of the patent but waited to submit the reexamination until five days before the close of fact discovery.  Prior to that, the defendants did not participate in discovery.  Plaintiff Blazek served an infringement claim chart, but defendants did not respond to it and the defendants did not submit a prior art statement as required by the court’s scheduling order.  The defendants also did not identify any experts or submit expert reports as required by the court’s scheduling order.

After submitting the reexamination request, essentially on the eve of trial, the defendants asked the court to stay the litigation arguing that the plaintiffs would not be prejudiced by a stay and that a stay would streamline the issues for trial.  The court denied the stay.  Citing the 36-month average pendency for ex parte reexaminations, the court held a near three-year delay would prejudice the plaintiff because the inventor was nearly 80-years old and ailing:  ”waiting more than 3 years to resume this case could very likely result in the loss of critical evidence, if not a very important witness.”  The Court also found it relevant that the defendants delayed seeking the reexamination request until fact discovery closed and the case was trial-ready.  The defendants admitted that they knew of the prior art patents on which they sought the reexamination request at least four months before seeking the reexamination.  The Court found it was significant that the defendants sought the stay for the tactical reason of avoiding the cost of litigation and concluded “defendants cannot ‘have their cake and eat it too.’”  Finally the court held that there would not be a streamlining of issues based on the results of the reexamination because the defendants did not assert invalidity of the patent as a defense.

A timely filed patent reexamination may sometimes be effective in staying a concurrent litigation.  But, as this case illustrates, it is no guarantee.  A determination whether to stay a litigation in lieu of a pending reexamination is invariably a balancing test that considers the totality of the circumstances.  The sole factor weighing in favor of a stay in this case was the mere chance that, three years down the road, the patent-in-suit could be invalidated.  Not surprisingly, this was insufficient for this district court judge and the defendant will likely pay heavy price for ignoring the pending litigation.

Sterne discusses how in certain high profile situations in the past two years, the stock price (and company valuation) of a publicly traded patent owner has dropped precipitously due to a significant decision in a patent suit or in a concurrent reexamination of the patent in suit such as the issuance of a non-final office action rejecting some or all of the claims of the patent in reexamination. This precipitous drop is in large part due to “short selling” in the capital markets of the stock of the patent owner, which is driven down by the shorts as a way to make a big profit. Read More on this Hot Topic.

You can listen to that keynote address here: Rob Sterne Bright Lights Keynote Address

The Bright Lights Conference showcased 50 of the most innovative public companies ranked in the 90th percentile for technology leadership. These companies were selected from more than 1,600 small cap companies which were scored, ranked and analyzed on the basis of their rate of innovative change, as well as the novelty, quality and industry impact of their patents.

This paper will be part of the course materials for the upcoming 5th Annual Advanced Patent Law Institute on January 21-22, 2010 hosted at the USPTO.

“We are pleased to provide cutting edge data and analysis on this important developing area of patent reexamination,” said Robert Greene Sterne, founding director of SKGF, paper co-author, and recognized expert on patent reexaminations.  “Previously unavailable, this data and our analysis confirms what we have known anecdotally: the next big battle ground in reexamination is going to be appeals from the CRU.”

Jon E. Wright, SKGF director, paper co-author and former CAFC clerk observed, “The CAFC is going to be confronting a flood of reexam appeals from the CRU.  The Court is going to have to decide critical issues involving reexams to make the system more timely, balanced and effective.”

Lori A. Gordon, SKGF director, paper co-author, and seasoned reexamination attorney with domain experience in electronics and communications noted, “Our data collection and analysis provides the first ever explanation of what is really happening at the CRU in terms of appeals to the BPAI.  The BPAI is experiencing very significant backlogs in appeals from normal patent examination.  The addition of a significant number of time-critical appeals from the CRU will further test the BPAI’s ability to process reexam appeals with the required ’special dispatch.’”

Paper co-author and SKGF associate Byron L. Pickard added that “Other areas of interest are district court review of reexam rulings under the Administrative Procedure Act and possible mandamus actions.  These areas of reexam law may prove critical as the reexam process matures.”

Download the full paper here: Appeals from the Central Reexamination Unit