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Intervening Rights and Invalidity-Argument Estoppel in Litigation After Patent Reexamination
Kenneth G. Parker, David M. O'Dell
The Federal Circuit recently resolved two issues of first impression as to how patent reexamination proceedings affect related patent infringement litigation. These two cases, Marine Polymer1 and Bettcher Industries,2 are likely to have a significant impact on both litigation and reexamination-proceeding practices, as well as the strategic interplay between them. As a brief overview:
- Patentees should know that: (1) their arguments in reexamination can work to eliminate or limit liability for acts that would otherwise constitute infringement; and (2) they will need to address invalidity arguments raised in litigation even if those arguments were or could have been made by the accused infringer in a pending inter partes reexamination, as long as any right of appeal remains in the reexamination.
- Accused infringers should know that: (1) the benefits of forcing a patentee to argue claim scope in a reexamination include the potential for release from liability based on acts taken or products made before the reexamination concludes, even if those acts or products would otherwise support a finding of infringement; and (2) they can seek inter partes reexamination of an asserted patent knowing that they will not be estopped from raising invalidity arguments in litigation that they could have raised in the reexamination, as long as any right of appeal remains in the reexamination.
Patentee Arguments in Reexamination Can Trigger an Infringer’s Intervening Rights
Under 35 U.S.C. §§ 252, 307(b), and 316(b),3 an accused infringer can avoid liability for infringement of a reexamined patent if the scope of the asserted patent claims that issued from reexamination are not substantially identical to the original patent claims. The statutes create “intervening rights” in the accused infringer. These intervening rights come in two types, absolute intervening rights, which are dictated by the statutes, and equitable intervening rights, which, under the statutes, a court has the discretion to grant.
Under absolute intervening rights, the accused infringer has a limited right to practice the asserted patent claims if those claims were modified during reexamination. The accused infringer is not liable for infringing those claims based on acts that occurred before the claims’ issuance from reexamination. And it cannot be liable for infringing the claims for using, selling or offering to sell a product that was made, used, sold, offered for sale, or imported before the claims’ issuance from reexamination. This is true regardless of whether the acts or the using, selling, or offering to sell would otherwise constitute infringement.4 Given that a substantive change in the scope of a claim in reexamination triggers an irrebuttable presumption that the claim improperly issued in the first place,5 intervening rights prevent a patentee from using an improperly issued claim to capture another’s technology.
Under equitable intervening rights, a court may grant an accused infringer a limited right to practice the asserted patent claims after those claims issue from reexamination; again, only if those claims were modified in a substantive manner during the reexamination. The court may allow the accused infringer to manufacture, use, sell or offer to sell a product, where such behavior would otherwise constitute infringement of the claims, if: (1) the product was manufactured, used, sold, offered for sale, or imported before the claims’ issuance from reexamination, or (2) if, before the claims issued from reexamination, the accused infringer had substantially prepared to so manufacture, use, sell, or offer to sell the product. Similarly, the court may allow an accused infringer to practice a claimed method if it was practicing, or had substantially prepared to practice, the method before the claim issued from the reexamination.6
Marine Polymer is important in that it states that intervening rights can be triggered by patentee argument, not only by patentee amendment of the language of the claims or addition of new claims.7 Although sections 307(b) and 316(b) both state that the intervening rights of section 252 apply to "[a]ny proposed amended or new claim determined to be patentable and incorporated into a patent following a reexamination proceeding,” the Marine Polymer panel stated that whether intervening rights are triggered is a function of whether the scope of the claim has changed, “not merely whether different words are used.”8 Otherwise, a patentee could “abuse the reexamination process by changing claims through argument rather than changing the language of the claims to preserve otherwise invalid claims and, at the same time, avoid creating intervening rights as to those claims.”9
Thus, the patentee in Marine Polymer was held to have changed the scope of its claims—without amending them—by arguments convincing the patent examiner to adopt the district court’s erroneous claim construction and issue the claims over the otherwise invalidating prior art.10 Because of this, the Federal Circuit found the accused infringer had absolute intervening rights, and reversed the district court’s summary judgment of infringement and the associated permanent injunction and damages award with respect to the accused products manufactured before the claims’ issuance from reexamination.11 The Federal Circuit also vacated the permanent injunction and damages award with respect to products manufactured after the claims’ issuance from reexamination, and remanded the case to the district court to determine if equitable intervening rights are warranted.12
Marine Polymer is likely to apply to claims issuing from inter partes or post-grant review under the America Invents Act (“AIA”).13 These AIA provisions state that the intervening rights of 35 U.S.C. § 252 shall apply to “any proposed amended or new claim” that issues from inter partes or post-grant review.14 The relevant language of these intervening-rights provisions is identical to that in 35 U.S.C. § 307, the statute interpreted by the Marine Polymer court.
Inter Partes Estoppel Applies Only After All Rights of Appeal Are Exhausted
Under 35 U.S.C. § 315(c), a third-party requester of an inter partes reexamination is partially estopped from challenging the validity of the reexamined claim in litigation. The requester-litigant is estopped from raising invalidity arguments that it “raised or could have raised during the inter partes reexamination proceeding” with respect to a claim “finally determined to be valid and patentable.”15 Bettcher Industries settles the issue that a claim is not “finally determined to be valid and patentable” in a reexamination—and thus the section-315(c) estoppel provision is not triggered—until “all appeal rights are exhausted, including appeals to [the Federal Circuit].”16
Because the district court in Bettcher Industries applied the section-315(c) estoppel prior to the exhaustion of all appeals in the inter partes reexamination, the Federal Circuit vacated the district court’s denial of the requester-defendant’s motion for a new trial on patent invalidity. The district court’s decision to exclude from evidence the prior-art references considered in the inter partes reexamination was erroneous because, although the Patent and Trademark Office (“PTO”) had confirmed the claims over the prior-art references and issued a Right of Appeal Notice in the reexamination, the reexamined claims had not been “finally determined to be valid and patentable”—the requester-defendant still had a right to appeal the PTO’s confirmation to the Federal Circuit.17
It is not clear if Bettcher will apply to the inter-partes-review and post-grant-review estoppel provisions of the AIA.18 Both provisions state that the estoppel is triggered when the proceeding “results in a final written decision.” This is in contrast to the inter-partes-reexamination estoppel, which triggers when the claims are “finally determined to be valid and patentable.” The AIA defines the “final written decision” as the decision on the reexamination or review proceeding issued by the Patent Trial and Appeal Board (“PTAB”).19 Under the AIA, the right to appeal the PTAB’s decision to the Federal Circuit is triggered by the same “final written decision.”20 So, it is possible that the requester will be estopped from raising in litigation the invalidity arguments it “raised or reasonably could have raised during” the proceeding,21 even though the PTAB’s “final written decision” from that proceeding is then on appeal to the Federal Circuit.
Reexamination is a powerful defensive tool in patent infringement litigation. Those asserting their patent rights, and those accused of infringing another’s patent rights, would do well to consider all the potential effects of reexamination on litigation before entering a reexamination in connection with a litigation. Additionally, a patentee should take great care in making its arguments in reexamination even when the claims are not amended, as the arguments can now substantively limit a patentee’s rights even when the claims issue from the reexamination with their original language.
If you have any questions regarding these matters, please contact one of the attorneys in our IP Litigation or Patent Reexamination practice groups.
You may also view the alert in the PDF linked below.
PDF - Intervening_Rights.pdf
____________________1 Marine Polymer Techs., Inc. v. Hemcon, Inc.,
No. 2010-1548, 2011 U.S. App. LEXIS 19602 (Fed. Cir. Sept. 26, 2011). 2 Bettcher Indus. Inc. v. Bunzl USA, Inc.,
No. 2011-1038, 2011 U.S. App. LEXIS 20027 (Fed. Cir. Oct. 3, 2011). 3
Section 252 creates intervening rights with respect to reissued patents. Sections 307(b) and 316(b) state that section 252 applies to patent claims that issue from either ex parte
or inter partes
35 U.S.C. §§ 252, 307(b), 316(b). 5 Marine Polymer
, 2011 U.S. App. LEXIS 19602, at *13. 6
35 U.S.C. §§ 252, 307(b), 316(b). 7
While Marine Polymer
considered arguments made in an ex parte
reexamination, its holding should apply equally to inter partes
reexaminations (and to reissue proceedings). 8 Marine Polymer,
2011 U.S. App. LEXIS, at *13. Judge Lourie would have held that intervening rights do not apply unless the language of the claims is changed in reexamination. Id
. at *28–*29 (Lourie, J, dissenting). 9 Id.
at *16. 10 Id.
at *8–*9. 11 Id.
at *22–*23. 12 Id.
at *25–*26. 13
The inter partes
review provisions of the AIA, 35 U.S.C. §§ 311–319, are in effect as of September 16, 2012. The post-grant review provisions of the AIA, 35 U.S.C. §§ 321–329, take effect on September 16, 2012 and, except for business method patents, apply to patents issuing from applications filed March 16, 2013 or later. The AIA left the relevant ex parte
reexamination provisions unchanged. See
Pub. L. 112-29 Secs. 3(n)(1), 6(f)(2)–(3); USPTO, America Invents Act: Effective Dates, Oct. 5, 2011, available at http://www.uspto.gov/aia_implementation/aia-effective-dates.pdf
35 U.S.C. § 318(c) (inter partes
review) and § 328(c) (post-grant review). 15
35 U.S.C. § 315(c). 16 Bettcher Indus.,
2011 U.S. App. LEXIS 20027, at *45. 17 Id.
at *10–*11, *45. 18
35 U.S.C. §§ 315(e) (inter partes
review) and 325(e) (post-grant review). 19
35 U.S.C. §§ 318(a) (inter partes
review) or 328(a) (post-grant review). 20
35 U.S.C. §§ 319 (inter partes
review) or 329 (post-grant review). 21
35 U.S.C. §§ 315(e) (inter partes
review) and 325(e) (post-grant review).