August 2010
DigiTimes
By Charles E. Van Horn; Esther H. Lim; Kenie Ho
Authored by Kenie Ho, Esther H. Lim, and Charles E. Van Horn
For many businesses, their patent portfolios provide the greatest weapon for keeping their competitive edge in the U.S. marketplace. It can be used as a sword to strike at competitors—precluding them from selling competing products that infringe the patents—or as a shield—deterring competitors from bringing a patent-infringement suit because they risk the threat of a countersuit. The reissue and reexamination procedures of the U.S. Patent and Trademark Office (USPTO) are valuable tools for businesses that want to strengthen these weapons or weaken those of their competitors. Reissue allows patent owners to correct errors in U.S. patents. Reexamination allows anyone to test the validity of a U.S. patent.
Pfizer Inc., a U.S. biomedical and pharmaceutical company, recently took advantage of the reissue procedure to strengthen one of its prized patents covering Lipitor—a popular drug prescribed by doctors to treat high cholesterol. In 2003, Ranbaxy Laboratories Ltd., an Indian drug manufacturer that makes a generic version of Lipitor, invalidated one of Pfizer’s patent claims. The invalidated claim was in a Pfizer patent due to expire over a year after Pfizer’s main patent covering Lipitor. Pfizer sells billions of dollars of Lipitor annually, and losing over a year of patent protection posed a challenge. Pfizer’s solution? Use the USPTO reissue procedure to correct the claim. In early 2007, Pfizer filed a reissue application. Two years later, Pfizer received the corrected—and strengthened—claim.
Electronic Frontier Foundation (EFF), a civil-liberties group in San Francisco, regularly uses reexaminations to attack the validity of patents it believes limit free expression online or suppress innovation in the software and Internet fields. EFF’s so-called patent-busting project identifies patents and collects prior art to show invalidity. Once it identifies the patents and prior art, it files reexamination requests at the USPTO. EFF has successfully challenged the validity of such patents as Clear Channel’s live concert-recording patent and NeoMedia Technologies’ barcode-lookup patent. It has targeted other patents, such as Amazon’s one-click patent, Nintendo’s hand-held software-emulation patent, and Acacia Technologies’ streaming-media patent.
Reissue allows a patentee to correct a variety of errors in a patent. An error may include inadvertently obtaining a patent that does not cover all the disclosed inventions the patentee intended to protect. In 2003, Brady Construction Innovations, Inc., a construction-supply company based in Beverly Hills, California, lost a patent-infringement lawsuit to its competitor Metal Lite, Inc. because the U.S. district court ruled that Metal Lite’s products did not infringe Brady’s patent. Brady, however, believed its patent should have covered Metal Lite’s products and applied for a reissue patent to correct the deficiency. The USPTO granted Brady the reissue patent on January 9, 2007. Brady filed a new patent-infringement lawsuit against Metal Lite the same day.
Just as a patent may not cover all the inventions the patentee intended to protect, a patent can also inadvertently cover too much, such as an invention already known in the prior art, which would render the patent invalid. Reissue can correct such error. In 1991, Keith Manufacturing Co., a conveyer manufacturer located in Oregon, U.S.A., lost a patent-infringement suit against its competitor Hallco Manufacturing Co. because certain claims in Keith’s patent covered an old Hallco conveyor system that predated Keith’s claimed invention. Keith requested a reissue patent from the USPTO to narrow the original claims to exclude the old Hallco conveyor system. After receiving the reissue patent, Keith resued Hallco, which led to settlement.
To be eligible for reissue, the patent owner must acknowledge and identify an error in the patent. But there are limits to the types of errors correctable through reissue.
First, if a patent fails to cover all the inventions a patentee intended to protect, the patentee may correct that error only if a broadening reissue is filed within two years of the patent’s original issue date. In the Brady v. Metal Lite case, Brady’s reissue patent was eventually invalidated because Brady used the reissue process to broaden its original patent to cover Metal Lite’s products more than two years after the original issue date.
Second, even if a patentee requests a broadening reissue within the two-year time limit, the patentee may not broaden the original patent to recapture disclaimed subject matter. For example, during the patent-application process, a patentee may narrow the coverage of a patent to exclude certain prior art. If the patentee later decides it did not really need to narrow the patent to exclude the prior art or that it narrowed it too much, the USPTO might not allow the patentee to recapture the disclaimed subject matter.
Third, if a patentee made misrepresentations or failed to submit relevant prior art to the USPTO during the patent-application process with the intent to deceive the USPTO, the patentee may not use reissue to correct this inequitable conduct. Finally, only a patent owner can request a reissue of the patent, but once the reissue process has begun, a third party may file a protest arguing why any claim in the patent is not patentable. Other than the protest, a third party cannot participate in the reissue process.
Businesses have increasingly used reexamination to attack U.S. patents. In the past decade, the number of reexaminations has more than doubled from about 400 filings in 1999 to over 900 in 2009. Oftentimes, the reexamined patent is part of a pending patent-infringement suit. Indeed, about half of recent reexamination requests are litigation related. Judges may stay a patent litigation pending the outcome of the reexamination. The stay benefits a defendant because it gives the defendant time to prepare the case and search for additional prior art to use against the patent.
Another advantage is that reexaminations are much cheaper than patent lawsuits, which can cost millions of dollars. One of the main reasons for the high litigation costs is the extensive discovery permitted in U.S. federal courts. Reexaminations, on the other hand, are more focused, discovery more limited or nonexistent.
Further, in federal court, an issued patent is automatically presumed valid. Judges and juries in federal court can declare the patent invalid only if there is “clear and convincing” evidence. But in reexaminations, there is no such presumption; thus, it can be easier to invalidate a patent at the USPTO.
Even if a patent is not completely invalidated during reexamination, the USPTO will often reduce the scope of patent claims. A device or process that might have infringed a patent before reexamination might not infringe the same patent after reexamination. For example, in the case of Amazon’s one-click patent, Amazon reduced the scope of patent claims to sustain patent validity.
If, after the USPTO reduces the scope of patent claims, a device or process still falls within the scope of the patent, then the defendant may have “intervening rights,” which eliminate liability for certain types of activities that occur before the change in the scope of the patent claims. For example, BIC Leisure Products, Inc., a manufacturer of sailboards, used “intervening rights” to avoid paying damages to Windsurfing International, Inc. (WSI), a competing manufacturer, for sailboards that BIC already had in its inventory or on back-order before WSI reduced the scope of its patent claims.
Reexamination does pose some risks. Before the USPTO grants a reexamination request, it reviews the request and the prior art submitted with the request to determine whether the request raises a substantial new question of patentability. If the USPTO denies the request, it has, in effect, determined that the prior art submitted with the request would not invalidate the patent. Alternatively, the USPTO may grant the reexamination request but confirm the validity of the patent during reexamination. Thus, reexamination can backfire on a requester who intended to invalidate the patent but must instead deal with a stronger patent that survives reexamination. This is why patent owners often file reexamination requests for their own patents after learning of prior art that may affect validity. Indeed, approximately 40% of ex parte reexaminations—one type of reexamination at the USPTO—are filed by patent owners.
It can take from less than a year to several years for the USPTO to complete a reexamination, which can cause much uncertainty for companies waiting to make business decisions based on the outcome. If the reexamination unit is busy or if the patent under reexamination is in a popular technology area, the reexamination process can often be slow. Further, if the patent owner disagrees with the outcome of the reexamination, he can appeal to the USPTO’s Board of Patent Appeals and Interferences, then later to the U.S. Court of Appeals for the Federal Circuit, each of which may require several years to resolve.
Reissue and reexamination are important tools in the U.S. patent system. When used properly, reissues and reexaminations can effectively strengthen a company’s patents and reexaminations can knock out or limit the scope of a competitor’s patents. Moreover, reissue and reexamination are relatively inexpensive when weighed against the gains they can provide. Accordingly, reissue and reexaminations can be attractive tools for attacking or strengthening a U.S. patent.
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm’s clients.
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