October 2011

Intervening Rights Triggered by Patent Owner’s Narrowing Arguments in Reexamination
John S. Sieman

In Marine Polymer Technologies, Inc. v. HemCon, Inc., No. 10-1548 (Fed. Cir. Sept. 26, 2011), the Federal Circuit held that accused infringer HemCon, Inc. (“HemCon”) was protected by absolute intervening rights with respect to products manufactured prior to the issuance of a reexamination certificate and remanded for a determination regarding equitable intervening rights as to products manufactured afterwards.  

Marine Polymer Technologies, Inc. (“Marine Polymer”) sued HemCon for infringement of its U.S. Patent No. 6,864,245 (“the ’245 patent”) related to p-GlcNAc, a polymer that helps to slow bleeding.  Marine Polymer’s ’245 patent claims specifically require “biocompatible” p-GlcNAc.  The concept of biocompatibility, as described in the specification, relates to the extent to which the p-GlcNAc causes a negative biological reaction.  The specification discloses four tests to determine biocompatibility, including an elution test and three other tests. 

The elution test yields scores from zero to four on a biological reactivity scale, with zero at the bottom of the scale representing no reactivity, and four at the top of the scale representing severe reactivity.  If scores remain below three on this reactivity scale, then the p-GlcNAc meets the biocompatibility test.  The other three tests measure biocompatibility using a similar scale.  While the independent claims simply required biocompatibility in general, several original dependent claims required specific scores on the elution test.  In particular, three originally dependent claims required a zero score on the elution test, and six others required scores of one or two on the elution test.

The parties proposed competing constructions for the term “biocompatible” to the district court.  Rejecting the constructions proposed by both parties, the district court construed the biocompatibility limitation in the independent claims as requiring no detectable biological reactivity.  Based on its claim construction, the district court granted SJ of infringement.  Marine Polymer also defeated HemCon’s invalidity defenses, winning a judgment of nearly $30 million and a permanent injunction. 

After the district court issued its claim construction order but prior to trial, HemCon requested reexamination of Marine Polymer’s ’245 patent.  During the reexamination, the examiner initially applied a broader claim construction than the district court, concluding that “biocompatible” meant “low variability, high purity, and little or no detectable reactivity.”  Slip op. at 5 (citation omitted).  In the examiner’s view, the district court’s construction requiring no reactivity was inconsistent with the numerous dependent claims that required a specific elution score of zero, one, or two.  Applying the broader construction, the examiner rejected all of the claims.

In response to the rejection in the reexamination, Marine Polymer argued in favor of the district court’s narrower construction.  In an attempt to resolve the inconsistency noted by the examiner, Marine Polymer cancelled the dependent claims that specifically required an elution score of one or two.  In view of the claim cancellations, the examiner agreed with the district court’s construction of the term “biocompatible” and approved the claims.  The PTO mailed its notice of intent to issue the reexamination certificate after the district court had already entered its final judgment, from which HemCom appealed. 

Due to the timing of the parallel reexamination and litigation proceedings, HemCom’s first opportunity to raise an intervening rights defense came during the appeal.  HemCon argued that the reexamination narrowed the claims and, as a result, it was entitled to both absolute and equitable intervening rights under 35 U.S.C. §§ 252 and 307.  Because the defense was not available until after the final judgment, the Federal Circuit exercised its discretion to consider the issue of intervening rights.

Focusing first on absolute intervening rights, the Court observed that absolute intervening rights—providing an accused infringer the right to use or sell specific products made, used, or purchased before the grant of the reexamined patent—do not apply if the accused product infringes a valid claim of the reexamined patent.  The Court explained that absolute intervening rights are available only if the original claims have been substantively changed, and substantive changes to the claims create an irrebuttable presumption that the original claims were materially flawed.  Here, the Court found that intervening rights applied in view of Marine Polymer’s arguments to the PTO, even though the claims were not amended during reexamination. 

Supporting its conclusion regarding intervening rights, the Federal Circuit further found that the district court erred in construing the biocompatibility claim term to exclude any detectable biological reactivity.  The Court reasoned, similar to the position originally taken by the reexamination examiner, that the specification and dependent claims cancelled during reexamination made clear that some reactivity was consistent with biocompatibility. 

The Court also found HemCon did not waive its claim construction argument that the claims must allow for some biological reactivity, despite HemCon’s proposing an even broader construction at the district court.  The Court explained that a party may raise claim construction arguments for the first time on appeal that are consistent with the claim construction proffered by that party at the district court.  Here, HemCon was entitled to protect the original breadth of its proposed claim construction by arguing that the district court improperly added the “no reactivity” limitation. 

Concluding its analysis regarding absolute intervening rights, the Federal Circuit rejected Marine Polymer’s arguments that certain dependent claims never changed in scope because they always required an elution test score of zero.  Even though these dependent claims required an elution test score of zero, they focused exclusively on the elution test and not any of the other three testing methods.  Thus, prior to the reexamination, these zero-elution-score claims required no reactivity only under the elution test.  In contrast, after Marine Polymer imported the district court’s erroneous construction on reexamination, they also required no reactivity under the other three tests discussed in the specification. 

After finding that absolute intervening rights protected HemCon’s pre-reexamination activities that the district court found to be infringing, the Federal Circuit reversed the district court’s grant of judgment of infringement, reversed the damages award, and vacated the district court’s permanent injunction. 

Turning from absolute intervening rights to equitable intervening rights, which relate to an accused infringer’s rights following the grant of a reexamined patent, the Court recognized that unlike the absolute intervening rights issue, the inquiry as to whether equitable intervening rights should apply is a fact-intensive one.  The Court explained that the district court made no factual findings on the issue and therefore remanded the matter to the district court to determine in the first instance whether equitable intervening rights should apply.

Finally, the Court declined to consider HemCon’s argument that Marine Polymer’s ’245 patent is invalid under HemCon’s preferred construction.  The Court found the issue moot because Marine Polymer changed the scope of the claims during reexamination, effectively surrendering its original claims in order to preserve the ’245 patent’s validity.  The validity of the original claims was no longer a live issue because future infringement claims will either be based on the reexamined claims or will be barred by the intervening rights doctrine. 

Judge Lourie dissented from the majority opinion, raising two main points of disagreement.  First, he would not have considered the reexamination proceeding because the district court did not do so and because it was still possible for the reexamination to be separately appealed to the Federal Circuit.  Judge Lourie believed that the Court’s consideration of the reexamination under such circumstances could potentially deprive the patentee of its right to have its infringement proceeding decided separately from a nonfinal PTO proceeding.  Second, even taking the reexamination proceeding into account, Judge Lourie would not have found intervening rights because such rights under 35 U.S.C. §§ 307(b) and 316(b) apply only to “amended or new claims.”  Even if Marine Polymer’s claims did change in scope during the reexamination, such a change did not occur through an amendment or new claim.  Judge Lourie explained that even though 35 U.S.C. § 252 includes the “substantially identical” test relied on by the majority, that section of the statute does not override the threshold requirement in §§ 307(b) and 316(b) that intervening rights apply only to amended or new claims.