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Neither Consideration During Prior Litigation Nor Consideration During Initial Examination by the PTO Precluded the Use of a Reference During Reexamination Where It Raised a Substantial New Question of Patentability

07-1534
September 04, 2008
Casp Ph.D., Courtney B.

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Last Month at the Federal Circuit - October 2008

Judges: Lourie, Bryson, Gajarsa (author)

[Appealed from: PTO, Board]

In In re Swanson, No. 07-1534 (Fed. Cir. Sept. 4, 2008), the Federal Circuit affirmed the Board’s rejection of claims 22-25 of U.S. Patent No. 5,073,484 (“the ’484 patent”) in a reexamination hearing. The Court previously affirmed a district court judgment that some of the claims of the ’484 patent were not invalid. Although the prior art reference had been considered during initial examination and by the Court, the Federal Circuit held that under the reexamination statute, there was a substantial new question of patentability regarding whether the prior art reference anticipated and made obvious the claims that warranted reexamination.

The ’484 patent discloses a method of quantitatively analyzing small amounts of biological fluids to detect the presence of a particular substance. During prosecution of the ’484 patent, the examiner originally issued a § 103 rejection based on various combinations of prior art, including U.S. Patent No. 4,094,647 (“Deutsch”). Applicant amended the claims, and the ’484 patent issued and was assigned to Surmodics, Inc. (“Surmodics”), who exclusively licensed the patent to Abbott Laboratories (“Abbott”). 

Abbott sued Syntron Bioresearch, Inc. (“Syntron”) for infringement of two patents, including the ’484 patent. Syntron counterclaimed that the ’484 patent was invalid in light of Deutsch. The jury found that the patents were not infringed, and that Syntron had failed to prove by clear and convincing evidence that the claims were invalid. Abbott appealed, and Syntron cross-appealed to the Federal Circuit, which affirmed the judgment of validity on all the asserted claims of the ’484 patent.

Syntron then filed a request for an ex parte reexamination of the ’484 patent, alleging that there was a substantial new question of patentability. The examiner granted the request and, on reexamination, rejected several claims of the ’484 patent as anticipated or rendered obvious by Deutsch. The Board affirmed the examiner’s rejections, and additionally rejected Surmodics’s claim that the reexamination was improper as to Deutsch because Deutsch did not raise “a substantial new question of patentability,” as required by 35 U.S.C. § 303. Surmodics appealed.

On appeal, the Federal Circuit first looked to the statute and to congressional intent to determine the meaning of “a substantial new question of patentability” as described in § 303. The Court noted that Congress intended reexaminations to provide an important “quality check” on patents that would allow the government to remove defective and erroneously granted patents. To prevent potential harassment of patentees, the PTO may only grant a reexamination request if it determines that a “substantial new question of patentability” has been raised. In In re Portola Packaging Inc., 110 F.3d 786 (Fed. Cir. 1997), the Court interpreted the “substantial new question of patentability” requirement to preclude reexamination based on prior art previously considered by the PTO in relation to the same or broader claims. Congress, however, disagreed with the Federal Circuit’s interpretation of § 303 and amended the statute to expressly state that the existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the PTO or considered by the PTO.

The Federal Circuit disagreed with Surmodics’s argument that the district court’s consideration of Deutsch in determination of the validity of the ’484 patent precluded the reference from raising a substantial new question of patentability in subsequent reexamination proceedings. The Court noted that the language of the § 303 amendment discusses references previously cited by or to the PTO or considered by the PTO, and does not discuss or address consideration by courts. The Court also indicated that the legislative history for both the original statute and the amendment suggests that Congress was concerned only with the consideration of issues in prior PTO examinations, not prior civil litigations.

The Court then noted that PTO examination procedures have distinctly different standards and purposes compared to civil litigation. The Court noted that in civil litigation, the presumption of validity must be overcome with clear and convincing evidence that the patent is invalid. Thus, the Court held, a prior holding of validity is not necessarily inconsistent with a subsequent holding of invalidity and is not binding on subsequent litigation or PTO reexaminations.

In PTO examinations and reexaminations, the standard of proof—a preponderance of evidence—is substantially lower than in a civil case, there is no presumption of validity, and claims are construed more broadly. In light of these differences, the Court noted that considering an issue at the district court level is not equivalent to the PTO having had the opportunity to consider it. The Court held that Congress did not intend a prior court judgment upholding the validity of a claim to prevent the PTO from finding a substantial new question of validity regarding an issue that has never been considered by the PTO. The Court further stated that to hold otherwise would allow a civil litigant’s failure to overcome the statutory presumption of validity to thwart Congress’s purpose of allowing for a reexamination procedure to correct examiner errors, without which the presumption of validity never would have arisen. The Court also held that there was no constitutional violation of the separation of powers when reexamination considers the same issue of validity as a prior district court proceeding. The Court’s final judgment and the examiner’s rejection are not duplicative—they are differing proceedings with differing evidentiary standards for validity.

The Court also addressed Surmodics’s claim that Deutsch did not raise a “substantial new question of patentability” because Deutsch was considered by the PTO during the initial examination as a secondary reference for rejecting various dependent claims as obvious. The Court relied on the amendment to § 303(a), which explicitly mandates that the existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the PTO or considered by the PTO. The Court noted that the “amendment removes the focus of the new question inquiry from whether the reference was previously considered, and returns it to whether the particular question of patentability presented by the reference in reexamination was previously evaluated by the PTO.” Slip op. at 20. The Court further stated that, as was true before the amendment, an argument already decided by the PTO cannot raise a new question of patentability.

The Court agreed with the Board that the use of Deutsch in the reexamination did create a substantial new question of patentability. The Court found that in the original examination, Deutsch was relied upon solely as a secondary reference rather than a primary reference that taught or made obvious the specific analytical method claimed. The Court noted that in the original examination, the independent claims were found obvious without any reliance on Deutsch, and nowhere in its decision did the examiner consider the particular analytical method disclosed by Deutsch. Accordingly, the Court held that in light of this extremely limited purpose for which the examiner considered Deutsch in the initial examination, the issue of whether Deutsch anticipated the methods disclosed in the claims of the ’484 patent raised a substantial new question of patentability at reexamination.

Because Surmodics did not argue the merits of the Board’s rejections on appeal, the Court held those arguments had been waived and affirmed the Board’s rejection of the claims.