December 9, 2014
Commercial Times
Amendment of Claims Trigger Intervening Rights
Post-grant procedures at the U.S. Patent and Trademark Office (“USPTO”) frequently result in patentees’ amendments of claims, making prior activities of a third party infringing. The doctrine of intervening rights, however, may shield the third party from liability for prior activities. After the enactment of the Leahy-Smith America Invents Act (“AIA”), accused infringers are relying more on the new post-grant procedure under the AIA. For example, more than 1,400 inter partes review (“IPR”) petitions have been filed, and the Patent Trial and Appeal Board has canceled over 65% of the instituted claims. Patentees’ submissions of substitute or amended claims and arguments to overcome prior art frequently limit the scope of patentees’ rights and give third parties more opportunities to reduce the damages patentees may claim because of intervening rights or other admissions by the patentees.
Intervening Rights as Applied to Amended Claims
35 U.S.C. § 252 provides two types of intervening rights: absolute intervening rights and equitable intervening rights. Absolute intervening rights extend only to anything made, purchased, sold, or used “before the grant of the reissue” patent (i.e., products already made at the time of reissue) and might not extend to methods or processes. Equitable intervening rights, in contrast, are discretionary, apply to both processes and products, and can apply after issuance of a reissued patent, as long as “substantial preparation was made” in their development “before the grant of the reissue” patent.
Prior to the AIA, claims amended during reexaminations gave rise to intervening rights under U.S.C. §§ 307(b) and 316(b). The courts had to determine whether (1) “amended or new” claims were incorporated into a patent during a reexamination, and (2) the amended claims included “substantive change” when compared to the original claims. IPRs should give rise to intervening rights under U.S.C. § 318(c) in similar ways.
While it is common that additional prosecution history from IPR or reexamination may change how claims are interpreted as well as their scope, intervening rights arise only if the claim at issue is “amended or new.” This requires a change to the claim text. In Marine Polymer Technologies, Inc. v. HemCom, Inc., 672 F.3d 1350 (Fed. Cir. 2012), the Federal Circuit clarified that the cancellation of dependent claims and arguments made during the reexamination, whether they effected a change in claim scope or not, does not trigger intervening rights.
A patentee seeking damages for an asserted infringement during the period between issuance of the original and reexamined patents, therefore, must show that the original and reexamined claims are “identical,” meaning that no substantive changes have been made. The test is whether the scope of the claims is identical, not merely whether different words are used. Thus, a claim amendment made during reexamination following a prior art rejection is not per se a substantive change. Reexamination claims are not substantively changed and are considered legally “identical” where amended claims merely clarified the completely sufficient language used in the original claims. Kaufman Co. v. Lantech, Inc., 807 F.2d 970, 977 (Fed. Cir. 1986). However, if substantive changes have been made, the patentee is entitled to infringement damages only for the period following the issuance of the reexamination certificate.
Compared to liability for past activities, an accused infringer is usually more concerned about liability from continuing its allegedly infringing activities after a patent reissues. A court maintains the discretion to permit that party to continue to engage in infringing activities if the accused infringer made “substantial preparations” prior to the reexamination. The determination of “substantial preparations” is based on several factors:
• whether the infringer was aware of the existence of the patent in question;
• whether the infringer sought and obtained the advice of counsel regarding the patent;
• whether the infringer attempted to design around the patent;
• the amount of time and money the infringer expended in researching and developing its product;
• the amount of inventory of the infringing product currently remaining; and
• the consequences the infringer would suffer if unable to continue selling its product.
LMT Mercer Grp., Inc. v. Maine Ornamental, LLC, No. Civ. 10-4615, 2014 WL 284238, at *12 (D.N.J. Jan. 24, 2014).
The inquiry is fact-and-evidence-intensive. For example, in LMT Mercer, while Defendant Maine could suffer from its inability to sell the remaining inventory, the court found that the losses would not undermine Maine’s business and that Maine became aware of the patent early on, but did nothing to determine whether its products could infringe. Because one seeking equitable relief should also have acted equitably, Maine was not entitled to equitable intervening rights.
Impact of Prosecution History Estoppel and Disclaimer on Intervening Rights
To determine whether a claim change is “substantive,” the Federal Circuit emphasized that “it is necessary to analyze the claims of the original and the reexamined patents in light of the particular facts, including the prior art, the prosecution history, other claims, and any other pertinent information.” Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1347 (Fed. Cir. 1998). While the Marine Polymer decision held that arguments during prosecution are insufficient to trigger intervening rights if done without claim amendment, Judge Timothy Dyk stated in his dissent that “it is well established that statements during prosecution or reexamination of a patent . . . to overcome rejections, can change the meaning of a claim term . . . .” 672 F.3d at 1373. Hence, the prosecution history and reexamination record may still bear some weight on the issue of intervening rights, albeit in a more limited capacity.
In Convolve, Inc. v. Compaq Computer Corp., No. 00 Civ. 5141 GBD, 2014 WL 3600381 (S.D.N.Y. July 11, 2014), the district court relied heavily on prosecution history and the arguments made during the reexamination to find that intervening rights arose due to the patentee’s amendment of certain asserted claims. Specifically, the patentee added the word “seek” before every instance of “acoustic noise” in the claims and argued that the claimed method targeted a type of acoustic noise different from what is disclosed in the prior art. The court, therefore, found that the patentee overcame the examiner’s rejection of its claims through the amendment. In coming to its decision, the court disagreed with the patentee’s argument that the specification and the prosecution history suggested that the amendment was implicit, or inherent, in the claims as originally patented. Id. at *15-18. Instead, it held that those statements were “substantive in nature” and “made for the purpose of obtaining claim allowance.” Id. at *17, *20.
Because the Marine Polymer decision pertains to reexaminations, the question of whether claims in a reissue proceeding are subject to the “amended or new” requirement remains open. Specifically, unamended claims in a reissue could trigger intervening rights if there is a substantive change in their scope as a result of narrowing arguments or claim constructions made during the proceeding. Given that many IPR decisions will be appealed, the Federal Circuit will eventually decide whether to extend the same intervening rights law in reexaminations to IPRs. Consequently, one cannot completely discard the impact of prosecution history estoppel and disclaimer on intervening rights in reissues or IPRs.
Conclusion
Accordingly, before patentees decide to amend their claims in IPR, reexamination, or reissue, it is important to consider how intervening rights may apply. Accused infringers, on the other hand, should avail themselves of intervening rights whenever possible to reduce their potential damages liability.
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. Reprinted with permission from the Commercial Times, published by China Times Publishing Group. 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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