Authored by Darren M. Jiron and Charles E. Lipsey
You are busily preparing and implementing your defensive litigation strategy to confront allegations of patent infringement when a team member asks, "Should we request reexam?" The answer is often based on one part gut reaction, two parts past experience (good or bad), and a pinch of skepticism. Is there is a better way?
It's helpful to first have a full understanding of the potential limitations, risks, and benefits of reexams.
Reexamination is only available for alleged validity defects raising a substantial new question of patentability based on patents or publications. While novelty and nonobviousness based on such references can be considered, along with issues of "double patenting," invalidity based on prior public use or offers for sale, for example, cannot. Nor can invalidity due to inadequacies in the patent specification.
The obvious risk of reexamination is that your best validity defense will be considered by the PTO, be rejected, and thereafter be less likely to succeed in court. If the whole case turns on the issues to be raised in reexamination, and the credibility of fact and expert testimony is crucial to the outcome, then presentation in court, with the opportunity to present and cross-examine witnesses live, may be your only viable option.
Cancellation of the allegedly infringing patent claims would be the ultimate outcome of successful reexamination. Other benefits, however, also exist. If the issues to be raised in reexamination turn on arcane points of technology or patent practice that might not be easily understood by a nontechnical judge or jury, such that you might choose not to try them anyway, there is little reason not to pursue them before the PTO. Moreover, if the major issue to be tried is alleged inequitable nondisclosure of a patent or printed publication, initiation of the reexamination by the PTO may facilitate proof of the "materiality" of the reference even if the patent claims are ultimately confirmed.
Not all the benefits of reexamination arise from the ultimate outcome. If you have a viable business option even if you lose (such as access to a license or a noninfringing alternative), the relatively low cost of reexamination can also be a major benefit. Assuming the litigation can be stayed pending resolution of the proceeding, the defendant can use reexamination as Congress intended-to test patent validity at the PTO without incurring the high costs of litigation. A stay can also provide additional time to investigate additional defenses or design a noninfringing alternative.
Other benefits can be realized even without staying the litigation. For example, during reexam the patent owner may be forced to make claim amendments to preserve the validity of the claims. Such amendments can bolster noninfringement positions and limit damages through intervening rights. Further, the patent owner's responses during the reexamination create additional prosecution history that can affect claim construction.
Reexamination can also generate a cloud of uncertainty over the patent when the PTO declares the presence of a substantial new question of patentability or rejects the asserted patent claims. Under this cloud, a court or jury (if the record of proceedings is admitted in evidence) may look suspiciously upon the asserted patent claims, or the patentee may be moved to settle on acceptable terms.
Reexamination can even have a positive effect for a defendant after the parties settle and conclude the litigation. Assuming the settlement agreement requires royalties only for activities falling within the scope of a valid patent claim, royalty payments may no longer be required under the agreement for any activities that fall only within the scope of claims canceled during reexamination.
Evaluating the Likelihood of Success
Availability of a Stay
The probability of realizing stay-based benefits directly depends on the forum in which the case is pending and the stage of the litigation. Certain judges, who do not perceive a realistic prospect that reexamination is likely to dispose of the whole case, commonly deny such requests. Further, motions to stay filed early in litigation are granted more regularly than those filed late in litigation. It is possible to research a judge's record to estimate the probability of a granted stay for a particular stage of litigation.
Tool Selection and the Risk/ Reward Ratio
The likelihood of ultimate success in reexamination often depends directly on the ability to present compelling rebuttal to the arguments that will be advanced by the patentee. In this regard, two different reexamination tools are available-ex parte and inter partes. In an ex parte proceeding, the third party requester has no involvement after the reexamination request is granted. With no opportunity to challenge the examiner's or the patent owner's positions, a risk exists that the PTO could confirm the original patent claims over the submitted prior art without fully appreciating the requester's arguments. In this case, the patent would actually be strengthened by surviving reexamination.
Inter partes reexamination, on the other hand, provides the opportunity for third party involvement, but at a fearful price: The requester is later foreclosed from raising in court any issue it could have raised in the inter partes reexamination. While this third party involvement is pursued less frequently because of the fear of estoppel, it may have a dramatic effect on the outcome. Compared to ex parte reexamination, far fewer patents emerge from inter partes reexamination with their claims intact.
The Decision Tree
From the seeming chaos, a logical decision tree emerges. Ask first, "Can I afford to litigate?" If not, inter partes reexamination offers the most bang for the buck because the challenger is allowed to respond to the PTO positions and to the patent holder's arguments. Ask next, "Is it okay if I lose, i.e., do I have access to a viable noninfringing alternative?" If so, inter partes reexamination is again attractive, because you have a better chance of winning than in an ex parte reexam. Then ask, "Are there portions of my invalidity case that are meritorious but that are impractical to try to a judge or jury?" If so, you could consider severing them from the rest of the case, and trying an ex parte reexamination on those issues. (You'd want to avoid the inter partes proceeding because of the danger of estoppel.) Ask next, "Will I benefit from reexamination even if I ultimately lose (from the added time provided by a stay or enhanced 'materiality' arguments arising from commencement of the proceeding)?" If so, ex parte reexamination again is attractive, because it leaves you free to try those arguments again in court. Finally ask, "Is my best invalidity defense one that is most likely to be decided in my favor by the PTO, i.e., because it turns on a fine point of technology or patent practice?" If so, inter partes reexamination may be your best option, because it allows you to participate. But be assured, everybody will second-guess you if you lose.
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