BMW Victory in United States District Court for the Eastern District of Virginia against PTO – In Reexaminations, PTO Director Must State a Ground-By-Ground Basis for a Discretionary EPR Denial

FOR IMMEDIATE RELEASE
April 7, 2025

Finnegan is pleased to announce that firm client BMW of North America, LLC (“BMW”) has secured a victory for patent challengers in ex parte reexamination (“EPR”) proceedings before the United States Patent and Trademark Office (“USPTO”). During reexamination of U.S. Patent No. 7,925,416, the USPTO determined that BMW’s EPR raised a substantial new question of patentability of at least one claim. Then, in re-evaluating this determination, the USPTO’s former Director, Kathi Vidal, confirmed that at least one ground in the EPR raised new prior art and arguments that the USPTO had never considered. Nevertheless, former Director Vidal found. under 35 U.S.C. § 325(d), that the EPR raised substantially the same prior art and arguments as the USPTO previously evaluated, without acknowledging the inconsistency in these findings.

In response, BMW sued in the U.S. District Court for the Eastern District of Virginia (“EDVA”) to have the Director determine whether each ground of the EPR raises substantially the same prior art and arguments as the USPTO previously evaluated in view of the Director’s finding that at least one ground raised a substantial new question of patentability.

On March 25, 2025, the EDVA issued an Order, agreeing with BMW’s challenge. The Court found that the Director acted arbitrarily and capriciously by treating all EPR grounds as the same, despite finding that they are different. Instead, the Court found that the PTO Director is required to treat each ground separately when deciding whether an EPR raises substantially new prior art or arguments. Because the Director failed to do so, the Court remanded with instructions to explain, on a ground-by-ground basis, why the USPTO previously erred in determining that BMW’s EPR raised a substantial new question of patentability of at least one claim, or allow reexamination to proceed on any ground that raises a substantially new question of patentability.

The EDVA Court’s determination confirms that EPRs, unlike inter partes review proceedings, proceed on a ground-by-ground basis, so the USPTO must separately address any substantial new question of patentability raised in each EPR ground. BMW is optimistic that the EDVA’s decision will lead to appropriate evaluation of patents based on substantially new patentability grounds.

The case is BMW of North America, LLC, et al. v. Kathi Vidal, et al., Case No. 1:24-cv-235 (PTG/WEF) (E.D. Va.).