IP Gespräche 2009 Frankfurt ● Karlsruhe ● Basel ● Zürich

IP Gespräche 2009 Frankfurt ● Karlsruhe ● Basel ● Zürich Strategic Uses of U.S. Reexamination Proceedings – Strengthen Your Market Position and Avoid U.S. Patent Litigation Jonathan H. Spadt, Esquire Glenn E.J. Murphy, Esquire

Reexamination vs. Litigation Congress established reexamination to provide a quality check on issued patents. Patent validity can be challenged outside of court. Reexamination is a way to challenge, or reaffirm, the validity of a patent claim.

Reexamination Is: •Cheaper than litigation • Sometimes quicker than litigation • More effective than litigation (from the perspective of a patent challenger) • A strategically useful tool that is effective either offensively or defensively, before or after litigation has begun

CheaperThan Litigation $1,800,000 $1,589,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $767,000 $800,000 $600,000 $400,000 $91,000 $200,000 $13,000 $0 Ex Parte Inter Partes Litigation worth Litigation worth less than more than $1,000,000 $1,000,000

Sometimes Quicker than Litigation

More Effective Than Litigation(from the perspective of a patent challenger)

Strategically Useful Tool • What are They? • Ex Parte Reexaminations • Inter Partes Reexaminations • How are they used?

Ex Parte Reexaminations Anyone Can Request an ex parte Reexam: 1. The Patent Holder 2. A Challenging Entity 3. The Director of the PTO

Ex Parte Reexaminations What is required for an ex parte Request? • An explanation of how the prior art is relevant to each of the claims. • A Challenging Entity may request an ex parte reexamination anonymously. • If there is a substantial new question of patentability a Reexamination proceeding will commence.

Ex Parte Reexaminations For Ex Parte Reexam: • The reexamination takes place between only the patent owner and the PTO. • Only the patent owner may appeal an adverse decision from the reexamination.

Inter Partes Reexaminations For Inter Partes Reexam: • The third party participates with the reexamination prosecution in the PTO. • The third party may file or be a part of an appeal by the patent owner. • There is an estoppel created.

Estoppel • A third-party requester is estopped from arguing during a subsequent litigation that a claim is invalid based on grounds that were “raised or could have been raised” during the reexamination. • The estoppel is specifically limited to “civil actions” in district court. • Similarly, an accused infringer cannot request an inter partes reexamination after losing a final decision in district court on any validity issues that the party “raised or could have raised” in the civil action.

Estoppel • The estoppel provisions do not on their face apply to Section 337 investigations through the ITC. An ITC finding of validity does not estop the losing defendant from later requesting inter partes reexamination on the same grounds. • Likewise, a defendant may raise invalidity issues in an ITC investigation that were previously addressed by an inter partes reexamination involving the same parties.

Reexaminations What are some tactical advantages? • Cost savings over litigation • Focus on patent/publication prior art validity arguments • Other Validity attacks available for court action (in addition to prior art) • Expertise of Examiners • Comfort with Patent Office procedures • Different presumption and burden of proof • Clean up patents before litigation

Different presumption and burden of proof • Relevant legal standards that apply in Reexamination proceedings favor the patent challenger more than in Federal Court. • No presumption of validity. • Lower burden of proof – • Mere preponderance of the evidence (vs. the higher clear and convincing evidence required in Federal Court).

InterveningRights • Absolute Intervening Rights • An accused infringer may use or sell a product that was made, used, or purchased before the grant of the reexamination certificate, as long as such activity did not infringe a claim of the reexamined patent that was in the original patent. • If a claim is amended during reexamination and the amendment substantively changed the claim, then absolute intervening rights apply. • An absolute intervening right only protects products that have already been made when the reexamination certificate is granted, and does not extend to infringing processes or methods. • Essentially, an infringer may sell off existing inventory of a product that infringes the reexamined patent claims without incurring liability for past damages. It is protection from past liability and damages.

Intervening Rights, cont. . . • Equitable Intervening Rights • Protection from future liability and damages. • Equitable intervening rights address the continued manufacture, use, or sale of additional/new products covered by the reexamined patent when the defendant made, purchased, or used identical products, or made substantial preparations to make, use, or sell identical products, before the date of issuance of the reexamined claims. • Equitable intervening rights are potentially much broader than absolute intervening rights, but they are discretionary. A court may provide for equitable intervening rights to protect investments made before the grant of a reexamination certificate, including the continuation of otherwise infringing activity after such time.

Interplay of Litigation and Reexamination • Complex strategic and tactical considerations • No hard and fast rules • Timing and procedural posture are important

Favorable Outcomes – Patent Defendant • Stay or termination of litigation • Reversal of prior litigation • Creation of intervening rights • Reduction or elimination of royalty payments • Avoidance or lifting of injunction

Favorable Outcomes – Patent Owner • Affirm validity of patent • Eliminate or minimize troublesome prior art • Rehabilitate patent • Estoppel (inter partes)

Translogic Tech., Inc. v. Hitachi, Ltd.2005-1387, 2006-1333, -1192 (Fed. Cir. 2007) • District court – damages and permanent injunction • Ex parte reexamination • CAFC – vacated and ordered dismissal of district court judgment • Prior holding of no invalidity not binding on PTO in reexamination

In re Trans Texas Holdings Corp.2006-1599, -1600 (Fed. Cir. 2007) • Prior litigation settled after claim construction • Patent owner filed for reexamination • PTO invalidated claims based on broader claim construction • PTO not bound by court’s claim construction

In re Swanson2007-1534 (Fed. Cir. 2008) • District court found patents not invalid but not infringed • Reexamination ordered based on reference from original prosecution considered in litigation • Later consideration of old reference not precluded unless prior consideration involved identical issues

Procter & Gamble v. Kraft Foods Global2008-1105 (Fed. Cir. 2008) • Inter partes reexamination • Infringement litigation one month after product launch • P&G moved for preliminary injunction; Kraft moved for stay pending appeal of reexamination • Stay not available where motion for injunction is pending

Inland Steel Co. v. LTV Steel Co.03-1483 (Fed. Cir. 2004) • Jury verdict of infringement dismissed with leave to re-file pending reexamination • Reexamination canceled patents • Defendant sought fees as prevailing party in district court • PTO’s invalidity finding (after appeals) binding on courts

Summary • Reexamination gaining importance as a strategic tool in patent disputes • Reexamination generally favors the patent defendant • Reexamination is not a guarantee against being sued or having to litigate, but may lead to more favorable outcome with relatively low risk

Thank You Jonathan H. Spadt, Esquire Glenn E.J. Murphy, Esquire RatnerPrestia, P.C. Valley Forge Office Street address Mailing address Suite 301 Suite 301 1235 Westlakes Drive 1235 Westlakes Drive, Berwyn Berwyn, PA 19312P.O. Box 980 Valley Forge, PA 19482 USA Phone: 1-610-407-0700 Fax: 1-610-407-0701 jhspadt@ratnerprestia.com gmurphy@ratnerprestia.com

IP Gespräche 2009 Frankfurt ● Karlsruhe ● Basel ● Zürich