Inter Partes Reexamination Estoppel and ITC Proceedings

One knock against the inter partes reexamination system is that it creates an estoppel. Under 35 USC 315(c), a third-party of requester is estopped from later asserting that a claim is invalid based on grounds that were "raised or could have been raised" during the reexamination. The 315(c) estoppel, however, is specifically limited to "civil action[s]" arising from 28 USC 1338 – i.e., those brought in district court. Similarly, under Section 371(b), 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.

In an e-mail earlier this week, Scott Kamholz of Foley Hoag raised the idea that the inter partes reexamination estoppel provisions do not apply to Section 337 investigations through the ITC. I believe Kamholz is correct. Thus, 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. Of course, the proceedings in the ITC and PTO are quite different and could readily lead to different outcomes. Perhaps most notably, patents are given a strong presumption of validity in ITC proceedings but are not presumed valid during reexamination.

32 thoughts on “Inter Partes Reexamination Estoppel and ITC Proceedings

  1. Mr. Kamholz’s find is a good one. Certainly the estoppel issue has been biggest hurdle for those who would like to replace litigation with reexamination. What bothers me is that for up to fifty percent of potential litigants this may not be rational.

    Patent professionals oftentimes are concerned with legal theory – “what could possibly go wrong” – rather than “what is in the best interest of the client.” Faced with a sophisticated, highly technical legal issue that could detrimentally affect a company, executives will typically take the advice of well-known litigators. After all, what choice do they really have? The litigators, however, may have objectives or experience that is at cross-purposes with those of the client: Most patent litigators are not patent attorneys and accordingly cannot be the lead on a reexam request; fees for litigation are exponentially greater than for reexam.

    Patent litigators talk to clients about the flexibility of litigation versus reexam, the vagaries of examiners, and the virtual finality of a reexam result given art arguments are typically the most powerful in litigation. Rather, the litigator would like to exchange the problems of reexam with the solution of litigation: protracted, expensive interactions; the greater vagaries of a jury; the possibility of years of appellate practice. In short, the objective seems to be the pursuit of greater uncertainty rather than less.

    From a Net Present Value (NPV) perspective, what party benefits from greater uncertainty? It is the party with a substantially weaker case. Those with a weak case have to try to even the playing field by introducing as much confusion and uncertainty as they can. But what about those with a relatively strong case?

    Executives make rational decisions in the presence of certainty, or at least probability. It seems commonsensical, then, that they should be seeking the lowest cost, quickest way to reach an understanding of the legal issue. That is, at least those with a good, substantive position should. Also, wasn’t this Congress’s supporting idea behind the institution of inter partes reexam? Companies will act in their own best interest, which will mean up to fifty percent will reach for reexam. What they did not adequately consider is the best interest of patent litigators, which is not aligned with that of their clients.

    So, how can one realign the interests of patent litigators with those of their clients? Can this be solved through legislation? Probably not. The only way may be through educating business executives, something that does not appear to be happening at the moment.

  2. “Practically speaking, the presumption means squat”

    Just like mostly all of your posts.

    Contrary to Mooney’s glib assertion, the words of 102, “a patent shall issue UNLESS,” creates a powerful presumption that an application contains an invention unless it can be demonstrated otherwise.

    You don’t even need a POWERFUL COMPUTER BRAIN to figure that one out. Oh wait, well maybe Mooney does need one…

  3. EG: “the burden is still on the 3rd party/PTO to prove invalidity by preponderance fo the evidence.”

    Kind of. The third-party in inter-partes re-exam is kind of like Mickey, and PTO is like Rocky. Mickey can’t get in the ring and swing (though he would if he could). He just provides information to Rocky (“the body! the body!”), and it’s up to Rocky to decide what to do with it.

  4. “Practically speaking, the presumption means squat other than the fact that the PTO presents its objections to the patent first (rather than the applicant filing separate papers first, presenting arguing why the claims are valid).”

    Well, sure. When the PTO’s position is “quality = reject, reject, reject” does it really matter who goes first? It does matter when you get beyond the examiner to the Board. Of course, they’re in the process of adopting the policy of “quality = affirm, affirm, affirm” so pretty soon it won’t matter at all.

    But in the meantime…

  5. “All applications are presumed issuable. Until the examiner makes a prima facie case. Read the first sentence of section 102.”

    Practically speaking, the presumption means squat other than the fact that the PTO presents its objections to the patent first (rather than the applicant filing separate papers first, presenting arguing why the claims are valid).

  6. My point is that the other contributer was right to point out that Dennis’ “no presumption of validity during re-exam” might have been phrased more felicitously. You say European patent law is “oversimplisitic”. I don’t understand. That statement is too simple for me. Can you make your statement more complex? Or would I then still not understand?

  7. Oh Maxi, I work closely with your European counterparts and they do not feel it is so easy to get claims allowed in the US, in fact they say they are having a horrible time at it old chap. Is the US system too complicated for the simplistic European mind that can only operate with oversimplisitic rules?

    What is your point Deary, I mean dreary??

  8. “Presumption of issuability, as it were, rather than presumption of validity?”

    Precisely. All applications are presumed issuable. Until the examiner makes a prima facie case. Read the first sentence of section 102.

  9. …so that the “presumption” that remains then is the usual one at the PTO, that applied first time around, that Applicant is “entitled” to have his claims issue, unless the Examiner can get on its feet a legitimate objection to issuance. Presumption of issuability, as it were, rather than presumption of validity?

  10. “So effectively the patent is presumed valid until proven otherwise.”

    Yes, but the statement may be misleading. The status of claims during re-exam is exactly the same as the status of claims during the initial examination. There is no added presumption for the examiner to overcome simply because the PTO allowed your claims once.

  11. EG,

    So effectively the patent is presumed valid until proven otherwise. That is why I took issue with the original statement “… patents [] are not presumed valid during reexamination.” I was worried that this may been correct and due to some provision/decision I had never heard of.

  12. Jam,

    Just the 35 USC 282 presumption of validity; the burden is still on the 3rd party/PTO to prove invalidity by preponderance fo the evidence. Does that answer your question?

  13. EG,

    I’m sorry, but would you mind being a little more specific? Are you talking about the part saying that the 35 U.S.C. 282 presumption of patent validity has no application in reexamination
    proceedings? This does not support a blanket conclusion that no where else in the examination proceedings is a provision requiring the 3rd party requester to prove invalidity of claims before the PTO will cancel them.

  14. Jam,

    See recent In re Swanson case, citing In re Etter. There is also a different standard for invalidity: preponderance of evidence, versus clear and convincing in a court proceedings.

  15. “… patents [] are not presumed valid during reexamination.”

    Really? Anyone have a cite for this? I thought even regular utility patent applications were presumed valid and the burden is on the PTO to find otherwise by a preponderance of the evidence.

  16. While there may not be a statutory estoppel provision regarding ITC decisions, you can bet that an adverse ITC decision will weigh heavily against the encumbered party when introduced as material evidence during the re-examination, thus amounting to constructive estoppel.

  17. “Boring trolls….blah blah blah”

    Because I and my troll-puppet show are SOOO exciting…

  18. “Nobody ever expected that a thumb controller would be useful for scrolling through lists displayed on a small handheld device.”

    Nobody expected the Spanish Inquisition!

  19. Blah blah blah blah blah.

    Boring trolls and their puppets engaging in habitual Mooney bashing.

    Typical weekday afternoon.

  20. what is all this “could be performed by a human” garbage? You’ve been spending too much time listening to Malcolm “If I only had a brain” Mooney

  21. Agreed, Argues. Plus, the “touch screen display” could be a piece of paper and the specification lacks the necessary code to enable the invention. Also, “M-finger translation gesture” in claim 8 is an obscene gesture.

    Apple should have relied on trade secret protection.

  22. Nobody ever expected that a thumb controller would be useful for scrolling through lists displayed on a small handheld device.

    Troll ain’t funny. Troll ain’t clever. Troll is teh stoopit.

  23. 6,

    invalid under 101.

    not tied to a particular machine (processors, displays, and memory are not particular machines), exalts form over substance, post-solution activity, data gathering and display, and could be performed by a human.

    also, it preempts all uses of the fundemental principles described by the program and the heuristics.

    heuristics, after all, are just thumb rules and any human could apply the thumbrules to figure out whether the other human wanted to scroll or translate.

    and it was done on A POWERFUL COMPUTER BRAIN.

  24. It is a curious idea. There is a little known (and uncodified) parallel estoppel provision in section 4607 of the Intellectual Property and Communications Omnibus Reform Act of 1999, which imposes estoppel regarding “any fact” found in a inter partes reexamination proceeding. This provision is limited to “civil actions,” but does not mention section 1338. I don’t think ITC proceedings are civil actions, but it is a closer question than section 315(c).

  25. “that statute is currently interpreted as a final unappealable judgment”

    We know the patent office interprets it that way, but isn’t there an active appeal to the Federal Circuit on this issue?

  26. “Similarly, under Section 371(b), 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.”

    I don’t think this sentence is correct. If you’re referring to section 317(b), that statute is currently interpreted as a final unappealable judgment, not an initial district court decision.

  27. I’ll also bet that Scott is right. The Fed Circuit held a few years ago in Kinik v ITC that the “materially changed” defense of 35 USC 271(g) applies in district court proceedings but doesn’t apply in ITC proceedings. Here the statute seems pretty clear that the estoppel provisions apply in civil actions and not ITC actions. I think a good topic for a law review article would be whether or not it makes sense from a policy perspective to have different standards in these different fora.

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