Settlement + Vacatur: Whitewashing an Invalidated Patent

In Gracenote, Inc. v. MusicMatch, Inc., the District Court (N.D. Cal. Judge Wilken) granted MusicMatch’s motion for partial summary judgment – holding the claims of one of the patents invalid as anticipated. Within months, the parties settled (motivated in part by the anticipation of Yahoo!’s purchase of MusicMatch). As part of the settlement, MusicMatch agreed not to oppose vacatur of the summary judgment decision. On motion, the court did vacate its holding.

In its motion for vacatur, Gracenote indicated that it “intends to seek re-examination of the ’593 patent.” This result apparently made the vacatur appear more palatable and potentially allow Gracenote to achieve a narrower (but now valid) claimset. Gracenote wrote the following in its motion:

Gracenote hereby requests that the Court vacate its [Summary Judgment Order and] Reconsideration Order. As Gracenote has set forth in its various briefs filed with this Court, Gracenote believes that the Court erred in finding that xmcd and CDDB anticipate or render obvious certain claims of the ’593 patent. Accordingly, Gracenote intends to seek re-examination of the ’593 patent, and to submit evidence of xmcd and CDDB to the PTO. Gracenote will likewise submit the relevant orders of this Court to the PTO at that time. Accordingly, Gracenote respectfully requests that the Court vacate the above cited orders and allow the PTO to determine the relevance of xmcd and CDDB to the claims of the ’593 patent. . . . Gracenote requests the orders be vacated in fairness so that it can pursue re-examination of the ’593 patent before the PTO.

Although Gracenote seemingly promised to seek reexamination, no reexamination request has been filed in the six years since this case was decided. It is unclear to me whether that failure would rise to the level of contempt of court.

Notes:

  • Gracenote, Inc. v. MusicMatch, Inc., 2004 U.S. Dist. LEXIS 17617 (N.D. Cal. 2004).
  • Block Financial v. LendingTree (W.D. Mo. 2010).
  • File Attachment: GracenoteMotion.pdf (168 KB)
  • See also, Persistence Software, Inc. v. The Object People, Inc., 200 F.R.D. 626,627 (N.D. Cal. 2001) (vacating prior summary judgment motion of invalidity for the express purpose of allowing “future actions against third parties for patent infringement”.); United States Gypsum Co. v. Pac. Award Metals, Inc., 2006 U.S. Dist. LEXIS 47237 (N.D. Cal. 2006) (vacating judgment that patentee was estopped from claiming infringement under the doctrine of equivalents due to prosecution history estoppel).

27 thoughts on “Settlement + Vacatur: Whitewashing an Invalidated Patent

  1. MJ, the PO’s would be best advised to bring the court documents to the attention of the PTO prior to the issuance of any continuation. If a continuation did issue, I suspect the remedy would be to file a reissue, and barring that, simply disclaim the patent. Otherwise, I do not see how this family of patents could successively avoid a charge of IE.

  2. In looking at the documents a key aspect of this case was the inequitable conduct claim where the undisclosed prior art that invalidated the patent was written by the inventors themselves, and known to the prosecuting attorneys.
    The undisclosed prior art of the inventors was found to anticipate the ’593 and was material prior art in the SJO. For another patent in suit the prior art was found to render the claims obvious.

    There is a doctrine of ‘Infectious Inequitable Conduct’ where findings in one patent can bleed onto other patents in the family.

    There was another patent in suit where the art was found to be obvious

    Not to have submitted to the PTO during prosecution, and again not to submit it by agreement with the court, doesn’t seem fair to the patent system.

  3. TIA, Move up to the parent of ’593, which is US 6,154,773, ser. no. 09/060,876. There are two continuations – 12/191,625 and 11/841,784.

  4. DZwick, my point precisely. The Office has not been informed of the vacatur and prior proceedings in any way, even during continuations. This is a whole new kettle of fish that the the PO may not be able to avoid by any hook or crook.

    Thanks, DZ

  5. The patent in litigation appears to be US 6,330,593. Since the litigation, it looks like two continuations were filed from the parent of ’593. In both continuations, it also looks like neither disclosed any litigation-related documents, at least not in their IDSs, although both disclosed office actions from the ’593. If the claims of the ’593 patent and the continuations are closely related, there is a duty to disclose relevant information from the ’593 litigation, e.g., claim charts, Markman hearing determinations, and any assertions made during litigation that are at odds with arguments made to the examiner.

    Excerpt from the MPEP:

    2001.06(c) Information From Related Litigation [R-2]

    Where the subject matter for which a patent is being sought is or has been involved in litigation, the existence of such litigation and any other material information arising therefrom must be brought to the attention of the U.S. Patent and Trademark Office.

  6. Don’t worry bright boy – every thing you say is taken that way.

    Or is it that we just don’t care?

    I get so confused.

  7. btys “you have no business experience whatsoever.”

    The audacity of Mooney’s lame projections has no bounds…

    My audacity was daring to hope that everyone would detect the sarcasm.

  8. “A great use of resources! Especially after the patent has just been reexamined ex parte in court.”

    Yeah, because claim amendments happen all the time in district court.

    The Director hasn’t initiated a reexaminaton in 4 or 5 years, the PTO dropped that practice when the CRU was established.

  9. “you have no business experience whatsoever.”

    The audacity of Mooney’s lame projections has no bounds…

  10. No harm no foul. If they don’t intend to assert this patent again, then who cares if they went ahead with the re-examination? If they do intend to assert the patent, then I’m sure they will do a re-exam beforehand.

  11. Ned: The PTO can order its own reexamination.

    A great use of resources! Especially after the patent has just been reexamined ex parte in court. Your lack of understanding of these sorts of inefficiencies clearly shows, Ned, that you have no business experience whatsoever.

  12. The fee is $180.00

    You’re getting a much better deal on ex parte reexaminations than I am. Or are you quoting the legal fees for drafting the reexam request?

  13. They didn’t say when they would seek the reexam. Surely, a Court would expect them to wait until they identified another infringer, and then seek reexam with an eye towards obtaining valid claims tailored to read on the infringer’s product(s). That’s just good strategy. And if the infringer never materializes, so much the better.

  14. Anyone, including you Dennis, can bring this matter to the attention of the Director.

    Yeah, and for $2520 plus legal drafting fees, anyone can file an ex parte reexamination request. So what’s the problem?

  15. The PTO can order its own reexamination.

    Anyone, including you Dennis, can bring this matter to the attention of the Director.

    What would be interesting to investigate is whether the P0 brought the court case to the attention of the examiner in the continuation.

  16. There appear to be continuations pending from the parent, perhaps the patetee just decided to submit the art in those.

    *ahem*

    You mean “just decided to submit the art and the briefs and holding in the District Court case”.

  17. There appear to be continuations pending from the parent, perhaps the patetee just decided to submit the art in those. Big deal

    Either way, it is not like they can assert the ’593 without doing something to remove the cloud hanging over it.

  18. Although Gracenote seemingly promised to seek reexamination, no reexamination request has been filed in the six years since this case was decided.

    I’m sure there’s a good explanation. Maybe someone got sick, or a dog ate the re-exam.

    In any event, determining anticipation is often a close case. There is no point in discouraging settlement just because some court found a technical defect in a patent.

  19. Court defers to greater expertise of PTO, in matters of patent validity? Like in Europe, I guess, where no court of law has been given any remit to control what the EPO gets up to. The EPO can do what it pleases, in its absolute discretion. And the result……?

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