by Dennis Crouch
There is a significant and growing overlap between patents in reexamination and patents in litigation. These parallel processes raise practical issues priority and precedence between decisions by a court compared with actions by an executive agency. In her recent dissent in the appellate decision of In re Construction Equipment Company (CEC), —- F.3d —-, 2011 WL 6224539 (Fed. Cir. 2011), Judge Newman argued that a reexamination proceeding requested by an accused infringer (PowerScreen) after a court had already finally rejected the accused infringer's obviousness defense should be considered an an unconstitutional violation of separation of powers and a violation of principles of res judicata and issue preclusion. The majority (Judges Prost and O'Malley) affirmed the PTO determination on reexamination that CEC's claimed invention is obvious and therefore unpatentable.
The facts of the case are simple:
Litigation: In 1996, CEC sued PowerScreen for infringement. PowerScreen argued that the patent was invalid as both obvious and anticipate. However, the district court rejected those arguments and upheld the patent's validity and issued a permanent injunction. The Federal Circuit affirmed that decision in 2000. Powerscreen then unsuccessfully petitioned the Supreme Court for a writ of certiorari.
Reexamination: In 2007, PowerScreen decided to take another bite at the apple and filed a reexamination request - identifying the same prior art references rejected in the district court decision as well as a few others. See Reexam No. 90/008,447 (Fed. Cir. 2011). The examiner rejected the claim, BPAI affirmed, and CEC appeal to the Federal Circuit.
Back to Litigation: Based upon the reexamination results, PowerScreen would like for the district court to lift the permanent injunction.
The Majority rejected Judge Newman's contentions largely based upon the Federal Circuit's 2008 Swanson decision. In that case, the court allowed a reexamination to proceed even though the requesting party had unsuccessfully asserted some of the same prior art in litigation of the same patent. There, the court explained the general principle that issue preclusion does not apply to patent validity judgments (although it does apply to patent invalidity judgments).
Open door to estoppel: Although the majority agreed that the patent was properly invalidated during the reexamination, it refused to opine on whether the adjudged infringer “might or might not be entitled to seek abrogation of the injunction” based upon the reexamination results.
Notes on the Case:
- As an aside, at oral arguments, Judge O'Malley asked the patentee to explain the “points of novelty” of the invention.
- Scott A. McKeown writes that under this case “the infringer could attempt to 'undo' the effect of the earlier, final, court judgement by invalidating the patent via the EXP filing.”
- Michael Barclay writes “Judge Newman sure likes patents.”
- PHawk writes that the “ruling is merely exemplary of the present policy to eviscerate patent protection for all but large corporations.”