Court Issues TRO: Enjoining Infringer from Filing a Reexamination Petition

by Dennis Crouch

Columbia Sportswear v. Serius Innovative (S.D.Cal. 2017)

I previously wrote about Columbia Sportswear design patent verdict and damages award against Serius.  The patent – D657,093 – covers a wavy-pattern as part of a heat reflective material.  Post trial, the court has now issued an emergency Temporary Restraining Order (TRO) enjoining Serious from initiating a reexamination of the design patent — finding that the reexamination could improperly “avoid the jury’s verdict in this case.”

HeatReflectives

The key fact: We already have a jury verdict of infringement and, according to the court (and patentee’s motion for TRO), during the lawsuit, the defendant stipulated to the patent’s validity.

On irreparable harm (and element of TRO), the court writes:

Allowing Seirus to collaterally attack the Design Patent at this very late juncture in litigation would undoubtedly cause Columbia undue hardship. A reexamination of the Design Patent could potentially result in its invalidation, which would moot Columbia’s fully-litigated infringement claims.

Finally, the court finds, that the public interest is served by restraining order – since “The public interest is served by enforcing the parties’ stipulation and protecting the validity of the Court’s judgment.”

The TRO was issued the same-day as requested and, although Seirus was apparently same-day notice notice, it did not have the opportunity to respond.

A few notes here: First, I expect that most TRO’s include legal and factual errors that stem from the fact that they are issued in an emergency, usually in an ex parte fashion.  The court typically relies upon the statements of counsel requesting TRO — perhaps in a way that should raise additional duties to the court.

Stipulation of Validity?: Normally judges rule that patents are “not proven invalid” rather than actually holding them “valid.”  Here, however, the TRO motion refers the judge to the prior “stipulated judgment of validity” and the judge consequently held that Seirus will not be harmed by “complying with its own stipulation of validity.”

Looking back at the docket appears to tell a different story.  As I suspected, the prior judgment states that the patent “has not been proved invalid.”  However, the jointly-agreed-upon document is titled “JUDGMENT OF VALIDITY OF U.S. PATENT NO. D657,093.”  So, the document has some ambiguity, but the distinction here is potentially critical: A not-able-to-prove-invalidity would seemingly not prohibit a reexamination filing since the varying standards of proof logically allow for a patent to be cancelled during reexamination even if it could not have been invalidated in court.  Of course, under a slight extension of MedImmune and Lear, it might not even make a difference.  (Note here, that MedImmune and Lear both permitted a licensee to challenge).

Here, the patentee argued to the court that the “consent judgment … precludes [Seirus] from initiating a reexamination proceeding on the D’093 Patent.”  Unfortunately, the patentee does not cite any authority toward its conclusion other than Flex-Foot, Inc. v. CRP, Inc., 238 F.3d 1362 (Fed. Cir. 2001), but that decision does not reach the reexamination question here and was pre-MedImmune.

The key case I would cite here is In re Baxter Intern., Inc., 678 F.3d 1357 (Fed. Cir. 2012).  In that split decision, the Federal Circuit found no problem with an adjudged infringer taking same prior from the district court case (that lost there) and re-using it in a reexamination (and cancelling the claims).

Finally (for this post), the court appears to have inadequately considered the equities and the public interest associated with cancelling an improperly issued patent.  As the Supreme Court wrote in MedImmune: “the equities of the licensor do not weigh very heavily when they are balanced against the important public interest in permitting full and free competition in the use of ideas which are in reality a part of the public domain.”

I’m confident that Seirus will challenge the TRO, which (I believe) is subject to immediate appeal to the Federal Circuit under 28 U.S.C. § 1292(a)(1).

Update: I noted above my belief that the TRO decision (enjoining the defendant from filing a reexam petition) was immediately appealable based upon 28 U.S.C. § 1292(a)(1)’s statement that orders “granting, continuing, modifying, refusing or dissolving injunctions” create direct appellate jurisdiction.  A friend emailed me the non-precedential decision in Hallmark Cards, Inc. v. Grp. One Ltd., 110 F. App’x 99, 100 (Fed. Cir. 2004), holding otherwise.  One way to read Hallmark is that a TRO is not appealable if the district court is planning to quickly hold a preliminary injunction hearing – as is the case here.

38 thoughts on “Court Issues TRO: Enjoining Infringer from Filing a Reexamination Petition

  1. Dennis, I respectfully disagree with your comment that the district court didn’t properly weigh the equities. This was just a temporary restraining order (TRO), a short term order that, under FRCP 65(b)(2), ordinarily expires within 14 days after issuance. It’s common for district courts to issue TROs shortly after the request is filed, and here, it made sense.

    If the accused infringer had gone ahead and filed its ex parte reexamination request, there would be no way to unring that bell. The district court would likely have had no authority to enjoin the USPTO from reexamining the patent once the request was filed. The equities clearly weighed in favor of making the defendant wait a couple of weeks before filing a reexamination request on a stipulated-valid patent it had been litigating for years, instead of allowing the defendant to immediately take the irreversible act of filing a reexamination request. I cannot fault the district court for enjoining the reexamination filing until the issue could be more thoroughly briefed by the parties.

    And I’m not sure you’re right on merits, either, Dennis. The facts here are very different from Baxter, where the reexamination requests were filed well before the CAFC affirmed the jury’s validity verdict in the Fresenius case in September 2009. Baxter did not present a scenario in which a party filed for reexamination of a patent after entry of a final and binding consent judgment against the defendant’s invalidity challenge. And Leer/Medimmune did not involve court judgments, but rather, no-challenge provisions in contracts, so they didn’t involve the countervailing policy consideration of upholding judgments.

    Seems like the most on point case here is Foster v. Hallco, 947 F.2d 469 (Fed. Cir. 1991), in which the CAFC held that a consent judgment on the issue of patent validity could bar a future challenge and would not run afoul of Lear v. Adkins. I acknowledge though that the consent judgment here is a lot more ambiguous than the one in Foster v. Hallco on whether there was any intent to bar future challenges, but that’s an issue the district court will have to address in deciding whether to enter a preliminary injunction.

  2. Paging federal jurisdiction nerds… isn’t this a potential violation of the separation of powers? Seems odd to see an Article III court barring a party’s right to seek relief in an Executive Branch administrative agency…

    Ah well, Oil States should clear that up. 😛

    1. Michael, is the poster of the case that is important here. The trial by jury was completed, and the case was all but over except for a final judgment.

      This is not about enjoining a defendant for filing for reexamination near the start of trial. It is about res judicata.

      1. That sort of helps, Ned. Except that res judicata applies only to the parties and an invalidity ruling by the PTAB would knock out the patent for the entire public. And it seems strange to tell a defendant, “Go ahead if you want, but the result won’t change for you even if you win.”

        I get why the district court granted the TRO. I’m just not sure that an Article III court had the authority to enjoin the PTAB from exercising its authority.

        Just a strange situation. Seems like the PTAB and the federal courts operate in separate spheres.

        But this is an area of agency law that I don’t know anything about. Probably wouldn’t seem weird at all to lawyers for the Sierra Club looking to enjoin EPA rules, for example.

        1. The enjoining was NOT the USPTO being enjoined.

          If someone else were to approach the USPTO seeking the same action, the USPTO would fully be able to follow through.

          Here, it is the particular entity that due to the Law of the Case is enjoined.

          (and from what I can tell, this was entirely appropriately within the purview of the Article III court)

          1. anon,

            I got that. And I guess that’s why the district court granted the TRO rather than (as I suggested in an alternative scenario above) allowing the defendant to proceed despite the fact that the result would not matter to the defendant.

            I guess in the end the answer is in timing. No federal court could enjoin an accused infringer from requesting a reexam before a final judgement of validity and infringement. (Right?) But the moment that final judgment issued, the accused lost its right to argue invalidity vis-a-vis its adversary. And the fact that that right remains for the rest of the world simply doesn’t matter to the accused infringer.

            Another angle that I’ve not really thought through is the non-mutual collateral estoppel effect of the final judgment on invalidity. Perhaps there is no need for the rest of the world to request a reexam after a federal court has issued a final judgment of invalidity (at least with respect to the particular claims included). Other future accused infringers can simply point to the invalidity ruling and get the case dismissed on 12(b)(6).

            Interesting fact pattern.

            1. Of course, collateral estoppel applies (as to a party) only when a particular issue has been tried, fully and fairly, and was necessary to a final judgment. Certainly, a stipulation by the infringer of invalidity does not mean that the issue of validity has been fully and fairly tried says that the judgment is binding on the patent owner.

          2. That isn’t how res judicata or the law of the case works. And the law of the case only applies in a particular case, as the term implies.

  3. This is not a scenario likely to occur very often, because it is not that often that a litigated and tried patent suit is concluded by the D.C., including the damages, in less than one year from the date of the complaint. In a normal patent suit the losing defendant is barred from filing an IPR at that point in time by the IPR statute [the one year time limit from the complaint filing date].

    1. Not even to mention the bizarre rarity of a defending allegedly admitting or conceding validity and then trying to file an IPR.

      1. Paul, typically, one does not have to concede validity. One simply does not have to raise it as an affirmative defense. I wonder if the two were conflated in this case?

    2. Reexam, not IPR.

      1. Thanks. But in that case, 35 USC 301 says: “Any person at any time may file a request for reexamination by the Office of any claim of a patent on the basis of any prior art cited under the provisions of section 301.”

        As just noted in another comment, reexaminations take a long time
        even to get declared. Even a Fed. Cir. appeal of this decision would most likely be over before the reexam is decided. Assuming the D.C. decision is sustained on appeal, the D.C. decision would be truely final at that point, so how could the reexam decision affect this D.C. damages outcome against this defendant? [versus an injunction].

        1. BTW, we are so used to the preference for IPRs that one tends to forget that an ex parte reexamination can be filed anonymously, and even filed by someone in a foreign country. There is no requirement to ID a real party in interest or its privies. The defendant here could have filed this reexamination anonymously. Also, once filed, my understanding is that a reexamination request cannot be withdrawn, so the Judge’s order here cannot be effected by enjoining the defendant if the reexam petition is already filed and the fee paid.

        2. > As just noted in another comment,
          > reexaminations take a long time
          > even to get declared

          ???

          By statute, the Director must decide whether to declare a reexamination within 3 months after the filing of the request. See 35 U.S.C. 303(a). That’s half the time it takes to get an IPR institution decision.

  4. Dennis says: Finally (for this post), the court appears to have inadequately considered the equities and the public interest associated with cancelling an improperly issued patent. As the Supreme Court wrote in MedImmune: “the equities of the licensor do not weigh very heavily when they are balanced against the important public interest in permitting full and free competition in the use of ideas which are in reality a part of the public domain.”

    Meaning exactly what? In order for only the most ‘perfect’ and ‘good’ and in ‘use’ domestic claimed invention by the most perfect in scope patent claims should ever be given enforcement and, therefore, ex parte reexamination must be allowed to collaterally attack a final judgment of a court at any an all times and, therefore, must consume all other considerations? You do know, Dennis, that as a lawyer, one is an ‘officer of the court’ which is a pledge to the judiciary, and ‘due process’ in every sense of that phrase. It is not a pledge to the Administrative State or to the proposition that a patent claim embodies some ultimate ‘truth’ as to the perfection of the claimed cause of action. Enforcing a patent claim has always and will always be a gambit and that is ‘true’ of any cause of action ever brought into a court. My point being that the ‘perfection’ and ‘complexity’ arguments are swallowing the rule not the other way around. Interesting to see how deep the ‘bad patent’ argument has infiltrated the thinking of purported lawyers.

    1. So we let patents that might be bad survive when challenging them would mean they might get removed? Also I do not follow your due process argument are you saying that there is no due process at the PTAB? That would be a very serious argument that would need serious proof.

      Given the tiny amount of time patent examiners can spend examining patents and given how many bad patents seem to get through – maybe the assumption that all patents that get through are great needs to be rethought somewhat?

      1. Zaldar,

        That would be a job for Congress (not the courts).

        As it is, the law still provides a presumption – and a level of that presumption – that the courts MUST accept.

      2. No but the reexamination process should ‘act in harmony’ with the courts, i.e., enforce administrative estoppel, in other words some comity or full faith of credit to court judgments. Indeed, after passage of the original ex parte reexamination statute, that was exactly the holding of Mossinghoff’s special panel determining there was no ‘substantial new question’ of patentability after you litigated and lost the case in D.Ct. In re Perne CCPA I believe. I think it is still in the MPEP, but a dead letter. Slippery slope forward 20 or 30 years both ex parte and IPR panels have downright contempt for the Art III courts. IPR panel’s would have had a better chance of surviving had they given comity to the Art III department, for example, accepting Markman orders as informative of BRC, and therefore create a form of res judicata on a case by case basis and letting the patent owner make these arguments. But alas, the implementing procedures, basically say screw the courts we’ll do whatever we want. Even CAFC, which has been bending over backwards to save the statute is getting embarrassed by issues like panel stacking re-hearings and the Alice in wonderland view of proving a claim amendment would ultimately succeed before allowing the claim amendment. SCOTUS needs to stick a fork in it, and send congress back to the drawing board.

    2. Interesting to see how deep the ‘bad patent’ argument has infiltrated the thinking of purported lawyers.

      That drum beat comes from several different philosophical camps.

  5. Dennis, courts have been enjoining second-filed lawsuits and enforcing res judicata for a very long time. It is part and parcel with providing an orderly process, and finality to judgments. This role of the court system is far more important in the scheme of things that allowing multiple, collateral, assaults on patent validity in the name of the public interest. Providing virtually no due process whatsoever to a patent owner is hardly in the public interest to the extent that we want a patent system at all. An unjust system like this is no better than the Star chamber.

    1. Yep, and of note is that ALL the other administrative courts – apply ‘administrative estoppel,’ a form of res judicata, to actions collateral to Art III judgments. Every admin court, that is, but for PTO courts, whom are staffed with non-APJs. So the admin court with the least protection is the universe of admin courts is the least deferential to the Art III courts. Go figure.

    2. Try to get a federal court to enjoin a state court action or vice versa. This is a wholly different forum. I believe this TRO will be tossed, post haste. Never mind the fact that the supposed immediate and irreparable harm is fictional: Even if the defendant filed a reexam tomorrow, it isn’t even going to start any time soon.

      1. The harm comes not in the final result of what is started but rather the harm comes in that the already adjudicated matter can be tossed because it is not “fully finalized” and the new mechanism is engaged.

        1. A D.C. trial decision is NOT “tossed” merely because a new validity test mechanism is “engaged” [any more that if a second patent suit was started on the same patent]. It is not even “engaged” by a mere reexam petition, and even if it does become “engaged” that still does not “toss” the D.C. decision unless the D.C. decision is still pending when there is a final Fed. Cir. decision on the reexamination. Highly unlikely since a final decision in the reexamination would require a time-unlimited adverse prosecution completion by the reexamination examiners, a final adverse PTAB decision, and then any patent owner Fed. Cir. appeal.

          1. There was a recent case that showed precisely the opposite of what you are saying Paul.

      2. In significant Dallas site, I don’t think the court is enjoining a court or the PTO. They are enjoining a party to the lawsuit.

  6. “The court typically relies upon the statements of counsel requesting TRO — perhaps in a way that should raise additional duties to the court.” – This is correct. There’s a heightened ethical duty in a TRO motion because it’s ex parte. I believe you have to disclose all adverse facts/law, unlike in a PI.

  7. Seems like some sanctions for the patentee are in order.

    1. Why?

      (No snark – your post seems based purely on your well known cognitive dissonance and being anti-patent; or did you have some actual sanctionable conduct in mind with your comment?)

      1. Seems like somebody “forgot” to cite some important cases from the past 16 years. But, hey … “zealous”. That’s all that matters. Questioning motives is soooooooooo unfair unless it’s the motives of the 99% who are just looking for a handout. Right, “anon”?

        You’re a very serious person. And all about “patent quality”! Yup. You said so.

        1. That is not an answer.

          Instead of diving into the ad hominem, perhaps you should have taken that (relatively small) step and actually listed cases “forgotten.”

          You may have even approached being a decent commentator for that (small) step…

          1. are not the cases the side should have cited but didn’t listed in the blog post? What would be gained by relisting them?

            1. As noted above, the cases cited in the blog post are of a questionable pertinence. Further, Malcolm had the chance to either reference those cases or provide better ones.

              He did neither.

              In addition, it would have been more pertinent to do more than merely post his feelings and his (usual) ad hominem.

              Why are you sticking up for the biggest blight on this blog?

  8. These mistakes, as Professor Crouch alleges, probably wouldn’t happen in ED Texas. The judges (and law clerks) know patent law cold.

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