When does a PTO Cancellation undermine a District Court Judgment of Infringement?

PhaZZer v. Taser (Supreme Court 2020)  [Petition for writ of certiorari]

PhaZZer defaulted in the litigation and the district court awarded $7.8 million to Taser. On appeal, the Federal Circuit quickly issued a R.36 no-opinion affirmance in 2019.  Then, in February 2020 the USPTO finally cancelled the claims of the asserted patent (via reexamination). US7234262.

Because of the bankruptcy stay, PhaZZer apparently had time to wait for the USPTO reexamination decision, although that case has not yet been appealed to the Federal Circuit. In its new petition for certiorari, Phazzer argues that the damages should be void ab initio and asks the Supreme Court to remand the case to the Federal Circuit for such a ruling.

Petitioner requests that either this Petition for
Writ of Certiorari be granted or, preferably, the issue be remanded to the Federal Circuit for
reconsideration of its Order affirming the District Court judgment so that the action can be remanded to District Court to vacate the patent damages.

The questions presented are:

1) Is the Federal Circuit affirmation of the patent damages now incorrect in light of the change of circumstances created by the USPTO cancellation of all patent claims?

2) Is remand to the US Court of Appeals for the Federal Circuit timely and appropriate in light of the change of circumstances created by the USPTO cancellation of all patent claims?

3) Does Respondent [the Patentee] lack standing to assert the patent claims following the USPTO cancellation?

This case is related to the pending petition in Chrimar where the petitioner is arguing that timing of USPTO cancellation is important — namely that USPTO cancellation should not be used to undermine an already issued district court final judgment.  The Supreme Court is considering the Chrimar petition in its penultimate conference of the term on June 18, 2020.

26 thoughts on “When does a PTO Cancellation undermine a District Court Judgment of Infringement?

  1. 8

    Relevant note from Dennis’ latest blog, with inserts in brackets: “Consideration of one fully briefed petition was postponed [by the Sup. Ct.] Chrimar Systems. Chrimar has to do with the timing of judgment finality and issue preclusion. Particularly: How does claim cancellation via inter partes review impact [allegedly final] prior court judgments upholding the the patent? (In this case, an appeal in the infringement litigation was still pending on other grounds). A petition on related issues was recently filed in PhaZZer [this case], and the court may be considering the issues together.”

  2. 7

    How many more years will we still see continuations of wistful thinking and potential misleading of patent owners with repeated Sup. Ct. unsupported arguments, unsupported Congressional bills, etc., that IPRs are going to somehow just disappear or somehow become merely advisory, contrary to broad bi-partisan AIA Congressional support and intent? What is needed is more practical improvements and clarifications of IPRs.
    For example, a clarification can still be sought in a better handled case than this one [perhaps from WDTX] for a clear decision that when an infringement damages decision is truly final before any PTO decision removes the infringed claims from the patent that the judgement stands for that decision and the already awarded damages can still be collected from that defendant. We have yet to actually see such a clear facts case.

    1. 7.1

      The spin of your characterization is noted, oh cheerleader of the IPR.

      (you do realize Paul that your past positions have kind of taken away your credibility on this matter, right?)

    2. 7.2

      Just until we can convince inventors to stop throwing their money away on fake patents.

  3. 6

    And furthermore, this “timing” issue is another red herring, more bending over backwards to find some illogical logic to save the AIA. See my Hayburn’s reasoning. It’s a facial challenge to the statutory scheme of ‘dual jurisdiction’ and the finality requirement of Art III jurisdiction. When does a PTO Cancellation undermine a District Court Judgment of Infringement? Answer: Always.

  4. 5

    My prediction. Cert Denied. Because SCOTUS will not confront the ‘finality issue’ re: Hayburn’s case. See, Oil States. And this is Hayburn’s case squared up (with the novel twist of CAFC deferential (Chevron) review of the presumed correct agency record). The best argument here is that Patlex was decided when 35 USC 145 was the Constitutional safety valve under the old Ex Parte Reexamination statute. Since 145 granted a right to trial de novo of the facts and issues, one could argue that it was an Article III court invalidating the patent and PTO stood on no greater ground than any other challenger. That ‘safety valve’ of 145 was abolished under the AIA, and therefore, this is a de novo issue never decided. Ergo, this is the ‘dual jurisdiction’ and ‘finality’ issue addressed in Hayburn’s case. Highlighting of course how wrongly argued Oil States was at SCOTUS when she conceded ground on Ex Parte reexamination. In other words, the best argument here, is that Patlex was probably correctly decided since 145 existed, it sub silento ‘saved’ the statute and the then scheme of ex parte reexamination. But no more, since 145 review is gone, and CAFC review of the Agency record of the ex parte reexamination does not allow de novo conclusion of fact and law, and further PTAB grants NO comity or deference, or administrative estoppel, not even lip service, to the prior Art III determinations in the same matter. Concluding there is probably a way for Congress to create a scheme to accommodate ex parte and inter-party PTAB and the Art III jurisdictional requirement of ‘finality’ (put a new 35 USC 145 – optional right to trial de novo wherein another Art III court CAN give proper comity and deference to the other Art III court, heck Congress could even make it the SAME Art III court, that might even be better), but not NOW, under the existing statutory scheme. As it is NOW, under the current ‘dual jurisdiction’ statutory scheme, it is impermissibly enlisting the Art III Courts into rendering merely advisory judgments. That’s Hayburn’s case. Footnote, it makes no difference whether the US Patent now falls under the so called ‘public rights’ doctrine (Oil States), since Hayburn’s case was a right to collect a pension<— a 'public right' doctrine case if there ever was one.

    1. 5.1

      This makes complete sense. Going back to rudimentary law would clean up the huge mess created by the AIA. Corruption, bias, quid pro quo, separation of powers, 7th amendment, 5th amendment, appointments clause would all be solved by making PTAB advisory.

      And it would still work as intended. If the USPTO dials back the execution rate and issues reasoned opinions, district courts are going to give it a lot of weight.

    2. 5.2

      And it doesn’t even require an act of Congress. When the USPTO issues a cancellation certificate, it does not mean the patent never existed. Cancellation of claims in an IPR legally terminates the claims but does not nullify the claims ab initio. This may require overturning Fresenius (2-1 Fed Circuit), but nothing more. Cancellation of claims in an IPR means early termination. It can be evidence of invalidity of the underlying property right, but cannot be a legal determination. This would put the genie back in the bottle.

    3. 5.3


      I agree completely – both with your reasoning (and then some) and with cert denied because the Supreme Court has no interest in either cleaning up its mess or being held in any way accountable.

  5. 4

    The reexam request was filed by Stinger Systems (not clear on their relationship to the parties in this case) based on the assertion that the claims in the patent were not entitled to its priority date (Sept 1999). The issued patent was based on a CIP in the priority chain where the subject matter of the allowed claims was introduced, so the priority date should have been that particular date (Dec 2005). There was prior art in the intervening time period that anticipated the new subject matter (102(b) art with a date in 2000).

    Looks like the USPTO made a mistake in its analysis of the priority date for this subject matter. This is a perfect illustration of why some patents deserve to be revoked by either an IPR or reexam. Many Examiners are quite good, but they are human and make occasional mistakes. Having a means to cheaply and easily correct those mistakes benefits everyone (except the beneficiary of that mistake). Some people like to whine about the USPTO and the revocation of patents (especially when they’re the beneficiary of those mistakes), but there is very little for anyone wanting to take advantage of those mistakes.

    1. 4.1

      False equivalency in your “some like to whine” assertion there Anon2, as the implication is that anyone speaking out on the ability to nullify a granted patent property right is merely “whining” and ‘more likely than not’ has a patent that should not have been granted anyway.

      1. 4.1.1

        Not at all. I said “some”, not “all.” You’re right in that it would be a false equivalency if I had used the term “all” though. I intentionally didn’t because I had only one specific whiny person (and group) in mind when I said it. I’ll let you make all the assumptions you want as to who that person (and group) might be. And I refuse to confirm or deny any guesses you may deign to put forth.

  6. 3

    Some facts are missing here: who filed for re-exam, and when? If it was Phazzer, did Phazzer seek a stay of court proceedings once the reexam was filed?

  7. 2

    This is so absurd. The USPTO can’t help themselves from attacking inventors if we try to use our patents. This is unsustainable. What good is a patent if they are just going to cancel it later and erase all your damages? And what is the point of going to court?

    1. 2.2

      Exactly. The Courts are rendering advisory judgments <— back in the bad olde days, errr . . . that wasn't allowed.


          See above. An Art III court has a ‘finality’ requirement in order to have jurisdiction over a matter. In Hayburn’s case, the court was to sit and hear claims and dates of service in the Revolutionary War on order to place a person on the pension roll (get a war pension). However, there was a ‘dual jurisdiction’ wherein the Secretary of State could take somebody on or off the pension roll to correct mistakes, etc. This triggered the ‘finality’ requirement of Art III jurisdiction. In other words, in order for an Art III court to have jurisdiction in a matter, it’s judgment must be ‘final’ (right or wrong LOL), and not subject to obviation (void ab inito) by any other division of the government. Since there was a scenario in the statutory scheme wherein a person could be put on the pension roll by an Art III court and there was a plausible scenario where the Executive could take somebody off the pension roll (mind you this is a facial challenge since it didn’t happen) the Court refused to sit as judges to adjudicate claims of war service (they would sit as mere commissioners to hear the claims, hey government was really small back then), reasoning that the statutory scheme violated the ‘finality’ requirement of Art III jurisdiction.

  8. 1

    ? This cert petition starts with the following text – is this first sentence not really true, per your first sentence above?
    “While this patent case was pending on appeal, the United States Patent and Trademark Office (“USPTO”) issued a judgment in an ex parte reexamination invalidating all patent claims on which the Patentee based its infringement claims, and then the USPTO issued a Reexamination Certificate cancelling all of those patent claims. Unfortunately, the Federal Circuit refused to stay the case, a mere nine weeks so that a review that USPTO judgment could be made, necessitating the present Petition for Writ of Certiorari and/or, preferably, remand to the Federal Circuit.”
    It is important to note that D.C. patent litigation and appeal moving faster than the defendant’s IPR decision finality is rare, contrary to the fuss sometimes made about that subject. Here it is only because of the very rare situation of a defendant apparently not even filing an answer to the complaint [only a motion to dismiss] and thus naturally getting hit with a default judgement by the D.C. [How likely is that situation to get much sympathy?]

      1. 1.1.1

        Thanks Dennis! Yes, that is in the text I cited, and it is an even more unusual situation these days, since ex parte reexaminations are rarely used instead of IPRs unless the defendant blew the IPR one year filing deadline. I should have started my comment with “Even if it had been an IPR …”

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