With the rising cost of litigation, defendants faced with a patent infringement lawsuit should seriously consider requesting reexamination of patents-in-suit at the United States Patent and Trademark Office. Under the proper circumstances, reexamination offers a cost-effective alternative to litigation, which may result in a stay of the district court litigation, significant amendments to the asserted claims or even cancellation of all asserted claims.
Ex parte vs. inter partes reexamination
Reexaminations provide a means for any member of the public, including the patentee, to request that the USPTO reexamine a patent claim in light of a “substantial new question of patentability” based on prior art printed publications or patents. Reexaminations come in two forms: ex parte and inter partes.
Ex parte reexaminations can be requested by a patent owner or any third party. If an ex parte reexamination is requested by a third party, the patent owner is entitled to file a statement if the USPTO finds a new question of patentability, at which time the patentee may amend the originally issued claims or add new claims. The third-party requester may respond to the patent owner’s statement, but the participation of the third party in the reexamination process ends there.
Inter partes reexaminations can be requested by any party other than the patentee and are only available for patents that issued from an original application filed in the United States on or after November 29, 1999. Because a third party has the right to participate throughout an inter partes reexamination, the third party maintains greater control over the process than with an ex parte proceeding. Inter partes reexaminations do, however, impose some risks. Specifically, a defendant in a district court action is “estopped” from challenging the patent on any ground that was or could have been raised in a prior inter partes reexamination.
Procedure and pendency
In 2005, the USPTO announced that it had implemented a new process for handling reexamination proceedings, targeting all future reexaminations for completion within two years. Additionally, all reexaminations are now assigned to a Central Reexamination Unit (CRU) dedicated solely to reexaminations. The CRU conducts a panel review at various stages in the proceedings to ensure all matters are addressed appropriately.
Despite this policy, March 2009 data from the USPTO website indicates that the average pendency of inter partes reexaminations is 33.7 months. Presumably, involvement of the third party in inter partes reexaminations accounts for the additional time. Ex parte reexaminations have an average pendency of 24.8 months – closer to the USPTO’s 2005 stated goal.
According to USPTO statistics, the majority of patents put through reexamination result in some change to their claims. As of March 31, 2009, statistics from the USPTO website indicate that:
73 percent of ex parte reexaminations initiated by a third party resulted in some or all of the claims being canceled or amended
93 percent of inter partes reexaminations resulted in some or all of the claims being canceled or amended
These statistics indicate that a defendant embroiled in a district court action may enjoy several advantages by filing a request for reexamination, such as:
a stay of the district court action, pending conclusion of the reexamination process
avoiding liability for past damages if claims are substantively amended during reexamination
assistance with narrowing claims during the claim construction process
Time is of the essence
In deciding whether to stay a litigation pending a reexamination, district courts consider whether the patentee will be unduly burdened or prejudiced by the stay, whether a stay will simplify the issues for trial and whether discovery has been completed and a trial date set. Therefore, the sooner a request for reexamination is submitted, the better. In fact, most courts will not consider staying the litigation until at least a first office action rejection is issued, thereby placing greater weight on the timeliness of filing a request. To reap the potential benefits of the reexamination process in a district court litigation, file requests for reexamination as soon as possible after the lawsuit is filed.
One of the main disadvantages of reexamination is that it could result in a stronger patent. Indeed, a patent holder may change the claims of the patent in such a way as to remedy invalidity concerns or read directly on a defendant’s products (though a patentee cannot broaden its claims during reexamination).
Another disadvantage is that reexamination is limited to prior art printed publications or patents. Other invalidity defenses, such as on-sale bar or public use, are not available in a reexamination proceeding. Additionally, as noted above, involvement in an inter partes reexamination may estop a defendant from later asserting in district court that a claim is invalid based on grounds that were “raised or could have been raised” during the reexamination.
A valuable tool
In sum, while reexamination of patents-in-suit may have certain disadvantages, defendants faced with a patent infringement lawsuit should nevertheless weigh its potential for canceling or amending claims against them. It is a valuable tool in the arsenal of IP protection.
For more information, please contact Christine K. Corbett.