post-grant proceedings and pending litigation:...
TRANSCRIPT
Post-Grant Proceedings and Pending Litigation:
Impact of Fresenius v. Baxter Leveraging PTO Decisions to Nullify or Support Infringement Judgments and Damages
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WEDNESDAY, SEPTEMBER 11, 2013
Presenting a live 90-minute webinar with interactive Q&A
Michael L. Kiklis, Partner, Oblon Spivak McClelland Maier & Neustadt, Alexandria, Va.
Scott A. McKeown, Partner, Oblon Spivak McClelland Maier & Neustadt, Alexandria, Va.
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© Copyright 2013 Oblon, Spivak, McClelland, Maier & Neustadt L.L.P.
Post Grant Patent Practice:
Litigation Alternatives & Collateral
Attacks
Scott McKeown
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 5
Post Grant History
1980s ex parte reexam
Slow, unpredictable
One sided, Favorable to patentees
1999 AIPA
Inter Partes
USPTO – CRU
Portola Packaging
Trolls
2012 AIA
IPR, PGR, CBM
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 5 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 5
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 6
Fresenius v. Baxter
Concurrent ex parte reexam with litigation
Verdict not invalid….appeal to CAFC on 103
(Fresenius I 2009)
Remand on damages…damages determined, execution
stayed pending appeal (Fresenius II)
USPTO CAFC Appeal - Reexam appeal adverse to
patentability affirmed (2012) 2003 litigation…2006 reexam filing…6 year duration
USPTO cancels claims
Fresenius II
District court not final enough
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 6 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 6
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 7
Fresenius Game Changer or
Hype?
Ex Parte (no estoppel)
Translogic v. Hitachi (2007)
Jury verdict overturned..unconstitutional?
BPAI judges not appointed?
Cert denied
In re Construction Equipment (2011)
Injunction?
Fresenius (2013)
SAP v. Versata (2014)
IPR and CBM to multiply fact patterns?
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 7 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 7
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 8
Fresenius En Banc?...Unlikely
Reexam Era Closes
Now IPR, CBM,
PGR
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 8 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 8
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 9
PTAB will win the Race
Speed!
CBM
IPR…ITC, rocket dockets
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 9
0
10
20
30
40
50
60
70
80
90
Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
IPR and CBM Filings
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 9
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 10
USPTO Third Party Mechanisms
Legislative Solutions (AIA)
Patent Trial & Appeal Board (PTAB)
Inter Partes Review (IPR)
Post Grant Review (PGR)
Transitional Business Method (CBM)
Other Options
Patent Reexamination (ex parte)
Least attractive
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 10 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 10
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 11
What Advantages Does the
USPTO Offer Patent Challengers?
Vastly Improve Chances of Success
BRI (broadest reasonable interpretation)
No Presumption of Validity (Patentability)
Technical Audience
Preponderance of evidence (51%)
Clear & Convincing 80%+ (Courts/ITC)
Claim Construction within 4-6 months (PTAB)
Obtain settlement leverage faster…disrupt war chest
Courts..Markman/SJ...take years
11 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 11
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 12
What Advantages Does the
USPTO Offer Patent Challengers?
Much Lower Cost
Patent litigation $3-5 million to trial (avg.)
IPR (100s of $K) (CBM, PGR, higher)
Reexam (10s of $K) (request)
Troll Model Unsuited for USPTO
No Significant Discovery Burden (PTAB)
SPEED Changes Everything!!
Technical Judges (no examiners)
Competitor Policing (reexam)
12 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 12
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 13
What Risks Does the USPTO
Pose to Patent Challengers?
Estoppel (PTAB)
But is it really a concern?
Not all defenses at risk…reasonably raised?
Average Texas juror vs. PTAB Judge?
“New” Procedure…not really
Estoppel (Reexam)
Practical estoppel…stronger patent, more claims
Anonymity at a price
Mishandled third party submissions
Undermine later defenses and options
13 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 13
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 14
Strategic Post Grant Options
Choosing a USPTO Post Grant
Option That Suits Your Needs
14 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 14
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 15
Post Grant Choice: Patent
Reexamination
Patent Reexamination or PTAB Proceeding?
Why use Ex Parte Patent Reexamination?
One sided….favorable Patentee statistics
Slow, but improving…$12k filing fee
Amendment opportunity/interviews
Marginal change can be effective (no search)
Decreasing importance at USPTO
Popular products ….secondary considerations?
Patent examiners are not created equal
Filing rate has dropped significantly in 2013…why?
Benefits?
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 15 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 15
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 16
Post Grant Choice:
Reexamination
Patent Reexamination or PTAB Proceeding?
Why use Ex Parte Patent Reexamination?
ANONYMITY
Strong art (102, multiple grounds)
Easy to understand technology
Short claim using plain language
Interface, Menu system, design patent, etc
Proactive…Portfolio diligence
-Not recommended for litigation disputes
-Complex technology
-Legal Challenges (priority, complex 103)
Has a place, but more for systematic policing
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 16 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 16
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 17
Post Grant Choice: Inter Partes
Review (IPR)
Why use Inter Partes Review? Contested….favorable Challenger statistics: 89% success
No anonymity (estoppel)
Primarily alternative to litigation
Fast…$23k fee (3/19/13 9k…14K)
New in name, but old in function
Patents and printed pubs only
Most popular USPTO proceeding for combating trolls, uses:
Stays
Claim construction
Portfolio attack
Must be completed within 12 months
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 17 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 17
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 18
Post Grant Choice: Inter Partes
Review (IPR)
Why use Inter Partes Review?
PTAB Trial Section: Litigation, Interference and
Industry Experience (law clerks, litigators)
3 Judges per case (no examiners)
160 proceedings in 6 months
50 CBMs ~400 IPRs
IBM, Oracle, Motorola, RIM, SAP, Apple, Samsung
50+% of filings target trolls
Courts staying cases in recognition of differences with
patent reexamination (speed, quality)
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 18 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 18
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 19
Post Grant Choice: Post Grant
Review (PGR)
Why use Post Grant Review?
Future consideration, not yet available (2015)
Primary benefit is expanded scope 101, 112, etc
More of interest to Bio/Pharma
Significant estoppel!!
Threshold standard different, but not really
Limited Window
Not expected to be popular.
Congress addressing
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 19 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 19
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 20
Post Grant Choice: Covered
Business Method (CBM)
Why use CBM?
Special standing requirements
Limited to business methods/ecommerce
Exclude technological inventions
Must have been sued or charged with infringement
Strong stay provisions…deadly even
interlocutory
No significant estoppel
No litigation timing concerns
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 20 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 20
PTAB Timeline
8/17/2013
Petitioner Reply
2/17/2013 - 2/17/2014
Post Grant PTAB Proceedings
(17-23 Months)
9/17/2012 8/17/20141/1/2013 1/1/2014
2/17/2013
Order/Sched.
3/17/2013
Conference Call
Discuss Scheduling,
Protective Order &
Motions
PO Discovery
2/17/2013 - 6/17/2013
6/17/2013 - 8/17/2013
Petitioner Discovery
Oblon Spivak
Patentspostgrant.com
© Copyright 2012
9/17/2013
PO Reply
2/17/2014 - 8/17/2014
Director Extension?
9/17/2012 - 2/17/2013
Front End ~ 5 Months
6/17/2013
PO Response/Amend 2/17/2014
Written Decision?
-Beware Substantial
Evidence Standard-
10/26/2013
Settlement/Request for Hearing
--motions to exclude, observations, etc--
12/12/2013
Oral Hearing
8/17/2013 - 9/17/2013
PO Discovery
12/17/2012
PO Resp?
10/19/2012
Mandatory Disclosures
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 21
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 22
PTAB Timing Controls
IPR/PGR
Defendant 1 year litigation bar (IPR)
Triggered upon service of complaint
Includes privies
Earlier suits dismissed w/o prejudice do not prevent
IPR (MacAuto IPR)
DJ control (invalidity) (IPR/PGR)
Lose USPTO option thereafter
Can file later for strategic reasons
DJ on non-infringement
TPCBMP no litigation controls
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 22 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 22
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 23
Jury vs. PTAB Judge?
Conclusions
The patent litigation landscape has changed in the U.S.
Small trolls cases are no longer viable investments especially for
e-commerce/business methods.
Speed of PTAB has yet to be experienced by many courts, this will
change soon
Speed will outpace most litigation schedules
USPTO filings are no longer a litigation tool, but an alternative
Courts are likely to grant stays much more liberally once the PTAB
establishes a track record
But what happens in cases that are a race, what have we learned
from Fresenius et al?
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 23 1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 23
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 24
Thank You
Scott A. McKeown
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 24
Post-Grant Proceedings and
Pending Litigation: Impact of
Fresenius v. Baxter
September 11, 2013
Michael L. Kiklis [email protected]
© Copyright 2013 Oblon, Spivak, McClelland, Maier & Neustadt L.L.P.
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 26
Agenda
Background
Res Judicata/Collateral Estoppel
Prior Fed Cir decisions
Fresenius v. Baxter (Fed. Cir. July 2, 2013)
Best practices
Res Judicata/Collateral Estoppel
The Restatement of the Law, Judgments 2d.
§ 17. Effects of Former Adjudication–General Rules
A valid and final personal judgment is conclusive between the parties,
except on appeal or other direct review, to the following extent:
1. If the judgment is in favor of the plaintiff, the claim is extinguished
and merged in the judgment (see § 18);
2. If the judgment is in favor of the defendant, the claim is extinguished
and the judgment bars a subsequent action on that claim (see § 19);
3. A judgment in favor of either the plaintiff or the defendant is
conclusive, in a subsequent action between them on the same or a
different claim, with respect to any issue actually litigated and
determined if its determination was essential to that judgment
(see § 27).
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 27
Res Judicata
“Under res judicata, a final judgment on the merits of an action
precludes the parties or their privies from relitigating issues that
were or could have been raised in that action.” San Remo Hotel,
L.P. v. City & Cnty. of S.F., 545 U.S. 323, 336 n.16 (2005)
(emphasis added).
A judgment otherwise final for purposes of the law of res judicata is
not deprived of such finality by the fact that time still permits
commencement of proceedings in the trial court to set aside the
judgment and grant a new trial or the like; nor does the fact that a
party has made such a motion render the judgment nonfinal.
Restatement §13, comment f.
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 28
Collateral Estoppel
Restatement § 27. Issue Preclusion–General Rule
When an issue of fact or law is actually litigated and determined by a
valid and final judgment, and the determination is essential to the
judgment, the determination is conclusive in a subsequent action
between the parties, whether on the same or a different claim.
Four factor test:
(1) The issue is identical to one decided in the first action;
(2) The issue was actually litigated in the first action;
(3) Resolution of the issue was essential to a final judgment in the first
action; and
(4) Plaintiff had a full and fair opportunity to litigate the issue in the first
action. In re Freeman, 30 F.3d 1459, 1465 (Fed.Cir. 1994).
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 29
Collateral Estoppel (cont’d)
Restatement § 28(4): an exception for when a “party against whom
preclusion is sought had a significantly heavier burden of persuasion
. . . in the initial action than in the subsequent action. . . .”
The Federal Circuit has refused to apply issue preclusion to PTO
prior art validity challenges, citing the different burden of proof and
different claim construction standard. In re Swanson, 540 F.3d 1368,
1377 (Fed. Cir. 2008); see also In re Construction Equip. Co., 665
F.3d 1254, 1256 n.3 (Fed. Cir. 2011); In re Baxter Int’l, Inc. 678 F.3d
1357, 1365 (Fed. Cir. 2012).
The Federal Circuit has refused to bind the Board to a district court’s
Markman order because the PTO was not a party at the district
court. In re Trans Texas Holdings Corp., 498 F.3d 1290, 1296-98
(Fed. Cir. 2007).
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 30
Mendenhall v. Barber-Green (Fed Cir. 1994)
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 31
Facts:
Mendenhall asserts patent against Cedarapids and Astec in
separate suits
Astec litigation found patent not invalid, but Fed. Cir.
remanded for damages determination
While Astec pending on remand, asserted patent ruled invalid
in Cedarapids litigation
Invalidity affirmed by Fed. Cir. on appeal in Cedarapids while
damages still pending before Astec district court
Mendenhall v. Barber-Green (Cont’d)
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 32
Held: Cedarapids decision barred Mendenhall from
recovering for infringement in the Astec litigation
Invalidity of the patents was a defense that subsequently
arose and that Astec could properly assert
Because there was no final judgment in Astec litigation, court
was not barred from applying the Cedarapids judgment to the
Astec case
Cedarapids judgment was “intervening controlling authority”
giving Astec an “overriding defense.”
Fresenius Majority: “virtually identical” to Mendenhall
Translogic Tech v. Hitachi, et al. (Fed. Cir. 2007)
Infringement judgment against defendants
Damages and permanent injunction
While litigation on appeal, same panel
affirmed obviousness of the patent via
PTO reexamination.
Fed Cir vacates the District Court’s
decision and remands case for dismissal
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 33
In re Baxter (Fed. Cir. 2012)
Appeal from reexamination
Fed. Cir. had already affirmed district court
JMOL of not invalid because Fresenius
had failed to present sufficient evidence
Board decision discussed the Fed Cir’s
decision: "[a]lthough claims 26-31 were not proven invalid in
court, a lower standard of proof and the broadest reasonable
interpretation standard of claim construction apply at the PTO and
therefore the agency is not bound by the court's determination."
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 34
In re Baxter (cont’d)
Fed Cir justified different outcomes:
burden of proof and Examiner used
additional references “Lest it be feared that we are erroneously elevating a decision by the
PTO over a decision by a federal district court, which decision has
been affirmed by this court, the following additional comments must
be made. When a party who has lost in a court proceeding
challenging a patent, from which no additional appeal is possible,
provokes a reexamination in the PTO, using the same presentations
and arguments, even with a more lenient standard of proof, the PTO
ideally should not arrive at a different conclusion.”
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 35
In re Baxter (cont’d)
Newman’s dissent: “No authority, no theory, no law or history, permits administrative
nullification of a final judicial decision.”
“The reexamination of Baxter's patent claims 26-29 and 31 was
based solely on the same references on which Fresenius relied in
the litigation.”
“My colleagues justify the PTO's authority to overrule judicial
decisions on the argument that the standard of proof is different in
the PTO than in the courts. That theory is flawed, for obviousness is
a question of law, and the PTO, like the court, is required to reach
the correct conclusion on correct law.”
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 36
Fresenius USA, Inc. v.
Baxter Int’l, Inc. Majority: Judges Dyk & Prost
Dissent: Judge Newman
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 37
Fresenius USA v. Baxter No. 2011-1334, -1335 (Fed. Cir. July 2, 2013)
Technology: ‘434 patent directed to a hemodialysis
machine with an integrated touch screen interface
Brief Chronology:
Fresenius brings DJ suit against ‘434 patent
Judgment against Fresenius – ‘434 not invalid and
infringed
While litigation pending, reexamination determined that all
asserted claims invalid
Post-judgment damages remain pending
Fresenius argues that Baxter no longer has cause of
action
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 38
Fresenius USA v. Baxter (cont’d)
Issue: Whether cancellation of claims
during reexamination proceeding by the
PTO must be given effect in litigation
where merits issues finally decided, but
some damages issues remain on appeal
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 39
Timeline
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 40
Statutory Backdrop
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 41
Majority decision begins with a review of PTO
reissue authority
Pre-1928: grant of reissue extinguished all causes of
action under original patent (Moffitt v. Garr, 66 U.S.
273 (1861))
1928 Amendment: If reissue claims are substantially
identical, suit for infringement of original claims may
stand
Patentee could recover for past infringement of claims
“identical” to those in the original patent
Statutory Backdrop (cont’d)
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 42
Reexamination statute modeled from Reissue
Suit for past infringement only allowable for claims that
survive reexamination in “identical” form
General Rules:
Cancelation of claims = claims void ab initio
Patentee loses any cause of action based on
canceled claims, pending litigations moot
Similarly, cancelation of claims cannot be used
to reopen final damages judgment
Baxter’s Argument on Appeal
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 43
District Court’s 2007 judgment is “final” and “binding”
between the parties and, therefore, has res judicata
effect within the pending litigation
Fed. Cir.:
“It is important here to distinguish between different concepts of
finality…. We are … not dealing with finality for purposes of
determining the potential res judicata effect of this infringement
litigation on another suit. We are concerned instead with
whether the judgment in this infringement case is sufficiently final
so that it is immune to the effect of the final judgment in the PTO
proceedings.”
Majority Decision (cont’d)
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 44
Held: 2007 judgment may have been given preclusive
effect in another infringement case between parties,
but it was not sufficiently final to preclude application of
the intervening final judgment in reexam
2007 judgment did not “end[] the litigation on the merits and
leave[] nothing for the court to do but execute the judgment.”
Quoting Mendenhall v. Barber-Green Co., 26 F.3d 1573, 1580 (Fed. Cir.
1994).
Where the scope of relief remains to be determined, there is
no final judgment binding the parties (or the court)
Even if liability already established
Majority Decision (cont’d)
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 45
Fed. Cir. rejected Baxter’s argument that allowing a
PTO determination to control the outcome of pending
litigation offends separation of powers, citing Plaut v.
Spendthrift Farm, Inc., 514 U.S. 211 (1995)
Plaut should not be read to impose restrictions on reopening
cases before there is a final judgment ending the case
Similarly, Plaut recognized that “when a new law makes clear
that it is retroactive, an appellate court must still apply that law
in reviewing judgments still on appeal that were rendered
before the law was enacted, and must alter the outcome
accordingly.”
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 46
Majority Decision (cont’d)
Summary:
If damages issues remain pending, a district court’s
finding that an asserted patent is “not invalid” is
subject to “reversal” via reexamination
In other words, without a final (non-appealable)
judgment, a reexamination finding of invalidity can
erase a prior damages award
Finality means that there is nothing for the court left to do
but execute the judgment
Newman Dissent
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 47
Majority ruling is an unconstitutional violation of
separation of powers
“My colleagues hold that the prior adjudication by this
court of validity and infringement is irrelevant, and that the
later decision by the PTO overrides and displaces our
prior adjudication, depriving the parties to that
adjudication of their binding judgments.”
“Reexamination is an alternative to litigation, not a
dominating sequel to litigation.” Intention to override Art. III courts would have been mentioned in the
legislative process
Newman Dissent (cont’d)
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 48
Adjudication of the validity of the patent was final
between the parties
Prior judicial determination of validity cannot be annulled
by a coequal government branch
“The judgment of validity is binding not only on the
courts and the parties, but also on the PTO.”
Cases cited by the majority addressing “finality”
relate solely to court-to-court relationships
Irrelevant to whether the PTO can override or ignore prior
judicial decision on same question
Newman Dissent (cont’d)
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 49
Remand related only to post-judgment royalties &
had no relation to any issues in the reexamination
Once issue finally decided cannot be reopened
although other issues remain
Judge Newman cites cases from each circuit standing for
the proposition that preclusion and estoppel apply to
issues finally decided in full and fair litigation
Mendenhall inapposite:
Decision does not bar issue preclusion nor relieves PTO
of its obligation to separation of powers principles
Newman Dissent (cont’d)
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 50
Majority’s analogy to reissue patents a “needless
distraction:” Reexamination cannot negate res judicata effect
“Claims that emerge from reexamination do not create a new cause of
action that did not exist before. We therefore reject Aspex’s argument
that the issuance of [amended or new claims] had the effect of
negating the res judicata effect of the prior litigation [of the original
claims].” Aspex Eyewear, 672F.3d 1335, 1341-42 (Fed. Cir. 2012)
Accordingly, reissue statute does not authorize the PTO to
review, override, or deny full faith and credit to prior judicial
rulings
Versata Software v. SAP America 106 USPQ2d 1649 (Fed. Cir. 2013)
Technology: computerized pricing engines
Versata’s “Pricer” won 35% of bids pre SAP
Pricer sales went to zero after SAP entered market
At trial: Versata awarded
$260 million lost profits
$85 million reasonable royalties
Decision affirmed by CAFC in May 2013
CBM:
Prior to CAFC litigation decision, SAP sought
Covered Business Method Patent Review
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 51
Versata Software v. SAP America (cont’d)
Jan 2013: PTAB rejects Versata’s preclusion/estoppel
arguments
“As the final judgment in the related Versata v. SAP litigation
is currently on appeal to the Federal Circuit, we hold that the
district court’s judgment is not sufficiently firm to be accorded
conclusive effect for purposes of 37 C.F.R. 42.302 as it is still
subject to reversal or amendment.”
May 2013: CAFC affirms litigation holding. Remand to
consider scope of injunction
June 2013: PTAB finds asserted claims invalid under
101 as “disembodied concept”
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 52
Best Practices
Take advantage of PTO post-grant proceedings
in parallel to litigation
Comparatively easier invalidity burden
Crystalize issues, e.g., claim construction, for the
litigation
File PTO proceedings as soon as possible
Increases likelihood that PTO proceeding will finish
before court proceeding
Increases likelihood of a district court stay
1940 Duke Street, Alexandria, VA 22314, 703.413.3000, Fax 703.413.2220, www.oblon.com 53
Stay Tuned
This issue is ripe for Fed Cir en banc review
and Supreme Court Review
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