This may answer Albie's question and also satisfy my curiousity about who handles validity issues and validity appeals. The courts concern is infringement, the USPTO rules on validity. Refer to highlighted at end.

The second appeal is handled by the court

Understanding the ex parte process

After submitting the prior art and initial statement of the

“pertinence and manner of applying the cited prior art to

every claim for which reexamination is requested”, the ex

parte requester is only allowed to file a reply if the patent

owner files a patent owner’s statement. Thereafter, the ex

parte requestor has no further involvement in the ex parte

reexamination proceeding. The patent owner alone argues the

issue of patentability with the USPTO examiner.

Reexamination is conducted according to the regular reexamination

procedures. The patent owner can propose any

claim amendments and new claims in order to distinguish the

invention from the prior art, but such amendments cannot

enlarge the scope of any claim of the patent. The patent

owner alone may appeal to the USPTO Board of Appeals and

Interferences and then, if still dissatisfied, seek review from

the Court of Appeals for the Federal Circuit. The ex parte

requestor has no such right of appeal. ( that's good I didn't know this,

sorry if it has been discussed before.We win this it's over)

http://www.sughrue.com/files/Publication/4e04d0af-555d-4af9-8828-20983bb31da3/Presentation/PublicationAttachment/42915bdd-6b16-47ac-9357-2a17030b9b3d/YoshiMIPArticle(1).pdf