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PRESENTATION
:
VALIDITY CHALLENGES
IN RE-EXAMINATION PROCEEDINGS
John Whealan
*
I’d like to talk about re-examination. I know a little about it and have worked on a few
cases. What is re-examination? Basically, about 150,000 patents are issued a year. Some
mistakes are made regarding patent issuance, no matter how hard the UPTO tries. In 1980,
coinciding with the formation of the Federal Circuit, Congress was concerned with the
confidence, or lack thereof, in the validity of patents and tried to restore confidence in the
patent system by establishing the re-examination process. This process is exactly what it
implies; it is a second examination, if used correctly, of an issued patent.
Congress had three main considerations regarding such a process. First and foremost,
if done correctly (and some are not), it should provide a cheaper and quicker resolution of
a validity dispute than obtainable in District Court. The goal was to allow the admini-
strative process to work, as opposed to clogging down the court system. The second reason
was to rely on the expertise of the people within the Patent and Trademark Office. If we’re
good enough to examine a patent, shouldn’t we be good enough to re-examine it? The third
reason was to strengthen the validity and confidence in the patent system and the validity
of patents. The purpose of the system was to correct errors and, in some instances, to
remove patents that should not have issued. I like to think of it, if done well, as quality
control after the fact. Regardless of how many applications we have or how many exami-
ners we have, it is a way to focus our talents a second time, usually with the help of a third
party.
The re-examination statute is governed by §35 U.S.C. I will briefly touch on the key
sections, §§301-307. Section 301 allows submission of a prior arts statement when prior art
believed to be relevant to an existing patent is found. Interestingly, §301 is not limited to
re-exams. For example, if Mark found a patent he thought was relevant to an issued patent,
he could send it in, the USPTO would put it in the file and he would not have to request a
re-exam. I do not think he would have to pay money, I am not sure about the money part,
but he definitely does not have to go through the whole re-examination process. Therefore,
you could submit prior art whenever you want. The section basically states, “prior art
Edited for publication by Kraig Hill, Toshiko Takenaka and/or Kevin Takeuchi, CASRIP.
Copyrights 2001 by the author and CASRIP, respectfully.
* Deputy General Counsel for Intellectual Property Law and Solicitor, U.S. Patent and Trade Office,
Arlington VA.
2001
VALIDITY CHALLENGES IN RE
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believed to be relevant.” Notice, the sections do not say “new prior art;” they just say,
“prior art.” I will explain later why that is important.
Section 302 states that any person at any time can request that the USPTO re-examine
a patent. Who might do this? A patentee might do this, if he finds art that was not
considered and wants it looked at. Third parties do it, such as competitors and sometimes
defendants in litigation, as a way to attempt to delay or shut down the trial while the re-
examination takes place. The §302 request falls back on §301; it says it is based on the
prior art cited in the §301 statement. Again, it does not say “new prior art.” I am harping
on that and you will see why later.
Section 303 then has the decision portion. The key is, is there a “Substantial New
Question” (SNQ) of patentability based on the prior art submitted in the §301 statement?
How can you have a substantial new question of patentability? You could have new art,
sometimes but not always, and that can likely present a new question the examiner didn’t
consider. But, ask yourselves whether or not you could have a new question about a piece
of prior art that you already looked at. Is it not possible that you did not think about a piece
of prior art in a certain way, or somebody did not point it out to you in a certain way, and
you might want to take a second look?
In the background of all this is, if the USPTO is there to correct mistakes, shouldn’t
the director, the head of the agency, be able to make the decision of whether or not there is
a substantial new question? Section 303 says not only may a third party or applicant re-
quest a re-exam, but the director himself may request a re-exam. On occasion the director
will request a re-exam when he/she sees a patent issued that shouldn’t have, or he/she
thinks there is a question on the patent. The director will declare his/her own sua sponte re-
exam. Once it’s declared an order issues. The patent owner has the opportunity to submit a
statement. If he does, the third party or the requestor has the opportunity to reply. How
many times do you think a patent owner submits a statement? Very rarely, because this
gives the requestor a second bite of the apple when filing a reply. I am told the owner
would rather let the re-exam engage, and then the requestor is shielded because he cannot
further participate. Thus, rarely are these statements made.
Once the re-exam is initiated, §305 basically says, “look, we don’t have a whole set of
separate rules for re-exams. We just examine them as we would have done in the first
instance. We do it faster and we try to do a really good job, but we don’t have a new set of
examination rules for re-exams.” There is an appeal process if you lose, just like a regular
case. A certificate is issued, stating that the claims are allowed or cancelled.
What issues are considered during re-exams? Is every issue involved in examination
considered in re-exam? No. The idea was to consider prior art issues not previously seen.
A typical case refers to prior art that the examiner never knew about. Thus, re-exams are
limited to §§ 102 and 103, issues regarding prior art. If you want to come forward, for ex-
ample, and say the USPTO shouldn’t have issued for a perpetual motion machine, we
might say your right, but we can’t declare a re-exam because that would fall under §101.
We typically do not do that; I do not know if there has ever been a case on it, but the
USPTO has never done it. If you come in and say it’s not enabled, we say, “Sorry, we’re
not allowed to look at it. Go to one those distinguished judges’ courts, file a DJ action, and
pursue your case that way.” A re-examination is a limited second look; it’s not to redo the
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No. 7
whole thing over again. That is why there is a balance between what the USPTO is allowed
to look at and what it’s not. However, if you add or amend a claim and it is a new claim
never looked at in the first instance, then we are allowed to consider §§ 101, 112 and any
other issues that may come up.
It is interesting to think about how a re-exam differs from a District Court proceeding.
Let’s imagine that we have a case in Judge Cohn’s court and a re-exam is filed at the same
time. My bet is that Judge Cohn is not going to stay the District Court case. Furthermore,
the validity issues are percolating in District Court and at the USPTO. Is it the same set of
review? Not quite. Judge Cohn has to give the patent a presumption of validity and the
USPTO does not; there is no presumption of validity in a re-examination. Less evidence is
necessary for the USPTO to invalidate or not issue the patent; that is one of the differences
in the burdens and presumptions the USPTO office uses to review. Secondly, the USPTO
gives claims their broadest, most reasonable interpretations. If a claim is subject to two
possible interpretations, the USPTO uses the broader interpretation, so someone cannot
then later sue under the narrow one. USPTO takes the broader of the two; however, the op-
portunity exists to narrow the claim if desired. In Judge Cohn’s court, the case law requires
claim interpretation to preserve the patent validity. Thus, there’s a difference between the
way validity issues in a re-exam case will be considered versus a District Court
proceeding. There are slightly different standards.
You may be curious about some of the re-exam statistics. How many re-exams are
typically filed a year? Since its inception about 1980, over the last 20 years there have been
a total of about 6,000, which comes out to roughly 300 a year. If you think of a quarter of a
million patent applications and 150,000 issued patents, 300 is a relatively small number.
The largest percent of re-exam requests are by third parties, about 55%, but not far behind
are patent owners at 43%. People think of re-exams as a way for competitors to tie up a
patent, but it turns out that applicants/patentees use it also as a vehicle to get better exam-
ination of their patent, which I find interesting. Also, the director initiates about 2% of re-
exam requests.
Over the last 20 years, the numbers started out at about 200 a year and peaked,
ironically, in 1996 at just over 400; now we’re running at about 300. Interestingly, 1996
was when Recreative Technologies was decided, which appears to have cut back on the
scope of re-exams. It is interesting to see an increase and then a dip around the same time.
It may be coincidental, but it may not.
The portion of re-exams that we know have been involved in litigation is 20%. My
guess is that the number is low; I don’t think the USPTO is told of every instance.
Obviously there are going to be instances where the court is discussing litigation and a
complaint may not be filed yet, but the requestor may still request a re-exam. Thus, those
may not be technically litigation, but very close to it.
A re-exam is granted 90% of the time, which, in my personal opinion, is high, maybe
too high. I think we should grant fewer re-exams and, when granted, the examination
should be more thorough. Additionally, the USPTO should reject more patents by provi-
ding more upfront screening, as opposed to granting patents whenever there is new art.
How long does it take to complete a re-exam? Approximately one to two years. Re-
examinations are given top priority in review and with the boards; however, the back and
2001
VALIDITY CHALLENGES IN RE
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forth between it all takes a certain amount of time. The USPTO does not stay the re-exam
if there is a District Court case pending. There is a Federal Circuit case on that point. Fur-
thermore, the USPTO does try to process a re-exam with what is called “special dispatch,”
which is, for the government, a high level of speed.
The story I hear is that the USPTO grants re-exams pretty readily, but the claims
usually get out the door, or the important ones do. Where all claims were confirmed, out of
all the re-exams, about 26% were re-examined. That means that ultimately nothing was
done to any of the other claims. That’s a quarter. That’s not so high. Where all the claims
were cancelled, about 10% were re-examined. Again, that is a pretty low number. Where
there were claim changes – a pretty broad group (this can mean one claim was amended,
they all were amended, they were narrowed, etc.) – 64% were re-examined. Thus, in about
two-thirds of the cases something changes, showing that the system is probably working.
Thus, at least the re-exam doesn’t seem a waste of time.
Finally, it might not surprise you that in the area of chemical, electrical and mechan-
ical engineering, it is an even split of 1/3, 1/3, and 1/3 that request a re-examination. There
is not one group of technology cases that uses re-examination more readily than another.
Let’s talk briefly about a few of the cases. These cases involve more procedural issues
than they do validity issues. This is because the validity issues are not much different in a
re-exam case than they are in a regular exam case. If it is a §103, it is a §103, whether or
not we can start the re-exam, whether we can consider it a re-exam, etc. Issues such as
these come up a lot. There is a string of cases in the last three or four years I have been
involved with in one way or another.
The first was Recreative Technologies,
1
in 1996. There, a §103 rejection was made in
the original case based on a single reference by the District Court. In the re-exam, the
USPTO made a §102 rejection based on the same reference. This was not a very complex
technology – it was a towel cleaner for a golf bag. There is an old story in law school that I
believe is true, “bad facts make bad law.” These were bad facts. Arguably, the examiner
should have caught it in the first instance, but didn’t. Judge Newman wrote a fairly strict
opinion suggesting that since the re-exam was limited to new questions about technology
not in front of the examiner in the first instance, it required “new prior art.” I respectfully
disagree. If you read §§ 301, 302, and 303, it does not say “new art.” However, I can
understand her frustration with a single reference being used a second time. We cannot
consider the same question, but arguably, do you need new art?
That was the beginning of limiting re-exams. About a year later in a similar case,
Portola Packaging,
2
Judge Luray took it one-step further, relying on the wonderful prece-
dent of Recreative Technologies. He said that government officials are presumed to do
their job well. I appreciate that. He went on to say that if it’s a cited reference, the exam-
iner must have read it. With all due respect, it’s like saying I’ve read every single case
that’s cited, but I haven’t. I don’t read a standard summary judgment case they might
write, except obviously on the key issues. In Portola, the references were read by the
1
In re Recreative Technologies Corp., 83 F.3d 1394 (Fed. Cir. 1996).
2
In re Portola Packaging, Inc., 110 F.3d 786, 42 USPQ2d 1295 (Fed. Cir. 1997).
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No. 7
examiner, you could see that. The references were applied individually or in different com-
binations. Then in the re-exam, the references were combined in a different way. Judge
Luray said you couldn’t do that. He said that not only had the examiner read every one of
the references that had been cited, he had considered them both alone and in every possible
combination. Any math majors here? That is just not factually accurate, but that is what he
said.
Again, bad facts make bad laws. However, here the facts were not quite so bad. It was
clear that the examiner had read the references in the first instance. otherwise he couldn’t
have applied them. I think that probably troubled Judge Luray, and he went one step
further. He said that not only did the examiner do this for the existing claims, he did it for
the amended claims that he never knew about during the original examination. Talk about
clairvoyant. The examiner considered all the possible combinations, both alone and in
combination, for claims he never saw. That’s pretty good. The argument was that you
could only narrow claims in a re-exam; therefore, he must have considered them. I think
that as claims get narrower, little lights go off in your head and you say that the reference
is a lot more important. He did not necessarily consider them, but that is what Judge Luray
said.
We tried to take the case en banc. We convinced one single judge, but I guess that was
not good enough. Judge Rader wrote what I thought was a fair dissent for not taking the
case en banc. He went through the statutory construction and said, “Hey, we’re not looking
for work. This is not an us-versus-them mentality, this is ‘we think we might have made a
mistake. We would like to correct the mistake. Please let us do it.’” They didn’t.
The court fortunately seemed to cut back a little bit in the case that followed, in re
Leonardo,
3
dealing with double patenting. The USPTO lost those two cases, and the court
allowed us to consider double patenting in a re-exam so long as it wasn’t considered in the
first instance. There were good facts in that case. I don’t think good facts make just
outcomes, but it was an interesting case.
In the Henniker case,
4
a couple of years later, the re-exam grant was based on old art,
but the rejection was based on old and new art. The court said that was good enough and
looked into the rejection, not at the grant. What happened in that case was that we never
knew this rule was there. We started re-exams pre-Recreative Technologies, and then real-
ized what the rules were and rejected them based on old/new art, and they said that was
okay.
The USPTO had a recent case that Ray Chinn argued in EDDA, in front of Judge
Ellis.
5
People are surprised that the USPTO is sued in District Court as well as in the
Federal Circuit, but we do get sued there. It’s usually not merit based, but we still have to
go prove that. They sued the USPTO to try to shut down a re-exam. A second re-exam was
granted in a case and somebody sued to try to enjoin to USPTO. Judge Ellis, in what I
thought a very thorough decision, basically found that grants of re-exams are not final
3
In re Leonardo, 119 F.3d 260 (Fed. Cir. 1997).
4
No citation found.
5
No citation found.
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VALIDITY CHALLENGES IN RE
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agency decisions and are therefore not challengeable in the District Court. Basically, you
have to wait and see if the claims are rejected. His point was that there were many ways to
win: you can convince the examiner not to reject your claims, convince the board not to
reject your claims, or can convince the Federal Circuit. Until you get a final decision, the
court is not going to look at re-exam grants in the first instance.
The Portola and the Recreational Technology cases went one way. At least there has
been a little insight in cutting back. Again, go back to the purpose of granting re-exams, if
done right: to correct errors. If you put all kinds of roadblocks in front of the USPTO, they
are not going to be re-examining patents that they think are invalid. I don’t think that’s
really what Congress had in mind.
After those cases came down, what did the USPTO do? We tried to figure out what
they meant, told examiners what they meant, told the public, and issued “guidelines.”
“Guidelines” are not law, but they give the USPTO case interpretation. There are three
ways of interpreting the bright-line rules laid out by Portola. We could say a cited refer-
ence is considered, or we’ll never look at a case on re-exam unless you give us new art. We
could have gone to the other extreme and stated that the cases had to be read and applied,
which the facts of both those cases stated. We fell somewhere in the middle. We said that
if the reference is cited and discussed, we will not usually consider it in a re-exam.
However, we did not go so far as to say that a cited reference is good enough. Why do we
do that? It was not to say that the Federal Circuit cannot extend Portola and Recreation
Technologies in this direction. The bottom line is that that was not the holding of those two
cases, and we feel the alternative would be a dumping in of references. We’d get hundreds
of references and we wouldn’t want that to happen.
I want to touch on two final items. One is that there is now a second type of re-exam
with the American Inventor’s Protection Act (AIPA)
6
called an “interparties re-exam.”
There are now interparties re-exams and exparties re-exams, but the majority are still
exparties re-exams. The reason is that the interparties re-exams only apply to patents filed
and issued after the AIPA passed, around Thanksgiving of 1999. Although the USPTO
does a good job, it usually takes about two years to issue patents, so eligible patents have
not yet come out the door. Thus, there have not been a lot of interparties re-exams so far.
There are two main issues to consider in an interparties re-exam. First, there is a set of
statutes that apply. But there are several key effects. One is that the requestor is not frozen
out of the re-exam process and can respond to everything the applicant says. Thus, it is a
back and forth process, with the requestor receiving 30 days to respond. This is a major
change. However, there are two things that really do not help the requestor and that the
requestors do not like. One, although they can appeal to the Board of Patent Appeals, if
they lose they cannot appeal to the Federal Circuit. The second concern is that there is an
estoppel. Basically, you cannot raise in Judge Cohn’s or Judge Sauer’s court any issue you
could have raised or were able to raise in a re-exam. Thus, you are not able to do both, you
must pick one.
6
American Inventors Protection Act of 1999, Public L. No. 106-113, 113 Stat. 1537-544 (1999).
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