Most patents currently being reexamined at the PTO are also being litigated in parallel proceedings in district court. This rise in importance of parallel reexaminations leads directly to both Constitutional controversies and practical problems. Although the Federal Circuit has nimbly attempted to avoid the problem, the truth is that both the PTO (an Article II executive agency) and the Article III Courts focus on the same question of validity of patent claims. These races to conclusion raise questions of both separation of powers and res judicata.

A practical issue is raised by Microsoft in the i4i case relates to the relevance of non-dispositive reexamination events to the question of willful infringement. In Microsoft's case, the ex parte reexamination request was initially granted, and that grant was followed by a non-final office action rejection. On appeal, Microsoft argued that the PTO's rejections of i4i's claims on obviousness grounds should result in a per se finding that its its infringement defenses were not objectively reckless. Rather, according to Microsoft, the PTO's grant of reexamination and non-final rejection at least serve to prove that its defenses were credible. i4i argues on the other side that the non-dispositive reexamination events are irrelevant because of the different standard for review, different claim construction approach, and lack of finality.

At the Santa Clara Law School conference that I attended yesterday, one panelist made a seeming reasonable suggestion - that courts should begin to reexamination results once an applicant agrees to amend or cancel claims being asserted during litigation. At that point, it is a foregone conclusion that the resulting reexamination certificate will not confirm the patentability of those pre-amended claims.

Comments

Perhaps one way to strike a fair balance is to exclude the evidence of the reexamination proceeding but lower the evidentiary standard for proving invalidity to a “preponderance of the evidence” to the extent that the accused infringer presents the jury with the same invalidity arguments that the PTO examiner used to issue the “final” rejection. This suggestion is not perfect, as some can rationally argue that it could be too confusing to a jury to have to apply different evidentiary standards to different invalidity contentions. Does this counsel that district courts should give greater thought to staying a litigation once the PTO issues a “final” rejection? See e.g., HTC Corp. v. Technology Properties Ltd., No. C 08-00882 JF, 2009 WL 1702065, *2 (N.D. Cal. June 17, 2009) (granting “limited stay” because some of the asserted patents had received “final” rejections in reexamination proceedings); but see Power Integrations Inc. v. Fairchild Semiconductor Intern. Inc., No. 08-309-JJF-LPS, 2008 WL 5335400, *2 (D. Del. Dec. 19, 2008) (denying stay even though final rejections were issued as to some of the asserted claims).

Bob Matthews said: "Does this counsel that district courts should give greater thought to staying a litigation once the PTO issues a “final” rejection? See e.g., HTC Corp. v. Technology Properties Ltd., No. C 08-00882 JF, 2009 WL 1702065, *2 (N.D. Cal. June 17, 2009) (granting “limited stay” because some of the asserted patents had received “final” rejections in reexamination proceedings)"

Bob, your statement here about the court's rationale for issuing the stay might be slightly misleading. The order issued at a time when the examiner in one patent had issued a NIRC, but with amended claims, and in another had indicated in an examiner's interview that the PO had made successful arguments and proposed amendments that would render the claim allowable. In both cases, reexamination certificates were near and the the claim amendments would or could affect claim construction; which was then pending before the court.

http://www.patentlyo.com/patent/2009/09/using-reexaminations-to-avoid-willfulness-damages.html