Tuesday, August 09, 2005

THE DOWNSIDE OF CONTINUATIONS (PART III): Continuing from last week's post, I discussed the concept of parasitic reexamination, where you take the litigation record of a previous defendant filed in a continuation and use it against the parent application. One big advantage of this approach is that you can "tack on" to the invalidity work done by previous counsel, and establish your own invalidity position in a fraction of the time (and expense) it took the original defendant to do so.

This may be a good time to note that the parasitic approach is not an end-point, it's a starting point. Due diligence should always be exercised by anyone considering a reexamination, and the work of previous defendants and their counsel should be vetted for thoroughness and accuracy.

However, once the art is collected and analyzed, it can be a potent weapon against the patent(s) being asserted against the industry. This is basically was was done in the Eolas patent reexamination, as well as the NTP reexaminations. Currently, both patents are hung up at the USPTO, with the patentees trying to salvage what they can of their patent claims.

Once reexamination is underway, the patentee is placed in the awkward position of placing a myriad of statements into the prosecution history, which can easily narrow the scope of the claims and potentially eliminate equivalents that could be asserted in future litigation. Also, anything narrowed in the parent application will have a direct effect on all the continuations (and CIPs). Accordingly, the patentee must spend a lot of time making sure that the reexamination strategy doesn't clash with the litigation strategy. And if the patentee is a holding company (that often tries cases on contingency), this ties up a lot of resources, which is a good thing for potential defendants.

The patentee also has to exercise the same care in responding to office actions in the continuation, as statements by the applicant/patentee can also trickle-down and limit the scope of the parent. The big case in this regard is the Federal Circuit's decision in Microsoft v. Multi-Tech Systems, that was decided in February of 2004. The big rub in this case is that the prosecution history of a continuation application can limit the scope of the parent, even if the prosecution history is closed in the parent. Judge Rader, in his dissent, summarized it this way:

By way of illustration, assume three patents (A, B, and C) share a common specification directed to a method for hanging a picture.

Patent A claims an attaching step and a leveling step.

Patent B claims an attaching step and a centering step.

Patent C claims only the attaching step.

The prior art contains a reference to attaching pictures using nails. Because they contain limitations beyond attaching, patents A and B issue without rejection. Patent C, however, is rejected in light of the prior art.

To distinguish the prior art, the applicant clarifies the attaching step is limited to using Velcro, not nails. Under what logic would a court limit the claims in Patents A and B to Velcro based on the later and inapplicable prosecution history of Patent C? That, however, is exactly what the majority does in this case.

[T]he majority essentially disregards the holding of Georgia-Pacific. In this case, for the first time, this court applies the prosecution history of one patent to limit the claims of a related patent that was allowed before the creation of the prosecution history at issue.

This should be scary stuff for anyone that is prosecuting continuation applications, and is something to keep in mind when considering a reexamination. Reexaminations have begun to establish themselves as effective weapons to use against over-zealous patentees. By threatening an entire line of patents, defendants can develop opportunities to neutralize problematic patents, or at least gain a bargaining position over a plaintiff that is in the middle of an enforcement effort. Of course, this can also lead to a situation where you can claim that the parties "reached a settlement on very favorable terms" and actually mean it . . .

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