Thursday, May 10, 2007

When Art. III and APA Judges Disagree on Validity, Who Wins?

Assume the following facts:

  1. Patentee sues XYZ in district court for infringement.
  2. XYZ files multiple reexamination requests in the PTO seeking to invalidate patent.
  3. District court gets tired of waiting for the PTO after 3 years, and resumes litigation.
  4. In the meantime, PTO finds patent invalid, and patentee appeals to the BPAI.
  5. District court finds patent not invalid and infringed by XYZ.
  6. BPAI affirms invalidity, XYZ files motion to grant JMOL in district court.
  7. District court refuses to recognize the PTO's findings and enters judgment in favor of patentee.
This is the situation facing the defendant in Translogic Technology v. Hitachi, (D. Oregon, No. Civ. 99-407-PA). Reading the court's opinion from Dec. 2005 (404 F.Supp.2d 1250), you can see the tough position the court was in:

Plaintiff filed this action in March 1999. Because of the reexamination proceedings that began in July 1999, in September 1999, this court granted defendants' motion to stay.

In December 2002, the court lifted the stay of litigation because the reexamination proceedings appeared likely to continue for years. This court determined that plaintiff deserved its day in court, despite the possibility that the reexamination proceedings might some day produce rulings that were inconsistent with this court's rulings. The Special Master reviewed the reexamination file up to that time in writing his report on claim construction. This court held the trial on validity in October 2003.

Meanwhile, reexamination proceedings proceeded at a somewhat slower pace. Cf. 35 U.S.C. § 305 (reexamination proceedings must be conducted with "special dispatch"). The PTO granted the request for reexamination in July 1999. Six years and five reexaminations later, the Board issued the claim construction on which defendants now rely.

If a district court was obliged to alter its claim construction to conform to a later claim construction issued by the Board, then there would be no reason to proceed with litigation while reexamination proceedings were pending. District courts are not, however, bound by the Board's rulings, and district courts are not required to stay litigation under these circumstances. See Vitronics Corp. v. Conceptronic, Inc., 36 F.Supp.2d 440, 441 (D.N.H.1997). The Federal Circuit is the proper forum to resolve
conflicts between this court's claim construction and the Board's claim construction.

Thus, the case is now before the CAFC (oral arguments were heard April 3, 2007 - listen to the arguments here). One of the questions presented is:
1. Should the judgment of the district court be vacated and the case remanded for summary dismissal because the claims of the '666 patent are unpatentable on reexamination and the patent is void ab initio?

This will be a very important decision that affects the relationship between the USPTO and the district courts when defendants challenge validity in parallel proceedings. This is also the type of situation the Patent Reform Act of 2007 is trying to avoid by terminating reexaminations when a "judgment by a district court" is rendered (as opposed to a "final decision").

Download/view Hitachi (Appellant) brief here.

Download/view Translogic (Appellee) brief here.

Similar Problems in the EPO

Opposition Proceedings at the EPO are often not concluded until six or more years after a patent has granted. Recently in the case of Unilin Beheer BV v Berry Floor NV (link) a UK court found a patent valid and infringed, while the EPO found the patent invalid. The UK Court of Appeals held that the UK Court trumped the EPO:

"If the patent is revoked, the way is cleared; if it is upheld and held infringed then compensation will be payable for past acts. And an injunction will run unless there is a later revocation by the EPO. Subject to that last point, the effect of all this is that one does not have to wait to find out who has won until the slowest horse in the race gets there . . . [It does not] help to ask whether a national court or the EPO is 'top'. It all depends on the circumstances, as the two following scenarios illustrate: the patent is still under opposition when a national court holds it valid and the EPO then revokes. So the EPO is 'top'. [Second,] the EPO holds the patent valid and a national
court subsequently revokes it (there is no estoppel created by an EPO decision as to validity […]). So the national court is 'top' . . . In truth asking which tribunal is 'top' is simply not helpful – there is just the untidy compromise inherent in the EPC and one which cannot be properly resolved unless and until a rational patent litigation system for Europe is created."

See "Patent damages not refunded if EPO cancels patent" (link)

1 Comentário:

Unknown said...

A fair analogy might be the situation where a patent is fully litigated against two defendants. In the first, the patent is found valid and infringed, and the defendant pays damages. In the second, the patent is found invalid.

I believe in those situations, the earlier defendant is still bound by the judgment in its case, while the later defendant is free to litigate its case. That will probably be the outcome here.


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