Willfulness, Reissue and Reexam

Prof Merges

Nov. 18, 2010

Agenda

• Willful infringement

• Reissue

• Reexamination

Willful Patent Infringement

• Development of the doctrine

• Court “may increase damages up to 3x”

• Knowledge proof opinion letters

1. Should a party's assertion of the advice of counsel defense to willful infringement extend waiver of the attorney-client privilege to communications with that party's trial counsel? See In re EchoStar Commc'ns Corp., 448 F.3d 1294 (Fed.Cir.2006).

2. What is the effect of any such waiver on work-product immunity?

3. Given the impact of the statutory duty of care standard announced in Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (Fed.Cir.1983), on the issue of waiver of attorney-client privilege, should this court reconsider the decision in Underwater Devices and the duty of care standard itself?

35 USC 284

When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed. Increased damages under this paragraph shall not apply to provisional rights under section 154(d) of this title.

The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances.

“Traditional” Federal Circuit rule

“Where ... a potential infringer has actual notice of another's patent rights, he has an affirmative duty to exercise due care to determine whether or not he is infringing. Such an affirmative duty includes, inter alia, the duty to seek and obtain competent legal advice from counsel before the initiation of any possible infringing activity.” – Underwater Devices

http://www.seagate.com/www/en-us/

Optimized Trajectories for MotionControl: Convolve, Inc.

Convolve: curl, wind, or twist together

• Applied to functions: a mathematical “intertwining” of two separate functions

The duty of due care standard has led to punitive damages based on nothing more than a negligent failure to proceed with “due care.” See, e.g., Stryker Corp. v. Davol, Inc., 234 F.3d 1252, 1259 (Fed. Cir. 2000) (declining to overturn jury finding of willful infringement when evidence indicated that reliance on advice of counsel was “unreasonable”)

But the duty of due care standard shifts to the defendant the burden of demonstrating that it has acted with sufficient care to forestall a finding of willful infringement. See Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmBH v. Dana Corp., 383 F.3d 1337, 1349 (Fed. Cir. 2004) (en banc) (Dyk, J.) (this “effectively shifts the burden of proof on the issue of willfulness from the patentee to the infringer”).

Seagate opinion

• Over the years, we had held that an accused infringer's failure to produce advice from counsel “would warrant the conclusion that it either obtained no advice of counsel or did so and was advised that its [activities] would be an infringement of valid U.S. Patents.” Knorr-Bremse, 383 F.3d at 1343

• Supp. P. 132

Supp. P. 133

• Just recently, the Supreme Court addressed the meaning of willfulness as a statutory condition of civil liability for punitive damages. Safeco Ins. Co. of Am. v. Burr, --- U.S. ----, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007)

• [T]he Court concluded that the “standard civil usage” of “willful” includes reckless behavior. Id. at 2209

• In contrast, the duty of care announced in Underwater Devices sets a lower threshold for willful infringement that is more akin to negligence. This standard fails to comport with the general understanding of willfulness in the civil context, Richland Shoe Co., 486 U.S. at 133, 108 S.Ct. 1677 (“The word ‘willful’ ... is generally understood to refer to conduct that is not merely negligent.”), and it allows for punitive damages in a manner inconsistent with Supreme Court precedent

Supp. P. 134Accordingly, we overrule the standard set out in

Underwater Devices and hold that proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness. Because we abandon the affirmative duty of due care, we also reemphasize that there is no affirmative obligation to obtain opinion of counsel.

• When opinions are sought, NO waiver of attorney-client privilege with respect to trial counsel

• Which removes a large disincentive to seek opinion letters and to “pre-clear” patent issues generally

Reissues and Reexamination

• Both are post-issuance administrative proceedings– PTO involvement with patents does NOT end

with issuance

• Both have specific procedures and requirements; and strategic uses

Reissues

• Background

• Mentor v. Coloplast

251. Reissue of Defective Patents.

Whenever any patent is, through error without any deceptive intention, deemed wholly or partly inoperative or invalid, by reason of a defective specification or drawing, or by reason of the patentee claiming more or less than he had a right to claim in the patent, the Commissioner shall, on the surrender of such patent…, reissue the patent for the invention disclosed in the original patent, and in accordance with a new and amended application, for the unexpired part of the term of the original patent. No new matter shall be introduced into the application for reissue.

Elements

Whenever any patent is, [1] through error without any deceptive intention, deemed [2] wholly or partly inoperative or invalid, by reason of a [3] defective specification or drawing, or by reason of the patentee claiming more or less than he had a right to claim in the patent, the Commissioner shall, on the surrender of such patent

Key Provision

• “through error without any deceptive intention”

– Error: mistake, inadvertence

– Without deceptive intention

•No plan to broaden or recapture . . .•Not the result of a strategic decision

during prosecution

The Commissioner may issue several reissued patents for distinct and separate parts of the thing patented, upon demand of the applicant, and upon payment of the required fee for a reissue for each of such reissued patents.

The provisions of this title relating to applications for patent shall be applicable to applications for reissue of a patent, except that application for reissue may be made and sworn to by the assignee of the entire interest if the application does not seek to enlarge the scope of the claims of the original patent.

251. Reissue of Defective Patents, cont’d

No reissued patent shall be granted enlarging the scope of the claims of the original patent unless applied for within two years from the grant of the original patent.

Broadening Reissues

No reissued patent shall be granted enlarging the scope of the claims of the original patent unless applied for within two years from the grant of the original patent.

“2 Year Rule”

The two-year period is not based on the priority date but on the issue date. 35 U.S.C. § 251; M.P.E.P. ¶ 1412.03. Accordingly, a broadening reissue may be filed on a continuation or divisional application more than two years after the issue date of the parent patent so long at it is filed within two years of the issue date of the continuation patent.

A reissued patent shall not abridge or affect the right of any person who …, prior to the grant of a reissue, made, purchased, offered to sell, or used within the United States, or imported into the United States, anything patented by the reissued patent, to continue the use of, to offer to sell, … unless the making, using, offering for sale, or selling of such thing infringes a valid claim of the reissued patent which was in the original patent.

Intervening rights – section 252

Intervening rights – section 252

The court before which such matter is in question may provide for the continued manufacture, use, offer for sale, or sale of the thing made, purchased, offered for sale, used, or imported as specified, or for the manufacture, use, offer for sale, or sale in the United States of which substantial preparation was made before the grant of the reissue, and the court may also provide for the continued practice of any process patented by the reissue that is practiced, or for the practice of which substantial preparation was made, before the grant of the reissue, to the extent and under such terms as the court deems equitable for the protection of investments made or business commenced before the grant of the reissue.

Reissue Requirements

• (1) “Error in the patent” and (2) “Error in Conduct”

Error in the Patent

-- Claiming too much (after-discovered prior art)

-- Not claiming enough (after-discovered competitor product)

Some Defects are too Big!

• Complete anticipation

• Insufficient disclosure

Rules cont’d

• Error in conduct– Reissue cures only some types of conduct

• Cannot cure Inequitable conduct, e.g.

Mentor v. Coloplast

• Why did Mentor seek a reissue?

• How did this relate to its litigation strategy?

“An attorney’s failure to appreciate the full scope of the invention” is not an uncommon defect in claiming an invention. In re Wilder, 736 F.2d 1516, 222 U.S.P.Q. 369 (Fed. Cir. 1984), cert. denied, 469 U.S. 1209 (1985).

Mentor v. Coloplast

• Recapture rule– Only applies to broadened reissue claims

• Cannot recapture subject matter surrendered in original prosecution

• Nuanced application: claims broader in some ways than original, narrower than in original

Mentor’s initial claims, which did not require the transfer of the adhesive from the outer to the inner catheter surface, were rejected by the examiner. Mentor then added the adhesive transfer limitation and argued that the amended claims should be allowed because “none of the references relied upon actually showed the transfer of adhesive from the outer surface to the inner surface as the sheath is rolled up and then unrolled.” The amended claims were allowed. Mentor then sought and obtained the reissue patent containing claims 6-9.

p. 1080

Reissue claim 6, which does not include the adhesive transfer limitation, impermissibly recaptures what Mentor deliberately surrendered in the original prosecution. Specifically, the reissue claims do not contain the limitation that, during rolling and unrolling, the adhesive be transferred from the outer to the inner surface of the catheter.

Reissue vs. Reexam

• Reissue: available to fix patent for any cause that makes it “inoperative or invalid”; can be broadening (2 yr rule)

• Only the patentee may request reissue: “upon surrender or the patent . . .”

• Can be withdrawn by patentee at any time

Reexam

• Can be requested by anyone

• The types of prior art which may be considered in a reexamination proceeding are limited to patents and printed publications. 35 U.S.C. § 301; 37 C.F.R. § 1.552

Traditional (Ex Parte) Reexams

• Third party participation in a traditional reexamination is limited. If a third party requests reexamination, the patent owner is notified and provided an opportunity to submit a statement in opposition to an order for reexamination. 35 U.S.C. § 302; 37 C.F.R. §§ 1.510(b)(5), 1.530(b).

• If the patent owner submits a statement, the requestor is given an opportunity to reply. 37 C.F.R. § 1.535. Otherwise, a non-patentee requestor's participation ends with the request for reexamination. However, the patentee is required to serve on the requestor a copy of all papers filed with the Patent Office. 37 C.F.R. § 1.550(e).

35 U.S.C. 301 Citation of prior art.Any person at any time may cite to the Office in

writing prior art consisting of patents or printed publications which that person believes to have a bearing on the patentability of any claim of a particular patent. If the person explains in writing the pertinency and manner of applying such prior art to at least one claim of the patent, the citation of such prior art and the explanation thereof will become a part of the official file of the patent.

Section 302.Request for Reexamination

Any person at any time may file a request for reexamination by the Office of any claim of a patent on the basis of any prior art cited under the provisions of Section 301 of this title. … The request must set forth the pertinency and manner applying cited prior art to every claim for which reexamination is requested. Unless the requesting person is the owner of the patent, the Commissioner promptly will send a copy of the request to the owner of record of the patent.

• What is required?

303 (a): Within three months following the filing of a request for reexamination under the provisions of section 302 of this title, the Director will determine whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request, with or without consideration of other patents or printed publications

Reexam result

Commissioner may issue “a certificate canceling any claim of the patent finally determined to be unpatentable, confirming any claim of the patent determined to be patentable, and incorporating in the patent any proposed amended or new claim determined to be patentable.” 35 U.S.C. § 307(a).

• BUT: No broadened claims permitted

• Quantum v. Rodime . . .

Page 1095

Rodime requested reexamination and, during the ensuing proceedings, amended the track density limitation from “at least 600” to “at least approximately 600” tpi

35 U.S.C. § 305 states, in relevant part, that “[n]o proposed amended or new claim enlarging the scope of a claim of the patent will be permitted in a reexamination proceeding.” . . .

• The term “at least approximately 600 tpi” therefore defines an open-ended range starting slightly below 600. Since the amended limitation includes subject matter not covered by the original claims, i.e. track densities below 600 tpi, we conclude that Rodime expanded the scope of their claims during reexamination in violation of 35 U.S.C. § 305.

Inter partes reexam

• Rationale

• Complaints

• Reform?

Patent Quality Control

• ex parte• inexpensive

• inter partes

AdministrativePatent Revocation?

• expensive

Prosecution

District Court

Federal Circuit

Litigation

• inter partes• moderately inexpensive

• low quality • high quality• good quality

Trends and issues in reexams

• Stay during litigation

• “Special dispatch” problems

• Beefed up inter partes proceeding/more use of proceedings?

Trends in reexam requests

• 2005: 59 inter partes reexams• 524 Ex parte reexams instituted

• 2008: 168 inter partes• 680 Ex parte reexams instituted

Stays pending reexam

• Extremely district- and even judge-dependent

• ED Texas: 20% grant rate for stays

• SD Cal, ND Ill: 85%, 65% in ND Cal

• -- Patently-O 11/1/2009

Zurko

• Fed Cir traditionally applied the “clearly erroneous” standard of review to PTO findings of fact

• Challenged in this case

Standards of review

• Clearly erroneous is stricter standard, allows more reversals by court, compared to “substantial evidence” standard

• Traditionally applied by CCPA, and then Fed Cir

At 1056

But the difference is a subtle one—so fine that (apart from the present case) we have failed to uncover a single instance in which a reviewing court conceded that use of one standard rather than the other would in fact have produced a different outcome.

APA Section 706Section 706, originally enacted in 1946, sets forth standards

that govern the “Scope” of court “review” of, e.g., agency factfinding (what we shall call court/agency review). It says that a“reviewing court shall—

. . .“(2) hold unlawful and set aside agency . . . findings . . . found to

be—“(A) arbitrary, capricious, [or] an abuse of discretion, or . . .. . .“(E) unsupported by substantial evidence in a case subject to

sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; . . .

Arti Rai

Pre-Zurko (“clearly erroneous” standard)

Post-Gartside (“substantial evidence” standard)

Affirmances 57 68

Reversals/remands 26 13

Percentage affirmance

68.7% 83.9%

From Arti Rai, Duke Law School