** Guest Post by Scott A. McKeown of Oblon Spivak & PatentsPostGrant.com **
The face of patent litigation in the U.S. has evolved greatly in the last 5 years with respect to patent reexamination. For patent litigators, throughout the U.S. and especially the Northern District of Illinois, the emergence of this now seemingly reliable strategic option is an important case management consideration. Indeed, if not adequately considered in the course of litigation counseling, reexamination ignorance may create malpractice opportunities for unsuccessful defendants.
Defendants, as well as those concerned with patents clouding their competitive landscape are increasingly requesting patent reexamination at the USPTO. When prior art patents and printed publications can be effectively presented to enable the USPTO to reject original patent claims, the expectation is that the prosecution of the reexamination proceeding will result in cancellation or amendment of original patent claims.
The sudden growth in reexamination filings can be attributed to several factors. These factors include, the emergence of the "non-practicing entity"(NPE) problem, the eligibility of inter partes reexamination for post 1999 patent application filings, and the efforts of the USPTO and Congress to overhaul the reexamination process, first with legislation overruling the Portola Packaging decision in 2002, and with creation of a special USPTO unit in 2005.
In 2005, the USPTO established the Central Reexamination Unit (CRU) to exclusively handle all reexaminations, whether ex parte or inter partes within the Office. The CRU created a procedure by which every reexamination proceeding is processed by a team (3) of experienced primary examiners. The CRU has greatly improved the responsiveness and quality of patent reexamination.
With respect to NPEs, reexamination is an attractive strategy as an active reexamination may shut down (i.e., stay) an otherwise costly litigation by forcing the dispute away from the high cost battle of district court litigation, back to the PTO. At the PTO, the NPE's leverage of contingency litigation counsel and forced discovery costs are removed. Moreover, the standard of review in reexamination for proving unpatentability is much more favorable to a challenger as compared to the district court action. In federal district court the standard to invalidate a U.S. patent is "clear and convincing evidence." Whereas, in reexamination, the US PTO can establish unpatentability by a "preponderance of evidence," and unexpired claims are given their broadest reasonable interpretation. See 37 C.F.R. 1.555(b)(2)(ii).
Upon conclusion of a reexamination, canceled or amended claims will present the challenger with freedom to operate either through non-infringement of the altered claims, or decrease liability through the doctrine of intervening rights.
With this background in mind, a review of a recently asserted malpractice claim is presented along with a discussion of the new Local Patent Rules of the Northern District of Illinois as they pertain to concurrent reexaminations.
In Ecast Inc. v. Morrison & Foerster L.L.P. (Superior Court for the State of California, County of San Francisco) Ecast, a former client of MoFo, sued the firm for malpractice. The compliant stemmed from MoFo's defense of Ecast in a patent infringement suit in the Northern District of Illinois. In the suit, six patents were asserted against Ecast by Rowe International Corp and Arachnid Inc. (Rowe International Corp., and Arachnid, Inc. v. Ecast, Inc., Rockola Mfg. Corp., and View Interactive Entertainment Corp. (click here for much more about this case from the Chicago IP Litigation Blog's archives).
Notably, at paragraph 25 of the complaint, it is alleged that:
Once Defendants undertook to represent Ecast in the Rowe case, Defendants failed to sufficiently explain and advise Ecast of the benefits Ecast could have derived by filing a request for reexamination of the patents-in-suit. Proper pursuit of a patent reexamination could have resulted in a stay of the Rowe litigation for a substantial period of time. Although technically a stay, the reexamination process often serves to effectively end the patent litigation in many cases and could have terminated the Rowe case. (emphasis added)
Paragraphs 28-29 go on to allege that:
Had Ecast been properly advised of the benefits to be gained by the reexamination process, mainly a significant stay of the Rowe case possibly leading to avoidance of all further litigation risks, legal fees and expenses, then Ecast would have chosen to pursue reexamination. Ecast would have pursued reexamination and it would likely have been successful because approximately one month after new counsel substituted in as counsel of record for Ecast in the Rowe case, a reexamination of the Arachnid patents was sought by Ecast and granted by the Patent and Trademark Office. The reexamination resulted in a finding that there was a substantial question as to the patentability on all the Arachnid patents. Under these circumstances, the claims are often modified or cancelled.
Because the reexamination was pursued at such a late date and in such close proximity to the commencement of trial, no stay of the Rowe case was imposed because Ecast's request came too late. (emphasis added)
Surely, whether or not reexamination would have truly benefited Ecast is speculative, likewise, the likelihood of obtaining a stay is quite subjective, varying significantly in accordance with the stage of reexamination as well as the perception of reexamination efficacy/efficiency in each forum. Nevertheless, a failure to properly counsel a client on the potential benefits of reexamination, as alleged here, appears to be a significant risk going forward.
With respect to the timing discussion of the complaint, a late filing of a reexamination request may have become even more critical in view of new local patent rule, LPR 3.5, which requires:
Absent exceptional circumstances, no party may file a motion to stay the lawsuit pending reexamination in the U.S. Patent Office after the due date for service of the Final Contentions pursuant to LPR 3.2. (emphasis added)
In other words, since the request for a stay must be presented in the above time frame, and as reexamination may take time to advance to a point favorable to a challenger (i.e, final rejection or appeal stage) it is n ow of even greater importance that reexamination be explored and if necessary instituted at the earliest possible point in a dispute.
Patent Reexamination, concurrent with, or even in place of more traditional litigation practices is becoming increasingly commonplace. While patent reexamination was once viewed as an ineffective procedure, and critics may still cite inefficiencies, significant strides have been made at the USPTO to present a viable post grant challenge mechanism. In view of recent developments in the Northern District of Illinois, practitioners would be well advised to explore reexamination options with clients early in the representation.
Scott A. McKeown is a partner with Oblon, Spivak, McClelland Maier & Neustadt and a team leader of the Reexamination and Reissue Practice Group. He is a founder and frequent contributor to patentspostgrant.com
* If you are interested in writing a guest post for the Chicago IP Litigation Blog, send an email by clicking here.
… Continue Reading
Rowe Int'l. Corp. v. ECast, No. 06 C 2703, Slip Op. (N.D. Ill. Nov. 28, 2008) (Kennelly, J.).
Judge Kennelly construed the terms of plaintiff's computer jukebox patents -- click here for more on this case in the Blog's archives, including more on claim construction. Of particular interest, the Court held that "programmable computer memory" and "programmable memory" both mean a computer memory that can be programmed, requiring little construction. The Court rejected defendant's construction that would have limited the term to random access memory.
The parties both sought further construction of "user attract", but the Court had previously construed the term and saw no basis to revisit the construction without a clear and succinct explanation from counsel as to why it was required.
… Continue Reading
Rowe Int'l. Corp. v. Ecast, Inc., No. 06 C 2708, 2008 WL 4133516 (N.D. Ill. Aug. 25, 2008) (Kennelly, J.)
Judge Kennelly granted in part plaintiff's patent infringement summary judgment motion and denied defendants' noninfringement summary judgment motion.* Of particular interest, the Court held that defendant Ecast could directly infringe the patents in suit, despite the fact that it did not make or assemble all components of the system - Ecast contributed the memory and the network, while the other defendants supplied the jukebox components. But the Court held that Ecast could directly infringe the patent for at least two reasons. First, Ecast produced promotional and technical materials advertising complete jukebox systems. Second, the evidence showed that Ecast directed and controlled the other defendants' production of computer jukeboxes specifically designed to work with Ecast's system.
* For more on this computer jukebox infringement case in the Blog's archive click here.
… Continue Reading
Rowe Int'l Corp. v. Ecast, Inc., No. 06 C 2703, 2007 WL 1498958 (N.D. Ill. May 17, 2007) (Kennelly, J.).*
Judge Kennelly issued this claim construction opinion construing the claims of eight patents related to computer jukeboxes and computer jukebox networks. Of particular note, the Court construed "song selection means" in USPN 5,355,302 (the "'302 patent") as a keyboard separate from a display for generating a signal representing a song selected from the set of songs stored in the jukebox. Plaintiffs sought a construction that would include a visual touchscreen, arguing that the Court should consider the following language from an unrelated patent by the same patentee (the "'398 patent"), that was not part of the patent in suit or its prosecution history: "song selection means displayed on said visual screen." Plaintiffs argued that this language showed that "song selection means" could include on-screen displays. But the Court held that considering the language was not permissible and that, even if it were, the language only showed that the inventors were capable of claiming an on-screen display, but chose not to in the '302 patent.
* You can read more about this case in the Blog's archives.
… Continue Reading
Rowe Int'l Corp. v. Ecast, Inc., No. 06 C 2703, 2007 WL 1438370 (N.D. Ill. May 14, 2007) (Kennelly, J.).
Judge Kennelly denied defendants' motion to dismiss plaintiffs' patent infringement complaint for lack of standing. As to two patents that were not expressly assigned to plaintiffs before the suit was filed (the "Progeny Patents"), the Court used Illinois contract law to interpret the following blanket provision in the assignment agreement regarding the parent patent, which assigned the parent application and any improvements or related applications:
any and all other applications . . . which the undersigned may file . . . on said invention or improvements, and in any and all Letters Patent of the United States and foreign countries, which may be obtained on any of said applications . . . .
The Court held that this provision was unambiguous. Pursuant to this provision, the inventors assigned plaintiffs any related patents or improvements to the original application. Because the Progeny Patents were related to the parent patent, they were assigned to plaintiffs. And, therefore, plaintiffs had standing to file suit. Additionally, the Court noted that the express assignment of the Progeny Patents that plaintiffs received post-filing did not retroactively confer standing upon plaintiffs for this suit.
… Continue Reading
Rowe Int’l. Corp. v. Ecast, Inc., __ F. Supp.2d __, 2007 WL 831772 (N.D. Ill. Mar. 19, 2007) (Kennelly, J.). Judge Kennelly held that plaintiff Arachnid waived its privilege as to a limited scope of information and held that Arachnid’s related uses of the information did not rise to the level of the crime-fraud exception, … Continue Reading