Reexamination Tactics: Present and Future

Transcription

1 INTELLECTUAL PROPERTY DESK REFERENCE PATENTS, TRADEMARKS, COPYRIGHTS AND RELATED TOPICS PATENT Reexamination Tactics: Present and Future Mitchell G. Stockwell and Bonnie M. Grant

2 273 Reexamination Tactics: Present and Future Mitchell G. Stockwell and Bonnie M. Grant I. Introduction Patent litigation belies the notion of cost-effective, efficient patent dispute resolution. Typical costs range from $500,000 and $4,000,000 to litigate a patent dispute to judgment. Like any complex commercial dispute, these costs are driven in large part by attorneys fees, expert witness fees, discovery costs, trial exhibits, etc. That these costs multiply so swiftly in patent litigation partly stems from the many complex technical and legal issues chief among them patent infringement and validity parties must investigate, assert, or defend. These dispute resolution costs help drive the vast majority of cases to settlement. Such frequent settlements suggest that while counsel must prepare a case for trial, it is at least as important to prepare for settlement. One method of preparing for both settlement and litigation is to narrow the disputed issues with reexamination. Reexamination entails the United States Patent and Trademark Office ( PTO ) considering whether certain types of prior art, technical information available before the invention, raise a substantial new question of patentability. This provides the PTO s view of the impact of the prior art on patent claim validity. That view (after any appeal) is dispositive when claims are rejected; when original or amended claims are upheld, however, the PTO s decision following reexamination is highly relevant evidence of validity that a court must consider. These reexamination results allow counsel for a patent owner or accused infringer to prepare a case for trial and simultaneously generate important settlement leverage and options at a bargain basement price in comparison with trying validity to a court or jury. Patent 201 This article describes present reexamination practice, the effect of a reexamination proceeding on pending, anticipated, or subsequent litigation, and practical reexamination tactics. II. Reexamination Practice Reexaminations may be inter partes or ex parte. Inter partes reexamination is available for patents issuing from original applications filed in the U.S. on or after November 29, In general, inter partes reexamination allows a great amount of participation by third party requestors. Under inter partes reexamination, third party requestors may file comments responding to the patent owner s responses to office actions. Additionally, third party requestors may appeal decisions by the PTO upholding patentability. Under inter partes reexamination, however, the real party in interest must be identified, and third party requestors may be estopped under 315(c) from making certain arguments in subsequent litigations. From 2003 to 2007, inter partes requests increased by 600%. 1 More than half of patents in inter partes reexaminations are known to be in litigation during reexamination. 2 1 Institute for Progress, Reexamining Inter Partes Reexam (April 2008), available at uploads/2008/05/interpartesreexamwhitepaper.pdf. 2 Id.

3 KILPATRICK STOCKTON Ex parte reexamination allows significantly less participation by the third party requestor. In general, after the PTO issues an ex parte order for reexamination, the third party requestor cannot participate in the proceedings further. From 2002 to 2003, ex parte requests increased by 70%. In 2003, there were 392 requests filed for ex parte reexamination, and of those, 109 requests are known to have related litigation. A. Persons Who May Request and Participate in Reexamination Any person at any time may file a request for reexamination of a patent and they may do so anonymously if they file for ex parte reexamination. 3 But courts cannot order persons to file reexamination requests. 4 Nor can a court compel a patent owner to submit documents from some third party with the patent owner s submissions during the ex parte phase of reexamination proceedings. 5 B. Contents of the Request Each ex parte reexamination request must include (1) a statement pointing out each substantial new question of patentability; (2) an identification of every claim for which reexamination is requested and a detailed explanation of how the cited prior art applies to each such claim; (3) copies of the prior art and the patent for which reexamination is requested; (4) a fee; and (5) [a] certification that a copy of the request filed by a person other than the patent owner has been served in its entirety on the patent owner. 6 In addition to these requirements for submitting an ex parte request for reexamination, inter partes requests for reexamination must include: (6) [a] certification by the third party requestor that the estoppel provisions of do not prohibit the inter partes reexamination; and (7) [a] statement identifying the real party in interest to the extent necessary for a subsequent person filing an inter partes reexamination request to determine whether that person is a privy. 7 Requesters who own the patent also may describe why claims remain patentable despite the prior art cited in the request. 8 Also, the examiner may consider patents or printed publications in addition to those cited in the request. The most significant substantive portion of the request is the cited prior art and the characterization of that art. The request must be based on prior art consisting of patents or printed publications. 9 Under ex parte reexamination, however, admissions by the patent owner about matters affecting patentability may be used in combination with a patent or printed publication. 10 These content restrictions reflect the limitations of the PTO, which is not generally equipped to hear or weigh 3 35 U.S.C. 302 (2000); U.S. Dep t of Commerce, U.S. Patent & Trademark Office, Manual of Patent Examining Procedure 2212 (8 th ed. rev ) [hereinafter MPEP]; see also Parker Hannifin Corp. v. Davco Mfg. Corp., 13 U.S.P.Q.2d 1412 (N.D. Ohio 1989) (refusing to compel discovery on whether a party in litigation requested reexamination of the patent in suit). 4 In re Cont l Gen. Tire, Inc., 81 F.3d 1089 (Fed. Cir. 1996). 5 Emerson Elec. Co. v. Davoil, Inc., 88 F.3d 1051 (Fed. Cir. 1996) C.F.R (b)(5) (2008). The present reexamination fee is $2,520 (ex parte) or $8,800 (inter partes), but is subject to change (usually upward). Id. 1.20(c). If a reexamination proceeding is not instituted, a partial fee refund will be made. See id Id (b)(8). 8 Id (c) U.S.C. 301 (2000); 37 C.F.R (d) (2008). Patent owners but no others desiring consideration of issues like prior public uses or sales may file a reissue application. 35 U.S.C. 251 (2000). 10 MPEP, supra note 3, 2217; see also Ex parte McGaughey, 6 U.S.P.Q.2d 1334 (Bd. Pat. App. & Int. 1988).

4 275 testimony or apply rules of evidence to admissibility of evidence about prior art not described in patents, printed publications, or a clear record. Perhaps of more significance, a request may include affidavits or declarations explaining the content or dating the prior art. 11 Such written testimony provides an excellent mechanism for providing persuasive expert testimony to the PTO about the prior art either describing how it renders the invention unpatentable or how the invention differs from or improves over the prior art. Also, requesters may present evidence, including such affidavits or declarations that claims in the patent for which reexamination is requested are... not supported by an earlier... application whose filing date is claimed. 12 With this procedure, intervening patents or printed publications that are dated earlier than the patent s actual filing date, but not dated earlier than the patent s earliest filing date, may be used as prior art. 13 Moreover, while public use prior art cannot be considered on its merits within a reexamination proceeding, patent challengers must be careful not to overlook other, allowable uses for such evidence in reexamination. For example, that evidence bears on secondary considerations and the level of skill in the art, factors established by the Supreme Court as pertinent to whether inventions are obvious. 14 Evidence that the invention was publicly known, used, or sold in the United States by third parties may indicate obviousness by showing the trial and success of others. 15 Also, such evidence shows that the skill level in the relevant art sufficed to render the invention obvious to artisans of ordinary skill. 16 C. The Standard for Granting Reexamination All the evidence submitted in the request aims to answer the question: Does the cited prior art present a substantial new question of patentability? For challengers seeking to cancel or narrow patent claims, the answer is yes far more often than will be the answer to the corresponding question in litigation: Does the prior art invalidate the claim? Indeed, the low threshold for initiating a reexamination makes it difficult for patent owner requesters to persuade the PTO that no reexamination need be ordered. Indeed, one recent statistic indicates that the PTO grants 95% of inter partes reexamination requests. 17 If available, the examiner who originally handled the patent application will decide the request within at most three months. This is good news for patent owners reexamination by the same examiner issuing the patent probably heightens the chance that original or amended claims will be confirmed. Patent MPEP, supra note 3, Id. 13 Id.; see also In re Ruscetta, 255 F.2d 687 (C.C.P.A. 1958). 14 Graham v. John Deere Co., 383 U.S. 1 (1966). 15 See, e.g., In re Merck & Co., 800 F.2d 1091, 1098 (Fed. Cir. 1986); Am. Standard, Inc. v. Pfizer Inc., 722 F. Supp. 86, 139 (D. Del. 1989). 16 See, e.g., Newell Cos. v. Kenney Mfg. Co., 864 F.2d 757, 766 n.2 (Fed. Cir. 1988); Felburn v. N.Y. Cent. R.R. Co., 350 F.2d 416, 424 (6th Cir. 1965). 17 Institute for Progress, supra note 1.

5 KILPATRICK STOCKTON D. Proceedings After Grant of the Request Upon finding a substantial new question of patentability, the examiner assigned to the proceeding orders reexamination of the claim(s) to resolve that question. For ex parte reexaminations, the order granting reexamination will generally set a two-month time period in which the patent owner may file an optional statement and amendment refuting the substance of the request, amending original claims, or adding new claims. 18 If the patent owner files a statement and/or amendment, the third party requestor may file a reply. 19 In inter partes reexamination, however, the order granting reexamination will usually be accompanied by the initial office action on the merits. 20 In ex parte reexamination, after any statement or reply, the proceeding enters the prosecution stage, during which the examiner may reject the claims being reexamined or any new proposed claims. 21 While the patent owner may file amendments and arguments responsive to any rejections, a third party requester cannot participate in the prosecution stage. 22 Similarly, a patent owner can appeal a rejection, but a third party requester has no appeal rights. 23 In inter partes reexamination, however, a third party requester may file comments to every response filed by the patent owner to an office action on the merits. 24 Additionally, third party requesters may appeal decisions favorable to patentability. 25 Patents in reexamination are not presumed valid. 26 Indeed, third party challengers or the PTO need only prove that a particular claim is unpatentable by a preponderance of the evidence. 27 This burden is made even lighter given that the PTO gives the claims being reexamined their broadest reasonable interpretation consistent with the patent s specification. 28 In ex parte reexamination, these procedural advantages may help a third party challenger overcome the fact that patent owners have multiple chances (through amendment, new claims, personal interviews with the examiner or an appeal) to chip away at an examiner s resolve to reject claims. Once ordered, reexamination proceeds to conclusion. A recent survey indicates that the pendency period for reexaminations without appeal is between 34 and 53 months, while the PTO s own statistics report a pendency of about 28 months. 29 The survey authors have critiqued the PTO s C.F.R (2008). 19 Id Id Although new claims may be added and original claims amended, they cannot be broader than the original issued claims, or they are invalid under 35 U.S.C See Quantum Corp. v. Rodime, PLC, 65 F.3d 1577, 1580 (Fed. Cir. 1995); Thermalloy Inc. v. Aavid Eng g, Inc., 935 F. Supp. 55 (D.N.H. 1996), aff d, 121 F.3d 691 (Fed. Cir. 1997). 22 MPEP, supra note 3, MPEP, supra note 3, C.F.R (2008). 25 Id In re Etter, 756 F.2d 852 (Fed. Cir. 1985). 27 Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1427 (Fed. Cir. 1988). 28 In re Yamamoto, 740 F.2d 1569 (Fed. Cir. 1984). By contrast, claims under attack in litigation are construed, if possible, to sustain their validity. Id. at 1571 n Institute for Progress, supra note 1.

6 277 statistics as misleading. 30 At its completion, the PTO issues a certificate confirming original or amended claims and canceling unpatentable ones. A recent informal survey taken by Kilpatrick Stockton among registered patent attorneys comparing the two types of reexamination proceedings found that the quality of inter partes reexaminations is higher. Participants who had used both types of proceedings favored inter partes over ex parte. Participants said that the most serious flaws in any reexamination proceeding included the inability to raise evidence of public use prior art; the fact that there are no examiner interviews; and the estoppel provisions of reexamination proceedings. III. The Effects of Reexamination A. On Pending or Anticipated Litigation If related litigation on the patent is pending, courts may grant motions to stay the litigation or dismiss it without prejudice until the reexamination proceeding concludes. 31 For instance, the court will typically grant stay requests that are filed before discovery proceeds substantially, given the typical court s desire to obtain the expert view of the PTO and, as a practical matter, to get rid of a potentially complex patent case. Stays also make sense from the perspective of judicial efficiency there is little reason to determine validity or infringement of claims that may soon be canceled or narrowed. If the court stays related litigation, the PTO will further expedite reexamination proceedings. Despite the good odds that a court will stay litigation in favor of reexamination proceedings, nothing precludes patent owners from suing on a patent already in reexamination. For patents that already have survived reexamination or that are in reexamination but have received an indication of allowance from the PTO, patent owners may be able to establish more readily the factors necessary for a preliminary injunction. 32 B. On Later District Court Proceedings Much ink has been spilled on what effect a prior reexamination proceeding has when claims are rechallenged in subsequent litigation. A summary of the law might read as follows: Confirmation of patent claims following a reexamination proceeding effectively strengthens their statutory presumption of validity. Although reexamination does not bind a court as to validity questions, 33 it greatly increases a defendant s burden of establishing the invalidity of a reexamined patent in Patent Id. 31 See generally Steven M. Auvil, Note, Staying Validity Litigation Pending Reexami nation: When Should Courts Endeavor To Do So?, 41 Clev. St. L. Rev. 315 (1993); but see Standard Havens Prods., Inc. v. Gencor Indus., Inc., 953 F.2d 1360, 1366 n.2 (Fed. Cir. 1991) (declining to stay proceedings in view of reexamination despite the Board s approval of rejection); Arthrocare Corp. v. Smith & Nephew, Inc., 315 F. Supp. 2d 615, (D. Del. 2004) (denying accused infringer s motion to stay injunction pending appeal because of pending reexamination proceedings on the adjudicated patents); Eolas Tech. Inc. v. Microsoft Corp., 70 U.S.P.Q.2d 1939 (N.D. Ill. Jan. 15, 2004) (denying motion to stay entry of judgment in view of reexamination); NTP, Inc. v. Research in Motion, Ltd., No. Civ. A. 3:01CV767, 2003 WL (E.D. Va. Aug. 5, 2003) (denying as moot RIM s motion to stay pending director initiated reexaminations and entering judgment). 32 See, e.g., Am. Permahedge, Inc. v. Barcana, Inc., 857 F. Supp. 308 (S.D.N.Y. 1994); Auto. Prods. PLC v. Fed. Mogul Corp., 11 U.S.P.Q. 2d 1471 (E.D. Mich. 1989). 33 Gen. Elec. Co. v. Hoechst Celanese Corp., 740 F. Supp. 305, 312 (D. Del. 1990).

7 KILPATRICK STOCKTON view of the same art considered in reexamination. 34 For example, in assessing validity, courts must consider the fact that the PTO upheld the patent in reexamination. 35 But courts should defer to PTO findings following reexamination only with respect to the evidence and prior art that was before both the PTO examiners and the court. 36 Thus, the PTO s failure to address invalidity for obviousness may allow a defendant to argue that the court should consider obviousness independently. 37 Likewise, no heightened burden applies if prior art not previously before the PTO is used to show invalidity. These rules generally make sense. The whole reason for a heightened validity presumption following reexamination is that the PTO has confirmed claims despite the cited prior art. When the same or similar evidence is used in subsequent litigation, the fact finder is entitled to presume that the PTO did its job in reviewing that evidence, thus forcing the attacker to show that the PTO was wrong in its decision to grant the patent. 38 Although this is a higher burden, it is not impossible to meet. On the other hand, if significantly new evidence or testimony is presented in later litigation, the PTO s failure to consider such evidence indicates no heightened presumption should apply. Reexamination may impact more issues than whether a party s patent is invalid in view of prior art patents or printed publications. Thus, even though infringement and inequitable conduct issues are not directly considered by the PTO during reexamination, reexamination proceedings may have an impact on how a court or jury subsequently views those issues. A party challenging the validity of a patent through a reexamination proceeding obviously seeks to have patent claims canceled; such canceled claims cannot be infringed. Even if, however, this goal is not achieved, if the PTO considers the claims to be overly broad, the patent owner may be forced to amend them. Those amendments may further distinguish the claims from what the third party is doing or plans to do, possibly enhancing non-infringement defenses. Likewise, any arguments made by the patent owner during the reexamination proceeding may help the third party to have the claims interpreted more narrowly or may create estoppels that would prevent the patent owner from relying on the doctrine of equivalents to ensnare equivalent products or processes. Additionally, claim amendments may trigger intervening rights, which essentially preclude the patent owner from seeking infringement damages for activities occurring before the completion of reexamination. 39 The statute provides for both absolute and equitable intervening rights. If substantive claim amendments are made during reexamination, absolute intervening rights preclude recovery for all products made, purchased, used, or imported before the issuance of the 34 See, e.g., Am. Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1364 (Fed. Cir. 1984) ( [B]ecause the PTO has now held the claims in suit patentable in light of the additional art..., [defendant s] burden of proof of unpatentability has become more difficult to sustain. ). 35 See, e.g., Custom Accessories, Inc. v. Jeffrey-Allan Indus. Inc., 807 F.2d 955, 961 (Fed. Cir. 1986); Thermal Eng g Corp. v. Clean Air Sys., Inc., 706 F. Supp. 436, 443 (W.D.N.C. 1987). 36 E.I. du Pont de Nemours & Co. v. Cetus Corp., 19 U.S.P.Q. 2d 1174, 1180 (N.D. Cal. 1990). 37 See id. 38 Am. Hoist, 725 F.2d at 1360 (discussing the effect of a reissue proceeding) U.S.C. 252, 307 (2000); see generally Westvaco Corp. v. Int l Paper Co., 991 F.2d 735 (Fed. Cir. 1993); Laitram Corp. v. NEC Corp., 952 F.2d 1357 (Fed. Cir. 1991); Fortel Corp. v. Phone-Mate, Inc., 825 F.2d 1577 (Fed. Cir. 1987); Kaufman Co. v. Lantech, Inc., 807 F.2d 970 (Fed. Cir. 1986).

8 279 reexamination certificate. 40 Depending on the factual circumstances, the third party challenger may also persuade a court to grant equitable intervening rights, under which the challenger and its customers may continue manufacturing, selling, offering for sale, importing, and using allegedly infringing products at least to recoup its investment prior to the issuance of the reexam certificate. 41 Reexamination can also be used to help establish the materi ality prong of the inequitable conduct defense, by which a court can hold a patent unenforceable if it is shown that certain persons intentionally withheld material prior art information from the PTO during the original prosecution. That is because the result of a PTO proceeding that assesses patentability in light of information not originally disclosed can be of strong probative value in determining whether the undisclosed information was material. 42 On the other hand, failure of a party alleging inequitable conduct to include a reference in a reexamination request weighs heavily against any argument that the reference was material. 43 IV. Reexamination Tactics A. Reexamination Goals and Tactics by Third Party Challengers Reexamination allows a patent challenger to pursue several goals, including: (1) seeking to have claims in the patent canceled or at least narrowed to increase the challenger s non-infringement defenses or to provide grounds for intervening rights; (2) forcing the patent owner to submit arguments in favor of patentability that might create narrower claim interpretations or estoppels to enhance the challenger s non-infringement defenses; (3) showing that certain prior art withheld during the original prosecution is material; or (4) seeking a less expensive forum for adjudicating validity questions and seeking to stay concurrent, more expensive district court proceedings during that adjudication. Patent 201 Other reasons for seeking reexamination include the benefits of going to an expert forum such as the PTO over seeking to invalidate a patent in front of a jury or a court, which may be confused by the complexity of the technology or have its judgment about validity issues impacted by other issues to be decided in an infringement case. 44 Challengers may also seek reexamination because of the procedural benefits discussed above. 40 Cf. BIC Leisure Prods., Inc. v. Windsurfing Int l, Inc., 774 F. Supp. 832, 837 (S.D.N.Y. 1991) (granting absolute intervening rights based upon the defendant having an order for the infringing goods in hand on the reissue of the patent), aff d in pertinent part, 1 F.3d 1214 (Fed. Cir. 1993) U.S.C. 252 (2000). Few courts have granted such rights. Compare Wayne-Gossard Corp. v. Sondra, Inc., 434 F. Supp. 1340, 1363 (E.D. Pa. 1977) (noting that defendant s sales before the critical date amply compensated it for its investment and denying equitable intervening rights), aff d, 579 F.2d 41 (3d Cir. 1978), with Plastic Container Corp. v. Cont l Plastics, Inc., 607 F.2d 885, 903 (10th Cir. 1979) (allowing infringers to recoup [their] investment and to offset, against any infringement damages, the reasonable cost of converting or replacing [their] present equipment in order to produce noninfringing goods. ) and Richardson-Vicks, Inc. v. Upjohn Co., Civ. A. No , 1996 WL (D. Del. 1996) (granting intervening rights following a reexamination and applying a 7% running royalty to defendant s sales to compensate patent owner). 42 Molins, PLC v. Textron, Inc., 48 F.3d 1172, 1179 (Fed. Cir. 1995); see also Glaverbel Societe Anonyme v. Northlake Mktg. & Supply, Inc., 45 F.3d 1550 (Fed. Cir. 1995). 43 Sensonics, Inc. v. Aerosonic Corp., 81 F.3d 1566, 1571 (Fed. Cir. 1996). 44 See generally William J. Speranza & Michael L. Goldman, Reexamination-The Patent Challenger s View, 15 A.I.P.L.A. Q.J. 85 (1987).

9 KILPATRICK STOCKTON When a third party has been accused of infringement, additional factors can be identified that, if present, favor use of a reexamination, especially inter partes reexamination. For instance, reexamination should at least be considered where: an accused infringer has limited litigation resources; the case is mostly about past damages and the prior art presents a chance of claim amendments resulting in intervening rights; the technology is complex and likely to be viewed by the jury or court as presumptively entitled to a patent; and substantial existing non-infringement or invalidity defenses will remain whatever the reexamination outcome. Despite the presence of such factors, the tendency of reexamination proceedings to result in confirmed, if amended, patent claims suggests a cautious approach in selecting the reexamination option. Thus, when the main defense is invalidity and only weak to fair non-infringement defenses exist, reexamination may not be appropriate given the apparent bias favoring confirming some claims. This is especially true given that a court or jury may be all too willing to defer to the PTO s judgment on the effect on patent validity of the prior art already considered. However, if inter partes reexamination is available (i.e., the patent issued on or after November 29, 1999), the third party may have a better chance at obtaining claim cancellation because of the greater amount of participation permitted. A third party may employ various tactics to increase the chances that claims are amended or canceled in reexamination. For instance, PTO statistics indicate that the chances of having claims canceled or changed increase if a third party files a reexamination request. 45 Thus, when the patent is in litigation and the patent owner requests reexamination of its own patent, the accused infringer should consider filing a second request seeking to put its views in front of the PTO. Indeed, some third parties in ex parte settings, to enhance their ability to participate, have filed multiple requests, typically refuting the patent owner s responses to examiner s actions that issue in the ex parte phase of reexamination. 46 If inter partes reexamination is available, the third party challenger will have a much greater procedural advantage in the reexamination process. In addition to tactics implemented to enhance chances of a successful reexamination outcome, third parties accused of infringement should give thought to the tactical advantages reexamination offers in the context of the overall dispute. First, the substantially reduced cost of reexamination is a powerful incentive for less funded defendants to use the procedure because it tends to level the playing field. This incentive is enhanced when the reexamination may allow for a stay of expensive concurrent district court litigation. Likewise, during the long delay occasioned by reexamination, changes in priorities in the strengths of the case and, likely, in the market environment may possibly favor the accused infringer. For example, if during that time the product becomes less important, the patent owner may become 45 Id. The same data show that having an examiner other than the one who originally issued the patent assigned to the reexamination also enhances the chances that claims will be canceled or amended. Oral reports circulate among the bar of successful motions to recuse particular examiners from handling reexaminations of patents they originally issued, but no reported decisions reflect such recusals. But see In re Ovshinsky, 24 U.S.P.Q.2d 1241 (Comm n of Pat. & Trademarks 1992) (finding no bias by the examiner against the patent owner and denying patent owner s petition to recuse examiner assigned to reexamination proceeding). 46 PTO rules provide for consolidating such multiple requests, provided they are timely. 37 C.F.R (2008); MPEP, supra note 3, Other rules, however, provide some protection for the patent owner by stating that, in aggravated situations where it appears clear that the second or subsequent request was filed for purposes of harassment, the request should be denied. MPEP, supra note 3, 2240.

10 281 reluctant to expend resources enforcing the patent even if it survives reexamination. Or, if the accused product is removed from or phased out of the market during reexamination and the patent owner is also forced to narrow its patent claims, the resulting possible intervening rights may significantly decrease the case value. That is particularly so if concurrent district court proceedings are stayed. A stay may convince the patent owner to settle, because it will be unable to get a judgment for the one-to-two-year period it takes to complete the reexamination proceeding. A stay also provides the requester the opportunity to find and evaluate additional, possibly invalidating prior art while preventing the patent owner from taking expensive discovery of the requester. The very threat of a reexamination proceeding also may be a powerful tactic that could force a belligerent plaintiff to the negotiation table. Few patent owners, particularly ones engaged in an extensive licensing or enforcement program, can face the prospect of their patent being tied up for 18 months or more in a reexamination proceeding without seriously considering a reasonable settlement proposal. One such proposal could hinge on the reexamination outcome. For instance, the accused infringer could propose settling the case by paying X if the patent does not survive reexamination; a greater amount Y if the patent survives, but the claims are narrowed; or an even larger amount Z if the patent survives unscathed. X, Y, or Z could be fixed amounts or changing royalty payments for past and future sales. B. Reexamination Tactics by Patent Owners Obviously, patent owners seek to survive reexamination with an intact or substantially intact patent and then argue that the court or jury should defer to the PTO s expert view on validity issues. Patent owners may also seek new, narrower claims that cover infringing products yet, because they are narrower, are more likely to survive challenges to their validity following reexamination. To avoid possible intervening rights, patent owners may seek such narrower claims by rewriting original, still allowable dependent claims into independent form. 47 Once a certificate confirming original, new, or amended claims issues, the patent owner can then rely on the heightened presumption of validity generally accorded to the reexamined patent. Likewise, if a request for reexamination is denied, that very denial will also give the patent owner powerful arguments that the prior art cited neither impacts the validity of its patent nor is sufficiently material to support any inequitable conduct allegations if it was art that was arguably withheld during earlier prosecution. Tactically, an enhanced, stronger patent allows the patent owner to more readily obtain a preliminary injunction, since the patent s presumed validity strongly supports a likelihood that the patent owner will successfully thwart an invalidity defense. 48 If litigation has been stayed or will soon commence, Patent See 35 U.S.C. 305 (2000) (prohibiting patent owners from seeking broader claims). 48 See e.g., Am. Permahedge, Inc. v. Barcana, Inc., 857 F. Supp. 308 (S.D.N.Y. 1994); Auto. Prods. PLC v. Fed.-Mogul Corp., 11 U.S.P.Q. 2d 1471 (E.D. Mich. 1989).

11 KILPATRICK STOCKTON a patent owner also can use the fact that the patent was successfully reexamined or that a request for reexamination was denied to more readily defend a summary judgment of invalidity. 49 Even better, patent owners may in some limited circumstances seek summary judgment that the patent is not invalid in view of the defendant s prior art, thereby narrowing the issues for the court or jury to infringement. For example, the court in Transmatic, Inc. v. Gulton Industries 50 granted partial summary judgment of validity and in doing so observed that [t]he Court will especially give deference to the PTO s patentability decision in this case because the PTO found the... invention pa tentable twice--initially and upon reexamination. Of course, the third party challenger s procedural benefits are the patent owner s burdens. For example, the presumption of validity whose benefit is lost to the patent owner during reexamination is a powerful shield that sometimes may be all that prevents a fact finder from determining the invention was taught by the prior art. Thus, patent owners with a weak patent facing potentially strong art may wish to avoid reex amination and instead rely on the statutory presumption. V. Conclusion A reexamination proceeding is a powerful dispute resolution tool that both patent owners or patent challengers may wield to great effect. It provides a relatively efficient forum in which to confirm validity of patents on valid inventions and eliminate patents on technology that does not constitute true invention deserving of patent protection. 49 For example, in reissue proceedings, the Federal Circuit has consistently required district courts to consider the fact that the PTO considered the prior art during reissue. See, e.g., Fromson v. Advance Offset Plate, Inc., 755 F.2d 1549 (Fed. Cir. 1985); Am. Hoist and Derrick Co. v. Sowa & Sons, 725 F.2d 1350 (Fed. Cir. 1984) F. Supp. 1052, 1063 (E.D. Mich. 1993), aff d in part, rev d in part, 53 F.3d 1270, 1275 (Fed. Cir. 1995).