Written by Michael T. Ghobrial, Michael Jordan, and Joseph R. Condo for the 28th Annual Joint Patent Practice Continuing Legal Education Seminar (www.jppcle.org), which will be held on April 17, 2012 in New York City.
Under the majority’s rule in Marine Polymer I, arguments made before the US Patent and Trademark Office (USPTO) during reexamination that change the scope of a claim will trigger absolute intervening rights for an accused infringer under 35 U.S.C. §§ 252 and 307(b). Marine Polymer Techs. v. HemCon, Inc., 659 F.3d 1084, 1092 (Fed. Cir. 2011) (hereinafter “Marine Polymer I”). Thus, under the majority’s rule, all damages for the period before the issuance of the reexamination certificate will be eliminated. Id. at 1087. However, the en banc review rejected the majority’s rule in Marine Polymer I in favor of the rule promulgated by Circuit Judge Lourie’s dissenting opinion in Marine Polymer I because the majority’s rule ignores the literal text of 35 U.S.C. §§ 307(b) and 316(b). Marine Polymer Techs. v. HemCon, Inc., Slip. Op. at 21, 26 (Fed. Cir. 2012) (en banc; hereinafter “Marine Polymer II”).
As discussed in the en banc opinion written by Judge Lourie in Marine Polymer II, the literal text of 35 U.S.C. §§ 307(b) and 316(b) requires that intervening rights apply only to “amended or new claims.” Marine Polymer II at 20-21. Although arguments may change the scope of a claim, those arguments do not create intervening rights. Intervening rights may only be created by an “amended or new claim.” Id. (citing § 307(b)). Therefore, arguments that change the scope of a claim during reexamination cannot create intervening rights during reexamination. Id.
Similarly, scope changing arguments made during an inter parties review, post grant review, or ex parte reexamination under the American Inventor’s Act of 2011 will not create intervening rights. The literal text of 35 U.S.C. §§ 307, 318, and 328 each require that intervening rights apply only to “amended or new claims.” Accordingly, only new or amended claims may create intervening rights during an inter parties review, post grant review, or ex parte reexamination.
Marine Polymer sued HemCon for infringement of U.S. Patent. No. 6,864,245 (‘245). 659 F.3d at 1087. The ‘245 patent claims a “biocompatible” polymer that may be used to stop bleeding.
During Markman proceedings, Marine Polymer and HemCon proposed competing constructions for the term “biocompatible.” Id. at 1088. However, the district court rejected the proposed definitions and adopted its own definition. Id. at 1088-89.
Using the district court’s definition of “biocompatible,” Marine Polymer moved for summary judgment of literal infringement on all asserted claims, which was granted by the district court. Id. at 1089. A jury trial was then held to determine validity and damages. The jury found that the asserted patent was valid and that Marine Polymer was entitled to a reasonable royalty of HemCon’s profits. Id. After the jury verdict, HemCon filed motions for judgment as a matter of law (JMOL). The district court denied each of the motions and made a further legal determination that the asserted claims were not obvious under 35 U.S.C. § 103. Accordingly, the district court entered final judgment and granted reasonable royalty damages for past infringement in the amount of $29.4 million. The district court also issued a permanent injunction barring future infringement of the asserted claims of the ‘245 patent. Id.
During the pendency of the district court proceedings, HemCon requested reexamination of the asserted patent. The reexamination proceeding concluded over a month after the trial had completed. Id. at 1090. During the reexamination, the examiner adopted a construction of the term “biocompatible” that was broader than the construction adopted by the district court. Id. at 1089-90. The examiner explained that the district court’s construction conflicted with dependent claims 4, 5, 13, 14, 21, and 22, which required a broad construction of “biocompatible” to avoid inconsistency. Using the broad construction of “biocompatible,” the examiner then rejected all claims of the ‘243 patent in light of the prior art.
In response, Marine Polymer deleted the inconsistent claims and argued that the district court’s narrower construction of “biocompatibility” should be adopted by examiner. The remaining claims were left unchanged. With the conflicting claims canceled, the Examiner agreed, adopted the district court’s narrower construction of “biocompatibility,” withdrew all rejections, and confirmed the remaining claims as patentable. Id.
HemCon then appealed the district court’s ruling to the Court of Appeals for the Federal Circuit (CAFC) and argued that infringement could not occur because Marine’s arguments in reexamination had created intervening rights. Id. at 1090-91. Specifically, HemCon argued that intervening rights had been created when Marine Polymer substantively changed the scope of the ‘245 patent’s claim during reexamination by arguing in favor of a narrower construction of “biocompatible.” Id.
III. MAJORITY OPINION IN MARINE POLYMER I BY JUDGE DYK
Under the majority’s rule in Marine Polymer I, arguments made before USPTO during reexamination that substantively change the scope of a claim trigger absolute intervening rights for an accused infringer under 35 U.S.C. §§ 252 and 307(b). 659 F.3d at 1092.
According to the majority’s opinion, intervening rights are available if the original claims have been “substantively changed.” Id. at 1091 (citing Laitram Corp v. NEC Corp., 163 F.3d 1342, 1346 (Fed. Cir. 1998)). To determine whether a substantive change has been made, a court must discern whether the scope of the claims has changed and not merely whether different words were used. Thus, the majority concluded that if the scope of the asserted claims substantively changed during reexamination, then HemCon would be entitled to absolute intervening rights. Id. at 1091.
The majority then analyzed the reexamination proceedings and found that the scope of the original claims incorporated the broad construction of “biocompatible” provided by the examiner during the reexamination. Id. at 1091-92. Because Marine Polymer had argued for the narrower construction of “biocompatibility,” the majority found that Marine Polymer had substantively changed the scope of the claims. Therefore, under 35 U.S.C. §§ 252 and 307(b), this change in scope granted absolute intervening rights to HemCon even though Marine Polymer did not amend the language of the claims. Id. at 1092.
Accordingly, the majority reversed the district court’s finding of infringement, vacated the jury’s verdict, and eliminated all damages for the period before the issuance of the reexamination certificate. Id. at 1092, 96.
IV. DISSENTING OPINION IN MARINE POLYMER I BY JUDGE LOURIE
Judge Lourie dissented from the majority’s opinion for two reasons. See id. at 1096-97.
First, Judge Lourie opined that it was procedurally improper for the majority to have considered the results of the reexamination proceeding in their review of the district court’s decision. Id. at 1096. Judge Lourie noted that the reexamination proceeding could have been directly appealed to the CAFC; however, the reexamination proceeding was not appealed. Rather, HemCon choose to appeal the district court’s decision. Id. Therefore, the majority’s consideration of the results of the reexamination proceeding may have unfairly deprived Marine Polymer of its right to have the infringement proceeding decided separately from a non-final USPTO proceeding. Id.
Second, Judge Lourie opined that the majority had ignored the statutory language requirement of 35 U.S.C. § 307(b), which requires assessing whether intervening rights arise from an asserted claim that is “amended or new.” During reexamination only “amended or new claims” have the effect specified in 35 U.S.C. § 252. However, the majority ignored § 307(b) and proceeded directly to the subsidiary “substantive change” analysis that derives from 35 U.S.C. § 252. Id. Thus, the majority had erred in deciding that an argument that changes the scope of a claim without changing the language of a claim would trigger absolute intervening. Id.
V. REHEARING ENBANC
A divided CAFC affirmed the district court’s finding of infringement and concluded, as an alternative ground for affirmance, that intervening rights do not apply to claims that have not been amended and are not new. Marine Polymer II at 3.
Only ten of the Federal Circuit judges participated in the decision. The majority opinion was written by Judge Lourie and was joined by Chief Judge Rader, and Judges Newman, Bryson, and Prost. The dissenting opinion was written by Judge Dyk and was joined by Judges Gajarsa, Reyna, and Wallach. Both the majority opinion and the dissenting opinion were broken into two sections – the first section discussing claim construction, and the second section discussing intervening rights. Judge Linn joined the claim construction portion of the dissent, but joined the intervening right section of the majority opinion. The final tally resulted in a 5-5 split for claim construction, and a 6-4 decision for intervening rights. This paper will focus on the intervening rights discussions.
During the rehearing, HemCon argued that Marine Polymer had triggered intervening rights by arguing for a narrow construction of “biocompatible” during reexamination. Id. at 17. Specifically, HemCon argued that, by canceling dependent claims and by persuading the Examiner to adopt the district court’s narrow construction of “biocompatible” effected a substantive change in the scope of the remaining claims. Citing Laitram Corp, HemCon then argued that the key to intervening rights lies in determining whether the scope of the reexamined claims differs from the original claims. However, the majority disagreed with HemCon’s interpretation of intervening rights.
The majority began its discussion of intervening rights by first noting that the reexamination of the asserted patent was a separate and distinct proceeding that was not properly before the court on appeal. Id. at 20. As the majority explained, the appeal concerned the judgment of the district court, which did not and could not consider the reexamination proceeding that concluded after trial. However, the majority rejected the premise of HemCon’s arguments regarding intervening rights as an alternative ground for decision because HemCon’s arguments disregarded the plain language of § 307(b). Id.
The majority then turned to § 307(b), which states that only “amended or new” claims incorporated into a patent during reexamination “will have the same effect as that specified in section § 252.” Id. at 20-21 (citing § 307(b)). In light of §§ 307(b) and 252, the majority indicated that an analysis of intervening rights consists of two steps. First, under § 307(b) a court must determine whether the asserted claim is “amended or new.” Id. at 21. If the answer is no, then the inquiry ends there. Only if a claim at issue is new or has been amended may a court proceed to the second step in the analysis, which is to assess the substantive effect of any such change pursuant to § 252. Id. Thus, the plain directive of the governing statute does not permit HemCon to invoke intervening rights against claims that the PTO confirmed on reexamination to be patentable as original issued. Id. at 26.
The majority further explained that Laitram was consistent with the two-step intervening rights analysis. Id. at 21. As the majority noted, Laitram focused on whether the claims had been substantively changed because the claims had been changed. In other words, in Laitram there was no question that the claims at issue had been amended in reexamination; the first step had been met.
VI. AMERICA INVENTS ACT OF 2011
In light of the majority opinion in Marine Polymer II, scope changing arguments made during an inter parties review, post grant review, or ex parte reexamination under the American Inventor’s Act of 2011 may not create intervening rights. The literal text of 35 U.S.C. §§ 307, 318, and 328 each require that intervening rights apply only to amended or new claims. Thus, during inter parties review, post grant review, or ex parte reexamination, only “amended or new claims” will have the effect specified in 35 U.S.C. § 252. See 35 U.S.C. §§ 307, 318, and 328. Accordingly, arguments that change the scope of a claim during inter partes review, post grant review, or ex parte reexamination may not create intervening rights during an inter parties review, post grant review, or ex parte reexamination.
Although it is not entirely clear, it is unlikely that a scope changing argument made during a supplemental examination would give rise to intervening rights. See 35 U.S.C. § 257(b). Section 275 does not recite the “amended or new claim” language, but under § 257(b), a patentee that files a supplemental examination may be forced into an ex parte reexamination. However, the ex parte reexamination falls under § 307(b), which requires that intervening rights apply only to “amended or new claims.”
On the other hand, patentees should be cautions when making arguments during a reissue proceeding as § 252 does not recite the “amended or new claims” language. See § 252. Accordingly, a scope changing argument may raise intervening rights during a reissue proceeding.
The United States Supreme Court (USSC) may not wish to engage in the claim construction controversy of this particular dispute, decided in a 5-5 decision, because the CAFC applied the correct claim construction law, but the respective CAFC judges simply disagreed on certain factual issues. Consequently, the USSC may not grant cert and thus may not weigh-in on the intervening rights issue that was decided in a 6-4 decision.
USSC action notwithstanding – patent owners should be cautious to avoid any amendments during a reexamination, especially to critical claims. Patent owners should also understand that claims added during a reexamination could be subject to intervening rights. In addition, as during initial examination of the application, patent owners should weigh carefully any and all statements that could be construed to characterize claims during a reexamination.