The adage “if at first you don’t succeed,
try again” could be the motto for companies involved in patent proceedings. In legal terms, the process is known
as re-examination.
“It can be a valuable tool and legal strategy,” says Daniel E. Venglarik, a patent attorney for the Munck Butrus PC’s Intellectual
Property Section. “As a bonus, re-examination is less costly than typical legal proceedings.”
Smart Business asked Venglarik to
explain when re-examination is suitable as
part of a patent litigation strategy.
What is patent re-examination?
Companies sued for patent infringement
use re-examination either to slash the costs
of defending against the infringement
claim or as a backstop against an unfavorable verdict. For example, in one case a
company got hit with a jury verdict in
excess of $100 million but got the patent
office to hold that the patent should never
have been granted. In other cases, companies have saved in excess of $2 million in
attorney fees through re-examination.
How does patent re-examination differ from
patent litigation?
Re-examination is an administrative procedure by which the patent office takes a
second look at whether a patent should
have been granted in the first place, usually based on prior art that the patent office
hadn’t considered when it originally decided to grant the patent.
Re-examination is limited to issues of
patent validity over prior art patents and
publications. Litigation allows defendants
to develop a range of other defenses such
as noninfringement, invalidity due to lack
of enablement or failure to disclose the
best mode, inequitable conduct, and others.
What tactical litigation advantages does reexamination offer?
A re-examination can stall litigation by
three to five years. Re-examination can also somewhat level the playing field
regarding litigation expense when a ‘patent
troll’ is the plaintiff, since the cost of
defending the re-examination will not normally be covered by a contingent fee agreement. A well-drafted re-examination
request that has not yet been filed often
makes a good bargaining chip during settlement negotiations, especially where the
patent owner has already licensed the
patent to others.
How would re-examination fit within a patent
litigation strategy? What objectives are
served?
Normally, you want to seek re-examination soon after suit is filed to increase the
likelihood of litigation being stayed pending the outcome of the re-examination.
There is some benefit to waiting for the
court to render a claim construction, but
by that time, significant discovery has been
completed and the court may not grant any
stay. Re-examination should always be
considered as a backstop or ‘insurance policy’ against an unfavorable outcome at
trial. Typical objectives for re-examination
are: to reduce or preferably, eliminate the
number of claims that can be asserted
against your products; to force the patent owner to amend the claims and thereby
create ‘intervening rights’ cutting off damages; to defer litigation expense and any
judgment; and to gain time to develop and
bring to market a noninfringing substitute.
What criteria should be used in deciding to
pursue patent re-examination as part of litigation strategy?
The first-order variable should be the
existence of good prior art patents or printed publications not considered by the
patent office during the original examination of the patent. If such prior art exists,
the balance will normally tip heavily in
favor of filing a re-examination.
Secondary factors include the amount of
damages at issue, which might make simply taking a license the cheaper expedient,
the availability of indemnification or a joint
defense arrangement, and whether the
patent owner can be encouraged to also
sue your competitors.
What kind of results have been obtained in
using re-examination?
Our firm has frequently gotten patent litigation stayed pending completion of a reexamination, obtained complete rejection
of the patent claims of concern as
unpatentable, and forced patent owners to
make claim amendments that both cut off
our client’s liability for damages and avoided threats of an injunction.
In defending re-examinations, we’ve
argued around the need for any claim
amendments that would reduce available
damages, obtained expedited consideration of re-examinations, and secured additional claims for the patent that specifically targeted the infringer’s design while leaving no question as to validity.
DANIEL E. VENGLARIK practices in the Munck Butrus PC’s
Intellectual Property Section as a patent attorney registered before
the United States Patent and Trademark Office. Reach Venglarik
at [email protected].