CAFC Urges Deference to PTO Reexamination Determinations

Scott Daniels | March 17, 2011

Over the last two years, there is has been a growing trend among some District Courts to defer to decisions that the PTO makes on patent validity in its reexamination proceedings.  This deference to the PTO is shown not only in cases where the court stays infringement litigation pending completion of a reexamination, but also where the court resorts to the PTO’s reexamination findings to resolve non-validity issues, for instance, willfulness, claim construction, materiality in an inequitable conduct defense, a patentee’s likelihood of success for a preliminary injunction motion, etc.  This trend received a further nudge forward yesterday when the CAFC reversed an award of attorney’s fees against the patentee in Old Reliable v. Cornell, citing inter alia the PTO’s notice of intent to confirm the validity of the patent claims.

The case has a long history.  The trial court determined that the patent claims were anticipated by and obvious over the prior art, stating that “anticipation is the epitome of obviousness.” The trial court’s validity judgment was later affirmed by the CAFC.  In the meantime, the accused infringer filed a motion asserting that the case was exceptional because the patentee had acted unreasonably in bringing and maintaining the case despite clear evidence that the patent was invalid.  The court agreed and awarded nearly $200,000 to the accused infringer in fees, expenses, and costs.

In yesterday’s decision the CAFC concluded differently.  It maintained its earlier decision that the patent was invalid, but also found that the patentee had sufficient factual and legal basis to maintain its validity arguments.  The CAFC therefore held that the patentee’s actions did not justify a holding that the case was exceptional, reversing the trial court’s award.

Among the considerations cited by the CAFC was the fact that the PTO had confirmed the validity of the claims in a parallel reexamination proceeding.  (The PTO issued a notice of intent to issue a reexamination certificate confirming the validity of the claims, though it later withdrew the notice when informed that the CAFC had affirmed the trial court’s invalidity judgment).  The patentee could not have acted improperly, the CAFC reasoned, if the PTO found that the claims were valid.  “The fact that the PTO, after assessing the relevant prior art, confirmed the patentability of all claims of the ‘950 patent undercuts [the accused infringer’s] contention that [the patentee] had no reasonable basis for its assertion that its patent was not anticipated.”

Clearly, the CAFC’s conclusion that the patentee had acted reasonably was primarily based on the disclosure of the prior and the other evidence in the case.  Even in the absence of the PTO’s determination in the reexamination, the CAFC would likely have reached the same conclusion.  Moreover, the CAFC’s reference to the PTO’s reexamination findings is not new – in Hyatt v. Kappos, cited in yesterday’s decision, the CAFC stated that deference is due to the PTO as “the knowledgeable agency charged with assessing patentability.”  Still, the CAFC’s analysis that the PTO reexamination findings on validity may have persuasive impact on issues that are not, strictly speaking, limited to patent validity, is significant.  We expect that the CAFC’s specific conclusion in this case that the results of reexamination proceedings may affect a determination of whether a case is “exceptional,” will push the trial courts to consider such results in resolving other non-validity issues as well.

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