Judge Campbell Denies Prosecution Bar in Reexamination

Scott Daniels | October 26, 2011

Cases with parallel infringement litigation in District Court and reexamination at the PTO often present the issue of whether a patentee’s lawyer, with access to confidential information under a protective order, may also defend the patent-in-suit in reexamination.  Accused infringers sometimes worry that the patentee’s counsel will use their confidential information, disclosed under the court’s protective order for use in the court case only, in the co-pending reexamination.   Patentees, on the other hand, often do not want to be forced to hire separate litigation and reexamination lawyers.

Judge David Campbell of the District Court in Arizona wrote an informative decision last week in NeXedge v. Freescale Semiconductor et al., 2011 U.S. Dist. LEXIS 121737, summarizing the applicable standards for resolving such disputes.  The accused infringer asked Judge Campbell to include in his protective order a provision barring each of the patentee’s lawyers, who had subscribed to the protective order, from participating in the reexamination. 

Judge Campbell began his analysis by explaining that a “party seeking the patent prosecution bar must first show that there is an ‘unacceptable’ risk of inadvertent disclosure of confidential information, determined by the extent to which counsel is involved in ‘competitive decision-making’ with its client” (emphasis added).  The Judge defined “competitive decision-making as ‘a counsel’s activities, association, and relationship with a client that are such as to involve counsel’s advice and participation in any or all of the client’s decisions (pricing, product design, etc.) made in light of similar or corresponding information about a competitor.’”

If “risk of inadvertent disclosure has been shown, the Court must balance that risk against the potential harm to the opposing party in denying it the counsel of its choice,” Judge Campbell explained.   (Emphasis added).  Factors to be considered in estimating this harm include “the extent and duration of counsel’s past history in representing the client before the PTO, the degree of client’s reliance on that past history, and the potential difficulty the client might face if forced to rely on other counsel for the pending litigation or engage other counsel to represent it before the PTO.”

Once the potential risk to the accused infringer and the potential harm to the patentee are determined, the court balances these conflicting interests.

Here, the balance tilted sharply in favor of the patentee.  Judge Campbell initially faulted the accused infringer for failing to identify any confidential information that patentee’s counsel might improperly use in the reexamination.  He noted that the patentee “is not in the business of developing or patenting new products,” so that “many of the concerns recognized in the prosecution bar cases simply do not exist.” 

Judge Campbell then asserted that “the relatively modest risks presented by the reexamination context do not outweigh Plaintiff’s strong interests in avoiding the increased costs and duplication of effort that would arise were Plaintiff required to retain and educate separate counsel for the reexamination proceeding.”  Finally, he noted that it was “Defendants, not Plaintiff, [who] initiated the reexamination, and [that they] did so after this lawsuit was filed.” 

The lesson for an accused infringer to learn is (1) to identify its confidential information that might be used improperly and (2) to explain how such information could be used by the patentee’s reexamination attorney to the competitive disadvantage of the accused infringer.

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