Walker Digital Resorts to ITC to Work around Reexamination

Scott Daniels | December 9, 2011

In April Walker Digital (of Priceline-Jay Walker fame) sued LG, Samsung, Sharp, Sony, Toshiba and a series of other makers of Blu-ray disc players in Delaware for infringement of U.S. Patent No. 6,263,505.  In June an anonymous third-party requested reexamination of five of the 43 ‘505 patent claims, and in September Sony requested reexamination of the remaining 38 claims.  Defendants then moved to stay the Delaware infringement action pending completion of the reexaminations.

In the meantime, the PTO has moved expeditiously with the reexaminations.  It granted the first reexamination and then rejected all 43 claims as being either anticipated or made obvious by the cited prior art, but it denied Sony’s request for failing to raise any substantial new question of patentability not already raised in the first reexamination.  The rejection relies, essentially, on a single prior art reference, yet it is quite detailed and might be difficult to overcome.  The apparent strength of the rejection, plus the speed with which the PTO is moving in the reexamination, mean that there is a strong possibility that they will grant Defendants’ stay motion.  A stay would mean that the validity issue would be decided by the PTO, rather than by the District Court, to the obvious advantage of Defendants.

What is Walker Digital to do?  The answer came Monday when it filed a Section 337 Complaint with the ITC, seeking an order excluding the allegedly infringing Blu-ray disc players from entry into the United States.  The ITC, unlike the District Courts, refuses to stay investigations in favor of parallel reexamination proceedings.  Moreover, the ITC is required by statute to exclude infringing imports and its injunctive power against infringing imports already in the United States is not limited by the Supreme Court’s eBay decision.  See Spansion Decision These advantages offered by the ITC make it a preferred forum for many patent owners, especially those facing difficult reexaminations.

Still, in this case, the progress made in the ‘505 reexamination, together with the comparative speed shown by the PTO in recent months, could foretell a change in the ITC’s treatment of parallel reexaminations.  One wonders whether the ITC would exclude infringing imports, if there is a final determination by the PTO that the ‘505 patent is invalid.  Would the ITC insist on enforcing the ‘505 patent by excluding infringing imports where the agency that originally issued the patent now concludes that it is invalid?  And what role would the “public interest” have in such an analysis?

One solution might be for the ITC to allow the importers to continue to bring the infringing imports into the United States while the CAFC reviews the PTO’s rejection, provided that the importers post a bond that would compensate the patent owner in the event that the CAFC confirms the validity of the patent claims.  In any event, the relationship of the courts, the ITC and the PTO remains unclear and is subject to change.

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