Accused Infringer Wins Absolute Intervening Rights but not Equitable Intervening Rights

Scott Daniels | January 29, 2014

Ex parte reexamination and inter partes review offer an accused infringer a number of benefits, even where the patent survives its trial at the Patent Office.  Most notable among those benefits is the possibility of the accused infringer obtaining intervening rights based on amendment of the claims during reexamination or review.  Such rights are created by 35 U.S.C. § 307(b) which reads:

Any proposed amended or new claim determined to be patentable and incorporated into a patent following a reexamination proceeding will have the same effect as that specified in section 252 of this title for reissued patents on the right of any person who made, purchased, or used within the United States, or imported into the United States, anything patented by such proposed amended or new claim, or who made substantial preparation for the same, prior to issuance of a certificate under the provisions of subsection (a) of this section.

Essentially, an accused infringer obtains “absolute intervening rights” for patent claims whose scope has been “substantively changed” in the reexamination or review, so that there is no liability for accused products that were made or used before the reexamination certificate issue date.  “Equitable intervening rights” are available to the accused infringer where a court, in its equitable discretion, allows it to continue to engage in infringing activities—e.g., to continue to make or use the products—after the reexamination certification has issued, provided that the accused infringer had made substantial preparations for the infringing activities prior to the reexamination or review.

Last week the trial judge in LMT Mercer Group v. Maine Ornamental, 10-cv-4615 (D.N.J.) granted summary judgment in favor of the accused infringer on issue of absolute intervening rights, but ruled against it with respect to equitable intervening rights. 

During reexamination of the patent-in-suit, the patentee amended its claims to a fence post to recite (1) that a particular “engaging means” was “axially” slidably engaging, and (2) that the same “engaging means” was “dimensioned to provide resistance to removal.”  The accused infringer requested summary judgment, asserting the scope of the claims had been substantively changed. 

The patentee countered that the amendments merely clarified the original claims, and that the original claims should be construed in light of the specification to require (1) slidably engaging feature be “axial,” and (2) that the same “engaging means” be “dimensioned to provide resistance to removal.”  The trial judge was having nothing of it.  She first noted that the amendments had been made to avoid an anticipation rejection.  She then construed the claims, finding that there was no basis in the specification for narrowly construing the claims as urged by the patentee.  She concluded that the patentee had substantively narrowed its claims and that the accused infringer was excused of any liability for any act of infringement that had occurred before the issue date of the reexamination certificate. 

It was a different story for equitable rights.  The trial judge acknowledged that the accused infringer had expended considerable time, effort, and money in the development of its products; but she also found that the accused infringer had also been aware of the patent early in the development and/or sale of its products, and had done virtually nothing to determine whether its products could be considered to infringe on the patent.  She added that has the accused infringer had “long since recouped its development costs, which weighs against granting … equitable intervening right to continue to sell its inventory.”  So, “after balancing the equities,” the judge held that the accused infringer “would not be entitled to equitable intervening rights allowing it to continue the sale of its inventory after [the reexamination certificate issue date], of any product that may be ultimately found to be infringing.”


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