When does Inter Partes Reexamination Estoppel Kick In?

| October 4, 2011

The CAFC’s decision yesterday in Bettcher Industries v. Bunzl gives much needed guidance on the relationship between patent infringement actions in District Court and parallel reexamination proceedings at the PTO.  The specific holding is that the inter partes reexamination estoppel provision of 35 U.S.C. § 315(c) takes effect when “all appeal right [in the reexamination] are exhausted, including appeals to” the CAFC – an inter partes reexamination requester may not re-litigate in a later infringement action, any invalidity issue that it raised and lost, or could have raised but did not, in its inter partes reexamination. 

Bettcher sued Bunzl for infringement of a patent for a rotary knife.  Running parallel to Bettcher’s infringement action was an inter partes reexamination requested by Bunzl.  At trial in the infringement action, the judge ruled that Bunzl was estopped under 35 U.S.C. § 315(c) to present prior art that had been asserted in the reexamination because the examiner had already determined that the patent was valid despite Bunzl’s prior art.  The judge reasoned that the examiner’s validity determination was final because the examiner had issued a Right of Appeal Notice (a notice roughly analogous to an Advisory Action in original prosecution).  At the end of the trial, the jury concluded that Bettcher’s patent was not invalid and not infringed. 

Each party appealed to the CAFC on the issue on which it had lost: Bettcher on the infringement issue and Bunzl on the validity issue.  The CAFC affirmed both the validity and the non-infringement determinations.  Of interest to reexamination practitioners, however, is the CAFC’s decision that the § 315(c) estoppel applies only after all possible appeals have been completed; the examiner’s Right of Appeal Notice did not trigger an estoppel and the trial judge should not have excluded Bunzl’s prior art.  Accordingly, the CAFC remanded the case to the trial court for consideration of the prior art that had been excluded at trial.

Section 315(c) reads:

 (c) CIVIL ACTION.- A third-party requester whose request for an inter partes reexamination results in an order under section 313 is estopped from asserting at a later time, in any civil action arising in whole or in part under section 1338 of title 28, the invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings. This subsection does not prevent the assertion of invalidity based on newly discovered prior art unavailable to the third-party requester and the Patent and Trademark Office at the time of the inter partes reexamination proceedings.

(Emphasis added).  The issue for the CAFC was therefore whether issuance of a Right of Appeal Notice, based an examiner’s confirmation of the patent’s validity, was “a final determination.” 

The CAFC found that it was not.  It first noted that reexamination certificates, which mark the conclusion of an inter partes reexamination under § 316(a), issue “when the time for appeal has expired or any appeal proceeding has terminated,” without distinguishing between appeals to the PTO Board and appeals to the CAFC. 

Next, the CAFC cited § 317(a) which prevents a party from requesting a second inter partes reexamination under a certificate issues in its first inter partes reexamination, and § 317(b) which limits a party’s right to request inter partes reexamination after it has lost either in court or in an earlier inter partes reexamination (after losing on the validity issue either in court or in an inter partes reexamination, “neither [the accused infringer] nor its privies may thereafter request an inter partes reexamination of any such patent claim on the basis of issues which that party or its privies raised or could have raised in such civil action or inter partes reexamination proceeding”).  The CAFC stated that the “parallel structure of subsections (a) and (b) suggests that, while subsection (a) applies during the pendency of reexamination proceedings, subsection (b) applies only when reexamination and all appeals have terminated.”  Since § 317(b) is analogous to § 315(c), the estoppel in the latter should also arise only after all appeals are completed.  The CAFC added that its conclusion on this point is consistent with the relevant passages from the legislative history (145 Cong. Rec. 29276, 29973 (1999) and from the MPEP (§ 2686.04). 

Finally, the CAFC argued that the PTO Board’s power to issue new rejections during an appeal suggests that the examiner’s rejection is not a “final determination” for purposes of § 315(c).  The CAFC therefore remanded the case to the trial court with instructions to consider Bunzl’s prior art.

The decision in Bettcher Industries will obviously bind the trial courts on the issue of what constitutes “a final determination” under § 315(c).  But it also might have some persuasive affect on judges on what, in other contexts, makes a PTO action “final.”  For instance, a judge might feel “a tug” from the reasoning in Bettcher Industries to maintain a reexamination stay until all appeals in the reexamination have been completed.  Or a judge might be reluctant to take an examiner’s action into account for issues such as willfulness and claim construction, until all appeals are over.

Category: Estoppel

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