On October 3, 2011, in a matter of first impression, the United
States Court of Appeals for the Federal Circuit identified the
trigger for applying estoppel under 35 U.S.C. § 315(c) when a
patent-in-suit is also subject to an inter partes reexamination at
the U.S. Patent Office. The bottom line: All appeals in the
reexamination must first be exhausted. Bettcher Industries, Inc. v. Bunzl USA,
Inc., Fed. Cir., No. 2011-1038 (Oct. 3, 2011).
Section 315(c) estops a third party who successfully requests an
inter partes reexamination from relying in litigation on certain
invalidity arguments when the patent claims in the reexamination
have been "finally determined" to be valid. In this case,
the District Court for the Northern District of Ohio had held that
the estoppel provision of § 315(c) applies at the conclusion
of an inter partes reexamination when an examiner issues the Right
of Appeal Notice. But the Federal Circuit reversed and held that
estoppel under § 315(c) applies only after all appeal rights
have been exhausted, including appeal to the Federal Circuit.
Id. at 26.
What This Means for You
Faced with full-blown infringement litigation, accused
infringers sometimes prefer to challenge the validity of a patent
in an inter partes proceeding, often because this can be a less
expensive option than litigation. But the benefits of reexamination
bring with them the risk of estoppel. Following the
Bettcher decision, however, this estoppel will not be
triggered unless and until the challenging party has exhausted its
right to appeal, which can take six years, on average. District
courts will likely be less inclined to grant a stay of the
litigation in light of this time horizon, making it more likely
that expenses will increase with parallel proceedings rather than
decrease.
Under the "America Invents Act," on the other hand,
estoppel in an inter partes review proceeding will apply as soon as
the Patent Trials and Appeals Board (PTAB) issues a written
determination — regardless of appeals. 35 U.S.C.
§315(e). Even though the parties will be able to appeal the
PTAB's determination to the Federal Circuit, estoppel will
prevent the challenger from maintaining a challenge at the district
court level on the same grounds that were or reasonably could have
been raised in the review proceeding. Thus, it should be possible
to reach the point of estoppel within 12 - 18 months instead of six
years. With resolution or estoppel that close in time, district
courts may be more inclined to stay parallel litigation, and cost
savings may become more achievable.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.