It is an increasingly common patent litigation tactic for accused infringers to not only assert declaratory judgment claims for invalidity but also, if at all possible, to challenge the asserted patent at the PTO. There is good reason behind the trend: the statistics for success at the PTO post-AIA favor accused infringers heavily, and courts often are willing to stay patent infringement litigation while the PTO proceeding plays out. However, in the event that a stay is not granted, accused infringers should avoid the temptation of incorporating PTO filings by reference in lieu of preparing a detailed Prior Art Statement, as the saga of Tire Service Equipment Mfg. Co., Inc. v. Gaither Tool Co. continues to demonstrate.
In the ongoing case, Gaither is accused of infringing a patent directed at a method and apparatus for seating a tubeless tire onto a rim. Gaither filed a declaratory judgment of invalidity counterclaim and sent the asserted patent to reexamination at the PTO. The litigation and PTO matters have been moving forward simultaneously.
In the fall of 2014, Gaither was required to serve its prior art statement in the litigation, disclosing every piece of prior art on which it was relying and giving a “complete and detailed explanation of what [it] alleges the prior art shows and how that prior art invalidates the claim(s) asserted.” Pretty standard. What Gaither served, however, was simply a two-page statement that merely incorporated by reference its answer to a single interrogatory and hundreds of pages of materials from the PTO proceedings. Plaintiff moved to strike the statement. The Court declined to strike the original statement, but simultaneously chastised Gaither for failing to comply with the Scheduling Order’s requirements and disallowed Gaither’s subsequent attempt to supplement.
Unfortunately for Gaither, the decision to file a thread-bare, incorporates-by-reference prior art statement has come back to haunt them again. In a January 21, 2016, opinion, Judge Frank granted partial summary judgment against Gaither on its invalidity counterclaim and defense. The Judge once again pointed out the deficiencies of Gaither’s prior art statement, noting that it did not comply with the Scheduling Order’s requirements and lacked “clear citations or cross references to the ‘incorporated’ material.” Noting that it was Gaither’s burden to establish invalidity by clear and convincing evidence, Judge Frank held that the statement’s failure to cite to evidence that would raise a factual dispute as to validity warranted summary judgment. For good measure, the judge went on to assess the information that Gaither attempted to incorporate by reference into its prior art statement – quickly dispatching with the interrogatory response as “vague” and “largely conclusory” and disposing of the PTO materials as inconclusive (the Reexamination is still pending, though a final rejection of some claims has been issued) and applying a different standard on which to assess patent validity. Gaither had attempted to argue that its incorporated materials at least provided notice of specific legal theories of invalidity that it should be allowed to develop at trial – but the Court soundly rejected that argument, too: “[O]n summary judgment, the question is not whether a party is allowed to develop legal theories, but rather whether the party can point to record evidence that raises a genuine issue of material fact for trial. Here, the theories raised are not supported by admissible evidence in the record.”
Perhaps Gaither’s invalidity case was always paper-thin. However, that seems unlikely, particularly given the status of the reexamination proceedings. One wonders whether a better approach to its Prior Art Statement may have at least preserved Gaither’s invalidity claims through to trial. The moral here is simple: cutting corners when putting together your Prior Art Statement may be penny-wise and pound-foolish.