Addressing the pre-AIA estoppel provision of 35 USC § 317(b), the US Court of Appeals for the Federal Circuit affirmed a Patent Trial and Appeal Board (PTAB) decision not to terminate all pending re-examinations of a patent after the party that requested one of the re-examinations received an adverse ruling as to specific claims of that patent in a co-pending litigation. In re: Affinity Labs of Texas, LLC,Case Nos. 16-1092; -1172 (Fed Cir., May 5, 2017) (Chen, J).

Section 317(b) states:

Once a final decision is entered against a party in a civil action . . . that the party has not sustained its burden of proving invalidity of a patent claim in suit . . . then neither that party 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 the civil action . . . and an inter partes reexamination requested by that party or its privies on the basis of such issue may not thereafter be maintained by the Office.

Affinity Labs of Texas is the owner of a patent against which Richard King petitioned for ex parte re-examination of all claims. After Affinity brought an infringement action against Volkswagen Group of America in district court, it also requested inter partes re-examination of all claims of the patent. Apple also requested inter partes re-examination after Affinity brought an action against it.

The US Patent and Trademark Office (PTO) granted all three re-examination requests and merged them into one re-examination proceeding. While the merged re-examination was pending, Apple and Affinity reached a settlement and filed a joint stipulation of dismissal at the district court. Apple then filed a notice of non-participation in the re-examination. Volkswagen, however, received an adverse final judgment in its district court case, upholding the validity of claims 28 and 35 of the patent. Volkswagen eventually settled with Affinity, and the parties filed a joint stipulation of dismissal with the district court. Volkswagen filed a notice of non-participation in the re-examination. Affinity petitioned the PTO to terminate the entire merged re-examination proceedings under § 317(b).

The PTO denied Affinity’s request to terminate the re-examinations but did severe the Volkswagen re-examination from the merged proceeding. The PTO also held that the estoppel provision of § 317(b) applied to claims 28 and 35, and therefore no rejection could be maintained against those claims in the Volkswagen re-examination. The Examiner proceeded to evaluate the Volkswagen re-examination separately from the merged Apple/King re-examination and found numerous claims of the patent to be unpatentable in each re-examination proceeding. Affinity appealed to the PTAB, which affirmed the Examiner’s rejections. Affinity then appealed to the Federal Circuit.

On appeal, Affinity argued that the estoppel provision of § 317(b) required the PTO to terminate all three re-examinations after Volkswagen received an adverse ruling as to claims 28 and 35 in the co-pending litigation. The Court disagreed, noting that the estoppel provision speaks to “any patent claim,” as opposed to the patent as a whole, and this claim-by-claim approach applied to both a request for inter partes re-examination and the maintenance of a pending inter partes re-examination. Therefore, the Court affirmed the PTO’s decision to proceed with the Volkswagen re-examination as well as its decision that no rejection could be maintained against claims 28 and 35 of the patent in the Volkswagen re-examination. The Court also concluded that the final decision in the Volkswagen litigation did not have a preclusive effect on the King/Apple re-examination. The Court noted that § 317(b) applies only to inter partes re-examinations and not ex parte re-examinations, and therefore had no bearing on the ex parte King re-examination. The Court further noted that the estoppel provision applies only to a requester that was a party to the civil action or its privies. Because Apple was not a party to the Volkswagen litigation and there was no evidence that Apple was Volkswagen’s privy, the Court affirmed the PTO’s decision not to terminate the inter partes re-examination requested by Apple.