On September 26, 2011 the Federal Circuit overturned a patentee’s $29.4 million infringement verdict and held that cancelling dependent claims in a reexamination without changing the language of the independent claims narrowed the claim scope. Therefore, the accused infringer was protected from infringement damages due to absolute intervening rights. Marine Polymer Tech. v. Hemcon, Inc., Appeal No. 2010-1548 (Fed. Cir. 2011).
Reexamination Was Initiated During the District Court Proceedings and Completed After the Verdict and Final Judgment
The patentee, Marine Polymer, sued Hemcon alleging Hemcon’s wound treatment used an infringing polymer. The parties disputed the meaning of the patent claim term "biocompatible." The district court considered and rejected the proposed constructions of both parties. Instead, the district court adopted its own construction which required in part that the polymer exhibit "no detectable biological reactivity." The court then granted the patentee, Marine Polymer, summary judgment of literal infringement even though the court’s "no detectable biological reactivity" construction was narrower than the patentee’s proposed construction that would have allowed for "acceptably low levels of adverse bioreactivity." A jury trial on damages resulted in a verdict of $29.4 million for the patentee Marine Polymer.
After the grant of summary judgment, but before the jury trial, the accused infringer, Hemcon, initiated a reexamination proceeding at the USPTO. The examiner initially rejected all the claims as obvious over the prior art and noted that the district court’s claim construction of "no detectable biological reactivity" was inconsistent with dependent claims that explicitly allowed some reactivity. In response, Marine Polymer abandoned its proffered district court claim construction of "acceptably low levels of adverse bioreactivity" and instead stated that "the [district court’s] interpretation of the term ‘biocompatible’ should be adopted in this reexamination," and Marine Polymer cancelled the six allegedly inconsistent dependent claims. Marine Polymer did not amend or otherwise change the wording of the claims being litigated. The examiner allowed the remaining claims stating in the reasons for patentability that he "now agrees with the court’s definition of the term biocompatible…" of "no detectable biological reactivity." Thus, the reexamination, which started during the district court litigation, finally concluded after the jury verdict, i.e., the reexamination certificate issued during the course of the Federal Circuit appeal process.
The Federal Circuit Finds a Change of Claim Scope and Absolute Intervening Rights Even Though Not Considered Below
On appeal the accused infringer appellant, Hemcon, asserted that based on the reexamination record, it was entitled to intervening rights and therefore, protected from infringement. The appellant raised this on appeal even though the issue had never been before the district court. The Federal Circuit first noted that the appellee, Marine Polymer, did not contend the Federal Circuit was barred from considering it for the first time on appeal and that in any event an appellate court has "the discretion on appeal to consider events as to which judicial notice is appropriate that arise after a judgment."
The Federal Circuit then began by explaining the doctrine of absolute intervening rights:
The doctrine of absolute intervening rights protects an accused infringer’s right to continue using, selling, or offering to sell specific products covered by reissued or reexamined claims when the particular accused product had been made before the date of the reissue or reexamination and the scope of the claims is substantively changed. 35 U.S.C. § 252; see also 35 U.S.C § 307(b) (applying the provisions of § 252 to "amended or new claim[s] determined to be patentable and incorporated into a patent following a reexamination"). "The specific things made before the date of reissue, which infringe the new reissue claims, are absolutely free of the reissued patent and may be used or sold after the date of the reissue without regard to the patent." BIC Leisure Prods., Inc. v. Windsurfing Int’l, Inc., 1 F.3d 1214, 1220 (Fed. Cir. 1993). In other words, the statute "provides an accused infringer with the absolute right to use or sell a [specific] product that [it] made, used, or purchased before the grant of the reissue[d] [or reexamined] patent." Id.
However, intervening rights do not apply where the accused product "infringes a valid claim of the reissued patent which was in the original patent." 35 U.S.C. § 252. Therefore, intervening rights are available only if the original claims have been "substantively changed," and "in determining whether substantive changes have been made, we must discern whether the scope of the claims [has changed], not merely whether different words are used." Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1346 (Fed. Cir. 1998).
Next, the Court examined the proper construction of "biocompatible" and found that the district court erred by requiring "no detectable biological reactivity" since the claims did originally cover "slight reactivity." However, the patentee, Marine Polymer, had stated during the reexamination that "the [district] Court’s claim construction is consistent with the broadest reasonable interpretation of the claim term in light of the description…" after it had originally advocated a different claim construction to the district court. The Federal Circuit found that by making that reexamination statement, the patentee "imported the district court’s erroneous claim construction on reexamination." Therefore, even though the patentee, Marine Polymer, did not change the original wording of the asserted claims during the reexamination, the Court held that the patentee had narrowed the original claim scope in the course of the reexamination. This meant that the accused infringer was entitled to absolute intervening rights and not liable for any damages prior to the issuance of the reexamination certificate, i.e., the entirety of the $29.4 million jury verdict was vacated. The Court remanded the issue of whether Hemcom could be liable for infringing the narrowed claims subsequent to the reexamination certificate.
The Marine Polymer case reaffirms the belief of many that reexamination proceedings can already be a useful tool for the accused infringer when used properly and timely. The recently passed America Invents Acts provides for additional post-grant PTO procedures. Thus, the scenario of PTO proceedings in addition to or in lieu of district court proceedings will become even more prevalent than they are today.
The Marine Polymer case already underscores the importance of a coordinated and consistent district court litigation and PTO prosecution strategy—particularly as to claim construction and scope. However, with post-grant PTO proceedings sure to increase, many patent litigators will need to enhance their understanding of PTO proceedings and procedures. Similarly, many patent practitioners will need to more fully appreciate the impact that their actions, as well as potential inactions in the initial patent prosecution and any post-grant proceedings, will have on the ultimate patent’s scope, validity, and enforceability. In sum, patent practitioners will need to be even more vigilant and perceptive to draft an initial patent application and prosecute it to issuance in order to obtain a patent that can both survive any post-grant proceedings and be enforceable against infringers.