The U.S. Court of Appeals for the Federal Circuit affirmed the validity of a reexamination proceeding, despite a reference used to reject the claims having been previously considered by both the Patent and Trademark Office (PTO), a district court and the Federal Circuit. In re Swanson, Case No. 07-1534 (Fed. Cir., Sept. 4, 2008) (Gajarsa, J.).

The patent at issue relates to a method in which a test strip receives a fluid that flows along the test strip and through zones which test for the presence of a substance. During the initial PTO examination, a number of claims were rejected as obvious, the PTO relying on a prior art patent, Deutsch, as a secondary reference against features of a dependent claim. After the claims were amended, a patent issued, was assigned to SurModics and was exclusively licensed to Abbott Laboratories. After Abbott sued Syntron Bioresearch on the patent, the defendant asserted patent claims were invalid both for obviousness and anticipation in view of Deutsch. However, a jury found the claims not invalid over Deutsch, and the decision was upheld on appeal at the Federal Circuit. After the appeal, Syntron filed a request for ex parte reexamination, which resulted in claims being rejected as anticipated by Deutsch. The PTO Board of Appeals upheld the rejections and Abbott appealed to the Federal Circuit.

On appeal Abbott argued that the reexamination failed to meet the threshold requirement of a “substantial new question of patentability” in view of previous consideration of Deutsch in the initial PTO examination and the earlier court proceedings.

The Federal Circuit held that court proceedings do not affect the determination of a “substantial new question of patentability,” further clarifying its decision in Ethicon v. Quigg. Specifically, the Federal Circuit explained that a prior court judgment upholding the validity of a patent claim over a reference does not prevent a reexamination of the same claim in view of the same reference, even where a court has previously reviewed the specific issues raised in reexamination. Instead, the determination of a “substantial new question of patentability” is strictly based on whether the PTO—and no other party—has considered a given question of patentability. The different burden of proof before a court and the PTO dictate this result. In court, a patent enjoys a presumption of validity, a significant hurdle which must be overcome by “clear and convincing” evidence. In contrast, the PTO gives claims “their broadest reasonable interpretation, consistent with the specification” and only requires a preponderance of evidence supporting invalidity, expanding the universe of prior art that may be invalidate claims. In view of the purpose of reexamination, a finding of validity by a court should not bar reexamination, as the finding may rest on a presumption of validity given to a patent that was issued by the PTO in error. The Federal Circuit rejected SurModics’ arguments that the reexamination statute— “allowing an executive agency to find patent claims invalid after an Article III court has upheld their validity—violates the constitutionally mandated separation of powers,” again based on the different burdens of proof. However, the Federal Circuit commented that “[i]n contrast, an attempt to reopen a final federal court judgment of infringement on the basis of a reexamination finding of invalidity might raise constitutional problems.”

The Federal Circuit further noted that in view of the 2002 amendments to the patent laws, even prior consideration of a reference by the PTO does not bar reexamination on the basis of that reference. Instead, whether a reexamination may proceed is based on whether a particular question of patentability, not just a particular reference, was previously considered by the PTO. Determination of the scope of consideration turns on review of the record of the prior examination, i.e., to determine how a given reference was used by the PTO. For example, the record may reflect that the examiner did not properly understand the reference or did not consider a portion of the reference. In this particular case, Deutsch was previously cited for an “extremely limited purpose.” Thus, the issue of whether Deutsch anticipated or made obvious the claims as a whole was a “substantial new question of patentability never addressed by the PTO.” As a result, reexamination seeking review of this broader question of patentability was deemed proper.