Case Summary: In re Swanson, decided by the Federal Circuit on September 4, 2008

By John M. Carson and William J. Blonigan
Knobbe, Martens, Olson & Bear, LLP

Facts

The patent statutes permit a patent to be reexamined by the United States Patent and Trademark Office (USPTO) where a requestor is able to show a substantial new question of patentability (SNQ). Specifically, 35 U.S.C. § 303 provides a threshold requirement for reexamination that a cited prior art reference must raise a SNQ. In 2002, § 303 was amended to overrule the Federal Circuit's holding in In re Portola Packaging, Inc. that reexamination was not allowed by Congress where a reference's effect on the same claim or a broader claim had already been considered during the original examination. This amendment gave the USPTO clear authority to grant a reexamination based on a reference that it already considered or cited. However, the Federal Circuit had never before evaluated the scope of the SNQ requirement after the 2002 Amendment.

On initial examination of the Swanson patent application, an examiner rejected certain claims as obvious, combining Deutsch, as a secondary reference, with two primary references. The applicant amended the claims and Swanson issued. In litigation with an accused infringer, a district court found, and the Federal Circuit affirmed, that the claims were not invalid over Deutsch.

Post-litigation, in an ex parte reexamination requested by the accused infringer, the USPTO appeals board affirmed an examiner's rejection over Deutsch of the same claims that had been upheld by the courts. The appeals board found that Deutsch raised a SNQ because it was not previously cited with respect to the newly rejected claims or relied upon for the same reason as it was newly relied upon in reexamination. The appeals board also dismissed the patent holder's argument that the litigation affirming Swanson's validity over Deutsch precluded it from finding a SNQ.

Holding

The appeals board's decision was appealed to the Court of Appeals for the Federal Circuit. Given the extremely limited purpose for which the examiner considered Deutsch in the initial examination, the legislative history of § 303, and the varying standards and purposes of patent litigation and reexamination, the Federal Circuit affirmed.

The court held that a court's prior consideration of a prior art reference does not preclude the USPTO from finding the SNQ required to initiate a reexamination proceeding. The Federal Circuit first recognized that while the applicable statute clearly states that the existence of a SNQ is not precluded by the USPTO's previous consideration of a reference, it does not address the preclusive effect of a court's prior consideration of a reference. The court was swayed by the "distinctly different standards, parties, purposes and outcomes" between proceedings in the USPTO and the courts.

In particular, in view of the presumption applied by the courts that an issued patent is valid and the substantially lower standard of proof necessary to invalidate a patent in reexamination proceedings than in court, evidence insufficient to invalidate a patent in a court may be sufficient to do so before the USPTO. Thus, the Federal Circuit concluded that "Congress did not intend a prior court judgment upholding the validity of a claim to prevent the PTO from finding a [SNQ] regarding an issue that has never been considered by the PTO."

The court interpreted a SNQ broadly to refer to "a question which has never been considered" by the USPTO. The court also offered guidance for determining whether a SNQ is raised by a reference previously considered by the USPTO. The court's new SNQ analysis will consider (1) "the context in which the reference was previously considered and the scope of the prior consideration" and (2) "whether the reference is now being considered for a substantially different purpose." The scope of the prior consideration will depend on the examiner's use of the reference in the record.

Comment

Although this case was based on an ex parte reexamination and § 303 of the Patent Act, the analogous section applicable to inter partes reexaminations, § 312, of the Patent Act, was concurrently amended in 2002. Accordingly, there is no apparent reason why the court's decision and reasoning would not also apply to inter partes reexaminations. While the court's holding could, therefore, be read to greatly weaken the SNQ threshold in all reexaminations and enhance the likelihood of a successful request for reexamination based on previously considered prior art, the court cautioned that it would "judiciously interpret" the standard "to prevent abusive tactics and harassment of patentees through reexamination." Nevertheless, the likelihood of successfully raising a SNQ among all reexaminations sought is statistically high, and this case appears only to enhance that likelihood.

About the Authors

John M. Carson is a partner in the San Diego office of Knobbe, Martens, Olson & Bear, LLP. His practice involves representation of clients for acquisition, protection and exploitation of IP rights. His practice is international in scope with an emphasis on the European and Asian IP markets.

William J. Blonigan is an associate in the Irvine office of Knobbe, Martens, Olson & Bear, LLP. He specializes in patent interferences and litigation.