Only New or Amended Claims, Not Arguments, Can Trigger Intervening Rights in Patent Reexamination, Says En Banc Federal Circuit

On March 15, 2012, the U.S. Court of Appeals for the Federal Circuit issued its en banc decision in Marine Polymer Technologies, Inc. v. HemCon, Inc., upholding the district court’s $29 million verdict in favor of the patent owner, Marine Polymer, and denying defendant HemCon’s intervening rights defense where Marine Polymer had never formally amended the asserted patent claims during reexamination. The en banc ruling overturns an earlier decision by a three-judge panel, which held that intervening rights accrue when the patent owner limits the claim scope by argument rather than by formal amendment to the claims.

While the en banc decision is a victory for patent owners whose arguments alone will no longer trigger intervening rights (rights that eliminate some or all of the damages period), patent owners must still be mindful, as the court pointed out, because such arguments can still affect the proper interpretation and effective scope of their claims.

Background

Marine Polymer sued HemCon for infringement of a patent that claims “biocompatible” compositions for use in various industrial, pharmaceutical, and biomedical applications. The meaning of the term “biocompatible” was relevant in the infringement litigation, as well as in the parallel reexamination proceeding that HemCon initiated against the same patent in the USPTO. The district court and USPTO examiner initially adopted different meanings for the term “biocompatible.” At the urging of Marine Polymer, the examiner eventually adopted the district court’s narrower interpretation and confirmed the validity of the original patent claims without any change to the claim language. In the parallel litigation, a jury found in favor of Marine Polymer, resulting in a $29 million damages award and a permanent injunction against HemCon.

Panel Decision

On appeal, a split 2-1 panel of the Federal Circuit reversed the district court on the grounds that HemCon had acquired “intervening rights” against the asserted patent claims under 35 U.S.C. § 307(b) due to Marine Polymer’s arguments regarding those claims in the reexamination. The panel majority agreed with the USPTO examiner’s broader construction of “biocompatible” and further held that Marine Polymer’s arguments to narrow that construction in the reexamination constituted a disavowal of claim scope. This disavowal, the panel majority held, was equivalent to an amendment for purposes of triggering intervening rights under § 307(b). The intervening rights eliminated all damages for the period prior to issuance of the reexamination certificate (and intervening rights may provide equitable rights going forward as determined by a court).

The Federal Circuit granted Marine Polymer’s petition for rehearing en banc on January 20, 2012.

En Banc Majority

A 6-4 majority of the en banc Court sided with the patent owner, Marine Polymer, and held that “intervening rights do not apply to claims that have not been amended and are not new.” (Maj. op. 4.) The relevant statute, 35 U.S.C. § 307(b), states: “Any proposed amended or new claim determined to be patentable and incorporated into a patent following a reexamination proceeding will have the same effect as that specified in section 252 of this title for reissued patents on the right of any person who made, purchased, or used within the United States, or imported into the United States, anything patented by such proposed amended or new claim, or who made substantial preparation for the same, prior to issuance of a certificate under the provisions of subsection (a) of this section” (emphasis added).

In interpreting § 307(b), the majority stated that the first question when assessing whether intervening rights arose from a reexamination is whether the asserted claim is “amended or new”; if the answer is no, that ends the inquiry. A claim is “amended” under § 307(b) only if, according to the majority, the textual language of the claim asserted in the litigation had been changed in the reexamination. A patent owner’s arguments bearing on the effective scope of an asserted claim, without an actual claim language change, do not trigger intervening rights as to that claim. Only if the claim asserted in the litigation is new or has been amended, the majority held, may the court proceed to the second step in the analysis and assess the substantive effect of any such change under § 252 (the statutory section outlining the effect of intervening rights).

Here, as to the claims asserted in the litigation, because Marine Polymer had neither added those claims in the reexamination nor changed the textual language of those claims in the reexamination, that was the end of the inquiry for purposes of HemCon’s claim to intervening rights. The full damages period against HemCom was thus restored.

En Banc Dissent

Four judges (Dyk, Gajarsa, Reyna, and Wallach) dissented on the issue of intervening rights. In their view, a patent claim can be “amended” within the meaning of § 307(b) even without a change to the claim language. For purposes of intervening rights, the dissent argued that a patent owner’s argument that rises to the level of a clear and unambiguous disclaimer or disavowal of claim scope is the same as an amendment to the actual claim language.

In support, the dissent cited other statutes, such as the Flammable Fabrics Act (15 U.S.C. § 1193) and the Administrative Procedure Act (5 U.S.C. § 551), where courts have held that legal instruments can be constructively or effectively “amended” without an explicit language change. The dissent also criticized the majority’s decision on policy grounds, which the dissent expects will encourage patent owners to amend claims by argument rather than formal methods in an attempt to avoid intervening rights.

Conclusion

Patent owners in reexamination can now take some comfort in knowing that their arguments alone will not trigger intervening rights, although such statements will remain relevant for claim scope. Parties challenging patents through reexamination also will need to closely consider how they approach arguments made by patent owners during prosecution. Indeed, as the en banc majority pointed out, “patent applicants’ actions and arguments during prosecution, including prosecution in a reexamination proceeding, can affect the proper interpretation and effective scope of their claims.” (Maj. op. 26.) Also, given the sharp split in the Federal Circuit’s decision, there may be an attempt to have the case taken up by the Supreme Court.

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Andrew S. Baluch
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Pavan K. Agarwal
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Jeanne M. Gills
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Chicago, Illinois
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