Brian Chau is a JD candidate at Osgoode Hall Law School.
A recent case, In Re Construction Equipment Company, came through the US Court of Appeals, Federal Circuit, which highlighted potential conflicts between findings of validity that arise from re-examination on the one hand and an invalidity action on the other. This case appeared to be rather odd: the Federal Circuit confirmed the validity of certain patent claims in a matter in 1998, and then under subsequent re-examination, found that the same claims were invalid due to issues of obviousness 9 years later. The re-examination was appealed to the Federal Circuit.
On first glance, this is problematic: the same issues seem to be re-litigated, with a different result – was this simply the re-litigation of an issue that was already litigated to finality in prior judicial proceedings? Would this be a situation where the PTO overstepped its authority during the re-examination and ignored a final judgement of the Court? If so, should the principles of res judicata or abuse of process prevent the reconsideration of these issues?
For those of us unfamiliar with re-examination proceedings (they are seldom applied in Canada, but the more popular ex parte re-examination in the United States is very similar to the Canadian re-examination), re-examination is a relatively summary and expedient proceeding whereby a party files a request to the USPTO to re-examine an already-granted patent. The re-examination is limited in focus, only considering anticipation and obviousness challenges based upon published documentation, patents and patent applications that should have been considered during the initial examination of the patent prior to granting. This is in contrast to determinations of patent validity in full-blown court actions, where parties may challenge patent claims on a broader range of grounds, undergo discovery and the Court conducts hearings where the evidence is subject to examination and cross-examination. The majority decision was very short and is silent about the prior invalidity action and the potential for an issue of res judicata or abuse of process, upholding the finding by the Board of Patent Appeals and Interferences (BPAI) that the patent claims were obvious.
However, a fiery dissent was lodged by Newman J. who considered the case to be one where the principles of res judicata and issue preclusion should have prevented Powerscreen from requesting re-examination. In her dissent, she considered the various policy reasons involved: the public interest in finality, the conservation of scarce judicial resources, and the ability of an administrative agency to override a judicial adjudication.
These are all valid concerns – but let’s look carefully to see whether this situation should trigger these principles. Here, the same prior art is cited against the same patent, and the challenge is also on obviousness grounds. However, there is a key difference: The prior art, while considered previously, was applied in a different way than in the previous litigation in an obviousness challenge. In light of these circumstances, it may be interpreted as Newman J. proposing that, in the interests of finality, where prior art has been raised in prior proceedings, it should not be open to re-litigation. As Professer Vaver notes in his book, this line of thinking is similar to the current English rule and thus, similarly fails to take into consideration the countervailing public interest in intellectual property litigation.
As such, instead of applying a res judicata in this situation, it may be better to consider the abuse of process doctrine when determining when an issue is open to reconsideration. The abuse of process doctrine is, similar to res judicata, designed to provide finality in litigation and is a broader remedy where a court will preclude re-consideration of an issue where not only is there re-litigation but also an additional serious element where it is shown that the process which is to serve justice is being abused to work an injustice.
In this scenario, there is a strong public interest in ensuring that patentees are not granted exclusive rights against the public where their patent claims were either obvious or anticipated. If we accept the reasoning in Newman J.’s dissent, in the interests of finality, the patent system could reward unworthy claimants and penalize defendants who did not or could not exhaustively investigate their assertions. As such, while Newman J. does have some strong policy concerns, a more nuanced approach should be taken rather than instituting a complete bar on re-litigating on already-considered prior art.
There are certain situations where the courts should refuse to re-litigate, but these should only apply where there is a clear abuse of process, for example, where the parties are attempting to re-litigate on exactly the same issues, with arguments that do not provide any more merit than those already argued. While this may open the doors to some overlapping arguments in litigation, a less mechanistic approach to re-litigation would nonetheless help ensure that strong invalidity arguments are not unnecessarily barred simply because the prior art had already been considered in another light. Given the facts of this case, it appears that the balance is in favour of re-considering these issues.
Details of the Case
The original invalidity action and subsequent re-examination proceedings concerned US patent 5,234,564, a patent owned by the Construction Equipment Company (CEC) concerning a vehicle for screening rocks and plant matter (among other things).
In 1998, CEC sued Powerscreen for infringement. The Federal Circuit court confirmed the validity and corresponding willful infringement of certain claims in the ‘564 patent.
In 2007, a third party requester (possibly Powerscreen) requested an ex parte re-examination of the ‘564 patent, raising questions of patentability based upon previously considered prior art from the 1998 decision, applying the prior art in a different way than was alleged in 1998 (citing the same references and additional references, but placing strongest reliance on the same references that had been cited in the litigation). The PTO began a re-examination, finding that the request raised a substantial new question and in spite of amendments and submissions by CEC, the examiner rejected all the claims as obvious. CEC then appealed to the BPAI, who upheld the decision of the PTO. CEC then appealed to the Federal Circuit.