En Banc Federal Circuit Requires Reexam Claim Amendments for Intervening Rights

On March 15, 2012, the en banc Federal Circuit issued a divided decision in Marine Polymer Technologies, Inc. v. HemCon, Inc. that vacated the September 2011 panel decision and upheld the district court’s $29.4 million verdict in favor of the patent owner. In a section of the majority opinion that the dissent characterizes as dicta, the majority revisited the panel decision that an intervening rights defense can arise from arguments made during a reexamination proceeding, and decided that intervening rights can arise only if claims are amended or added during reexamination. This decision gives stakeholders a bright line rule to apply, but may not be consistent with other doctrine relating to claim construction and prosecution history estoppel.

The Patent At Issue

The patent at issue was Marine Polymer’s U.S. Patent 6,864,245, directed to “biocompatible” preparations of poly-β-1→4-N-acetylglucosamine (“p-GlcNAc”). Claim 1 recites:

1. A biocompatible poly-β-1→4-N-acetylglucosamine comprising up to about 150,000 N-acetylglucosamine monosaccharides covalently attached in a conformation and having a molecular weight of up to about 30 million daltons.

As summarized in the majority opinion, “[p]urified p-GlcNAc has utility in various industrial, pharmaceutical, and biomedical applications,” and “promotes hemostasis (i.e., stoppage of bleeding or hemorrhage) and is therefore useful in trauma units for treating serious wounds.”

The Meaning Of “Biocompatible”

Marine Polymer brought an infringement action against HemCon in March of 2006.  During the litigation, the meaning of “biocompatible” was a central issue in dispute.

Marine Polymer argued that the term should be construed to mean “biomedically pure [p-GlcNAc] that reproducibly exhibits acceptably low levels of adverse bioreactivity, as determined by biocompatibility tests.” 

HemCon argued that the term should be construed to mean p-GlcNAc that had been “harvested from plant microalgae,” or, broadly, “suited for biomedical applications.”

The district court construed the term in light of “the ’245 patent’s claim language, written description, and prosecution history,” as p-GlcNAc “with low variability, high purity, and no detectable biological reactivity as determined by biocompatibility tests.”

Armed with this claim construction, HemCon filed a request for ex parte reexamination against the ’245 patent in August of 2009, citing ten prior art documents as raising substantial new questions of patentability given the district court’s construction of “biocompatible.”

The USPTO examiner idependently construed the claims, adopting a “broadest reasonable interpretation” that the term means “low variability, high purity, and little or no detectable reactivity.” Based on this construction, the examiner rejected all of the originally granted claims as invalid in view of the prior art.

In response, Marine Polymer canceled the dependent claims that were inconsistent with the district court’s claim construction (e.g., that recited embodiments with some detectable biological reactivity) and urged the Examiner to adopt the district court’s claim construction.

Subsequently, the examiner issued a Reexamination Certificate “which canceled dependent claims 4, 5, 13, 14, 21, and 22 and confirmed the patentability of claims 1–3, 6–12, and 15–20″ as originally granted.

Meanwhile, back at the district court, a jury upheld the validity of the ’245 patent, found that HemCon infringed, and awarded damages of $29.4 million. The court denied HemCon’s motions for judgment as a matter of law and entered a permanent injunction.

Intervening Rights

On appeal, HemCon invoked the intervening rights provisions of 35 USC § 307, based on prosecution during the reexamination proceeding. The relevant portion of the statute states:

(b) 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.

35 USC § 252 states:

The surrender of the original patent shall take effect upon the issue of the reissued patent, and every reissued patent shall have the same effect and operation in law, on the trial of actions for causes thereafter arising, as if the same had been originally granted in such amended form, but in so far as the claims of the original and reissued patents are substantially identical, such surrender shall not affect any action then pending nor abate any cause of action then existing, and the reissued patent, to the extent that its claims are substantially identical with the original patent, shall constitute a continuation thereof and have effect continuously from the date of the original patent.

A reissued patent shall not abridge or affect the right of any person or that person’s successors in business who, prior to the grant of a reissue, made, purchased, offered to sell, or used within the United States, or imported into the United States, anything patented by the reissued patent, to continue the use of, to offer to sell, or to sell to others to be used, offered for sale, or sold, the specific thing so made, purchased, offered for sale, used, or imported unless the making, using, offering for sale, or selling of such thing infringes a valid claim of the reissued patent which was in the original patent. The court before which such matter is in question may provide for the continued manufacture, use, offer for sale, or sale of the thing made, purchased, offered for sale, used, or imported as specified, or for the manufacture, use, offer for sale, or sale in the United States of which substantial preparation was made before the grant of the reissue, and the court may also provide for the continued practice of any process patented by the reissue that is practiced, or for the practice of which substantial preparation was made, before the grant of the reissue, to the extent and under such terms as the court deems equitable for the protection of investments made or business commenced before the grant of the reissue.

HemCon argued, and the original panel of Federal Circuit judges agreed, that the course of prosecution during the reexamination effectively changed the scope of the claims, giving rise to intervening rights.  Before the en banc court, HemCon argued that the cancelation of the dependent claims and adoption of the district court’s “narrower” definition of “biocompatible” resulted in “a substantive change in the scope of each remaining claim.” In particular, where the originally granted claims allowed for “some reactivity,” the claims after reexamination permitted “no detectable biological reactivity.”

Marine Polymer argued that “intervening rights cannot apply with respect to claims that have not been amended or newly introduced in the reexamination proceeding.”

The Majority Decision

Judge Lourie wrote the majority opinion for the court, which was fully joined by Chief Judge Rader and Judges Newman, Bryson and Prost, and which was joined by Judge Linn for Part II (the intervening rights section). In Part I, the court affirmed the district court’s judgments as to validity, infringement and damages.

Judge Lourie begins the analysis, noting:

The doctrine of intervening rights first developed as courts recognized that permitting substantive changes to the scope of patent claims through post-issuance procedures left “the door . . . open for gross injustice” where a third party, having already begun to make, use, or sell a given article, finds its previously lawful activities rendered newly infringing under a modified patent.

He also noted:

Intervening rights do not accrue, however, where the accused product or activity infringes a claim that existed in the original patent and remains “without substantive change” after reissue.

The majority opinion interprets § 307 as follows:

[A]fter a patent emerges from reexamination, the statute makes available absolute and equitable intervening rights to the same extent provided in the reissue statute, but only with respect to “amended or new” claims in the reexamined patent.

Thus, the majority finds:

HemCon’s intervening rights argument must fail because it disregards the plain and unambiguous language of § 307(b) which applies to only “amended or new” claims.

The majority addressed HemCon’s position that “arguments made during prosecution can affect the ultimate meaning of a claim term—and thus the ‘scope of a claim,’” but found no basis in § 307(b) for intervening rights stemming from arguments alone.

The majority also addressed HemCon’s arguments that “shrewd patentees” could rely on arguments rather than amendments during reexamination to avoid giving rise to intervening rights. The court expressed doubt that a USPTO examiner would accept “argument alone” if amendments really were required for patentability, and noted that “if an argument does suffice to overcome a rejection, it is probably because the claims at issue are not unallowable.” The majority also noted that “gamesmanship concerns [could] run both ways.” For example, “[u]nder HemCon’s rule,” a reexamination requestor could acquire intervening rights by raising specious issues that “necessarily” would trigger “substantive arguments in defending the claims.” All in all, the majority concluded that “the fear of gamesmanship” did not justify a decision “contrary to the plain meaning of the statute.”

In sum, the plain directive of the governing statute before us does not permit HemCon to invoke intervening rights against claims that the PTO confirmed on reexamination to be patentable as originally issued.

The Dissenting Opinion

Judge Dyk wrote a dissenting opinion which was fully joined by Judges Gajarsa, Reyna and Wallach, and which was joined by Judge Linn for Parts I-II.

After expressing his dissenting views on the claim construction issue, Judge Dyk took the majority to task for opining on an issue that was not really before the court. With the affirmance of the district court’s claim construction of the original claims, “the original and reexamined claims are identical in scope, and there is thus no issue of intervening rights.”

Not withstanding his view that the court should not have addressed the issue at all, Judge Dyk explained in Part III of his opinion why “the majority is incorrect as a matter statutory interpretation.” Briefly, Judge Dyk focuses on the “substantially identical” language of 35 USC § 252 and notes that the claims of the ’245 patent were not “substantially identical” after reexamination because of the arguments and claim amendments (e.g., the cancelation of dependent claims) that were made during the reexamination proceeding.  Judge Dyk cited other instances (from other statutes in other areas of law) where “amendments” were found to arise “without a language change.”

Judge Dyk also criticized the majority view as contrary to the intent of Congress, and took a different view on the “gamesmanship” issue.

Allowing patent owners to avoid creating intervening rights by amending claims by argument is an abuse of the reexamination process and undermines the purpose of intervening rights.

Drawing The Right Line?

While I understand Judge Dyk’s concerns that this bright line rule gives patent holders a strong incentive to overcome rejections based on argument rather than amendments, I agree with the majority that USPTO examiners are not likely to accept arguments when claim amendments are required. I also believe that a different rule would result in a tremendous amount of resources being spent on the issue of whether statements made during a reexamination proceeding did or did not give rise to prosecution history estoppel that effectively altered the scope of the claims, so as to potentially support an intervening rights defense.

I also note the tension evident here between parallel district court and reexamination proceedings, where the court has construed the claims in accordance with judicial claim construction doctrine while the USPTO examiner is applying a “broadest reasonable interpretation,” which is likely to be broader. It will be interesting to see how these different claim construction paradigms play out under the estoppel provisions of the new Inter Partes Review and Post Grant Review proceedings.