Patent Reexams: A Patent Holder's Headache Cured by Contract?
Can a contract between private parties prevent the PTO from proceeding with a patent reexamination? Callaway Golf thought so when it signed a settlement agreement with a competitor in the golf ball industry. In Callaway Golf Co. v. Kappos, Case No 1:11CV266, 2011 U.S. Dist. LEXIS 82381 (E.D. VA. July 27, 2011) (Brinkema, L.), Judge Brinkema disagreed.
The settlement agreement, entered into to resolve in multiple cases, contained a “Dispute Resolution” clause vesting venue solely in Delaware federal court. Callaway’s competitor and party to the settlement, Acushnet Co., later filed a request for inter partes reexamination. The PTO granted the request based on its determination of a substantial new question of patentability. Callaway unsuccessfully petitioned the PTO to vacate the reexamination, which led to the civil action against Kappos seeking an injunction vacating the reexaminations.
Although Acushnet had breached the settlement agreement by requesting the reexamination, the Court would not order a halt to the PTO proceedings for a multitude of reasons:
- Neither the settlement agreement nor breach of contract ruling bound the PTO as it was not a party in either instance.
- The inter partes reexamination statute imposes a nondiscretionary duty upon the PTO to conduct reexaminations when it receives a request that leads to a substantial new question of patentability.
- Private contracts preventing patent reexaminations are contrary to the public interest in valid patent monopolies.
Among its many reasons for rejecting Callaway’s motion, the Court emphasized that reexaminations, once started, cannot be halted by private contract provisions. As a consolation, Judge Brinkema noted Callaway’s success in its contract claim; though damages for the breach of a license for an invalid patent may not be as high as Callaway would hope.
