Patent Reexams: A Patent Holder's Headache Cured by Contract?

Posted on August 5, 2011 by Matthew Osborne

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.
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Squatting in the Public Domain: Part One

Posted on March 2, 2009 by Bernie Pike

OK, so patent laws are complex and the courts have decided to keep changing the rules.  We have deal with it.  However, I strongly believe and will argue in this blog that strong patent laws accelerate innovation and the limited monopoly provided in exchange for disclosing and enabling an invention can be arranged as a fair exchange.  An ideal patent is balanced such that only “inventions” are found to be patentable and the claim scope granted in the patent is commensurate with the invention.  In such a system, the public would benefit equally with the inventor from disclosure and use of an invention.  However, implementing a system of laws that defines what is useful, new, nonobvious, clear, and enabled and thus eligible for a “right to exclude other” from performing has proven complex.

The complexity, exacerbated by frequent changes in the law by the Supreme Court and the Court of Appeals for the Federal Circuit, has created a grey area between technology that may protected by enforceable patented technology and technology that is in the public domain.  For example, the patent office due to budget problems and frequent examiner turn over has issued patents with questionable validity.  Further, several court decisions have moved enforceable patents from enforceable intellectual property to the public domain.  These patents are left “squatting on the public domain.”

These squatters are costly to business and a drag on the innovation.  Businesses must decide how to deal with these squatters.  Here are the options:
 

  • Design around Squatting Patent;
  • Invalidate the Squatting Patent:
    • Reexamination – ex parte reexamination or inter partes reexamination; or
    • File declaratory judgment suit if threatened;
  • License the Squatting Patent; or
  • Produce the product and risk “infringement suit.”

There certainly is value in owning even unenforceable patents.  In fact, every patent holder should understand whether they are merely squatting in the public domain to understand the value of their own patents.  More later . . .

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