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On June 20, 2001, the full House Judiciary Committee approved H.R. 1866 and H.R. 1886. These bills, introduced by Rep. Howard Coble, R-N.C., are intended to improve patent re-examination proceedings in the U.S. Patent and Trademark Office. Patent re-examination is an administrative proceeding in which an issued patent is re-examined by the PTO because a “substantial new question of patentablity” arose after the issuance of that patent. Re-examination is designed to protect the public by ferreting out invalid patents without the expense of litigation. In addition, patent re-examination allows courts to refer patent validity questions to an administrative agency with expertise in both the patent laws and the technology involved. Patent re-examination can reinforce investor confidence in the certainty of patent rights by affording an opportunity to review patents of doubtful validity. Furthermore, patent re-examination provides an opportunity to patent holders as well, allowing them to strengthen the validity of a patent if new information comes to light. H.R. 1866 would overrule the U.S. Court of Appeals for the Federal Circuit’s decision in the case of In re Portola Packaging Inc. In that case, the court held that as a matter of law, a substantial new question of patentablity cannot arise if the references asserted by the requestor were already relied upon by the examiner at the time the patent was initially examined. In other words, a re-examination proceeding cannot be granted if the reference that purports to raise a new issue of patentablity was applied by the examiner during the original examination process. Accordingly, the most effective way to meet the substantial new question threshold has been the citation of prior art not previously considered by the examiner. In the Portola Packagingcase, a third-party patent challenger requested a re-examination proceeding, claiming that several references raised new questions of patentablity. One of the references was not cited by the examiner during the original examination process. During the re-examination proceeding, Portola Packaging narrowed its patent claims to define the invention around this new reference. Nevertheless, the PTO rejected the narrowed patent claims in light of two references that were previously considered by the examiner during the original examination. On appeal, the Federal Circuit overturned the rejection, and stated that re-examination should have been terminated once Portola Packaging narrowed its patent claims to define the invention around the newly cited reference. H.R. 1866 specifically provides that the existence of a substantial new question of patentabililty is not precluded by the fact that a patent was previously cited by the examiner. The proposed legislation recognizes that the limitations placed on “a substantial new question of patentabililty” by the Portola Packagingcase were unwarranted. There are many instances where a patent examiner may misconstrue, overlook, or simply fail to understand the relevance of a prior art reference of record. Limiting the ability of patent challengers, and even patent owners, to raise a substantial new question of patentability without citation of newly discovered references reduces the quality of the PTO examination process, and can force challengers to incur the substantial expenses of litigation to expose the invalidity of a patent (or to simply acquiesce to patent owners demands, e.g., if the cost of litigation outweighs the cost of a license.) The Federal Circuit in Portola Packagingpointed out that government officials are presumed to have properly discharged their official duty. The court stated “if the references were in front of the examiner, it must be assumed that he or she reviewed them.” The court’s absolute bar against re-examination relating to references that the examiner is presumed to have reviewed, however, went too far. Patent challengers, and patent owners alike, can benefit from the ability to provoke a re-examination on the basis of references that were already considered by the examiner. To be sure, allowing such re-examinations would reduce legal costs, conserve judicial resources, and provide a quicker way to resolve the validity of patents. H.R. 1886 is another bill aimed at improving the re-examination process. H.R. 1886 would allow third parties to appeal re-examination decisions to the Federal Circuit. Under the current law, third parties cannot appeal re-examination decisions beyond the Board of Patent Appeals and Interferences, the administrative tribunal within the PTO. H.R. 1886 would allow third party appeals to a more impartial body (the Federal Circuit). Many third parties may currently choose to avoid the use of re-examination proceedings because judicial review is not available. Losing an argument before the Board of Patent Appeals and Interferences might strengthen a competitor’s patent. For this reason, some patent challengers avoid the use of the re-examination proceedings, in favor of more costly declaratory judgment actions in District Court, which can be appealed to the Federal Circuit. H.R. 1886 is based on the notion that if re-examination proceedings are designed to protect the public by eliminating invalid patents without the expense of litigation, then the public ought to be able to appeal a negative decision to the ultimate patent authority. This would encourage the public to use re-examination proceedings, rather than the more costly declaratory judgment actions for patent challenges. Judicial resources would also be conserved insofar as declaratory judgment actions are avoided in favor of the re-examination proceedings. Notwithstanding the clear benefits of these new re-examination bills, H.R. 1866 and H.R. 1886 could be viewed by patent owners as limiting their patent rights. Indeed, these bills do provide patent challengers with additional ammunition for patent challenges. In light of recent case law, which imposes substantial limits on the scope of patent coverage, patentees’ concerns about the scope of their patent rights may be well founded. Still, these new re-examination bills could also strengthen patent owners’ rights. To be sure, H.R. 1866 would allow both patentees and patent challengers to initiate re-examination proceedings where a substantial new question of patentablity relates only to references that were already considered by the examiner. Indeed, the availability of such a proceeding could be very advantageous to an owner of a patent of dubious validity. In addition, other patent owners may want to initiate interference proceedings in scenarios where it is almost certain that a re-examination based on references already cited by the PTO would be denied. In those cases, denial of the re-examination proceeding could strengthen the patent owner’s position. In addition, H.R. 1886 may provide benefits to patent owners insofar as it encourages patent challengers to use the re-examination proceedings, rather than the more costly declaratory judgment actions for patent challenges. In sum, these new patent re-examination bills would improve the patent process. H.R. 1866 expands the availability of re-examination proceedings for patent challengers and patentees alike. Moreover, H.R. 1866 should reduce the costs relating to patent challenges and conserve judicial resources by promoting the use of administrative proceedings for patent challenges. H.R. 1886 expands the rights of challengers, allowing challengers to appeal re-examination decisions to the Federal Circuit. This too, should improve the patent process, encouraging patent challenges to use the re-examination proceedings and promoting the correct rule of law as determined by the highest courts. Kelly Patrick Fitzgerald is an associate of the intellectual property law firm of Shumaker & Sieffert. He can be reached at [email protected]. The law firm site is www.ssiplaw.com.

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