A splintered U.S. Court of Appeals for the Federal Circuit, sitting en banc, reversed on earlier panel decision and concluded that intervening rights cannot be applied to claims whose text was not amended or that were not added during reexamination. In so holding, the Court rejected the reasoning of a prior panel that intervening rights could be applied based on claim scope limiting arguments made during reexamination. Marine Polymer Techs., Inc., v. HemCon, Inc., Case No. 10-1548 (Fed. Cir., Mar. 15, 2012) (en banc).

Background

In the court below, a jury found that HemCon had infringed Marine Polymer’s directed to preparations of p-GlcNAc, a naturally occurring polymer produced by organisms such as arthropods, fungi and microalgae.

The patent claims place particular importance on “biocompatible” compositions of p-GlcNAc. The specification describes four tests that can be used to assess the biocompatibility of a substance and states that biocompatibility requirements are met if a given test substance shows no more than mild or slight biological reactivity. The district court construed the claim term “biocompatible p-GlcNAc as p-GlcNAc “with low variability, high purity and no detectable biological reactivity as determined by biocompatibility tests.”

In the midst of the district court litigation, HemCon filed a request for ex parte reexamination of the Marine Polymer patent. During the ensuing proceedings, the examiner adopted a construction of “biocompatible” different from the district court’s, concluding that under its broadest reasonable interpretation, the term meant “low variability, high purity and little or no detectable reactivity.” (emphasis added). The examiner noted that several dependent claims required test scores that correspond to slight or mild reactivity. The examiner explained that the district court’s construction, requiring “no detectable biological reactivity,” conflicted with those claims, while his interpretation avoided the inconsistency. Using his broader construction, the examiner rejected all of the claims based on the prior art.

In response Marine Polymer cancelled the dependent claims, arguing that the inconsistency had been eliminated and the district court’s construction should be adopted in view of the teachings in the specification. The examiner agreed and confirmed the patentability of the remaining claims. The U.S. Patent and Trademark Office (USPTO) issued a notice of intent to issue a reexamination certificate after the district court had already entered final judgment in the infringement action.

Intervening Rights

As explained by the Court, there are two kinds of intervening rights: intervening rights that abrogate liability for infringing claims added to or modified from the original patent if the accused products were made or used before the reissue, often referred to as absolute intervening rights; and intervening rights that apply as a matter of judicial discretion to mitigate liability for infringing such claims even as to products made or used after the reissue if the accused infringer made substantial preparations for the infringing activities prior to reissue, often referred to as equitable intervening rights.

Under 35 U.S.C. § 252, intervening rights apply only when the reissued claims are not “substantially identical” to the original claims. 35 U.S.C. § 307(b) extends intervening rights to ex parte reexamination proceedings. Consequently, both absolute and equitable intervening rights are available for patents that have undergone ex parte reexamination.

Prior Panel’s Decision

In the prior panel decision (IP Update, Vol. 14, No. 10), authored by Judge Dyk, the Court held that the district court’s claim construction was incorrect and should have allowed for p-GlcNAc that exhibited some biological reactivity. As a result, the claim scope vis a vis the correct construction was narrowed during reexamination by Marine Polymer’s arguments and cancellation of the dependent claims. Because of this narrowing, the Court found that the reexamined claims were not substantially identical to the original claims, reversed the district court’s judgment of infringement on the ground of absolute intervening rights and remanded to the district to determine whether HemCon is entitled to equitable intervening rights.

Judge Lourie dissented, finding it improper for the appellate court to decide the issue of intervening rights in the first instance without the benefit of the district court’s view. In addition, even if proper, Judge Lourie believed that intervening rights should not have applied because the textual language of the claims had not been changed and no new claims were added.

En Banc Decision

Two competing opinions were authored by the en banc Court. Judge Lourie and four judges would have adopted the district court’s “no detectable biological reactivity” construction, while Judge Dyk and four other judges would have reversed the district court’s claim construction and applied a broader “little or no detectable biological reactivity” construction. Circuit Judges Moore and O’Malley did not participate in the decision. As the court was equally divided on the correct claim construction, the district court was affirmed.

When considering the intervening rights issue, however, Judge Linn switched sides, creating a 6-4 majority for the opinion of Judge Lourie. The majority found the language of § 307(b) to be clear and unambiguous:

[T]he plain directive of the governing statute [§ 307] before us does not permit HemCon to invoke intervening rights against claims that the PTO confirmed on reexamination to be patentable as originally issued. To be sure, patent applicants’ actions and arguments during prosecution, including prosecution in a reexamination proceeding, can affect the proper interpretation and effective scope of their claims. But in rejecting HemCon's request for intervening rights, we are not here interpreting claims. Rather, we are interpreting a statute that provides for intervening rights following reexamination only as to “amended or new” claims. The asserted claims of the ’245 patent are neither.

Judge Dyk’s dissent chastises the majority for considering the intervening rights issue without additional briefing or oral argument. Further, the dissent characterizes the majority’s ruling as dicta, because affirmance of the district court’s claim construction means that the scope of the claims was never altered during reexamination and the issue of intervening rights should have been mooted.

On the merits of the intervening rights issue, the dissent argues that “the ‘amended or new’ language in § 307(b) was clearly intended to have the same meaning as ‘substantially identical’ in § 252.”

Practice Note: Although the majority’s opinion is based on the language of § 307(b), which deals only with ex parte reexaminations, the “amended or new” language is also used in the patent statute dealing with inter partes reexaminations and the portions of the America Invents Act (AIA) that provide for inter partes review and post-grant review. Thus, the Court’s analysis is expected to be equally applicable to those proceedings.

It remains unclear, however, whether argument-based intervening rights might still be applied to reissue proceedings, where intervening rights is governed solely by § 252. In that case, the original panel’s and dissent’s analysis would seem to be more persuasive.

Only time will tell if a litigant will be able to successfully argue that (based on the affirmance of the district court’s original claim construction) the intervening rights decision here is only dicta and not entitled to the effect of a precedential en banc decision (and therefore not binding on future panels or entitled to deference by a future en banc panel).