Re-examination vs. Invalidity Proceedings: A Question of Judicial Supremacy

Re-examination vs. Invalidity Proceedings: A Question of Judicial Supremacy

Re-examination and invalidity proceedings each play an important role in the patent system, offering different avenues that narrow or invalidate existing patent claims. However, a lack of clarity on how the two provisions co-exist has led to litigation which this editor believes could be avoided through legislative amendments to the American patent regime. Similar issues exist in the Canadian jurisprudence, the Canadian Patent Act does not adequately provide a framework for how this co-existence should be dealt with by the Courts.


Re-examination provides a summary means of challenging a patent, limited to certain grounds supported by affidavit evidence. If the requester is able to demonstrate that there is a 'substantial new question of patentability', a re-examination proceeds akin to the initial examination of the patent during application. (This standard has recently changed in respect of one of the methods of re-examination in the United States but the change is not material for the purposes of this article) A examiner re-examines the patent and the examiner's decision may be appealed by the patent owner to the Board of Patent Appeals and Interferences (the Board). The decision of the Board can then be appealed to the Federal Circuit.

Invalidity proceedings, on the other hand, are initiated as a part of court actions and generally involve a full trial process. Litigants have the benefit of oral evidence, discovery and a hearing before the Court but the process is also more expensive and longer in duration.

Given their differences, challengers are left with a tactical decision that is based upon the particular circumstances of the case and their strategy. In certain situations, one is clearly superior to the other, but what happens when both re-examination and invalidity proceedings are used together?

In a recent case, In Re Baxter (Baxter), the United States Court of Appeals for the Federal Circuit considered this issue, grappling with a conflict between administrative and judicial decision-makers, the potential for abuses of process and the importance of consistency and finality in Court decisions.

Baxter concerned a dispute regarding Baxter International’s patent for a “Method and Apparatus for Kidney Dialysis”, U.S. Patent 5,247,434 (the ‘434 patent). The particular claims in question related to the means and interface used for the control of certain functions of the dialysis machine.

One of Baxter’s competitors, Fresenius, challenged Baxter’s claims through both an invalidity proceeding and a subsequent re-examination. Fresenius’ initial action failed as a matter of law to show clear and convincing evidence and this outcome was affirmed on appeal to the Federal Circuit. The Federal Circuit noted that “Fresenius failed to present any evidence-let alone substantial evidence-that the structure corresponding to the means for delivering dialysate limitation.... existed in the prior art”.

In parallel with the litigation, Fresenius initiated a re-examination of the ‘434 patent. Fresenius relied upon references that were not raised in the action and the examiner found that these references rendered obvious the claims in question.

The examiner’s conclusion was appealed to the Board and the Director of the PTO ordered the Board to consider the Federal Circuit’s decision in the Fresenius litigation. The Board affirmed the examiner’s rejections and noted that “a lower standard of proof and the broadest reasonable interpretation standard of claim construction apply at the PTO and therefore the agency is not bound by the court’s determination”.


The Decision of the Federal Circuit

Baxter appealed the decision of the Board to affirm the examiner’s rejection of the claims to the Federal Circuit. On first glance, this appears to be a dilemma: the Federal Circuit, in the Fresenius litigation, has ruled in favour of the validity of the claims but the Board and the PTO has decided against the validity of the claims in question.

In this peculiar situation, the majority decision of the Federal Circuit reviewed the evidence and the possible conflict between the invalidity proceeding and re-examination. The majority was sensitive to the potential for conflicting outcomes and noted that “when a party who has lost in a court proceeding challenging a patent...provokes a re-examination in the PTO, using the same presentations and arguments, even with a more lenient standard of proof, the PTO ideally should not arrive at a different conclusion”. The majority found that in this case, the examiner’s rejections were based on references that were “not squarely at issue during the trial on the invalidity issues”, and therefore relied upon new prior art. The majority upheld the rejections but commented the tactical nature of Fresenius’ in obiter: “Why Fresenius did not present that prior art before the district court we do not know”.

Newman J., in her minority decision, dissented. Newman J. was primarily concerned with the erosion of judicial supremacy by an administrative decision maker. She noting that upholding the administrative decision effectively violated the constitutional authority of the Courts and the rules of estoppel and preclusion. She argued that the principles of judicial finality should have applied “in all forums” and thus should have precluded Fresenius from raising the matter again on the issues of fact and law based on the logic that they had “one good bite at the apple and should not be given a second”.

She was concerned about the fairness of the process, leading to the potential harassment of patent owners through multiple lawsuits that end up wasting judicial resources and incurring unwarranted costs to the parties. She supported re-examination as an ‘efficient and economical alternative to litigation’ as a part of the ‘tactical armory’ of litigators but stressed that its purpose should not distorted to enable administrative agencies to override the final decisions of the Courts.



This case is reminiscent of an earlier case in the Federal Circuit, In Re Construction Equipment Company (CEC), where a similar fact situation arose. In CEC, the re-examination was conducted years after the litigation confirmed the validity of the claims and applied the same references in a different manner. The decision in CEC was also similar: the majority upheld the rejection of the claims with Newman J. providing a strongly worded dissent raising the same issues as in Baxter, namely arguing for preclusion, finality and concerns about the overstepping of administrative authority.

Both the majority and Newman J. have valid arguments: while re-examination is designed to further the purpose of patent law by removing deadwood claims from the Patent Register, it is important to ensure that the overall process is still fair to both the patent owners and the patent challengers.

Extrapolating from the majority decisions in both Baxter and CEC, a challenger would be able to use re-examination to effectively obtain a ‘second chance’ to challenge the validity of the claims using the same references, so long as the arguments utilize the references in a different manner from that in the original invalidity proceeding.

To resolve some of the concerns that were raised in this decision, this editor recommends that further guidance be provided through the following legislative amendments:

1. Where concurrent invalidity proceedings and re-examinations have been initiated and not yet resolved, either party should be entitled to request a stay of the later of the proceedings or re-examination absent a reason to the contrary;

2. Where a claim has been challenged by a prior re-examination or invalidity proceeding, the subsequent judge or examiner must consider the prior decision in coming to their own decision regarding the validity of the claim; and

3. Where a claim has been challenged by a prior re-examination or invalidity proceeding, the challenging party should be precluded from doing so unless they indicate the reasons that (a) the new arguments are substantially different than the earlier arguments and (b) why the new arguments were not raised earlier.

The goal of these amendments would be to provide judges and examiners a better framework to deal with the co-existence of the different provisions. A level of discretion is required to ensure that there is the necessary latitude to prevent abuses of process while at the same time allowing for the consideration of new arguments that have merit.

Further, the stipulations that the challenger provide reasons if the validity had been upheld in a prior re-examination / invalidity proceeding are designed to provide decision makers with more information that they can use to decide whether the new argument is bona fide or if it should be precluded on grounds of abuse of process.


Brian Chau is a recent graduate of Osgoode Hall Law School.

Editor's note (19/12/12): A more detailed version of this piece has been published in the Intellectual Property Journal (IPJ), "Re-Visiting Patent Re-Examination under Sections 48.1-48.5", 24 I.P.J. 279.