Second-Hand Rose

Marine Polymer Technologies v. Hemcon

It turns out that used is better than new for patent holders contesting a claim of intervening rights after patent reexamination.  In Marine Polymer Technologies v. Hemcon, a 6-4 en banc Federal Circuit concluded that intervening rights for an accused infringer apply only when a patent holder actually changes claim language during re-examination-even if arguments made during the reexam change the scope of the claims.  A heated dissent said the majority's opinion "plainly and directly thwarted" the purpose of intervening rights.  The result?  Even with PTO "factory reconditioning," claims that remain unchanged in reexamination just don't qualify as new.

The patent at issue covered a polymer used to treat serious wounds.  Patent holder Marine Polymer accused HemCon of infringement.  Using a different construction of the patent claim "biocompatible" than that argued by the patent holder, the district court, nonetheless, found the patent valid and literally infringed at summary judgment.  The case then went to the jury, which awarded $29.4 million in damages after finding the patent was neither obvious nor anticipated by prior art.

While the patent was still before the district court, HemCon requested a reexamination of the patent.  In reexamination before the PTO, Marine Polymer argued for a narrower interpretation of a key claim term, but - critically - did not amend the actual text of the claim.

HemCon appealed and argued that the verdict should be reversed under the doctrine of intervening rights, which provides that an accused infringer has the right to sell products made before a reexamination certificate was issued if the reexamined patent contains "amended or new claims."  The original Federal Circuit panel agreed with HemCon.  Its decision held that even though Marine Polymer did not change the language of the claims, the claims were essentially amended due to the company's arguments made in reexamination, thereby allowing HemCon to acquire intervening rights.

The en banc majority rejected that interpretation.  The majority held that whether or not Marine Polymer's arguments affected the scope of the claims, "they did not 'amend' those claims for intervening rights purposes or make them 'new,' which is what the statutory language requires."

Reinstating the $29.4 million jury verdict, the en banc majority concluded that intervening rights for an accused infringer apply only when a patent holder actually changes claim language during reexamination.  The majority said that "amended" is a term of art in patent prosecution, including reexamination proceedings, and thus connotes formal changes to the actual language of a claim.

A vigorous dissent complained that the majority's interpretation thwarted the purpose of intervening rights and worried that the decision would encourage patent applicants to engage in "improper strategic behavior."  The majority specifically rejected that concern.

The panel then split 5-5 on whether to affirm the district court's findings that the patent was valid and infringed and that the damages award was reasonable.  The panel also disagreed on whether the district court's claims construction was correct, but because of the equal split, the district court's decision stands.

Marine Polymer offers important lessons on maximizing a patent's Blue Book value during reexamination.  Keeping full value requires that the patentee resist trading-up by trading in current claims for actual amendments.  Instead, to take advantage of the insulation against intervening rights the opinion offers, patentees should stick to arguments made to the patent examiner.  The decision also highlights the potential benefits of a reexamination that occurs concurrently with litigation.  Patentees may be able to argue (but perhaps not textual amendments, depending on whether they are deemed substantial changes) without risk of intervening rights.  Before the en banc opinion, patentees would have been at greater risk of being pulled into reexamination but unable to defend their claims by arguing against asserted rejections without risking losing their claims for past damages.  But, with Marine Polymer, patentees facing reexamination can use argument to dress-up otherwise hand-me-down patent claims-and still get infringement damages from the right vintage.

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