• Federal Circuit: There are Some Defenses an Accused Infringer Cannot Raise
  • November 2, 2008 | Author: James B. Lampert
  • Law Firm: Wilmer Cutler Pickering Hale and Dorr LLP - Boston Office
  • On September 22, 2008, the Federal Circuit held that "improper revival" is not one of the defenses listed in 35 U.S.C. § 282 and thus "may not be raised as a defense in an action involving the validity or infringement of a patent." Aristocrat Technologies Australia v. International Game Technologies (Fed. Cir. Dkt. No. 2008-1016). The decision has broad implications, will make it more difficult to defend against an action for patent infringement, and raises several questions. What possible invalidity defenses other than "improper revival" cannot be raised? If the Patent and Trademark Office (PTO) has applied the wrong legal standard in making what the Federal Circuit called a "procedural decision," and thus grants a patent that should not have been granted, is that "procedural decision" subject to any review? International Game Technologies (IGT) has asked the Federal Circuit to reconsider the decision en banc.

    In Aristocrat, the patent applicant missed its national filing fee deadline and petitioned the PTO to revive its patent application, saying that the late payment was "unintentional." The PTO granted the petition, even though the apparently pertinent statute (35 U.S.C. § 371(d)) says that "failure to comply with [the payment requirement] shall be regarded as abandonment . . . , unless it be shown . . . that such failure to comply was unavoidable," and later issued the patent. Aristocrat (ATA) subsequently sued IGT for infringement. In its defense, IGT argued that the PTO erroneously granted the petition for revival because ATA had the burden of proving the delay was "unavoidable" rather than merely "unintentional." The district court agreed, and held the patent invalid. On appeal, the Federal Circuit reversed; it never reached the "unavoidable" vs. "unintentional" question, but held that "improper revival" was simply not a defense that an accused infringer could raise.

    The Federal Circuit said its "conclusion that improper revival is not a defense comports with . . . Magnivision, Inc v. Bonneau Co., 115 F.3d 956 (Fed. Cir. 1997)," in which it held that  "[p]rocedural lapses during examination, should they occur, do not provide grounds for invalidity." Citing a fear that "accused infringers would inundate the courts with arguments relating to every minor transgression they could comb from the file wrapper," the Court relied on Magnivision to suggest that "improper revival" was not only an unavailable defense under § 282, but was also unreviewable: "[a]bsent proof of inequitable conduct, the examiner's or the applicant's absolute compliance with the internal rules of patent examination becomes irrelevant after the patent has issued." The Court also cited Ferguson Beauregard/Logic Controls v. Mega Sys., LLC, 350 F.3d 1327, 1343-44 (Fed. Cir. 2003). In Ferguson, the district court had said that "it had no authority to take action based on the allegedly 'improper' revival of the 048 patent." However, this issue apparently was not pressed on appeal, and the Federal Circuit holding was that the district court properly "declin[ed] to address the alleged inequitable conduct issue because it was not properly raised."

    The Court acknowledged that, in Quantum Corp. v. Rodime, PLC, 65 F.3d 1577, 1584 (Fed. Cir. 1995), it had said that "Section 282 does not state that the list of invalidity defenses contained therein are the only ones available," and had held that a "patentee who improperly enlarged the scope of its claims during reexamination, in violation of 35 U.S.C. § 305, subjected itself to a defense of invalidity." To reconcile its decision in Quantum with its holding in Aristocrat, the Court said that Quantum was "inapposite to this appeal" because the "primary concern in Quantum . . . that failure to impose invalidity for violation of the statute would encourage noncompliance . . . is simply not present here." However, the Quantum Court said this in connection with rejecting the patentee's argument that its patent should be remanded to the PTO; and not in considering whether a section of the statute other than § 282 could provide a proper defense.

    Moreover, the Court in Quantum expressed a second concern: not permitting the defense would "render [] the prohibition in [the statute] meaningless." The Aristocrat decision does not say how this concern is addressed by refusing to consider IGT's "improper revival" defense that was based on a specific provision of the patent statute; nor is it clear why the question of whether the PTO adhered to a statutory standard should be treated the same as the issue in Magnivision, whether there was "compliance with the internal rules of patent examination."

    Absent inequitable conduct, a patent challenger may be unable to raise any defenses based on what the Federal Circuit deems to be a "procedural decision" made by the PTO. Not only does this limit the defenses available to a patent challenger, it also reduces accountability by making PTO "procedural decisions" effectively unreviewable. Whether the Federal Circuit agrees to an en banc rehearing, and what it eventually decides, remain to be seen.