Intervening Rights Unavailable Unless Claims Amended in Reexamination, Split Court Says

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By Tony Dutra  

Patent claims resulting after reexamination do not invoke an infringer's intervening rights unless the claims are new or amended, a 6-4 en banc U.S. Court of Appeals for the Federal Circuit ruled March 15 (Marine Polymer Technologies Inc. v. Hemcon Inc., Fed. Cir., No. 2010-1548, 3/15/12).

The en banc court thus affirmed a lower court's infringement finding, a $30 million damages award, and an injunction against a polymer manufacturer, as it reversed a Sept. 26 split Federal Circuit panel decision.

The dissent concluded that, even though the asserted claims themselves were not amended in reexamination, the patentee's reexamination arguments and cancellation of six other claims—which successfully overcame an invalidity rejection—effectively narrowed the scope of the claims that remained.

The court was actually equally divided 5-5 on the question of whether the district court had properly construed the claims at issue, with the dissent chastising the majority's reliance on a single example in the specification as support for the patentee's preferred construction.

‘Biocompatible' Definition Disagreement

Marine Polymer Technologies Inc. owns a patent (6,864,245) which claims a polymer, p-GlcNAc, useful in trauma units for treating serious wounds. Independent Claim 6 requires that the polymer be “biocompatible” in the sense of not causing negative reactions when the polymer is placed in contact with human tissue. Dependent Claims 12 and 20 required no biological reactivity as measured by a score of zero on an elution test.

Marine Polymer sued HemCon Inc. in the U.S. District Court for the District of New Hampshire, asserting Claims 6, 12, and 20, and four other claims that did not specify any biocompatibility scores on the test. It did not assert six other ‘245 patent claims that allowed for elution test scores of non-zero “slight” or “mild” reactivity.

Subsequently, HemCon requested reexamination of the ‘245 patent in the Patent and Trademark Office. The examiner concluded that “biocompatible” meant “low variability, high purity, and little or no detectable reactivity” and made a preliminary rejection for obviousness as a result. Marine Polymer cancelled the six non-zero reactivity claims to overcome the rejection, convincing the examiner to delete “little” from the construed term.

In the court litigation, Judge Joseph A. DiClerico Jr. construed “biocompatible” to mean “low variability, high purity, and no detectable biological reactivity as determined by biocompatibility tests,” in agreement with the examiner's eventual construction, but also noting that the specification identified three other tests. He granted summary judgment of infringement of the seven asserted claims and subsequently upheld a jury's findings on validity and damages of just under $30 million.

DiClerico's final judgment, including an injunction, was published Sept. 22, 2010. The PTO's notice of intent to issue the reexamination certificate was published Nov. 3, 2010, and the certificate issued March 29, 2011.

HemCon appealed the infringement finding, claiming that Marine Polymer changed the scope of the patent claims in reexamination, such that HemCon was entitled to intervening rights under 35 U.S.C. §252.

Court Agrees to Reconsider En Banc

A 2-1 Federal Circuit panel reversed, holding that absolute intervening rights—relevant to products sold before reexamination—can apply when a patent's claim scope is narrowed in reexamination, even though the claims themselves were not amended. 659 F.3d 1084, 100 USPQ2d 1257 (Fed. Cir. 2011).

The majority remanded only to request additional factual findings on issues that would determine HemCon's entitlement to equitable intervening rights as to products made prior to the reexamination but not sold as of the reissue date.

In dissent, Judge Alan D. Lourie argued that intervening rights apply only to amended or new claims.

In a Jan. 20 order, the court granted the patent owner's petition for en banc rehearing and vacated the panel opinion. The court allowed amicus briefs per a Jan. 30 order, but did not conduct additional oral arguments.

Three briefs were filed supporting Marine Polymer's position—by Soverain Software LLC and Tessera Inc.; by Sealy Corp.; and by the Biotechnology Industry Organization and Pharmaceutical Research and Manufacturers of America. A group led by Hewlett-Packard Co. and another group led by Geico Corp. filed briefs supporting Hemcon.

Court Split on Claim Construction

Lourie wrote the current en banc majority opinion, first affirming the district court's claim construction which, again, was made prior to the completion of the reexamination.

Lourie and four of his colleagues found support for the lower court's judgment in the specification, noting a specific reference that “the p-GlcNAc of the invention exhibits no detectable biological reactivity.”

The court rejected Hemcon's argument that claim differentiation principles apply, since two dependent claims were phrased as “The biocompatible [p-GlcNAc] of [other claims] which has an elution test score of 0.”

“As we have held, claim differentiation is ‘not a hard and fast rule and will be overcome by a contrary construction dictated by the written description or prosecution history,' ” the court said, quoting from Seachange International Inc. v. C-COR Inc., 413 F.3d 1361, 1369, 75 USPQ2d 1385 (Fed. Cir. 2005). “Such description appears in the specification here,” the court explained.

The court affirmed the infringement judgment accordingly, as it determined that Hemcon's infringement appeal hinged on reversing the claim construction.

As to damages, the court rejected Hemcon's argument that the jury improperly relied on the entire market value of its p-GLcNAc sales as a royalty base. In fact, at trial, both parties' experts used total sales as the base, differing only in royalty rates that should apply.

In addition, the court said that the district court had substantial evidence that biocompatible p-GLcNAc was the basis for customer demand of Hemcon's infringing products, justifying use of the entire market value as a royalty base under Lucent Technologies Inc. v. Gateway Inc., 580 F.3d 1301, 92 USPQ2d 1555 (Fed. Cir. 2009).

Chief Judge Randall R. Rader and Judges Pauline Newman, William C. Bryson, and Sharon Prost joined the opinion as to claim construction, infringement, and damages.

Statute Plain and Unambiguous on Intervening Rights

The majority, now joined by Judge Richard Linn, next turned to the issue of intervening rights. The court held that even if the claim construction was erroneous, “as an alternative ground for decision, … HemCon's intervening rights argument must fail because it disregards the plain and unambiguous language of §307(b).”

The availability of intervening rights to an infringer is codified under Section 252, “Effect of reissue,” and referenced by Section 307(b) on “Certificate of patentability, unpatentability, and claim cancellation” under an ex parte reexamination:


Any proposed amended or new claim determined to be patentable and incorporated into a patent following a reexamination proceeding will have the same effect as that specified in section 252 of this title for reissued patents on the right of any person who made, purchased, or used within the United States, or imported into the United States, anything patented by such proposed amended or new claim, or who made substantial preparation for the same, prior to issuance of a certificate under the provisions of subsection (a) of this section.

“Thus, after a patent emerges from reexamination, the statute makes available absolute and equitable intervening rights to the same extent provided in the reissue statute, but only with respect to ‘amended or new' claims in the reexamined patent,” the majority reasoned.

The court rejected Hemcon's argument that the determining factor is the scope of the reexamined claims even without amendment.

The court characterized its precedents on the issue, most notably Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1346-47, 49 USPQ2d 1199 (Fed. Cir. 1998), as calling for a two-step analysis. Hemcon's argument is directed to the second step, whether the reissued claims reflect a substantive change, the court said. However, it added, “under §307(b), the first question when assessing whether intervening rights arose from a reexamination is whether the asserted claim is ‘amended or new'; if the answer is no, that ends the inquiry.”

Consequently, because the asserted claims in the case are neither new or amended, the court affirmed the final judgment of the district court.

Dissent on Claim Construction

Judge Timothy B. Dyk, author of the original panel's majority opinion, now wrote in dissent.

First, as to the claim construction issue, the dissent said, “Nowhere does the specification disavow or disclaim from the scope of the claims polymers exhibiting [non-zero] levels of reactivity.”

The dissent made the claim differentiation argument rejected by the majority and noted that the six original dependent claims that claimed biocompatible p-GLcNAc with “slight” or “mild” reactivity. “If ‘biocompatible' requires that there be no reactivity, but these dependent claims require slight or mild reactivity, they are nullified and become utterly meaningless,” the dissent argued.

Dyk further criticized the majority for relying on one example out of 18 in the specification to support its claim construction. “Judge Lourie's new approach to claim construction would enable patentees to eliminate questions of validity by narrowing claims in accordance with a preferred embodiment or single example, while also allowing alleged infringers to narrow claims beyond their valid scope to avoid infringement,” he said. “That approach cannot be correct.”

In the majority opinion, Lourie countered: “In fact there is only one example of the claimed p-GlcNAc in the specification; the rest of the [dissent's] cited ‘examples' provide various methods of purifying, characterizing, or using the disclosed product.”

Linn, Judges Jimmie V. Reyna and Evan J. Wallach, and Senior Judge Arthur J. Gajarsa—who participated in the original panel—joined the dissent on this point.

Dissent on Intervening Rights

Linn did not join the other four dissenters as to intervening rights, though.

The dissent first said that, inasmuch as the district court did not consider the question of intervening rights, “there is nothing to affirm in that respect, … and there is thus no issue of intervening rights and no need for the majority to offer ‘an alternative ground for decision.' ” The dissent characterized the majority's claim construction decision as nonprecedential and its intervening rights discussion as dictum.

Nevertheless, the dissent contended that the Federal Circuit should be able to “consider the changes to a patent effected by reexamination,” and thus that the issue was properly before the court.

Relying on the history of intervening rights prior to the inclusion of Section 252 in the Patent Act of 1952, the dissent expanded its coverage to encompass situations in which “a written document can be ‘amended' without a language change.” The dissent drew support from court decisions outside the patent context, however.

The dissent further noted that, in two 19th century decisions, the U.S. Supreme Court held that a change to a patent specification affected the scope of the invention even though the claims were not altered. “If a change in the language of the specification could result in an ‘amended' claim, it is difficult to see why a change in claim scope achieved by argument cannot also result in an amended claim,” Dyk said.

Citing the amicus briefs supporting Hemcon, he decried the likelihood of “mischief” and “gamesmanship” that will ensue based on the majority's opinion. “The majority's construction of the statute defeats the public notice function of the patent system by encouraging patentees to define the scope of the invention outside of the claims themselves, thus not apprising accused infringers of what is available to them,” he said.

Judges Kimberly A. Moore and Kathleen M. O'Malley did not participate in the decision.

Brian M. Poissant of Jones Day, New York, represented Marine Polymer. HemCon was represented by Raymond A. Kurz of Hogan Lovells, Washington, D.C.

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