Trial Judge Terminates Injunction After PTO Issues Advisory Action in Reexamination

Japanese language version via WHDA Reexam Blog.

The sequence of events of In re Swanson is well known. A jury determined that the patent was valid and infringed. The trial court’s judgment based on the jury’s verdict was affirmed by the CAFC. The accused infringer then filed a reexamination request, and the PTO rejected the claims. The CAFC affirmed the rejection, despite having earlier found the claims to be valid – the CAFC reconciled these apparently contradictory results by noting that validity is a different issue at the PTO than it is in court. This surprising outcome in Swanson is one of the reasons that reexamination is so popular among accused infringers.

Judge James Cohn of the Southern District of Florida has now taken the Swanson approach one step further – in Flexiteek Americas v. PlasTEAK (Case No. 08-60996-civ-Cohn/Seltzer) he has withdrawn a permanent injunction on basis of an advisory action in a reexamination, which found the patent-in-suit to be invalid.

Flexiteek had accused PlasTEAK of infringing U.S. Patent No. 6,895,881 (for synthetic teak paneling). Before trial, Judge Cohn granted summary judgment against PlasTEAK on the issues of anticipation and obviousness because of its “repeated failures to set forth the basis of these affirmative defenses.” At trial in June 2009, the jury found that Plasteak literally infringed the ‘881 patent.

Judge Cohn enjoined Plasteak in February from further infringement of the ‘881 patent. The judge also acknowledged that PlasTEAK had filed a request for reexamination at the PTO the previous November, and included in the injunction the qualification that “[u]pon any decision by a court or the United States Patent and Trademark Office that renders the ‘881 Patent invalid or unenforceable, PlasTEAK may petition this Court to terminate this Permanent Injunction.”

In the meantime, the reexamination had proceeded quickly: PlasTEAK’s reexamination request was granted, the sole claim was rejected as both anticipated and obvious, the rejection was made final, and on June 3, 2010, the examiner issued an advisory action maintaining the prior rejections.

On the basis of this advisory action, Judge Cohn terminated the injunction. He began his analysis by citing Swanson for the holding that a prior court determination of patent validity is “not binding on subsequent litigation or PTO reexaminations.” Swanson articulated “the difference between a defendant in a civil case failing to meet its burden to demonstrate that a patent is invalid versus a determination by the PTO that a patent is invalid,” Judge Cohn explained. He continued that his own judgment here was even less “binding” than in Swanson because it was based on PlasTEAK’s failure to answer discovery, as opposed to the jury verdict in Swanson.

Judge Cohn added that “the PTO’s Advisory Action is not only the most recent decision regarding the ‘881 Patent’s validity, it is a decision made after a thorough examination of the matter conducted by a body which holds particular expertise in such issues.” He concluded that the PTO’s determination of invalidity should control.

The Flexiteek patentee had argued that it would be injured more by a termination of the injunction than PlasTEAK would be injured by maintenance of the injunction. Judge Cohn disagreed: “it is far more difficult to determine how much money Defendants could have made if the Permanent Injunction stands and the PTO’s decision is upheld, as opposed to the amount of damages suffered by Plaintiff if the Permanent Injunction is terminated and the PTO’s decision is reversed.”

It must be noted that Judge Cohn’s willingness to terminate his own injunction on the basis of the PTO’s advisory action, as opposed to a CAFC ruling of invalidity, is his own. And his decision is certain to be appealed. Still, Judge Cohn’s decision is another step in the shift of authority on patent issues from the courts to the PTO.