Smucker Loses Reexam Battles, But May Win Litigation War

On Thursday the PTO Board of Appeals affirmed (here, here) the reexamination examiner’s findings that two patents – U.S. Patent Nos. 7,314,328 and 7,325,994 – are valid over certain prior art. The ‘328 and ‘994 patents are owned by Mack-Ray and claim nozzle structures for “a spreader apparatus,” e.g., a squeeze bottle for holding jelly and spreading it on bread. Mack-Ray sued Smucker (the jelly company) for infringing the two patents, and both companies subsequently requested the present reexaminations. What will interest reexamination practitioners, however, is the extreme reluctance of the Board to consider issues not strictly within the PTO’s reexamination jurisdiction.

Mack-Ray sued Smucker for infringement of the patents in May 2008. A few weeks later Smucker sent Mack-Ray a prior art reference, “the Seaquist Application,” that, according to Smucker, disclosed the nozzle structure of Smucker’s accused squeezable bottles. Smucker’s message to Mack-Ray, and later to the PTO, was that if its bottles infringed the ‘328 and ‘994 patents, the Seaquist Application anticipated those patents.

Mack-Ray then requested ex parte reexamination of the patents, stating that a substantial new question of patentability had been raised, but that “Mack-Ray maintains that the ‘328 Patent remains patentable over Seaquest.” The same sentence appears in Mack-Ray’s ‘994 reexamination request. The ‘328 and ‘994 requests also stated that Seaquist fails to disclose the claim requirement of a “side wall having a peripheral outer surface defined by a concave surface that transitions into a convex surface that terminates at the opening,” or the claim requirement of “upper and lower walls [comprising] a concave surface that transitions into a convex surface terminating at the opening.” This concave-convex nozzle structure, on which both Mack-Ray and Smucker focus, is shown in Fig. 4 of the ‘328 and ‘994 patents in which nozzle 11 slopes outwardly and then inwardly at the opening.

Presumably believing that Mack-Ray had not done justice to the disclosure of the Seaquist reference, Smucker requested inter partes reexamination. The PTO granted all four requests; the two ‘328 requests were merged, and the two ‘994 requests were merged. The examiner, however, refused to adopt Smucker’s proposed rejections of the ‘328 and ‘994 claims on the basis of Seaquist, and he closed prosecution, confirming the patentability of the claims. Smucker appealed.

Smucker made two arguments to the Board: one, that the examiner had erred in failing to give the claims their “broadest reasonable construction” or to consider Mack-Ray’s “admissions in litigation,” and the other, that the examiner had erred in not rejecting the claims “in light of Patent Owner’s bringing an infringement lawsuit against the Requester.” Smucker’s argument was essentially that Mack-Ray, by filing its law suit, had admitted that its claims covered the Smucker commercial nozzle structure, and since that accused structure was disclosed in the Seaquist reference, Mack-Ray had admitted that its claims covered a prior art nozzle structure. Mack-Ray’s claims were therefore anticipated by the prior art.

The Board was not buying. First, the Board found that the examiner’s stated reason for not rejecting the claims was sufficient. Though, it was “concise, it is nonetheless complete because it states what was lacking in the cited prior art reference and fully meets the requirements of the Rules.” The Board faulted Smucker because it did “not specifically explain how the WO Seaquist reference discloses the pertinent limitation,” i.e., the limitation of a concave-convex nozzle structure that the examiner and the Board found lacking in the reference.

The Board then addressed Smucker’s “admission” argument. It complained that Smucker had cited no “persuasive authority that mere filing of a law suit is an ‘admission.’” Mack-Ray’s complaint had only stated that it “owns this patent and [that] Smucker’s nozzles infringe.” Mack-Ray’s legal pleadings did “not establish what the claims actually mean or that the advocated construction [of the claims] is correct as a matter of law.”

The Board then made the evidentiary point that “the record is lacking with respect to establishing that the features of the opening in the commercialized dispenser and [the nozzle structure] disclosed in WO Seaquist are identical.” It explained that “[i]t is not the PTO’s responsibility, nor does the PTO have the resources, to evaluate such factual matters.” The elements of Smucker’s assertion of the Seaquist reference “all are a poor fit for the limited evidentiary nature of a reexamination proceeding.” More broadly, “[r]eexaminations are to be based on prior art patents or publications, not on devices such as the commercialized dispenser by Smucker.”

The Board’s complete focus upon the “four corners” of the cited prior art shows that it considers its reexamination subject matter jurisdiction to be extremely circumscribed to consideration of “patents or printed publications” and nothing else. The Board’s discussion of “admissions” raises a number of questions, for instance, why didn’t the Board regard 37 C.F.R. § 1.104(c)(3) to be “persuasive authority” when it provides that an “examiner may rely upon admissions by the applicant, or the patent owner in a reexamination proceeding, as to any matter affecting patentability?” The Board’s analysis might interest patent prosecutors who routinely face rejections based on “applicant’s admissions,” not to mention the applicants who feel obliged to submit hundreds of litigation documents to comply with the duty of disclosure. Similarly surprised will be the litigators who ask whether admissions in pleadings are binding or can be withdrawn, not whether they are admissible. The Board’s refusal, because of lack of resources, to compare Smucker’s accused commercial squeeze bottle with the disclosure of the Seaquist reference is also open to question, especially since there does not appear to be any dispute regarding the structure of Smucker’s commercial nozzle. Reexamination practitioners take note.

But how does the Board’s ruling affect the parties? Mack-Ray’s case in Texas was dismissed without prejudice in 2008 after a sealed stipulation of the parties. Could Mack-Ray now return to Texas and resume its litigation against Smucker? Despite the careful, circumspect treatment of the reexaminations by its attorneys, I suspect that Mack-Ray could not. Having prevailed at the PTO with a determination that the Seaquist nozzle structure does not satisfy its patent claims, it may be difficult to convince the Texas court that Smucker’s commercial nozzle structure also does not satisfy those same patent claims.