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TC helps establish precedent on reexamination estoppel

Jason Schwent, CIPP/US October 6, 2011

In a case of first impression handed down earlier this week, the Court of Appeals for the Federal Circuit ruled that the estoppel provisions of 35 U.S.C. § 315(c) apply “only after all appeal rights are exhausted, including appeals to [the Federal Circuit].” Thompson Coburn, on behalf of its clients Bunzl USA, Inc. and Bunzl Processor Distribution, LLC, asked the Court to overturn a trial court’s conclusion that the estoppel provisions applied against Bunzl. The trial court had concluded that the estoppel provision took effect even though a reexamination proceeding was still pending on appeal.

In 2008, Bettcher Industries, Inc. sued Bunzl USA, Inc. and Bunzl Processor Distribution, LLC in the Northern District of Ohio alleging that rotary knife blades sold by Bunzl infringed a patent owned by Bettcher. Bunzl asserted that its rotary knife blades did not infringe the Bettcher patent and that the patent is invalid in view of prior art.

Shortly after suit was filed, Bunzl filed a request for inter partes reexamination asserting that Bettcher’s patent is invalid due to obviousness. The examiner granted Bunzl’s request for inter partes reexamination and initially determined that Bettcher’s patent claims were unpatentable in view of the cited references. The examiner handling the reexamination, however, eventually changed his mind and issued a final office action confirming the patentability of Bettcher’s patent claims. Bunzl appealed the examiner’s decision to the Board of Patent Appeals and Interferences.

During pre-trial proceedings, Bettcher argued that because of the examiner’s decision, Bunzl should be estopped from arguing any of the points raised in, or that could have been raised in, Bunzl’s reexamination. According to Bettcher, the examiner’s final office action constituted a “final determination” under 35 U.S.C. § 315(c), triggering that statute’s estoppel provisions. Bunzl argued that a “final determination” under 35 U.S.C. § 315(c) could not occur until all appeals (both to the Board of Patent Appeals and Interferences as well as to the Federal Circuit) were exhausted or until the time for appeal expired. The trial court agreed with Bettcher and prohibited Bunzl from raising any of its obviousness invalidity arguments during trial.

Following a jury trial, the trial court entered a judgment of no infringement and no invalidity which prompted both parties to appeal.

On appeal, the Federal Circuit rejected Bettcher’s request for a new trial on the issue of infringement. The panel, however, vacated the lower court’s denial of Bunzl’s request for a new trial on the issue of obviousness.

According to the Federal Circuit, the trial court erred by concluding that Bunzl was estopped from presenting the obviousness arguments it had, or could have, raised in the inter partes reexamination proceeding while an appeal of the examiner’s decision was still pending. The Federal Circuit ruled, as Bunzl had argued, that estoppel was triggered not when a patent examination was completed, but only after all appeal rights, including an appeal to the Federal Circuit had been exhausted.

Because the trial court had improperly prevented Bunzl from raising its obviousness arguments at trial, the Federal Circuit remanded the case to the trial court to see whether a new trial on the issue of obviousness was warranted under the circumstances of the case.

The lower court case is Bettcher Industries, Inc. v. Bunzl USA, Inc., et al., 2010 WL 2507318 (N.D. Ohio Jun 15, 2010). The Federal Circuit decision is Bettcher Industries, Inc. v. Bunzl USA, Inc., et al., 2011 WL 4537797 (Fed. Cir. 2011).