Court Excludes PTAB Decision That Conflicts With Prior Final District Court Judgment

September 23, 2014

In Affinity Labs of Texas, LLC v. Ford Motor Co., Affinity moved in limine to exclude any reference to the decision of the PTAB regarding an inter partes reexamination filed by a defendant in an earlier case involving a related patent, i.e.., one stemming from the same application and thus sharing the same specification. In the prior decision, the PTAB found that the specification lacked written description for the term "soft button." Affinity argued that the PTAB's decision should be excluded because it conflicted with a prior decision of the district court on the same issue.

In the prior proceedings, the PTO rejected the claims of the related patent in an inter partes reexamination filed three months after the patent was added to the litigation. Subsequently, a jury found the patent infringed and not invalid for lack of written description. Appeal was taken and during the pendency of the appeal, the parties settled. The appeal then was dismissed and 5 months later the patent owner moved to terminate the inter partes reexamination. Eight months later the PTO terminated reexamination. Nearly a year after that termination, the PTAB affirmed the examiner's rejection based on lack of written description. Defendant Ford sought to introduce this decision before the jury.

The Court began its discussion of the issue with reference to the Federal Circuit's opinion in Fresenius USA, Inc. v. Baxter Int'l, Inc., 721 F.3d 1330 (Fed. Cir. 2013):

When confronted with conflict between a district court judgment and a PTO Order, the Federal Circuit has indicated that the first pathway that leads to a final decision determines the outcome of future proceedings. Fresenius, 721 F.3d at 1347. In Fresenius, there were parallel proceedings in both the Northern District of California and the PTO.

* * *

In Fresenius the Federal Circuit decided whether cancellation of claims by the PTO, as affirmed by the Federal Circuit, was binding on the infringement litigation in the district court, which was pending on appeal in the Circuit Court. Id. at 1332. The Circuit Court looked to general res judicata principles, and determined that the decision of the PTO was final, and the district court litigation was still on appeal. Therefore the Federal Circuit held that the patent was invalid and vacated the decision of the district court.

Turning to the case at hand, the district court entered a final judgment that the patent was not invalid for lack of written description. However, unlike the Fresenius case, the PTAB decision holding that the patent was invalid for lack of written description was not final because the patent owner has petitioned the PTAB for rehearing and the Federal Circuit also has not decided this issue.

The court concluded that the PTAB decision was not binding on the instant case and that the "danger of confusion of the issues and misleading the jury substantially outweighs the probative value of informing the jury of the PTAB decision":

The jury will be informed that since the PTO issued the patent in suit, it is presumed, under law passed by Congress, to be valid. They will be instructed that there must be clear and convincing evidence to find invalidity. Ford would like to inform that jury that another division of the PTO found that other similar claims of a related patent were held to be invalid, because of lack of written description. Affinity could then presumably point to some dozen other patents, stemming from the same application and argue that the PTO found adequate written description in each of those cases. How is the jury to evaluate all this? Combine the information on presumed validity in the Federal Judicial Center video on patents with the number of examiners who supposedly carefully examined the claims of the various patents in the family and found adequate written description, and weigh that against the order of the three Administrative PTAB judges? What weight does the jury give to this court's instructions about clear and convincing evidence when Ford is pointing to "three, count them, three" other judges who have already decided the issue before the jury?

**********

This case illustrates a district court's application of the Federal Circuit's Fresenius decision to hold that, in cases involving parallel proceedings in the PTO and district court, the first pathway that leads to a final decision determines the outcome of future proceedings.

Affinity Labs of Texas, LLC v. Ford Motor Co., Case No. 1-12-cv-580, Doc. 226 (Sept. 8, 2014) (Clark, J.).

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. The authors represent inventors, patent owners and technology companies in patent licensing and litigation in U.S. District Courts and in the United States Patent and Trademark Office, including numerous IPRs currently pending before the PTAB. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Greg Cordrey at 949.623.7236 or GCordrey@jmbm.com.