By: Audrey A. Millemann

In Marine Polymer Technologies, Inc. v. HemCon, Inc., 2012 U.S. App. LEXIS 5567 (Fed. Cir., March 15, 2012), the Federal Circuit Court of Appeals reversed an earlier decision by a panel of the court that had created uncertainty as to the rights of an infringer resulting from patent reexamination proceedings.  The court held in a sharply split en banc decision that intervening rights arise in a patent reexamination only when the claims have been amended or are new.  The decision overturned the panel’s September 2011 decision that held intervening rights arise even if the patent owner does not amend the claims, but merely even makes an argument that changes the meaning of the claims.  The decision also reinstated a $29.4 million jury verdict for the plaintiff.

Marine Polymer owned a patent that covered a composition that was used in biomedical and pharmaceutical applications, including the treatment of wounds.  The claims contained the limitation that the compositions were “biocompatible” (i.e., that the compositions were not highly reactive with living cells.  

Marine Polymer sued HemCon for patent infringement.  During claim construction, Marine Polymer argued for a narrow construction of the term “biocompatible” and HemCon argued for a broad construction.  The district court adopted a construction narrower than that proposed by Marine Polymer.

Marine Polymer moved for summary judgment of infringement based on the district court’s construction.  The district dourt granted the motion.  The issues of patent validity and damages for infringement were then tried to a jury.  The jury found the patent valid and awarded $29.4 million in damages to Marine Polymer.  The district court also entered a permanent injunction.  HemCon appealed to the Federal Circuit. 

During the infringement case, before the final judgment, HemCon had filed a request in the United States Patent and Trademark Office for an ex parte reexamination.  During the reexamination, the patent examiner construed “biocompatible” more broadly than the district court and found all of the claims to be obvious over the prior art.  Marine Polymer responded by cancelling the claims that were rendered obvious by the prior art and argued that the examiner should adopt the district court’s narrower construction of “biocompatible.”  The examiner accepted Marine Polymer’s argument, and found all claims patentable based on that construction.

On appeal to a panel of the Federal Circuit, HemCon argued that it had obtained intervening rights during the reexamination of Marine Polymer’s patent and was therefore not an infringer.  The panel agreed and reversed the district court’s judgment of infringement and the jury’s verdict of damages. 

Marine Polymer petitioned for an en banc rehearing by the court.  The en banc court, in a divided decision, affirmed the district court’s judgment for Marine Polymer.

On appeal to the full court, HemCon did not dispute infringement, but argued that it had obtained intervening rights during the reexamination.  HemCon contended that the patentable claims had changed in scope during the reexamination because  the claims were narrowed during reexamination due to Marine Polymer’s cancelling of certain claims.  HemCon’s position was that because arguments made by a patent applicant during prosecution can affect the scope of the claims, so should arguments made by the patent owner during a reexamination.

Marine Polymer argued that intervening rights cannot be acquired unless the claims have been amended or are new, and that the surviving claims in this case had not been amended and were not new.

The court agreed with Marine Polymer.  The court explained that the doctrine of intervening rights was originally applied to patents modified through reissue proceedings, but that the doctrine also applies to reexamined patents pursuant to statute.  Under 35 U.S.C. §307(b), any amended or new claim held patentable in a reexamination is subject to the same intervening rights as pertain to reissued patents under 35 U.S.C. §252.

Section 252 sets forth two types of intervening rights: absolute and equitable.  Absolute intervening rights absolve the infringer of liability if the accused product was made or used before the new or modified claim became patentable in the reissue or reexamination proceeding.  Equitable intervening rights are discretionary, and mitigate the infringer’s liability for products made or used after the new or modified claim became patentable in the reissue or reexamination proceeding if the infringer engaged in substantial preparation for the infringing activity before the claim became patentable. 

The court held that HemCon had not acquired intervening rights.  The court relied on the express language of section 307(b) to find that “only ‘amended or new claims’ incorporated into a patent during reexamination…will be susceptible to intervening rights.”  Thus, if the claim in question is not amended or new, the infringer cannot have obtained intervening rights. 

According to the court:

“Whether or not Marine Polymer’s arguments to the examiner and cancellation of claims during reexamination may have affected the remaining claims’ effective scope, they did not ‘amend’ those claims for intervening rights purposes or make them ‘new,’ which is what the statutory language requires.  Intervening rights are therefore unavailable under §307(b) as a matter of law.”

The court also addressed HemCon’s concern that this interpretation of section 307(b) would open a loophole for patent owners to avoid intervening rights by relying on arguments instead of amendments in reexamination proceedings.  The court stated that the risk of such abuse was minimal, given that the reexamination examiner would require an amendment to the claims if it was needed to overcome a rejection.  The court noted that the risk of abuse by infringers was far greater if the court adopted HemCon’s position – infringers would file meritless reexaminations to force the patent owner to make an argument that affected the scope of the claims, and then contend that intervening rights had been acquired because an argument had been made.

This case is a significant one and numerous amici curiae filed briefs on both sides.  The tech industry (Hewlett-Packard, Cisco, Dell, eBay, Facebook, Google, and others) supported HemCon, while the biotechnology and pharmaceutical industries supported Marine Polymer. 

Most commentators agreed that the panel’s decision created uncertainty in that a patent owner would not know whether intervening rights had been acquired by the infringer in a reexamination and that that issue would likely be subject to separate litigation.  The test as set forth in the en banc decision is clear-cut: no intervening rights can attach unless the claim has been amended or is new. 

In the end, while the case triggered a lot of legal discussion by outsiders, it was probably the $29.4 million jury verdict that was driving the parties.