On September 4, 2008, in In re Swanson, et al. (Fed. Cir. Dkt. No. 2007-1534) the Federal Circuit refused to limit the grounds on which an interested third party could seek to invalidate a patent through re-examination. The Court abandoned the rule it had established some 10 years ago in In re Portola Packaging Inc., 110 F.3d 786 (Fed. Cir. 1997),¹ and upheld a Patent and Trademark Office (PTO) re-examination decision invalidating patent claims in view of a piece of prior art (Deutsch) that the PTO Examiner had cited during the original patent prosecution. The Court also said that re-examination was not barred by its previous decision affirming a jury verdict holding the claims valid over Deutsch. Abbott Labs. v. Syntron Bioresearch, Inc., 334 F.3d 1343 (Fed. Cir. 2003).

The Swanson decision raises a number of important issues.

First, it underscores two significant differences between an infringement action and a proceeding before the PTO. In an infringement action, a patent is "presumed valid" (35 U.S.C. § 282) and a patent challenger must prove invalidity by "clear and convincing evidence." Before the PTO, there is no presumption of validity, and an Examiner need show that a claim is not patentable by only a preponderance of the evidence.

Also, a court and the PTO apply different rules when they construe a claim. A court will construe a claim based on the patent, the prosecution history, and sometimes "extrinsic evidence." By contrast, the PTO will give a claim its "broadest reasonable" interpretation. With respect to the Swanson patent, the question was whether the prior art Deutsch patent showed "flowing said [test] solution along the [test] medium." In the earlier infringement litigation, the Federal Circuit said that "the jury could have reasonably interpreted the language of the claims, standing alone, as requiring that the [test] solution itself provide the required flow."² In the subsequent re-examination, the PTO found that Deutsch anticipated the claim because the claim did "not contain a limitation requiring that the test solution itself provide the flow."

Second, and the major issue discussed in the opinion, the Court said that the 2002 amendment to the re-examination statute overruled Portola. Both the original and amended re-examination statute require the PTO to order re-examination if a re-examination request raises "a substantial new question of patentability" (35 U.S.C. § 304); the 2002 amendment made explicit that the "existence of a substantial new question...is not precluded by the fact that a patent...was previously cited by or to the [Patent and Trademark] Office."

Thus, even though the PTO Examiner who originally examined the Swanson patent had relied on Deutsch to reject some dependent claims, the Court in Swanson found that "[i]n light of the extremely limited purpose for which the examiner considered Deutsch in the initial examination, the Board is correct that the issue of whether Deutsch anticipates the method disclosed in claims 22, 23, and 25 [subject to re-examination] was a substantial new question of patentability, never before addressed by the PTO." Although "the ultimate question of whether the reexamination is based on a substantial new question of patentability...remains a question of law which [the Federal Circuit] review[s] de novo," the Court recognized that underlying inquiry is one of fact–"an analysis of the record of the prior proceedings to determine if and how the examiner used the reference in making his initial decisions." Therefore, a substantial new question of patentability may be raised by a reference previously considered, and even applied by an Examiner in rejecting claims, if the re-examination request applies the reference to the claims differently.

Similarly, the Court held that re-examination was not precluded even though the question of whether Deutsch anticipated the patent claims had been raised (and decided by the jury) in the previous infringement litigation. The Court noted that the re-examination statute and legislative history make no reference to precluding art raised in prior court proceedings from being used to establish a substantial new question of patentability, and that procedural differences between PTO and court proceedings (e.g., burdens of proof and claim construction) point away from precluding a re-examination based upon art considered by a district court. It then concluded "that Congress did not intend a prior court judgment upholding the validity of a claim to prevent the PTO from finding a substantial new question of validity...As properly interpreted a 'substantial new question of patentability' refers to a question which has never been considered by the PTO; thus a substantial new question can exist even if a federal court previously considered the question."

In re Swanson thus provides new avenues to a patent challenger. That a particular prior art reference was not found to invalidate a claim in litigation, or that a particular prior art reference was cited by the PTO Examiner during initial examination, does not bar a re-examination request based on that reference. In either event, a patent challenger (even one who lost in a district court and on appeal) may now request that the PTO re-examine a patent claim under a claim construction standard and burden of proof that are significantly less rigorous than those applied to an issued patent in an infringement case.

¹ In In re Portola Packaging, the Federal Circuit held that the statute precluded re-examination based on prior art previously considered by the PTO. In amending the statute in 2002, Congress said that "the Federal Circuit incorrectly interpreted Congress' original intent," and that Portola "impose[ed] an overly-strict limit that reaches beyond the text of the Patent Act." (House Report 107-120 at 2.)

² Claim construction is an issue exclusively within the province of the court. Markman v. Westview Instr., Inc., 517 U.S. 370 (1996). In the Abbott infringement litigation, the Court held that Syntron had waived the issue by failing to request a specific claim construction or to object to the trial court's instruction that the limitation should be given its "ordinary meaning."