Absolute or Equitable Intervening Rights: It Matters

A Delaware District Court grants-in-part and denies-in-part patentee’s motion for summary judgment regarding accused infringer’s defense of intervening rights.  Sonos, Inc. v. D&M Holdings, Inc., No. 14-1330-WCB (D. Del. Nov 7, 2017).

The owner of a patent that survives reexamination “is only entitled to infringement damages for the time period between the date of issuance of the original claims and the date of the reexamined claims if the original and the reexamined claims are substantially identical.” Convolve, Inc. v. Compaq Comput. Corp., 812 F.3d 1313, 1322-23 (Fed. Cir. 2016).  This case pertains to an issue of law not squarely addressed by the Federal Circuit—i.e., whether 35 U.S.C. § 252, second paragraph, first sentence extends to process claims (or only to product claims).  First, a little background…

The first sentence of 35 U.S.C. § 252, second paragraph commonly is referred to as a defense of absolute intervening rights.

This defense allows a party whose products infringe a reissued or reexamined patent to continue to use or sell specific products that were made, purchased, or used before the reissuance or reexamination, if the asserted claim was not in the original patent, so long as the accused infringer began its infringing activity before the patent was reissued or reexamined.

35 U.S.C. § 252, second paragraph, second sentence commonly is referred to as a defense of equitable intervening rights.

This provision authorizes the court to provide for the continued manufacture, use, offer for sale, or sale of the thing made, purchased, offered for sale, used, or imported as specified, or for the manufacture, use, offer for sale, or sale in the United States of which substantial preparation was made before the grant of the reissue, and the court may also provide for the continued practice of any process patented by the reissue that is practiced, or for the practice of which substantial preparation was made, before the grant of the reissue, to the extent and under such terms as the court deems equitable for the protection of investments made or business commenced before the grant of the reissue, under such terms as the court deems equitable for the protection of investments made or business commenced.  See also Shockley v. Arcan, Inc., 248 F.3d 1349, 1360-61 (Fed. Cir. 2001).

In the instant case, Sonos (the patentee) asserted that D&M (a direct competitor) infringed, among other patents, U.S. Pat. 8,588,949 (the ‘949 patent which had successfully undergone reexamination).  As discussed below, in response, D&M only asserted a defense of absolute intervening rights; it did not assert a defense of equitable intervening rights.

The ‘949 patent is directed to a multimedia controller that controls multiple multimedia players in a local area network (e.g., group audio volume control).  The claims at issue included a product claim and a method claim (both amended during the reexamination to overcome an anticipatory reference). 

Claim 1 provided for a multimedia controller including a processor that was configured to perform various functions, including to:  accept via the user interface an input to facilitate formation of the player group, wherein the input to facilitate formation of the player group indicates that at least two of the plurality of players in the local area network are to be included in the player group for synchronized playback of a multimedia output from the same multimedia source (emphasis on the limitation added to overcome the anticipatory reference).

Claim 16 provided for a method, comprising, inter alia:  receiving via the user interface an input to facilitate formation of the player group, wherein the input to facilitate formation of the player group indicates that at least two of the plurality of players in the local area network are to be included in the player group for synchronized playback of a multimedia output from the same multimedia source… (emphasis on the limitation added to overcome the anticipatory reference).

Sonos argued that the amendment was for clarification purposes only (making explicit what was always implicit in the original claims, when viewed in light of intrinsic evidence)—accordingly, Sonos argued that the amendments did not substantively change the scope of the claims and the defense of absolute intervening rights was not applicable.  Under this analysis, D&M infringed both the product and process claims and no genuine issue of material fact existed.

Further, Sonos argued that since D&M asserted only the defense of absolute intervening rights, Sonos was entitled to judgment as a matter of law with regard to the infringement of the process claim 16—as the defense under 35 U.S.C. § 252, second paragraph, first sentence did not apply to process claims.

With respect to Sonos ‘clarifying’ assertions, D&M disagreed.  D&M argued that amendments made to overcome a prior art rejection during reexamination are “a highly influential piece of prosecution history,” and it is “difficult to conceive of many situations in which the scope of a rejected claim that became allowable when amended is not substantively changed by the amendment,” citing Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1348 (Fed. Cir. 1998).  Under this analysis, D&M would infringe neither the product nor process claims; at the least, a genuine issue of material fact existed as to the substantive nature of the amendments.

Further, D&M argued that to interpret 35 U.S.C. § 252, second paragraph, first sentence in accordance with Sonos’ arguments permits the rule to swallow the defense—e.g., when the patentee claims parallel process and method claims, as Sonos did.  In the ‘949 patent, Sonos claimed a processor (claim 1) configured to execute a logic block that accepts via the user interface an input … and a method (claim 16) that comprises receiving via the user interface an input … (essentially the same limitations).  Stated differently, D&M argued that the defense of absolute intervening rights is of no benefit if Sonos simply can assert the parallel process claim (claim 16) against the process that was used to make the very same product (of claim 1), which was intended to be protected by absolute intervening rights.

Since the Delaware District Court determined a genuine issue of material fact existed with respect to Sonos’ amendments during reexamination, summary judgment with regard to the product claim (claim 1) was denied.  However, since D&M failed to assert the defense of equitable intervening rights (even though the amendment to claim 16 may have been substantive), the district court granted Sonos summary judgment with respect to the process claim (claim 16).

Lessons for Practice

To patentees:  at least for applications which are considered to be of greater value, when possible, draft parallel process and product claims.  This is particularly true in the computer processing context where computer product claims often mirror method claims.  If it all, it is these more valued patents which are likely to be selected for reexamination, where the distinction between process and product claims may affect patent rights.

To competitors:  if you assert a defense of intervening rights under § 252, assert defenses of both absolute intervening rights and equitable intervening rights—e.g., particularly when the claims at issue include a process claim.

Conclusion

If this case is appealed and the Federal Circuit issues a precedential opinion regarding 35 U.S.C. § 252, second paragraph, second sentence, I will address this topic in a follow-up blog post.

Upcoming Webinar

Functional Claiming After Williamson v. Citrix
December 14, 2017 at 12:00 pm CST
During the webinar, Charles Bieneman will cover strategies for avoiding – or embracing – functional claim interpretations, and for avoiding findings that functional claim language is indefinite. Register

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