Re-examinations

How Adversaries Helped to Strengthen PMC’s Patent Portfolio

Patent reexamination proceedings in the United States Patent and Trademark Office (USPTO) have been the subject of heated debate. It is no wonder why. Some defendants believe that reexams make it easier to identify questionable patent claims that can weaken patents and make them less attractive to enforce in costly litigation. Others believe that reexams take too long to complete and are a delaying tactic used by defendants that can backfire.

For a defendant the principal attribute of a reexamination is delay of any underlying infringement litigation for those patents under review. However, if patent claims are upheld, the patents emerge stronger, more valuable and with priority dates that can provide much longer coverage.

Eight-Year Delay
A delay of two pending litigations was the immediate result of the reexamination proceedings initiated against Personalized Media Communications (PMC) by defendants Thomson and Scientific Atlanta. However, procedural delays in the patent office also produced a silver lining for PMC. This resulted in stronger and more thoroughly-vetted patents – the opposite of what the defendants had hoped for.
Beginning in February 2003 and ending in October 2003, two defendants in PMC’s litigations filed eleven reexamination requests for the company’s seven then-issued patents. These reexamination requests were granted between April 2003 and January 2004.

As a direct result of these grants, PMC’s case against DirecTV was stayed in September 2003. It has remained so for eight years. PMC’s case against Scientific Atlanta was not stayed immediately based on the grants alone but was three years later while the reexamination proceedings were on-going. Although initiated in early 2004, little progress was made in the proceedings until the summer of 2005. Only after the proceedings had been pending for almost a year and a half did the USPTO issue initial Office Actions.

Continued Stagnation
Although PMC responded to each USPTO action promptly and thoroughly, the reexamination proceedings stagnated. The USPTO examiner responsible for the proceedings simply maintained his prior rejections and no substantive progress was made. Finally, in late 2007, appeals of the examiner’s rejections were perfected and Examiner’s Answers were issued. During this extended period the Examiner confirmed as patentable over half of the claims of PMC’s patents including all claims of U.S. Patent 5,233,654. The appeals process stagnated again and the appeal briefing process was not complete until 2008. Hearing dates were not scheduled until early 2009. The Board ultimately reversed many of the Examiner’s rejections, resulting in over two-thirds of the claims of the issued patents confirmed as patentable. Although PMC was quite successful in having the examiner’s rejections overruled by the Board of Patent Appeals and Interferences, the Board did not issue its decisions until late 2008 through early 2010.

All claims were confirmed patentable in two of PMC’s patents, U.S. Patent No. 5,109,414 covering cable head-ends and satellite uplinks and U.S. Patent No. 5,233,654 covering interactive consumer services and audience polling and monitoring. In three of PMC’s patents, U.S. Patent No. 4,965,825, 5,335,257 and 5,887,243, between 60% and 70% of the claims were confirmed, including more than half that were involved in stayed litigations. While in two PMC patents, U.S. Patent Nos. 4,694,490 and 4,704,725, a majority of the claims were cancelled, the impact was minimal. Only one claim of those patents had been asserted in any litigation.

Short and Long-Term Impact
The impact of these lengthy reexamination proceedings on PMC’s portfolio of patents was and continues to be extremely positive. The presumption of validity for many of PMC’s related patents was strengthened because of the huge amounts of prior art that were considered during the reexamination, far more than would have been considered in the course of routine patent applications. Prior art for subsequent PMC issued patents and applications is the same that the USPTO examiners considered in their lengthy reconsideration. This higher presumption of validity post-USPTO reexamination was explained in the recent Supreme Court decision in Microsoft v. i4i. While the defendants were successful in getting the pending litigations stayed, once the reexams were completed, the potential for recovery in them increased exponentially.

The reexamination of PMC’s patents, while having the unfortunate immediate result of delaying resolution of pending litigation by several years, ultimately enhanced the quality and value of the company’s overall portfolio and the danger to potential infringers. Priority dates for the issued PMC patent claims are either in 1981 or 1987. However, because the applications were filed prior to June 8, 1995, the issued patents are afforded terms of 17 years from issuance, permitting them to cover more products sold.

Rendering Good Patents Even Better
In the final analysis, the reexamination of the PMC patents was an infringer’s worse nightmare. It resulted in more potential recovery and fewer defenses. If there is a moral of this story it is that defendants must be careful what they wish for: reexamining patents they believe may be questionable can result in stronger rights for the plaintiff and a weaker case for the defendant.