THE BOARD OF PATENT APPEALS AND INTERFERENCES DECLARES A SINGLE INTERFERENCE BETWEEN ONE APPLICATION AND ELEVEN PATENTS OWNED BY THE SAME COMPANY
by Charles L. Gholz 
Company X (my client) and company Y (its major competitor) have been involved in patent litigation and incipient patent litigation for some time. (Regrettably, company X has refused to authorize me to disclose the identity of either party to this story.) Company Y is the owner by assignment of twelve patents obtained by company Z. Those twelve patents all stem from four applications filed on the same day, and company Z continues to own five patents that stem from the same four original applications — plus, presumably, a plurality of pending applications that stem from those same four applications.
In anticipation that company Y and/or company Z would some day sue company X on one or more of those seventeen patents, we requested an interference between an application owned by company X and sixteen of the seventeen patents owned by companies Y and Z. In addition, we suggested that, instead of declaring separate interferences, the Board of Patent Appeals and Interferences should declare a single interference between the application owned by company X and all sixteen of those patents. (In our estimation, company Z patented the same basic invention sixteen times using slightly different language each time. Counsel for company Y and company Z disagree.)
While the requests for interferences were pending, company Y sued company X for infringement of eight of the twelve patents that company Z had assigned to it. Shortly thereafter, APJ Jameson Lee declared an interference between the application owned by company X and eleven of the patents stemming from the original four applications — six owned by company Y and five owned by company Z.
We then moved for a stay of the patent infringement litigation until after conclusion of the interference. Counsel for company Y agreed to a stipulated stay of the infringement action for a term of months, and we anticipate that that stipulated stay will be extended periodically. Apparently counsel for company Y is also content to litigate the validity and enforceability issues in the PTO rather than in the court.
In addition, we are filing 37 CFR 1.642 requests to bring five of the remaining six patents stemming from the original four applications into the interference.
Why This is Important
The reason that all of this is important to you, gentle reader, is that it offers the possibility of saving big bucks in patent litigation. The board will decide any question of validity and enforceability that could be decided in the patent infringement litigation, and, if it decides one of those issues in favor of company X, its decision will result in cancellation of the relevant claims from the patents owned by company Y and company Z pursuant to 35 USC 135(a). That will, of course, moot the patent infringement litigation pro tanto. On the other hand, if the board decides any of those issues against company X, that decision will have an issue preclusion effect against company X in the district court litigation.
Of course, the fact that decisions are made by one decisional authority rather than another does not ipso facto mean that that the decisions will be better, more expeditious, or less costly to the litigants. However, in this case I think that that will be the result.
First, the fact that the decisions will be made by the board rather than by the court means that the decisions will be made by APJs (all of whom have technical training and most of whom have years of experience as patent examiners) in a jury-free environment. In my opinion, that means that the board’s decision is more likely to accurately apply the law.
Second, as a rule of thumb, the cost of a patent interference is approximately one tenth the cost of a patent infringement action.
Third, even though the interference was declared before October 05, 1998, Judge Lee has entered an order bringing the interference under the new procedures which are to govern all interferences declared on or after that date. Hence, there is a realistic possibility that this interference will be decided by the board before the infringement action would have been decided by the district court.
Finally, and perhaps most importantly, the contrary possibility needs to be considered. If the court were to go ahead and decide the validity questions (including priority!) before the board did, its decision would not bind the board, because of the lower standard of proof imposed on the patent challenger in the interference. That is, because the burden of proof imposed on a patent challenger in a district court is clear and convincing evidence, whereas the burden of proof imposed on a patent challenger in an interference is only the preponderance of the evidence, a decision by the district court that company X had not carried its burden in the district court would not be binding on the board. Hence, it makes sense to litigate the validity issues before the board. That way the district court will not have to determine the validity issues at all, and it will have to determine damages if and only if company X loses on the validity issues before the board.
To the best of my knowledge, the PTO has never declared a multi-patent interference like this one before. However, what it has done once, it could do again. If this becomes a regular practice, it could be very good news indeed for all patent-sensitive industries.
Published in Intellectual Property Today, Vol. 5, December 1998, page 6.
2. Coakwell v. United States, 292 F.2d 918, 130 USPQ 231 (Cl. Ct. 1961), made applicable to the Federal Circuit by South Corp. v. United States, 690 F.2d 1368, 215 USPQ 657 (Fed. Cir. 1982) (in banc). See generally Gholz, Collateral Estoppel Effect of Decisions by the Board of Patent Interferences, 65 JPOS 67 (1983).
3. Restatement (Second) of Judgments §28(4); and Ethicon v. Quigg, 849 F.2d 1422, 1429, 7 USPQ2d 1152, 1157 (Fed. Cir. 1988) (recognizing that the PTO and the courts can reach different results on validity questions because "the two forums have different standards of proof for determining invalidity" and stating that "The doctrine of collateral estoppel does not prevent the PTO from completing the reexamination in this situation [i.e., despite ongoing district court litigation involving the same validity issues].").
4. Harmon, Patents and the Federal Circuit (3d ed. 1994) § 1.5.
5. Bruning v. Hirose, ___ F.3d ___, ___ USPQ2d ___ (Fed. Cir. September 29, 1998) (non- precedential); and Schrag v. Strosser, 21 USPQ2d 1025, 1027 (PTOPBAI 1991).