PTAB Invalidation of Original Claims Bars Pre-issue Damages for Reissued Claims
A surprisingly underutilized patenting mechanism - the reissue patent application - should be an essential component of any portfolio building practice. The reissue application allows patent owners to correct/adjust claim scope (in some cases broaden), add additional claims, and perform a number of other corrections to an originally issued patent prior to asserting it.
For example, where a Patent Owner has its claims cancelled that the PTAB, the Patent Owner may seek to reissue its patent thereafter with new, narrower claims. (This option may be more attractive than the PTAB's amendment process, which is limited in the number of claims that may be raised, and, reissue is not an inter partes process).
But, reissue is not a magic time machine. That is, trying to resurrect a damages case linked to your earlier cancelled claims by arguing that your narrowed, reissue claims are somehow the same scope, is a losing argument (not surprisingly)
In Cisco Systems, Inc. v. Capella Photonics, Inc. (here), Capella asserted that (1) Cisco infringed two reissued patents, and (2) Capella was entitled to pre-issuance damages because the reissued claims were "substantially identical" to claims of the original patents (i.e., intervening rights did not apply). However, the claims of the original patents had been invalidated by the PTAB in earlier IPR proceedings.
The Northern District of California therefore had to address:
whether [reissued] claims that are substantially identical to previously invalidated claims are also invalid. In other words, given the PTAB's ruling, can this Court nonetheless redetermine the scope of the original claims of the [original] Patents, and conclude (contrary to the PTAB) that the original claims were not invalid and that Capella's reissue claims are likewise not invalid? That is the only way Capella can thread the needle to recover pre-issue damages.
The court held that "logic and precedent suggest the PTAB determination[s] should be given preclusive effect," and therefore Capella could not seek pre-issue damages. Federal Circuit precedent led the court to conclude that "the breadth of the collateral estoppel effect afforded to a PTAB determination of invalidity, and the strong interest in affording such PTAB determinations finality suggest that [the binding effect of a PTAB decision applies to the validity of substantially identical claims of a reissued patent]." And notably, the court found that preclusion applies whether the PTAB invalidated the claims under the BRI or Phillips standard. To support its conclusion, the court posed a hypothetical:
If an IPR proceeding were to be instituted against the reissued claims of [the reissued] Patents, and the claims were deemed "substantially identical" to the original claims, the PTAB would be bound by collateral estoppel and, in light of its invalidation of the [original] Patent claims, would have to find the substantially identical claims of the reissued patents invalid. There would be no "materially different issues that alter the question of patentability"; the validity of the two sets of patents would present "identical issues of patentability." The PTAB's determination of invalidity of the [reissued] Patent claims would, in turn, be binding on this Court. The application of collateral estoppel is ultimately inescapable.
In effect, this decision eliminates the possibility of recovering pre-issuance damages for any reissued patent where the original patent claims were invalidated. Either the reissued claims are "substantially identical" to the invalidated claims, which renders them invalid, or the reissued claims are not "substantially identical," in which case § 252 bars the reissued patent owner from recovering pre-issuance damages.
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