United States District Court, E.D. Virginia, Alexandria Division
For Disney Enterprises, Inc., Plaintiff: Jeffrey Paul Kushan, Sidley Austin LLP, Washington, DC.
For David Kappos, Honorable. Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Defendant: Dennis Carl Barghaan, Jr., LEAD ATTORNEY, United States Attorney's Office, Alexandria, VA.
Leonie M. Brinkema, United States District Judge.
In this civil action brought pursuant to 35 U.S.C. § 145, plaintiff Disney Enterprises, Inc. (" Disney" ) seeks a judgment that it is entitled to a reissue of U.S. Patent No. 5,963,915 (" the '915 patent" ) covering the pending claims in United States Reissue Patent Application 09/970,772 (" the '772 application" ), all of which were rejected as obvious by the United States Patent and Trademark Office (" USPTO" ) after extensive administrative proceedings. A one-day bench trial was held, during which the only witnesses were two experts, one testifying on behalf of the plaintiff and the other on behalf of the defendant. Having heard the evidence
and reviewed the trial exhibits and the administrative record, the Court makes the following findings of fact and concludes that Disney has failed to prove that it is entitled to the reissue patent it seeks.
I. LEGAL PRINCIPLES
A. Standard of Review and Burden of Proof
This civil action was brought under 35 U.S.C. § 145, which " gives the Court the power to set aside any ruling refusing a patent and determine patentability de novo." Hitachi Koki Co., Ltd. v. Doll, 620 F.Supp.2d 4, 16 (D.D.C. 2009)  (citing Mazzari v. Rogan, 323 F.3d 1000, 1004 (Fed. Cir. 2003); Newman v. Quigg, 877 F.2d 1575, 1579 (Fed. Cir. 1989)) (citation and internal quotation marks omitted). The Supreme Court recently held that § 145 actions " should be conducted according to the ordinary course of equity practice and procedure and . . . should be prepared and heard upon all competent evidence adduced and upon the whole merits." Kappos v. Hyatt, 132 S.Ct. 1690, 1699-1700, 182 L.Ed.2d 704 (2012) (quoting Butterworth v. United States ex rel. Hoe, 112 U.S. 50, 61, 5 S.Ct. 25, 28 L.Ed. 656, 1884 Dec. Comm'r Pat. 429 (1884)) (internal quotation marks omitted). Because " the district court acts as a factfinder when new evidence is introduced in a § 145 proceeding," it " must assess the credibility of new witnesses and other evidence, determine how the new evidence comports with the existing administrative record, and decide what weight the new evidence deserves." Id. at 1700. The standard of review of the new evidence must therefore " [a]s a logical matter" be " de novo because [the district court] is the first tribunal to hear the evidence in question." Id. Nevertheless, " the district court may, in its discretion, consider the proceedings before and findings of the Patent Office in deciding what weight to afford an applicant's newly-admitted evidence." Id. at 1700 (quoting Hyatt v. Kappos, 625 F.3d 1320, 1335 (Fed. Cir. 2010) (en banc)) (internal quotation marks omitted).
Patent prosecutions before the USPTO employ a " burden-shifting" framework, which is " merely a procedural device that enables an appropriate shift of the burden of production." In re Jung, 637 F.3d 1356, 1362 (Fed. Cir. 2011) (citation and internal quotation marks omitted). During prosecution, the initial burden is on the examiner to establish a prima facie case of unpatentability, which " need not be a full exposition on every conceivable deficiency of a claim . . . . Rather, its purpose is simply to provide sufficient notice to the applicant to facilitate his effective submission of information." Hyatt v. Dudas, 492 F.3d 1365, 1370 (Fed. Cir. 2007). The burden then shifts to the applicant to produce evidence or argument to rebut that prima facie case. Id. Finally, patentability is " determined on the entirety of the record, by a preponderance of evidence and weight of argument." In re Glaug, 283 F.3d 1335, 1338 (Fed. Cir. 2002).
Disney implied during closing arguments that the USPTO bears the burden of re-establishing such a prima facie case in this § 145 proceeding:
[T]he central story here is whether the person with skill . . . would have concluded at the first instance in what we
call a prima facie case, whether that case, that invention is obvious. If that is not, that is not established by the evidence, the rejection of the PTO are [sic] incorrect; and under this proceeding, you have the authority to direct the PTO to issue Disney the patent.
Trial Tr. [Dkt. No. 70] at 234:17-25. That argument is unsupported by case law and " appears to urge the Court to improperly allow the meaning of 'prima facie case' in the context of ordinary litigation to supplant its meaning in patent prosecution." Alberts v. Kappos, 917 F.Supp.2d 94, No. 10-1727, 2013 WL 204694, at *6 (D.D.C. Jan. 18, 2013). The Federal Circuit has explained that " the prosecution and litigation contexts are distinct." In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litig., 676 F.3d 1063, 1080 n.7 (Fed. Cir. 2012). Moreover, if § 145 proceedings are to be " conducted according to the ordinary course of equity practice and procedure," Hyatt, 625 F.3d at 1335, it is the plaintiff and not the USPTO that bears the burden of proof. See also Alberts, 2013 WL 204694, at *7 (indicating that the Court did not believe that the USPTO had the burden of re-establishing a prima facie case in § 145 proceedings, while also finding that the USPTO would have met such a burden).
Accordingly, Disney bears the burden of proving by a preponderance of the evidence that it is entitled to a reissue patent covering the pending claims in the '772 application. See, e.g., Johnson v. Brenner, 253 F.Supp. 919, 923 (D.D.C. 1966) (noting in a § 145 action that the burden of proof was borne by the patent applicant).
B. Reissue Patents
Under 35 U.S.C. § 251(a), reissue patents are available " [w]henever any patent is, through error, deemed wholly or partly inoperative or invalid . . . by reason of the patentee claiming more or less than he had a right to claim in the patent." Applying for a reissue patent is therefore a means of attempting to correct or amend a patent that has already been issued. See Manual of Patent Examining Procedures (" MPEP" ) § 1400.01 (8th ed. rev. Aug. 2012); see also Medrad, Inc. v. Tyco Healthcare Grp. LP, 466 F.3d 1047, 1052 (Fed. Cir. 2006) (holding that " any error that causes a patentee to claim more or less than he had a right to claim" is correctable through reissue).
An application for reissue " constitute[s] an offer to surrender [the original] patent, and the surrender shall take effect upon reissue of the patent" ; however, " [u]ntil a reissue application is granted, the original patent . . . remain[s] in effect." 37 C.F.R. § 1.178(a). If the reissue is granted, it will be valid only " for the unexpired part of the term of the original patent." 35 U.S.C. § 251(a); see also MPEP § 1405 (" The maximum term of the original patent is fixed at the time the patent is granted. While the term may be subsequently shortened, . . . it cannot be extended through the filing of a reissue." ).
Although a reissue application may not include any " new matter," 37 C.F.R. § 1.173; accord 35 U.S.C. § 251(a), it is examined in the same manner as a newly submitted application and is generally subject to the same requirements. See 37 C.F.R. § 1.176(a). As a consequence, " the claims in a reissue application are subject to any and all rejections which the examiner deems appropriate," regardless of " whether the claims are identical to those of the [original] patent or changed from those in the [original] patent." MPEP § 1445.
C. Obviousness Standard
Under the patent statute, an invention that would have been obvious to a person of ordinary skill in the relevant art
at the time of the invention is not patentable. Specifically:
A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102,  if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.
35 U.S.C. § 103; see also Pub. L. No. 112-29 § 3, 125 Stat. 284, 287. An obviousness analysis concerns the patent's claims, not the embodiments described in the specification.
See, e.g., Jackson Jordan, Inc. v. Plasser Am. Corp., 747 F.2d 1567, 1578 (Fed. Cir. 1984) (" The claims, not the particular embodiments, must be the focus of the obviousness inquiry." (emphasis in original));
see also KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 419, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007) (" In determining whether the subject matter of a patent claim is obvious, neither the particular motivation nor the avowed purpose of the patentee controls. What matters is the objective reach of the claim." ). During examination, claims must be given " their broadest reasonable interpretation consistent with the specification, and . . . claim language should be read in light of the specification as it would be interpreted by one of ordinary skill in the art." In re Am. Acad. of Sci. Tech. Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004) (quoting In re Bond, 910 F.2d 831, 833 (Fed. Cir. 1990)) (omission in original) (internal quotation marks omitted).
Obviousness is a question of law based on underlying facts, which include " the scope and content of the prior art . . .; differences between the prior art and the claims at issue . . .; and the level of ordinary skill in the pertinent art." Graham v. John Deere Co. of Kan. City, 383 U.S. 1, 17, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966). Objective evidence of nonobviousness must also be considered, including " secondary considerations" such as " commercial success, long felt but unsolved needs, failures of others, etc." Id.;
see also KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 407, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007) (" While the sequence of these questions might be reordered in any particular case, the [Graham] factors continue to define the controlling inquiry." ). Because Disney has never presented any evidence or argument regarding secondary considerations, either during these proceedings or before the USPTO, they are not addressed below.
In its most recent case directly addressing the obviousness standard, the Supreme Court rejected the Federal Circuit's " 'teaching, suggestion, or motivation' test (TSM test), under which a patent claim is only proved obvious if 'some motivation or suggestion to combine the prior art teachings' can be found in the prior art, the nature of the problem, or the knowledge of a person having ordinary skill in the art." KSR, 550 U.S. at 407 (quoting Al-Site Corp. v. VSI Int'l, Inc., 174 F.3d 1308, 1323-24 (Fed. Cir. 1999)). Instead, the Supreme Court found that the proper obviousness inquiry asks " whether the improvement is more than the predictable use of prior art elements according to their established functions," observing that " [w]hen a work is available in one field of endeavor, design incentives and other market forces can prompt variations of it, either in the same field or a different one." Id. at 417. Such predictable
variations, including " the simple substitution of one known element for another or the mere application of a known technique to a piece of prior art ready for the improvement," are likely barred from patentability by the obviousness doctrine. Id.
The Supreme Court recognized that an obviousness analysis will often require " a court to look to interrelated teachings of multiple patents; the effects of demands known to the design community or present in the marketplace; and the background knowledge possessed by a person having ordinary skill in the art, all in order to determine whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue." Id. at 418. In conducting that analysis, however, " a court can take account of the inferences and creative steps that a person of ordinary skill in the art would employ," and thus " the analysis need not seek out precise teachings directed to the specific subject matter of the challenged claim." Id.; see also id. at 421 (" A person of ordinary skill is also a person of ordinary creativity, not an automaton." ).
Although the Court recognized that the TSM test was not incompatible with this approach if treated as a " [h]elpful insight" instead of a " rigid and mandatory formula," it also cautioned against " a formalistic conception of the words teaching, suggestion, and motivation," and " overemphasis on the importance of published articles and the explicit content of issued patents" because " [i]n many fields it may be that there is little discussion of obvious techniques or combinations, and it often may be the case that market demand, rather than scientific literature, will drive design trends." Id. at 419. Allowing applicants to patent " advances that would occur in the ordinary course without real innovation retards progress and may, in the case of patents combining previously known elements, deprive prior inventions of their value or utility." Id.; see also id. at 415-16 (" For over a half century, the Court has held that a patent for a combination which only unites old elements with no change in their respective functions . . . obviously withdraws what already is known into the field of its monopoly and diminishes the resources available to skillful men." (quoting Great A. & Pac. Tea Co. v. Supermkt. Equip. Corp., 340 U.S. 147, 152-53, 71 S.Ct. 127, 95 L.Ed. 162, 1951 Dec. Comm'r Pat. 572 (1950) (internal quotation marks omitted))).
Accordingly, " [w]hen there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp." Id. at 421. If one of those known options is successful, that success " is likely the product not of innovation but of ordinary skill and common sense." Id. In such circumstances, " the fact that a combination was obvious to try might show that it was obvious under § 103." Id. Of course, " [a] factfinder should be aware . . . of the distortion caused by hindsight bias and must be cautious of arguments reliant upon ex post reasoning," but " [r]igid preventative rules that deny factfinders recourse to common sense . . . are neither necessary under [Supreme Court] case law nor consistent with it." Id.
After KSR, the USPTO promulgated and published guidelines concerning how its examiners should conduct such an obviousness analysis; those guidelines provide that examiners must " ensure that the written record includes findings of fact concerning the state of the art and the teachings of the references applied," and
in certain circumstances should " include explicit findings as to how a person of ordinary skill would have understood prior art teachings, or what a person of ordinary skill would have known or could have done." Examination Guidelines for Determining Obviousness Under 35 U.S.C. 103 in View of the Supreme Court Decision in KSR International Co. v. Teleflex Inc., 72 Fed. Reg. 57526, 57527 (Oct. 10, 2007). Additionally:
[T]he focus when making a determination of obviousness should be on what a person of ordinary skill in the pertinent art would have known at the time of the invention, and on what such a person would have reasonably expected to have been able to do in view of that knowledge. This is so regardless of whether the source of that knowledge and ability was documentary prior art, general knowledge in the art, or common sense.
Id. In short, " [a]n obviousness analysis measures the difference between the claimed invention and the prior art to determine whether the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art." Unigene Labs., Inc. v. Apotex, Inc., 655 F.3d 1352, 1360 (Fed. Cir. 2011) (quoting Alza Corp. v. Mylan Labs., Inc., 464 F.3d 1286, 1289 (Fed. Cir. 2006)) (internal quotation marks omitted).
II. FINDINGS OF FACT
A. Background Findings
1. Procedural Background
On February 21, 1996, Steven Kirsch (" Kirsch" ) filed a patent application titled " Secure, Convenient and Efficient System and Method of Performing Trans-Internet Purchase Transactions." Administrative Record ("A.R." )  at A1-43. That application resulted in the issuance of the '915 patent on October 5, 1999. Pl.'s Trial Ex. (" PX" ) 6. The '915 patent was initially assigned to Infoseek Corporation and was later assigned to Disney.  A.R. at A116, A134-35; PX 6.
Two years after the '915 patent was issued, on October 4, 2001, Kirsch filed the '772 application, which seeks reissue of the '915 patent with broader claims pursuant to 35 U.S.C. § 251. A.R. at A136-38, A140, A217. The '772 application was also initially assigned to Infoseek Corporation and later assigned to Disney. A.R. at A138, A1375-80. For the first six years of administrative proceedings, the USPTO rejected the '772 application numerous times based on U.S. Patent No. 5,774,670 (" the Montulli patent" ) and several other prior art references. See, e.g., A.R. at A296-99, A505-31, A545-67, A617-46. Afterward, the rejections were generally based on U.S. Patent No. 5,708,780 (" the Levergood patent" ) (PX 7) and several other prior art references. See, e.g., A.R. at A1935-57, A2053, A2603-04, A2609-34, A2696-2726, A2933-35.
On April 6, 2011, after almost ten years of administrative proceedings, including numerous Office Actions, several amendments to the claims in the '772 application, and three Requests for ...