In In Re Affinity Labs of Texas, LLC, [2016-1092, 2016-1172] (May 5, 2017) the Federal Circuit affirmed the Board’s affirmance of a reexamination determination that all of the claims of U.S. Patent No. 7,324,833 was invalid.

The Board merged two inter partes reexaminations (one of which brought by Volkswagen) and an ex parte reexamination of U.S. Patent No. 7,324,833.Volkswagen subsequently received an adverse final judgment in a parallel district court proceeding, upholding the validity of claims 28 and 35 of Affinity’s ’833 patent. In response, Affinity petitioned the PTO to vacate the entire merged reexamination proceeding, arguing that the estoppel provision in pre-America Invents Act (AIA) 35 U.S.C. § 317(b)1 extends to all parties, not just Volkswagen, and all claims challenged in the three reexaminations, not just litigated claims 28 and 35.  The PTO
denied Affinity’s termination request, but it severed the Volkswagen reexamination from the merged proceeding and held that no rejection could be maintained in that reexamination as to the claims at issue in the district court.  The Examiner evaluated the Volkswagen reexamination separately from the merged King/Apple reexamination and ultimately issued a Right of Appeal Notice in each proceeding, rejecting numerous
claims of the ’833 patent as unpatentable, and the PTAB affirmed.

Affinity argued that the PTO erred in maintaining the reexaminations in light of the final decision that Volkswagen failed to prove invalidity of two of the patent’s claims, which were asserted in the co-pending litigation and, therefore, the Board’s decisions in the reexaminations should be reversed pursuant to the section 317(b) estoppel provision.

Affinity also argued that, assuming the reexaminations were properly maintained, the Board’s decisions are based on misreadings of the
asserted prior art and a misevaluation of Affinity’s objective indicia evidence of nonobviousness.

Because the plain language of pre-AIA section 317(b) precludes Affinity’s
estoppel argument and because the Board found no error in the Board Decision upholding the Examiner’s findings of unpatentability as to all claims at issue, the Federal Circuit affirmed.

Affinity argued that the decision not to terminate all three reexaminations frustrated section 317(b)’s underlying policy goal of preventing duplicative, harassing actions. The Federal Circuit concluded that a
straightforward reading of the plain language of section 317(b) precludes Affinity’s overly broad conception of the estoppel provision, and found no grounds to reverse the Board’s final decisions based on section 317(b).

The Federal Circuit observed that Section 317(b) bars a party from using the inter partes reexamination process after a final decision has been
entered against that party in a civil action. The Federal Circuit noted that (1) it applies to the party in the civil action that loses its validity attack against “any patent claim” as well as the party’s privies; (2) it applies to validity issues raised in the civil action or that could have been raised in
that action; (3) unlike section 317(a), it speaks in terms of any “patent claim,” as opposed to the “patent;” (4) it prohibits the losing party and its privies from requesting an inter partes reexamination “of any such patent claim;” and (5) “on the basis of such issues,” it prohibits the PTO from “maintain[ing]” any inter partes reexamination requested by the losing party.  The Federal Circuit disagreed with Affinity’s proposed interpretation that the estoppel provision applied differently to maintaining a pending reexamination versus requesting a new reexamination.  The Federal Circuit held that section 317(b) was plainly limited the scope of estoppel in all circumstances to only those claims actually challenged and for which the requesting party received an adverse final decision in the district court proceeding.  The Federal Circuit further found no basis in the statute for Affinity’s argument that the final decision in the Volkswagen litigation should have preclusive effect on the reexaminations requested by third parties.

The Federal Circuit concluded that substantial evidence supports the Board’s unpatentability findings as to all challenged claims in the merged third party reexaminations, and because the claims at issue in the
Volkswagen reexamination comprised only a subset of the claims in the merged third party reexamination, it declined to address the alternative grounds of unpatentability at issue in the Volkswagen reexamination appeal.