Dresser Industries, Inc. v. Ford Motor Co.

• Decision Date: 15 October 1981
• Docket Number: Civ. A. No. CA3-80-1470-G.
• Parties: DRESSER INDUSTRIES, INC., Plaintiff, v. FORD MOTOR COMPANY and Eagle Lincoln-Mercury, Inc., Defendants.
• Court: U.S. District Court — Northern District of Texas

530 F. Supp. 303

211 USPQ 1114

DRESSER INDUSTRIES, INC., Plaintiff, v. FORD MOTOR COMPANY and Eagle Lincoln-Mercury, Inc., Defendants.

Civ. A. No. CA3-80-1470-G.

United States District Court, N. D. Texas, Dallas Division.

October 15, 1981.

John K. DeLay, Jr., Hugh L. Steger, Storey, Armstrong, Steger & Martin, Dallas, Tex., and Joseph M. Fitzpatrick, Lawrence F. Scinto, Fitzpatrick, Cella, Harper & Scinto, New York City, for plaintiff.

Robert F. Middleton, Ronald W. Kessler, Meyers, Miller, Middleton, Weiner & Warren, Dallas, Tex., for defendants; Hal D. Cooper, Jones, Day, Reavis & Pogue, Cleveland, Ohio, Robert E. McCollum, Clifford L. Sadler, Keith Zerschling, Dearborn, Mich., of counsel.

MEMORANDUM ORDER

PATRICK E. HIGGINBOTHAM, District Judge.

Currently before the Court are the Motions of Defendants Ford Motor Company and Eagle Lincoln-Mercury, Inc. (collectively "Ford") for an order compelling Plaintiff, Dresser Industries, Inc., to apply to the Patent and Trademark Office ("PTO") for "reissue" of the patents in suit and to dismiss this case. Dresser has also filed a second Motion for a Stay of this litigation, pending a determination by the PTO of Dresser's current application for a "reexamination" of its patents.

Dresser commenced this action on November 5, 1980, alleging that Defendants had infringed two of its patents involving sonic exhaust recirculation valves. In answer to Dresser's complaint and initial interrogatories, Defendants countered that the two Dresser patents were invalid because they were anticipated and obvious in light of prior art not disclosed to, or considered by, the PTO, and because of certain material omissions and misrepresentations made by Dresser when prosecuting its original patent application.

On July 1, 1981, Dresser filed an application for "reexamination" of its patents, pursuant to the newly adopted reexamination statute, 35 U.S.C. §§ 301-307 (effective July 1, 1981), and implementing rules set forth at 37 C.F.R. §§ 1.501-1.570, 46 Fed. Reg. 29187 (May 29, 1981). Specifically, Dresser requested reexamination in light of two pieces of prior art not previously considered by the PTO; the Converse Patent No. 3,524,344, and a printed publication of the Fox Valve Development Co. advertising its throttling valves. In its answer to Plaintiff's first set of interrogatories, Ford cited both these materials as prior art invalidating Dresser's patent. On July 8, 1981, Dresser requested a stay of these proceedings pending reexamination of its patents, which request was denied by the Court during a conference held on July 10, 1981. At that conference, Dresser announced it was amenable to dismissal of this action, without prejudice, on condition that Defendants would agree not to file suit for a declaratory judgment while reexamination proceedings were pending before the PTO. Defendants declined to agree to a dismissal under this condition. On August 27, 1981, the PTO issued an order granting Dresser's request for reexamination. Thereafter, on September 14, 1981, Dresser filed a renewed motion for a stay.

In the interim, on July 30, 1981, Ford moved for an order compelling Dresser to file an application for "reissue" of its patents, pursuant to 35 U.S.C. §§ 251-256 and PTO rules set forth at 37 C.F.R. § 1.171 et seq., and for dismissal of this action pending a reissue decision. Ford argues that the PTO's reissue procedures are both more fair and appropriate than reexamination because they allow participation by patent contestants and because the examiner's determination of validity under 37 C.F.R. § 1.175 is to be based on the totality of factors affecting patentability, not prior art and printed publications alone. In contrast, Ford emphasizes, the new reexamination procedures commenced by Dresser are ex parte, and patentability is reexamined primarily in light of the specific prior art cited by the patentee in its request for reexamination — here the Converse patent and Fox publication. Ford has announced its willingness to agree not to commence a declaratory judgment action should this case be dismissed, but only if Dresser initiates an application for reissue rather than reexamination. Ford is not willing to waive its legal right to sue for a declaratory judgment while Dresser prosecutes its application for an ex parte reexamination of its patent in light of some, but not all, of the prior art brought to its attention. Ford further opposes Dresser's request for a stay pending reexamination on grounds that it would unfairly delay this case while doing little to advance its ultimate outcome.

Ford's position has much to commend it. From the perspective of full and fair consideration of the patent validity issue, the reissue procedure is manifestly superior to reexamination. First, the scope of the PTO's inquiry into patentability is broader under reissue than under reexamination. According to Rule 1.175 of the Rules of Practice in Patent Cases, 37 C.F.R. § 1.175, applications for reissue may encompass questions of invalidity involving defective specifications, overnarrow or overbroad claims by the patentee, prior art or other information relevant to patentability which has not previously been disclosed to the PTO, and other errors or possible errors occurring during the original patent examination. Moreover, under Rule 1.176, 37 C.F.R. § 1.176, the reissue application is to be examined "in the same manner as original applications, subject to the rules relating thereto." Such examination includes a "thorough examination of the available prior art relating to the subject matter of the invention ... and ... the patentability of the invention as claimed," as well as "compliance of the application with the statutes and rules." See 37 C.F.R. § 1.104.

In contrast, under the reexamination statute, 35 U.S.C. § 302 et seq. and Rule 1.552(a)-(c) of the Rules Relating to Reexamination, patent claims will be reexamined solely on the basis of patents or printed publications. Only amended or new claims will be examined for compliance with the broader requirements for patentability contained in 35 U.S.C. § 112 and Rules 1.71-1.79 of the Rules of Practice in Patent Cases, 37 C.F.R. §§ 1.71-1.79. Subsection (c) of Rule 1.552 specifically states that questions unrelated to prior art will not be resolved in reexamination proceedings.¹ Thus, as Ford claims, the PTO will not consider in the reexamination process issues such as fraud on the Patent Office, prior public use or sale, inadequacy of the disclosure and the factual basis for the invention claimed, all of which have been raised as defenses in this case.

The reissue rules also provide opportunities for varying degrees of participation by contestants which are not available under the rules for reexamination. Indeed, after rulemaking hearings on its reexamination procedures, the Office expressly rejected suggestions relating to more participation by third parties. It stated that "the essentially ex parte nature of the reexamination proceedings was believed to be in keeping with the spirit and intent of the statute...." 26 Fed.Reg. 29176 (May 29, 1981). Where, as here, a patentee has filed an application for reexamination, the only access to the process allowed third parties is to submit, up to the date reexamination is granted, citations to prior art which are believed to be pertinent to the patent and patentability. Even where a party other than the patentee, requests reexamination,² the "requester" may only file an initial statement in support of reexamination and, if reexamination is granted, a reply to the patent owner's statement, if a reply is filed. See 37 C.F.R. § 1.535. No other submission from the reexamination requester will be considered, id., and Rule 1.560(a) expressly provides that requests by reexamination requesters to participate in interviews with examiners will not be granted.

In contrast, third-party "protestors" who are involved in pending patent litigation are permitted to participate in all stages of reissue proceedings and to proffer "any information" which, in the protestor's opinion, would make the grant of a patent improper. See generally, 37 C.F.R. § 1.219; Manual of Patent Examining Procedure §§ 1901-1922 ("PTO Manual") (1980). The PTO Manual provides that, where a court has suspended litigation for consideration of a related application by the PTO and has expressed its desire for protestor participation, the PTO will permit a protestor to submit materials generated in the litigation, see § 1901.02, to file written comments, see § 1901.07(b), and to participate in interviews between the reissue applicant and the examiner, see § 1902. In effect, the reissue procedures invite litigants fully to air their positions respecting patentability and permit the PTO to make a determination of patentability based upon a far broader scope of relevant information than is possible under the reexamination procedure.

Dresser argues nevertheless that the streamlined reexamination procedure is more appropriate in this case because reexamination proceedings, including appeals to the Board of Appeals, are to be conducted with "special dispatch." See 37 C.F.R. § 1.550. Whether reexamination applications will be resolved with greater dispatch than reissue applications filed in the midst of patent litigation, however, is unclear. Under 37 C.F.R. § 1.102, reissue applications arising out of stayed litigation are to be given "priority" over initial applications and other reissue applications.³ In such cases, the PTO will also entertain petitions under 37 C.F.R. § 1.183 to waive the two-month delay period provided by 37 C.F.R. § 1.176 before which reissue applications will be considered by the PTO. To expedite reissue, protestors involved in litigation are directed to mark all submissions boldly with the notation "REISSUE LITIGATION," and to handcarry or mail all documents to a special repository, "in order to insure prompt...