Pic Inc. v. Prescon Corp.

• Decision Date: 05 March 1980
• Docket Number: Civ. A. No. 76-432.
• Citation: 485 F. Supp. 1302
• Parties: PIC INCORPORATED, Plaintiff and Counterclaim Defendant, v. The PRESCON CORPORATION, Defendant and Counterclaim Plaintiff, v. Frederic A. LANG, Counterclaim Defendant.
• Court: U.S. District Court — District of Delaware

485 F. Supp. 1302

PIC INCORPORATED, Plaintiff and Counterclaim Defendant, v. The PRESCON CORPORATION, Defendant and Counterclaim Plaintiff, v. Frederic A. LANG, Counterclaim Defendant.

Civ. A. No. 76-432.

United States District Court, D. Delaware.

March 5, 1980.

William J. Wier, Jr., and Robert Jacobs, Bader, Dorsey & Kreshtool, Wilmington, Del., Robert J. Washburn, Woodcock, Washburn, Kurtz & Mackiewicz, Philadelphia, Pa., for PIC Inc. and Frederic A. Lang.

Richard P. Beck, Morris, James, Hitchens & Williams, Wilmington, Del., Paul VanSlyke and Ben D. Tobor, Arnold, White & Durkee, Houston, Tex., for The Prescon Corp.

OPINION

MURRAY M. SCHWARTZ, District Judge.

This case is an action by plaintiff PIC Incorporated ("PIC"), alleging patent infringement by defendant The Prescon Corporation ("Prescon"). PIC is the assignee of Patent No. 3,646,748 for an invention entitled "TENDONS FOR PRESTRESSED CONCRETE AND PROCESS FOR MAKING SUCH TENDONS" which was issued to Frederic A. Lang on March 7, 1972 ("the Lang patent"). Prescon denied infringement and counterclaimed against PIC and Lang for a declaratory judgment that the patent is invalid for many reasons, including the existence of prior art and fraud on the Patent Office. Following commencement of this litigation, Lang filed an application for reissue of the Lang patent with the Patent and Trademark Office ("PTO") under 37 C.F.R. § 1.171 and plaintiff moved to stay the litigation pending the PTO's decision. By order of this Court dated August 5, 1977, plaintiff's motion for a stay was granted. The proceedings before the PTO have now been concluded; following a decision against the validity of the Lang patent by the Examiner, the PTO Board of Appeals reversed the Examiner and upheld the validity of the Lang patent over the prior art cited to it during the proceedings. In addition, the Assistant Commissioner for Patents found no fraud in the procurement of the patent, at least with regard to the two pieces of prior art he examined. PIC has moved for partial summary judgment on the issues of invalidity by reason of prior art and fraud in the procurement of the patent, claiming that the PTO decision in the reissue application proceeding should be given preclusive effect in this Court. For the reasons set forth below, plaintiff's motion will be denied. A detailed discussion of the reissue application procedure and the facts as applied to that procedure is essential to an understanding of the holding that a result favorable to a patentee in a PTO reissue proceeding on issues of invalidity by reason of prior art and fraud is not entitled to preclusive effect in the courts.

I. The Reissue Application Procedure: In General

In March, 1977, the Patent and Trademark Office amended its regulations concerning reissue applications and provided, inter alia, for limited participation by interested parties and the public in such proceedings.¹ Under these new regulations, applicants for reissue may obtain a ruling by the PTO on the validity of a patent without declaring under oath their belief that the original patent is "wholly or partly inoperative or invalid."² Through the use of this procedure, a patentee may now direct the PTO's attention to "prior art or other information relevant to patentability, not previously considered by the Office, which might cause an Examiner to deem the original patent invalid," without admitting the patent's invalidity.³ It was hoped that this procedure would "improve the quality and reliability of issued patents."⁴

In accordance with the PTO's Manual of Patent Examining Procedures ("M.P.E.P."), applications in which questions of "fraud" or "violation of the duty of disclosure" are present are forwarded to the Assistant Commissioner for Patents. § 721.01, M.P. E.P. Resolution of the fraud issues is deferred while the Primary Examiner first considers all other issues.

As noted, the new PTO reissue regulations provide for participation by protestors against pending applications. 37 C.F.R. § 1.291. Such parties may file with the Examiner objections to pending reissue applications which may include citations to prior art or other related information.

As originally promulgated, the reissue rules contemplated no further participation by protestors in reissue proceedings.⁵ However, further guidelines relating to 37 C.F.R. §§ 1.175 and 1.291, adopted on December 12, 1978,⁶ expanded somewhat the role of protestors in the reissue proceeding. A protestor may now "monitor the proceedings," file such additional papers as it considers appropriate, and request the PTO to supply it with "copies of Office actions or other documents mailed by the Office." (977 O.G. 11 at 13). Such documents will be sent to protestors at the "sole discretion of and for the convenience of" the PTO.⁷ Under the 1978 guidelines, the Examiner may communicate with the protestor in writing to seek clarification and/or additional information. It is pointed out, however, that such communication normally should not be necessary where the protestor has supplied only published prior art. It is also made clear that protestors are to refrain from any oral communication with Examiners except to ask purely procedural questions, unless specifically authorized in writing by the Assistant Commissioner for Patents.

The Examiner is also given discretion to solicit the protestor's comments on responses to PTO actions submitted by patent applicants. Such an opportunity to comment is only provided, however, "where it would appear to be of benefit to the examination process and only with the approval of a Supervisory Primary Examiner."⁸

The new guidelines also provide a very limited opportunity for protestor participation in interviews with the patent Examiner and in oral argument before the Board of Appeals. Protestor participation in interviews will normally not be permitted by the Assistant Commissioner unless "special justifying circumstances exist,"⁹ and in no case will a protestor be granted an interview with an Examiner without the applicant present. Under the regulations, only a patent applicant may appeal an adverse decision of the Examiner to the Board of Appeals.¹⁰ In the proceedings before the Board, the Primary Examiner is given the opportunity to file a brief and appear at an oral hearing.¹¹ Protestors may likewise request permission to file a brief and appear at oral argument. The protestor's brief, however, is only to be considered by the Examiner in preparing his answering brief. Moreover, the right to participate in oral argument is granted by the Board of Appeals only if it decides that "the issues on appeal are such that protestor's participation at the hearing would be helpful."¹² However, "if appellant reissue applicant does not request an oral hearing, or provides timely notification to the Board and protestor that appellant will not appear, protestor will not be heard."¹³ Thus, the patent applicant has the ability to prevent the protestor from appearing before the Board of Appeals.

Any applicant dissatisfied with the decision of the Board of Appeals may appeal to the U. S. Court of Customs and Patent Appeals or file a civil action in a district court. (37 C.F.R. §§ 1.301, 1.303). No provision is made in the PTO regulations for an appeal by a protestor who is dissatisfied with the Board's decision.

A recent review of the reissue application procedures by the Assistant Commissioner indicates that more protestor participation than was originally contemplated by the PTO is being provided in accordance with the December, 1978 guidelines. However, "protestor participation has been approached cautiously because of the delay and harassment dangers and resultant expenses to the applicant."¹⁴ Moreover, the PTO has declined to declare a reissue application proceeding a "contested case"¹⁵ because of these same concerns, and the PTO's Manual of Patent Examining Procedures states that "the question of patentability has been uniformly looked upon as ex parte in character. It is a question between the applicant and the office on behalf of the public."¹⁶

II. The Reissue Application Procedure: Ex Parte Lang

In April, 1977, Lang filed an application for reissue of the Lang patent with the PTO, along with a prior art statement that directed the PTO's attention to prior art which had not been previously cited to the PTO. Lang informed the PTO that "the majority of this material was brought to applicant's attention by the defendant in Civil Action No. 76-432."¹⁷ Lang also supplied the PTO with all papers filed in this litigation (Doc. No. 56A, A 41), including the Opinion and Order of this Court staying the litigation pending the reissue proceeding.¹⁸

Lang's request for expedited consideration of his claims was granted by the Assistant Commissioner (A 73), and Prescon was given the opportunity to file a protest under 37 C.F.R. § 1.291. In so doing, the Assistant Commissioner stated, "it is recognized, of course, that Prescon is under no obligation to participate in any manner in this proceeding. The decision as to whether or not to file a protest is soley sic within the discretion of Prescon." (A 63). At the same time, a "requirement for information" consisting of thirty detailed questions concerning the prior art cited by Lang was directed to Lang. It was required that any papers filed on behalf of either PIC or Prescon reflect service on the other party but the PTO noted that absent a protest or request from Prescon to do so, it would not supply Prescon with copies of actions by the Primary Examiner or papers originating from the PTO. Lang's answers to the PTO's request for information were filed in November, 1977. (A 75-101). Included with this response was a letter from Prescon's counsel to Lang stating that Prescon had decided not to file a protest.¹⁹ Prescon did, however, direct Lang's attention to additional materials, including prior art, that were relevant, in its view, to...