Since Vacatur Seeks Equitable Relief, Clean Hands Matter
In an opinion related to its 2021 ruling that a decision in earlier inter partes reexaminations of related patents had a preclusive effect that collaterally estopped the Patent Trial & Appeal Board (Board) from making new findings on the same issue, the US Court of Appeals for the Federal Circuit vacated the Board’s decision on remand since the patent at issue expired. SynQor, Inc. v. Vicor Corp, Case No. 20-1259 (Fed. Cir. Jun. 17, 2022) (Chen, Prost, JJ.), (Lourie, J., dissenting) (non-precedential).
After being sued by SynQor, Vicor petitioned for reexamination of several SynQor patents (including the ’021 and ’190 patents). In the ’190 patent reexamination proceeding, Vicor successfully argued that the ’190 patent claims (including new claims sought to be added by SynQor) were unpatentable over two references. After appeals to the Board (which reversed the examiner) and Federal Circuit (which reversed-in-part, vacated-in-part), the case was remanded to the Board to consider the examiner’s obviousness rejections in light of the Court’s conclusion that prior art patents anticipated certain claims.
On remand, the Board affirmed almost all of the examiner’s rejections and applied a new ground of rejection to one of SynQor’s proposed new claims. However, before the Board issued its final decision regarding the new claims, the ’190 patent expired and SynQor appealed to the Federal Circuit to vacate the Board’s decisions regarding the new claims on the ground that the ’190 patent’s expiration rendered the Board’s patentability decision moot. The Court agreed and vacated the Board’s decisions, explaining that the inability to issue the new claims meant that “the Board’s patentability determinations were unreviewable for mootness” since the Court would be “frustrated by the vagaries of circumstance” (thereby falling under the Supreme Court’s Munsingwear doctrine) from reviewing the Board’s determinations on the merits.
Similarly, in the ’021 patent’s reexamination, the examiner rejected all challenged claims, including two new claims that SynQor proposed. The Board affirmed the examiner’s rejections, and on appeal the Federal Circuit affirmed-in-part, vacated-in-part and remanded for the Board to reconsider two obviousness grounds it deemed the Board had unjustifiably reached inconsistent conclusions on (relative to a separate reexamination proceeding for another related patent). On remand, the Board again found SynQor’s proposed new claims unpatentable, unaware that the ’021 patent had expired over a year prior. In its rehearing petition, SynQor informed the Board of the ’021 patent’s expiration and asked the Board to vacate its decision on the merits. SynQor appealed after the Board declined to do so.
Appeal on the ’021 Patent
On appeal, SynQor requested that the Federal Circuit vacate the Board’s decision (for the same reasoning as in the ’190 patent appeal). Vicor argued that the Court lacked Article III jurisdiction to consider the request, and that SynQor was not entitled to equitable relief because of its failure to inform the Board of the ’021 patent’s expiration date, which caused the remand decision to be issued. Vicor also argued that the timing of the ’021 patent expiring before the Board rendered its decision versus the ’190 patent expiring well after the Board upheld the examiner’s rejections distinguishes the two cases.
The Federal Circuit agreed that although it lacked jurisdiction as to the merits of the underlying Board decision (under the Supreme Court’s decision in U.S. Bancorp), it can still take other actions regarding the litigation. Specifically, “when a case becomes moot, the appellate court ‘may make such disposition of the whole case as justice may require,’ including vacating an unreviewable decision.” Under the Munsingwear doctrine, vacatur permits an appellate court to vacate a lower court or administrative agency’s decision when review of that decision on the merits becomes moot “by the vagaries of circumstance.”
Since claims added during reexamination are not incorporated into the patent until a reexamination certificate issues and since the patents expired before their respective appeals processes completed, the proposed new claims could never issue (regardless of their merits) and any patentability determinations regarding them, prior to certificate issuance, were moot. The Federal Circuit found no material difference in terms of whether a patent expired before (or after) the Board’s final determination of unpatentability. Therefore, the Court granted the vacatur request for the ’021 patent for the same reasoning as for the ’190 patent. As in the prior appeal, the Court also found it sufficient that SynQor informed the Board of the patent’s expiration in its first submission following expiration.
The Federal Circuit vacated the Board’s remand decision and awarded costs to SynQor.
In his dissent, Judge Lourie questioned whether the two cases are truly “materially indistinguishable” in both having patents that expired before the Board’s appeals process was complete. Judge Lourie found a major difference between the Board rejecting the proposed new claims in the ’190 patent two years before it expired versus the situation of the ’021 patent where the patent expired before the Board rejected its new claims. He especially considered this difference significant since vacatur is an equitable remedy, with the party seeking vacatur having the burden to demonstrate equitable entitlement to the remedy and needing to have clean hands. To Judge Lourie, the 13-month period during which SynQor failed to notify the Board that its patent had expired looked “suspiciously like a strategic decision to lay low until the decision and, only if one lost, seek vacatur,” “like either game gamesmanship or negligence, and rewarding that conduct with vacatur is not equity.” Judge Laurie felt that SynQor should have been “upfront with the Board and informed it that, in its view, the appeal was moot,” instead of expending the Board’s scarce resources in adjudicating the appeal.
Practice Note: The majority in these cases were satisfied with the patent owner informing the Board about the status of their patent in their first submission after receiving a decision. However, given the differing opinions at the Federal Circuit, practitioners may be safer in updating the Board or other appellate body of any change in its patent(s)’ status at their earliest opportunity.