Case 1:17-cv-00770-JDW Document 439-21 Filed 07/31/24 Page 1 of 8 PageID #: 40420
`Case 1:17-cv-00770-JDW Document 439-21 Filed 07/31/24 Page 1 of 8 PagelD #: 40420
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`EXHIBIT 21
`EXHIBIT 21
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`The Resurgence and Perils of Ex Parte Reexaminations | Sterne Kessler
`7/26/24, 11:50 AM
`Case 1:17-cv-00770-JDW Document 439-21 Filed 07/31/24 Page 2 of 8 PageID #: 40421
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`PUBLICATIONS
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`/ ARTICLES
`
`Ex parte reexaminations have re-emerged as an increasingly
`important component of patent litigation and licensing
`negotiations. With the passage of the America Invents Act
`(AIA) and the advent of inter partes reviews (IPRs) and post
`grant reviews (PGRs) in 2012, inter partes reexamination were
`discontinued and ex parte reexamination fell out of favor. Over
`the last few years IPR institution rates have declined. Ex parte
`reexamination requests have increased dramatically—often
`providing a second chance for petitioners who were
`unsuccessful in IPR proceedings. The esoteric and nuanced
`reexamination rules and procedures combined with the
`complex interplay between reexaminations and AIA
`trials/litigation proceedings raise unique and oftentimes
`befuddling issues that parties must consider. This article sheds
`light on these issues, including summarizing the reexamination
`process and examining estoppel issues associated with
`establishing a substantial new question (SNQ) of patentability
`—the limiting function to allow an ex parte reexamination
`request granted. Lastly, we explore the impact of the recent
`Vivint US Court of Appeals for the Federal Circuit decision
`1
`that may subject hundreds of ex parte reexaminations that
`relied on art used in failed IPR petitions to termination.
`
`An ex parte reexamination is a powerful tool for third-party
`requesters—often defendants in a patent lawsuit—to attack
`the validity of patent claims without the estoppel risks
`associated with IPR and PGR proceedings. Patent Owners, on
`the other hand, can use ex parte reexaminations as a faster
`alternative to reissue to strengthen their patent claims against
`invalidity challenges in later or parallel AIA, district court, or US
`International Trade Commission (ITC) trials. A reexamination
`request can challenge the validity of one or more claims in the
`patent on proposed novelty or obviousness grounds based
`only on patents and other printed publications. Parties can file
`a reexamination at any time after a patent is granted and up to
`six years after it expires.
`
`After a peak of nearly 800 filings in 2012—the year the AIA
`came into effect—as expected ex parte reexamination filings
`steadily declined until 2019, when they took a somewhat
`unexpected turn. At that time, ex parte reexamination numbers
`began to rise, and continue to rise today. As shown in Figures
`1 and 2, reexamination filings have significantly increased, but
`remain far below pre-AIA levels.
`
`https://www.sternekessler.com/news-insights/publications/resurgence-and-perils-ex-parte-reexaminations-0/
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`1/7
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`The Resurgence and Perils
`of Ex Parte Reexaminations
`IP Litigator
`June 1, 2022
`Authors
`Jason D. Eisenberg, Salvador M. Bezos,
`James R. Hietala
`+ See All
`Background
`Ex Parte Reexamination
`Requests, Grant Rates, and
`Success Rates
`

`

`7/26/24, 11:50 AM
`The Resurgence and Perils of Ex Parte Reexaminations | Sterne Kessler
`Case 1:17-cv-00770-JDW Document 439-21 Filed 07/31/24 Page 3 of 8 PageID #: 40422
`A surge in reexamination requests following a “failed” AIA
`challenge accounts for a portion of the overall growth of
`reexamination filings. As shown in Figure 3, about a third of all
`such do-over reexaminations were filed in the past two years.
`Nonetheless, these do-over filings do not fully explain the
`recent increase in popularity of ex parte reexaminations.
`
`Figure 1: Ex Parte Reexam Requests Last 41 Years
`
`Figure 2: Ex Parte Reexam Requests Since AIA
`
`Figure 3: Reexam Request-PTAB Challenge Status
`
`Figure 4: Ex Parte Reexam Grant Rate
`
`The overall increase in filings since 2019 appears to be
`attributable to three primary factors: (1) Fintiv (35 U.S.C. §
`314(a)) and 35 U.S.C. § 325(d) discretionary denials, (2)
`IPR/PGR petitioners who failed on the merits, and (3) accused
`infringers who either sought to avoid PTAB-related estoppels
`or delayed filing at the PTAB until after a 35 U.S.C. § 315 bar
`but still wanted to seek a PTO invalidity challenge.
`Turning to reexamination results, a stark difference exists
`between the threshold for receiving a grant of a reexamination
`request and invalidating the claims of a patent. As shown in
`Figure 4, grant of reexamination requests has hovered around
`95%.
`Although grant rates are high, however, invalidating all the
`claims of a patent is rare, coming in at around 15% (whether
`or not a patent owner or a third party files the request), as
`shown in Figures 5 and 6.
`Rather, patent owners typically take advantage of being able
`to amend—a more difficult task and unpredictable in AIA
`proceedings—and have obtained favorable outcomes from
`reexaminations with strategic amendments, sometimes adding
`additional claims directed to infringing products.
`Figure 5: Ex Parte Reexam Outcomes
`
`https://www.sternekessler.com/news-insights/publications/resurgence-and-perils-ex-parte-reexaminations-0/
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`2/7
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`Figure 6: Ex Parte Reexam Outcomes
`
`

`

`The Resurgence and Perils of Ex Parte Reexaminations | Sterne Kessler
`7/26/24, 11:50 AM
`Case 1:17-cv-00770-JDW Document 439-21 Filed 07/31/24 Page 4 of 8 PageID #: 40423
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`A complex set of rules govern ex parte reexaminations. From a
`requester perspective, a successful reexamination request
`requires at least three things: excellent prior art supported by
`detailed claim charts, a strong expert declaration, and a
`reexamination request that ties everything together. A strong
`expert declaration must demonstrate why the claimed
`invention is in the public domain through a thorough technical
`tutorial, how and why it is obvious to combine the art, while
`demonstrating a high expectation of success in achieving the
`reference combination. Additionally, and often a shortcoming
`in requests, the request must demonstrate there are no legal,
`statutory, or rule-based estoppels, bars, or issues that prevent
`the establishment of an SNQ of patentability.
`
`Like all patent litigation, claim construction considerations are
`fundamentally important. Anticipation and obviousness
`positions must be based on solid claim construction positions
`and consider alternative constructions and all potential
`amendments for unclaimed subject matter. Importantly,
`although the broadest reasonable interpretation claim
`construction standard applies for most reexaminations, the
`ordinary and customary meaning standard applies when a
`patent expiration occurs during reexamination. These claim
`construction nuances are another issue that may trip up the
`unwary.
`
`Finally, despite the somewhat misleading “ex parte”
`characterization of reexaminations, under the new regime
`discussed below, requesters need to monitor the
`reexamination proceeding as a requester may file opposition
`or rebuttal briefs addressing certain patent owner filings.
`
`From a patent owner perspective, there are three critical
`reexamination aspects. First, although reexaminations are ex
`parte, they are extremely asymmetric attacks. Second, while
`reexaminations have a historical reputation of being slow to
`achieve a final determination, the reality is that the active
`prosecution aspect of reexaminations happens very quickly
`and the timeline for prosecution leaves little flexibility. Third,
`reexamined patents usually emerge, but with amended claims
`that are narrower, which trigger intervening rights and
`potentially reduced damages.
`
`The proceeding takes place ex parte with no opportunity for
`the requester (i.e., patent challenger) to participate after filing
`the reexamination request with few exceptions. Yet the ex
`parte nature understates the significant advantage the
`requester has even though its last word typically comes in the
`reexamination request.
`
`A reexamination request has no page limit and can be
`hundreds or thousands of pages, while raising dozens of SNQs
`and proposed rejections. Moreover, the requester has no time
`limit to file a reexamination request. And after a request is filed
`and before the CRU decides whether to grant the request, a
`patent owner cannot respond to a reexamination request,
`except as explained below. Indeed, the PTO will discard any
`response from the patent owner submitted before the PTO
`issues an Office action.
`2
`
`Unlike a reissue proceeding that may not impact the as-issued
`patent if the proceeding is abandoned, reexamination does
`not permit the patent owner to stop the reexamination
`without abandoning some or all claim scope completely.
`
`https://www.sternekessler.com/news-insights/publications/resurgence-and-perils-ex-parte-reexaminations-0/
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`3/7
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`Ex Parte Reexamination
`Proceeding Complexities
`

`

`7/26/24, 11:50 AM
`The Resurgence and Perils of Ex Parte Reexaminations | Sterne Kessler
`Case 1:17-cv-00770-JDW Document 439-21 Filed 07/31/24 Page 5 of 8 PageID #: 40424
`Reexaminations are very fast and leave virtually no timing
`flexibility for the patent owner. Only after the PTO orders the
`reexamination does the patent owner have an opportunity to
`respond. Even then, best practice suggests that a patent owner
`does not respond because the patent owner’s statement
`following a reexamination order triggers the opportunity for a
`reply from the requester. This gives the requester a valuable
`3
`second opportunity to attack the patent.
`
`Once a reexamination begins, the timeline is aggressive and
`unforgiving. Typically, within five months of instituting the
`reexamination, the patent office issues a first Office action on
`the merits. The Office action can either reject the claims based
`on the request or reject the claims entirely independent of the
`request relying on completely new art. It is more typical,
`however, for the Examiner to write an Office action based on
`the reexamination request. The patent owner has a non-
`extendable by right two-month period to respond to the first
`Office action. Here we want to note a very important
`4
`distinction from original prosecution that can create issues for
`the uninformed.
`
`During ex parte prosecution, patent owners can retroactively
`take those extensions by right and without limitation to
`receive needed flexibility. For example, extensions of time can
`allow better arguments and perhaps inventors or experts to be
`marshaled in support of a response. Even so, applicants try to
`avoid extensions of time because they are costly, both in
`dollars and in modifications to the patent term.
`
`In reexaminations, though, extensions of time are not
`retroactive or by right. Indeed, a patent owner must request an
`extension before the initial response due date and must
`comply with the deadline unless the patent office grants the
`extension. The language of the rule, Rule 1.550(c) seems
`reasonable—extensions are available with “sufficient cause”
`and “not for more than a reasonable time.” In practice, while
`extensions of two-weeks to one month are often granted, a
`longer extension is essentially impossible absent extenuating
`circumstances such as acts of nature, incapacity, or death.
`
`A patent owner may make claim amendments and add new,
`narrower claims in a reexamination proceeding. But these must
`be made to the non-final Office action and a patent owner
`cannot wait for a final Office action to file amendments as they
`will not be entered absent a showing of good cause that the
`evidence or argument was unavailable.
`5
`
`Requests for continued examination to enter post final Office
`action claim amendments in reexamination are not permitted.
`
`The Patent Office tries to conduct reexaminations such that
`the second Office action is final. Once the action becomes
`6
`final, the patent owner has limited options. The patent owner
`has no right to further prosecute. So either an after Final reply
`taking allowable subject matter or proposing very narrowing
`amendments for allowability needs to be filed or a notice of
`appeal. If the Examiners decline to change their mind in
`response to an after-final submission, the patent owner’s only
`recourse is an appeal to the Board.
`7
`
`Ultimately, based on the statistics shown above, most
`reexamination patents do eventually issue. But the result is
`that the claims are almost always amended. This is deeply
`problematic for patent owners as claims amended in
`reexamination cannot always be used to recover past damages
`because of intervening rights, a very complex area of the law.
`
`With the surge in do-over reexamination requests after a failed
`AIA proceeding, the interpretation of ex parte reexamination
`rules will likely continue to evolve as they adapt to the
`
`https://www.sternekessler.com/news-insights/publications/resurgence-and-perils-ex-parte-reexaminations-0/
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`4/7
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`Ex Parte Reexamination in a New
`State of Flux: The Impact of Vivint
`

`

`7/26/24, 11:50 AM
`The Resurgence and Perils of Ex Parte Reexaminations | Sterne Kessler
`Case 1:17-cv-00770-JDW Document 439-21 Filed 07/31/24 Page 6 of 8 PageID #: 40425
`interplay with IPR proceedings. One such evolving
`interpretation involves the relationship between establishing
`an SNQ and 35 U.S.C. § 325(d), which has become increasingly
`important and relevant. In particular, do the SNQ and § 325(d)
`tests require different and explicit requester, patent owner,
`and CRU analysis before or after granting or denying a
`request?
`
`The SNQ standard has a long history. 35 U.S.C. § 303(a) states
`in relevant part, “within three months following the filing of a
`request for reexamination . . . the Director will determine
`whether a substantial new question of patentability affecting
`any claim of the patent concerned is raised by the request.” A
`prior art patent or printed publication raises an SNQ where
`there is a substantial likelihood that a reasonable examiner
`would consider the prior art patent or printed publication
`important in deciding whether the claim is patentable. The
`8
`SNQ standard, for which inquiry is based upon fact analysis
`and performed on a case-by- case basis, seeks to protect the
`patentee from harassing invalidity challenges. The SNQ
`requirement protects patentees from having to respond to, or
`participate in unjustified reexaminations. Further, the
`requirement bars reconsideration of any argument already
`decided by the Office, whether during the original examination
`or an earlier reexamination.
`9
`
`On the other hand, 35 U.S.C. § 325(d) provides, in pertinent
`part, that “in determining whether to . . . order a proceeding
`under . . . chapter 30 [the chapter relating to ex parte
`reexamination], . . . the Director may take into account
`whether, and reject the petition or request because, the same
`or substantially the same prior art or arguments previously
`were presented to the Office.” Congress included this section
`in the AIA to similarly stop harassment of patent owners.
`
`The relationship of what is an SNQ and what qualifies for
`denial of grant under § 325(d) is unclear. For example, is the
`bar to proving an SNQ higher or lower than the bar to denying
`a request because it includes substantially the same art or
`arguments? Are the same or different factors considered for
`each? Does the CRU have to address each separately in an
`Order, or even address them at all explicitly? Does issuing an
`Order granting reexamination imply the CRU considered both
`these provisions and moved forward anyway? The Federal
`Circuit recently suggested as much in In re Vivint, 14 F.4th
`1342, 1350 (Fed. Cir. 2021). The issues,
` while still in a state of
`10
`flux, addressed in Vivint are still evolving and critical to
`effective reexamination practice.
`
`Thus, best practice requires that a requestor address both why
`they have established a SNQ and why the Office should not
`deny the request under § 325(d). The patent owner needs to
`be ready to respond through petition practice if they believe
`the requester or CRU is wrong in their analysis.
`
`1. In re: Vivint. 14 F.4th 1342 (Fed. Cir. 2021).
`2. MPEP § 2249.
`3. 37 C.F.R. § 1.535.
`4. MPEP § 2266.
`5. MPEP § 2260.
`6. MPEP § 2271.
`7. MPEP § 2273.
`8. MPEP § 2242.
`9. House Report 96-1307, 96th Cong., 2d Sess. (1980).
`10. In another case, Alarm.com Inc. v. Hirshfeld, 26 F.4th 1348
`(Fed. Cir. 2022), Alarm.com filed three ex parte
`reexaminations after three failed IPRs. The CRU sua sponte
`denied them under 35 U.S.C. § 315(e)(1) before a decision
`on grant was issued. Alarm.com sought review of the
`https://www.sternekessler.com/news-insights/publications/resurgence-and-perils-ex-parte-reexaminations-0/
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`5/7
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`

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`7/26/24, 11:50 AM
`The Resurgence and Perils of Ex Parte Reexaminations | Sterne Kessler
`Case 1:17-cv-00770-JDW Document 439-21 Filed 07/31/24 Page 7 of 8 PageID #: 40426
`Director’s vacatur decisions under the Administrative
`Procedure Act (APA), 5 U.S.C. §§ 706(2) A), (C). 26 F.4th at
`1362. The district court dismissed Alarm.com’s complaint
`on the ground that APA review of the Director’s decision
`was precluded by the ex parte reexamination procedures.
`Alarm.com appealed to the Federal Circuit. On February
`24, 2022, the Federal Circuit reversed the district court’s
`determination that Alarm.com was precluded from
`challenging the Office’s action and remand for further
`proceedings consistent with their opinion. Id. at 1362-63.
`Alarm.com subsequently dismissed the district court case.
`Alarm.com v. Hirschfeld, No. 1:21-cv-170, Docket No. 34
`(E.D. Va. April 27, 2022).
`
`This article appeared in the May/June 2022 issue (Volume 28,
`Number 3) of “IP Litigator,” published by Wolters Kluwer. This
`article originally appeared in the 2021 PTAB Year In Review:
`Analysis & Trends report, published by Sterne, Kessler, Goldstein
`& Fox.
`
`©
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`The Resurgence and Perils of Ex Parte Reexaminations | Sterne Kessler
`7/26/24, 11:50 AM
`Case 1:17-cv-00770-JDW Document 439-21 Filed 07/31/24 Page 8 of 8 PageID #: 40427
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