Free Memorandum - District Court of Arizona - Arizona

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Michael S. Rubin (#005131) David Bray (#014346) MARISCAL WEEKS MCINTYRE & FRIEDLANDER, PA 2901 North Central Avenue, Suite 200 Phoenix, Arizona 85012-2705 Robert R. Brunelli (#20070) Benjamin B. Lieb (#28724) SHERIDAN ROSS P.C. 1560 Broadway, Suite 1200 Denver, Colorado 80202-5141 Attorneys for Robert E. Moroney, LLC, Robert Moroney, and A Major Difference, Inc. IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Erchonia Medical, Inc., et al. Plaintiffs, v. Miki Smith, et al. Defendants. Erchonia Medical, Inc. et al. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

No. CIV 02-2036-PHX-MHM

17 Plaintiffs, 18 v. 19 Miki Smith, et al. 20 Defendants. 21 22 23 24 25 26 27 28 v. Erchonia Medical, Inc., et al. Defendants. Robert E. Moroney, LLC, et al. Plaintiffs,

ROBERT E. MORONEY AND ROBERT E. MORONEY, LLC'S BENCH MEMORANDUM RE: EFFECT OF REISSUE APPLICATION FOR U.S. PATENT NO. 6,013,096

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Pursuant to the Court's June 30, 2006 Order, Robert E. Moroney and Robert E. Moroney, LLC (collectively "REM") submits this Bench Memorandum to the Court to address the following issues related to the pending Reissue Application for United States Patent No. 6,013,096 ("the '096 Patent"): (1) The effect of the reissue application process on the asserted claims of the '096 Patent; and REM's right to assert new counterclaims and defenses to any patent that reissues from the '096 Patent.

6 7 8 I. 9 10 (2)

INTRODUCTION The '096 Patent was filed on November 19, 1997 and was issued on January 11,

2000. Prior to the initiation of its action for infringement of the '096 Patent against REM, 11 Erchonia Medical, Inc. and Kevin Tucek (collectively "Erchonia") filed a reissue 12 application with the U.S. Patent and Trademark Office ("USPTO") seeking to increase the 13 claim scope of the '096 Patent. That reissue application remains pending. The Court has 14 requested the parties to submit bench memoranda outlining how the pending reissue 15 application may affect the current litigation, including by way of procedure, additional 16 required discovery, and pending and additional claims. 17 II. 18 A. 19 A patentee may obtain a reissue to correct a patent that is or may be deemed wholly 20 or party inoperative or invalid. 35 U.S.C. § 251. One of the possible reasons for a 21 patentee to seek reissue may be because the claims of the original patent may be too 22 narrow (failing to protect the full scope of the invention) as Erchonia has alleged in this 23 case. See Chisum, D., Chisum on Patents § 15.01. The filing of this type of reissue 24 application is often referred to as a "broadening reissue." 25 To obtain a reissue, the patentee must file the same parts required for an application 26 for an original patent, i.e., specification, drawings, and amendments. 37 C.F.R. §§ 1.171, 27 1.173. 28 The reissue applicant must also submit an oath or declaration establishing The Reissue Application REISSUE APPLICATIONS IN GENERAL

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ownership of the patent, consent to the reissue examination, and a statement why the applicant believes that the patent is partially or wholly inoperative. 37 C.F.R. § 1.173. The application for reissue of a patent constitutes an offer to surrender the patent, the surrender taking effect upon reissue of the patent. 37 C.F.R. § 1.178; Manual of Patent Examining Procedure ("MPEP") § 1416. Until the reissue, the original patent remains in effect. Id. B. Examination Of The Reissue Application

Once a complete reissue application is submitted, the reissue application is "examined in the same manner as a [regular] patent application." 37 C.F.R. § 1.176; Chisum § 15.03[5]; MPEP § 1440. The examination of any patent application is between the USPTO and the applicant, i.e., it is not an adversarial process, nor can third parties participate. Importantly, a reissue application is subject to the same duty of disclosure requirements as is a regular application, i.e., the applicant has a "duty to disclose to the Office all information known to the applicants to be material to patentability as defined in § 1.56." See MPEP § 1418; 37 C.F.R. § 1.56. The reissue application also exposes all claims of the original patent to further examination. L.E.A. Dynatech, Inc. v. Allina, 49 F.3d 1527 (Fed. Cir. 1995). C. Special Treatment Of Reissue Applications Involved In Litigation

Reissue applications are treated as special and are generally "acted on by the 20 examiner in advance of other applications." 37 C.F.R. § 1.176. The highest priority is 21 given to reissue patent applications involved in litigation that have been stayed by a court 22 pending reissue. MPEP § 1442.01. On the other hand, the USPTO may suspend action 23 on a reissue application for patent involved in litigation "in order of avoid duplication of 24 effort" unless: "(1) a stay of litigation is in effect; (2) the litigation has been terminated; 25 (3) there are no significant overlapping issues between the application and the litigation; 26 or (4) it is the applicant's desire that the application be examined at that time." MPEP § 27 1442.02; Chisum § 15.04[3][b]. Upon allowance, the reissue patent is "printed in such a 28 manner as to show the changes over the original patent." MPEP § 1401.11. -3Document 338

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D.

The Effect Of Reissue

A reissued patent is fully effective as of its issue date. 35 U.S.C. § 252. Surrender of the original patent does not affect any pending action or abate any cause of action to the extent, but only to the extent, that the asserted claims of the original and reissue patents are identical. See Chisum § 15.05: The surrender of the original patent shall take effect upon the issue of the reissued patent, and every reissued patent shall have the same effect and operation in law, on the trial of actions for causes thereafter arising, as if the same had been originally granted in such amended form, but in so far as the claims of the original and reissued patents are substantially identical, such surrender shall not affect any action then pending nor abate any cause of action then existing, and the reissued patent, to the extent that its claims are substantially identical with the original patent, shall constitute a continuation thereof and have effect continuously from the date of the original patent. 35 U.S.C. § 252.

12 However, if claims of a reissued patent are sought to be asserted against the alleged 13 infringer, the patent holder must amend its complaint to assert the reissued patent. See 14 e.g., Aspex Eyewear, Inc. v. E'Lite Optik, Inc., No. 98-2996, 2002 U.S. Dist. LEXIS 15 24564, at *4 (N.D. Tex. Dec. 20, 2002), citing, Seattle Box Co. v. Indus. Crating & 16 Packing, Inc.,731 F.2d 818, 827 (Fed. Cir. 1984) ("An original patent cannot be infringed 17 once a reissue patent has issued. The original claims are dead."). Further, amendments, 18 arguments and other actions during a reissue application may affect the interpretation of 19 the reissued patent claims, including claims derived from the original patent. Fromson v. 20 Anitec Printing Plates, Inc., 132 F.2d 1437, 1443 (Fed. Cir. 1997) ("The prosecution 21 history when a patent is reissued is part of the framework in which the patent is construed, 22 as is the prosecution history of the original patent."). Additionally, applicant conduct 23 during the reissue application may be a source of additional inequitable conduct claims 24 and defenses. See Hewlett-Packard Co. v. Bausch & Lomb Inc., 882 F.2d 1556, 1563 25 (Fed. Cir. 1989) (inequitable conduct that occurs during prosecution of a reissue 26 application renders all the claims of the reissued patent, including the original claims, 27 unenforceable). Inequitable conduct arises where an applicant breaches the duty to 28 prosecute patents with candor and good faith, including the duty to disclose information -4Document 338

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known to the applicant that is material to patentability of the claims in the pending reissue application. Purdue Pharm. L.P. v. Endo Pharm. Inc., 438 F.3d 1123, 1128 (Fed. Cir. 2006). III. THE '096 PATENT REISSUE APPLICATION A. Procedural Background

On November 6, 2001, prior to commencement of this action, Erchonia filed a broadening reissue patent application for the '096 Patent. A copy of the '096 Patent reissue application file history is attached hereto as Exhibit 1 ("Reissue App."). In support of its application, Erchonia gave an explanation as to the nature of its request to broaden its patent: "[t]he attorney preparing the original application failed to appreciate the full scope of the invention." (Reissue App., p. 148.) B. Erchonia's Proposed Amendments

Erchonia filed an additional 14 claims (claims 20-34) in the reissue application. The USPTO, in an office action dated September 9, 2004, rejected as unpatentable all proposed new claims for being obvious in light of prior art. (Reissue App., pp. 58-64.) In response to this office action, Erchonia cancelled all new claims, i.e., claims 20-34. (Id., pp. 46-57.) As a result, Erchonia ended up with the same claims as the '096 Patent and the USPTO issued a notice of allowability on January 19, 2006. (Id., pp. 5-7.) On April 5, 2006, a telephone interview was held to discuss the status of the reissue application. The Summary of the telephone interview indicates: "[Erchonia's]

representative was informed that prosecution would be reopened since upon further review it was determined that no errors were currently being corrected in the reissue and as such could not issue." (Id., p. 2.) Thus, it appears, that the reissue application for the '096 Patent is still pending and could be for some time.1 It is REM's understanding, based upon conversations between counsel, that Erchonia intends to continue to pursue the reissue application and to assert any reissued patent against REM.

In contrast, Erchonia represented months later during the June 29, 2006 Status Conference that the reissue application had been allowed and was expected to issue shortly. -5Document 338

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C.

Erchonia Has Failed To Disclose Newly-Discovered Prior Art To The '096 Patent

On March 3, 2003, REM notified Erchonia of prior art uncovered during discovery 3 in this action that is highly material to the patentability of the claims in the reissue 4 application. (See March 3, 2003 Letter to Erchonia's counsel attached hereto as Exhibit 5 2.) As best as REM can ascertain, these prior art references have never been disclosed by 6 Erchonia during the reissue application, even though Erchonia has a continuing duty to 7 disclose this prior art under 37 C.F.R. § 1.56. 8 D. 9 10 11 12 13 14 15 A. 16 17 18 19 20 21 22 23 24 Regardless of whether the reissue patent claims are identical to those of the '096 25 Patent, REM will have new counterclaims and defenses available relating to Erchonia's 26 actions during the reissue application process. 27 continues to have a duty of disclosure and candor to submit prior art that may be material 28 to the patentability of the claims pending in the reissue application. Although additional -6Document 338 As noted above, Erchonia has and The Effect Of Reissuing On Pending Claims-At-Issue Of The '096 Patent Erchonia Has Also Failed To Disclose The Court's Claim Construction

The interpretation of the asserted claims of the '096 Patent in this action is also highly material to the patentability of claims pending in this reissue application. Yet, Erchonia has failed to submit the Court's claim construction of the '096 Patent in the reissue application. IV. THE EFFECT OF THE REISSUED PATENT ON THE PRESENT ACTION

Should the pending claims of the reissued patent be identical to the asserted claims of the '096 Patent, the claims of the reissued patent must be treated as one continuous right. 35 U.S.C. § 252. Interpretation of those asserted claims would remain unchanged. However, when the patent reissues, Erchonia must amend its Complaint to assert the reissued patent as a result of surrender of the '096 Patent to obtain reissue, i.e., the '096 Patent will have ceased to exist. Aspex Eyewear, 2002 U.S. Dist. LEXIS 24564 at *4. B. REM's Right To Assert New Defenses Resulting From The Reissue Application For The '096 Patent

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material prior art references were provided to Erchonia, it has not disclosed this new prior art to the USPTO. Nor has Erchonia disclosed the Court's claim construction. REM believes that Erchonia's failure to disclose this material information is deliberate. As such, at a minimum, REM has additional claims and defenses to the assertion of the reissued patent based upon inequitable conduct. REM must have a full and fair opportunity to assert all available claims and defenses to that reissued patent if Erchonia is to have any monetary or equitable relief thereunder. VI. CONCLUSION For the foregoing reasons, REM suggest that a stay of these proceedings would be most appropriate until the examination of the reissue application has been completed. Such a stay would likely prompt the USPTO to give higher priority to the pending reissue application as noted above. When the patent has reissued, Erchonia should then be permitted to amend its Complaint to assert the reissued patent to the extent that it is appropriate to do so and REM can then assert any new counterclaims and defenses that arise from the reissue application process and Erchonia's assertion of the reissued patent. Once this pleading process is completed, REM suggests that a status conference be held to set a schedule for any additional and necessary discovery, etc. related only to the new claims and defenses. Dated: July 28, 2006 Respectfully submitted,

By:

s/ Benjamin B. Lieb Michael S. Rubin David Bray MARISCAL WEEKS MCINTYRE & FRIEDLANDER, PA Robert R. Brunelli Benjamin B. Lieb SHERIDAN ROSS P.C. Attorneys for Robert E. Moroney, LLC, Robert Moroney, and A Major Difference, Inc.

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CERTIFICATE OF SERVICE I hereby certify that on July 28, 2006, I electronically transmitted or caused to be transmitted the attached ROBERT E. MORONEY AND ROBERT E. MORONEY, LLC'S BENCH MEMORANDUM RE: EFFECT OF REISSUE APPLICATION FOR U.S. PATENT NO. 6,013,096 to the Clerk's Office using the CM/ECF system for filing and transmittal of a Notice of Electronic Filing to the following ECF registrants: David Geoffrey Bray: [email protected], [email protected] Michael S. Rubin: [email protected], [email protected] Ray Kendall Harris: [email protected], [email protected] Timothy R. Hyland: [email protected], [email protected], [email protected] Steven Plitt: [email protected], [email protected], [email protected] Dominic Lewis Verstegen: [email protected], [email protected], [email protected] Bradley R. Jardine: [email protected], [email protected], [email protected] Michael Warzynski: [email protected], [email protected] Scott A. Salmon: [email protected] Ira M. Schwartz: [email protected], [email protected], [email protected] Michael A. Cordier: [email protected], [email protected], [email protected] In addition, a copy of the above-referenced pleading was mailed to the following: Gordon Samuel Bueler Bueler Jones LLP 1300 N. McClintock Drive, #B-4 Chandler, AZ 85226 Gale Peterson Cox Smith Matthews 112 E Pecan Street, Suite 1800 San Antonio, TX 78205-1521 DATED THIS 28th day of July, 2006. By:
J:\4888\-7\PLEADINGS\BENCH M EM O RE REISSUE.wpd

Gregory L. Miles Lori A. Curtis Davis Miles PLLC P.O. Box 15070 Mesa, AZ 85211-3070

s/ Benjamin B. Lieb

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