Callaway Golf Co. v. Kappos

802 F. Supp. 2d 678, 2011 U.S. Dist. LEXIS 82381, 2011 WL 3206880
CourtDistrict Court, E.D. Virginia
DecidedJuly 27, 2011
DocketNo. 1:11cv266 LMB/TCB
StatusPublished
Cited by3 cases

This text of 802 F. Supp. 2d 678 (Callaway Golf Co. v. Kappos) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Callaway Golf Co. v. Kappos, 802 F. Supp. 2d 678, 2011 U.S. Dist. LEXIS 82381, 2011 WL 3206880 (E.D. Va. 2011).

Opinion

MEMORANDUM OPINION

LEONIE M. BRINKEMA, District Judge.

Before the Court are the parties’ cross-motions for summary judgment [Dkt. Nos. 10 and 22] concerning plaintiff Callaway Golf Company’s (“Callaway”) request to vacate defendant United States Patent and Trademark Office’s (“PTO”) inter partes reexaminations of four of Callaway’s patents. For the reasons stated in this Memorandum Opinion, Callaway’s motion will be denied and defendants’ motion will be granted.

I. Background

A. Statutory and regulatory background

A patent’s validity can be challenged either in a lawsuit filed in federal district court or through a reexamination conducted by the PTO. Congress has created two types of patent reexamination procedures: ex parte and inter partes. Congress created the ex parte reexamination in 1980. Either the PTO on its own initiative, or a third party, can request an ex parte reexamination. 37 C.F.R. § 1.520.

In 1999, Congress created the inter partes reexamination. Unlike an ex parte reexamination, which allows the PTO to initiate a reexamination, an inter partes reexamination must be requested by a third party. When a request for inter partes reexamination is made, the PTO must determine whether a “substantial new question of patentability affecting any claim of the patent concerned is raised by the request.” 35 U.S.C. § 312(a). If the PTO determines that such a question exists, the PTO is required to begin the inter partes reexamination. 35 U.S.C. § 313. After the PTO initiates an inter partes reexamination, the patent owner may submit pleadings that support the patent’s validity. The requestor may 1) submit written comment to the patent owner’s response, 2) appeal an adverse reexamination decision to the Board of Patent Appeals and Interferences (“BPAI”), and 3) brief and argue its position before the board. Cooper Techs. Co. v. Dudas, 2007 WL 4233467, at *1, 2007,U.S. Dist. LEXIS 88046, at *2 (E.D.Va. Nov. 30, 2007), aff'd 536 F.3d 1330 (Fed.Cir.2008).

B. Callaway’s patents and the 1996 settlement agreement

Callaway and its competitor, Acushnet Company (“Acushnet”) manufacture golf balls. Callaway owns U.S. Patent Nos. 6,210,293; 6,503,156; 6,506,130; and 6,595,873 (“Sullivan patents”), which claim a multi-layer golf ball. Pl.’s Statement of Material Facts at ¶ 2.

On August 5, 1996, Acushnet entered into an agreement with Spalding and Evenflow Companies, Inc., Callaway’s predecessor-in-interest, and Lisco, Inc., a wholly owned Spalding subsidiary, to resolve various patent-related claims in various civil actions then pending in the United States District Court for the District of Delaware (Civil Action Nos. 95-CV-366 and 95-CV-640, filed by Spalding and Civil Actions 95-CV-10384 and 95-CV-10376, filed by Acushnet). The agreement contained a “Dispute Resolution” clause, which provides that:

[a]ny dispute arising out of or relating to patents, including the above mentioned patents, other intellectual property owned or controlled by the parties, or claims relating to advertising shall be resolved in accordance with the procedures specified in this Section, which [682]*682shall be the sole and exclusive procedure for the resolution of any such disputes.

A253-55. The agreement requires a series of settlement discussions and mediation. If the dispute is unresolved after mediation, “either party may initiate proceedings but only in the United States District Court for the District of Delaware, and no other. Said court retains jurisdiction of the parties for such purposes.” A256. The Stipulations of Dismissal of the Delaware, cases, filed under Fed.R.Civ.P. 41, stated that the United States District Court for the District of Delaware “shall retain jurisdiction to resolve any and all disputes arising out of the Settlement Agreement in accordance with the terms of the Settlement Agreement.” A258-59.

Problems arose between Callaway and Acushnet over Acushnet’s Titleist Pro VI line of golf balls, with Callaway alleging in 2005 that these golf balls infringe its Sullivan patents. Throughout 2005, the parties tried to resolve their dispute, but failed to do so. Pl.’s Statement of Material Facts at ¶ 3.

C. Acushnet’s inter partes reexamination request

On January 17, 2006, Acushnet requested that the PTO conduct inter partes reexaminations of Callaway’s Sullivan patents. A2, 2200, 2518, 2819. On April 7, 2006, the PTO determined that Acushnet’s request raised a substantial new question of patentability and accordingly began inter partes reexaminations of the Sullivan patents. A187.1

On April 13, 2006, Callaway filed an administrative petition to vacate the reexaminations, arguing that Acushnet had violated the 1996 settlement agreement by requesting the reexaminations. A231. On June 7, 2006, the PTO denied Callaway’s petition, concluding that the reexamination statute requires the PTO to order and conduct inter partes reexamination when a substantial new question of patentability is found and that an agreement between parties does not relieve the PTO of that statutory duty. A436. The PTO also noted that Congress passed the inter partes reexamination statute in 1999, three years after the parties entered their settlement agreement. Id. Moreover, the PTO concluded that such a contractual provision that prohibits challenges to patent validity would be contrary to public policy, and reasoned that withdrawing the inter partes reexaminations “would leave both the public and the patent owner with an unresolved request for reexamination and unresolved substantial new question of patentability[.]” A437-38.

On June 16, 2006, Callaway filed a petition for reconsideration of the denial of its petition to vacate. A440. On September 7, 2006, the PTO denied the petition for reconsideration. A551. The PTO relied largely on the reasoning of its earlier decision, concluding that Acushnet did not breach the 1996 agreement, and that the agreement does not bind the PTO. Id. The PTO stated that its decision constitutes a “final agency action” under 5 U.S.C. § 704, which would allow Callaway to seek judicial review in federal court; however, Callaway did not seek judicial review and the reexamination continued. A565.

D. Litigation in the United States District Court for the District of Delaware

On February 9, 2006, shortly after Acushnet requested inter partes reexaminations, Callaway sued Acushnet in the [683]*683United States District Court for the District of Delaware, alleging that Acushnet’s Pro VI golf balls infringe the Sullivan patents. Callaway Golf Co. v. Acushnet Co.,

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802 F. Supp. 2d 678, 2011 U.S. Dist. LEXIS 82381, 2011 WL 3206880, Counsel Stack Legal Research, https://law.counselstack.com/opinion/callaway-golf-co-v-kappos-vaed-2011.