Intervening Rights: How the Blue Origin SpaceX Patent Dispute May Evolve

Rendering of a SpaceX Falcon 9 first stage after landing on the autonomous spaceport drone ship. Image credit: Jon Rosszlsa.

Rendering of a SpaceX Falcon 9 first stage after landing on the autonomous spaceport drone ship. Image credit: Jon Rosszlsa.

For space companies, technologies which seem in one’s grasp more often than not take a long time to prove out and cost millions upon millions of dollars before there is an actual working prototype demonstrating that, in fact, the technology works as envisioned. Better (or worse!) funded competitors may pop up at any moment, using similar technologies to steal the low hanging fruit of the existing space-related market. What is a space entrepreneur to do in order to protect their developing technologies and efforts from relegation to also ran status? As previously mentioned here, at least a portion of one emerging space company’s answer to this conundrum was filing at least one somewhat curious patent application.

Blue Origin, LLC (Blue) filed U.S. Patent Application No. 12/815,306, entitled “Sea Landing of Space Launch Vehicles and Associated Systems and Methods” with a priority date of June 15, 2009 which ultimately issued as U.S. Patent No. 8,678,321 in March of 2014. More popularly known as the Sea Landing Patent, this patent currently covers the broad process of a vertical takeoff rocket taking off on land and vertically landing on a sea-based floating structure. SpaceX has been incrementally and painfully working toward actually pulling this feat off for several years now and are just now about to attempt the task. To date, no one has attempted, much less accomplished, this feat. If/when SpaceX is successful, the barriers to a mainstream space economy will have demonstrably lowered.

In anticipation of accomplishing this first ever landing, SpaceX filed a pair of Inter Partes Review (IPR) challenges to Blue Origin’s Sea Landing Patent in August 2014, asserting that, under the law, Blue’s claimed inventions were already in the public domain and/or obvious in light of public disclosures made before Blue filed their application for the Sea Landing Patent. Those challenges are currently pending and are expected to take a year or so to resolve. At the conclusion of these IPRs, the Sea Landing Patent may be partially or completely invalidated, some or all of the claims may be confirmed as patentable, or some or all of the claims may be amended and confirmed as patentable.

USPTO Public PAIR record showing a new filing related to the Sea Landing Patent. Image credit: USPTO

USPTO Public PAIR record showing a new filing related to the Sea Landing Patent. Image credit: USPTO

In early December 2014, Blue filed U.S. Patent Application No. 14/559,777 which claims the benefit of the Blue’s initial patent application filing. This application is not yet available for public viewing thus is contents are not known, but educated guesses can be made. It was filed one day before Blue was invited to respond to SpaceX’s challenges to the Sea Landing Patent. It was also filed after the Sea Landing Patent issued and thus cannot be a traditional continuation or continuation in part application. Given the strength of SpaceX’s prior art and the difficulty of amending patents under the type of challenge SpaceX filed, it is likely, though not completely certain, that this application is a “reissue” application.

What is a reissue application and what does it mean for SpaceX and other would be barge landing launch services providers? A reissue patent application is filed to correct “errors” arising in a parent patent which render that patent “wholly or partially inoperative or invalid.” Reissue patent applications go through the same review and approval process as other types of patent applications and may alter the scope of the claimed invention. If the reissue patent application is approved, the parent patent is surrendered and the reissue patent goes into effect. Essentially, if Blue’s December 2014 filing is a reissue patent application, it gives them a shot before USPTO examiners to alter the scope of their claimed invention in light of the prior art SpaceX filed in their challenge, in the hopes of maintaining at least some patent protection.

Notably, the IPR process SpaceX used to challenge the Sea Landing Patent does not automatically grant a patent holder the right to amend their patent during the challenge process! In fact, the vast majority of motions to amend under IPR have been denied. Thus, when a patent is challenged via IPR, it is not unheard of for a challenged party to file a reissue application early on, fight the challenge, but then give up in the challenge after the reissue patent application is filed or the reissue patent is granted.

Assuming for the moment that Blue did file a reissue patent application in December of 2014, what happens if the Sea Landing Patent survives in one form or another? Obviously, if the Sea Landing Patent is invalidated via SpaceX’s IPR challenges and Blue doesn’t get a reissue patent granted, the public (including SpaceX) doesn’t have to worry about infringing the Sea Landing Patent. Conversely, if one or more of the Sea Landing Patent’s claims is confirmed as patentable and that claim reads on SpaceX activities, it is likely that SpaceX and Blue would continue battling over the Sea Landing Patent and/or reach some settlement. But what happens if some or all of the Sea Landing Patent’s claims survive in a substantially altered form (e.g., they contain additional limitations) via an IPR decision or issuance of a reissue patent?

First, in light of the prior art that SpaceX brought to the USPTO’s attention, the scope of any surviving claims is likely to be substantially reduced. In fact, the surviving patent’s scope (whether the original patent or a reissue) scope may be reduced so much that SpaceX’s particular take on landing a rocket at sea will not be covered! In that case, SpaceX likely tells their legal team good job and Blue must content itself with covering a narrower slice of the sea landing game. Hopefully, such a patent covers how Blue plans on utilizing the technology, thus providing them some value for their troubles!

If, as part of a reissued patent or as a result of an IPR decision, substantially altered patent claims survive and those claims read on what SpaceX plans on doing (i.e., landing first stages of rockets on sea-based platforms for later reuse), there is the matter of enforceability of those claims (“New Claims”).

Legal and equitable intervening rights are available to would be infringers such as SpaceX which insulate them from liability for activities carried out before the New Claims issue. 35 USC §252 provides for certain absolute intervening rights, stating that the New Claims cannot “affect the right of any person… who, prior to the grant of [New Claims], made, purchased, offered to sell, or used within the United States, or imported into the United States, anything patented by the [New Claims].” In other words, for goods, systems and other physical objects produced before the New Claims are granted, there is no liability for infringement! There is a catch, however: Blue secured process claims and is likely to vigorously pursue process-type New Claims. A careful reading of the absolute intervening rights clause does not explicitly provide for intervening rights for processes. Some courts have interpreted this clause to only apply to goods, applying only equitable intervening rights to processes. Equitable intervening rights arise from the last sentence of 35 USC §252 and allow a court, in its discretion, to provide for continued and potentially royalty free infringement of both process and goods-type New Claims even after the New Claims issue if the court finds such activities to be equitable. Examples where such rights are granted are where substantial preparations were made before the New Claims issued, if there were existing orders or contracts the cost of producing non-infringing goods or using non-infringing processes, and whether the infringer has made sufficient profits to recoup its investment. Courts have broad discretion in crafting such equitable intervening rights and may limit permitted use of infringing articles or processes to goods on hand at the time the New Claims issue.

SpaceX vehicles in production. Image credit: SpaceX

SpaceX vehicles in production. Image credit: SpaceX

For SpaceX, if New Claims are ultimately issued, even under equitable intervening rights, several points weigh in favor of no liability for at least some rocket launch processes involving landing at sea. First, SpaceX has several first stage cores on hand at any given time and its factory is built to produce up to forty annually, representing substantial preparation, stock on hand and investment. SpaceX has also invested a considerable amount to bring its reusable Falcon 9 program to fruition, monies that will likely take a significant amount of time to recoup. Based on factors that have previously shaped equitable intervening rights grants, if Blue is granted New Claims which SpaceX landing activities infringe, a court may very well grant them a significant amount of time to continue practicing their technologies without paying Blue damages. Interestingly, even if permitted infringement was limited to rockets on hand the emerging reusability of the F9R might result in a small fleet of reusable vehicles SpaceX could use for a significant amount of time!

As the technological envelope is pushed by emerging space companies like Blue Origin and SpaceX, the legal envelope can be explored as well and neither is as straightforward as it often seems at first glance.

Happy creating!

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