A Critique Of Recent Opinions Of The Federal Circuit In Patent Interferences

1989Journal of the Patent and Trademark Office Society, volume 71 (1989), pages 439-59

TABLE OF CONTENTS

I. Introduction
II. Substantive Interference Law
A. Excuses for Non-Activity During a Classical Diligence Period
Griffith v. Kanamaru
B. Proof of Successful Testing as a Requirement for Proof of an Actual Reduction to Practice
Newkirkv. Lulejian
C. Intefering Claims in Patent-Patent Interferences
Advance Transformer Co. v. Levinson
D. The Effect of Suppressing or Concealing An Actual Reduction to Practice
Lutzker v. Plet
E. The Effect of Ties in Invention Dates
Oka v. Youssefyeh
F. Grounds for Splitting CountsBigham
 v. Godtfredsen
III. Interference Procedure
A. Burdens of Proof and Persuasion Where an Applicant Copied a Claim from a Patent
Martin v. Mayer
B. Interferences Between Commonly Owned Cases
Consolidated World Housewares, Inc. v. Finkle
C. Agreements Between The Parties Concerning Procedure
Utter v. Hiraga
IV. Post-Interference Practice
A. The Effect of 37 CFR 1.204/1.608 Declarations in Subsequent Litigation
Baker Oil Tools, Inc. v. Geo Vann, Inc.

I. Introduction

This article covers Federal Circuit interference opinions published since those covered in the author's previous article by the same title at 69 JPTOS 657 (1987) through December 31, 1988.

The Federal Circuit has still published remarkably few opinion in new rule interferences1 and none at all involving a patentability question in the interference context. Accordingly, its most interesting recent interference opinions have involved procedural questions that will continue to arise under the new rules. A particularly welcome opinion was Utter v. Hiraga, which decided that interferents' procedural agreements are enforceable in the interference itself. On the other hand, in Martin v. Mayer the court continued some ancient and mischievous nonsense concerning the allocation of burdens of proof and/or persuasion where an applicant has copied a claim from a patent.

II. Substantive Interference Law

A. Excuses for Non-Activity During a Classical Diligence Period

Griffith v. Kanamaru, 816 F.2d 624, 2 USPQ2d 1361 (Fed. Cir. 1987) (opinion by Senior Circuit Judge Nichols for a panel that also consisted of Circuit Judges Bissell and Archer).

In this, the first new rule interference to be decided by the Federal Circuit, the court maintained the traditional hard line on classical diligence.2 While this country has a first-to-invent system, not a first-to-file system, it is exceedingly difficult for a first conceiver to establish the 35 USC 102(g) "reasonable diligence" required to tack a conception date prior to its opponent's reduction to practice to its own later reduction to practice if the period in question is of significant length.

Appellant Griffith was an applicant and the junior party. He had a conception date of June 30, 1981, and an actual reduction to practice date of January 11, 1984. Appellee Kanamaru was a patentee and the senior party, relying on a U.S. filing date of November 17, 1982. Thus, the party Griffith had to establish reasonable diligence from just prior to November 17, 1982, to January 11, 1984.

When the interference was declared, the party Griffith was put under an order to show cause why judgment should not be entered against it immediately pursuant to 37 CFR 1.617(a).3 The party Griffith filed "[a]dditional evidence" pursuant to 37 CFR 1.167(b),4 but the board entered summary judgment against it pursuant to 37 CFR 1.617(g),5 and the party Griffith appealed from that judgment.

Although the party Griffith had a period of fourteen months to account for, the board and the court focused on a three-month period of inactivity from June 15, 1983, to September 13, 1983. The party Griffith advanced two excuses for its non-activity during that period.6

The party Griffith's first excuse was that Griffith, who was a professor at Cornell University, was reasonably waiting for a graduate student to do the dog work.7 However, that excuse didn't fly:

We first note that, in regard to writing for a graduate student, Griffith does not even suggest that he faced a genuine shortage of personnel. He does not suggest that Ms. Jenkins was the only person capable of carrying on with the aminocarnitine experiment. We can see no application of precedent to suggest that the convenience of the timing of the semester schedule justifies a three-month delay for the purpose of reasonable diligence. Neither do we believe that this excuse, absent even a suggestion by Griffith that Jenkins was uniquely qualified to do his research, is reasonable.8

The party Griffith's second excuse was a little better, but still not good enough to fly. That was that, "notwithstanding Cornell University's extraordinary endowment, it is reasonable, and as a policy matter desirable, for Cornell to require Griffith and other research scientists to obtain funding [which Professor Griffith required to achieve his actual reduction to practice] from outside the university."9 According to the court:

The crux of Griffith's argument is that outside funding is desirable as a form of peer review, or monitoring of the worthiness of a given project. He also suggests that, as a policy matter, universities should not be treated as businesses, which ultimately would detract from scholarly inquiry.10

However, weighty as those considerations may have been to the university, in the court's view they did not outweigh the need for early public disclosure of inventions.11 Instead, the court said that this excuse was "more in the nature of commercial development, not acceptable as an excuse for delay, than the 'hardship' cases . . . [that had been found to constitute reasonable diligence despite breaks in work on actual reductions to practice.]"12

B. Proof of Successful Testing as a Requirement for Proof of an Actual Reduction to Practice

Newkirk v. Lulejian, 825 F.2d 1581, 3 USPQ2d 1793 (Fed. Cir. 1987) (opinion delivered by Circuit Judge Newman for a panel that also consisted of Circuit Judge Friedman and Senior Circuit Judge Baldwin).

This short opinion contains several interesting holdings relating to proof of an asserted actual reduction to practice.

The critical language in the count was "means for electronically altering said pushout robot rotational operation [sic; the rotational operation of said pushout robot] by changing said stored program."13 Prior to the critical date, the party Newkirk had had in existence a device capable of performing the recited step,14 but it had not actually tested the device to ensure that it would work -- i.e., the party Newkirk had not altered the rotational operation of the pushout robot by changing the stored program. The court held that the party Newkirk had not proved an actual reduction to practice before the critical date because "Proof of actual reduction to practice requires more than theoretical capability; it requires showing that apparatus of the count actually existed and worked for its intended purpose."15

The party Newkirk sought to excuse the absence of proof that it had actually tested this feature of the recited apparatus prior to the critical date on the ground that it was an "immaterial limitation." That argument did not fly because the court held that "It is . . . well established that every limitation of the interference count must exist in the embodiment and be shown to have performed as intended."16 What makes this holding interesting, however is that the court supported it by a citation to Correge v. Murphy, 705 F.2d 1326, 217 USPQ 753 (Fed. Cir. 1983), in which the court stated that an actual reduction in practice "must include every essential limitation of the count"!17

Comment: Has the court now dropped the adjective "essential" from the old rule? If it has, it would be a blessing, for it led to nothing but confusion and had no redeeming social value at this stage of the proceedings. Instead, the problem of "immaterial" (but inconvenient) limitations in the count is better taken care of at the motion stage, during which the parties have the opportunity to move to redefine the issue by substituting a different count omitting the allegedly immaterial limitation. Once the count is decided upon, however, the rule should be, as stated in this opinion, that every (not every essential) limitation of the count must be shown to have existed in the asserted actual reduction to practice.18

C. Interfering Claims in Patent-Patent Interferences

Advance Transformer Co. v. Levinson, 837 F.2d 1081, 5 USPQ2d 1600 (Fed. Cir. 1988) (opinion delivered by Circuit Judge Newman for a panel that also consisted of Circuit Judge Bissell and Chief Judge Re of the United States Court of International Trade).

Levinson, a patentee defendant in a declaratory judgment action, counterclaimed for a 35 USC 29119 patent-patent interference with a Feinberg patent owned by the plaintiff. The district court refused to declare the interference, and the Federal Circuit affirmed, using some very peculiar logic.

As would almost necessarily always be the case, the Levinson patent and the Feinberg patent did not contain identical claims. In the PTO, of course, there is no requirement that two cases (patents or applications) contain identical claims before they are held to interfere. Phantom count practice has, at the very least, become very common. In fact, it is probably the norm rather than the exception. However, the court acted as if it had never heard of phantom counts:

interfering patents are patents that claim the same subject matter. Albert v. Kevex Corp., 729 F.2d 757, 758 n.1, 221 USPQ 202, 204 n.1 (Fed. Cir.), reh'd denied, 741 F.2d 396, 223 USPQ 1 (1984).

It is thus correct, and necessary, to compare claims, not disclosures, when comparing issued patents under section 291. The district court's findings 130-132, pointing out differences between the Levinson and the Feinberg claims, have not been shown to be clearly erroneous.

***

The threshold issue under section 291 is whether the patents contain claims to the same subject matter. *** The [district] court's conclusion that the claimed inventions are not the same has not been shown to be in error.20

Comment: In many cases the owner of the patent that the owner thinks interferes with a patent owned by another company has two alternative remedies. It can try to provoke a patent patent interference in a district court under 35 USC 291, or it can file a reissue application and try to provoke a reissue application-patent interference before the Board of Patent Appeals and Interferences under 35 USC 135. In most cases, the latter technique has been preferred because of the expertise of the Board of Patent Appeals and Interferences, which normally decides such issues more quickly, less expensively, and more accurately than it is reasonable to expect from a district court. However, the patent-patent interference option has remained open for the rare case where tactics dictate its use. The court's opinion in Advance, however, virtually destroys that option. How often will two patents actually "contain claims to the same subject matter"?

D. The Effect of Suppressing or Concealing an Actual Reduction to Practice

Lutzker v. Plet, 843 F.2d 1364, 6 USPQ2d 1370 (Fed. Cir. 1988) (opinion delivered by Circuit Judge Archer for a panel that also consisted of Circuit Judges Smith and Nies).

This short opinion contains several interesting holdings concerning suppression or concealment.21

In this case, the period between the party Lutzker's first actual reduction to practice and its filing date was approximately fifty-one months, so that the court had no difficulty at all approving the board's holding that the delay "was unreasonably long and sufficient to give rise to an inference of intent to abandon,22 suppress, or conceal the invention."23 The court conceded that, as argued by the party Lutzker, "[a]n inference of suppression or concealment may be overcome with evidence that the reason for the delay was to perfect the invention,24 but it held that delay could not be excused (1) if "the delay is caused by working on refinements and improvements which are not reflected int he final patent application"25 or (2) if "the activities which caused the delay go to commercialization of the invention."26 In this case, the "refinements and improvements" to the claimed subject matter (a canape maker) made during the fifty-one months after the party Lutzker's first actual reduction to practice were not disclosed in its patent application, and the activities that the court dismissed as "go[ing] to commercialization of the invention" were "the development of a recipe book to be sold along with the canape maker . . . and the development of a blister card on which to package the canape maker for sale."27

An additional point that takes this case out the ordinary was the presence of affirmative evidence of the party Lutzker's intent to suppress or conceal the invention.28 In this case, Mr. Lutzker (who held a number of patents on devices commercialized by his company) had testified that it was his "policy . . . not to disclose his invention[s] to the public [or to file patent applications on his inventions] until he is ready to go into commercial production."29 The board found, and the court agreed, that "Such a policy is evidence of an intent to suppress or conceal the invention. . . ."30

E. The Effect of Ties in Invention Dates

Oka v. Youssefyeh, 841 F.2d 581, 7 USPQ2d 1169 (Fed. Cir. 1988) (opinion delivered by Chief Judge Markey for a panel that also consisted of Circuit Judge Rich and Senior Circuit Judge Miller).

This opinion answers the interesting question of what to do when the parties establish the same invention date and at least one of those dates is not a filing date: ties go to the senior party.31

In this case, the senior party (Youssefyeh et al.) stood on its October 31, 1980 Japanese priority date. The junior party (Oka et al.) proved a conception within the scope of the count "in the last week of October 1980."32 However, it is standard interference law that, "where testimony merely places the acts [in question] within a stated time period, the inventor has not established a date for his activities earlier than the last day of the period,"33 and the court interpreted the last day of the last week of October 1980 as October 31.34 Thus, the court held that the party Youssefyeh's conception date and the party Oka's filing date were the same -- i.e., October 31, 1980. The court then reasoned as follows:

Oka, as the senior party, is presumptively entitled to an award of priority, and Youssefyeh, as the junior party in an interference between pending applications, must overcome that presumption with a preponderance of the evidence. Morgan v. Hirsch, 728 F.2d 1449, 1451, 221 USPQ 193, 194 (Fed. Cir. 1984); 37 C.F.R. §1.257(a)(1983). In the event of a tie, therefore, priority must be awarded to the senior party. Accord Yamaha Int'l Corp. v. Hoshino Gakki Co., 840 F.2d 1572, 1580 n.11, 6 USPQ2d 1001, 1008 n.11 (Fed. Cir. 1988) (In a trademark opposition, "where the evidence is so evenly balanced that no preponderance emerges . . . , the party having the burden of persuasion necessarily loses."). Because Youssefyeh, the junior party, failed to show a conception date earlier than Oka's filing date, Oka is entitled to priority. We reverse the board's award of priority to Yousefyeh.35

Comment: Note that this logic will not provide an answer where both parties are held to be entitled to the same filing date (whether U.S. or foreign) and neither party is held to be entitled to any date prior to its earliest filing date.36

F. Grounds for Splitting Counts

Bigham v. Godtfredsen, 857 F.2d 1415, 8 USPQ2d 1266 (Fed. Cir. 1988) (opinion delivered by Circuit Judge Newman for a panel that also consisted of Senior Circuit Judge Baldwin and Circuit Judge Mayer).

Although this was an old rule interference, the sole issue decided by the court on appeal was the propriety of the board's decision dividing the original count into two counts.37 Thus, this opinion offers some guidance concerning how the court will treat the many 37 CFR 1.633(c)(1) issues that it will likely get in new rule interferences.38

The original count had recited "certain complex penicillanic acid compounds having a side chain containing the substituent 'X',"39 which was defined as "chloro, bromo, iodo, lkyl-sulfonyloxy having from one to four carbon atoms, benzenesulfonyloxy and toluenesulfonyloxy."40 On the party Godtfredsen's motion, the PTO split41 count 1 into two new counts, each of which was allegedly drawn to patentably distinct subject matter. Count 2 recited the same penicillanic acid compounds and defined X as iodo or bromo, and count 3 recited the same penicillanic acid compounds and defined X as chloro, alkylsulfonyloxy having from 1 to 4 carbon atoms, benzensulfanyloxy, or toluenesulfonyloxy. The party Godtfredsen's motion was based on experimental data showing that the bromo and iodo compounds reacted more rapidly than the chloro compound (and, presumably, the alkylsulfonyloxy, benzenesulfonyloxy, and toluenesulfonyloxy compounds).

The party Godtfredsen relied solely on the date of its British priority application for constructive reduction to practice of the subject matter of count 2. Unfortunately for the party Godtfredsen, that application defined X as "a halogen atom" (which of course meant a fluorine atom, a chlorine atom, a bromine atom, an iodine atom, or an astatine atom42), but specifically named only chlorine (which was recited in count 3, but not in count 2). Moreover, the party Bigham proved an actual reduction to practice of the chlorine compound prior to the party Godtfredsen's British priority date.

The board awarded priority to the party Godtfredsen as to count 2 based on its Brisith priority date, but it awarded priority to the party Bigham as to count 3 based on its actual reduction to practice of the chlorine compound.

On appeal, the court specifically "assume[d] that the board did not clearly err in holding, on the evidence adduced, that in this instance the bromo and iodo species are patentably distinct from the chloro species."43 Nevertheless, the court reversed the PTO's decision splitting the original count into two counts on the ground that:

Godtfredsen can not invoke one theory of law based on chemistry (i.e. that bromo and iodo are patentably distinct from chloro in the intended chemical reaction) and, having obtained a bifurcation of count 1 on that theory, urge a contrary theory (i.e. that halogen exemplified by chloro comprises disclosure of the bromo and iodo species) in order to obtain priority as to those species.44


Having so held, the party Bigham's arguments as to why it should have been awarded priority on count 2 became moot. The party Bigham was entitled to priority as to the reinstituted count 1 for the same reason that it was entitled to priority as to count 3: namely, its actual reduction to practice of the chloro compound before the party Godtfredsen's British priority date.

III. Interference Procedure

A. Burdens of Proof and Persuasion Where an Applicant Copied a Claim from a Patent

Martin v. Mayer, 823 F.2d 500, 3 USPQ2d 1333 (Fed. Cir. 1987) (opinion delivered by Circuit Judge Newman for a panel also consisting of Circuit Judge Davis and Senior Circuit Judge Nichols).

Confusion in the Federal Circuit and its predecessor, the CCPA, as to realistic allocations of burdens of proof and persuasion in interferences traces back through Woods v. Tsuchiya, 754 F.2d 1571, 225 USPQ 12 (Fed. Cir. 1985), and Holmes v. Kelly, 586 F.2d 234, 199 USPQ 778 (CCPA 1978), at least as far as Wagoner v. Barger, 463 F.2d 1377, 175 USPQ 85 (CCPA 1972). The court seems blind to the facts (1) that final hearing involves what amounts to appellate review of decisions on preliminary motions and (2) that the decisions on certain types of preliminary motions amount to appellate review of decisions by primary examiners.

In this case, the party Mayer had copied a claim from the party Martin's patent. The primary examiner rejected that claim under the first paragraph of 35 U.S.C. 112, and the party Mayer then cancelled the first claim and copied the claim from the party Martin's patent
in modified form.45 The primary examiner did not reject the second claim for lack of support (he did reject it on other grounds not relevant here), and an old rule interference was ultimately instituted involving a count that was identical to Mayer's claim. Mayer was the senior party. Martin moved to dissolve the interference as to that count on the ground that the party Mayer did not have support for his claim corresponding to the count, and that motion was denied. The party Martin then submitted expert testimony supporting its view of the inadequacy of the party Mayer's disclosure,46 and it sought review at final hearing of the primary examiner's decision denying its motion to dissolve the interference as to that count. 47 A three-member panel of the board affirmed that primary examiner on this point, and the party Martin appealed to the Federal Circuit.

At the Federal Circuit level, the court gave no apparent weight to the fact that three successive PTO tribunals had held that the party Mayer had support for its claim corresponding to the count.48 Instead, the court ruled that the board had erred in placing "the burden of going forward"49 on the party Martin -- i.e., the burden of persuading it that the primary examiner had erred in ruling In the party Mayer's favor on the party Martin's motion to dissolve the interference as to that count. According to the court:

It is Mayer, the copier of claims from Martin's patent, who has the burden of proving, by clear and convincing evidence, that "the disclosure on which he relies supports the copied claims which became the interference counts". Burson v. Carmichael, 731 F.2d 849, 852, 221 USPQ 664, 666 (Fed. Cir. 1984). See also DeGeorge v. Bernier, 768 F.2d 1318, 1321, 226 USPQ 758, 760 (Fed. Cir. 1985).
This burden requires, as the first step, that Mayer go forward and present a prima facie case of support for the copied claim. This prima facie case must itself be established by clear and convincing evidence. If such prima facie case of support for the count [sic; copied claim] is not made, the patentee Martin will prevail without more.
It is immaterial whether the copier has the senior or junior filing date. Holmes, 586 F.2d at 236, 199 USPQ at 781.*** This ultimate burden never shifts. 50

Comment: This analysis, which does find support in Woods, Holmes, and Wagoner, places the board in a perplexing situation.

What must the patentee put in a 37 CFR 1.633(a) motion for judgment on the ground that an applicant does not have 35 USC 112 first paragraph support for a claim that it copied (either exactly or in modified form) from the patentee? If the patentee merely says "It is respectfully submitted that the applicant does not have 35 USC 112 first paragraph support" for such a claim, does the applicant have to respond by showing that it does have support for the claim?

Then, if the 37 CFR 1.610 examiner-in-chief rules that the applicant does have support for the copied claim, what must the patentee put in its brief at final hearing? If the patentee merely says "It is respectfully submitted that the examiner-in-chief was wrong in ruling that the applicant has support for the copied claim," does the applicant once again have to carry the "ultimate burden" of persuading the panel of the board that it has support for the copied claim?

In real life, of course, the patentee will do its best to persuade both the 37 CFR 1.610 examiner-in-chief and, if it loses at that level, the board that the applicant does not have support for the copied claim. However, the court's language indicates that, at each stage, the burden is on the applicant to persuade the decision maker that it does have support for the copied claim even though the lower tribunal has already held that it does. This is in contrast to the normal rule in an appellate situation, which is that the party that lost below has to persuade the next higher tribunal that the tribunal below was wrong.

B. Interferences Between Commonly Owned Cases

Consolidated World Housewares, Inc. v. Finkle, 837 F.2d 261, 4 USPQ2d 1565 (Fed. Cir. 1987) (opinion delivered by Chief Judge Markey for a panel that also consisted of Circuit Judges Davis and Bissell).

This opinion offers an interesting glimpse of the practice under 37 CFR 1.602(a), which states that:
 

Unless good cause is shown, an interference shall not be declared or continued between (1) applications owned by a single party or (2) applications and an unexpired patent owned by a single party. [Emphasis supplied.]


In this case, Consolidated World Housewares, Inc. (CH) had bought an application owned by the inventor Finkle. Later, CH bought another application on the same invention from the inventors Bankier and Muderlak. Thus, CH was not entitled to the benefit of the second paragraph of 35 USC 103, since, at the time that the two inventions had been made, those inventions were not "owned by the same person or subject to an obligation of assignment to the same person."

CH was required to pay royalties to each of its assignors, but, not unreasonably, it did not want to pay royalties to both assignors. CH initially sued both assignors, alleging that it could not determine which application was entitled to priority because Finkle would not cooperate in determining priority. The District Court dismissed the suit on the ground that the underlying dispute was actually an interference, that only the PTO has jurisdiction to conduct an interference between two applications, and that CH had not exhausted its administrative remedies until it asked the PTO to institute an interference between Finkle and Bankier et al., with Finkle's non cooperation being the "good cause" required by 37 CFR 1.602(a). Consolidated World Housewares, Inc. v. Finkle, 662 F. Supp. 389, 3 USPQ2D 1718 (N.D. Ill. 1987).

CH then asked the PTO to declare an interference between Finkle and Bankier et al., and the PTO did so -- but it limited the interference to the evidentiary phase. That is, it permitted CH to use the PTO's administrative machinery to force the party Finkle to put on its priority proofs. However, the PTO refused to decide the interference. Thus, the net effect of its actions was that, once CH had the priority proofs of both of its assignors before it, it had to decide priority pursuant to 37 CFR 1. 78(c).51

C. Agreements Between the Parties Concerning Procedures

Utter v. Hiraga, 845 F.2d 993, 6 USPQ2d 1709 (Fed. Cir. 1988) (opinion delivered by Chief Judge Markey for a panel that also consisted of Senior Circuit Judge Nichols and Circuit Judge Nies).

This opinion may have undone the mischief caused by Goodsell v. Shea, 651 F.2d 765, 210 USPQ 612 (CCPA 1981), in which the court refused to decide a dispute over an agreement not to appeal, saying:

If Goodsell desired to question whether the agreement were [sic; was] binding, he was free to seek a resolution of the matter in another court. However, he chose not to pursue such an option and appealed here. Having done so, he is bound by the record below which includes the agreement not to appeal. . . .52

In the write-up of Goodsell that appeared in U.S.C.C.P.A. Current Awareness (Patent Resources Group, Inc. 1982), the author commented that:

this refusal to consider the contract issue raised by Goodsell . . . is unfortunate because there certainly can be genuine issues of contract law in construing agreements between interferents, and it would be enormously inefficient to have to resolve those issues in some other court.99 *** Thus, it is to be hoped that the court will see fit to reconsider this aspect of Goodsell v. Shea in subsequent cases.
99Query: If Goodsell had sued Shea for breach of contract, asking for damages and a declaratory judgment that Shea had breached the contract and that his breach excused Goodsell from his agreement not to appeal from the board's decision, would the CCPA have stayed Goodsell's appeal to the CCPA pending final decision in that suit?

The court has now done just what the author hoped, although it still has not overruled Goodsell by name. In Utter there was also an agreement not to appeal, but the agreement only covered certain aspects of the interference.53 The appellee moved to dismiss the appeal, "arguing that the . . . agreement precludes Utter from appealing the board's decision."54 Rather than avoiding the issue as it had done in Goodsell, the court considered the parties' arguments in extenso and concluded that the agreement did not preclude the party Utter from raising the issue on appeal.
Comment: This decision is indeed welcome to the extent that it signals that procedural agreements between the parties during the course of an interference are enforceable in the interference.55 However, Utter cites Goodsell (for another proposition), which makes it very clear that the court was aware of Goodsell, but Utter does not frankly state that the court will no longer follow Goodsell concerning the procedure by which one can enforce such agreements. In view of the court's position that its precedents can only be overruled in banc, that leaves Goodsell as arguably viable precedent that is flatly inconsistent with Utter.

IV. Post-Interference Practice

A. The Effect of 37 CFR 1.204/1.608 Declarations in Subsequent Litigation

Baker Oil Tools, Inc. v. Geo Vann, Inc., 828 F.2d 1558, 4 USPQ2d 1210 (Fed. Cir. 1987) (opinion delivered by Circuit Judge Newman for a panel that also consisted of Senior Circuit Judge Baldwin and Circuit Judge Archer).

This opinion shows that arcane procedural points of interference practice can have substantive impact in subsequent infringement litigation. In this case, both the reason for and the effect of obscuring dates in documents accompanying a 37 CFR 1.204(c) declaration and the effect of assertions made in 37 CFR 1.204(c) declarations56 were misunderstood by a district court judge, with disastrous consequences at trial.

The patentee's assignor had been involved in a interference prior to issuance of the patent. The assignor had been a junior party applicant in a patentee-applicant interference; its effective filing date had been more than three months after the patentee's effective filing date; and, pursuant to 37 CFR l.204(c), it had filed declarations accompanied by documents evidencing activities prior to the patentee's effective filing date, which was June 7, 1971.57 In one of the 37 CFR 1.204(c) declarations, the applicants had averred "that the invention corresponding to the proposed counts of the interference had been reduced to practice by Baker Oil [i.e., the assignee, which was the plaintiff in the infringement suit] 'prior to June 7, 1971'."58 Additionally, the applicants obscured the dates on the copies of the document that accompanied the declaration, "an act on which the district court placed weight as a matter of inequitable conduct."59

The interference was declared based on the applicant's 37 CFR I.204(c) showing. Nevertheless, they later abandoned the interference. However, notwithstanding their loss in the interference, they ultimately obtained the patent in suit, and the effect in that suit of the averments in the 37 CFR 1.204(c) declaration and the obscuring of the dates in the copies accompanying that declaration is what concerns us here.

In the litigation, the defendant (which was not the owner of the patent with which the plaintiff had previously been in interference) attempted to rely on the 37 CFR l.204(c) assertion that Baker Oil had reduced to practice the invention recited in the proposed counts of the interference as an admission binding on Baker Oil in the subsequent litigation.60 (The defendant's theory was that the device allegedly actually reduced to practice had been used publicly early enough to be a 35 USC 102(b) reference and that the asserted claims were invalid over the 35 USC 102(b) reference.) Baker Oil, of course, sought to dismiss the 37 CFR 1.204(c) statement as "an assertion in the nature of a pleading which is tested in an inter-partes interference by evidence."61 Morever, Baker Oil argued that the device in question had not actually been reduced to practice, thereby removing the predicate for the defendant's 35 USC 102(b) argument.

The court was obviously troubled by what it perceived as an inconsistency between the positions taken by Baker Oil in the two litigations. According to it:

[A 37 CFR 1.204(c) declaration] is more than a pleading, but [it is] not an adjudication. It is a sworn statement of fact.62


Nevertheless, it refused to hold that Baker Oil was bound by the statement in the 37 CFR 1.204(c) declaration:

We agree with Baker Oil that the district court erred in law in its interpretation of these interference proceedings. Baker Oil's assertion before the PTO that the early device was reduced to practice should not have been given preclusive or estoppel effect. It may of course be considered as a factor in determining whether the pre-critical date uses were indeed primarily experimental, Fed.R.Evid. 801(d)(2), and Baker Oil concedes in its brief that appellees "are entitled to use the statements made in the interference as some evidence tending to refute assertions of experimentation," but it did not of itself establish that a completed invention existed at that time.63

The fact that Baker Oil had obscured the dates on the copies of the documents accompanying its 37 CFR 1.204(c) declarations was less troubling. Concealing a material fact from the Patent and Trademark Office can, of course, constitute fraud on (or inequitable conduct in) the Patent and Trademark Office. However, the Manual of Patent Examining Procedure expressly permits the "concealment" of the exact dates of alleged conceptions and actual reductions to practice in 37 CFR 1.608(b) declarations64 on the very good around that those exact dates are not material at that point in the interference. All that is material, and all that 37 CFR 1.204(c), 37 CFR 1.608(b), and the MPEP require the prospective junior party applicant to aver is that the actions in question occurred "before the patentee's effective filing date."65

In this case, the district court ruled that the patentee "had concealed the most pertinent prior art, its own device, by removing the dates from the documents [submitted with the 37 CFR 1.204(c) showing]."66 On appeal, the Federal Circuit found that the activities "concealed" had not constituted a prior public use of the invention. However, since knowingly concealing an embarrassing fact could constitute fraud even if the embarrassing fact is ultimately held to be irrelevant, the court continued as follows:

Baker Oil had correctly advised the district court that it was standard procedure before the PTO, when filing documents for the purpose of attempting to institute an interference with an issued patent, to obscure the dates on the documents as filed and merely to aver that these records antedate the filing date of the adverse patent.*** The district court referred to the "undisputed fact" of removal of the dates, apparently as evidence of culpable intent. But following this authorized and universally practiced PTO procedure carries no weight as evidence of culpable intent.67

Comment: Although the purpose and function of 37 CFR 1.131 practice is quite different from the purpose and function of 37 CFR l.201(c)/1.608(b) practice, they share the common features that not obscuring actual invention dates in the copies of the documents filed with the PTO can prematurely and unnecessarily reveal important information and that, accordingly, the PTO is quite willing to accept documents with actual dates obscured accompanied by sworn statements that the actions in question took place before a critical date. Accordingly, it is the author's opinion that the court's rationale should also apply to obscuring dates in 37 CFR 1.131 showings.68

First published in the Journal of the Patent and Trademark Office Society, volume 71 (1989), pages 439-59.

*.Copyright 1987, 1988, 1989 by Charles L. Gholz; Oblon, Spivak, McClelland, Maier, & Neustadt, P.C.; Arlington, Virginia. Portions of this article have been published previously by Patent Resources Institute, Inc. in the chapter entitled "Interferences" of the materials for PRI's twice-a-year programs on Federal Circuit Patent Law.

**.Partner in Oblon, Spivak, McClelland, Maier, & Neustadt, P.C.


Endnotes


[1].As to the continued viability of the old interference rules after the promulgation of the new interference rules, see generally Gholz, "Old Rule Interferences After the Promulgation of the New Rules." 68 JPTOS 335 (1986).

[2].The term "classical diligence" is used to refer to diligence extending from just prior to an opponent's conception date to the reduction-to-practice date of the party relying on the diligence period. This should be distinguished from diligence extending from a party's actual-reduction-to-practice date to the earlier of its filing date or its first public disclosure date. As to the latter, recently developed diligence requirements, see generally Correge v. Murphy, 705 F.2d 1326, 217 USPQ 753 (Fed. Cir. 1983). The standards for the two types of diligence appear to be significantly different, and it cannot be assumed that any precedent applicable to one type of diligence is automatically applicable to the other type.

[3].37 CFR 1.617(a). An examiner-in-chief shall review any evidence filed by an applicant under § 1.608(b) to determine if the applicant is prima facie entitled to a judgment relative to the patentee. If the examiner-in-chief determines that the evidence shows the applicant is prima facie entitled to a judgment relative to the patentee, the interference shall proceed in the normal manner under the regulations of this part. If in the opinion of the examiner-in-chief the evidence fails to show that the applicant is prima facie entitled to a judgment relative to the patentee, the examiner-in-chief shall, concurrently with the notice declaring the interference, enter an order stating the reasons for the opinion and directing the applicant, within a time set in the order, to show cause why summary judgment should not be entered against the applicant.

[4].37 CFR 1.617(b). The applicant may file a response to the order and state any reasons why summary judgment should not be entered. Any request by the applicant for a hearing before the Board shall be made in the response. Additional evidence shall not be presented by the applicant or considered by the Board unless the applicant shows good cause why any additional evidence was not initially presented with the evidence filed under §1.608(b). At the time an applicant files a response, the applicant shall serve a copy of any evidence filed under §1.608(b) and this paragraph.

[5].37 CFR 1.617(g). If a response by the applicant is timely filed, the examiner-in-chief or the Board shall decide whether the evidence submitted under §1.608(b) and any additional evidence properly submitted under paragraph (b) of this section shows that the applicant is prima facie entitled to a judgment relative to the patentee. If the applicant is not prima facie entitled to a judgment relative to the patentee, the Board shall enter a final decision granting summary judgment against the applicant. Otherwise, an interlocutory order shall be entered authorizing the interference to proceed in the normal manner under the regulations of this subpart.

[6].In a curious use of the language, excused non-activity is treated as "reasonable diligence" rather than as an excuse for not being reasonably diligent.

[7].According to the court, Professor Griffith "had promised . . . [the graduate student] she could have that task[,] which she needed to qualify for her degree." 2 USPQ2d at 1362.

[8].2 USPQ2d at 1363.

[9].2 USPQ2d at 1362.

[10].2 USPQ2d at 1363.

[11]."As the board notes, Chief Judge Markey has called early public disclosure the 'linch pin of the patent system'. Horwath v. Lee, 564 F.2d 948, 950, 195 USPQ 701, 703 (CCPA 1977)." 2 USPQ2d at 1362.

[12].2 USPQ2d at 1363.

[13].3 USPQ2d at 1794.

[14].Apparently there was no dispute that the device in existence prior to the critical date was capable of performing the recited step. However, the recited step had not actually been performed until after the critical date.

[15].3 USPQ2d at 1794. In support of its holding the court cited Wiesner v. Weigart, 666 F.2d 582, 588, 212 USPQ 721, 726 (CCPA 1981) ("invention is not reduced to practice until its practicability or utility is demonstrated pursuant to its intended purpose"); and Chandler v. Mock, 150 F.2d 563, 565, 66 USPQ 209, 211 (CFCPA 1945) ("reduction to practice of a complex mechanical device . . . requires that the device was subjected to a test under actual working conditions which demonstrated not that the device might work, but that it actually did work"). However, the holding in Newkirk v. Lulejian should be contrasted with Shurie v. Richmond, 699 F.2d 1156, 216 USPQ 1042 (Fed. Cir. 1983), in which the court held that it was not necessary to prove that the utility of the product produced by the process recited in the count had been verified prior to the critical date where the utility of the product of the process was obvious from the product itself. Shurie is the only recent example of application of the old rule that an actual reduction to practice can be established despite the absence of proof of testing prior to the critical date where the device is extremely simple.

[16].3 USPQ2d at 1794.

[17].705 F.2d at 1329, 217 USPQ at 755; emphasis supplied.

[18].Of course, under the new rules, the court will also review decisions on motions to substitute different counts. However, it should undertake that review first, then attack the evidentiary issues on the basis of set count parameters.

[19].35 USC 291 states:

The owner of an interfering patent may have relief against the owner of another by civil action, and the court may adjudge the question of the validity of any of the interfering patents, in whole or in part. The provisions of the second paragraph of section 146 of this title shall apply to actions brought under this section.

[20].5 USPQ2d at 1602.

[21].The court's opinion at times confuses suppression or concealment (which is a unitary concept) with abandonment, which is something entirely different. As to abandonment see In re Gibbs, 476 F.2d 486, 168 USPQ 578 (CCPA 1971). What was involved in Lutzker v. Plet was suppression or concealment.

[22].See footnote 1.

[23].6 USPQ2d at 1372.

[24].6 USPQ2d at 1372.

[25].6 USPQ2d at 1372, citing Horwath v. Lee, 564 F.2d 948, 958, 195 USPQ 701, 706 (CCPA 1977). Presumably the word "final" is a rhetorical flourish having no significance.

[26].6 USPQ2d at 1372, citing Fitzgerald v. Arbib, 268 F.2d 763, 766, 122 USPQ 530, 532, (CCPA 1959).

[27].6 USPQ2d at 1372.

[28].In most cases, the only evidence in support of a finding of suppression or concealment is the length of the delay.

[29].6 USPQ2d at 1371. Some of these facts (including the interpolation) are not found in the court's opinion. However, the author represented the party Plet during the administrative phase of the interference.

[30].6 USPQ2d at 1372, citing Young v. Dworkin, 489 F.2d 1277, 1281-82, 180 USPQ 388, 392 (CCPA 1974).

[31].When both dates are filing dates, the board has held that neither party is entitled to an award of priority. See Lassman v. Brossi, 159 USPQ 182 (PTOBPI 1967), criticized in Rollins, PTO Practice: Ties Go to the Runner, 69 JPTOS 407 (1988).

[32].7 USPQ2d at 1172.

[33].Haultain v. DeWindt, 254 F.2d 141, 142, 117 USPQ 278, 279 (CCPA 1958).

[34].October 31, 1980 fell on a Friday. Many people refer to Monday as the first day of the week and Sunday as the last day of the week. Additionally, all calendars refer to Sunday as the first day of the week and to Saturday as the last day of the week. Thus, October 31, 1980 was not the last day of the last full week of October 1980 under either interpretation of the phrase "the last week of October 1980," and an alternative interpretation of the testimony would have moved the party Youssefyeh's conception back before October 31.

[35].7 USPQ2d at 1172.

[36].See footnote 1, supra. Incidentally, Japanese law provides a delightfully Japanese solution to this problem: where two or more applicants are entitled to the same filing date, "only one such applicant, agreed upon after mutual consultation among all the applicants, may obtain a patent for the invention." See Palmer, Comparative Analysis of the Law of Double Patenting Outside of the United States of America, 4 APLAQJ 357, 366 (1976).

[37].The court's opinion contains no details concerning the procedural background of the appeal. Thus, it is impossible to tell from the opinion whether the motion to substitute counts 2 and 3 for count 1 was granted or denied by the primary examiner and, therefore, whether the board's decision affirmed the primary examiner's decision substituting the two counts or reversed the primary examiner's decision refusing to substitute the two counts. The reason that it would be very interesting to know which way the decision came up is that the board had previously held that it had jurisdiction in old rule interferences to review primary examiners' decisions granting motions to add or substitute counts, but no jurisdiction to review primary examiners' decisions denying motions to add or substitute counts. See Woods v. Tsuchiya, 754 F.2d 1571, 1575, 225 USPQ 11, 13 (Fed. Cir. 1985), criticized on this point in Gholz, A Critique of Recent Opinions of the Federal Circuit in Patent Interferences, 69 JPTOS 657, 678-79 (1987).

[38].37 CFR 1.633 reads as follows in relevant part:

A party may file the following preliminary motions:

***

(c) A motion to redefine the interfering subject matter by (1) adding or substituting a count. . . .

[39].8 USPQ2d at 1267.

[40].8 USPQ2d at 1267.

[41].See footnote 1, supra. The court did not state whether it was the primary examiner or the board that did the splitting.

[42].Neither of the counts recited either the fluorine or the astatine compound.

[43].8 USPQ2d at 1268.

[44].8 USPQ2d at 1268.

[45].Some of the facts set forth in this paragraph cannot be gleaned from Judge Newman's opinion, but were supplied by counsel for the party Mayer.

[46].The board stated that the party Martin's expert testimony was "entitled to little, if any, weight" because the disputed language in the claim was "easily understandable" and because "expert testimony will not be received in an interference when it attempts to interpret or explain a disclosure." 3 USPQ2d at 1336. The court disagreed, saying that "There is no rigorous rule excluding expert testimony in an interference," id., and giving great weight to that testimony. Of course, this was an old rule interference, but the same result with respect to admissibility of expert testimony on such issues should apply a priori in new rule interferences. 37 C.F.R. 1.671.

[47].Under the new rules, the comparable motion would be a 37 C.F.R. 1.633(a) motion for judgment that the party Mayer's claim corresponding to that count was unpatentable to the party Mayer for lack of 35 U.S.C. 112 first paragraph support, and that motion would be decided by the examiner-in-chief in charge of the interlocutory stages of the interference under 37 C.F.R. 1.610 rather than by a primary examiner.

[48].I.e., a primary examiner ex parte, a primary examiner inter partes, and a panel of the board inter partes. Under the old rules, the primary examiner who decided to enter a claim ex parte might or might not be the same primary examiner who ruled on a preliminary motion attacking the correctness of the ex parte decision. In this case, the two primary examiners were the same, but whether they were the same individual or different individuals should not affect the fact that three separate and independent PTO decisions had been made on this point by the time the case got to the court.

[49].3 USPQ2d at 1335.

[50].3 USPQ2d at 1335-36.

[51].37 CFR 1.78(c) reads as follows:

Where two or more applications, or an application and a patent[,] naming different inventors and owned by the same party contain conflicting claims, and there is no statement of record indicating that the claimed inventions were commonly owned or subject to in obligation of assignment to the same person at the time the later invention was made, the assignee may be called upon to state whether the claimed inventions were commonly owned or subject to an obligation of assignment to the same person at the time the later invention was made, and if not, [to] indicate which named inventor is the prior inventor. In addition to making said statement, the assignee may also explain why an interference should or should not be declared. [Emphasis supplied]

[52].210 USPQ at 614. In Goodsell, the agreement between the parties covered the manner in which evidence was to be submitted to the board as well as the no-appeal provision. Goodsell apparently argued that Shea had not submitted his evidence to the board in the manner agreed upon, that the entire agreement was unitary, and that Shea's alleged failure to honor one part of the agreement excused Goodsell from honoring the other part.

[53].In short summary, certain aspects of the interference were submitted to arbitration and other aspects of the interferences were submitted to the board. The agreement to appeal only covered the aspects of the interference that were submitted to arbitration, and the dispute was over whether an issue raised on appeal by the party Utter fell in the first category or the second. The court held that it fell in the second category and that, accordingly, the agreement did not prevent the appeal.

[54].6 USPQ2d at 1713.

[55].Compare Selva & Sons, Inc. v. Nina Footwear, Inc., 705 F.2d 1316, 217 USPQ 641 (Fed. Cir. 1983), which squarely holds that such agreements made during inter partes trademark proceedings are binding and enforceable in the trademark proceedings themselves.

[56].The corresponding section in the new rules is 37 CFR 1.608(b). For purposes of this case, 37 CFR 1.204(c) and 37 CFR 1.608(b) are substantively identical.

[57].37 CFR 1.204(c) reads as follows:

When the effective filing date of an applicant is more than 3 months subsequent to the effective filing date of the patentee, the applicant, before the interference will be declared, shall file two copies of affidavits or declarations by himself, if possible, and by one or more corroborating witnesses, supported by documentary evidence if available, each setting out a factual description of acts and circumstances performed or observed by the affiant, which collectively would prima facie entitle him to an award of priority with respect to the effective filing date of the patent. This showing must be accompanied by an explanation of the basis on which he believes that the facts set forth would overcome the effective filing date of the patent. Failure to satisfy the provisions of this section may result in summary judgment against the applicant under §1.228. Upon a showing of sufficient cause, an affidavit or declaration on information and belief as to the expected testimony of a witness whose testimony is necessary to overcome the filing date of the patent may be accepted in lieu of an affidavit or declaration by such witness. If the examiner finds the case to be otherwise in condition for the declaration of an interference[,] he will consider this material only to the extent of determining whether a date prior to the effective filing date of the patent is alleged, and if so, the interference will he declared. (See also §1.228.)

[58].4 USPQ2d at 1211. That is, the declaration did not assert a specific date on which the actual reduction to practice had taken place, but merely stated that it had taken place prior to the patentee's filing date.

[59].4 USPQ2d at 1212.

[60].As to the issue preclusive effect of decisions in patent interferences, see generally Gholz, "Collateral Estoppel Effect of Decisions by the Board of Patent Interferences," 30 DePaul L. Rev. 789 (1981), 65 JPOS 67 (1983).

[61].4 USPQ2d at 1212. Note that Baker Oil had abandoned the interference "before the stage at which its asserted reduction to practice would have been litigated inter partes." Id.

[62].Id.

[63].4 USPQ2d at 1212-13.

[64].The court once again blurred the difference between the new rules and the old rules by referring to Chapter 23 of the MPEP, which refers to 37 CFR 1.608(b) declarations -- i.e., to the new rule analogs of the 37 CFR 1.204(c) declarations that were actually in issue. In particular, the court quoted the following passage from §2308.02 of the MPEP:

[I]t is not necessary that the exact date of conception or reduction to practice be revealed in the affidavits, declarations, or exhibits if the affidavits or declarations aver observation of the necessary acts and facts, including documentation when available, before the patentee's effective filing date.

[65].In fact, in some cases giving the actual dates would reveal to the patentee information that the patentee is not entitled to have at that stage in the interference. Ordinarily, the patentee-senior party is not entitled to see the applicant-junior party's 37 CFR 1.608(b) showing until after the patentee-senior party has filed its own preliminary statement alleging its own pre-filing date invention dates. 37 CFR 1.612. However, if the examiner-in-chief to whom the interference his been assigned rules that the applicant-junior party's 37 CFR 1.608(b) showing is insufficient to prove that the applicant is prima facie entitled to a judgment relative to the patentee, the examiner in-chief enters a show cause order concurrently with the declaration of the interference. 37 CFR 1.617(a). If the applicant-junior party files a response to the show cause order, it must simultaneously serve copies of its 37 CFR 1.608(b) showing on all opponents. 37 CFR 1.617(b). Thus, if that showing contains the applicant-junior party's actual invention dates, those dates would be revealed to its opponent(s) before those opponents have filed their own preliminary statements.

[66].4 USPQ2d at 1215.

[67].4 USPQ2d at 1216.

[68].If it does not, many now practicing patent law will have to take early retirement!