A Critique of Recent Opinions of the Federal Circuit in Patent Interferences

Apr 200082 Journal of the Patent & Trademark Office Society 296, April, 2000

TABLE OF CONTENTS

I. INTRODUCTION

II. CONCEPTION

III. CLASSICAL DILIGENCE

IV. ACTUAL REDUCTION TO PRACTICE

V. PEELER DILIGENCE

VI. CONSTRUCTIVE REDUCTION TO PRACTICE

VII. DERIVATION

VIII. THE 35 USC 135 (B) BAR

IX. CORROBORATION

A. The Requirement for Corroboration of an Inventor's Testimony Does Apply to an Inventor's Testimony Offered to Establish a 35 USC 102 (g) Defense, But it Applies Only When The Testifying Inventor is a Named Party, an Employee of or Assignor to a Named Party, or Otherwise is in a Position Where he or she Stands to Directly and Substantially Gain by his or her Invention's Being Found to Have Priority Over the Patent Claims at Issue

Thomson S.A. v. Quixote Corp

B. Corroboration is Required of Any Witness Whose Testimony Alone is Asserted to Invalidate a Patent

Finnigan Corp. v. International Trade Commission

X. INTERFERENCE PRACTICE

A. The Fact that an Applicant's 37 CFR 1.607 (b) Showing is Deemed Satisfactory to Make Out a PrimaFacie Case of Priority for Purposes of Declaring an Interference With a Patentee Does Not Guarantee That the Showing is Satisfactory to Prove Priority in the Interference

Cavanagh v. McMahon

XI. PATENTABILITY ISSUES ARISING IN AN INTERFERENCE CONTEXT

XII. COURT REVIEW OF DECISIONS IN INTERFERENCE

A. The Fact That a Party Gave up in One of Two Interferences on the Same Count and Application Does not Preclude it From Defending its Victory in the Other Interference

Rexam Industries Corp. v. Eastman Kodak Co

XIII. POST-INTERFERENCE PRACTICE

XIV. RELATIONSHIPOFINTERFERENCEPROCEEDINGSTO COURT PROCEEDINGS

XV. CONCLUSION

I. INTRODUCTION

This article covers the Federal Circuit's precedential and interesting non-precedential opinions[3] published since those covered in my previous article by the same title at 81 JPTOS 241 (1999)[4] through December 31, 1999.[5]

II. CONCEPTION

Nothing relevant this year.

III. CLASSICAL DILIGENCE

Nothing relevant this year.

IV. ACTUAL REDUCTION TO PRACTICE

Nothing relevant this year.

V. PEELER DILIGENCE[6]

Nothing relevant this year.

VI. CONSTRUCTIVE REDUCTION TO PRACTICE

Nothing relevant this year.

VII. DERIVATION

Nothing relevant this year.

VIII. The 35 USC 135(b) Bar

Nothing relevant this year.

IX. CORROBORATION

A. The Requirement for Corroboration of an Inventor's Testimony Does Apply to an Inventor's Testimony Offered to Establish a 35 USC 102(g) Defense, But it Applies Only When The Testifying Inventor is a Named Party, an Employee of or Assignor to a Named Party, or Otherwise is in a Position Where he or she Stands to Directly and Substantially Gain by his or her Invention's Being Found to Have Priority Over the Patent Claims at Issue

Thomson S.A. v. Quixote Corp.

In Thomson S.A. v. Quixote Corp., 166 F.3d 1172, 49 USPQ2d 1530 (Fed. Cir. 1999) (opinion delivered by Circuit Judge Rich for a panel that also consisted of Circuit Judges Schall and Gajarsa), the accused infringer (Quixote) had relied on the testimony of two former employees of a non-party (MCA) who had worked on a project (the laser videodisc project) as establishing a 35 USC 102(g) defense. The patentee (Thomson) argued that the alleged prior inventors' testimony was "insufficient as a matter of law to support a holding of invalidity under subsection 102(g), because such testimonial evidence by inventors of their prior invention requires corroboration."[7] The district court rejected that argument, and, on appeal, so did the Federal Circuit.

There were questions whether the jury's verdict rested solely upon the testimonial evidence of MCA's two former employees and whether those two individuals had been the inventors of the device in question. However, Judge Rich's opinion asserts that, "Even if we accept Thomson's ... assertion [that the jury verdict rested solely on the testimony of the two former MCA employees], and further assume that the MCA employees were acting as inventors in the laser videodisc project, Thomson's argument fails because this case does not present circumstances in which there is a need for corroboration...."[8]

Judge Rich's opinion first concedes that "We have ... often held, in both interference and infringement lawsuits, that an inventor's testimony alone respecting the facts surrounding a claim of derivation or priority of invention cannot satisfy the clear and convincing standard without corroboration."[9] However, the opinion then asserts that the precise issue before the court was an issue of first impression:

Although courts have reviewed infringement suits in which the defendant had attempted to prove subsection 102(g)-type anticipation by a non- party inventor at trial ..., neither the Supreme Court nor we have directly held whether the corroboration rule must be applied to testimony by non-party inventors that is directed to establishing their invention as anticipating the claims at issue.[10]

Addressing that issue, the court held that corroboration was required, but only in certain circumstances (which, incidentally, the court then held were not present in this case--arguably making its pronouncement on this point dictum in all future cases):

The clear and convincing standard of proof required to establish priority, along with the numerous methods in the Federal Rules of Civil Procedure and [[the Federal Rules of] Evidence by which a party may test, challenge, impeach, and rebut oral testimony, normally protects patentees from erroneous findings of invalidity. *** Thus, the corroboration rule is needed only to counterbalance the self-interest of a testifying inventor against the patentee. We therefore hold that corroboration is required only when the testifying inventor is asserting a claim of derivation or priority of his or her invention and is a named party, an employee of or assignor to a named party, or otherwise is in a position where he or she stands to directly and substantially gain by his or her invention['s] being found to have priority over the patent claims at issue.[11]

Comment: In interferences, of course, testifying inventors normally are named parties, and they are usually asserting a claim of derivation or priority of their own invention. However, it is also possible for an interferent to be relying on the invention of a non-party as constituting 35 USC 102(f) or 35 USC 102(g) prior art.[12] Accordingly, the court's distinction presumably applies to interferences as well as to infringement litigation.

B. Corroboration is Required of Any Witness Whose Testimony Alone is Asserted to Invalidate a Patent

Finnigan Corp. v. International Trade Commission

In a confused and confusing opinion issued the very day that Judge Rich died, a panel of the Federal Circuit including Judge Rich(!) said that Thomson S.A. v. Quixote Corp., 166 F.3d 1172, 49 USPQ2d 1530 (Fed. Cir. 1999), "do[es] not stand for the proposition that only an interested witness's testimony requires corroboration."[13] Finnigan Corp. v. International Trade Commission, 180 F.3d 1354, 51 USPQ2d 1001 (Fed. Cir. 1999) (opinion delivered by Circuit Judge Lourie for a panel that also consisted of Circuit Judges Rich and Michel). The Finnigan opinion refers to evidence offered to support a finding of priority in an interference as "testimony ... asserted to invalidate a patent ...''[14] --although of course at least one interferent has to be an applicant. In addition, it totally confuses the requirement for corroboration of testimony (which is like a go/no go valve in the sense that, if corroboration is required and no corroboration is offered, the testimony in question cannot establish the proposition for which it is offered no matter how credible it is) and the evaluation of the credibility of the testimony (as to which corroboration is frequently important). Moreover, if what the Thomson court said was a holding (of course, as I said in my write- up of Thomson, I don't think that it was), then Finnigan, being another opinion by a three-judge panel, cannot overrule it. South Corp. v. United States, 690 F.2d 1368, 215 USPQ 657 (Fed. Cir. 1982) (in banc).

Comment: Despite the frequent citations of interference opinions in both Thomson and Finnigan, neither of those opinions should have any great impact on interference practice. It is clear that corroboration is required for an inventor's testimony concerning what he or she did and when he or she did it when that testimony is offered to establish priority. When such testimony is offered to establish invalidity, then the rule in interferences should be no different than the rule in district court patent infringement actions or in section 337 actions in the International Trade Commission[15] --whatever that rule is in view of Finnigan!

X. INTERFERENCE PRACTICE

A. The Fact that an Applicant's 37 CFR 1.607(b) Showing is Deemed Satisfactory to Make Out a Prima Facie Case of Priority for Purposes of Declaring an Interference With a Patentee Does Not Guarantee That the Showing is Satisfactory to Prove Priority in the Interference

Cavanagh v. McMahon

Cavanagh v. McMahon, _____ F.3d _____, _____ USPQ2d _____ (Fed. Cir. April 07, 1999) (non-precedential) (opinion delivered by Circuit Judge Michel for a panel that also consisted of Circuit Judges Plager and Schall), was a patent- application interference. The applicant had provoked the interference by filing a 37 CFR 1.607 request accompanied by 37 CFR 1.608(b) declarations. The APJ to whom the interference was assigned declared the interference without putting the applicant (the party Cavanagh) under a 37 CFR 1.617 order to show cause, from which it can be deduced that he (or she) had found the party Cavanagh's showing adequate to make out a prima facie case that the party Cavanagh was entitled to a judgment that it had made its invention prior to the party McMahon et al.'s filing date. In the interference, the party McMahon et al. did not introduce evidence either that it had made its invention prior to its filing date or that the party Cavanagh had not done what it said that it had done in its 37 CFR 1.608(b) declarations.[16] Nevertheless, the board held at final hearing that the party Cavanagh had not proved that it made its invention prior to the party McMahon et al.'s filing date.

On appeal, the party Cavanagh argued that it had "satisfied ... [its] burden of proving priority by a preponderance of the evidence because (1) the APJ, by declaring the interference, determined that ... [it] had met ... [its] burden of proving a prima facie case of priority, and (2) McMahon failed to present evidence to rebut Cavanagh's argument during the interference."[17] However, the court rejected that argument as "flawed."[18] According to it, "the declaration of an interference under a prima facie standard does not preclude a finding that Cavanagh's evidence failed to establish, by a preponderance of the evidence, actual reduction to practice prior to McMahon's filing date."[19] It reasoned that:

It is axiomatic that different standards are applied in reviewing evidence for purposes of declaring an interference (prima facie standard) and in a final hearing for purposes of determining the ultimate issue of priority of invention (preponderance of the evidence standard). See 37 C.F.R. §1.608(b) (1998) (applicant must show it is "prima facie entitled" to a judgment "before an interference will be declared"); 37 C.F.R. § 1.657(b) (1998) ("In an interference ... a junior party shall have the burden of establishing priority by a preponderance of the evidence.")***Satisfying the prima facie standard does not necessarily satisfy the preponderance of the evidence standard as well, even when the Senior Party, here McMahon, does not present testimony of its own. See, e.g., In re Alton, 76 F.3d 1168, 1175, 37 USPQ2d 1578, 1583-84 (Fed. Cir. 1996) (implying that mere argument can suffice to rebut a prima facie case in a patentability context: "[t]o overcome a prima facie case, an applicant must show that the invention as claimed is adequately described to one skilled in the art. 'After evidence or argument is submitted by the applicant in response, patentability is determined on the totality of the record, by a preponderance of the evidence with due consideration to persuasiveness of argument."D¢=EQP:0012¢=' (citation omitted) (emphasis added)). Thus, Cavanagh cannot establish priority by a preponderance of the evidence simply by relying on the declaration of an interference based on his meeting a prima facie burden.[20]

Comment: A panel of the board at final hearing is not bound by what a single APJ does during the interlocutory stage of the interference.[21] Hence, the panel could simply have disagreed with the original APJ's assessment of the party Cavanagh's evidence.[22]

XI. PATENTABILITY ISSUES ARISING IN AN INTERFERENCE CONTEXT

Nothing relevant this year.

XII. COURT REVIEW OF DECISIONS IN INTERFERENCE

A. The Fact That a Party Gave up in One of Two Interferences on the Same Count and Application Does not Preclude it From Defending its Victory in the Other Interference

Rexam Industries Corp. v. Eastman Kodak Co.

Unusual situations sometimes call for creative solutions to procedural problems. Rexam Industries Corp. v. Eastman Kodak Co., 182 F.3d 1366, 51 USPQ2d 1457 (Fed. Cir. 1999), (opinion delivered by Circuit Judge Lourie and joined by Circuit Judge Newman; Circuit Judge Rich heard oral argument but died before the case was decided) was such a case.

The board had declared a first interference in 1991 between a patent owned by Rexam and an application owned by Kodak. Kodak won that interference in 1994 based on its filing date (i.e., without proving an invention date before its filing date), and the board entered a judgment that, on the record then before it, Kodak was entitled to its claims designated as corresponding to the count. However, Rexam filed a 35 USC 146 action requesting court review of the board's decision.[23]

In 1996, while the 35 USC 146 action between Rexam and Kodak was still pending, the board declared a second interference on the same count between the same Kodak application and an application owned by Avery.[24] Kodak conceded priority to Avery in that interference, and a judgment was thereupon entered that, on the record then before it, Kodak was not entitled to the claims designated as corresponding to the count--i.e., that, Kodak was not entitled to the very same claims that the board's prior judgment had said that Kodak was entitled to (on the record previously before it). When the period for seeking court review of that judgment expired, the decision of the board became "the final refusal by the Patent and Trademark Office of the claims involved [in the interference] ...'' pursuant to 35 USC 135(a). Similarly, pursuant to 37 CFR 1.663, "the claims of the [Kodak] application corresponding to the count ... [stood] finally disposed of without further action by the examiner." However, the Federal Circuit noted that "Kodak did not expressly abandon that application,"[25] and counsel for Rexam told me that there were claims in it that had not been designated as corresponding to the count.[26]

Rexam then moved for summary judgment in the 35 USC 146 action, arguing "that Kodak had abandoned its constructive reduction to practice [which, you will recall, was the basis on which it had won the interference against Rexam] by permitting the '738 interference decision to become final, and that Kodak's concession of priority to Avery should be treated as a request for entry of an adverse judgment against Kodak in the section 146 proceeding under 37 C.F.R. § 1.662(a)."[27] The district court denied Rexam's motion, but it certified two questions relating to that decision to the Federal Circuit, and the Federal Circuit granted Rexam's 28 USC 1292(b) petition for leave to file an interlocutory appeal. The two questions certified to the court read as follows:

1. Can a patent applicant that prevails in an interference before the Board of Patent Appeals and Interferences based only on the constructive reduction to practice represented by its patent application, continue to contest priority in a succeeding civil action under 35 U.S.C. § 146, notwithstanding the patent applicant's acquiescence, during pendency of that Section 146 action, in entry of final judgment against it on priority grounds in another interference involving the same inventions but a different adversary?

2. If the answer to the above question is in the negative, must the Board's decision awarding priority to the patent applicant and against a patentee be reversed, with judgment entered in favor of the patentee regarding priority.[28]

On appeal, the Federal Circuit answered the first of the two questions certified to it in the affirmative and did not reach the second. It conceded that "no language in section 146 of the patent statute expressly addresses this issue,"[29] but it asserted that "section 135(a) of the statute and our case law [i.e., the line of opinions beginning with Perkins v. Kwon, 886 F.2d 325, 12 USPQ2d 1308 (Fed. Cir. 1989)] interpreting that provision provide substantial guidance for our analysis."[30] Relying on the "[p] ublic policy .... [which] favors award of the patent to the first inventor ...,"[31] it asserted that:

even though Kodak cannot obtain a patent for the contested subject matter because it is not the assignee of the first inventor, it should be entitled to attempt to show that Rexam, which similarly is not the assignee of the first inventor, is not entitled to retain its patent. The reasoning is that, if Kodak has been determined by the Board to have priority over Rexam, then Avery, which has similarly been determined to have priority over Kodak, must have priority over Rexam, and Rexam should not retain its patent."[32]

Comments: Rexam's counsel told me that Rexam is asserting in the 35 USC 146 action that Kodak does not have priority over Rexam! If Rexam is ultimately successful in that regard, it will no doubt be placed in still a third interference--this time with Avery.[33]

Would the result have been different if all of Kodak's claims had been designated as corresponding to the count--particularly if Kodak had been a patentee? In that case, the patent would have been canceled by operation of law when the board's judgment became final pursuant to the last sentence of 35 USC 135(a). It would presumably have been more difficult for the Federal Circuit to hold that Kodak had standing to continue to litigate the 35 USC 146 action with Rexam if Kodak's patent had ceased to exist during the pendency of the 35 USC 146 action. However, although the Federal Circuit's opinion points out that Kodak "did not expressly abandon ... [its] application in interference"[34] after losing the second interference, and although that application was still pending as of the date of the Federal Circuit's opinion, nothing in that opinion suggests that the continued pendency of Kodak's application was outcome determinative.

XIII. POST-INTERFERENCE PRACTICE

Nothing relevant this year.

XIV. RELATIONSHIP OF INTERFERENCE PROCEEDINGS TO COURT PROCEEDINGS

Nothing relevant this year.

XV. CONCLUSION

This is the shortest and least substantive interference year-in-review since I began writing them in 1987.[35] That no doubt reflects the present but, I hope, temporary bottleneck in obtaining final decisions from the board, since I can testify from personal experience that interferences continue being declared at a great rate. Moreover, due to the advent of the new rules and the ""trial section," the board is steadily eating into its backlog of cases not yet decided at final hearing, so its seems likely that the Federal Circuit's interference docket will pick up substantially in the next year or two.

Published in the 82 Journal of the Patent & Trademark Office Society 296, April, 2000.


Endnotes



[1]Copyright 2000 by Charles L. Gholz; Oblon, Spivak, McClelland, Maier, & Neustadt, P.C.; Arlington, Virginia. Portions of this article have been published previously by Patent Resources Group, Inc. in the chapter entitled "Interferences" of the materials for PRG's programs on Federal Circuit patent law. I acknowledge with thanks the contributions of my colleague, former Administrative Patent Judge Alton D. Rollins.

[2]Partner in and head of the interference section of Oblon, Spivak, McClelland, Maier & Neustadt, P.C.; Arlington, Virginia. My direct dial telephone number is (703) 412-6485, and my E-mail address is [email protected]

[3]Federal Circuit Rule 47.8 divides the opinions and orders of the court into those that are "precedential" (i.e., those that may be cited to the court as precedent) and those that are "non-precedential" (i.e., those that may not be cited to the court as precedent). The non-precedential opinions were formerly called "unpublished" opinions, but the court changed its terminology after noting that many of its "unpublished" opinions were in fact published in the United States Patents Quarterly.

The Federal Circuit attempts to discourage citation of its non-precedential opinions to its "feeder" courts and agencies. See, e.g., Hamilton v. Brown, 39 F.3d 1574 (Fed. Cir. 1994). However, the non-precedential opinions of the Federal Circuit have at least the same status as law review articles written by the judges of the Federal Circuit, and in practice some of the administrative patent judges seem to welcome citation of the non-precedential opinions of the Federal Circuit. After all, what the court did once gives at least some guidance to what the court might do again, and the administrative patent judges can use language out of the non-precedential opinions even if they cannot cite them.

[4]See also my previous articles by the same title at 80 JPTOS 321 (1998), 79 JPTOS 271 (1997), 78 JPTOS 550 (1996), 77 JPTOS 427 (1995), 76 JPTOS 649 (1994), 75 JPTOS 448 (1993), 73 JPTOS 700 (1991), 71 JPTOS 439 (1989), and 69 JPTOS 657 (1987).

[5]The fact that I publish this review every year in a similar format accounts for the sections which read in their entirety "Nothing relevant this year."

[6]So called after Peeler v. Miller, 535 F.2d 647, 653-54, 190 USPQ 117, 122 (CCPA 1976) (Rich, J.). See also Shindelar v. Holdeman, 628 F.2d 1337, 207 USPQ 112 (CCPA 1980); and Correge v. Murphy, 705 F.2d 1326, 217 USPQ 753 (Fed. Cir. 1983).

[7]166 F.3d at 1174, 49 USPQ at 1531; emphasis in the original.

[8]166 F.3d at 1174-75, 49 USPQ at 1531.

[9]166 F.3d at 1175, 49 USPQ at 1532.

[10]166 F.3d at 1175-76, 49 USPQ at 1532; footnote omitted.

[11]166 F.3d at 1176, 49 USPQ at 1533.

[12]See, e.g., Kramer v. Ballard, 11 USPQ2d 1148 (Comm'r 1989).

[13]180 F.3d at 1369, 51 USPQ2d at 1012.

[14]180 F.3d at 1369, 51 USPQ2d at 1012.

[15]My friend and colleague Paul Morgan, in-house interference specialist at Xerox, argues that the rule should be different when such testimony is offered to establish invalidity/unpatentability in an interference than when such testimony is offered to establish invalidity in a district court patent infringement action or in a section 337 action in the International Trade Commission. According to him:

that issue would NOT be the same as a 102(f)/103 3d party invention motion attack in an interference, not just because of the absence of any presumption of patent validity in an interference, but also because of the effective absence of the discovery available to protect the patent owner in the D.C. in modern patent litigation on which J. Rich directly based his (aptly named) Quixote decision. An interference proceeding is totally unsuited to handling an issue based entirely on 3d party internal evidence and witnesses--available, if at all, only narrowly and only at the mercy of an APJ's Rule 687(c) required permission, rarely granted as to 3d parties.

I disagree. It is certainly true that interference discovery is abysmally weak. See generally Gholz, Patent Interferences--Big Ticket Litigation With No Effective Discovery, 4 Intellectual Property Today No. 9 at page 10 (1997). However, I think (1) that the proper response to that regrettable fact is to reform interference discovery and (2) that the current weakness of the procedures for discovery in interferences should not be permitted to dictate substantive rules.

[16]Although the opinion does not say so, it seems likely that the party Cavanagh simply introduced its 37 CFR 1.608(b) declarations as its priority case.

[17]Slip opinion at 4, _____ F.3d at _____, _____ USPQ2d at _____.

[18]Slip opinion at 4, _____ F.3d at _____, _____ USPQ2d at _____.

[19]Slip opinion at 4, _____ F.3d at _____, _____ USPQ2d at _____.

[20]Slip opinion at 4-5, _____ F.3d at _____, _____ USP2d at _____.

[21]See 64 F.R. 12900 (March 16, 1999), "Consideration of Interlocutory Rulings at Final Hearing in Interference Proceedings."

[22]See Wiesner v. Weigert, 666 F.2d 582, 212 USPQ 721 (CCPA 1981), for an old interference rules case with a similar fact pattern and the same outcome.

[23]See Gholz, Why Are 35 USC 146 Actions Becoming So Popular?, 5 Intellectual Property Today No. 9 at page 6 (1998).

[24]Since the administrative phase of the first interference had already ended, it was too late to add Avery's application to the first interference pursuant to 37 CFR 1.642.

[25]182 F.3d at 1368, 51 USPQ2d at 1458.

[26]He also told me (a) that those claims stood finally rejected before Kodak copied the claims in interference from the Rexam patent, (b) that the examiner made a post-final rejection restriction requirement between Kodak's original claims and the claims that Kodak copied from Rexam's patent, and (c) that Kodak elected the copied claims. Thus, the claims pending in Kodak's application when judgment was entered against it in the second interference were both non-elected and finally rejected. Nevertheless, the PTO had allowed that application to pend without action all that time.

[27]182 F.3d at 1368, 51 USPQ2d at 1459.

[28]182 F.3d at 1367, 51 USPQ2d at 1458.

[29]182 F.3d at 1369, 51 USPQ2d at 1459.

[30]182 F.3d at 1369, 51 USPQ2d at 1459, citing Perkins v. Kwon, 886 F.2d 325, 12 USPQ2d 1308 (Fed. Cir. 1989); Hyatt v. Boone, 146 F.3d 1348, 1356-57, 47 USPQ2d 1128, 1133-34 (Fed. Cir. 1998); Wu v. Wang, 129 F.3d 1237, 1242, 44 USPQ2d 1641, 1645 (Fed. Cir. 1997); and Guinn v. Kopf, 96 F.3d 1419, 1422, 40 USPQ2d 1157, 1159 (Fed. Cir. 1996) (Rich, J.). See also Gholz, Is the Declaration of an Interference a Ticket to Ride to the End of the Line?, 5 Intellectual Property Today No. 5 at page 31 (1998).

[31]182 F.3d at 1369, 51 USPQ2d at 1460.

[32]182 F.3d at 1369-70, 51 USPQ2d at 1460.

[33]Such successive interferences are apparently not uncommon. I currently represent a third party that is waiting in line to take on the winner of a pending two-party interference.

[34]182 F.3d at 1368, 51 USPQ2d at 1458.

[35]See footnote 4, supra.