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

TABLE OF CONTENTS

I. Introduction

II. Substantive Interference Law

A. Determining Inventorship Is Nothing More Than Determining Who Conceived the Subject Matter at Issue

B. Proof of Conception of a Genus Encompassing a Genus Defined by a Count is Inadequate to Prove Conception of Subject Matter Within the Scope of the Count

C. Evidence Required to Prove an Actual Reduction to Practice

III. Interference Procedure

A. The Board Did Not Abuse Its discretion in Granting Summary Judgment Against a Junior Party That Did Not File a Timely Preliminary Statement Despite the Fact That the Examiner-in-Chief Did Not Issue a 37 CFR 1.640(d)(2) Show Cause Order First

B. The Burden of Proof as to Priority Issues on a Junior Party Applicant
Whose Effective Filing Date Is Before a Senior Party Patentee's Issue Date Is the Preponderance of the Evidence, Not Clear and Convincing Evidence

C. No Adverse Inference Can Be Drawn From a Senior Party's Failure to Cross-Examine a Junior Party or Put On Rebuttal Evidence

D. You Can Allege Alternative Inventors of the Subject Matter of a Count and Alternative Invention Dates in Your Preliminary Statement

IV. Post-Interference Practice

A. New Issues Can be Raised in a Section 146 Action Only in "Compelling Circumstances"

I. Introduction

This article covers Federal Circuit precedential opinions² published since those covered in the author's previous article by the same title at 76 JPTOS 649 (1994) through December 31, 1994.³

There were two welcome developments in interference law this year. First, in Bosies v. Benedict⁴ the court undid most of the potential harm that might have been caused by its opinion the previous year in Price v. Symsek.⁵ In Bosies, the court reaffirmed the well-settled law that the burden of proof as to priority issues on a junior party applicant whose effective filing date is before a senior party patentee's issue date is the preponderance of the evidence, not clear and convincing evidence. Second, In Credle v. Bond⁶ the court made it clear that you can allege alternative inventors of the subject matter of a count and alternative invention dates in your preliminary statement -- provided that the preliminary statement makes it very clear exactly what you are doing.

The worst interference development of the year was the court's substantial retreat in Scott v. Finney⁷ from the board's traditional requirement that, in order to be an actual reduction to practice, a prototype must be successfully tested under actual use conditions or conditions accurately simulating actual use conditions for a reasonable length of time.

II. Substantive Interference Law

A. Determining Inventorship Is Nothing More Than Determining
Who Conceived the Subject Matter at Issue

Sewall v. Walters, 21 F.3d 411, 30 USPQ2d 1356 (Fed. Cir. 1994) (opinion delivered by Circuit Judge Rich for a panel that also consisted of Chief Circuit Judge Archer and Senior Circuit Judge Lay of the Eighth Circuit), was "an originality contest as opposed to a priority contest."⁸ Walters had been a consultant for Sewall's employer ("Star"), and Star filed an application naming Sewall and Waters as joint inventors.⁹ Twenty six months later, "Walters filed an identical application . . . , which is unassigned, asserting sole inventorship of that subject matter."¹⁰ The two applications were placed in interference, and the board entered judgment for the party Walters, holding that "Walters was the sole inventor of . . . [the] subject matter [defined by the count]."¹¹

On appeal, the court first noted that "Determining 'inventorship' is nothing more than determining who conceived the subject matter at issue, whether the subject matter is recited in a claim in an application or in a count in an interference."¹² Since Sewall admitted that he did not independently conceive the subject matter recited in the count, "The 'inventorship' issue to be decided . . . [was] . . . who conceived the invention for which patent protection is sought, and not who first conceived that invention."¹³

The court then summarized some hornbook law on conception as follows:

Conception exists when a definite and permanent idea of an operative invention, including every feature of the subject matter sought to be patented, is known. Coleman v. Dines, 754 F.2d 353, 359, 224 USPQ 857, 862 (Fed. Cir. 1985). Conception is completely when one of ordinary skill in the art could construct the apparatus without unduly extensive research or experimentation. See Summers v. Vogel, 332 F.2d 810, 816, 141 USPQ 816, 820 (CCPA 1964); In re Tansel, 253 F.2d 241, 243, 117 USPQ 188, 189 (CCPA 1958).¹⁴

Finally, the court applied that well-settled law to the facts of the case before it. What Sewall had done was to embody in hardware form an invention conceived by Walters and the novel portion of which had previously been embodied in software form by Walters. While it is certainly possible that transmuting a device from software form to hardware form could require independent inventive skill, in this case the board had held that it had not, and the court held that "The record amply supports . . . the Board's . . . holding that Sewall's hardware design was dictated explicitly by Walters' specifications."¹⁵ Moreover, the court said that, "In addition, Sewall has failed to persuade us that the Board clearly erred in finding that Sewall's design of circuits to carry out Walters' idea was simply the exercise of the normal skill expected of an ordinary chip designer, which did not involve any inventive acts on the part of Sewall."¹⁶ Accordingly, the court affirmed the board's judgement.

Comment: The count recited an apparatus comprising five "means" none of which was expressly limited to hardware. In addition, while the specification disclosed the hardware developed by Sewall, it stated that the element which differentiated the invention from the prior art "could be accomplished solely through software . . . ,"¹⁷ which the court said "render[ed] the presence of Sewall's alleged coinventive contributions, namely, the circuits that he designed, completely optional to the apparatus of the count."¹⁸ That, it seems to me, should have been enough to make the bulk of the court's analysis superfluous.

If Walters first conceived one species within the scope of the count, what difference does it make whether or not a second species within the scope of the count was later conceived by Sewall and Walters jointly, and what difference does it make whether or not the second species was patentably distinct from the first species? If the party Sewall et al. had wanted a count limited to the hardware implementation designed by Sewall, it could have moved under 37 CFR 1.633(c)(5) to require Walters to present a claim to that apparatus¹⁹ and under 37 CFR 1.633(c)(1) to add a count so limited.²⁰ If the party Sewall et al. had filed a 37 CFR 1.633(c)(5) motion, and if the party Walters had presented the claim proposed by the party Sewall,²¹ the examiner-in-chief (initially) and the board (at final hearing) would have considered whether or not the subordinate count was patentably distinct from the generic count in deciding whether or not to add the subordinate count limited to the hardware implementation.²² Similarly, if the party Sewall had any claims that were limited to the hardware implementation designed by Sewall, it could have moved under 37 CFR 1.633(c)(4) to have those claims designated as not corresponding to the count.²³ If the party Sewall had sone so, the examiner-in-chief (initially) and the board (at final hearing) would have considered whether or not those claims were patentably distinct from the count in deciding whether or not to "degroup" those claims.²⁴ However, since the party Sewall et al. did not file either type of motion, the question of whether or not the hardware implementation was patentably distinct from the subject matter recited broadly by the count was irrelevant to the issues before the court.

B.Proof of Conception of a Genus Encompassing a Genus Defined by a Count
is Inadequate to Prove Conception of Subject Matter Within the Scope of the Count

Bosies v. Benedict, 27 F.3d 539, 30 USPQ2d 1862 (Fed. Cir. 1994) (opinion delivered by Circuit Judge Lourie for a panel that also consisted of Chief Circuit Judge Archer and Circuit Judge Plager), stands for the propositions (1) that proof of conception of a genus encompassing a genus defined by a count is inadequate to prove conception of subject matter within the scope of the count and (2) that evidence of conception must be evidence of conception by the or a named inventor.

In Bosies the counts all recited²⁵ compounds one component of which was "a . . . hydrocarbon chain containing 2 to 8 carbon atoms . . . ."²⁶ The party Benedict's conception document showed a formula that included those compounds, but had the number "n" for the number of carbon atoms in the hydrocarbon chain and no definition of the number n. That is, the formula in the conception document was generic to the formula in the counts. The formula in the conception document read on the compounds with hydrocarbon chains containing 0 and 1 carbon atoms, and it read on the compounds with hydrocarbon chains containing more than 9 carbon atoms. Moreover, the party Benedict submitted no proof that either of the named inventors comprising the party Benedict had specifically contemplated a compound of the type recited in the counts with the hydrocarbon chain containing 2 to 8 carbon atoms. Instead, it submitted an affidavit by the non-inventor laboratory technician (Sunberg) who witnessed the conception document. In that affidavit, Sunberg testified that he "considered 'n' to be a range of values, including n=1 and n=2."²⁷

As to the first issue, the court said:

In order to establish conception, Benedict . . . was required to submit evidence showing, inter alia, a description of the compounds of the count. See Oka [Oka v. Youssefyeh, 849 F.2d 581, 7 USPQ2d 1169 (Fed. Cir. 1988)], 849 F.2d at 583, 7 USPQ2d at 1171. Absent such a showing, Benedict's case for conception must fail. See Fiers [Fiers v. Sugano, 984 F.2d 1164, 25 USPQ2d 1601 (Fed. Cir. 1993)], 984 F.2d at 1168-69, 25 USPQ2d at 1604-05.

In the instant case, count 1 is directed to a group of compounds in which "A" would, in the notebook formulation, correspond to "n" being two to eight. The formula disclosed, however, is a generic one that does not ascribe a value to "n" and thus does not specifically define any of the compounds to which count 1 is directed. Although the compounds of the count arguably might be within the scope of the generic formula set out in Benedict's notebook, that formula does not constitute a definite description of the compounds of the count. See D'Silva v. Drabek, 214 USPQ 556, 564 (BPAI 1981), aff'd, 691 F.2d 513 (CCPA 1982) (table).²⁸

As to the second issue, the court said:

Sunberg's testimony . . . was directed only to what Sunberg, a non-inventor, understood "n" to mean, and did not show the inventor's intended meaning of that variable. Sunberg did not testify that Benedict indicated in any way what "n" meant.

The question of conception is properly directed to whether there was "formation [] in the mind of the inventor of a definite and permanent idea of the complete and operative invention . . . [and whether] every limitation of the count [was] known to the inventor at the time of the alleged conception." Coleman v. Dines, 754 F.2d 353, 359, 224 USPQ 857, 862 (Fed. Cir. 1985) (emphasis added). Because Sunberg's testimony was not probative of what the inventors conceived, it was insufficient as a matter of law to establish the meaning of "n".²⁹

Accordingly, the court reversed the board, holding that it had "erred as a matter of law in concluding that Benedict proved conception of the subject matter of the counts prior to Bosies' effective filing date . . . ."³⁰

Comments: Actually, it is settled law that, to establish conception, Benedict would only have been required to submit evidence showing a description of a single compound of the count,³¹ not all of the compounds of the count ‹ or a genus congruent with the count, as suggested by the emphasized language in the first part of the first quoted passage.

As for the second point, the court noted that the party Benedict "did not submit the testimony of either inventor"³² and that "Sunberg did not testify that Benedict indicated in any way what 'n' meant,"³³ implying that the party Benedict could have carried its burden of proof either by offering the testimony of Benedict that he had understood "n" to mean one or two or by offering the testimony of Sunberg that Benedict had told him that "n" could be either one or two. Suppose however, that by the time testimony was taken. Benedict had not told Sunberg what he intended by "n". Would all have been lost for the party Benedict? I think not. I think that the party Benedict could have offered the testimony of an expert witness to the effect that those of ordinary skill in the relevant art as of the date of the conception document would have "considered 'n' to be a range of values, including n=1 and n=2."³⁴ That is, I do not believe that there was anything inherently wrong with what Sunberg said in this regard. What was wrong with it was that it was offered as the testimony of a fact witness, not as the testimony of an expert witness.³⁵

C. Evidence Required to Prove an Actual Reduction to Practice

How good is good enough is the usual question when evaluating a proffered actual reduction to practice. While every such case is fact-intensive, and while it is, therefore, difficult to draw generalizations, Scott v. Finney, 34 F.3d 1058, 32 USPQ2d 1115 (Fed. Cir. 1994) (opinion delivered by Circuit Judge Rader for a panel that also consisted of Circuit Judges Lourie and Schall), (1) contains a useful tutorial on the subject and (2) involves memorable subject matter. Treating those two facts in combination, Scott v. Finney is likely to become a leading case.

The subject matter in dispute was a penile implant designed to permit the implantee to simulate an erection by manipulation of the implanted device through his skin. The alleged actual reduction to practice was the implantation of a prototype of the device into an anesthetized patient and the manipulation of a prototype by the surgeon while the implantee remained anesthetized. After the surgeon had tested the prototype in that fashion, he (or she) removed the prototype and implanted a prior art, externally pumped mechanism.

The board held that the testing of the prototype did not constitute an actual reduction to practice because the test "had not shown utility, i.e., that the device would successfully operate under actual use conditions for a reasonable length of time."³⁶

The court reversed, saying that "the Board imposed an overly strict requirement for testing to show reduction to practice . . . ."³⁷

Two facts were key to the reversal. First, "The issue of reduction to practice is a question of law which . . . [the Federal Circuit] reviews de novo."³⁸ Second, the invention was a minor improvement in a crowded art. As the court put it;

Only the hydraulics of a fully self-contained internal prosthesis remained to be tested for workability. [The test on the anesthetized patient] . . . adequately showed the workability of these features.³⁹

Comment: If only the hydraulics of the fully self-contained internal prosthesis had to be tested, why was it necessary to put the prototype in the patient at all? It would seem to me that the hydraulics could have been tested for workability just as well by manipulating the prototype externally of a patient. Moreover, it seems to me that the board's requirement for "testing of an implantable medical device under actual use conditions or testing under conditions that closely simulate actual use conditions for an appropriate period of time"⁴⁰ is far closer to the spirit (or general thrust) of the prior opinions on the subject (particularly the prior board opinions) than the court's acceptance of such an unrealistic "testing" of the prototype prosthetic.⁴¹ After all, the whole point of the requirement for testing is that a thing that looks like it will work frequently does not work in practice -- or works for less than the period of time for which it will have to work in practice.⁴² However, the opinion does contain a useful collection of the cases on the subject of the adequacy of an alleged actual reduction to practice,⁴³ even if it did not follow them.

III. Interference Procedure

A. The Board Did Not Abuse Its Discretion in Granting Summary Judgment
Against a Junior Party That Did Not File a Timely Preliminary Statement
Despite the Fact That the Examiner-In-Chief Did Not Issue a 37 CFR 1.640(d)(2)
Show Cause Order First

37 CFR 1.640(d) provides, in relevant part, that:

An examiner-in-chief may issue an order to show cause why judgment should not be entered against the party when:

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(2) The party is a junior party who fails to file a preliminary statement . . . . [Emphasis supplied.]

However, in Abrutyn v. Giovanniello, 15 F.3d 1048, 29 USPQ2d 1615 (Fed. Cir. 1994) (opinion delivered by Circuit Judge Michel for a panel that also consisted of Circuit Judge Archer and Circuit Judge Schall), the court found no abuse of discretion in the board's simply having entered default judgment in two related interferences against a junior party that did not file a timely preliminary statement despite the facts (1) that the junior party had a reasonably good excuse for not having filed a timely preliminary statement and (2) the Commissioner, appearing as an amicus, asked the court to reverse the board's decision!⁴⁴

The junior party Abrutyn et al. was a patentee. Prior to declaration of the interference, the Abrutyn et al. patent had been assigned (via two mesne assignments) to the Somerville Technology Group ("STG"). However, the mesne assignments had not been recorded. Accordingly, when the interference was declared, the notice was mailed to the attorney for the first owner of the Abrutyn et al. patent. The attorney for the first owner initially designated himself as lead attorney for the part Abrutyn et al., but he subsequently filed a motion for leave to withdraw as lead attorney (since he did not represent the new owner of the patent). In the motion, he asked the examiner-in-chief to "provide [STG], the new owner of the . . . [Abrutyn et al.] patent[,] additional time for designating its Lead Attorney."⁴⁵ However, although the examiner-in-chief granted motion for leave to withdraw, he denied the request that the new owner of the patent be given additional time to designate its own lead attorney.

The preliminary statements were due on October 14, 1992. On October 19, 1992, STG recorded the second of the two mesne assignments -- which, according to the court, meant that, "by October 19[,] STG, as the assignee of record, had standing under PTO rules by [sic; to] file papers in the two interferences,"⁴⁶ Of course, by then the deadline for filing preliminary statements had passed, and, on December 18, 1992, the board entered final judgments against the party Abrutyn et al. in both interferences.

What makes this case interesting is that the examiner-in-chief did not follow the normal procedure of issuing a show cause order under 37 CFR 1.640(d)(2). If he or she⁴⁷ had done so, STG could have responded to the show cause order by filing a 37 CFR 1.645(b)/1.635 motion for leave to file its preliminary statement belatedly⁴⁸ and/or a request for final hearing at which, according to the court, it could have "raise[d] the new issue of its ownership [of the Abrutyn et al. patent], as permitted under 37 CFR §1.655(b) (1993)."⁴⁹ Instead, the board simply moved directly to the entry of default judgment against the party Abrutyn et al.

On appeal, the court first examined the question of what its standard of review should be. According to the court, "the Board or [an] EIC may impose an appropriate sanction, including granting judgment in an interference, against a party who fails to comply with the rules governing interferences, including filing deadlines."⁵⁰ The court then said that "A board decision pursuant to the permissive rules governing an interference is reviewed for abuse of discretion."⁵¹ It concluded from this that it would "review the Board's decision to enter the December 18 default judgment for an abuse of discretion."⁵²

Next, the court dealt with STG's argument that the board had "acted in inappropriate haste in granting judgment on the interference without . . . first allowing all interested parties a chance to take action."⁵³ It acknowledged that STG was "correct in its asserting that it was not permitted to communicate with the EIC before the October 14 deadline."⁵⁴ However, it faulted STG (or, realistically speaking, STG's attorneys) for failing to take action promptly to remedy the chain-of-title problem despite the fact that "STG had actual notice of the interference early in the proceedings."⁵⁵ In addition, although STG did not correct its chain-of-title problem until after its preliminary statement was due, because it did so "near two months . . . [before the board entered judgment], STG had ample time to protect its rights."⁵⁶ According to the court, "An EIC has broad discretion [under 37 CFR 1.645(b)] to consider late filings submitted with a motion showing sufficient cause for delay,"⁵⁷ and "STG could have filed a preliminary statement with a Rule 1.645(b) motion, but it did not."⁵⁸ Accordingly, STG was entitled to no sympathy:

We cannot say that the Board abused its discretion in entering judgement for Giovanniello in the face of STG's unexplained inaction for two months after becoming the assignee of record.⁵⁹

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It was STG's responsibility to act diligently to protect its rights in an interference proceeding.⁶⁰

The court therefore concluded that it was not an abuse of discretion for the board to enter summary judgment against the party Abrutyn et al. without the examiner-in-chief's having previously issued the party Abrutyn et al. a show cause order.

Comments: While 37 CFR 1.640(d) is certainly a "permissive rule[]," the court does not seem to have appreciated what is permissive about it. The "may" in 37 CFR 1.640(d) has indeed been relied upon to permit the examiners-in-chief not to issue a show cause order in circumstances where it would have been appropriate to do so. However, it has been relied upon in order to permit the party against which the show cause order might have been issued to submit evidence in support of a request for a judgment against the other party.⁶¹ To the best of the author's knowledge, the "may" in 37 CFR 1.640(d) has only been relied upon to permit the board to enter summary judgment immediately without giving the junior party (i.e., the party against which the show cause order might have been issued) the opportunity to show why judgment should not be entered against it in cases where the junior party had taken absolutely no action (i.e., there is every indication that the junior party is perfectly willing to lose by a default judgment). That is, the "may" has been used to give parties in the position of the party Abrutyn et al. a break, not to hammer parties in the position of the party Abrutyn et al.!

On the merits, there are two "take home lessons" here. First, record assignments promptly, so that you don't get into the position that STG was in. Second, once you are in an interference, move promptly! As the court obviously felt, STG's lackadaisical attitude toward the whole thing was inexcusable.

B. The Burden of Proof as to Priority Issues on a Junior Party Applicant
Whose Effective Filing Date is Before a Senior Party Patentee's Issue Date
is the Preponderance of the Evidence, Not Clear and Convincing Evidence

In Bosies v. Benedict, 27 F.3d 539, 30 USPQ2d 1862 (Fed. Cir. 1994) (opinion delivered by Circuit Judge Lourie for a panel that also consisted of Chief Circuit Judge Archer and Circuit Judge Plager), the court undid most of the potential harm that might have been caused by its opinion in Price v. Symsek, 988 F.2d 1187, 26 USPQ2d 1031 (Fed. Cir. 1993).⁶² In Bosies, the party Benedict was a junior party applicant, and the party Bosies was a senior party patentee. Not surprisingly, the party Bosies argued that the party Benedict had to prove its priority case by clear and convincing evidence -- relying on the court's unfortunate dicta in Price. Fortunately, however, the court limited Price to situations where the junior party applicant's filing date is after the senior party patentee's issue date:

It is well-settled that where an interference is between a patent that issued on an application that was copending with an interfering application, the applicable standard of proof is preponderance of the evidence. See Peeler v. Miller, 535 F.2d 647, 651 n. 5, 190 USPQ 117, 120 n. 5 (CCPA 1976); Linkow v. Linkow, 517 F.2d 1370, 1373, 186 USPQ 223, 225 (CCPA 1975); Frilette v. Kimberlin, 412 F.2d 1390, 1391, 162 USPQ 148, 149 (CCPA 1969), cert. denied, 396 U.S. 1002 (1970). Bosies' reliance on Price v. Symsek, 988 F.2d 1187, 26 USPQ2d 1031 (Fed Cir. 1993), for the contrary proposition [sic; for the proposition that, where an interference is between a patent and an application, the applicant's burden of proof as to priority issues is clear and convincing evidence] is inapposite, as that inference did not involve an application and a patent which before issuance had been copending with the application, but an application which was filed for purposes of provoking an interference after issuance of a patent. The court held that under those facts the applicant was required to prove prior invention by clear and convincing evidence. 988 F.2d at 1194, 26 USPQ2d at 1033.⁶³

Comment: Prior to Price it was equally well-settled that, when an interference is between an application and a patent that issued before the filing date or effective filing date of the application, the applicable standard of proof was beyond a reasonable doubt. However, this panel of the court apparently had more regard for precedent than the panel of the court that decided Price.

C. No Adverse Inference Can Be Drawn From a Senior Party's Failure
to Cross-Examine a Junior Party or Put On Rebuttal Evidence

Bosies v. Benedict, 27 F.3d 539, 30 USPQ2d 1862 (Fed. Cir. 1994) (opinion delivered by Circuit Judge Lourie for a penal that also consisted of Chief Circuit Judge Archer and Circuit Judge Plager), dealt with a common situation: your opponent has arguably failed to prove an essential element of its case. Do you cross-examine in an attempt to establish beyond doubt that