Patent Interferences — Big Ticket Litigation With No Effective Discovery1997
by Charles L. Gholz 1
Something needs to be done about the lack of effective discovery in patent interferences. In my opinion, what should be done is that interferents should be given access to at least the same kind of discovery as litigants in Federal district courts. At present, however, they do not have access to effective discovery.
What Patent Interferences Are
Patent interferences are administrative proceedings in the Patent and Trademark Office before the Board of Patent Appeals and Interferences.2 At the conclusion of a patent interference, a judgment is entered against one, both, or all of the parties that the involved claims of its patent are invalid or that the involved claims of its application are unpatentable.3 Thus, while the board does not ordinarily enter money judgments,4 its judgments are often worth millions of dollars to the prevailing party.
Patent interferences are a very specialized form of litigation, and they have their own specialized set of rules — 37 CFR 1.601 et seq. Those rules differ greatly from the Federal Rules of Civil Procedure in many respects,5 but in no respect more than the rule (37 CFR 1.687) governing discovery.
What Discovery is Available in Patent Interferences
There are three forms of discovery available in patent interferences6: (1) voluntary exchange of discovery,7 (2) discovery on a motion showing that "the interest of justice" requires that discovery be granted,8 and (3) production of documents and things "during cross-examination of an opponent’s witness" at trial. 9
The voluntary exchange of discovery sometimes works. 10 However, if a party has a really bad document in its file, it has a tremendous incentive not to agree to any voluntary exchange of discovery that would require it to produce that document.
The motions practice is occasionally productive, but not as often as the uninitiated might think. The basic problem is that the burden is on the movant to show that its opponent has something in its file that the board should consider in reaching its judgment. However, since the movant usually doesn’t know what its opponent has in its file, it usually can’t satisfy "the interest of justice" requirement as interpreted by the board.11
Requesting the production of documents during cross-examination of an opponent’s witness is grossly dysfunctional. In the first place, the odds are that your opponent won’t have the documents in question with him or her.12 In the second place, some notorious members of the interference bar make a practice of responding to all 37 CFR 1.687(b) requests with the statement "I’ll take that request under advisement" — and then only advising as to whether he or she will produce the documents in question after his or her opponent has gone back to his or her office on the other side of the country.13 And, in the third place, if you do get something interesting, you have a Hobson’s choice. Either you can ask questions right on the spot about a document or thing that you’ve never seen before or you can try to schedule a continuation of the deposition at a later date to allow you to prepare some really effective cross-examination. The first option leads to lousy questions, and the second option enormously increases the cost. (In patent interferences, the "trial" looks like a series of depositions around the country, so scheduling a continuation of the deposition at a later date frequently requires the cross-examining attorney to make a second trip to the town where the first deposition was held — perhaps clear across the country.14
What the Interference Bar Would Like to See Done with Discovery in Patent Interferences
In a rare display of unanimity, the Interference Committee of the American Intellectual Property Law Association (which includes most of the small band of practitioners who make their living handling interferences) agreed that the current discovery system in patent interferences is terrible, and the chair of the committee appointed a subcommittee to explore alternatives to that system. Regrettably, while everybody on the subcommittee agreed that the current system is terrible, the subcommittee promptly split three ways over what should replace the current system.
At one extreme were the practitioners who thought that all discovery is a waste of money and who wanted to abolish discovery in patent interferences entirely. (Prior to 1971, there was no discovery in patent interferences, and those practitioners wanted to go back to that system.)
At the other extreme were the practitioners (including me) who wanted full scale discovery in patent interferences — just like we used to have in the Federal district courts.
In the middle were the practitioners who wanted a rule modeled on FRCP 26 which would require disclosure of certain special classes of documents and things. The problem with that view was that we couldn’t agree on what kinds of documents or things should be disclosed — and "give them everything that you don’t want them to have" didn’t seem to be an adequately precise standard.
The discovery subcommittee met with two administrative patent judges from the Board of Patent Appeals and Interferences to discuss possible changes to the current discovery system. Those judges made two points. First, the PTO will not change the present system unless it is persuaded that the interference bar is practically unanimous in wanting change in a certain direction — and the present three-way split does not meet that criterion. Second, the PTO will not change the present system unless the new system would cost no more (and preferably less) time to administer than the present system. That criterion argues for the "no discovery at all" option, but it would preclude either of the other proposed changes — since both of the other proposed changes would be bound to generate more motions practice than the present system does.
Thus, for the moment we are left with an anomaly: big ticket litigation with no effective discovery. Although huge sums of money are frequently at stake, we in effect have a system of trial by ambush. It is exciting, but it often does not yield just results!15
Action Items — What I’d Like You to Do
I don’t know who you are, but, if you’ve read this article, you obviously have some interest in the patent system. Likely you are employed by or represent at least one company that occasionally gets into a patent interference. If you are, you have a practical, pocketbook interest in this subject!
Perhaps you agree with those interference practitioners who believe that all discovery is a waste of time and money. Perhaps you agree with me that wide-open discovery is more likely to lead to a just result than is the present system and that the additional expense of wide-open discovery is justified by the increased likelihood of achieving a just result. Perhaps you even have a good idea for how to define FRCP 26-type discovery in patent interferences.
In any event, the Patent and Trademark Office needs to hear from you! The person to write with your suggestions for how discovery in patent interferences should be changed is:
The Honorable Lawrence J. Goffney, Jr.
Acting Deputy Assistant Secretary of
Commerce and Acting Deputy
Commissioner of Patents and Trademarks
U.S. Patent and Trademark Office
Washington, DC 20439
Of course, please send me a copy of any letter that you send to Mr. Goffney. My address is:
Charles L. Gholz, Esq.
OBLON, SPIVAK, McCLELLAND,
MAIER & NEUSTADT, P.C.
1755 Jefferson Davis Highway
Arlington, VA 22202
If Mr. Goffney thinks (1) that a lot of patent practitioners (besides the statistically insignificant number of interference specialists) want to see the current system of discovery in patent interferences changed and (2) that a majority of patent practitioners are in favor of a particular kind of change, perhaps we can get the present lousy system improved!
1. Mr. Gholz is the head of the patent interference section of Oblon, Spivak, McClelland, Maier & Neustadt, P.C. of Arlington, Virginia, a past chair of the Interference Committee of the American Intellectual Property Law Association, and the current chair of the Discovery Subcommittee of that committee.
2. The statutory authority for patent interferences in the Patent and Trademark Office is 35 USC 135. Such interferences involve "two or more parties claiming the same patentable invention." 37 CFR 1.601(i). At least one of those parties must be an applicant, including a reissue applicant. One or more of the other parties may be a patentee.
It is also possible to have patent-patent interferences in Federal district courts pursuant to 35 USC 291. However, patent-patent interferences have generally been unsatisfactory. See, e.g., Advance Transformer Co. v. Levinson, 837 F.2d 1081, 5 USPQ2d 1600 (Fed. Cir. 1988), discussed in Gholz, A Critique of Recent Opinions of the Federal Circuit in Patent Interferences, 71 JPTOS 439, 445-46 (1989), and Kimberly-Clark Corp. v. Procter & Gamble Distributing Co., 973 F.2d 911, 23 USPQ2d 1921 (Fed. Cir. 1992), discussed in Gholz, A Critique of Recent Opinions of the Federal Circuit in Patent Interferences, 75 JPTOS 448, 480-83 (1993). As a result, most patentees faced with the prospect of a patent-patent interference file a reissue application, thereby restoring jurisdiction to the PTO for the purpose of conducting the interference.
3. In historical origin, patent interferences were priority disputes, and prior to 1985 the judgments of the present board’s predecessors were called awards of priority. However, awards of priority were frequently based on issues that had nothing to do with priority, which made the traditional nomenclature for the board’s judgments confusing. In 1984, 35 USC 135 was amended to increase the board’s jurisdiction over non-priority issues, and since 1985 the board’s judgments have been termed judgments rather than awards of priority. Many if not most of those judgments are based on the same kind of patentability issues that come up in infringement litigation. That is, the board has jurisdiction to hold that a claim in an issued patent is invalid. According to 35 USC 135(a), "A final judgment [of the board in a patent interference] adverse to a patentee from which no appeal or other review [i.e., a quasi-de novo civil action under 35 USC 146] has been or can be taken or had shall constitute cancellation of the claims involved in the patent [i.e., the claims in the patent designated as corresponding to the or a count]...."
4. The board can enter money judgments as sanctions against parties that "fail to comply with the regulations... or any order entered by an administrative patent judge or the Board." 37 CFR 1.616(a). However, the board does not enter money judgments on the merits.
5. The Federal Rules of Civil Procedure do not apply to patent interferences, even by way of analogy — a fact which often greatly confuses district court litigators who wander into patent interferences by mistake. See, e.g., Asari v. Zilges, 8 USPQ2d 117, 1120 (PTOBPAI 1987) ("We consider the reliance of Zilges et al[.] on FRCP 33 to be misplaced. While 37 CFR 1.287(c) provides that the Board may order additional discovery "within the scope of the discovery rules of the Federal Rules of Civil Procedure," it does not provide that the discovery procedure of the FRCP is applicable.") (emphasis in the original).
6. 35 USC 24, "Subpoenas, witnesses," might lead one to think that a fourth form of discovery is available — namely, plain old district court discovery obtained via an ancillary proceeding in a district court. Indeed that used to be the case. See generally Walterscheid, Interference Discovery, 58 JPOS 3 (1976). Moreover, to this day the PTO has no direct authority to forbid interferents from using 35 USC 24 against their opponents. However, 37 CFR 1.671(g) states that "A party must file a motion (• 1.635) seeking permission from an administrative patent judge prior to compelling testimony or production of documents or things under 35 U.S.C. 24...," 37 CFR 1.671(i) states that "Evidence which is not taken or sought and filed in accordance with this subpart shall not be admissible," and 37 CFR 1.687(a) states that "A party is not entitled to discovery except as authorized in this subpart." That is, the board cannot prevent an interferent from using 35 USC 24 without "permission from an administrative patent judge." However, at least until told otherwise by a court, if an interferent does use 35 USC 24 without such permission, the board will not consider any evidence that it obtains by that technique.
7. 37 CFR 1.687(d) reads as follows:
The parties may agree to discovery among themselves at any time. In the absence of an agreement, a motion for additional discovery shall not be filed except as authorized by this subpart.
8. 37 CFR 1.687(c) reads as follows:
Upon a motion (•1.635) brought by a party within the time set by an administrative patent judge under •1.651 or thereafter as authorized by •1.645 and upon a showing that the interest of justice so requires, an administrative patent judge may order additional discovery, as to matters under the control of a party within the scope of the Federal Rules of Civil Procedure, specifying the terms and conditions of such additional discovery. See •1.647 concerning translations of documents in a foreign language.
9. 37 CFR 1.687(b) reads as follows:
Where appropriate, a party may obtain production of documents and things during cross-examination of an opponent’s witness or during the testimony period of the party’s case-in-rebuttal.
10. One factor that makes the system work as well as it does is that a large percentage of all interferences are handled by a small band of regular practitioners. Those practitioners (a) have a good feel for what the administrative patent judges will order if a motion under 37 CFR 1.687(c) has to be filed and (b) have a powerful incentive not to get a reputation for taking unreasonable positions with either the administrative patent judge or their fellow practitioners.
11. See McKelvey, Discovery Before the Board of Patent Interferences, 58 JPOS 186 (1976); Purcell and Voight, The Scope of Discovery in Patent Interference Proceedings, 62 JPOS 160 (1980); and McCurdy and Christenberry, "Discovery in Interferences" in Patent Interference Practice, Patent Resources Group 1996.
12. Of course, you can advise your opponent in advance that you’re going to make a 37 CFR 1.687(b) request for a specific document or a specific class of documents. However, you apparently can’t compel your opponent to cooperate by bringing those documents to the deposition — although Rivier v. Coy, 12 USPQ2d 1231 (PTOBPAI 1989), suggests that at least Judge Smith might be prevailed upon to order a party to bring such documents to a deposition.
13. Most of the administrative patent judges are reluctant to resolve discovery squabbles "on the spot" by ruling on an oral motion for a request to produce during a 37 CFR 1.610(d) telephone conference. However, there are a few exceptions to that — notably including the previously mentioned Judge Smith.
14. 37 CFR 1.672(d) states that, "If any opponents [sic; opponent] requests cross-examination of an affiant, the party [whose witness the affiant is] shall notice a deposition at a reasonable location within the United States... for the purpose of cross-examination by any opponent." In practice, the depositions are usually held either in the office of the attorney whose witness the affiant is or in a location convenient to the affiant. Some attorneys endeavor to schedule all their witnesses for cross-examination at a single location and one right after the other (or in some other mutually agreeable pattern), but others don’t. 37 CFR 1.673(g) says that:
Before serving a notice of deposition and after complying with paragraph (b) of this section, a party shall have an oral conference with all opponents to attempt to agree on a mutually acceptable time and place for conducting the deposition. A certificate shall appear in the notice stating that the oral conference took place or explaining why the conference could not be had. If the parties cannot agree to a mutually acceptable place and time for conducting the deposition at the conference, the parties shall contact an administrative patent judge who shall then designate the time and place for conducting the deposition.
However, it has been my experience that even opposing counsel who are otherwise very difficult to get along with try very hard to avoid going to the administrative patent judge on this issue. I think that it is everybody’s fear that, if we bother an administrative patent judge with a squabble over the scheduling of depositions, he or she will arbitrarily schedule the depositions in a fashion that is inconvenient for both or all parties!
15. According to 37 CFR 1.601, the interference rules are supposed to "be construed to secure the just, speedy, and inexpensive determination of every interference." (Emphasis supplied.) However, it occasionally seems that the requirement for "the... speedy... determination of every interference" is given more weight than the requirement for "the just... determination of every interference"! See Gholz, A Critique of Recent Opinions of the Federal Circuit in Patent Interferences, 75 JPTOS 448 (1993) at 469, discussing Gerritsen v. Shirai, 979 F.2d 1524, 24 USPQ2d 1912 (Fed. Cir. 1992).