A Derivation Proceeding is not Just a Derivation Interference by Another Name!

March 27, 2019 – Article

  As stated in Gholz and Presper, The PTAB’s Primer for Derivation Proceedings, 21 Intellectual Property Today No. 10 at page 20 (2014), “Of the four new types of inter partes patent proceedings created by the America Invents Act [“the AIA”]…, the slowest off the starting block has been 35 USC 135(a) derivation proceedings.” Id. at 20. However, a panel of the board consisting of APJs Chang, Cocks, and Arbes has at last decided a derivation proceeding. Andersen Corp. v. GED Integrated Solutions, Inc., DER2017-00007 (March 20, 2019). As in the three related opinions discussed in the article cited at the outset of this article, the Andersen opinion starts by asserting that, “On the substantive law of derivation of invention, we apply the jurisprudence that [was] developed … [by the CCPA and the Federal Circuit in, inter alia, derivation interferences].” Slip opinion at 14. However, the procedure that the panel employed was very different from the procedure employed in derivation interferences and, in our opinion, unnecessarily complex.

            The key difference between the procedure employed in Andersen and the procedure employed in derivation interferences was that, when the panel instituted the proceeding, it did not define one or more counts and then tentatively designate each of each party’s claims as either corresponding to the count or to each count or as not corresponding to the count or to each count. That may have been because Andersen (the petitioner) copied all of the claims in GED’s patent in ipsis verbis (other than the numbering of the claims) and did not propose even one count.   That certainly needn’t have stopped the panel that instituted the proceeding from creating its own count and tentatively designating all of each party’s claims as corresponding to that count. However, the panel didn’t do that, but instead treated Andersen’s position to be that its named inventor (Mr. Oquendo) “conceived of the subject matter of each of claims 1-22 and communicated each conception to GED.” Slip opinion at 38; emphasis in the original.

            On the peculiar facts of this case, the panel was able to come up with a creative work-around that made the situation not as awkward as it might have been. What the panel did was to focus on one limitation in independent claim 1 in GED’s patent. It then ruled that the other two independent claims in GED’s patent recited “similar limitations”, slip opinion at 64 and 65, and that Andersen made “substantially the same arguments” concerning those claims as it did concerning claim 1. Since all of GED’s dependent claims incorporated one of those limitations by reference, that enabled the panel to rule that Andersen’s failure to prove that Mr. Oquendo  had conceived and communicated to one of Andersen’s two named inventors the subject matter defined by those limitations prior to the filing date accorded GED was “dispositive”. Slip opinion at 31. 

            By focusing on the one limitation in GED’s claim 1, the panel was able to rule that it “need not address GED’s arguments regarding other limitations of the independence claims and certain of the dependent claims.” Slip opinion at 66 n. 18. True, but that does not change the fact that the parties had gone to final hearing addressing those limitations, which presumably cost the real parties-in-interest boatloads of money. Moreover, and perhaps of more concern to the APJs, the fact that the parties had gone to final hearing addressing those limitations presumably cost the APJs considerably more work in preparing for final hearing and in their preliminary work in deciding the case.