Derivation Without Section 102(F) Changes Substance and Procedure!

April 2, 2019 – Article





                                                                        Prof. Joshua Sarnoff

                                                                        DePaul University College of Law




                                                                        Charles L. Gholz





As noted in Gholz, A Derivation Proceeding Is not Just a Derivation Interference By Another Name!, a panel of the Patent Trial and Appeals Board (Board) in Andersen Corp. v. GED Integrated Solutions, Inc., DER2017-00007 (March 20, 2019), held that the "the substantive law of derivation of invention" to be applied is "the jurisprudence that [was] developed" for derivation interferences." Slip opinion at 14. As also noted, "the procedure that the panel employed was very different from the procedure employed in derivation interferences and, in our opinion, unnecessarily complex" due to the facts that the panel (1) failed to utilize one or more counts to define the subject matter in issue and (2) failed to determine up front whether the claims at issue corresponded to the count or counts. In addition, we now note that the substance of the decisions that the Board needed to make for the derivation proceeding also differed from what would have been required for a derivation interference. 

Specifically, in Andersen, the Board did not have to consider patentability (particularly the obviousness under Section 103) of the claims of the senior party (i.e., the patentee) in light of any derived information that might have been communicated to that party’s named inventor which did not identically correspond to all of the elements of the claims of that party. This is because, under the America Invents Act (AIA), such derived information is no longer prior art, as it was under Section 102(f) of the pre-AIA Patent Act. In a derivation interference, any such derived information would have required evaluation of obviousness of the senior party's claims in light of pre-AIA Sections 102(f) and 103(a).

The Board in Andersen thus could and did forestall making any decisions regarding whether and what information may have been conveyed by the junior party to the senior party after it had decided that any communication did not include at least one element of all of the senior party’s claims. As the Board noted, after construing the claims at issue to require a "stop", "[f]irst, there is no allegation that Mr. Oquendo [the junior party’s named inventor] ever told Mr. Briese or Mr. McGlinchy [the senior party’s named inventors] that his design would not have V-shaped notches like in the prototype, or that his design was meant to have abutting stiffening flanges. Indeed, Mr. Oquendo admits that he never mentioned a stop specifically…. Thus, Anderson's assertion of communication is based only on what would have been understood based on the prototype and Mr. Oquendo's alleged discussion about it with Mr. Briese and Mr. McGlinchy. Because we find Andersen's arguments regarding   the prototype deficient … we need not resolve the credibility question of whether Mr. Oquendo actually ever showed it … which [the senior applicants] deny." Slip op. at 47 & n.13. 

The Board thus did not need to resolve what was actually communicated and consequently what information was actually derived, and it did not need to resolve conflicting testimony and thereby make credibility determinations.   In contrast, the Board would have had to make both difficult determinations under the pre-AIA law. 

In sum, elimination of Section 102(f) has changed both the substance and the procedure from derivation interferences, contrary to the dicta of the Board in Andersen. We hope that the improvident dicta will be repudiated soon, to avoid wasting Board and participant efforts with unnecessary procedures and consequent delays. And, as noted by Sarnoff in “Derivation and Prior Art Problems with the New Patent Act”, 2011 Patently-O Patent L.J. 12, 15, 16 & n.13, this likely was not Congress’s intent when enacting the AIA, and therefore courts may wish to adopt equitable restrictions on enforcing claims surviving derivation proceedings such as this one. 

In addition (and more radically), Andersen suggests that Congress may wish to reconsider its decision in the AIA to eliminate Section 102(f), just as it earlier fixed the problematic timing provisions of Section 135 derivations that were originally adopted in the AIA.