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

1989 – Article
Journal of the Patent and Trademark Office Society, volume 71 (1989), pages 439-59

TABLE OF CONTENTS

I. Introduction
II. Substantive Interference Law
A. Excuses for Non-Activity During a Classical Diligence Period
Griffith v. Kanamaru
B. Proof of Successful Testing as a Requirement for Proof of an Actual Reduction to Practice
Newkirkv. Lulejian
C. Intefering Claims in Patent-Patent Interferences
Advance Transformer Co. v. Levinson
D. The Effect of Suppressing or Concealing An Actual Reduction to Practice
Lutzker v. Plet
E. The Effect of Ties in Invention Dates
Oka v. Youssefyeh
F. Grounds for Splitting CountsBigham
 v. Godtfredsen
III. Interference Procedure
A. Burdens of Proof and Persuasion Where an Applicant Copied a Claim from a Patent
Martin v. Mayer
B. Interferences Between Commonly Owned Cases
Consolidated World Housewares, Inc. v. Finkle
C. Agreements Between The Parties Concerning Procedure
Utter v. Hiraga
IV. Post-Interference Practice
A. The Effect of 37 CFR 1.204/1.608 Declarations in Subsequent Litigation
Baker Oil Tools, Inc. v. Geo Vann, Inc.

I. Introduction

This article covers Federal Circuit interference opinions published since those covered in the author's previous article by the same title at 69 JPTOS 657 (1987) through December 31, 1988.

The Federal Circuit has still published remarkably few opinion in new rule interferences1 and none at all involving a patentability question in the interference context. Accordingly, its most interesting recent interference opinions have involved procedural questions that will continue to arise under the new rules. A particularly welcome opinion was Utter v. Hiraga, which decided that interferents' procedural agreements are enforceable in the interference itself. On the other hand, in Martin v. Mayer the court continued some ancient and mischievous nonsense concerning the allocation of burdens of proof and/or persuasion where an applicant has copied a claim from a patent.

II. Substantive Interference Law

A. Excuses for Non-Activity During a Classical Diligence Period

Griffith v. Kanamaru, 816 F.2d 624, 2 USPQ2d 1361 (Fed. Cir. 1987) (opinion by Senior Circuit Judge Nichols for a panel that also consisted of Circuit Judges Bissell and Archer).

In this, the first new rule interference to be decided by the Federal Circuit, the court maintained the traditional hard line on classical diligence.2 While this country has a first-to-invent system, not a first-to-file system, it is exceedingly difficult for a first conceiver to establish the 35 USC 102(g) "reasonable diligence" required to tack a conception date prior to its opponent's reduction to practice to its own later reduction to practice if the period in question is of significant length.

Appellant Griffith was an applicant and the junior party. He had a conception date of June 30, 1981, and an actual reduction to practice date of January 11, 1984. Appellee Kanamaru was a patentee and the senior party, relying on a U.S. filing date of November 17, 1982. Thus, the party Griffith had to establish reasonable diligence from just prior to November 17, 1982, to January 11, 1984.

When the interference was declared, the party Griffith was put under an order to show cause why judgment should not be entered against it immediately pursuant to 37 CFR 1.617(a).3 The party Griffith filed "[a]dditional evidence" pursuant to 37 CFR 1.167(b),4 but the board entered summary judgment against it pursuant to 37 CFR 1.617(g),5 and the party Griffith appealed from that judgment.

Although the party Griffith had a period of fourteen months to account for, the board and the court focused on a three-month period of inactivity from June 15, 1983, to September 13, 1983. The party Griffith advanced two excuses for its non-activity during that period.6

The party Griffith's first excuse was that Griffith, who was a professor at Cornell University, was reasonably waiting for a graduate student to do the dog work.7 However, that excuse didn't fly:

We first note that, in regard to writing for a graduate student, Griffith does not even suggest that he faced a genuine shortage of personnel. He does not suggest that Ms. Jenkins was the only person capable of carrying on with the aminocarnitine experiment. We can see no application of precedent to suggest that the convenience of the timing of the semester schedule justifies a three-month delay for the purpose of reasonable diligence. Neither do we believe that this excuse, absent even a suggestion by Griffith that Jenkins was uniquely qualified to do his research, is reasonable.8

The party Griffith's second excuse was a little better, but still not good enough to fly. That was that, "notwithstanding Cornell University's extraordinary endowment, it is reasonable, and as a policy matter desirable, for Cornell to require Griffith and other research scientists to obtain funding [which Professor Griffith required to achieve his actual reduction to practice] from outside the university."9 According to the court:

The crux of Griffith's argument is that outside funding is desirable as a form of peer review, or monitoring of the worthiness of a given project. He also suggests that, as a policy matter, universities should not be treated as businesses, which ultimately would detract from scholarly inquiry.10

However, weighty as those considerations may have been to the university, in the court's view they did not outweigh the need for early public disclosure of inventions.11 Instead, the court said that this excuse was "more in the nature of commercial development, not acceptable as an excuse for delay, than the 'hardship' cases . . . [that had been found to constitute reasonable diligence despite breaks in work on actual reductions to practice.]"12

B. Proof of Successful Testing as a Requirement for Proof of an Actual Reduction to Practice

Newkirk v. Lulejian, 825 F.2d 1581, 3 USPQ2d 1793 (Fed. Cir. 1987) (opinion delivered by Circuit Judge Newman for a panel that also consisted of Circuit Judge Friedman and Senior Circuit Judge Baldwin).

This short opinion contains several interesting holdings relating to proof of an asserted actual reduction to practice.

The critical language in the count was "means for electronically altering said pushout robot rotational operation [sic; the rotational operation of said pushout robot] by changing said stored program."13 Prior to the critical date, the party Newkirk had had in existence a device capable of performing the recited step,14 but it had not actually tested the device to ensure that it would work -- i.e., the party Newkirk had not altered the rotational operation of the pushout robot by changing the stored program. The court held that the party Newkirk had not proved an actual reduction to practice before the critical date because "Proof of actual reduction to practice requires more than theoretical capability; it requires showing that apparatus of the count actually existed and worked for its intended purpose."15

The party Newkirk sought to excuse the absence of proof that it had actually tested this feature of the recited apparatus prior to the critical date on the ground that it was an "immaterial limitation." That argument did not fly because the court held that "It is . . . well established that every limitation of the interference count must exist in the embodiment and be shown to have performed as intended."16 What makes this holding interesting, however is that the court supported it by a citation to Correge v. Murphy, 705 F.2d 1326, 217 USPQ 753 (Fed. Cir. 1983), in which the court stated that an actual reduction in practice "must include every essential limitation of the count"!17

Comment: Has the court now dropped the adjective "essential" from the old rule? If it has, it would be a blessing, for it led to nothing but confusion and had no redeeming social value at this stage of the proceedings. Instead, the problem of "immaterial" (but inconvenient) limitations in the count is better taken care of at the motion stage, during which the parties have the opportunity to move to redefine the issue by substituting a different count omitting the allegedly immaterial limitation. Once the count is decided upon, however, the rule should be, as stated in this opinion, that every (not every essential) limitation of the count must be shown to have existed in the asserted actual reduction to practice.18

C. Interfering Claims in Patent-Patent Interferences

Advance Transformer Co. v. Levinson, 837 F.2d 1081, 5 USPQ2d 1600 (Fed. Cir. 1988) (opinion delivered by Circuit Judge Newman for a panel that also consisted of Circuit Judge Bissell and Chief Judge Re of the United States Court of International Trade).

Levinson, a patentee defendant in a declaratory judgment action, counterclaimed for a 35 USC 29119 patent-patent interference with a Feinberg patent owned by the plaintiff. The district court refused to declare the interference, and the Federal Circuit affirmed, using some very peculiar logic.

As would almost necessarily always be the case, the Levinson patent and the Feinberg patent did not contain identical claims. In the PTO, of course, there is no requirement that two cases (patents or applications) contain identical claims before they are held to interfere. Phantom count practice has, at the very least, become very common. In fact, it is probably the norm rather than the exception. However, the court acted as if it had never heard of phantom counts:

interfering patents are patents that claim the same subject matter. Albert v. Kevex Corp., 729 F.2d 757, 758 n.1, 221 USPQ 202, 204 n.1 (Fed. Cir.), reh'd denied, 741 F.2d 396, 223 USPQ 1 (1984).

It is thus correct, and necessary, to compare claims, not disclosures, when comparing issued patents under section 291. The district court's findings 130-132, pointing out differences between the Levinson and the Feinberg claims, have not been shown to be clearly erroneous.

***

The threshold issue under section 291 is whether the patents contain claims to the same subject matter. *** The [district] court's conclusion that the claimed inventions are not the same has not been shown to be in error.20

Comment: In many cases the owner of the patent that the owner thinks interferes with a patent owned by another company has two alternative remedies. It can try to provoke a patent patent interference in a district court under 35 USC 291, or it can file a reissue application and try to provoke a reissue application-patent interference before the Board of Patent Appeals and Interferences under 35 USC 135. In most cases, the latter technique has been preferred because of the expertise of the Board of Patent Appeals and Interferences, which normally decides such issues more quickly, less expensively, and more accurately than it is reasonable to expect from a district court. However, the patent-patent interference option has remained open for the rare case where tactics dictate its use. The court's opinion in Advance, however, virtually destroys that option. How often will two patents actually "contain claims to the same subject matter"?

D. The Effect of Suppressing or Concealing an Actual Reduction to Practice

Lutzker v. Plet, 843 F.2d 1364, 6 USPQ2d 1370 (Fed. Cir. 1988) (opinion delivered by Circuit Judge Archer for a panel that also consisted of Circuit Judges Smith and Nies).

This short opinion contains several interesting holdings concerning suppression or concealment.21

In this case, the period between the party Lutzker's first actual reduction to practice and its filing date was approximately fifty-one months, so that the court had no difficulty at all approving the board's holding that the delay "was unreasonably long and sufficient to give rise to an inference of intent to abandon,22 suppress, or conceal the invention."23 The court conceded that, as argued by the party Lutzker, "[a]n inference of suppression or concealment may be overcome with evidence that the reason for the delay was to perfect the invention,24 but it held that delay could not be excused (1) if "the delay is caused by working on refinements and improvements which are not reflected int he final patent application"25 or (2) if "the activities which caused the delay go to commercialization of the invention."26 In this case, the "refinements and improvements" to the claimed subject matter (a canape maker) made during the fifty-one months after the party Lutzker's first actual reduction to practice were not disclosed in its patent application, and the activities that the court dismissed as "go[ing] to commercialization of the invention" were "the development of a recipe book to be sold along with the canape maker . . . and the development of a blister card on which to package the canape maker for sale."27

An additional point that takes this case out the ordinary was the presence of affirmative evidence of the party Lutzker's intent to suppress or conceal the invention.28 In this case, Mr. Lutzker (who held a number of patents on devices commercialized by his company) had testified that it was his "policy . . . not to disclose his invention[s] to the public [or to file patent applications on his inventions] until he is ready to go into commercial production."29 The board found, and the court agreed, that "Such a policy is evidence of an intent to suppress or conceal the invention. . . ."30

E. The Effect of Ties in Invention Dates

Oka v. Youssefyeh, 841 F.2d 581, 7 USPQ2d 1169 (Fed. Cir. 1988) (opinion delivered by Chief Judge Markey for a panel that also consisted of Circuit Judge Rich and Senior Circuit Judge Miller).

This opinion answers the interesting question of what to do when the parties establish the same invention date and at least one of those dates is not a filing date: ties go to the senior party.31

In this case, the senior party (Youssefyeh et al.) stood on its October 31, 1980 Japanese priority date. The junior party (Oka et al.) proved a conception within the scope of the count "in the last week of October 1980."32 However, it is standard interference law that, "where testimony merely places the acts [in question] within a stated time period, the inventor has not established a date for his activities earlier than the last day of the period,"33 and the court interpreted the last day of the last week of October 1980 as October 31.34 Thus, the court held that the party Youssefyeh's conception date and the party Oka's filing date were the same -- i.e., October 31, 1980. The court then reasoned as follows:

Oka, as the senior party, is presumptively entitled to an award of priority, and Youssefyeh, as the junior party in an interference between pending applications, must overcome that presumption with a preponderance of the evidence. Morgan v. Hirsch, 728 F.2d 1449, 1451, 221 USPQ 193, 194 (Fed. Cir. 1984); 37 C.F.R. §1.257(a)(1983). In the event of a tie, therefore, priority must be awarded to the senior party. Accord Yamaha Int'l Corp. v. Hoshino Gakki Co., 840 F.2d 1572, 1580 n.11, 6 USPQ2d 1001, 1008 n.11 (Fed. Cir. 1988) (In a trademark opposition, "where the evidence is so evenly balanced that no preponderance emerges . . . , the party having the burden of persuasion necessarily loses."). Because Youssefyeh, the junior party, failed to show a conception date earlier than Oka's filing date, Oka is entitled to priority. We reverse the board's award of priority to Yousefyeh.35

Comment: Note that this logic will not provide an answer where both parties are held to be entitled to the same filing date (whether U.S. or foreign) and neither party is held to be entitled to any date prior to its earliest filing date.36

F. Grounds for Splitting Counts

Bigham v. Godtfredsen, 857 F.2d 1415, 8 USPQ2d 1266 (Fed. Cir. 1988) (opinion delivered by Circuit Judge Newman for a panel that also consisted of Senior Circuit Judge Baldwin and Circuit Judge Mayer).

Although this was an old rule interference, the sole issue decided by the court on appeal was the propriety of the board's decision dividing the original count into two counts.37 Thus, this opinion offers some guidance concerning how the court will treat the many 37 CFR 1.633(c)(1) issues that it will likely get in new rule interferences.38

The original count had recited "certain complex penicillanic acid compounds having a side chain containing the substituent 'X',"39 which was defined as "chloro, bromo, iodo, lkyl-sulfonyloxy having from one to four carbon atoms, benzenesulfonyloxy and toluenesulfonyloxy."40 On the party Godtfredsen's motion, the PTO split41 count 1 into two new counts, each of which was allegedly drawn to patentably distinct subject matter. Count 2 recited the same penicillanic acid compounds and defined X as iodo or bromo, and count 3 recited the same penicillanic acid compounds and defined X as chloro, alkylsulfonyloxy having from 1 to 4 carbon atoms, benzensulfanyloxy, or toluenesulfonyloxy. The party Godtfredsen's motion was based on experimental data showing that the bromo and iodo compounds reacted more rapidly than the chloro compound (and, presumably, the alkylsulfonyloxy, benzenesulfonyloxy, and toluenesulfonyloxy compounds).

The party Godtfredsen relied solely on the date of its British priority application for constructive reduction to practice of the subject matter of count 2. Unfortunately for the party Godtfredsen, that application defined X as "a halogen atom" (which of course meant a fluorine atom, a chlorine atom, a bromine atom, an iodine atom, or an astatine atom42), but specifically named only chlorine (which was recited in count 3, but not in count 2). Moreover, the party Bigham proved an actual reduction to practice of the chlorine compound prior to the party Godtfredsen's British priority date.

The board awarded priority to the party Godtfredsen as to count 2 based on its Brisith priority date, but it awarded priority to the party Bigham as to count 3 based on its actual reduction to practice of the chlorine compound.

On appeal, the court specifically "assume[d] that the board did not clearly err in holding, on the evidence adduced, that in this instance the bromo and iodo species are patentably distinct from the chloro species."43 Nevertheless, the court reversed the PTO's decision splitting the original count into two counts on the ground that:

Godtfredsen can not invoke one theory of law based on chemistry (i.e. that bromo and iodo are patentably distinct from chloro in the intended chemical reaction) and, having obtained a bifurcation of count 1 on that theory, urge a contrary theory (i.e. that halogen exemplified by chloro comprises disclosure of the bromo and iodo species) in order to obtain priority as to those species.44


Having so held, the party Bigham's arguments as to why it should have been awarded priority on count 2 became moot. The party Bigham was entitled to priority as to the reinstituted count 1 for the same reason that it was entitled to priority as to count 3: namely, its actual reduction to practice of the chloro compound before the party Godtfredsen's British priority date.

III. Interference Procedure

A. Burdens of Proof and Persuasion Where an Applicant Copied a Claim from a Patent

Martin v. Mayer, 823 F.2d 500, 3 USPQ2d 1333 (Fed. Cir. 1987) (opinion delivered by Circuit Judge Newman for a panel also consisting of Circuit Judge Davis and Senior Circuit Judge Nichols).

Confusion in the Federal Circuit and its predecessor, the CCPA, as to realistic allocations of burdens of proof and persuasion in interferences traces back through Woods v. Tsuchiya, 754 F.2d 1571, 225 USPQ 12 (Fed. Cir. 1985), and Holmes v. Kelly, 586 F.2d 234, 199 USPQ 778 (CCPA 1978), at least as far as Wagoner v. Barger, 463 F.2d 1377, 175 USPQ 85 (CCPA 1972). The court seems blind to the facts (1) that final hearing involves what amounts to appellate review of decisions on preliminary motions and (2) that the decisions on certain types of preliminary motions amount to appellate review of decisions by primary examiners.

In this case, the party Mayer had copied a claim from the party Martin's patent. The primary examiner rejected that claim under the first paragraph of 35 U.S.C. 112, and the party Mayer then cancelled the first claim and copied the claim from the party Martin's patent
in modified form.45 The primary examiner did not reject the second claim for lack of support (he did reject it on other grounds not relevant here), and an old rule interference was ultimately instituted involving a count that was identical to Mayer's claim. Mayer was the senior party. Martin moved to dissolve the interference as to that count on the ground that the party Mayer did not have support for his claim corresponding to the count, and that motion was denied. The party Martin then submitted expert testimony supporting its view of the inadequacy of the party Mayer's disclosure,46 and it sought review at final hearing of the primary examiner's decision denying its motion to dissolve the interference as to that count. 47 A three-member panel of the board affirmed that primary examiner on this point, and the party Martin appealed to the Federal Circuit.

At the Federal Circuit level, the court gave no apparent weight to the fact that three successive PTO tribunals had held that the party Mayer had support for its claim corresponding to the count.48 Instead, the court ruled that the board had erred in placing "the burden of going forward"49 on the party Martin -- i.e., the burden of persuading it that the primary examiner had erred in ruling In the party Mayer's favor on the party Martin's motion to dissolve the interference as to that count. According to the court:

It is Mayer, the copier of claims from Martin's patent, who has the burden of proving, by clear and convincing evidence, that "the disclosure on which he relies supports the copied claims which became the interference counts". Burson v. Carmichael, 731 F.2d 849, 852, 221 USPQ 664, 666 (Fed. Cir. 1984). See also DeGeorge v. Bernier, 768 F.2d 1318, 1321, 226 USPQ 758, 760 (Fed. Cir. 1985).
This burden requires, as the first step, that Mayer go forward and present a prima facie case of support for the copied claim. This prima facie case must itself be established by clear and convincing evidence. If such prima facie case of support for the count [sic; copied claim] is not made, the patentee Martin will prevail without more.
It is immaterial whether the copier has the senior or junior filing date. Holmes, 586 F.2d at 236, 199 USPQ at 781.*** This ultimate burden never shifts. 50

Comment: This analysis, which does find support in Woods, Holmes, and Wagoner, places the board in a perplexing situation.

What must the patentee put in a 37 CFR 1.633(a) motion for judgment on the ground that an applicant does not have 35 USC 112 first paragraph support for a claim that it copied (either exactly or in modified form) from the patentee? If the patentee merely says "It is respectfully submitted that the applicant does not have 35 USC 112 first paragraph support" for such a claim, does the applicant have to respond by showing that it does have support for the claim?

Then, if the 37 CFR 1.610 examiner-in-chief rules that the applicant does have support for the copied claim, what must the patentee put in its brief at final hearing? If the patentee merely says "It is respectfully submitted that the examiner-in-chief was wrong in ruling that the applicant has support for the copied claim," does the applicant once again have to carry the "ultimate burden" of persuading the panel of the board that it has support for the copied claim?

In real life, of course, the patentee will do its best to persuade both the 37 CFR 1.610 examiner-in-chief and, if it loses at that level, the board that the applicant does not have support for the copied claim. However, the court's language indicates that, at each stage, the burden is on the applicant to persuade the decision maker that it does have support for the copied claim even though the lower tribunal has already held that it does. This is in contrast to the normal rule in an appellate situation, which is that the party that lost below has to persuade the next higher tribunal that the tribunal below was wrong.

B. Interferences Between Commonly Owned Cases

Consolidated World Housewares, Inc. v. Finkle, 837 F.2d 261, 4 USPQ2d 1565 (Fed. Cir. 1987) (opinion delivered by Chief Judge Markey for a panel that also consisted of Circuit Judges Davis and Bissell).

This opinion offers an interesting glimpse of the practice under 37 CFR 1.602(a), which states that:
 

Unless good cause is shown, an interference shall not be declared or continued between (1) applications owned by a single party or (2) applications and an unexpired patent owned by a single party. [Emphasis supplied.]


In this case, Consolidated World Housewares, Inc. (CH) had bought an application owned by the inventor Finkle. Later, CH bought another application on the same invention from the inventors Bankier and Muderlak. Thus, CH was not entitled to the benefit of the second paragraph of 35 USC 103, since, at the time that the two inventions had been made, those inventions were not "owned by the same person or subject to an obligation of assignment to the same person."

CH was required to pay royalties to each of its assignors, but, not unreasonably, it did not want to pay royalties to both assignors. CH initially sued both assignors, alleging that it could not determine which application was entitled to priority because Finkle would not cooperate in determining priority. The District Court dismissed the suit on the ground that the underlying dispute was actually an interference, that only the PTO has jurisdiction to conduct an interference between two applications, and that CH had not exhausted its administrative remedies until it asked the PTO to institute an interference between Finkle and Bankier et al., with Finkle's non cooperation being the "good cause" required by 37 CFR 1.602(a). Consolidated World Housewares, Inc. v. Finkle, 662 F. Supp. 389, 3 USPQ2D 1718 (N.D. Ill. 1987).

CH then asked the PTO to declare an interference between Finkle and Bankier et al., and the PTO did so -- but it limited the interference to the evidentiary phase. That is, it permitted CH to use the PTO's administrative machinery to force the party Finkle to put on its priority proofs. However, the PTO refused to decide the interference. Thus, the net effect of its actions was that, once CH had the priority proofs of both of its assignors before it, it had to decide priority pursuant to 37 CFR 1. 78(c).51

C. Agreements Between the Parties Concerning Procedures

Utter v. Hiraga, 845 F.2d 993, 6 USPQ2d 1709 (Fed. Cir. 1988) (opinion delivered by Chief Judge Markey for a panel that also consisted of Senior Circuit Judge Nichols and Circuit Judge Nies).

This opinion may have undone the mischief caused by Goodsell v. Shea, 651 F.2d 765, 210 USPQ 612 (CCPA 1981), in which the court refused to decide a dispute over an agreement not to app