How The United States Currently Handles The Interference Issues That Will Remain In A First-To-File World

1990 – Article
American Intellectual Property Law Association Quarterly Journal, volume 18 (1990), pages 1-17

by Charles L. Gholz *

I. Introduction
II. Derivation Cases
III. Inventorship Disputes Among Former Colleagues
IV. Interfering Cases Naming the Same Inventive Entity But Filed by Different Parties
V. Interleaving Priorities
VI. Improvidently Issued Patents
VII. Cases Having the Same Effective Filing Date
VIII. Ancillary Benefits
IX. How the Boundaries of the Dispute Are Set at the Outset and the Post-Proceeding Effect of the Decision
X Conclusion

I. Introduction

This Article is intended to provide a context for the following Articles. Many of the issues now decided in interferences[1] will, of course, disappear if and when the United States goes to a first-to-file system. However, many of the issues now decided in interferences will remain even if the U.S. goes to a first-to-file system, and the principal function of these Articles is to consider how those issues should be handled if the U.S. goes to a first-to-file system.[2]

One possibility is to continue handling those problems exactly as we do now. The interference section of the Board of Patent Appeals and Interferences is in place, its members are accustomed to handling the various issues discussed below,[3] and they could continue handling them after the change.[4] As the traditional expression goes, "If it ain't broke, why fix it?"

Another possibility, however, is that we could learn from the other major patent systems (all of which, of course, are now first-to-file systems) how to handle these issues even better - more quickly, more accurately, and/or less expensively. Whatever doubts an insular American might have on that score, it is at least theoretically possible that the Canadians, the Europeans, and/or the Japanese[5] (all of whom are confronted with the same problems) may have come up with a solution to handling one or more of those problems that is both better than our solution and suitable for adaptation to our system. These Articles are devoted to exploring that possibility.[6]

Moreover, there is another possible outcome. Harmonization does not mean only that the U.S. will change its laws and practices to some extent to conform to those of the Europeans and Japanese. Supposedly the Europeans and Japanese are also going to change their laws and practices to some extent to conform to those of the United States. Thus, it is possible that these Articles will convince our foreign readers that our system for handling those interference issues that do not depend on our current first-to-invent law is worth emulating and could be adapted to their own systems.

II. Derivation Cases

I am starting my discussion with the easy case. Even the most unreasonable, dyed-in-the wool critics of the current U.S. interference system agree that it would be intolerable if a thief could obtain a patent in preference to the true inventor.[7]

However, it is important to realize that there are actually two types of derivation cases: Cases involving allegations of outright theft of invention and cases involving allegations by one, both, or all of two or more companies that formerly cooperated in some fashion (e.g., in a joint research project, a customer-supplier relationship, etc.) that the other company's or companies' inventor(s) derived the invention in question from its inventor(s). The first type of derivation case is rare, though certainly not unheard of. The second type of derivation case, however, is quite common.[8]

The first type of derivation case usually involves what is known pejoratively as a "run away employee." For instance, consider the following. X formerly worked for ABC Corp., but he quit (or was fired). Either before or after (but usually after) termination of his employment, X files a patent application. Either before or after (but usually long after) termination of X's employment, ABC Corp. files a patent application naming Y as the inventor.[9] In the Patent and Trademark Office, those two applications (or one of those two applications and a patent that matured from the other one of those two applications) are adjudged to interfere,[10] and an interference is declared. X may not contest the proceeding, making the proceeding relatively simple.[11] However, X may well contest the proceeding -- alleging either that he, not Y, made the invention or that his invention is different from Y's invention and that both he and Y are entitled to patents on their respective inventions. Obviously, the opinions of corporate patent counsel about "run away inventors" notwithstanding, X may be right. Accordingly, we must continue to provide a forum for X and ABC Corp. to resolve this dispute.[12]

The second type of derivation case can have a background as varied as the possible relationships between two companies. All that is required is that one or more named inventors in an application or patent owned by M Corp. has communicated, either directly or indirectly, with one or more named inventors in an application or patent owned by N Corp. before the effective filing date of the alleged deriver. The interaction can be direct (e.g., face to face), but it does not have to be; it can be through a third party (typically an employee of the assignee of one of the parties) who communicated directly with the alleged derivee.[13] The information derived can be of everything recited in the count, but it does not have to be. This is one of those rare situations where "gist of the invention" is a meaningful concept -- that is, the alleged derivee can lose the interference if the board is persuaded that he derived the "gist of the invention" from the other party even if he did not derive every element recited in the count from the other party.[14]

Both types of derivation cases are now handled in interference proceedings, and both types of derivation cases could continue to be handled in interference proceedings even if we go to a first-to-file system. Whether we should continue to handle either or both types of derivation cases in interference proceedings if we go to a first-to-file system should depend, in part, on whether or not we think that the Canadians, Europeans, or Japanese have evolved better ways of handling the same issues.

III. Inventorship Disputes Among Former Colleagues

In Section II, I assumed that the two parties file applications naming non-overlapping sets of inventors. That is not always the case, however. In the second situation discussed in Section II, assume that N Corp. concedes that Z, an employee of M Corp., was at least a joint inventor of the subject matter in issue,[15] but M Corp. refuses to allow Z to execute a patent application prepared by N Corp.'s patent counsel and an assignment of that application to N Corp.[16] Under 37 C.F.R. Section 1.47(a),[17] N Corp. can file that application anyway, naming Z as a joint inventor with, e.g., its employee Q. If M Corp. files its own application naming Z, either with or without a colleague C, and if the PTO adjudges the two applications (or one of the applications and a patent that matured from the other application) to interfere, it may institute an interference styled Z and Q v. Z, Z v. Z and Q, Z and Q v. Z and C, or Z and C v. Z and Q, depending on the relative effective filing dates and the presence or absence of C.

As with conventional derivation cases, the parties may or may not be claiming identical subject matter, and either assignee may contend that the subject matter claimed in one or more claims in its case[18] is patentably distinct from the subject matter claimed in the other case.[19] If so, it will bear the burden of proof on that issue, whether or not it is the junior party or the senior party, as the moving party would in any ordinary case. However, if M Corp. places the propriety of N Corp.'s naming Z as a joint inventor in N Corp.'s application or patent in issue by filing a 37 C.F.R. Section 1.633(a) motion for a judgment that one or more claims in the Z and Q application is or are unpatentable (if in an application) or invalid (if in a patent) under 35 U.S.C. Section 102(f) because Z was not properly named as a joint inventor, the burden is apparently on N Corp. to prove that Z was properly named as a Joint inventor -- even though the PTO tentatively ruled that he was when it accepted the 37 C.F.R. Section 1.47(a) papers and even though N Corp. is the responding party, not the moving party.[20]

Although somewhat rare, these issues will obviously continue to come up from time to time in a first-to-file world,[21] and we need to continue to provide a forum to resolve them.

IV. Interfering Cases Naming the Same Inventive Entity But Filed By Different Parties

In Section II, I assumed that the two parties file applications naming non-overlapping sets of inventors, and in Section III, I assumed that the two parties file applications naming partially overlapping sets of inventors. Another situation, obviously, is where the two parties file applications naming the same inventor.[22] In fact, this situation can arise in either of the two situations discussed in Section II. That is, the individual can be a runaway employee, or he can be an employee of another company.

In the first situation, X formerly worked for ABC Corp. and either quit or was fired. Either before or after (but usually after) his termination, he files a patent application naming himself as the inventor. Either before or after (but usually long after) his termination, ABC Corp. files a patent application naming X as the inventor. If the application is filed before X leaves ABC Corp., X may execute the application prepared by counsel for ABC Corp., but if it is filed after X leaves ABC Corp., he probably will not execute the application, and ABC Corp. probably will file the application under 37 C.F.R. Section 1.47(b).[23] Either way, the fun starts when the PTO adjudges the two applications (or one of the applications and a patent that matured from the other application) to interfere.

In the second situation, Z again works for M Corp., but N Corp. asserts that it owns the invention pursuant to a contract between M Corp. and N Corp. M Corp. files an application executed by Z, naming Z as the inventor, and assigned to M Corp. N Corp. files an application under 37 C.F.R. Section 1.47(b) also naming Z as the inventor. As before, the fun starts when the PTO adjudges the two applications (or one of the applications and a patent that matured from the other application) to interfere.

In this situation, the parties do not proceed directly to an interference. If the two applications are still pending when the PTO catches the problem,[24] it will enter provisional double patenting rejections of the interfering claims in the two applications,[25] and, if one of the applications has matured into a patent, it will enter a double patenting rejection of the interfering claims in the other application. At that point, the party or the two parties faced with the double patenting rejection(s) can argue ex parte that the claims are patentably distinct (that is, that they do not interfere), which is the ex parte analog of a C.F.R. Section 1.633(b) motion. Also, if the two parties are not claiming identical subject matter and one of the parties is willing to assign its case to the other (perhaps in return for a royalty-free license under both cases and some additional consideration into the bargain), the situation can be resolved ex parte. If, however, the ex parte examiner(s) cannot be persuaded that the claims do not interfere and/or if the situation cannot be resolved ex parte, both the parties and the PTO have a problem.

The PTO's problem is that, at least in the past, it has refused to recognize this as an interference situation.[26] Despite the fact that it regularly handles ownership disputes when one of the parties is the government,[27] it has taken the view that, because such disputes are, at least in part, ownership disputes, they are none of its affair.[28] Thus, traditionally the most relief obtainable from the PTO has been a stay of proceedings while the parties thrash out their differences in a court of general jurisdiction -- e.g., the Court of Common Pleas of Yoknapatawpha County.[29] While this can work fairly well where the issue is purely one of ownership under a contract concerning subject matter the metes and bounds of which are undisputed, it can work fairly badly where the or an issue is whether the subject matter claimed in any given claim in each case ispart of the subject matter owned by each of the real parties in interest.[30] Thus, this is one subject area where we may have a lot to learn from our Canadian, European, and Japanese colleagues.

V. Interleaving Priorities[31]

While Section II discusses the easy case, this section discusses the most common case. Since nearly 50% of all U.S. patent applications are filed by foreigners from countries with first to-file systems, it should come as no surprise that approximately 50% of all interferences going to final hearing involve at least one foreign party and that approximately 10% of all interferences going to final hearing involve only foreign parties.[32] Moreover, many U.S. interferents rely at least in part on U.S. nonassured priority dates -- i.e., there are one or more CIP applications in their parentages. In each such case, a potential issue is what filing date one or more of the parties is entitled to for one or more of the counts.

If our change to a first-to-file system comes as part of a general harmonization of U.S., European, and Japanese patent laws, two other changes to our law impacting on this situation will presumably be made at the same time. First, U.S. applications will be published 18 months after the earliest claimed priority date. Second, the published applications be available as references as of their foreign priority dates -- subject, no doubt, to the same kinds of exceptions and limitations that have been engrafted on the availability as references as of their parent filing dates of U.S. patents that matured from CIP applications.[33] Those changes could be used as the basis for arguing that it will no longer be necessary to decide issues of this sort in interferences. However, I believe that they will not obviate the need for deciding issues of this sort in interferences.

In the first place, if (as is the current proposal) published U.S. patent applications claiming foreign priority dates are available as references as of their foreign priority dates only for novelty defeating purposes,[34] then U.S. examiners will not be able to cite them as references in the fairly common situation where two applicants have claims to non-overlapping subject matter that is obvious in view of each other -- a situation that is currently handled by a phantom count.[35] In that situation, the PTO will either have to issue two patents on mutually obvious subject matter (thereby exposing third parties to the risk of multiple liability under our expansive notion of equivalents) or continue to institute interferences between the two parties.[36]

In the second place, even if we ultimately decide to give published applications claiming foreign priority dates the same effect as of their foreign priority date as we currently give U.S. patents as of their U.S. priority date or dates (if any), it would still be highly desirable to sort out conflicting claims for priority in an inter partes context rather than in two independent ex parte contexts. Such situations are often extremely complex.[37] If the attempt is made to relegate these situations to independent ex parte proceedings, with the examiner handling each application citing the other party's published application as a reference[38] and each party attempting to antedate the reference under 35 U.S.C. Section 119 and/or 35 U.S.C. Section 120, the possibility of mutually inconsistent results becomes unacceptably high. Moreover, mutually inconsistent results are not merely a burden and an inconvenience to the two parties directly involved. Far more importantly, mutually inconsistent results would subject third parties to the risk of multiple liability[39] -- or, at a bare minimum, to the risk of multiple litigation.

For the foregoing reasons, I think that we will need to keep interferences to deal with this situation. Moreover, if the Europeans and Japanese adopt our notions of expansive equivalents (and that is one of the points that we are pushing for in the harmonization negotiations), I predict that they will ultimately have to turn to inter partes solutions for sorting out conflicting priority claims in their respective patent offices.

VI. Improvidently Issued Patents

No doubt in a perfect world all applications having interfering claims would be examined by the same examiner; all applications would be examined and, where appropriate, would issue in the order of their effective filing dates; examiners would always notice interfering claims; and we attorneys would always agree with the examiners concerning which claims do and do not interfere with each other. However, we do not live in a perfect world, and none of the foregoing is true in the world in which we do live. Accordingly, with distressing frequency patents issue to one company which, in the opinion of an attorney for a second company, have one or more claims that interfere with one or more claims in an application or a patent owned by the second company that, at least in the opinion of the attorney for the second company, has a senior effective filing date.

Additionally, although less commonly, an examiner can cite a patent having a junior effective filing date (as to the claim or claims in question) against a pending application and assert that the claim or claims in question interfere with one or more of the applicant's claims and that the junior patent can be removed as a reference only by cancellation of the patent's interfering claim(s) pursuant to a judgment in an interference.[40]

In the first of the foregoing situations, if the putative senior party is an applicant, he can simply request an interference under 37 C.F.R. Section 1.607, at the same time copying one or more claims from the patent either identically or in modified form if he chooses to do so.[41] In the second of the foregoing situations, the putative senior party is by definition an applicant, and once again he can simply request an interference under 37 C.F.R. Section 1.607. However, if the putative senior party is a patentee in the first of the foregoing situations, he has two options -- at least in theory. The option usually taken is to file an application to reissue the patent accompanied by a 37 C.F.R. Section 1.607 request to declare an interference between the reissue application and the allegedly junior patent.[42] The theoretically available alternative option is to file a civil action under 35 U.S.C. Section 291, "Interfering Patents," requesting a district court having personal jurisdiction over the patentee to "adjudge the question of the validity of . . . [either] of the interfering patents, in whole or in part."[43]

Once an interference has been initiated pursuant to any of the foregoing techniques, the parties can resolve the extent (if at all) to which their claims actually interfere, priority of invention (whether based on priority dates or on pre-filing invention dates), and the multitude of other issues (covered in Section VIII, infra) that can be resolved in interferences.

Since a switch to a first-to-file system will not end the issuance of allegedly improvidently issued junior patents, we will continue to need some technique for resolving all of those issues except pre-filing invention dates. Thus, we must either retain our current technique for resolving those issues or come up with another technique for doing so.

VII. Cases Having the Same Effective Filing Date

This is probably the rarest of the situations discussed in this Article. In fact, I am aware of only two reported U.S. opinions dealing with this issue: Van Otteren v. Hafner[44] and Lassman v. Brossi[45] In Van Otteren, the court held that, "Since the parties filed their applications on the same day, neither has a greater burden of proof than the other."[46] In Lassman, the board awarded priority against both parties, and First Assistant Commissioner Reynolds subsequently held that that meant that neither party was entitled to its claim corresponding to the count of the interference.[47]

The opinion in Lassman v. Brossi was sharply criticized by Examiner-in-Chief Rollins,[48] who asserted that:

It can be argued that the purpose of the patent system would be furthered more by granting valid patents on each of two or more simultaneously made inventions which happen to be the same than by denying patents to all the inventors. As noted earlier, it is relatively common for a given invention to be covered by a plurality of patents of different scope. From the viewpoint of a potential licensee or infringer, it is difficult to discern why it would make any difference whether the dominant patents were different or identical in scope.[49]

In response, I submit that the inconveniences to third parties of being subject to multiple law suits by the owners of dominant and subordinate patents is justified by what Judge Rich called "the socially valuable incentive to further research and development provided by the opportunity to obtain subservient patents. . . ."[50] However, there is no readily apparent corresponding social value in multiplying patents in adverse hands on the same invention.[51]

In any event, as Examiner-in-Chief Rollins's article makes very clear, we have not heard the last on this point even under our current law.

VIII. Ancillary Benefits

The United States does not have a pre-issuance opposition system, and our reexamination system, which was intended to provide some of the benefits of the European and Japanese opposition systems without some of the perceived detriments, has not been a success. Thus, pending a radical revision of our reexamination system, one of the ancillary benefits of the new interference rules has taken on particular importance.

That ancillary benefit is that, once an interference has been declared, each party's case is subject to full, inter partes reexamination.[52] Each party can rely on any ground to prevent its opponent from obtaining (if the opponent is an applicant) or maintaining (if the opponent is a patentee) any claim that has been grouped with a count that the party could rely on in an infringement litigation to invalidate that claim.[53] Such grounds commonly include unpatentability over the prior art,[54] lack of 35 U.S.C. Section 112 first paragraph support for one or more claims,[55] double patenting, unacceptable imprecision in claim language, etc. Thus, many interferences are lost on grounds that have nothing to do with priority, and many interferences are "won," not in the sense that the winning party has prevailed on priority, but in the sense that the winning party has prevented a competitor from obtaining or maintaining a patent at far less expense than it would have had to incur if it had litigated the validity of the patent before a lay judge or jury.[56]

IX. How The Boundaries Of The Dispute Are Set At The Outset and The Post proceeding Effect Of The Decision

One of the major problems with interferences under the old rules was that post-interference ex parte practice could drag on for years and could result in nasty surprises for the supposedly prevailing party.[57] Correspondingly, one of the major beneficial innovations of the new rules is the claim grouping procedure introduced by those rules.

Under the new rules, the subject matter in dispute in each interference is defined by one or more counts, each of which must define a "separate patentable invention."[58] Since each individual patent or patent application normally discloses one or, at most, a small number of separate patentable inventions, most interferences are conducted on the basis of one or, at most, a small number of counts. However, each claim in each party's case is designated either as corresponding to the count or to one of the counts or as not corresponding to any count. Moreover, an applicant interferent can move to add a claim in his application "to be designated to correspond to a count";[59] a patentee interferent can file a reissue application containing additional claims that either do or do not correspond to a count and, if the reissue application contains at least one claim (whether original or additional) that does correspond to a count, he can move to add the reissue application to the interference;[60] and if one's opponent is an applicant,[61] an interferent (whether a patentee or an applicant) can move to require his opponent "to add a claim and to designate the claim to correspond to a count."[62] All of these rules are intended to get all of the cards on the table in the interference, while the most interested parties are before the Office in a single, inter partes proceeding in which the precise scope of each separately patentable invention can be determined by an examiner-in-chief who is an expert in such matters with the aid of the arguments and the evidence submitted by the parties.[63]

Then, once the interference is over, all of the issues that were raised or could have been raised in the interference are settled.[64] An applicant that lost on the or all counts can still go back to ex parte practice, and a patentee that lost on the or all counts can still file a reissue application after the interference is over.[65] Moreover, the PTO has rejected the requests of interference practitioners that a losing applicant's file be opened to comment by the winning party.[66] However, such a losing applicant is only entitled to obtain a new claim (i.e., a claim that was not present in his application during the interference[67]) if he can persuade the examiner (l) that the new claim is patentable over the or all counts in the interference and (2) that the new claim could not have been put into the interference because the prevailing party did not have a claim in its case that interfered with the new claim or support for a claim that would have interfered with the new claim.[68] Thus, while there is still some room for post-interference game playing, that room has been drastically reduced by the new rules. In most cases, when it's over, it's over.

X. Conclusion

This Article has been intended to explain how we are currently handling a variety of issues that will remain if we go to a first-to-file system. Obviously, we could continue to handle each of these issues just as we are handling it now. On the other hand, we could decide to handle each such issue drastically differently -- for instance, in the way that the Canadians, Europeans, and/or the Japanese now handle it. The following Articles explain how the Cana