Is the Declaration of an Interference a Ticket to Ride to the End of the Line?

IS THE DECLARATION OF AN INTERFERENCE A TICKET TO RIDE TO THE END OF THE LINE? ^[1]

by Charles L. Gholz ^[2]

INTRODUCTION

The United States does not have an opposition system, and its reexamination system is not suitable for use in situations involving serious money.^[3] Accordingly, companies having an interest in "taking down" a competitor’s patent or in preventing a competitor’s patent from issuing in a jury-free environment and at a reasonable cost have traditionally turned to interferences on the theory that, if they can manage to provoke an interference, they can achieve the desired result even if they have no hope of winning as to priority. That is, they want to stay in the interference "to the end of the line" even if they know that, when they get there, judgment will be entered against them.

Unfortunately, that sensible stratagem has been subject to the limitation that some of the administrative patent judges have been reluctant (in my opinion, overly reluctant) to decide the patentability and validity issues raised by the parties.^[4] On the other hand, some of the administrative patent judges have been very willing to decide the patentability and validity issues raised by the parties.

In order to avoid deciding patentability and validity questions, the administrative patent judges who are so inclined have relied on two stratagems: (1) deciding one outcome-determinative issue and then dismissing everything else as moot and (2) asserting that certain (but, confusingly, not all) patentability issues are "ex parte" matters to be decided by an examiner in post-interference ex parte practice.

Two recent opinions of the Federal Circuit have gone a long way towards making it clear that neither of those decision-avoiding stratagems is acceptable. This note discusses those two opinions and then speculates concerning where this rapidly evolving area of the law may go next.

 

 Wu v. Wang, 129 F.3d 1237, 44 USPQ2d 164 (Fed. Cir. 1997)

(opinion delivered by Circuit Judge Lourie for a panel that also consisted of Circuit Judges Michel and Bryson)^[5]

 

Wu v. Wang was a follow-on to In re Van Geuns, 946 F.2d 845, 20 USPQ2d 1291 (Fed. Cir. 1991).^[6] In Van Geuns the court held that an appeal from a sua sponte holding of invalidity or unpatentability in an interference with which both or all of the parties disagree is treated like an appeal in an ex parte case — i.e., the appeal is given an ex parte heading, and the Solicitor is required to file a brief in support of the board’s decision. In re Emert, 124 F.3d 1458, 44 USPQ2d 1149 (Fed. Cir. 1997),^[7] extended that holding a little further, indicating that an appeal from a holding of unpatentability or invalidity entered on motion will likewise be treated like an appeal in an ex parte case if the prevailing party below chooses not to file a brief in support of its victory below — i.e., the appeal will similarly be given an ex parte heading, and the Solicitor will similarly be required to file a brief in support of the board’s decision.

In Wu v. Wang, each of the parties had filed a 37 CFR 1.633(a) motion for a judgment that its opponent’s claims designated as corresponding to the count were unpatentable. The party Wu’s motion was granted, and the party Wang was placed under an order to show cause why judgment should not be entered against it. The party Wang responded to that order by asking that it be allowed to stay in the interference in order to argue the unpatentability/invalidity of the party Wu’s claims designated as corresponding to the count.^[8] Administrative Patent Judge Martin permitted the party Wang to remain in the interference,^[9] and the case eventually went to final hearing. At final hearing, a panel of the board split three ways: Judge Martin would have held that all of the party Wu’s claims were either invalid or unpatentable, Judge Sofocleous would have held that all of the party Wu’s claims were neither invalid nor unpatentable, and Judge Pate would have held that some of the party Wu’s claims were invalid or unpatentable and that others were not.^[10] The result was that Judge Pate’s view prevailed, at least at the board level.

The case then proceeded to get curiouser and curiouser. First, the party Wu filed a 35 USC 141 appeal to the Federal Circuit; second, the party Wang filed a 35 USC 146 action against the assignee of the party Wu in the United States District Court for the Central District of California;^[11] and, third, the party Wang filed a 35 USC 141 notice of election in the Federal Circuit.^[12] The party Wu then filed a motion in the Federal Circuit asking the Federal Circuit (a) to disregard the party Wang’s notice of election (on the ground that what the party Wu had filed was an ex parte appeal, and the party Wang accordingly had no right to file a notice of election) and (b) to enjoin the party Wang from prosecuting its 35 USC 146 action in California (thereby implicitly conceding that the court had jurisdiction over the party Wang — i.e., that the party Wang was a party to the appeal). The party Wu then filed a "protective" 35 USC 146 action against the party Wang in the United States District Court for the District of Columbia,^[13] since 35 USC 141 says that, "If the appellant does not, within thirty days after the filing of such notice by the adverse party, file a civil action under section 146, the decision appealed from shall govern the further proceedings in the case." The Federal Circuit then asked the Solicitor to file a brief setting forth the PTO’s position, and she did so — supporting the party Wu’s view that the appeal was none of the party Wang’s business. Finally, the parties got the two 35 USC 146 actions stayed pending the Federal Circuit’s decision on the party Wu’s motion.^[14]

In a way, the court split the baby. It did not grant the party Wu’s motion to disregard the party Wang’s notice of election and treat the appeal as an ex parte appeal by the party Wu. On the other hand, the court also did not say that, once the interference was declared, the party Wang had a ticket to ride to the end of the line. Instead, it heavily and repeatedly emphasized Judge Martin’s decision to permit the party Wang to remain in the interference.^[15] However, it did not say that Judge Martin had to permit the party Wang to remain in the interference, and other administrative patent judges in such situations have entered judgments against parties in the party Wang’s position and terminated the interference.^[16] That is, it is apparently the board’s de facto position that the decision to permit a party such as the party Wang to remain in an interference is a discretionary one — i.e., a decision which each individual administrative patent judge can make either way. That decision, it appears, may depend on whether or not that individual administrative patent judge thinks that there is a public interest in deciding invalidity/unpatentability questions such as those raised by the party Wang (i.e., invalidity/ unpatentability questions raised by a party against which judgment is concededly going to be entered) in an inter partes forum.

There is dicta in the Federal Circuit’s opinion that suggests that at least that panel of the court would hold that, if a party such as the party Wang wants to stay in an interference solely for the purpose of arguing that its opponent’s claims are invalid or unpatentable, the party is entitled to do so.^[17] However, that was not the situation before the court in Wu v. Wang.

 

 Schulze v. Green, ___ F.3d ___, 45 USPQ2d 1769 (Fed. Cir. 1998)

(opinion delivered by Circuit Judge Michel for a panel that also consisted of Circuit Judges Lourie and Rader)

In Schulze v. Green the court decided (correctly, in my view) most of the $64 question left open in Wu v. Wang. In Wu the court held that it was not an abuse of discretion for the board to allow a party against which a judgment was going to be entered to remain in the interference solely for the purpose of trying to obtain a judgment against the other party. In Schulze the court held that the board must permit such a party to remain in the interference!

The party Schulze et al. filed (1) a preliminary statement that indicated that the invention defined by the count "was solely the work and invention of Schulze without the aid of Sherman"^[18] and (2) a 37 CFR 1.634 motion to correct the inventorship of its application in interference by deleting Sherman.^[19] The party Green et al. opposed the party Schulze et al.’s 37 CFR 1.634 motion on the ground that it did not "comply with the filing [sic; ?] requirements of 37 C.F.R. ·· 1.48 and 1.639, and also filed a motion requesting a testimony period on the issue of inventorship."^[20],[21] However, the party Green et al. did not file a 37 CFR 1.635 motion for leave to file a belated 37 CFR 1.633(a)/35 USC 102(f) motion for a judgment that the party Schulze et al.’s claims designated as corresponding to the count were unpatentable because it had its inventorship wrong. The party Schulze et al. opposed the party Green et al.’s motion for a testimony period on the issue of inventorship.

The administrative patent judge dismissed the party Schulze et al.’s 37 CFR 1.634 motion without prejudice "for failure to comply with the requirements of 37 C.F.R. · 1.48..."^[22] but nonetheless "granted limited testimony on the issue of... [the party Schulze et al.’s] inventorship."^[23] This seeming inconsistency is, however, easily explainable by the fact that, "In dismissing the [party Schulze et al.’s] motion to correct inventorship, the APJ stated that [t]he parties are reminded that a motion under 37 C.F.R. · 1.634, since it is not a preliminary motion, can be filed or refiled at any appropriate time in an interference.’"^[24] The administrative patent judge no doubt expected that the party Schulze et al. would promptly file a 37 CFR 1.634 motion that did comply with the requirements of 37 CFR 1.48. The only point of telling the party Schulze et al. that a 37 CFR 1.634 motion "can be filed or refiled at any appropriate time in an interference"^[25] was so that the party Schulze et al. would not file an unnecessary 37 CFR 1.635 motion for leave to file a belated 37 CFR 1.634 motion — as it would have had to do if the motion in question had been under 37 CFR 1.633 instead of under 37 CFR 1.634. However, the party Schulze et al. "did not refile... [its] motion to correct inventorship under 37 C.F.R. · 1.634, nor did... [it] request reconsideration under 37 C.F.R. · 1.640(c) (1997) of the decision dismissing... [its] motion."^[26]

After decision on the preliminary motions and the party Schulze et al.’s 37 CFR 1.634 motion, the preliminary statements were opened, and it was revealed that the party Green et al. did not claim to have made the invention defined by the count before the party Schulze et al.’s filing date. Accordingly, the administrative patent judge (1) placed the party Green et al. under a 37 CFR 1.640(d)(3) order to show cause why judgment should not be entered against it on the ground of priority of invention and (2) "vacated its [sic; his? her?] order granting limited testimony on the issue of... [the party Schulze et al.’s] inventorship."^[27]

The court’s opinion does not indicate how the party Green et al. responded to the 37 CFR 1.640(d)(3) order to show cause. However, it does state that:

Subsequent to issuance of the Order to Show Cause, Appellants [i.e., the party Schulze et al.] disclosed that they intended to wait until after judgment in the interference and a return to ex parte examination to refile their motion to amend inventorship under 37 C.F.R. · 1.48[e].^[28] Thereafter, Green filed a second motion for testimony on the inventorship issue, which was denied, and a [37 CFR 1.633(a)] motion for judgment that subject matter corresponding to the Count was unpatentable to Appellants under 35 U.S.C. · 102(f) for failure to recite the correct inventorship in the application. ^[29]

The administrative patent judge then deferred the party Green et al.’s 37 CFR 1.633(a)/35 USC 102(f) motion for judgment to final hearing. At final hearing, a panel of the board entered a judgment (1) that all of the party Green et al.’s claims designated as corresponding to the count were invalid for lack of priority and (2) that all of the party Schulze et al.’s claims designated as corresponding to the count were unpatentable under 35 USC 102(f).

The party Schulze et al. then appealed to the Federal Circuit,

contend[ing that] they were entitled to attempt to correct inventorship upon resumption of ex parte examination, [and] arguing that Green, having lost on priority of invention, had no assertable legal interest in any impact of correct inventorship on the patentability of Appellants’ [i.e., the party Schulze et al.’s] application claims.^[30]

The party Green et al. did not cross appeal from the board’s judgment that its claims were invalid, but it did appear as an appellee in support of the victory that it had won below.

On appeal, the Federal Circuit held that:

The very filing of... [the party Schulze et al.’s 37 CFR 1.634] motion fairly placed the issue of the inventorship of... [the party Schulze et al.’s] application in the interference. Pursuant to section 1.634, Appellants were required to follow the filing requirements of section 1.48 in order to be eligible to correct the inventorship of their application. As the APJ correctly found, however, Appellants’ motion was defective under section 1.48[,] and therefore the APJ could not adjudicate it but could only dismiss it, as he did. A defective motion under the regulation cannot support adjudication of the inventorship issue during the interference. Nevertheless, for the reasons stated post, the inventorship issue, having been fairly raised by Appellants, was still within the scope of issues for decision in the interference even after the APJ dismissed the defective motion.^[31]

In addition, and perhaps even more interestingly, the court said that:

Once an issue has been fairly raised during the course of an interference proceeding, the facts relating to that issue should be fully developed so the issue can be properly adjudicated, either by the APJ or by the Board at Final Hearing.^[32]

In this case, the court agreed with the party Green et al. (1) that the party Schulze et al. was not entitled to wait until post-interference ex parte practice to attempt to cure its inventorship problem and (2) that the party Green et al. had an "assertable legal interest" that entitled it to continue to pursue the inventorship issue even though judgment against it was proper. Nonetheless, the court held that the board had abused its discretion by entering judgment against the party Schulze et al. because the board had not given the party Schulze et al. fair warning (1) that it had to promptly file a corrected version of its 37 CFR 1.634 motion and (2) that, if it failed to do so, judgment would be entered against it. Accordingly, the court vacated the judgment against the party Schulze et al. and remanded the case to the board with instructions "to set a fixed period of time for... [the party Schulze et al.] to reform and refile... [its 37 CFR 1.634] motion."^[33] The court said (1) that, if the party Schulze et al. failed to do so, final judgment could be reentered against it and (2) that, if the party Schulze et al. did file a procedurally proper 37 CFR 1.634 motion, the board was to "decide whether inventorship is correct^[34] or is correctable and therefore whether the application claims are patentable."^[35] Interestingly, the court specifically mandated that, "[i]n no event... shall the case be returned to ex parte examination respecting the inventorship issue raised in the interference."^[36]

 

WHERE DO WE GO FROM HERE?

Does the court’s statement in Schulze that, "Once an issue has been fairly raised during the course of an interference proceeding, the facts relating to that issue should be fully developed so the issue can be properly adjudicated, either by the APJ or by the Board at Final Hearing"^[37] mean that the board has to decide every issue (1) raised by a party or (2) raised sua sponte by an APJ under 37 CFR 1.641^[38] In this case, the inventorship issue was apparently the party Green et al.’s only issue, but in many interferences a party will file a plurality of 37 CFR 1.633(a) motions asserting that some or all of the opposing party’s claims are invalid or unpatentable (depending on whether the opposing party is a patentee or an applicant) on a plurality of grounds. It is the practice of many of the administrative patent judges, if they grant one of those motions, to dismiss the others as moot. Of course, that means that, if the decision granting that one of the 37 CFR 1.633(a) motions is reversed at final hearing or during court review, the case has to be remanded to the administrative patent judge to decide the dismissed motions — which is a royal waste of time. On the other hand, if the administrative patent judges really have to decide all of the 37 CFR 1.633(a) motions, that will impose an additional obligation on them and, no doubt, slow down interference practice still further.

 

Schulze is certainly citable for the proposition that the administrative patent judges can no longer shuffle issues off to post-interference ex parte practice. If an issue raised by the parties before the board must be decided, it must be decided by the board.

However, I don’t think that Schulze necessarily gives the parties to every interference a ticket to ride to the end of the line just because the interference is declared. Two situations in which an interferent may not be able to get a decision on every issue it would like to have decided come readily to mind.

 

37 CFR 1.640(d)(3) Orders to Show Cause Entered Before the Preliminary Motions Are Filed

Some of the administrative patent judges now require the parties to file and serve their preliminary statements before the preliminary motions are filed and served, particularly in cases where one party’s filing date or effective filing date is substantially before the other party’s filing date or effective filing date. Then, if the junior party does not allege a date of invention before the senior party’s filing date or effective filing date, the administrative patent judge places the junior party under a 37 CFR 1.640(d)(3) order to show cause why judgment should not be entered against it.^[39] In response to such an order to show cause, the junior party can take the actions authorized in 37 CFR 1.640(e). However, while 37 CFR 1.640(e) is long and detailed as to procedure, all that it says about the merits is that, "When an order to show cause is issued under paragraph (d) of this section, the Board shall enter judgment in accordance with the order unless, within 20 days after the date of the order, the party against whom the order issued files a paper which shows good cause why judgment should not be entered in accordance with the order." The $ 64 question, of course, is what the administrative patent judges will accept as constituting good cause. There are, apparently, at least three schools of thought among the administrative patent judges.

First, there is the most restrictive view. Some of the administrative patent judges apparently believe that the only proper responses to a 37 CFR 1.640(d)(3) order to show cause are (1) a 37 CFR 1.633(b) motion for a judgment that there is no interference in fact (which, if granted, would mean that the junior party would save all of its claims) or (2) a 37 CFR 1.633(c)(4) motion for a judgment that one or more of the junior party’s claims designated as corresponding to the count should be "degrouped" (which, if granted, would mean that the junior party would save at least some of its claims). Of course, the administrative patent judge has to decide those motions, and review of his or her decisions can be sought at final hearing. Furthermore, review of the board’s decisions at final hearing can be sought in the courts pursuant to 35 USC 141 or 35 USC 146. However, the junior party doesn’t get to file any preliminary motions attacking the senior party’s claims, and the senior party doesn’t get to (or, depending on one’s perspective, doesn’t have to) file any preliminary motions at all. That means that the administrative patent judge’s motion work and the work of the board at final hearing are greatly reduced. In addition, neither party submits priority evidence, which still further reduces the board’s work.

Second, there is an intermediate view. Some of the administrative patent judges permit the junior party to file 37 CFR 1.633(a) motions for a judgment that some or all of the senior party’s claims designated as corresponding to the count are invalid or unpatentable and 37 CFR 1.633(c)(4) motions asking to have some of the senior party’s claims designated as corresponding to the count "degrouped." Their thinking is that, if the senior party has no valid/patentable claims designated as corresponding to the count, then the junior party has shown good cause why judgment should not be entered against it pursuant to 37 CFR 1.640(d)(3). Of course, this procedure only "works" for junior parties in the sense of enabling them to obtain or retain claims of their own if the basis for their 37 CFR 1.633(a) motions do not apply to them — e.g., if the junior party is arguing that the senior party does not have 35 USC 112 first paragraph support for some or all of its claims designated as corresponding to the count and that any of its claims that the senior party does have 35 USC 112 first paragraph support for should not be designated as corresponding to the count. While this procedure saves the administrative patent judges and the board some time, it obviously saves them a lot less time that the first procedure.

Finally, there is the wide open view — i.e., the view that the declaration of the interference truly is a ticket for the junior party to ride to the end of the line. Pursuant to this view, even a junior party that freely concedes that a judgment will eventually be entered against it should be able to "show good cause" why judgment should not be entered against it right away simply by saying that it wants to stay in the interference for the purpose of arguing that the senior party’s claims are invalid or not patentable. That view is exemplified by Gustavasson v. Valentini, 25 USPQ2d 1401 (PTOBPAI 1990) (opinion delivered by APJ Martin^[40] for a panel that also consisted of Vice Chairman Calvert and APJ Caroff). The party Valentini et al. was dead in the water under 35 USC 135(b), but that panel of the board still permitted it to stay in the interference solely to take down the claims in the party Gustavasson’s patent.^[41]

Of course, what I have called "the wide open view" will, generally speaking, make the most work for the administrative patent judges and the board. However, if the Federal Circuit agrees that there is public interest in allowing companies having an interest in taking down a competitor’s patent or in preventing a competitor’s patent from issuing in a jury-free environment and at a reasonable cost, then that is the view that the Federal Circuit should endorse when it gets the opportunity.

 

Truly Moot Motions

Despite the court’s seemingly all-encompassing language, I think that there is still some opportunity for the administrative patent judges or the board to dismiss certain motions as moot. For instance, suppose that a junior party files a 37 CFR 1.633(f) motion for the benefit of an earlier filing date, but (1) that filing date is after the senior party’s filing date or effective filing date, (2) the junior party does not challenge the senior party’s entitlement to its filing date or effective filing date, and (3) the junior party doesn’t allege a date of invention prior to the senior party’s filing date or effective filing date. Even if the junior party fully briefs its 37 CFR 1.633(f) motion, why should the administrative patent judge be put to the trouble of deciding it? The issue raised in the motion can have no possible effect on the outcome of the interference, and accordingly it would seem that the administrative patent judge and the board should be under no obligation to decide it.

 

CONCLUSION

In most cases the declaration of an interference is indeed a ticket to ride to the end of the line. However, there are at least two situations where that may not be so. Moreover, it seems likely that some of the administrative patent judges will attempt to read the court’s opinion in Schulze as narrowly as possible. Accordingly, I anticipate additional interesting developments in this area.

Published in Intellectual Property Today, Vol. 5, May 1998, pages 31-35.

 

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Endnotes

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[1.] Copyright 1998 Charles L. Gholz.

[2.] Mr. Gholz is a partner in and the head of the interference section of Oblon, Spivak, McClelland, Maier & Neustadt in Arlington, Virginia. His E- Mail address is cgholz@oblon.com.

[3.] See generally Kelber, "To Reexamine is Humanly Possible — to Interfere is Devine" in the Proceedings of the American Bar Association’s Section of Intellectual Property Law’s Program entitled "Patent, Trademark and Copyright Law: Litigation and Corporate Practice" (April 2-3, 1997).

[4.] I am not drawing any great distinction between patentability and validity issues. The board holds claims in patents invalid and claims in applications unpatentable, but it does so on precisely the same grounds. Moreover, it is clear that, at least in the board’s view, patent claims designated as corresponding to a count are not entitled to a presumption of validity. Lamont v. Berguer, 7 USPQ2d 1580, 1582 (PTOBPAI 1982) (expanded panel). Accordingly, there is really no difference between arguing that a patent claim is invalid or unenforceable and arguing that an application claim is unpatentable.

[5.] In the interest of complete candor, I note that I was one of the attorneys representing the party Wu.

[6.] Van Geuns is discussed at length in Gholz, A Critique of Recent Opinions of the Federal Circuit in Patent Interferences, 75 JPTOS 448, 457-63 (1993).

[7.] Emert is discussed in Gholz, A Critique of Recent Opinions of the Federal Circuit in Patent Interferences, 80 JPTOS ___, ___ (1998).

[8.] The party Wu had one patent and two applications in the interference. The party Wang argued that all of the claims in the party Wu’s patent in interference were invalid and that all of the claims in the party Wu’s applications in interference were unpatentable.

[9.] I believe that other administrative patent judges would have entered judgment against the party Wang, terminated the interference, remanded the interference to the ex parte examiner for consideration of the party Wang’s arguments that the party Wu’s application claims were unpatentable, and entered a 37 CFR 1.659(b) and/or 1.659(c) recommendation that the Commissioner order reexamination of the party Wu’s patent claims on the grounds raised by the party Wang.

[10.] This information does not appear in the court’s opinion. However, I was one of the attorneys representing the party Wu, and I write from personal knowledge.