PTAB Reversed on Issue of Diligent Reduction to Practice

cafc1Perfect Surgical Techniques (PST), Inc. owns US 6,030,384 (‘384). Olympus petitioned for inter partes review of ‘384 as anticipated or obvious over JP H10-33551 (JP ‘551). JP ‘551 published less than one year before the ‘384 priority date, and therefore JP ‘551 was only art under pre-AIA 35 U.S.C. §102(a). PST offered a Rule 131 affidavit to remove JP ‘551 as prior art. The Patent Trial & Appeal Board (PTAB) ruled that the affidavit did not show sufficient evidence of continuous diligence between conception and reduction to practice, and therefore JP ‘551 is prior art to ‘384.

The ‘384 inventor was a working surgeon, so most of his working day was given over to patient care. Inventor hired a patent attorney to draft the application that later became ‘384, and the attorney sent the inventor a draft on 28 January 1998, thus proving that the inventor had conceived of the invention before JP ‘551 published on 10 February 1998. PST relied on the ‘384 filing date (1 May 1998) for reduction to practice. Therefore, PST had to show diligence between 9 February (the day before the publication date of the Japanese reference) and 1 May. PST submitted correspondence and invoices from the attorney to show that the inventor and attorney were working diligently in that intervening time, but these records only documented activity on 2, 4, 12, & 16 March and on 7 & 13 April.

The question for the PTAB, then, was whether the gaps between (e.g.) 4 and 12 March, or between 16 March and 7 April were so long as to show a lack of diligence. The PTAB concluded that these gaps showed that the inventor and attorney were not continuously exercising reasonable diligence.

On appeal, PST argued that the PTAB had applied an incorrect legal standard by requiring continuous exercise of reasonable diligence. PST argued—and the Court of Appeals for the Federal Circuit (CAFC) agreed—that the correct standard is “reasonably continuous exercise of diligence.” In other words, one does not need evidence that one’s reasonable diligence was continuous, but rather one needs evidence that one’s diligence was “reasonably continuous.” See, Tyco Healthcare v. Ethicon Endo-Surgery, 774 F.3d 968, 975 (Fed. Cir. 2014) (“To establish diligence in reduction to practice, the basic inquiry is whether there was reasonably continuing activity to reduce the invention to practice,” internal quotations and ellipsis omitted).

The CAFC vacated and remanded for the PTAB to reconsider whether the evidence showed “reasonably continuous” diligence. Therefore, Perfect Surgical stands for the proposition that the standard for proving prior invention is not “continuous reasonable diligence,” but instead is “reasonably continuous diligence.”

Federal Circuit Weighs in on Evidentiary Challenge in IPR, Reversing PTAB

34447773_sMore often than not, evidentiary issues in IPR proceedings fail to make headlines because the Board will structure its Final Written Decision to avoid evidentiary challenges. Findings that a party’s motion to exclude is denied as moot are common. That makes the Federal Circuit’s decision in REG Synthetic Fuels, LLC v. Neste Oil Oyj (November 8, 2016) all the more interesting. In that decision, the Court reversed the Board’s decision to exclude certain evidence submitted by Patent Owner during the trial.

More specifically, Patent Owner sought to swear behind one of the prior art references presented in the Petition. Among the evidence provided for this purpose was test data from third parties, communications between the inventor and third parties, and minutes from a meeting that the inventor had attended. Id. at 5. Petitioner moved to exclude this evidence on the basis of lack of authentication, hearsay, or as improper reply evidence. The Board granted the motion to exclude.

On appeal, the Court first clarified that priority issues, including conception and reduction to practice, are questions of law predicated on subsidiary factual findings. Id. at 6. The Court addressed the Board’s finding that two emails between the inventor and a third party (Exhibit 2061 in the case) provided necessary corroboration of the patented invention. Id. at 16. Petitioner argued that the emails were hearsay because they contain out of court statements by a third party. Patent Owner responded by arguing that it did not offer the emails to prove the truth of the matter asserted. The Court agreed with Patent Owner, finding that the emails were offered for the non-hearsay purpose to show that the inventor thought he had achieved a quality claimed in the patent-at-issue. “The act of writing and sending the email is, by itself, probative evidence on whether [the inventor] recognized–at the time that he had written the email–” the claimed property. Id. at 17. In short, the exhibit was legally significant because it showed that the inventor communicated the conception of the invention to the third party.

Because the Board excluded relevant evidence in the trial, the case was remanded for further consideration.

PTAB Generously Expands Page Limits in Patent Owner Response

41185418_sThe Board has earned a reputation for rigidly following the procedural rules for IPR proceedings, for good reason. Early on, the Board was likely concerned that an ad hoc web of decisions that granted relief from the variety of rules that govern IPR would create an unwieldly body of decisions. As IPR approaches its 3-year old birthday, however, there are ever growing signs that the Board is willing to consider deviations from core procedural rules, in the right circumstances. For example, in Daicci Sankyo Co., Ltd., v. Alethia Biotherapeutics, Inc., IPR2015-00291, the Board granted Patent Owner’s request for 25 additional pages to argue the prior art status of certain references relied upon by Petitioner. Order at 3. Finding that the particular facts of the case favored an exception to the rules, the Board granted Patent Owner an additional 25 pages “to be used solely for the purposes of addressing the prior art status of references relied on by Petitioner based on prior conception plus reasonable diligence and/or prior actual reduction to practice.” Id. Similarly, Petitioner was granted an additional 12 pages to its reply brief to respond to these arguments.

Also interesting in this decision is the Board’s recitation of what should be addressed relative to this conception issues. Specifically, Patent Owner was instructed to present a “diligence chart” that includes: “1) list all days from the beginning of diligence through the end of diligence, 2) briefly state what happened on each day, and 3) cite the page and line of the motion on which the listed day is discussed; every date gap in the diligence showing must be explained…” Order at 4.

So, the Board demonstrates some leniency in the procedural rules, and also provides interesting guidance regarding what should be provided to the Board to prove diligence.