United States: Federal Circuit Finds the USPTO Has Discretion to Use the Two-Way Unpatentability Test for Interference

The U.S. Court of Appeals for the Federal Circuit has confirmed that it is within the discretion of the U.S. Patent and Trademark Office (USPTO) to apply a two-way unpatentability test as a threshold for declaring an interference. Eli Lilly & Co. v. Board of Regents of The University of Washington, (Fed. Cir. July 3, 2003).

Eli Lilly successfully requested the USPTO to declare an interference between a reissue application of its U.S. Pat. Nos. 4,775,624 (the `624 patent) and 5,302,529 (the `529 patent) assigned to the University of Washington. The reissue application recited a species claim to a complementary deoxyribonucleic acid (cDNA) sequence that codes for human protein C. Lilly proposed a genus claim construction and a species claim construction for claim 1 of the `529 patent to the USPTO. Neither claim construction met the two-way test for declaring an interference, but the genus construction met the one-way test.

The U.S. Board of Patent Appeals and Interferences (Board) granted a motion by the University of Washington to dismiss due to no interference-in-fact. Relying on prior Board precedent (Winter v. Fujita) that § 1.601(n) to require a two-way unpatentability test, the Board held that regardless of whether the `529 patent was construed to have a genus claim or a species claim, the Lilly reissue application did not define the same patentable invention as required by 37 C.F.R. § 1.601(n) to declare an interference. In the 1999 Winter decision, the Board defined the two-way unpatentability test as satisfied when claim A is anticipated or rendered obvious by claim B if claim B were prior art to claim A and claim B is anticipated or rendered obvious by claim A if claim A were prior art to claim B. Lilly appealed.

On appeal, Lilly argued that although the USPTO has some discretion to determine when an interference should be declared under 35 U.S.C. § 135(a), that discretion is bridled by the statutory mandate under § 102(g) that only one patent to the first inventor may issue. Lilly argued that for claims involving a genus and a species, a one-way patentability test should be used since a prior claim to the species clearly anticipates a later claim to the genus.

The Federal Circuit affirmed the dismissal, finding that the USPTO has discretion to choose between the two-way unpatentability test and the one-way unpatentability test. The Court noted that the one-way unpatentability test is over-inclusive since, if the genus were ultimately determined to have priority over the species, separate patents could properly issue to each and the interference would have been in vain. The Court also noted that the two-way test is under-inclusive since it would prevent the canceling of genus claims that did not have priority to the species. However, the Court determined that neither test was inconsistent with § 1.601(n) and the USPTO could reasonably choose one over the other.

Judge Lourie dissented on the grounds that the two-way test is not consistent with the plain language of § 1.601(n). Judge Lourie noted that the Board decision in Winter, which established the two-way unpatentability test, is not binding on the Court and is also "unsupported by any reasoning." Judge Lourie reasoned that the mere fact that an interference may be conducted in vain, and the potential burden on the USPTO in doing so, should not permit the USPTO to shy away from its duty of determining priority to ensure only one patent issues to the first inventor. Judge Lourie also noted that the two-way test will simply shift the burden from the personnel at the USPTO with expertise in interference practice to the already overburdened district courts that do not have the expertise.