United States: Swearing Behind A Reference With Reasonably Continuous Diligence

In Perfect Surgical Techniques, Inc. v. Olympus America, Inc., the Federal Circuit vacated and remanded a USPTO Patent Trial and Appeal Board decision in an Inter Partes Review proceeding, finding that the PTAB imposed too strict a diligence requirement for swearing behind a reference. This case reminds us that proof of conception and diligence towards reduction to practice has relevance outside of interference proceedings, although the ability to swear behind a reference was eliminated for most new applications and patents falling under the America Invents Act (AIA).

Swearing Behind A Reference

Applications and patents that fall under the pre-AIA version of 35 USC § 102 can disqualify a reference that is not a statutory bar under § 102(b) by proving an earlier date of invention. In accordance with § 102(g):

[T]here shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.

When swearing behind a reference, the critical period for diligence runs from the day before the reference was published through the date of actual or constructive reduction to practice of the invention.

The Patent At Issue And Critical Period

The patent at issue was PST’s U.S. Patent 6,030,384, directed to bipolar surgical instruments. The patent was granted from an application filed May 1, 1998.

The IPR was based on Japanese Application Publication H10-33551, published February 10, 1998. Since the reference was filed less than one year before the application’s filing date, PST attempted to swear behind it with evidence of an earlier date of conception and diligence towards constructive reduction to practice based on the activities of the inventor (Dr. Nezhat) and patent attorney (Mr. Heslin).

Some of the activities identified in the Federal Circuit decision include:

  • January 28: Mr. Heslin sends an initial draft of the application to Dr. Nezhat
    • February 10: publication of Japanese Application Publication H10-33551
  • March 2: Dr. Nezhat provides comments to Mr. Hesli
  • March 4: Mr. Heslin works on the application
  • March 12: Mr. Heslin requests a meeting with Dr. Nezhat to discuss the application
  • March 16: Mr. Heslin and Dr. Nezhat meet to discuss the application
  • April 7: Mr. Heslin revises the application
  • April 13: Mr. Heslin sends a revised draft of the application to Dr. Nezhat
  • May 1: Mr. Heslin files the application

The PTAB Decision

The PTAB accepted the inventor’s testimony and corroborating evidence, but determined that PST failed to establish “continuous” diligence during the required period. The PTAB focused on three times periods in particular:

  • February 10 to March 1
  • March 12 to March 15
  • April 13 to May 1

The Federal Circuit Decision

The Federal Circuit Decision was authored by Judge Moore and joined by Judge O’Malley. Judge Schall filed an opinion concurring in part and dissenting in part.

Echoing the language of § 102(g), the court explained:

In determining whether an invention antedates another, the point of the diligence analysis is not to scour the patent owner's corroborating evidence in search of intervals of time where the patent owner has failed to substantiate some sort of activity. It is to assure that, in light of the evidence as a whole, "the invention was not abandoned or unreasonably delayed."

The court first determined that the PTAB applied “too exacting” a standard for diligence:

A patent owner need not prove the inventor continuously exercised reasonable diligence throughout the critical period; it must show there was reasonably continuous diligence. …. Under this standard, an inventor is not required to work on reducing his invention to practice every day during the critical period. …. And periods of inactivity within the critical period do not automatically vanquish a patent owner's claim of reasonable diligence.

The court also found that the PTAB “did not properly weigh PST's evidence under a rule of reason,” but focused on specific dates with no supporting evidence instead of evaluating the evidence as a whole.” The court also criticized the PTAB for “summarily dismissing the activities of … Mr. Heslin,” stating that “[a]n attorney's work in preparing a patent application is evidence of an inventor's diligence.”

The court vacated and remanded to the PTAB to decide “whether all of PST's evidence, considered as a whole and under a rule of reason, collectively corroborates Dr. Nezhat's testimony that he worked reasonably continuously within the confines of his and Mr. Heslin's occupations to diligently finalize the patent application.” However, it noted that “the [PTAB's] finding that [the] long weekend [from March 12 to March 15] amounted to a period of inactivity is unreasonable on its face.”

Judge Schall’s Dissent

Judge Schall dissented from the majority decision for two reasons. First, Judge Schall was “not persuaded that the [PTAB] applied an inappropriate [diligence] standard.” Second, in Judge Schall’s opinion, “the First Gap alone constitutes substantial evidence for the Board's ultimate finding on diligence.” In this regard, Judge Schall noted that “PST [did] not contest the Board's finding that there was an absence of activity during the period of the First Gap.”

As I see it, the question here boils down to whether, after viewing the evidence, the Board was unreasonable in finding that an unexplained gap in activity lasting nearly three weeks was sufficient to show a lack of diligence. In my view, a reasonable mind might conclude that it was.

The Ongoing Relevance Of Diligence

Although the AIA moved the U.S. patent system towards a “first inventor to file” system, patents having an effective filing date prior to March 15, 2013 fall under the pre-AIA version of § 102, and so may be able to swear behind a reference. Given the popularity of IPR proceedings, the ability to prove prior conception and “reasonably continuous diligence” towards a later reduction to practice may remain relevant for many patent holders for the foreseeable future.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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