United States: Why Patent Interference Proceedings Are Worth It

Originally published in The New Jersey Law Journal, July 19, 2004

U.S. patent law is unique in recognizing the inventive activity of individuals as significant in deciding who is entitled to patent rights on an invention. Other countries simply rely on the filing date of a patent application to decide who gets a patent. Who actually invented first is not relevant in those countries. In the United States, however, the question of who made an invention first is important in two different situations. One is where the U.S. Patent and Trademark Office (PTO), or a court, decides which of two parties is entitled to a patent on a single invention. This is called a patent interference. The other is where a court decides whether a patent is invalid because someone else made the invention first. This latter situation typically arises as part of an invalidity defense to patent infringement. Both situations are governed by 35 U.S.C. §102(g), and both involve a determination of who is "first to invent." This article explores how a "first to invent" position can be more advantageously pursued in a patent interference rather than a district court action.

While the rules for conception, reduction to practice, and diligence are generally the same in a patent interference proceeding and in an invalidity defense in district court, there are procedural and substantive reasons why a patent interference can be the better forum to vindicate a "first to invent" argument. It may not always be apparent that one has a choice between an interference and an invalidity defense. But here’s how the situation might present itself. Your company might have a breakthrough product that has been carefully protected through filing one or more patent applications. You might even have a portfolio of patents and patent applications covering the product and related technology. You then learn of a new patent owned by the Acme Company broadly claiming an invention that might encompass your company’s breakthrough product.

At this juncture, you typically might obtain an opinion of counsel that Acme’s competing patent is invalid, or that your product does not infringe Acme’s claims, or both. If your initial reaction to Acme’s patent was correct, that is, if Acme’s patent claims do encompass your product, and your product is already protected by issued patent claims, or even pending patent applications, you and your counsel might come to the conclusion Acme’s patent is invalid because your inventor invented the technology first.

It is at this point that routine procedure might dictate that your outside counsel prepare a written opinion asserting the invalidity of Acme’s patent based on your inventor’s earlier work in the field, thus shielding your company from an assertion of willful infringement and the treble damages that go with it. That opinion might also serve [as] the basis of a complaint for declaratory judgment of invalidity. But that opinion will not protect your company from a patent infringement suit, nor will it help solve the problem of Acme’s new patent in the marketplace, which itself might impact your company’s ongoing business apart from any direct attack from Acme. Another option in this circumstance is to provoke an interference with the competing patent. One requirement for admission to an interference is a pending application, preferably filed before the opponent’s application. Thus, if your company has a pending application or is entitled to file a reissue application based on one of its patents, you might take steps to "provoke" an interference with the competing patent. This is usually done by copying or substantially copying the claims of the competing patent within one year of the patent’s issue date, and then filing a Request for Interference. See 35 U.S.C. §135(b); 37 C.F.R. §§ 1.607, 1.608.

The steps involved in provoking the interference vary depending on the respective filing dates of the competing patent application and patent, and may involve some significant strategy decisions regarding the scope and type of claims one wants to pursue. Consideration must be given to the statutory and regulatory framework that has been set up to avoid declaring an interference between what the PTO calls "patentably distinct" claims. See 37 C.F.R. §1.601(n); Eli Lilly & Co. v. Board of Regents of the Univ. of Washington, 334 F.3d 1264 (Fed. Cir. 2003). Additionally, an interference "count," which is similar to a claim and defines the interfering subject matter, should be carefully crafted and suggested to the PTO. The PTO examiner must be satisfied that the claims are allowable and that the application should be sent to the PTO’s Board of Patent Appeals and Interferences (Board), which has the authority to declare the interference and, thereafter, has jurisdiction over the proceeding. If these hurdles are overcome and the Board declares the interference, there are many reasons an interference is preferable to a district court invalidity defense for resolving a priority dispute. Here, in no particular order, are at least ten:

Any party in a district court proceeding asserting invalidity, either as a defendant in an infringement action, or as a plaintiff in a declaratory judgment action, bears the burden of proving that invalidity by clear and convincing evidence. On the other hand, in a PTO interference proceeding, where there is no "presumption of validity" as there is in a district court action, the burden is assigned differently, and the standard used is almost always only a preponderance of the evidence.¹

Thus, from the hypothetical in the above introduction, if your company asserted invalidity in a district court action, it would necessarily bear the burden of proving that invalidity by clear and convincing evidence. In an interference proceeding, on the other hand, the burden would play out in one of two different ways: if your company’s inventors were the "senior party," that is, if it went into the interference with the earlier effective filing date, the burden of proving priority would be placed from the beginning on Acme; if you were the "junior party," you would bear the burden of proving priority, but only by a preponderance of evidence. Thus, your company in this hypothetical is almost always better off from the burden of proof perspective in an interference proceeding than it is in a district court action.

An interference proceeding is bifurcated into "preliminary motions" and "priority" phases, with separate hearings and decisions for each phase. While an interference is usually considered a priority contest and a prima facie priority case must be evident to get into an interference, there is an opportunity to attack the other party’s claims on grounds other than priority during the preliminary motions period. For example, a party’s claims can be attacked in an interference as unpatentable over the prior art, i.e., the earlier patents and literature. Or a party’s claims can be challenged as failing to meet the enablement or written description requirements. Because a decision on any of the preliminary motions can determine the outcome of the interference before priority is even an issue, e.g. by determining that a patent is invalid, an interference is an attractive option when an interfering party has a strong validity attack on an issued patent.

Another reason an interference before the PTO is a more attractive option than an invalidity defense in district court is the decision-maker’s expertise. The Board has experience in patentability and priority determinations and makes these decisions regularly, as opposed to a judge or jury. Members of the Board all have scientific and technical training, as well as law degrees and significant patent legal training. Many are former PTO examiners. And since the fall of 1998, newly declared interferences have been assigned to what is called the Trial Section of the Board, which is specifically tasked with expediting interferences, particularly the preliminary motions, before the Board. Moreover, a three-member panel makes all significant Board determinations, thus hopefully ensuring three expert decision-makers for each substantive issue that arises in the case.

A patent applicant involved in an interference has the option of amending its claims if they are challenged as unpatentable during an interference. See 37 C.F.R. §1.633(c). Likewise, a patentee hit with a charge of unpatentable claims may have the option of filing a reissue application to amend its claims, which can then be brought into the interference as well. See 37 C.F.R. §1.633(h). There is no similar procedure afforded to parties engaged in litigation before a federal district court.

Importantly, this advantage of interference practice allows a party seeking to provoke an interference who has a pending application to tailor that application to fit the other party’s product or patent claims. For example, a patent applicant facing an infringement charge from a patentee might be concerned about his chances of proving invalidity as a defense in a district court. Even if his current pending claims are not overlapping in scope, he can amend his claims or file a related application to recite the claims he wants provided he has written description support. Likewise, a patentee might use a pending related application to recite claims that explicitly cover an accused product.

From the perspective of many companies (and their attorneys) engaged in patent infringement litigation, discovery is often considered the most onerous, expensive, and time-consuming aspect of the litigation. But discovery is a matter of right afforded to such litigants under the Federal Rules. On the other hand, an interference does not afford the parties discovery as a matter of right. Instead, an interfering party generally has to show the requested discovery is in the interest of justice, which is a higher standard than the relevance standard under the Federal Rules. See 37 C.F.R. §1.687. Discovery is generally frowned upon by the Board, and occurs in only a minority of interferences. While some may consider the limited discovery a disadvantage to provoking an interference, particularly where a party seeks to delay a certain outcome, e.g., pending FDA approval of a product, or where a party’s case hinges on information in the opponent’s possession, there can be no question that this fact serves to streamline the proceedings, usually making an interference a speedier and less expensive proposition than district court litigation.

Another factor impacting the speed and cost of an interference relative to a district court litigation is that testimony in an interference takes the form of affidavits and cross-examination deposition transcripts, and only rarely is testimony given in the presence of a Board member. This is true during both the preliminary motions and priority phases. While there are of course pros and cons to providing live testimony depending on the type of witness giving the testimony, there is more control over the affidavit testimony presented in an interference. Finally, while an oral hearing before a three-judge panel of the Board may and usually does occur at the end of each phase of an interference, these hearings are usually limited to twenty minutes per side.

As mentioned above, because of the very limited discovery and lack of live witnesses or trial, interferences are frequently a bargain when compared to full-blown patent infringement litigation. Expert witnesses can play a role in an interference but only on technical, not legal, issues. Thus, interferences do not seem to devolve into the battle of experts that seems so common in patent infringement litigation--saving expenses in this area as well.

Because of the differences among technologies and the varying complexities of interferences, it is nearly impossible to estimate costs for a typical interference. However, because of the bifurcated nature of an interference, it is usually possible to provide ballpark figures for each of the two phases of the interference taking into consideration what is known about the case in the beginning. When comparing these costs to a parallel district court action, the interference usually winds up being much less expensive. That reason alone is enough for many companies to at least consider provoking an interference before embarking on a litigation strategy.

Often, an interference is only the first step in a party’s overall litigation strategy. There is nothing to prevent a party from pursuing a lawsuit in federal court, particularly if discovery or live testimony may be important to the case. Or a party who has been sued for patent infringement may opt to provoke an interference, and then seek a stay in the litigation pending the interference outcome. While courts are often reluctant to grant such stays, they may be more amenable where the issues are highly technical, either from a scientific point of view or a patent law perspective.

Moreover, a final interference decision by the Board can be appealed to a federal district court pursuant to 35 U.S.C. §146. While the Court of Appeals for the Federal Circuit hears most interference appeals, a §146 action is an alternative, and is considered a hybrid of an appeal and a trial de novo. While the record before the PTO is admitted into evidence in a §146 case, the statute explicitly affords the parties the right to take further testimony within certain limits. Unsuccessful patent interferants often choose a §146 action as a means of obtaining evidence that was unavailable at the Board or as a means to present live witnesses. Or some do it simply to drag out the appeal process and delay the issuance of an opponent’s patent.

As mentioned above, a party who is successful in getting an interference declared and set up so that he is senior party has an advantage in the interference: he does not bear the burden of proving priority. Thus, a junior party patentee may be more willing to engage in meaningful settlement discussions with a potential infringer who has provoked an interference with his patent. The Board even requires the parties to engage in settlement discussions at various points during an interference after it has been declared. Thus, a small company who strategically provokes an interference may be able to obtain a better settlement with a patentee than he might otherwise obtain.

10. A successful interference outcome can result in a patent term extension.

While the intricacies of the PTO’s rules for patent term adjustment are beyond the scope of this article, there are provisions for an extension of patent term for delays in the PTO’s examination of an application due to interference proceedings. See 37 C.F.R. §§ 1.701(a)(1), 1.702(c), 1.703(a)(5), 1.703(c). Thus, some of the delays in the PTO’s issuance of a patent caused by engaging in an interference can at least theoretically be recouped at the end of the patent term.

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.