Tuesday, November 15, 2016

CAFC in Perfect Surgical : An attorney’s work in preparing a patent application is evidence of an inventor’s diligence

Of the diligence issue:

A patent owner need not prove the inventor continuously
exercised reasonable diligence throughout the
critical period; it must show there was reasonably continuous
diligence. See, e.g., Tyco Healthcare Grp. v. Ethicon
Endo-Surgery, Inc., 774 F.3d 968, 975 (Fed. Cir. 2014);
Monsanto, 261 F.3d at 1370. Under this standard, an
inventor is not required to work on reducing his invention
to practice every day during the critical period. See
Monsanto, 261 F.3d at 1369. And periods of inactivity
within the critical period do not automatically vanquish a
patent owner’s claim of reasonable diligence. For example,
in Monsanto, we held that substantial evidence
supported the jury’s presumed finding that an inventor
was reasonably diligent where there was no corroborating
evidence of any activity for a series of months. Id.
at 1370. We explained that, notwithstanding the absence
of daily notebook entries and the resulting gaps during
the critical period, “the work involved in the experiments
was continuous in nature” and therefore the reduction to
practice was “reasonably continuous.” Id. In Brown v.
Barbacid, we held that the patent owner’s evidence of
diligence during a 31-day critical period was “sufficient to
show substantially continuing activity” despite the lack of
activity during six single-day gaps. 436 F.3d at 1380–83.

Our holdings in these cases are consistent with the purpose
of the diligence inquiry. 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.”
Id. at 1379. That an inventor overseeing a study did not
record its progress on a daily, weekly, or even monthly
basis does not mean the inventor necessarily abandoned
his invention or unreasonably delayed it. The same logic
applies to the preparation of a patent application: the
absence of evidence that an inventor and his attorney
revised or discussed the application on a daily basis is
alone insufficient to determine that the invention was
abandoned or unreasonably delayed. One must weigh the
collection of evidence over the entire critical period to
make such a determination.

Our decision in In re Mulder, 716 F.2d 1542, 1542–46
The Board
cites In re Mulder for the proposition that “[e]ven a short
period of unexplained inactivity may be sufficient to
defeat a claim of diligence.” J.A. 16. In In re Mulder, a
competing reference was published just days before the
patent at issue was constructively reduced to practice.
716 F.2d at 1544. The patent owner was tasked with
showing reasonable diligence during a critical period
lasting only two days. Id. at 1545. But the patent owner
did not produce any evidence of diligence during the
critical period. Id. Nor could it point to any activity
during the months between the drafting of the application
and the start of the critical period. Id. Although the
critical period spanned just two days, we declined to
excuse the patent owner’s complete lack of evidence. Id.
In re Mulder does not hold that an inventor’s inactivity
during a portion of the critical period can, without more
destroy a patent owner’s claim of diligence.

Here, the Board’s erroneously heightened burden of
proof infected its analysis. First, the Board did not
properly weigh PST’s evidence under a rule of reason. See
Price v. Symsek, 988 F.2d 1187, 1195 (Fed. Cir. 1993)
(explaining that under a rule of reason analysis, “[a]n
evaluation of all pertinent evidence must be made so that
a sound determination of the credibility of the inventor’s
story may be reached”). Rather than evaluating PST’s
evidence as a whole, the Board fixated on the portions of
the critical period where PST did not provide evidence of
Dr. Nezhat’s specific activities to conclude Dr. Nezhat’s
exercise of diligence was not “continuous.” See J.A. 21–
22. In doing so, the Board repeatedly condemned PST for
not being “sufficiently specific as to facts and dates for the
entire critical period during which diligence is required.”
J.A. 21; see also id. (noting a portion of the critical period
where “Dr. Nezhat does not identify any specific activities
undertaken or the dates of those activities”). Th
(Fed. Cir. 1983), does not instruct otherwise.

Under a rule of reason analysis, PST was not required
to corroborate every day the application was worked on,
every surgery Dr. Nezhat performed, or specify precisely
what work was done. See In re Jolley, 308 F.3d 1317,
1328 (Fed. Cir. 2002) (“[C]orroboration may be provided
by sufficient independent circumstantial evidence, and
corroboration of every factual issue contested by the
parties is not a requirement of the law.”).

The Board compounded its error by summarily dismissing
the activities of Dr. Nezhat’s attorney,
Mr. Heslin, after determining that PST’s evidence of
Dr. Nezhat’s activities did not alone establish reasonable
diligence. J.A. 22 (“[W]e also need not reach and, therefore,
do not address whether Patent Owner provides
sufficient evidence to demonstrate Mr. Heslin’s continuous
exercise of reasonable diligence for the entire critical
period.”). This was error. An attorney’s work in preparing
a patent application is evidence of an inventor’s
diligence. See Brown, 436 F.3d at 1380 (citing Bey v.
Kollonitsch, 806 F.2d 1024, 1030 (Fed. Cir. 1986)). By
preparing and filing the application that would issue as
the ’384 patent on behalf of Dr. Nezhat, Mr. Heslin was
acting as Dr. Nezhat’s agent.

As to patentee as lexicographer:

The patentee is free to
define or limit a term used in a patent. See Thorner v.
Sony Comput. Entm’t Am. LLC, 669 F.3d 1362, 1365–66
(Fed. Cir. 2012). We conclude that the specification’s
separation of the terms perforated and passages with the
disjunctive phrase “or otherwise” makes clear that the
patentee intended that the term “perforated” is not the
same as “passages.” The patentee claimed only jaws that
are “perforated”; this claim does not extend to passages.
In light of the intrinsic record, we conclude that the term
“perforated” is not coextensive with or the same as “passages.”
Thus the Board’s finding that JP ’551 disclosed at
least one “perforated” jaw because JP ‘551 referenced a
passage cannot be supported. We vacate the Board’s
decision invalidating claims 11, 38, 41–44, 46, 47, and 49
over JP ’551 and remand for proceedings consistent with
this construction.

Judge Schall dissented on the diligence question.
[ I believe the Patent Trial and Appeal Board (“Board”)
applied the correct legal standard
in finding that Perfect Surgical Techniques, Inc. (“PST”)
failed to establish that Dr. Camran Nezhat, the inventor
named on U.S. Patent No. 6,030,384 (“the ’384 patent”),
exercised reasonably continuous diligence during the
critical period. I also believe the Board’s finding on
diligence is supported by substantial evidence. ]

To establish priority of an invention, a party must
show either an earlier reduction to practice or an earlier
conception followed by a diligent reduction to practice.
Purdue Pharma L.P. v. Boehringer Ingelheim GMBH, 237
F.3d 1359, 1365 (Fed. Cir. 2001); see also In re Steed, 802
F.3d 1311, 1316 (Fed. Cir. 2015) (“When the issue of
priority concerns the antedating of a reference, the applicant
is required to demonstrate, with sufficient documentation,
that the applicant was in possession of the laterclaimed
invention before the effective date of the reference.”);
Mahurkar v. C.R. Bard, Inc., 79 F.3d 1572, 1576–
78 (Fed. Cir. 1996) (explaining that a party attempting to
overcome anticipatory prior art has the burden to prove
an earlier date of invention). When a party relies on an
earlier conception (PST’s circumstance), it must “connect[]
the conception with [the inventor’s] reduction to practice
by reasonable diligence on his part, so that they are
substantially one continuous act.” Mahurkar, 79 F.3d at
1577 (quoting Christie v. Seybold, 55 F. 69, 76 (6th Cir.
1893)). The inventor must show diligence throughout the
entire critical period, which runs from a date just before
the prior art’s invention date to the inventor’s filing date.
See Creative Compounds, LLC v. Starmark Labs., 651
F.3d 1303, 1312–13 (Fed. Cir. 2011); Mahurkar, 79 F.3d
at 1578; 35 U.S.C. § 102(g) (2006) (“In determining priority
of invention . . . there shall be considered . . . 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.”).

Other cases, however, have couched the test in different
terms. In Gould v. Schawlow, our predecessor court
asked whether an inventor’s testimony “support[s] a
finding of that continuity of activity which constitutes
reasonable diligence.” 363 F.2d 908, 916 (C.C.P.A. 1966)
(emphases added). In Griffith v. Kanamaru, we inquired
whether an inventor was “continuously or reasonably
diligent” during the critical period. 816 F.2d 624, 629
(Fed. Cir. 1987) (internal quotations omitted); see also
Scharmann v. Kassel, 179 F.2d 991, 996 (C.C.P.A. 1950)
(“continuing and reasonable diligence”) (citing Hull v.
Davenport, 90 F.2d 103 (C.C.P.A. 1937)). Still other cases
have used different expressions for the test. See, e.g.,
Mahurkar, 79 F.3d at 1577 (defining “reasonable diligence”
as “one continuous act”); Bey v. Kollonitsch, 806
F.2d 1024, 1030 (Fed. Cir. 1986) (requiring “reasonable
diligence during the continuous . . . critical period”). But
perhaps most importantly for our purposes here, our
predecessor court in In re McIntosh asked whether an
applicant showed “continuous exercise of reasonable
diligence.” 230 F.2d 615, 619 (C.C.P.A. 1956). This
standard is the same one recited by the Board. Ante, 7

As to review under the "substantial evidence" standard:

We review the Board’s factual findings on diligence
for substantial evidence. Monsanto, 261 F.3d at 1369.
Substantial evidence justifies a finding if a reasonable
mind might accept the evidence to support it. Consol.
Edison Co. v. NLRB, 305 U.S. 197, 229 (1938). This
standard involves an examination of the record as a
whole, taking into account evidence supporting and
detracting from an agency’s finding. Universal Camera
Corp. v. NLRB, 340 U.S. 474, 487–88 (1951). Substantial
evidence does not require the Board’s finding to be the
only one possible from the record so long as it is reasonable.
“[T]he possibility of drawing two inconsistent conclusions
from the evidence does not prevent [a] finding from
being supported by substantial evidence.” In re Gartside,
203 F.3d 1305, 1312 (Fed. Cir. 2000) (quoting Consolo v.
Fed. Maritime Comm’n, 383 U.S. 607, 620 (1966)); see also
Jolley, 308 F.3d at 1320 (“If the evidence in record will
support several reasonable but contradictory conclusions,
we will not find the Board’s decision unsupported by
substantial evidence simply because the Board chose one
conclusion over another plausible alternative.”)

Of the actions of the patent attorney:

I also agree with the majority in faulting the Board
for failing to consider Mr. Heslin’s activities during the
Third Gap. Id. 10–11. An attorney’s diligence is imputable
to the inventor. E.g., Bey, 806 F.3d at 1027. Mr.
Heslin undertook actions during the Third Gap that could
be attributed to Dr. Nezhat, such as preparing an information
disclosure statement and finalizing the application.
Ante, 11. Had the Board investigated Mr. Heslin’s
actions, it may have arrived at a different conclusion on
Dr. Nezhat’s diligence during the Third Gap. Accordingly,
I agree that it was error for the Board to disregard Mr.
Heslin’s activities during the critical period.

As to the scope of the dissent:

To conclude, I believe substantial evidence supports
the Board’s finding that Dr. Nezhat failed to demonstrate
reasonable diligence during the entire critical period. I
therefore respectfully dissent from the majority’s decision
on this point. Accordingly, while I agree that we should
vacate the Board’s decision and remand the case to the
Board for further proceedings, I would limit the remand
proceedings to determining whether, under the correct
claim construction, the invention claimed in the ’384
patent is anticipated or rendered obvious in view of JP


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