« Frivolous | Main | Fitless »

March 22, 2009


Last week's CAFC showdown over inventorship highlights the foolery of first-to-invent, an anachronism indulged in only by the U.S. All other countries in the world use a first-to-file priority system. The next-to-last to abandon first-to-invent was the Philippines. In this episode, Henkel battled Procter & Gamble over a dishwater detergent fizzie.

Henkel v. Procter & Gamble (CAFC 2008-1447) precedential

P&G got 6,399,564, which Henkel put into an interference over who invented "that the compressed portion of the tablet dissolve at a faster rate than the non-compressed portion." This was the second round of appeals in this matter.

Whether an invention has been reduced to practice is a question of law based on underlying facts. Cooper v. Goldfarb, 154 F.3d 1321, 1327 (Fed. Cir. 1998). Accordingly, the Board's ultimate conclusion of reduction to practice is reviewed de novo, while its underlying factual findings are reviewed for substantial evidence. Henkel I, 485 F.3d at 1374. "Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938).

Following our remand in Henkel I, the Board found that P&G demonstrated an actual reduction to practice in February 1997, Board Decision at 10, predating Henkel's reduction to practice in May 1997, and thus awarded priority of invention to P&G, id. at 69. In so doing, the Board made a key factual determination--that P&G inventors appreciated by February 1997 the limitation in the count requiring that the compressed region of the tablet dissolve at a greater rate than the non-compressed region. Id. at 61-62. Whether substantial evidence supports this finding of fact is the only issue on appeal.

"In order to establish an actual reduction to practice, the inventor must prove that: (1) he constructed an embodiment or performed a process that met all the limitations of the interference count; and (2) he determined that the invention would work for its intended purpose." Cooper, 154 F.3d at 1327. The inventor must also "contemporaneously appreciate that the embodiment worked and that it met all the limitations of the interference count." Id.; see also Henkel I, 485 F.3d at 1374. As we held in Henkel I, to demonstrate a reduction to practice of the invention at issue here the inventors need only appreciate "that the dissolution rate of the compressed region is greater than the dissolution rate of the other region." Henkel I, 485 F.3d at 1375.

The dispositive evidence in favor of Procter & Gamble was a swearing back based upon a notebook, the Metzger-Groom Report.

The Metzger-Groom Report documents the preparation and testing of the tablet discussed in the McGregor Record of Invention.

The interpretation of the critical portion of the Metzger-Groom Report is a very close call, and can reasonably go either way. But our inquiry in this case is not how we would interpret this statement in the Metzger-Groom Report were we to do so in the first instance. Rather, our task is to determine whether the Board's interpretation is supported by substantial evidence. We conclude that it is.

Thus, even if we were to assume for the sake of this appeal that Henkel's interpretation of the Metzger-Groom Report is also reasonable, the substantial evidence standard of review compels affirmance of the Board's interpretation. See Guise v. Dep't of Justice, 330 F.3d 1376, 1381 (Fed. Cir. 2003) (finding Merit System Protection Board's interpretation of evidence supported by substantial evidence where the interpretation was reasonable); see also NLRB v. Augusta Bakery Corp., 957 F.2d 1467, 1473 (7th Cir. 1992) ("Where two inferences are possible, we cannot substitute our own inference for that of the Board, so long as the Board's is supported by substantial evidence in the record as a whole."); Midland Transp. Co. v. NLRB, 962 F.2d 1323, 1326 (8th Cir. 1992) ("We may not substitute our interpretation of the evidence for the Board's reasonable inferences.").

Because Henkel challenges only the Board's interpretation of the Metzger-Groom Report and not the Board's conclusion of corroboration based on that interpretation, we affirm the Board's award of priority of invention to P&G.


Posted by Patent Hawk at March 22, 2009 11:59 PM | Interference


"All other countries in the world use a first-to-invent priority system."

Typo. Or sarcasm? :-)

Posted by: Na at March 23, 2009 4:23 AM

"Typo or Sarcasm?"

From this report, one may conclude advocacy for adopting the First-To-File system in the U.S. I hope this is only sarcasm.

I spoke about the proposed First-To-File (FTF) system during my testimony on last week's FTC panel ( http://www.ftc.gov/bc/workshops/ipmarketplace/mar18/docs/katznelson.pdf ) and provided real data that should give pause to all:

One clear collateral damage factor associated with FTF would be the flood of hastily prepared patent applications with the USPTO at unprecedented numbers. My presentation shows that my company would have had to double the number of applications it filed to ensure early priority dates. Other evidence (Slide 9) shows that many of the applications filed under the "First-To-File gun" have lower quality.
One important item that FTF proponents forgot is that the USPTO has no pre-examination application disposal mechanisms such as early Search Reports and Deferred Examination as in foreign patent offices. Those are crucial filters in FTF systems (See slide 9) but are not the subject of HARMonization. U.S. FTF should be appropriately called "First-To-Flood" as it would reduce overall patent quality and would generate more fodder for 'trolls'. Of note is my data in Slide 7, which I obtained from six US-based universities. It shows that upon enactment of FTF, in the words of Ross Perot, there would be a "giant sucking sound" of lost priority rights. Small entities who cannot throw money at accelerating their R&D and their reduction to practice, would be disadvantaged compared to larger entities who can do so and thereby win the race to the patent office.

- Ron Katznelson

Posted by: Ron Katznelson at March 24, 2009 4:09 PM

Hi Ron:

Thanks for the comments.

Alas, I seem to be an outlier to otherwise like-minded souls. I actually favor first-to-file.

I've heard your position before, though you provide an apt presentation. I just don't believe you. It's the reverse equivalent from the folks calling inventors “trolls.” A flood of junk patents. The sky is falling. Or would be falling...

It is a truism that patents are only going to be as good as patent office examination. If applicants submit shoddy applications, something Dudas accused last year to justify falling allowance rates (utter nonsense, not incidentally), then they should be rejected. They should also be published, to provide prior art.

In the large, I don’t think patent submission quality would suffer with first-to-file. As it is, patent application quality is mediocre, reflecting the quality of patent prosecutors, most of whom are mediocre. If the standards for examination don’t change, the ones who think they could be more sloppy with first-to-file will learn that it doesn’t fly.

I don’t think your speculations match what actually happens as a process, taking into account who is involved. Talented prosecutors aren’t going to cut corners just to rush work into the Office.

Keep in mind that it’s rare that there is a real race condition to the patent office, in days or weeks, or even months. That is the ultimate argument against first-to-file: that there is a frequent race condition (if I don’t get this to the patent office, someone else will be first). Given the rarity of interferences, the facts indicate otherwise.

First-to-invent inherently creates a nightmare of uncertainty regarding priority date. That’s my objection to it. First-to-file solves that very real problem.

As it is right now, defense litigators hate §102(e), afraid it won’t stick, and they act like they’ve never heard of §102(a). That’s caused by first-to-invent (and mediocre litigators).

I invalidate patents constantly, over §112 as well as §102 & §103, including patents granted in the past few years. Examination quality is much better than it was 10 years ago, from the standpoint of rejection, but is conversely worse than it was a decade ago in granting merited patents. Examination quality has had far too much to do with attitude than merit in recent years. In the 1990s the PTO was just too lax.

There is no solution to the quality issue except quality examination. The PTO is like any government agency: half-assed at best. A good manager could fix that, but those seem scarce as hens teeth.

First-to-file doesn’t hurt or help examination quality. What it helps is legal certainty. That’s enough for me.

Posted by: Patent Hawk at March 24, 2009 4:49 PM

"First-to-invent inherently creates a nightmare of uncertainty regarding priority date. That’s my objection to it. First-to-file solves that very real problem."

Hawk, am I missing your logic? If "it’s rare that there is a real race condition to the patent office", where is the "nightmare of uncertainty"?

There are always race conditions in active arts (whether it be racing to file before another applicant or another publication). As one who performs validity searches, you know this and act on it whenever you date-limit search results.

The true issue is whether you value judicial equity over judicial efficiency, or vice versa. The CAFC decided Markman giving weight to the judicial "efficiency" (quotes necessary; it was said that having the CAFC review claim construction de novo would provide uniformity of results not otherwise attainable with jury trials) over judicial equity (and the 7th Amendment right), and see where it has gotten us.

I suspect the "efficiency" gained by first-inventor-to-file would let us reap similar rewards.

Posted by: Na at March 24, 2009 5:20 PM

It's a significant problem to think academically. Academics prove that all the time (think Lemley). There can be a big difference between what should work and what works in practice.

First-to-invent is a great idea in theory, but its practical problems damn it.

Sure, in theory there’s a race to the patent office. But no, there isn’t a practical race condition very often, as evidenced by interferences. So, from a prosecution perspective, first-to-file should not mean a rush to the patent office with sloppy work. And there’s always provisional filing.

Repeating myself, the problem with first-to-invent is that litigators shy away from prior art close to the known priority date, out of fear the inventor could swear an earlier priority. The priority date is uncertain with first-to-invent. It’s not with first-to-file.

Considering that litigation is the gatekeeper to PTO junk patent grants, and a relatively expensive gatekeeper, valuing efficiency is practical. Reexam doesn’t work: unjustly slow. Again, the problem is the patent office.

Give me a break with “judicial equity (and the 7th Amendment right).” Juries have their place as trier of fact, but claim construction is purely definitional, tediously so. The reason Markman came about was that juries were too easily bamboozled by lawyers over highly technical claim construction. I personally think Markman is a great concept, even as its jurisprudential guidebook could use some polishing. The reason it looks so bad sometimes, judging from reviewing case law, is that it can be quite difficult, not cut and dried. Blame prosecutors for sloppiness, and the patent office (again) for not insisting on clear claims. A little more elbow grease on §112 ¶2 is needed there. I think the first thing in litigation should be Markman, even before discovery cranks up. Would be quite efficient to put the writing on the wall up front.

Posted by: Patent Hawk at March 24, 2009 7:44 PM

As you say Hawk, we are usually like-minded on most patent matters. Reasonable minds can disagree. It appears, however, that you may have misunderstood what I call “poor quality applications”. It is not the quality of drafting or the work product of the patent practitioner that would make such applications of “lower quality”. Nor is it the haste under which the skimpy details are put together, because there may not be too many details to put together. The haste I referred to is not in the WRITING of an application. I stipulate that the care and diligence in writing the applications would be just as good as a patent attorney can put together for cases under the current First-To-Invent rules (although I agree with you that they can be improved). Rather, it is the haste in generating, finding, analyzing and assembling the CONTENT (or lack thereof) of these applications. Many of these applications would be missing much content, or worse yet, would have premature and misleading content. The question is whether these would be relevant quality TEACHINGS of technology, supporting useful claims. When most inventions are first conceived, they often do not come with the full understanding of the prior art, reduction to practice experience, experimentation and diligent establishment of optimal embodiments. They often lack implementation details and tests of the invention. Often, these components come only after considerable development.

I do not speculate that the “sky is falling”. My comments are based on reality and documented facts. I note that you have not responded to the very specific data in my slides. Perhaps you ought to study those more carefully. The EPO data in slide 9 clearly show the fact that the majority of applicants discard the CONTENT of their FTF applications (left) but not so for applications that are more mature. Why would applicants abandon 58% of “high quality” patent applications even before examination? Clearly, they must not be abandoning these because of poor drafting by the patent attorney. Do you believe that the applicants who file these applications know at the time they file the applications that they would abandon them so soon thereafter? I urge you to articulate an alternative explanation for this high abandonment rate. Merely stating: “I just don't believe you” would not cut it. Give me ANY alternative plausible explanation for these facts. Also explain what you think would happen at the USPTO with such FTF applications, where there are no pre-examination application disposal procedures such as Search Reports or deferral of examination. Do you think the USPTO would be able to divine which applications are among those 58% before they examine them? Work through this one and give me a specific answer.

While you are at it, please provide your own explanation for the data in Slide 7. Please articulate what you believe is happening at inventor’s laboratories between the time they internally submit their invention disclosures to a Tech Transfer Office and the time that a priority application is filed on their behalf. Surely, you do not believe that this period (exceeding one year for 13% of inventions) is merely consumed by patent attorneys drafting the application, do you? Please also explain whether you believe that this period would be made shorter under FTF and if so, what aspect or feature of the applications or the issued patents would be adversely affected. If you believe that not much change in filing date delays would take place, please explain what you believe to be the impact on these applications due to lost priority. Its one thing to surgically amend Section 102(g) for a First-To-File interference resolution, but it is quite another to do so with a sledgehammer across all of Section 102 to redefine what prior art means.

Ron Katznelson

Posted by: Ron Katznelson at March 24, 2009 8:07 PM

Hi Ron:

Thanks for your comments.

I can't explain your slide 7 because I don't quite understand it. And I contend it’s irrelevant regardless.

Your objection to first-to-file, as I understand it, is that invention is an ongoing process, and that reduction to practice information (implementation details) would be lacking in a first-to-file system.

That’s a problem with invention related to patents. Absolutely. That does not, to me, justify uncertainties and inefficiencies imposed by first-to-invent.

If invention is incremental, file CIPs.

I’m an inventor. I am sympathetic, as well as knowledgeable, about the process of inventing. But my self-interest does not justify the patent system revolving around inventive me when the cost is untold millions in wasted litigation that could otherwise be avoided.

My favor towards first-to-file is economic. It reduces uncertainty, and makes the patent regime more efficient. At some cost to inventors, who reap considerable windfall for their efforts, if there invention is worth anything.

Similar reasoning for favoring early Markman: potentially reduces litigation cost, which is the big ticket item for patents.

Posted by: Patent Hawk at March 24, 2009 8:41 PM

I appreciate the fact that you see certain benefits in FTF. As an inventor of more than 25 US patents, and as a researcher of prior art, I acknowledge that there would be some benefits and I regard this opposing view as relevant and worthy of consideration. However, I was serious about trying to get some specific responses from you on my data to ascertain that the costs of FTF are also fully appreciated and their relevance considered. Without a substantive discussion on the data of actual FTF examples, we can theorize like the Academics you criticize without getting far on the balance of costs and benefits. So, you say that you do not quit understand Slide 7, meaning that you do not quit understand one of my positions on the costs of FTF but somehow find it irrelevant? What about my questions on Slide 9? Any answers to those?

If you do not understand Slide 7, chances are that others may have a similar problem and I should have done a better job for the benefit of all readers. The chart is a Cumulative Distribution Function. Focus on the black line aggregating all types of priority applications and look at my introductory text explaining Slide 7. Please identify in response, what may still be unclear. I will be happy to clarify for the benefit of all your readers any question you might have, so that you may also answer my questions related to the data in Slide 7.

Ron Katznelson

Posted by: Ron Katznelson at March 24, 2009 10:10 PM

A substantive discussion - how delightful. Thank you both for your views and explicit reasoning

Posted by: Breadcrumbs at March 25, 2009 3:27 AM

Gosh, Hawk, I'm not an "academic" in any sense, and I'm mot even against FITF (it's really a non-issue to me as long as the playing field is level). What I'm saying is that for everyone who thinks it will be a cure-all for priority issues (as Markman was thought to be a cure-all for trying patent cases to juries), they are likely naive, and mistaken. (That's nothing personal, Hawk.)

"claim construction is purely definitional"

That meme is simply wrong and ignores stare decisis (and that's the best way to create judicial uncertainty). Chief Judge Markey put it best in Perini America, Inc. v. Paper Converting Machine Co., 832 F.2d 581, 4 USPQ2d 1621 (Fed.Cir. 1987):

"...this court does not undertake to retry the entire case upon appeal. A trial court's conclusions on the scope of the claims are reviewable as a matter of law, but findings on disputed meanings of terms in the claims ... must be shown to have been clearly erroneous .... That a claim must be interpreted in a certain way is a conclusion of law .... Like all legal conclusions, that conclusion rises out of and rests on a foundation built of established (undisputed or correctly found) facts. Interpretation of a claim, or of its scope, should not be assayed until that foundation is in place. If the meaning of terms in the claim, the specification, other claims, or prosecution history is disputed, that dispute must be resolved as a question of fact before interpretation can begin .... [Once the meaning of terms in the claims, specification, and prosecution history has been established,] it may still be necessary to interpret the claim, with its now-defined terms, in light of the specification and prosecution history, with their now-defined terms. It is that interpretation based on established facts that constitutes a legal conclusion reviewable as a matter of law."

As to clearer priority issues under FITF, the priority issues will change from those of conception, reduction to practice and statutory bars to those of claim support in provisional application strings, CIPs, and specification support in the eventual application for after-added claims.

And many (naive) applicants will file before a search. As for prior art, the (not-so-expert) litigators will *still* shy away from prior art with good provisional (rather than 102e) dates. That paradigm (for some) will merely change degree, not nature.

Posted by: Na at March 25, 2009 4:43 AM