The Fox Group v. Cree: Expanding Section 102(g) Prior Art

By Jason Rantanen

The Fox Group, Inc. v. Cree, Inc. (Fed. Cir. 2012) Download 11-1576
Panel: Newman, O'Malley (dissenting-in-part) and Wallach (author)

In The Fox Group, the Federal Circuit substantially expands the scope of prior art under 35 U.S.C. § 102(g). There are two main components of this expansion: the panel's unanimous interpretation of the reduction to practice requirement as not necessitating repeatability and the majority's sharp narrowing of what constitutes abandonment, suppression or concealment.

While Section 102(g) will be eliminated as a category of prior art for patents based on applications filed on or after March 16, 2012, it will continue to apply to a large number of patents for many years to come.

Background: In 1995, Cree grew a low defect silicon carbide (SiC) crystal and sent a sample to a university scientist for analysis.  The scientist advised Cree that there was an exceptionally low defect area in this sample.  That same year, a Cree researcher showed a cropped image of the sample and described its low defect nature, stating that it had an area with less than 1,000 dislocations per square centimeter and no micropipes.  The researcher also described the high quality of the sample in an article published in 1996 that included an image of an X-ray topograph of the crystal.  The article did not describe how the crystal was created and there was no evidence in the record that Cree took any steps towards commercialization prior to 2004.  

Fox is the assignee of Patent No. 6,562,130, filed on May 4, 2001.  The '130 patent claims a low defect SiC crystal having, among other properties, a density of dislocations per square centimeter of less than 104 and a density of micropipes of less than 10 per square centimter.  Fox sued Cree for infringement of the '130 patent in 2010 and Cree responded by arguing that its prior invention rendered the '130 patent invalid under 102(g).  The district court granted summary judgment in favor of Cree and Fox appealed.

Under 35 U.S.C. § 102(g)(2), a person is not entitled to a patent if:

before such person’s invention thereof, the invention was made in this country by another inventor who had not abandoned, suppressed, or concealed it. In determining priority of invention under this subsection, there 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.

There are two core requirement for 102(g) prior art.  First, the challenger must establish that the alleged prior inventor reduced its invention to practice first or, alternately, was the first party to conceive of the invention and then exercised reasonable diligence in reducing that invention to practice.  Second, the prior inventor must not have abandonned, suppressed, or concealed the invention.  The court's opinion addresses both.

Reduction to Practice: The court found that Cree satisfied the first element of prior inventorship by reducing the invention to practice in 1995 by (1) creating the crystal sample (which met all the limitations of the asserted claims of the '130 patent) and (2) recognizing that it was a low-defect crystal.  In reaching this conclusion, the CAFC rejected Fox's argument that reduction to practice of a product invention requires that the the prior inventor "must prove repeatabliity to prove that it had reduced the invention to practice."  Slip Op. at 9.  In other words, it was sufficient that Cree had created the crystal once; there was no requirement for it to prove that it could be done again. 

Suppresssion or Concealment: The more significant aspect of the opinion relates to the issue of suppression or concealment.  Here, Fox argued that Cree suppressed or concealed its invention because it (1) did not file a patent application for its Kyoto Wafer, (2) did not present proof of commercialization that would allow for reverse engineering, and (3) did not otherwise provide adequate disclosure because it failed to reveal the details of the growth conditions under which boule G0259 was made."  Slip Op. at 10.  

In rejecting Fox's argument, Judges Wallach and Newman concluded that disclosure of an product invention to the public requires only that the inventor make the existence of its invention known to the public.  (Note: the majority does not actually use the word "existence of"; however, in my view that's the only logical way to read the opinion, given that this is the only information that Cree disclosed).  Provided that general details about the invention are given to the public, it is irrelevant whether or not an invention is commercialized or a patent is filed.  "Filing a patent application and commercializing a product are only two convenient ways of proving an invention has been disclosed to the public."  Slip Op. at 11.  Here, it was sufficient that Cree sent samples of its boule for testing by Dr. Dudley, an outside evaluator, the product itself (though not the process used to make it) was described in a published paper, and knowledge of the product was disseminated outside of the company in the Kyoto presentation."  Id.  The crux of the majority's reasoning:

The purpose of § 102(g) is to bar an inventor from receiving a patent on an invention that has already been invented and was not abandoned, suppressed, or concealed. Apotex, 254 F.3d at 1038-39. If the patent claimed a process, then a prior inventor would have to prove prior invention of the process which had not been abandoned, suppressed, or concealed, to invalidate the patent under § 102(g). “Cree promptly and publicly disclosed its findings concerning the low defect properties of the SiC material from which the [Kyoto Wafer] was cut through a presentation at the 1995 International Conference and a published paper on the subject.” Fox Group, 819 F. Supp. 2d at 535. Accordingly, Cree promptly made its invention, a SiC material with low defect densities, known to the public. Fox has not produced sufficient evidence raising any genuine issues of material fact to show that Cree suppressed or concealed its invention.

Writing in dissent, Judge O'Malley emphatically disagreed with the majority on this issue:

Because Cree made the fact of its invention known to the public, the majority, like the district court before it, concludes that Fox can never establish abandonment, suppression, or concealment. Under the majority’s approach, an inventor could publicly announce that it made a product, with no explanation as to how it did so, and then hide it away in a closet indefinitely. As long as the inventor describes a product in general terms, the inventor cannot, according to the majority, be accused of abandoning, suppressing, or concealing the invention.

The majority’s approach cannot be the law. If a prior inventor could disclose the mere existence of a product and take no further action for nine years, the concept of abandonment, suppression, or concealment would be rendered meaningless. Consistent with our prior case law, where there is no enabling written disclosure, there must be evidence that the prior inventor timely made its
invention available to the public in some other way – e.g., through public use, commercialization, or filing a patent application claiming the invention. Such a requirement is consistent with § 102(g)’s general goal of giving the public the benefit of the invention. See Checkpoint, 54 F.3d at
761 (Section 102(g) “encourages prompt public disclosure of an invention by penalizing the unexcused delay or failure of a first inventor to share the ‘benefit of the knowledge of [the] invention’ with the public after the invention has been completed.” (citation omitted)).

Judge O'Malley further pointed out that this case was before the court on a grant of summary judgment of invalidity; in light of this posture, it was especially inappropriate to hold that Cree had not suppressed or concealed the invention. In particular, Judge O'Malley pointed to evidence indicating that Cree had a broad policy of concealing its production methods, and in light of that policy took specific steps to avoid enabling its competitors to make the invention. 

Comment: In my view, the majority erred in concluding that merely disclosing general information about the invention suffices to preclude any subsequent inventor from obtaining a patent.  In addition to Judge O'Malley's reasoning why this cannot be correct (including an analysis of why it is inconsistent with the CAFC's precedent), the effect of the majority's holding is to cause 102(g)(2) to swallow much of the remainder of Section 102.  Under the majority's reasoning, any disclosure about an invention, no matter how superficial or non-enabling, becomes potential prior art as long as there is secret information about a reduction to practice of the invention.  The effect of the court's opinion is to incentivize lower quality, non-enabling disclosures of information as, in the near term at least, this is all that is apparently necessary to defeat patentability.

32 thoughts on “The Fox Group v. Cree: Expanding Section 102(g) Prior Art

  1. I am a novice, so …:)
    In my view the Cree publication was not of an invention but of a discovery. The information that a material with those qualities does exist was important because it served as an impetus to work on inventing a process for making it. The low defect density silicon carbide was not an invention but merely an observation. Inasmuch as the Fox Group claimed the material with similar properties, they did not invent that and the patent was rightly challenged. What they did invent was a process of making it. Kind of like the synthesis of ammonia. The Haber process was the invention, not the ammonia. As long as these facts are unclear, there is no hope for clarity in court decisions.

  2. “There are only two places where you need two witnesses: Proving a patent invalid (primarily for prior invention) and treason.”

    I’m sure some people around here would argue that there’s only the one place.

  3. 102(g) isn’t raised often because it’s so hard to prove. In addition to showing conception/reduction to practice and having to rebut any evidence of abandonment, suppression, or concealment (by clear and convincing evidence), you have to corroborate that evidence. Corroboration is really, really hard to prove under the current rules. The doctrine has evolved well beyond the Barbed Wire Patent and become a nearly-impossible standard without physical evidence (and even then, sometimes physical evidence isn’t corroborating and the Federal Circuit will reverse verdicts of invalidity). There are only two places where you need two witnesses: Proving a patent invalid (primarily for prior invention) and treason.

  4. Certainly defendants who aren’t themselves heavily invested/dependent in their own patent portfolio are always in a better position to invalidate patents asserted against them.

    Sounds an awfully lot like the Troll strategy in the game of clearing patent thickets (or defusing the Patent Armageddon strategy of those that created the “troll” accusation game in the first place).

  5. My response was on point and all I get is your typical crassness.

    Prof. Crouch, is this the type of interchange you were looking for?

  6. Now we invalidate a patent based on an announcement with no requirement that the prior art ever be public?

    More than that is required. Much, much more:

    The court found that Cree satisfied the first element of prior inventorship by reducing the invention to practice in 1995 by (1) creating the crystal sample (which met all the limitations of the asserted claims of the ’130 patent) and (2) recognizing that it was a low-defect crystal.

    That’s pretty significant.

  7. Malcolm, even in a priority contest, the winning inventor still must have an enabling disclosure.  This simply is so well understood as to be beyond question.

    All prior art has to be enabling.  A combination of references, taken as a whole, still must be enabling.  

    Now we invalidate a patent based on an announcement with no requirement that the prior art ever be public?  This is ludicrous.

  8. it is not easy for most parties to prove, for many of the same reason it is hard for junior parties [second to file] to win interferences

    Yes, with the caveat that there is a vastly greater number of wells to plumb for prior art.

    I wonder if in some cases 102(g) arguments might be of concern as potentially being inconsistent with [usually-better] non-infringement arguments if the prior actual reduction to practice was the prototype of the commercial product being accused of infringement?

    I would not be surprised if that were true. Certainly defendants who aren’t themselves heavily invested/dependent in their own patent portfolio are always in a better position to invalidate patents asserted against them.

  9. I am not talking about the AIA. I am talking about this case.

    Oh of course! How could I have missed that. :P

    It changes the law, dramatically.

    I don’t really see it that way (see also curmudgeon’s comment below). I’m glad to see defendants taking advantage of 102(g). I’ve always wondered why it wasn’t asserted more often, particularly as a source of (“secret”) art for 103 assassinations. I’m pretty sure that door was opened by the Federal Circuit a while ago. Was it shut when I wasn’t looking?

  10. Full anticipation?  I don't think that is right.  I think the references taken as a whole must still teach the invention and be enabling.
     
    The relevance to the AIA is due to the fact that if something is not suppressed or concealed, the must be available to the public.  So what does this mean? It seems to me that an invention becomes available to the public when it is announced. The present case while discussing, that issue from a section 102 (g), is relevant to the new AIA, because it tells us that an invention is available even if what is disclosed not enabling.

  11. Thanks MM.
    Aside from attorneys who do not even think to raise 102(g) defenses, it is not easy for most parties to prove, for many of the same reason it is hard for junior parties [second to file] to win interferences. Also, quite often other activities of the first to invent provide other 102 defenses that are easier to prove. Also [just a guess], I wonder if in some cases 102(g) arguments might be of concern as potentially being inconsistent with [usually-better] non-infringement arguments if the prior actual reduction to practice was the prototype of the commercial product being accused of infringement?

  12. How Ned? prior invention [versus prior application filing meeting 112 or prior public disclosure] will be irrelvant for anything new filed after March 16.
    As to the case law on a prior art reference being “enabling” or not, outside of chemical practice that is a rarely succesful way to avoid prior art. Nor does reference-enablement require the same amount of disclosure needed to meet the 112 requirement for something one is trying to patent. A prior patent or publication “is a reference for whatever it teaches” for 103. Also, enablement of a reference is presumed unless clearly disproved, even for publications. In re Antor Media Corp. (Fed. Cir. 2012). Amgen Inc. v. Hoechst Marion Roussel Inc. 79 USPQ2d 1705 at 1714-15 only requires enablement for a full 102 anticipation.

  13. PM Actually the number of patents that have been attacked and failed to survive pure 102(g)-only attacks not based on any interfering patent or application, and thus not in any interference, is amazingly small, so this is not that significant.

    True enough. Although it’s never been clear to me why 102(g) wasn’t raised more often as a defense. Maybe we’re starting to see a new trend … with a defined expiration date.

  14. Under the new regime, it is the date of the non enabling provisional.

    Do you agree?

    I’d have to look at the new law again. It’s been a while since I thought about this issue. This case isn’t about the new law, though.

  15. Read the case first MM.

    I read the case. If you have a point to make or if you wish to attack me on some other grounds, you need to try a little harder. Maybe you should take a deep breath first and read exactly what I wrote very carefully.

  16. The above, including the comments, are demonstrating surprising support for the AIA elimination of 102(g) for applications filed after next March even from prior critics of that.
    Actually the number of patents that have been attacked and failed to survive pure 102(g)-only attacks not based on any interfering patent or application, and thus not in any interference, is amazingly small, so this is not that significant.

  17. David, those are all good points. I should have been more clear in my comment that I wasn’t focusing on the policy implications of applying 102(g) but simply on applying the law as the Federal Circuit has interpreted it (prior to this case, which seems to me to just follow along with previous interpretations).

    I agree that “secret prior” art is an odd duck and I’m not sorry to see it disappear. I can only imagine what you think of the (court-approved!) use of 102(g) art for obviousness purposes …

    “the effect of the general disclosure is to greatly reduce the patent-based incentive of subsequent inventors to actually make the invention available to the public”

    Claims to making the composition remain patentable, however. I think this is just a normal aspect of the patent system that everyone deals with all the time. At least it’s something that we folks in the chemistry arts have been dealing with forever. All in all, I think it’s a feature of our system (not a bug) that most compositions that are disclosed (generally or not) and not filed on become unpatentable and are therefore freely available to the public to make and use.

  18. MM, party X files a non enabling provisional application, then files an enabling non provisional that is published.

    The examiner rejects you, citing the NP, but effective as of the date of the provisional.

    Under current law (prior to this case), the effective date is the date of the enabling non provisional. Under the new regime, it is the date of the non enabling provisional.

    Do you agree?

  19. Jason, I couldn’t have said it better, the new 102(g) swallows or renders obsolete case law of 200yrs vintage that prior art must be enabling to invalidate a patent. Public use, public knowledge, printed publication, prior patents or applications? Not enabling? So what — 102(g) to the rescue.

    We have a GD mess on our hands now.

    This case also seems to stand for the proposition that an announcement alone is sufficient to make an invention “available” to the public. After all, if an invention is not so available, it must be suppressed or concealed.

    This case has major, adverse and unacceptable implication for the new 102 and its “otherwise available to the public” add-on to the former 102(b) categories.

  20. it remains indisputed that for 102(g) purposes the prior invention must first have been actually or constructively reduced to practice.

    Read the case first MM. Then see if you can make this statement. Pay attention to when the reduction to practice actually happened.

  21. I do think the patent would be valid under those circumstances. The public was never given the benefit of the invention until the second inventor came along. It was just given the knowledge that the invention existed.

    From my perspective, the consequences of not allowing patents in those circumstances raises a host of issues, regardless of whether you approach the patent system from an incentive-based perspective, a disclosure-based perspective, a commercialization perspective, or a patent race-based perspective. From an incentive perspective, for example, the effect of the general disclosure is to greatly reduce the patent-based incentive of subsequent inventors to actually make the invention available to the public.

    If, on the other hand, the first inventor commercialized the invention (even if the product of the commercialization was not enabling of the invention), made the product available to the public so that reverse engineering was possible, or provided some other detailed disclosure giving the public the benefit of the invention, then I would agree that the second inventor should not receive a patent. (I’m paraphrasing Judge O’Malley here).

    In general, I’m open to strong prior-art based limitations on patentability – provided that the prior art is actually available to the public. Third party “secret” prior art is necessarily not in that category.

  22. This debate goes to the heart of the quid pro quo patent “bargain” between inventor and public.

    MM, if the purpose of a patent system is to reward those who make available to the public an enabling disclosure of the solution to an objective technical problem then, yes, the first to file and allow PTO A publication of an enabling disclosure of process X is entitled to that reward, regardless whether ten years earlier, somebody made available a Kyoto wafer, the product of process X, that defies reverse engineering.

    But I know other readers have a different view what a patent system is for. So I look forward to the debate to follow, in this very olumn.

  23. Comment: In my view, the majority erred in concluding that merely disclosing general information about the invention suffices to preclude any subsequent inventor from obtaining a patent.

    Just to be clear, Jason, it remains indisputed that for 102(g) purposes the prior invention must first have been actually or constructively reduced to practice. That’s important. There was certainly at least a finding that reduction to practice occurred here.

    The issue you raise is what acts are sufficient to prove that subsequent to the reduction to practice the invention was not “abandoned, suppressd or concealed.” My understanding is that it was never particularly difficult to meet this requirement and keep the prior invention completely secret as long as you could show diligence e.g., towards commercializing the product. If you look at this way, the general disclosure of the invention here seems like a bonus for the public (including subsequent patentees).

    I’m not necessarily agreeing with the conclusion of the court here, given the facts. But consider the opposite scenario: First Inventor achieves actual reduction to practice of X, tells the world he made X, he keeps his methods of production secret, never commercializes X or gives X to anybody, then ten years later Second Inventor comes along and files on X and gets a patent to X (arguing to the PTO that the disclosure of X wasn’t enabling). Do you think that the patent to X should be valid even when the First Inventor challenges the patent and shows that he reduced the invention to practice and told everyone about it ten years earlier?

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