Inventorship and Third-Party Prototype Production

NFC Tech v. Matal (Fed. Cir. 2017)

Following an IPR administrative trial, the Patent Trial & Appeal Board (PTAB) concluded that the challenged claims of NFC’s U.S. Patent 6,700,551 are unpatentably obvious.  The focus of the dispute is on a pre-AIA inventorship claim — The PTAB rejected NFC’s attempt to claim priority to its date of invention.

Although the Patent Act itself has never directly defined inventorship, a substantial body of cases have worked through the problem.  In general, the courts have determined that invention is a two-step process that begins with a complete mental conception of the invention and concludes with reducing the invention to practice (i.e., creating a working model).  Most of the inventions claimed within patent documents are not actually reduced to practice prior to the application filing.  Rather, that substantial majority relies upon the judicially created exception that the filing of a patent application should be deemed (in the eyes of the law) a reduction to practice.

Here, NFC’s near-field communication patent application claims priority back to an original French patent application filed March 25, 1999, while the primary prior art reference has an effective date of February 8, 1999.   If the patent in question was a post-AIA patent, NFC would easily lose.  Here, however, NFC has the opportunity to claim back to its date of invention because its patent fits under the old law.

Under the old law, the inventor could claim priority back to that initial date of conception. However, that was generally a difficult prospect because the courts also required extensive post-conception diligence on the part of the patentee to reduce that invention to practice.  It is much simpler if the patentee did actually reduce the invention to practice prior to filing because diligence is no longer required post-RTP (just no suppression, abandonment, or concealment).  Although this ability to claim back to a date-of-invention is a benefit to patentees, it is usually thought of as something of a trap because of the high evidentiary burden placed on the inventor for proving prior conception, diligence, and reduction to practice.

itsatrap

Here, NFC argued that the named inventor (Charrat) and his team had reduced the invention to practice as of November 1998 by creating a device embodying the invention.  The PTAB rejected the argument — holding that a portion of the prototype had been built by a third party chip fabricator (Concept Electronique – CE) and, therefore, Charrat isn’t the one who reduced it to practice.  According to the Board, when a third-party reduces the invention to practice, that RTP only inures to the inventor if the inventor can show that he had already conceived of the invention and communicated that to the third party.  “For Charrat to receive the benefit of that reduction to practice, the Board read [the Federal Circuit] precedents as requiring that Charrat conceived the claimed invention and communicated the underlying subject matter to CE.”

On appeal, the Federal Circuit has reversed – finding that NFC had provided sufficient evidence of conception.

Here, Charrat provided testimony of his conception, but oral testimony alone is insufficient to prove prior invention.  Charrat also provided a data-sheet order to CE. The Board found that the data sheet had “no named author” – on appeal, however, the Federal Circuit credited the document’s statement “By BC” (BC are Charrat’s initials).  “Thus, contrary to the Board’s finding, the data sheet does name an author.”

The PTAB also found it odd that there was not more specific evidence (such as an email) from Charrat to CE that provides information on how to build the circuit (if Charrat had actually been the inventor).  The Federal Circuit rejected that analysis:

Here … Charrat’s account of a period of a few months, nearly twenty years ago, is nonetheless supported by documentary evidence. The relevant period and presence of documentary evidence places this case closer to Loral Fairchild Corp. v. Matsushita Electric. . . . [W]e characterized the inventor’s inability to submit [production] documents as “not surprising” given the amount of time that had passed. Here, similarly, Charrat’s account is corroborated by the initial data sheet that began the project, communications with CE, and documents generated after Charrat and INSIDE received the prototype and began to test it. “[C]orroboration of every factual issue contested by the parties is not a requirement of the law.” In re Jolley, 308 F.3d 1317, 1328 (Fed. Cir. 2002). On these facts, and particularly considering the amount of time that has passed, we determine that Charrat’s account was adequately corroborated.

 

In a typical murder mystery plot, the accused criminal wins by successfully pointing the finger toward the true killer.  Here, the appellate panel suggests that the the PTAB should have also considered that approach.  In particular, the Federal Circuit asks “who, if not Charrat, designed the prototype. . . . Charrat is the only source identified by the evidence for the design of the prototype. Indeed, there is no record evidence of any other INSIDE employee communicating with CE. Under the rule of reason, the totality of the evidence establishes the credibility of Charrat’s account.”

On remand, it looks like the IPR case will continue — in its original analysis, the PTAB did not actually determine whether the prototype embodied the claimed invention since it dismissed on other grounds.  Thus, NFC is simply one step closer to success.

 

20 thoughts on “Inventorship and Third-Party Prototype Production

  1. Note: link to ipwatchdog.com
    I thought this was a fine write-up of this decision. Especially, this decision’s inherent appreciation that modern companies do not normally save most old paper internal documents for all those years. Many even have document retention policies against that.
    Fortunately, for disputes over post-AIA patents instead of old patents, it will become much less likely that they will be needed or relevant, with the gradual elimination of both interferences and “swearing behind” prior art, as here.

  2. What do the patent maximalists say about ending Federal regulation of patents? Why not just end all Federal involvement in the IP system (including copyright and trademark), entirely, and let each state decide how they want to handle it? Nothing in the Constitution says that Congress can’t do that.

    50 different flavors of “patent rights.” Wouldn’t that be awesome? Just think of the awesome “innovative” patent rights that will spring up in great states like Texas, Mississipi and Hal Wegner’s beautiful home state of Florida. It’ll be like fifty different paradises for patent attorneys, each one with its own beautiful and unique bundle of sticks.

    C’mon, glibertarians. Let’s hear your voices rise up. Freedom! Try to be consistent for once! After all, you’re very serious people and you always have everyone’s best interests in mind. Sure you do!

    1. Like that’s the first thing that leaps to everyone’s mind when they read this case.

      What an Fn putz….

  3. Dennis, you do a good job here of explaining the frequently misunderstood law of 102(g) prior invention. The fact that a 20 year old remaining scrap of private evidence is in dispute here is one of the reasons for the AIA simplification of prior art evidence.
    My only quibble is with the Federal Circuit asking “who, if not Charrat, designed the prototype. . . . Charrat is the only source identified by the evidence for the design of the prototype.” Obtaining any such contrary evidence is the kind of evidence that is very difficult to obtain in the very limited scope of discovery provided for IPR parties. An additional discovery opportunity should logically be provided on this remand, but ….
    The fact that key prior art here was a French patent is another example of the kind of prior art found by IPR petitioners under lawsuit pressure that would be highly likely to be found by a PTO application examiner.

    1. The fact that key prior art here was a French patent is another example of the kind of prior art found by IPR petitioners under lawsuit pressure that would be highly likely to be found by a PTO application examiner.

      I think you meant “highly unlikely”. But, more importantly, France is a fake country and nothing that happens there should be used to deny a US citizen his/her natural rights.

    2. The key prior art is a US patent having a filing date of February 8, 1999. A French patent application filed at that date would not have been prior art under 102(e) (because France is a fake country).

    3. Paul, when one is trying to take a patent from another based on prior invention, I can see a need for very strict rules and reliable evidence.

      But, when one is defending a patent based on prior art not claiming the same invention, some liberality on corroboration should be the rule. The bias should be in favor of the inventor who shows actual reduction to practice. After all, it is this inventor who gave the world the invention in the first place. All he wants is protection for a limited time. Is that too much to ask?

      1. Ned, not to disagree that the burden of proof could be different, but actual reduction to practice does not necessarily “gave the world the invention” because it does not have to be public.

        1. Paul, agreed. But if one files a patent application and that application is eventually published, the published patent has an effective date as of the date of reduction to practice not only for priority, but for prior art purposes as well.

          1. Yes, part of the business plan confusing “unknowable secret prior art” against later filed applications that the AIA will gradually reduce as pre-AIA applications all finally issue and expire.

  4. Not sure it’s helpful to reference murder enquiries. In a civil dispute, the challenge is to establish a “more likely than not” theory of the case, isn’t it?

    If there is no answer to the question “If not Charrat then who?” then isn’t it more likely Charrat than not Charrat?

  5. concludes with reducing the invention to practice (i.e., creating a working model). Most of the inventions claimed within patent documents are not actually reduced to practice prior to the application filing. Rather, that substantial majority relies upon the judicially created exception that the filing of a patent application should be deemed (in the eyes of the law) a reduction to practice.

    It’s a trap indeed.

    The trap though is the attempted aspersion to anything but a full working model.

    Rather than some “judicially created exception,” is it not true that this abandonment of providing a working model was by Congress? Was this not instigated by Thomas Jefferson himself (and the inherent difficulty with providing such working models)?

    It has been noted previously that the author of this article exhibits a rather peculiar bias towards what being an inventor is (tied to this notion of constructive reduction to practice).

    Rather than seeing that bias and ameliorating it, the opposite seems to be the order of the day.

    One wonders then – WHY the animus against constructive reduction to practice?

    1. is it not true that this abandonment of providing a working model was by Congress?

      This isn’t about a “working model” requirement for obtaining a patent.

      It’s about whether the invention was reduced to practice by the inventor before the date of a prior art reference. That issue was deemed important in this case because the evidence of prior conception of the invention was weak.

      1. Your “reply” is a non sequitur to my comment.

        Maybe understand that which you want to tr011…

    2. We all know who is the “king of constant animus” here and it is not Dennis.

      1. And it’s all in 102(g) as well as the case law.

        1. CLEARLY 102(g) is not the basis of my comment. Paul.

          Pay attention – maybe spend less time nursing your hurt feelings and flinging out “king of animus” comments…

      2. WHY the animus against constructive reduction to practice?

        LOL

        Like that’s the first thing that leaps to everyone’s mind when they read this case.

        Dennis has an agenda! Dennis has an agenda! Must be that Google money that he keeps denying.

Leave a Reply

Your email address will not be published. Required fields are marked *

 Notify me of followup comments via e-mail.

You can click here to Subscribe without commenting