Self-Harm: Company’s own 102(e) prior art Cancels the Patent

by Dennis Crouch

Duncan Parking Techs., Inc. v. IPS Group, Inc. (Fed. Cir. 2019) and
IPS Group, Inc. v. Duncan Solutions Inc. (Fed. Cir. 2019)

This decision involves parallel appeals from (1) a district court siding with the accused infringer on noninfringement grounds; and (2)  a PTAB IPR decision siding with the patentee confirming patentability. On appeal, the accused infringer won on several grounds, but it appears that at least some of the claims will be found both infringed and valid.

In this post, I focus on the PTAB decision and self-harming prior art.

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The two patents in suit are related to single-space, credit-card enabled, solar-powered parking meters. U.S. Patents 8,595,054 and 7,854,310.  Of the two, the ‘054 patent has the earlier effective filing date (December 2006) while the ‘310 patent’s associated application was not filed until 14 months later (February 2008).  The two patents are both owned by IPS and have one overlapping inventor (King). However the patents also have several non-overlapping inventors.  Relevant for this case, Schwarz is a listed inventor of the ‘054 patent but not the ‘310 patent.

Once the ‘054 patent published in 2009, it became prior art under pre-AIA 35 U.S.C. 102(e) with a prior art date of December 2006.  102(e) offers two additional tricks for our situation here: First, a published application or patent only counts as prior art if filed “by another”; and second, 102(e) prior art cannot be used for obviousness purposes if the purported prior art is owned by the same entity as the application/patent being challenged.

By Another: This gets a little bit tricky, but the baseline law is that a prior art application is “by another” if invented by someone not listed in the later application being challenged.  Here, the purported prior art (the ‘054 patent) lists King and Schwarz as inventors — that counts as a different since Schwarz is not listed on the ‘310 patent.  However, the court allows parties to get into the weeds on this point and ask — who actually invented the particular aspects of the disclosure being used.  Here, the patentee argued that King (the overlapping inventor) is the one who created the particular disclosure.  On appeal, the Federal Circuit agreed with the legal analysis, but disagreed on the facts:

If Schwarz is a joint inventor of the anticipating disclosure, then it is “by another” for the purposes of § 102(e). . . . Because the [later] ’310 patent claims clearly include elements previously disclosed in Figure 8 [of the prior ‘054 patent], the question is whether Schwarz conceived those elements as they were disclosed in the ’054 patent. . . .

While IPS argues that Schwarz’s role consisted of “drawing a schematic,” the record shows that creating the block diagram was not a minor task. Schwarz had to coordinate with D+I as they designed a device that could
physically fit within an existing parking meter housing. As a result of Schwarz’s contribution, the ’054 patent discloses a parking meter device with a detailed electrical system, a challenge King described as one of “two big hurdles” to the invention. Thus, Schwarz’s contribution, measured against the dimension
of the full invention, was significant.

Okay, based upon the Federal Circuit’s conclusion that Schwarz is an inventor of that disclosure in the ‘054 patent and not listed on the ‘310 patent, his contribution is “by another” and thus can count as 102(e) prior art.

Same Owner: The same-owner caveat on 102(e) is quite powerful. However, pre-AIA it only applied to limit the obviousness doctrine.  Here, the challenge is anticipation and so the reference counts as prior art.

The result here is that the earlier application counts as prior art — as such, Federal Circuit reversed the PTAB decision and remanded for a finding that the claims should be cancelled.

= = = =

Note here that these details have been substantially changed by the America Invents Act. Under the new law, the same-company exception applies for both obviousness and anticipation. Thus, this case would have a different outcome.

In addition, the “by another” language was removed and replaced with “names another inventor.”  I don’t believe that this second language actually changes the law.

= = = =

The result here is that the ‘310 patent is invalid, but the ‘054 patent remains strong and at least some of its claims appear infringed.

27 thoughts on “Self-Harm: Company’s own 102(e) prior art Cancels the Patent

  1. 7

    re “Under the new law, the same-company exception applies for both obviousness and anticipation. Thus, this case would have a different outcome.”

    I’m not sure I understand – is this saying that a company can never have it’s patent invalidated due to its own prior art?

    1. 7.1

      Not for ownership prior to other concerns kicking in (for example, publication — which provides a strategic impact of defaulting to always filing with a non-publication request).

    2. 7.2

      No.

      Here is the relevant portion of the law, parse it carefully paying careful attention to the difference between publication dates and filing dates. Also note that the relevant exception applies to portion (a)(2). The section called (a)(1) still operates and that is why the answer to your question is “no”:

      (a)Novelty; Prior Art.—A person shall be entitled to a patent unless—
      (1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or

      (2) the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.

      (b) Exceptions.—
      (1)Disclosures made 1 year or less before the effective filing date of the claimed invention.—A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if—
      (A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or
      (B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.
      (2)Disclosures appearing in applications and patents.—A disclosure shall not be prior art to a claimed invention under subsection (a)(2) if—
      (A) the subject matter disclosed was obtained directly or indirectly from the inventor or a joint inventor;
      (B) the subject matter disclosed had, before such subject matter was effectively filed under subsection (a)(2), been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or
      (C) the subject matter disclosed and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.

      1. 7.2.1

        Also to be considered is the non-statutory double patenting (which roughly corresponds to the granted claims, but not the disclosure, of a patent previously filed by the same applicant being used in obviousness analysis).

  2. 6

    102(e) offers two additional tricks for our situation here: …
    second, 102(e) prior art cannot be used for obviousness purposes if the purported prior art is
    owned by the same entity as the application/patent being challenged.

    The thicket here is far thicker than a first glance may indicate.

    The owner here (IPS Group) holds 21 granted utility patents and 40 granted design patents – as revealed by a separate search of the USPTO database. I did not run a publication search, as often there is overlap with the granted items, and some of the still active items may well be filed under a non-publication request.

    The two patents here actually belong to two different families with overlapping prosecution timelines (with one of the two having a fairly innocuous strong of six back to back applications, while the other has a bit more complicated family of 10 non-provisonals, one PCT and three provisionals, with a “cousin” CIP line and offshoots of two other provisional filings)

    Of the non-provisionals, there are:
    four total abandons,
    seven grants and
    five still pending (with the last pending filed as recently as August of 2018.

    1. 6.1

      When faced with prior art D1 of “another”, can one get in under the “same entity” exception, and dissolve the objection to patentability by moving, in response to that objection, to acquire ownership of D1?

      In other words, what is the effective date for assessing “same entity”: filing date of D1, date the objection to patentability on the basis of D1, or some later date?

      1. 6.1.1

        my reply is caught in the “multiple links” filter MaxDrei

        1. 6.1.1.1

          …but effectively [pun intended], the answer is no, one cannot remedy a first charge by only later (after the critical date related to the filing) going out and bringing the “offending” item into the ownership umbrella.

      2. 6.1.2

        Max – First, the “another” language is from an older version of the statute.

        The relevant portion of the current version of 35 USC 102 is presented above at 7.2. The bolded portion at the bottom of that post provides the answer to your question under the current law. No. They have to be co-owed at the time of at the effective filing date (e.g., taking into account priority filings). The previous version of the law referred instead to the time of invention.

    1. 5.1

      I don’t get the relevance here. Was he a patent attorney at some time?

      1. 5.1.1

        It’s self harm lol. Also, it’s relevant to MM’s constant “muh republikkkans” jeers. He’s now btfo.

        1. 5.1.1.1

          MOST ALL of Malcolm’s rants and “feelings” posts are examples of self harm.

          As I noted recently in reply to Night Writer’s suggestion that Malcolm is paid to advance his propaganda, if that were indeed so, then the person(s) paying him should demand their money back.

          Malcom’s “swagger” (as the late Ned Heller described it) is one of the worst forms of advocacy that I have ever seen. He does a (nigh constant) DIS-service to the positions he would want to see advanced.

  3. 4

    “Girl by the whirlpool
    Lookin’ for a new fool
    Don’t follow leaders, watch the parkin’ meters”

  4. 3

    In addition, the “by another” language was removed and replaced with “names another inventor.” I don’t believe that this second language actually changes the law.

    I’m not so sure about this, this is a first to file kind of issue, isn’t it? Take this fact pattern – regardless of whether King invented a given element or feature, Schwarz was clearly aware of that feature, and this document is proof of that as much as if it was a whole new reference with only Schwarz’s name on it. The question of whether Schwarz derived from King is relevant in a first-to-invent system but not a first-to-file one.

    This is unlike the previous public use issue, in this case the language change to “names another inventor” directly conflicts with the prior court action of interrogating who actually created the particular feature. The plain meaning of the statute controls, and I’m not sure if it’s proper to go delving into who invented the feature when the statute only asks if the filing names another inventor in a first to file system.

    1. 3.1

      “the statute only asks if the filing names another inventor in a first to file system”

      That’s my reaction as well.

    2. 3.2

      Imagine I file SN ’77, in which I claim X but also disclose X any Y. I name two inventors, A and B, as inventors of X. Then I divide out SN ’88. My Div claims Y. When filing the divisional, I name as inventors only A and C. Why, because B made no contribution to Y.

      Now suppose that instead of SN ’77 I had filed on the same date SN ’99 with claims to both X any Y and naming all three inventors A, B and C. SN ’99 then gets used as the 102(e) attack on a later filing with inventors A and B alone.

      Questions: 1. Would ’77 or ’88 have been just as effective as attacks? 2. Do you still see no merit in the stance taken by the Federal Circuit?

      1. 3.2.1

        MaxDrei,

        Your hypo is faulty.

        gets used as the 102(e) attack on a later filing with inventors A and B alone.

        Um, no. Not in your hypo here, as the later does not have a “new” previously unnamed inventor, and the “attack” simply would not be made on inventor identity. There is simply no reason to start down a path questioning the later filing based on inventors.

        (of course, since your hypo is geared only to inventors, I presume that all other conditions, such as subject matter or effective dates are not at point)

        1. 3.2.1.1

          That’s the trouble with hypo’s. They fail to reveal the point.

          Here, I was envisaging a 102(e) attack on an application to protect invention Y, which application names as inventors only A and C.

          An earlier-filed application for Y-overlapping subject matter is SN ’88, and SN ’88 also names only A and C.

          Another possible earlier filing is SN ’99 but that filing also discloses both of inventions X’ any Y’ and names all of A, B and C as inventors (because B contributed to the invention of X’).

          What I wondered is whether SN ’99 is a good 102(e) attack on the Y claim, while the 102(e) attack using SN ’77 doesn’t fly.

          1. 3.2.1.1.1

            That’s the trouble with cr pot hypo’s.

            Fixed for you.

            (And the answer remains the same. The earlier item with all the inventors will NOT be used to attack the later item (the later item being attacked with less, but no different inventors). Your added verbiage does not make your hypo any less cr ppy.

            1. 3.2.1.1.1.1

              Lol – auto correct nabbed the first “cr ppy”

            2. 3.2.1.1.1.2

              You wrote:

              “The earlier item with all the inventors will NOT be used to attack the later item (the later item being attacked with less, but no different inventors).”

              Dennis wrote:

              “Relevant for this case, Schwarz is a listed inventor of the ‘054 patent but not the ‘310 patent.”

              In my hypo, all I do is to abbreviate Schwarz to “B”.

              Writing it out in full for you:

              “B is a listed inventor of the ‘054 patent but not of the ‘310 patent”.

              If what I wrote is “cr appy”, then so is what Dennis wrote.

              1. 3.2.1.1.1.2.1

                Agreed.

                This may be the exception that proves the rule.

  5. 2

    I need to re-read this case, because I really did not understand it when I read it yesterday. In particular, I just do not understand how the CAFC arrived at the conclusion that Schwarz was the inventor of a particular disclosure. There was evidence in the record to support the conclusion that King invented the disclosure at issue, and the Board below found as a fact that King invented that disclosure. That means that the CAFC—in order to upset this fact finding—had to conclude that there was clear error in the conclusion that King invented the disputed disclosure. I still do not understand how they worked this out to arrive at a conclusion of clear error (that is an invitation for someone who does understand to please break it down for me)

    1. 2.1

      I still do not understand how they worked this out to arrive at a conclusion of clear error (that is an invitation for someone who does understand to please break it down for me)

      You’re not alone. And this seems like the kind of requirement they would ignore, doesn’t it?

  6. 1

    While IPS argues that Schwarz’s role consisted of “drawing a schematic,” the record shows that creating the block diagram was not a minor task. Schwarz had to coordinate with D+I as they designed a device that could
    physically fit within an existing parking meter housing. As a result of Schwarz’s contribution, the ’054 patent discloses a parking meter device with a detailed electrical system, a challenge King described as one of “two big hurdles” to the invention. Thus, Schwarz’s contribution, measured against the dimension
    of the full invention, was significant.

    Presumably those dimensions are recited in the claims, right? They must be.

    1. 1.1

      Those dimensions may have dictated the placing of different parts in different places etc. in a fashion that was “design interconnected” to the rest of the disclosure as a whole. That’s what I’m thinking it is more likely the court was finding.

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