Speck v. Bates: Federal Circuit’s Two-Way Test for Pre-Critical Date Claims Limits Belated Interferences and Derivation Proceedings

by Dennis Crouch

Speck v. Bates, No. 23-1147 (Fed. Cir. May 23, 2024)

In likely one of the last interference proceeding appeals, the Federal Circuit has applied a “two-way test” to determine whether pre-critical date claims and post-critical date claims are “materially different” under pre-AIA 35 U.S.C. § 135(b)(1). The court found that Bates’ post-critical date claims in its U.S. Patent Application No. 14/013,591 were time-barred because they were materially different from Bates’ pre-critical date claims.

Although the decision is based upon an interference proceeding, the same provision is found within the new version of 135(b) that covers derivation proceedings. Thus, this same two-way test should apply to determine an amended claim was filed within the 1-year period.

Under the pre-AIA first-to-invent patent system, if two parties claimed the same invention in separate patent applications or patents, the USPTO could declare an interference proceeding to determine which party was the first to invent and thus entitled to the patent. However, Congress imposed a one-year time limit on when an interference could be provoked:

A claim which is the same as, or for the same or substantially the same subject matter as, a claim of an issued patent may not be made in any application unless such a claim is made prior to one year from the date on which the patent was granted.

35 U.S.C. § 135(b)(1).  In other words, in a situation where one of the competing applications has already issued or published, the other competing application must be amended to include a substantially similar claim within 1 year of the first’s issuance/publication date. This one-year anniversary of the patent’s issuance/publication is referred to as the “critical date.” Patent claims existing in the application before this critical date are “pre-critical date claims,” while claims added or amended after the critical date are “post-critical date claims.”

Despite the language of 135(b)(1), courts have recognized an equitable exception to this statutory time-bar. If an applicant was “already claiming substantially the same invention” in pre-critical date claims as the post-critical date claims, the post-critical date claims may still avoid the time-bar. Corbett v. Chisholm, 568 F.2d 759, 765 (C.C.P.A. 1977).  The key issue is determining whether the pre-critical date claims and post-critical date claims are “substantially the same” to fall under this exception. This involves comparing the two sets of claims to see if they have material differences.

In Speck, the Federal Circuit held that the correct approach is a “two-way test” that examines whether either set of claims contains limitations not found in the other.  If either the pre-critical date claims or post-critical date claims have a material limitation absent from the other set of claims, the claims are not substantially the same and the exception does not apply.

Both parties in Speck claim drug-coated balloon catheters.  Speck’s U.S. Patent No. 8,257,305 claims priority back to a 2003 application, but did not issue until September 4, 2012, making its 135(b)(1) critical date September 4, 2013 (one year later).   Bates patent application claimed priority back to 2001, but the ‘591 application was not filed until August 29, 2013, days before the critical date.  But, Bates significantly amended the claims after the critical date to overcome rejections. One key amendment required the device to be “free of a containment material atop the drug layer.”

On appeal, the key issues were: (1) whether there was pre-critical date support for the amended “free of a containment material atop the drug layer” limitation; and (2) whether the pre- and post-critical date claims were materially different. Speck argued the Board erred by applying only a “one-way test” looking at whether the post-critical date claims were narrower than the pre-critical date claims, rather than a “two-way test” examining whether each set of claims contained limitations not found in the other.

The Federal Circuit agreed with Speck. It found binding precedent from its predecessor court, the CCPA, supported a two-way test. For example, in Stalego v. Heymes, 263 F.2d 334 (C.C.P.A. 1959), the CCPA articulated that “claims are not for substantially the same subject matter if one of them contains one or more material limitations which are not found in the other.” Agreeing with Stalego, the Federal Circuit wrote that:

Applying a one-way test would permit materially broader post-critical date claims to avoid section 135(b)(1), despite having a materially broader scope. Applying a one-way test in this situation would undermine the requirement of lack of material difference.

Thus, the court held “the two-way test should be applied to determine if pre-critical date claims and post-critical date claims are materially different.”

Looking at the patents at issue, the court found that under the two-way test, the pre- and post- claims were materially different as a matter of law. Bates’ pre-critical date claims recited limitations like “free from any containment material” and “not contained within or covered by either a time release layer or a containment layer.” In contrast, the post-critical date claims only excluded containment material “atop the drug layer,” permitting the drug to be incorporated within a containment layer.  The court explained that while “difference in scope alone does not necessarily mean claims are materially different,” the prosecution histories demonstrated the differences were material:

In a separate interference proceeding concerning the ‘149 patent, Bates stated that “[a] basic and novel characteristic in Bates’ disclosure is the lack of a time-release layer, a containment material or a containment layer.” It would necessarily follow that the ‘591 application, which permits some containment material, is materially different as it lacks this “basic and novel characteristic.”

The court noted Bates also amended related applications to add limitations excluding containment layers to overcome obviousness rejections, demonstrating the materiality of those limitations. Citing Parks v. Fine, 773 F.2d 1577 (Fed. Cir. 1985) (“The insertion of this limitation to overcome the examiner’s rejection is strong, if not conclusive, evidence of materiality.”). The court found no substantial evidence supporting Bates’ position that the differences were immaterial.

The Speck v. Bates decision, while addressing a pre-AIA interference proceeding, has important implications for the new derivation proceedings under the AIA. The AIA replaced interference proceedings with derivation proceedings, but retained a similar one-year time-bar provision in 35 U.S.C. § 135(b). This provision requires that a petition for derivation be filed within one year of the first publication of a claim to an invention that is the same or substantially the same as the earlier application’s claim to the invention.

The Federal Circuit’s adoption of a two-way test for determining whether claims are “substantially the same” in Speck will therefore be directly applicable in the derivation context. This two-way test will further limit the ability of parties to claim derivation after the one-year window has passed, as they will need to show that their claims are not materially different from the alleged deriver’s claims using the two-way analysis. The Speck decision’s guidance on examining prosecution histories and statements about “basic and novel” characteristics to identify material differences will be highly relevant to this analysis.