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Precedential Decision on Diligence: ATI Technologies ULC v. Iancu

The Federal Circuit reversed a Patent Trial and Appeal Board (“PTAB” or “the Board”) ruling that invalidated three patents in three separate IPR proceedings (IPR2015-00325, IPR2015-00326, and IPR2015-00330).  The patent owner, ATI Technologies, asserted that the inventions in the challenged claims antedated the asserted prior art.  That is, ATI attempted to swear behind the asserted prior art.  The PTAB found that conception had occurred before the primary reference dates, and that constructive reduction to practice occurred on the filing date of each patent.  However, the PTAB found that ATI had not established actual reduction to practice and also had not established diligence from the time of conception to the constructive reduction to practice, i.e., the filing dates.  The PTAB then invalidated the three patents at issue over the asserted grounds.

On appeal, the Federal Circuit, in a precedential decision, reversed the PTAB, finding that ATI had indeed shown diligence from conception to constructive reduction to practice.  Given this finding, the Federal Circuit stated that it did not need to reach the question of actual reduction to practice, and therefore vacated the ruling regarding that issue.

In a prior decision overturning a PTAB ruling about diligence, the Federal Circuit had occasion to clarify that “[a] patent owner need not prove the inventor continuously exercised reasonable diligence throughout the critical period; it must show there was reasonably continuous diligence.”  Perfect Surgical Techniques, Inc. v. Olympus Am., Inc., 841 F.3d 1004, 1009 (Fed. Cir. 2016).  The Federal Circuit in this case found that the PTAB had apparently relied on an incorrect definition of diligence.  As the court summarized:

ATI stated that the PTAB applied an incorrect definition of diligence, and LGE so conceded in its brief before it withdrew from this appeal. The Director instead describes as “boilerplate” the PTAB’s erroneous definition. However, it was not boilerplate, for the PTAB appeared to find a dispositive difference between “continuous reasonable diligence” and “reasonably continuous diligence,” despite the documentary evidence of activity by ATI on “every business day.” We conclude that the PTAB applied the wrong legal standard for diligence. As explained below, under the proper legal standard, the record is clear that ATI exercised the requisite “reasonably continuous diligence.”

(emphasis added).

The evidence that ATI presented was substantial.  An inventor declaration (of some 60 pages) described the work of the various inventors and other employees, and was accompanied by almost 1300 pages of documentary records including metadata, document logs, and folder histories.  As the declaration explains, employees were required to save their work in a revision control system (Perforce) that tracked changes being made and associated metadata.  The declaration further explained that for the inventors and many other project managers/designers, the work that they performed from late 2001 to the end of 2003 was almost exclusively for the R400 project that led to the claimed inventions.  Based on the metadata, the declaration asserted that “at least one person on the R400 project team worked on the R400 design every non-holiday business day from early 2002 (when we conceived of the invention) until November 20, 2003 (the effective filing date of the ’871 patent).”

Despite neither the PTAB nor the petitioner having raised any questions about the documentary exhibits establishing diligence during the trial and at the final hearing, the Board found that ATI had not shown diligence because “ATI fails to provide evidence that is specific both as to facts and dates for each of the three critical periods.”  The PTAB’s reasoning was that the R400 project was modified after the conception date to include an optional feature not claimed, and that ATI failed to provide a reasonable way for the PTAB to determine whether unexplained lapses had not occurred.

The Federal Circuit faulted the PTAB for not providing any details about any apparent unexplained lapse, for not asking any questions about such alleged lapses, and for not requesting additional information regarding corroboration.  The Federal Circuit cited to long-held principles of diligence, namely that “It must be reasonable, under all the circumstances of the particular case in question,” and that “reasonable diligence does not involve uninterrupted effort, nor the concentration of [an inventor’s] entire energies upon [a] single enterprise.”

For parties attempting to antedate references, this decision highlights the value of providing extensive documentary support, and showing as much activity as possible.  For parties attempting to defeat antedating of a reference, this decision highlights the importance of cross-examining witnesses and identifying concrete holes in a party’s story of diligence.