District Court Denies Plaintiff’s Summary Judgment Motion on Improper Inventorship Defense, But Grants Plaintiff’s Motion on Derivation Defense
by Andrew Ford Schwerin, John Wittenzellner & Charles Everingham IV, Akin Gump
The patent defenses of improper inventorship and derivation are closely related, and both can be raised from a common set of facts. There are distinctions between the two, however, as a recent district court decision highlighted.
Cellular Communications Equipment LLC v. HTC Corp., involves several patents, one of which names a single inventor, Mr. Benoist Sebire. Before the November 2007 filing date, Mr. Sebire, along with other members of a working group, participated in conference relating to 3G technology. At the conference, materials were distributed to attendees, including a proposal by Ericsson. After the conference, but still before the filing date, an attendee circulated a summary of the working group’s discussions to Mr. Sebire and other attendees. The meeting and materials became the bases for HTC’s defenses of improper inventorship and derivation with regard to the Sebire patent. HTC did not, however, identify the alleged correct inventor(s). Plaintiff moved for summary judgment on both the improper inventorship defense as well as the derivation defense.
The court first addressed the improper inventorship defense. Pre-AIA 35 U.S.C. § 102(f) provides that “[a] person shall be entitled to a patent unless . . . he did not himself invent the subject matter sought to be patented.” To prove invalidity for improper inventorship, one must show clear and convincing proof that the patent names “more or fewer than the true inventors.” Gemstar-TV Guide Int’l, Inc. v. Int’l Trade Comm’n, 383 F.3d 1352, 1381-82 (Fed. Cir. 2004). Cellular Communications urged that the law required the defendant to identify the purportedly true inventor(s) to support its defense. The court, however, rejected this argument, noting that Cellular Communications “failed to cite case law that explicitly requires the identification of a putative inventor to establish a genuine issue of material fact with respect to improper inventorship.” After resolving this legal issue, the court considered the evidence. According to the court, two pieces of evidence–the email summary, and expert testimony regarding the summary’s contents–established an issue of fact with regard to inventorship. As a result, summary judgment was denied on this issue.
With respect to derivation, however, the court granted the plaintiff’s motion for summary judgment. Like improper inventorship, a derivation defense is rooted in pre-AIA 35 U.S.C. § 102(f). Cumberland Pharm. v. Mylan Inst., 846 F. 3d 1213, 1217-18 (Fed. Cir. 2014). To establish this defense, one must demonstrate “both prior conception of the invention by another and communication of that conception to the patentee” by clear and convincing evidence. Eaton Corp. v. Rockwell Int’l Corp., 323 F.3d 1332, 1334 (Fed. Cir. 2003). In turn, to show conception, one must show “formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention.” Singh v. Brake, 317 F.2d 1334, 1340 (Fed. Cir. 2003) (emphasis added). To support its derivation defense, HTC pointed to a slide deck and the Ericsson proposals coupled with the working group’s discussions. With respect to the slide deck, the court agreed with Cellular Communications that the deck merely disclosed “one step out of many that [were] claimed” in the Sebire patent. Accordingly, this was insufficient to establish conception. With respect to the Ericsson proposals and the group’s discussions, the court concluded that this evidence failed to show that “another inventor conceived a definite and permanent idea of the . . . invention.” Accordingly, the court granted summary judgment in favor of Cellular Communications on the issue of derivation.
Cellular Communications Equipment LLC v. HTC Corp., Civil No. 6-16-cv-475-KNM (E.D. Tex. July 5, 2018) (Mitchell, MJ)
Federal Circuit Affirms that Tribal Immunity Is Not Available for Inter Partes Review
by Romeao Jon Jennings, John Wittenzellner & Charles Everingham IV, Akin Gump
On July 20, 2018, the Federal Circuit affirmed in Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals, Inc. that tribal immunity cannot be asserted in IPRs. 1 The appeal stemmed from a dispute between Allergan and various generic drug manufacturers over patents related to Restasis, a drug for treating chronic dry eye. In 2015, Allergan sued the drug makers, alleging infringement of the Restasis patents based on their filing of abbreviated new drug applications for generic versions of the drug. Mylan and other manufacturers petitioned for IPR of the Restasis patents. The Board instituted the IPRs and set a consolidated oral hearing for September 2017.
Before the hearing, Allergan assigned its patents to the Saint Regis Mohawk Tribe (“the Tribe”). Under the agreement, Allergan received an exclusive grant-back license to the patents. After the assignment, the Tribe moved to terminate the IPRs based on sovereign immunity, citing two PTAB decisions immunizing the Universities of Florida and Minnesota under the 11th Amendment. 2 The Board denied the Tribe’s motion on various grounds, including that tribal sovereign immunity was not available in an IPR. 3
On appeal, the Tribe argued that tribal sovereign immunity should apply in IPRs because they are contested, adjudicative proceedings. In response, Mylan argued, among other things, that IPR is more like an agency enforcement decision, where tribal immunity does not apply. The Federal Circuit acknowledged that IPR is a “hybrid proceeding” with “adjudicatory characteristics,” but ultimately concluded that it was insufficiently adjudicatory to confer sovereign immunity. Four factors drove the Federal Circuit’s conclusion: (1) the Director possesses broad discretion in the decision to institute; (2) the Board may continue review even if the petitioner chooses not to participate; (3) the rules controlling IPRs are substantially different from the Federal Rules of Civil Procedure, and; and (4) IPRs are not necessarily proceedings in which Congress contemplated tribal immunity to apply.
Although the Federal Circuit limited its holding to tribal sovereign immunity, the decision may have broader consequences for entities such as state universities that traditionally enjoy state sovereign immunity in IPRs. Indeed, the Federal Circuit noted the “many parallels” between tribal and state sovereign immunity. Given this language, it would not be surprising to see future challenges to state sovereign immunity in IPRs.
Federal Circuit Dismisses IPR Petitioner’s Appeal of Final Written Decision for Lack of Standing
by Michael N. Petegorsky, Rachel J. Elsby & Rubén H. Muñoz, Akin Gump
Earlier this month, the Federal Circuit dismissed for lack of standing an appeal filed by an inter partes review (IPR) petitioner of a final written decision issued by the Patent Trial and Appeal Board (PTAB) that held two instituted claims not unpatentable.
Appellant JTEKT Corporation filed an IPR petition challenging the patentability of seven claims of a patent owned by appellee GKN Automotive LTD. In a final written decision, the PTAB held (as applicable here) that JTEKT failed to establish that Claims 2 and 3 were obvious in view of two prior art references. JTEKT appealed, and GKN moved to dismiss for lack of standing.
By statute, any person or entity may file an IPR petition—there is no requirement that the petitioner have Article III standing. See 35 U.S.C. § 311(a). The statute also provides that an unsuccessful petitioner may appeal an unfavorable final written decision to the Federal Circuit. See 35 U.S.C. § 141(c). However, the Federal Circuit has previously held that the statute does not remove the Article III injury-in-fact requirement for appeal. Thus, to establish standing on appeal from an IPR, a petitioner/appellant must show that it is engaged, or will likely engage, in an activity that would give rise to a possible infringement suit or has contractual rights that are affected by a determination of validity.
Here, JTEKT argued that, although it did not have a product on the market at the time of the appeal, it possessed standing because it was developing a product that faced potential infringement liability. However, the declarations that JTEKT submitted in support of its argument conceded that the product was still in development and, more importantly, would continue to evolve and change. In fact, JTEKT admitted that there was no final product that could be analyzed for infringement and that the potential risk of infringement was currently impossible to quantify.
The Federal Circuit held that, because JTEKT failed to show any concrete and substantial risk of infringement, or that its planned product will likely lead to claims of infringement, it lacked standing to appeal the PTAB’s final written decision. Although the court made clear that “IPR petitioners need not concede infringement to establish standing on appeal,” they must still meet the Article III injury-in-fact requirement to appeal a final written decision to the Federal Circuit.
Practice Tip: It is important to carefully consider the case timeline when filing an IPR petition. The benefits of filing a petition early (e.g., while a potentially infringing product is still in development) should be balanced with the risk of having no standing to appeal an adverse final written decision from the PTAB.
JTEKT Corp. v. GKN Automotive LTD., No. 2017-1828 (Fed. Cir. Aug. 3, 2018)