By providing a limited monopoly – the right to exclude others from making, using, selling, or offering for sale, the claimed invention – patents are important strategic corporate resources, enabling a company to exert considerable influence in the market place. A company holding a robust patent portfolio has the potential of wielding effective leverage over competitors vis-à-vis an exclusive place in the market, or licenses and royalties. Further, such a company has the potential of acquiring the heightened interest of investors. Thus, at its most basic level, a patent is a source of corporate power and revenue.

The United States, a major market for most companies, is a first to invent jurisdiction. That is, in the US a patent on a given invention is granted to the party that is first to invent, in contrast to other jurisdictions in which a patent on a given invention is granted to the party that is first to file an application therefor. When two or more parties seek to patent the same invention in the US, a proceeding called an interference typically results.

Interference proceedings generally

An interference is a proceeding to resolve who between two or more parties is the first to invent a given claimed invention. In simplest terms, it is a contest to determine priority of invention. However, other issues can be raised in the proceeding, such as invalidity in view of prior art (lack of novelty, obviousness), and invalidity due to insufficiency of disclosure (lack of enablement, lack of written description).

Usually these proceedings involve at least one pending US patent application and are conducted as an administrative action before Administrative Patent Judges (APJs) of the United States Patent and Trademark Office (USPTO). While somewhat rare, an interference can also involve two patents. Such a patent v patent interference falls outside of the jurisdiction of the USPTO, and is handled, instead, by a US district court. Since the majority of interference proceedings are conducted before the USPTO, this piece shall focus on such proceedings.

An interference before the USPTO may be initiated by the USPTO or provoked by an applicant during prosecution of his patent application. Interference proceedings are both very expensive and very time-consuming. An interference, from start-to-finish, can cost about the same as other inter partes proceedings, especially if many issues are raised, and can last about two to three years. Furthermore, interference proceedings can be coincidental with opposition proceedings between the same parties that are occurring in first-to-file jurisdictions, such as the European Patent Office. Thus, when facing an interference, the possibility of parallel proceedings in different jurisdictions, a global strategy to address such different proceedings, and working with counselors who team up with other advisors throughout the world to work together on these parallel proceedings, should be considered.

The prerequisites and the declaration of interference

Before an interference is declared by the USPTO, two conditions must be satisfied. First, each inventive party must have patentable subject matter. Second, the patentable subject matter must actually interfere.

With respect to the first requirement, it is well-settled that the USPTO must make a threshold ex parte determination of patentability of claimed subject matter to the potential parties before declaring an interference. In other words, the claimed subject matter of all the potential parties in an interference must be allowable or allowed by the USPTO. For example, the USPTO must determine in the first instance that an invention be definite, enabled, described, and novel and non-obvious (inventive) over the prior art. This showing of patentability is a condition precedent to the declaration of any interference by the USPTO. Thus, if an interference is declared without a prior finding of patentability, the interference is void ab initio.

The second requirement is that the allowable subject matter of both parties must actually interfere, commonly known as interference-in-fact. In order to determine interference-in-fact, the USPTO applies a two-way patentability test: invention A is the same patentable invention as an invention B when invention A is the same as or is obvious in view of invention B, assuming invention B is prior art with respect to invention A and vice versa.

In essence, the USPTO treats each party’s invention as prior art to the other’s for purposes of this test. Thus, if invention A is the same as or obvious in view of invention B (assuming B is prior art to A) and if invention B is the same as or obvious in view of invention A (assuming A is prior art to B), then interference-in-fact exists and assuming invention A is prior art with respect to invention B.

Once both of these conditions are satisfied – allowable subject matter and interference-in-fact – the USPTO issues a declaration of interference assigning an administrative patent judge (APJ) to the case and setting the proceeding into motion.

In the declaration, the subject matter of the interference is defined by one or more counts. A count takes the form of a patent claim. A common way that the USPTO makes a count is to take the language of each of the parties’ claims, in the alternative. For example, if party A has a claim that recites: “A composition comprising X and Y”; and party B has a claim that recites: “A composition comprising X and Y and Z”; the count may be: “A composition comprising X and Y or a composition comprising X and Y and Z.” All the parties’ application and/or patent claims that fall within the scope of the count(s) (that is, are the same as or obvious in view of the count) are in play for purposes of the interference. In turn, any claims that do not correspond to the count (that is, are patentably distinct from the count) are not involved in the interference; and, consequently, are not subject to any final judgment in the proceeding.

Thus, an important consideration upon receipt of a declaration of interference is whether any claims that are deemed to correspond to the count actually are patentably distinct from the count. That is, a party to an interference can have claims insulated from the interference by having those claims deemed to not correspond to the count; and, an important preliminary motion (discussed below) can be to have claims designated as not corresponding to the count.

The APJ also specifies the order of the parties as either junior or senior based on the filing dates of the applications and/or patents involved in the interference. Senior party status is afforded to the party which has the benefit of an earlier filing date, whereas the party having a later filing date is considered the junior party. A rebuttable presumption exists that the inventors made their invention in the chronological order of their effective filing dates. Thus, the APJ’s order of party status is important because it places the initial burden of proof on the junior party. That is, the burden of proof is on the junior party to prove invention prior to the senior party. The senior party accordingly has a procedural advantage. Therefore, while the US is not a first to file jurisdiction, it is still important to be the first to file because the earlier filing date can result in being senior party in an interference, and having the procedural advantages that come with being senior party.

The interference proceeding involves two stages: the preliminary motions phase and the priority phase. Either one of these may be dispositive, in that an interference may be won (or lost) during either the preliminary motions phase or the priority phase. An interference must terminate with an award of priority to one of the parties, or a decision of no interference-in-fact; it cannot terminate by mere settlement of the parties. And, any settlement agreement in an interference must be filed with the USPTO (although such agreements may be filed under seal to keep them out of the public record).

The preliminary motions phase

The first phase in an interference is the preliminary motions phase.

During the preliminary motions phase, each party in the interference is afforded an opportunity to file a number of motions for tactical and strategic purposes. These motions may, for example, attempt to redefine the count, have claims designated as corresponding to the count (as mentioned above), attack inventorship, abort the proceeding for failure of a condition precedent, or seek judgment for failure of an opposing party’s claims to meet the requirements for patentability. Accordingly, at the outset of an interference, it is important to study the other party’s prosecution and to have a firm idea of what motions can be made.

After a motion is filed, the opposing party is entitled to submit an opposition paper in rebuttal, after which the moving party is permitted to submit a paper in reply. While these motions are decided by a three judge panel of the entire Board of Patent Appeals and Interferences (that includes the APJ directly handling the particular interference), the APJ has discretion to have these motions decided in any order, or to defer decision on these motions until the conclusion of the priority phase (final hearing).

The papers declaring the interference include an initial date by which the parties are to submit a list of potential preliminary motions. Again, this demonstrates why it is critical to fully understand the other party’s prosecution at a very early date. Moreover, the APJ seeks to have this list of potential preliminary motions to see if either party is considering any potentially dispositive motions.

For instance, the APJ can decide that a motion for no interference-in-fact – which challenges one of the conditions precedent for the declaration of the interference – is a dispositive motion; namely that if the motion is granted, all other motions and further actions in the case are moot or unnecessary. The APJ may thus set an early time by which the parties must file such dispositive motions, so that they may be decided ahead of other preliminary motions.

The preliminary motions period is critical and can be outcome-determinative. For example, a successful motion may eliminate the interference and avoid the priority phase altogether, thereby saving a considerable amount of money and time. Thus, if it can be shown – and if the Board so decides – that, for example, interference-in-fact does not exist or that a party’s claims corresponding to the count are unpatentable (for instance, for failing the written description requirement, or failing the definiteness requirement, or for not being enabled, or for not being novel over the prior art or for not being nonobvious over the prior art), the interference ends.

Likewise, if it can be shown – and the Board so decides – that certain claims do not correspond to the count, those claims can be taken out of the interference proceeding. Indeed, if the claims not corresponding to the count are in an issued patent, these claims survive the interference regardless of the outcome, or if in a pending application, be the subject of a separate patent application, apart from the outcome of the interference.

Therefore, it is clear that care should be taken to wisely navigate the preliminary motions period. Indeed, if a party fails to raise an issue that could have been raised during the preliminary motions period, the party may lose its right to address that issue during final hearing. Again, this emphasises the importance of knowing your entire case at the outset of the proceeding.

The priority phase

If the interference is not terminated during the preliminary motions period, the interference moves into the priority phase. It is during this phase that the ultimate issue of which party invented first – and, thus, which party deserves the patent – is resolved.

The parties submit testimony and evidence to support their positions on priority. In order to determine priority, US statutory law requires consideration of the respective dates of conception and reduction to practice of the invention. That is, invention under US law has two components: conception and reduction to practice.

Conception is the completion of the mental part of the invention. It is the formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention. Basically, is the idea firm enough that the inventor could have – or did – convey it to someone who could have carried it out as his hands?

Reduction to practice, by contrast, is the physical element of the inventive process. There are two types of reduction to practice: actual and constructive. Actual reduction to practice occurs when the invention has been actually performed and demonstrated to be useful for its intended purpose. Constructive reduction to practice, on the other hand, is the filing of a patent application that meets the statutory disclosure requirements.

Typical evidence of conception and reduction to practice include written records, such as laboratory notebooks. The evidence, however, must be corroborated. More specifically, it is not enough to simply submit a written record by the inventor, such as an entry in a laboratory notebook as evidence. The entry must also be supported by additional testimony, of a non-inventor corroborating witness, who read and understood the written record; for instance the testimony of an individual who witnessed the notebook entry and understood its meaning on a date certain.

In short, a simple rule of thumb as to proof of invention is that inventors are presumed to be liars. In gentler terms, inventors are presumed to have an interest in the outcome of an interference proceeding. And thus, inventors’ records of invention need to be corroborated by the testimony of a non-inventor witness or non-inventor witnesses.

The date accorded a written record by an inventor is the date it is corroborated. Thus, if a notebook entry is made on 10th January, but not countersigned by a non-inventor as having been read and understood until 17th January, the latter date is the date accorded the record.

While many fear that their laboratory notebook records may not meet this incredible corroboration standard, there are other ways to demonstrate corroboration. For example, if an organisation has procedures for reporting the status of research projects to superiors or a patent department, those reports and the testimony of those who receive those reports may be corroborating documents and testimony. Consider that inventor A reports to research and development vice president Z on a monthly basis, and that there are quarterly meetings of the research group, and that there are memoranda circulated for these meetings that include a detailed discussion of the research/experiments and results, including possibly pages from laboratory notebooks. Those memoranda can become documents to corroborate inventor A’s work; and the testimony of Z and others in the research group that they received those memoranda and read and understood them on particular dates can be corroborating documents and testimony.

And one important point about analysing such memoranda and testimony: keep in mind the country from whence these documents come, and the holidays in that country. More specifically, consider an interference in which a foreign application has been accorded senior party status based on a filing date of, say, Tuesday, 4th September of a particular year due to a priority application having been filed that day in a foreign country, and a US corporation junior party trying to beat that date, with memoranda from September of that particular year and testimony stating how the memoranda was typically issued at the beginning of the first week of each month. While at first blush it may seem that the junior party has shown that the memoranda was issued prior to the filing date of the senior party, such would likely not be the case because Monday, 3rd September was the first Monday in September – a national holiday in the US – such that it is likely that the US corporation was not open for business and the memoranda was not issued, or read or understood by corroborating witnesses, on that day.

Thus there are many ways to demonstrate corroboration, but the party reviewing proof of corroboration should be objectively skeptical.

Judgment and court review

At the conclusion of the testimony period, the parties submit briefs and present arguments at a hearing before the Board. After the final hearing, the Board renders a final decision.

The final decision resolves the issues raised during the interference. The Board may, for example, enter judgment, in whole or in part, remand the interference to an APJ for further proceedings, or take any further action that is not inconsistent with the law.

If the Board enters an adverse judgment to a count against a party, ie, if that party loses, the claims of that party which correspond to the count are deemed unpatentable to that party. Further, that party is precluded from pursuing the lost claims in subsequent ex parte prosecution. These two results underscore the necessity to take an interference proceeding seriously and with extreme caution.

Finally, a party not satisfied with the Board’s decision has one month to request reconsideration from the Board. A decision on reconsideration is then made by the Board. If a party is still not satisfied with the outcome, the party may appeal for judicial review.

Judicial review may be before the Court of Appeals for the Federal Circuit (CAFC) or before a US district court. More specifically, a party dissatisfied with an adverse final decision from the Board may directly appeal to the CAFC, which has exclusive jurisdiction of an appeal from the Board with respect to patent interferences. The CAFC will review the Board’s decision anew, and will only address those issues actually raised on the record in the interference. The CAFC’s decision on appeal governs further proceedings in the interference.

Alternatively, the party receiving the adverse decision in the interference may seek judicial review in a civil action before a district court. However, judicial review in the district court is waived if the party already appealed to the CAFC. And like judicial review in the CAFC, a district court can address issues of priority and patentability, as well as decide whether the Board erred in applying the law or whether its findings were clearly erroneous.

Conclusion

The preceding is just a glimpse of the tremendous complexity of an interference action. One thing, however, is abundantly clear: an interference proceeding involves high stakes. For example, even before an interference is declared, considerable amounts of time and money have already been spent by the parties on research and patent procurement. Thus, when preparing and prosecuting a patent application, the possibility of an interference before the USPTO should be kept in mind, and that a valuable corporate asset – the patent – is ultimately on the line.