Questions of Inventorship and Pre-AIA Pitfalls: A Patent-Holder’s Earlier-Filed Patent May Anticipate A Later-Filed Patent Application When the Inventors Differ

February 13th, 2019

Summary: A patent-holder’s own pre-AIA patent may be anticipatory prior art, which invalidates a patent that issued from a later-filed patent application, under pre-AIA 35 U.S.C. § 102(e) if the inventors are not the same in both patents.

When an invention is developed by a team, apportioning credit can be difficult.  Nonetheless, the inventors, applicants, or their counsel must decide who to designate as an inventor during the patent-application process.  Care should be taken in this decision, since it can directly affect the validity of any patent that ultimately issues from the application.  The Court of Appeals for the Federal Circuit’s recent decision in Duncan Parking Technologies., Inc. v. IPS Group., Inc., No. 18-1205 (Fed. Cir. Jan. 31, 2019), highlights this point.  Specifically, because the same inventors were not identified in two commonly-owned patents, the Federal Circuit held that an earlier-filed patent may anticipate and invalidate several claims of the later-filed patent. Id. at 3, 18.

In Duncan, the Federal Circuit evaluated two patents owned by IPS Group, Inc. (IPS)—U.S. Patent No. 8,595,054 (filed December 4, 2006) (’054 patent) and U.S. Patent No. 7,854,310 (filed Feb. 27, 2008) (’310 patent)—related to devices for retrofitting parking meters to accept credit cards. Duncan, slip op. at 3.  Even though the ’054 patent does not share priority or a common specification with the ’310 patent, both patents include similar figures and describe devices/parking meters that are credit card-enabled, solar-powered, and used for a single parking space. Id. at 5-13.  The initial concept for the parking meter/device in the ’054 patent and the ’310 patent was attributed to IPS’s CEO, Dave King (named as a co-inventor for both patents). Id. at 3-4.  In implementing his initial concept, King stated that he had “two big hurdles,” including “integrating the electronic components and designing software and a controller to coordinate the electrical system.” Id. at 4.  IPS’s Chief Technical Officer, Adam Schwarz, helped address that integration hurdle. Id. at 4.  For instance, Schwarz created a block diagram illustrating the electrical connections between the components. Id. at 4-5.  A modified version of this diagram was included in the ’054 patent to show “[t]he various electrical and other components of the parking meter device.” Id. at 5 (quoting ’054 patent at col. 4 ll. 15-16).  Schwarz was eventually listed as a co-inventor on the ’054 patent, but not on the ’310 patent. Id. at 5, 7.

In July 2015, IPS filed suit against Duncan Parking Technologies (DPT), alleging DPT’s parking meter device infringed the ’054 and ’310 patents. Id. at 10.  In turn, DPT, petitioned the Patent Trial and Appeal Board (the Board) for inter partes review of the ’310 patent, alleging that various claims of the ’310 patent were anticipated by the ’054 patent under pre-AIA 35 U.S.C. § 102(e). Id. at 11On appeal, IPS did not dispute that the ’054 patent discloses each element of the ’310 patent. Id. at 14.  Instead, IPS argued that the anticipatory portion of the ’054 patent was invented solely by King and was therefore not prior art to the ’310 patent under § 102(e). Id.

For patent applications claiming a priority date before March 16, 2013, pre-AIA § 102(e) specifies that an application may be anticipated if the invention was described in “a patent granted on an application for patent by another filed in the United States before the invention by the applicant for patent.” 35 U.S.C. § 102(e) (2011) (emphasis added).  In this instance, “by another” means “that an application issued to the same inventive entity cannot qualify as § 102(e) prior art.” EmeraChem Holdings, LLC v. Volkswagen Grp. of Am., Inc., 859 F.3d 1341, 1345 (Fed. Cir. 2017) (citing Riverwood Int’l Corp. v. R.A. Jones & Co., 324 F.3d 1346, 1355-56 (Fed. Cir. 2003)).  If one joint inventor of the anticipatory disclosure in the earlier-filed application is not listed as an inventor for the later-filed application then the earlier-filed application is “by another” under § 102(e). See Duncan, slip op. at 15 (citing In re Land, 368 F.2d 866, 879, 54 C.C.P.A. 806 (CCPA 1966)).  Determining whether a reference patent is “by another” under § 102(e) requires a three-step evaluation to “(1) determine what portions of the reference patent were relied on as prior art to anticipate the claim limitations at issue, (2) evaluate the degree to which those portions were conceived ‘by another,’ and (3) decide whether that other person’s contribution is significant enough, when measured against the full anticipating disclosure, to render him a joint inventor of the applied portions of the reference patent.” Id. at 15-16.

Here, the Federal Circuit held the Board “clearly erred” by concluding that the ’054 patent did not anticipate the ’310 patent under § 102(e). Id. at 14.  The court noted that the ’054 patent “discloses each of the electrical components claimed in the ’310 patent, along with a detailed diagram showing how each component is connected.” Id. at 16.  To the extent those portions were conceived by Schwarz and not King, the Federal Circuit noted that “the question is whether Schwarz conceived those elements as they were disclosed in the ’054 patent.” Id. at 17.  In addressing that question, the court noted that “[i]t is clear that Schwarz conceived much of the ’054 patent’s electrical system” and the connections therein. Id. at 17-18.  As described by the court, Schwarz’s contributions were significant. Id. at 18.  In fact, he at least helped solve one of the “two big hurdles” identified by King as needing to be overcome in order to implement the initial concept for the invention. Id.

For these reasons, the Federal Circuit held that the anticipatory embodiment of the parking meter disclosed in the ’054 patent was the joint invention of King and Schwarz, thereby establishing the ’054 patent as prior art under pre-AIA 35 U.S.C. § 102(e) against the ’310 patent. Id. at 18.

Takeaway: It should be noted that changes in the law under the America Invents Act creates an exception wherein a patent issuing from an earlier-filed patent application that was not published within one year of the priority date of a later-filed application cannot be anticipatory prior art to that later-filed application that names a different inventor if [i] the patent or earlier-filed patent application was not published more than one year before the effective filing date of the later-filed application; and [ii] both the patent and the later-filed application are owned by the same person or subject to an obligation of assignment to the same person. See 35 U.S.C. § 102(b) (2013).  Nonetheless, even for post-AIA patents or applications, it may be helpful to consider issues of joint inventorship since, for example, the omission of a joint inventor may result in a determination that a patent issued from the later-filed application is invalid.