Under the America Invents Act, the Patent Trial and Appeal Board has been busy handling inter partes review (IPR), covered business method review (CBM), and post-grant review (PGR) proceedings.  Petitioners have filed thousands of petitions (nearly all for IPRs), the Board has instituted thousands of trials, and the Board has rendered thousands of final written decisions.

By contrast, another AIA proceeding, derivation (DER), has received less attention.  Since derivation proceedings became available in March 2013, petitioners have filed only fourteen derivation petitions and, until recently, the Board has not instituted any derivation trials, much less rendered a final written decision in one.

That ended last month when the Board instituted its first derivation trial on March 21, 2018, in Andersen Corp v. GED Integrated Solutions, Inc., DER2017-00007, a dispute over a window component.  With the Board instituting the Andersen trial, practitioners have shown a renewed interest in derivation proceedings.  This post provides a background on derivation proceedings, summarizes the Board's Andersen institution decision, and outlines things to look for as the Andersen trial proceeds.

Background on Derivation Proceedings

Derivation proceedings address originality of claimed subject matter -- who invented it.  The petitioner must have a pending patent application and file the petition within one year of the grant of the patent containing the challenged claim or one year of the publication of the earlier application containing that claim, whichever is earlier.

In the proceeding, the petitioner must show that (1) the respondent derived the invention from the petitioner, and (2) the respondent filed an application without authorization.

Derivation is not a new concept, but rather was an issue that could be raised in the Office's oldest (and now defunct) contested proceeding, the interference.  Interference proceedings addressed priority of claimed subject matter -- who first invented it.  While the AIA shift to a first-to-file regime did away with interference proceedings for patents with more recent effective filing dates, the Board explained in its first decision denying institution of a derivation trial that it will apply derivation case law as it developed in the interference context to derivation proceedings.  Catapult Innovations Pty Ltd. v. adidas AG, DER2014-00002, Paper 19 (PTAB July 18, 2014).

To establish derivation, the petitioner must prove (1) prior conception of the challenged claim, and (2) communication of the conception to the respondent.  The conception must include all limitations of the claim, and inventor testimony about conception and communication must be corroborated.  To remedy derivation, the Board may correct the naming of inventors in the challenged application or patent.

Andersen Institution Decision

On December 16, 2016, Andersen filed a derivation petition asserting derivation by GED of subject matter recited in claims 60-81 of Andersen's U.S. Patent Application No. 15/058,862, filed March 2, 2016, and claims 1-22 of GED's U.S. Patent No. 9,428,953.  The '862 application and '953 patent relate to spacer frames for insulated glass units.

The Board found Andersen's petition met the requirements for a derivation trial.  The Board also found that Andersen's petition was timely, as the application underlying the '953 patent was filed May 4, 2015, and published December 17, 2015.  The Board further found that Andersen made the threshold showing of derivation to institute a trial.  At the institution phase, the petitioner must provide substantial evidence of derivation, that is, "evidence which a reasonable person might accept as adequate to support a conclusion."  As part of its petition, Andersen submitted the affidavit of Mr. Oquendo, the named inventor of the '862 application.  The Board found that the Oquendo affidavit and supporting exhibits was substantial evidence of the two elements of derivation -- prior conception and communication.

With respect to conception, Mr. Oquendo testified that while he worked for Silver Line, an Andersen subsidiary, he conceived of the claimed spacer frame, developed a prototype of the frame in March 2009 (working with two spacer frames sold by GED), and developed CAD drawings of the frame by June 2009.  Mr. Opquendo also testified that he sent the CAD drawings to five other individuals associated with Silver Line.  With respect to communication, Mr. Oquendo testified that he had several interactions, including email correspondence, with GED beginning in March 2009 in which he communicated his spacer frame design.

The Board also found that the Oquendo affidavit and one supporting exhibit were substantial evidence that GED filed the application that lead to the '953 patent without Andersen's authorization.  In this regard, Mr. Oquendo testified about an exhibit titled "Agreement on Confidentiality."

Another requirement for a derivation petition is that at least one of the petitioner's pending claims be "the same or substantially the same," i.e., patentably indistinct, as the respondent's challenged claim, and that the challenged claim be "the same or substantially the same" as the invention disclosed by the petitioner to the respondent.

The Board found Andersen met this requirement too.  Andersen asserted that claims 60-81 of the '862 application were identical to claims 1-22 of the '953 patent and the Board agreed.  Andersen also presented a mapping of Mr. Opqendo's evidence of conception and communication to claims 1-22 of the '953 patent.  With this mapping, the Board concluded that Andersen had made a sufficient showing of derivation for each of the 22 challenged claims.  Thus, in effect, the Board instituted 22 grounds of derivation.

Things to Look for in the Andersen Trial

On the same day that the Board instituted trial, the Board issued a scheduling order, which provides the dates for the Andersen trial through November:

• April 17 Initial Conference Call
• June 13 Respondent's response to the petition
• September 5 Petitioner's reply to respondent's response
• October 3 Observations regarding cross-examination, motion to exclude evidence, and request for oral argument
• October 24 Response and opposition
• November 7 Reply to opposition
• November 14 Oral argument

There are several things to look for as the Andersen trial proceeds.  First, it will be interesting to see how the parties' substantive arguments develop.  At the trial phase, Andersen must prove derivation and no authorization by a preponderance of the evidence.  Earlier in the case, the parties argued whether the Board should address Andersen's derivation claim now or wait until examination of the '862 application is complete.  In its brief, GED argued that the '862 claims were unpatentable over prior art and under 35 U.S.C. § 112, and that the subject matter at issue dates back to a GED patent that issued in 1994.  Will GED pursue either of these theories in the trial?

Second, it will be interesting to see how much discovery the parties seek and how much discovery the Board permits in the proceeding.  Although derivation proceedings use many of the same trial procedures as other AIA proceedings, the Andersen trial is the first time any of these procedures will be used in the derivation context.  And the Andersen trial might provide insight to what extent, if at all, discovery in derivation proceedings will differ from discovery that occurred in interference proceedings that raised derivation.

Andersen might also impact other derivation petitions.  There are currently three other derivation petitions pending before the Board, and Andersen could affect the disposition of them.  Also, now that the Board has given practitioners an example of a derivation petition that resulted in an instituted trial, it will be interesting to see if the number of derivation petitions increases.

Patent Docs will monitor the Andersen trial and provide updates as the case progresses.