[author: Courtenay C. Brinckerhoff]

Although derivation proceedings only will be available for U.S. patent applications with an effective filing date on or after March 16, 2013, the USPTO already has published its final rules implementing the derivation provisions of the Leahy-Smith America Invents Act (AIA). The final rules embody several changes and clarifications as compared to the proposed rules.

The Revisions to 35 USC § 135

The first-inventor-to-file provisions of the AIA phase out interference proceedings, but create new derivation proceedings to address situations where an applicant or patentee believes that the applicant or patentee of an earlier filed application derived the subject invention.

If the derivation petitioner is an applicant, the USPTO will conduct a derivation proceeding under revised 35 USC § 135. (If the derivation petitioner is a patentee, the derivation proceeding will be conducted as a civil action under 35 USC § 291(a))

35 USC § 135 Derivation Proceedings

(a) INSTITUTION OF PROCEEDING.—An applicant for patent may file a petition to institute a derivation proceeding in the Office. The petition shall set forth with particularity the basis for finding that an inventor named in an earlier application derived the claimed invention from an inventor named in the petitioner’s application and, without authorization, the earlier application claiming such invention was filed. Any such petition may be filed only within the 1-year period beginning on the date of the first publication of a claim to an invention that is the same or substantially the same as the earlier application’s claim to the invention, shall be made under oath, and shall be supported by substantial evidence. Whenever the Director determines that a petition filed under this subsection demonstrates that the standards for instituting a derivation proceeding are met, the Director may institute a derivation proceeding. The determination by the Director whether to institute a derivation proceeding shall be final and nonappealable.

(b) DETERMINATION BY PATENT TRIAL AND APPEAL BOARD.—In a derivation proceeding instituted under subsection (a), the Patent Trial and Appeal Board shall determine whether an inventor named in the earlier application derived the claimed invention from an inventor named in the petitioner’s application and, without authorization, the earlier application claiming such invention was filed. In appropriate circumstances, the Patent Trial and Appeal Board may correct the naming of the inventor in any application or patent at issue. The Director shall prescribe regulations setting forth standards for the conduct of derivation proceedings, including requiring parties to provide sufficient evidence to prove and rebut a claim of derivation.

(c) DEFERRAL OF DECISION.—The Patent Trial and Appeal Board may defer action on a petition for a derivation proceeding until the expiration of the 3-month period beginning on the date on which the Director issues a patent that includes the claimed invention that is the subject of the petition. The Patent Trial and Appeal Board also may defer action on a petition for a derivation proceeding, or stay the proceeding after it has been instituted, until the termination of a proceeding under chapter 30, 31, or 32 involving the patent of the earlier applicant.

(d) EFFECT OF FINAL DECISION.—The final decision of the Patent Trial and Appeal Board, if adverse to claims in an application for patent, shall constitute the final refusal by the Office on those claims. The final decision of the Patent Trial and Appeal Board, if adverse to claims in a patent, shall, if no appeal or other review of the decision has been or can be taken or had, constitute cancellation of those claims, and notice of such cancellation shall be endorsed on copies of the patent distributed after such cancellation.

(e) SETTLEMENT.—Parties to a proceeding instituted under subsection (a) may terminate the proceeding by filing a written statement reflecting the agreement of the parties as to the correct inventors of the claimed invention in dispute. Unless the Patent Trial and Appeal Board finds the agreement to be inconsistent with the evidence of record, if any, it shall take action consistent with the agreement. Any written settlement or understanding of the parties shall be filed with the Director. At the request of a party to the proceeding, the agreement or understanding shall be treated as business confidential information, shall be kept separate from the file of the involved patents or applications, and shall be made available only to Government agencies on written request, or to any person on a showing of good cause.

(f) ARBITRATION.—Parties to a proceeding instituted under subsection (a) may, within such time as may be specified by the Director by regulation, determine such contest or any aspect thereof by arbitration. Such arbitration shall be governed by the provisions of title 9, to the extent such title is not inconsistent with this section. The parties shall give notice of any arbitration award to the Director, and such award shall, as between the parties to the arbitration, be dispositive of the issues to which it relates. The arbitration award shall be unenforceable until such notice is given. Nothing in this subsection shall preclude the Director from determining the patentability of the claimed inventions involved in the proceeding.

The Final Rules

The Final Rules are included in new Subpart E of Part 42 of 37 CFR. I will not reproduce all of the rules here, but this table of contents provides an overview of specific topics covered by the rules:

Subpart E – Derivation
General
42.400 Procedure; pendency.
42.401 Definitions.
42.402 Who may file a petition for a derivation proceeding.
42.403 Time for filing.
42.404 Derivation fee.
42.405 Content of petition.
42.406 Service of petition.
42.407 Filing date.
Instituting Derivation Proceeding
42.408 Institution of derivation proceeding.
After Institution of Derivation Proceeding
42.409 Settlement agreements.
42.410 Arbitration.
42.411 Common interests in the invention.
42.412 Public availability of board records.

Some of the key requirements set forth in the rules and commentary are highlighted below.

Who can be a derivation petitioner?

  • By statute and rule, a derivation petitioner must be an applicant for patent.
  • In accordance with other requirements, a derivation petitioner must have filed its own patent application (including a reissue application) that names the alleged “true” inventor and that claims the same or substantially the same invention as that claimed by the respondent, and the petitioner’s application must be pending.
  • In accordance with the purpose of a derivation proceeding, a derivation petitioner must be petitioning for a determination that another party named in an earlier-filed patent application (i) derived a claimed invention from an inventor named in the petitioner’s application and (ii) filed the earlier application without authorization.

When must a derivation petition be filed?

  • By statute and rule, a derivation petition must be filed within the one-year period beginning on the date of the first publication of a claim to an invention that is the same or substantially the same as the earlier application’s claim to the allegedly derived invention.
  • According to the Federal Register Notice, the “first publication” can be the publication of a PCT application that designates the U.S., a U.S. application, or a U.S. patent of the respondent. The USPTO does not consider any amended claims filed in a published application to constitute a “first publication” even though the amended claims could be viewed by members of the public.
  • According to the Federal Register Notice, the one year period includes the anniversary date of the first publication (avoiding the difficult construction of similar language in the patent term extension application context) and can be extended if the deadline falls on a weekend or Federal Holiday within the District of Columbia.

What must a derivation petition establish?

  • By statute and rule, a derivation petition must show the following:
    ~ standing (i.e., that the petitioner is an applicant and that the petition is filed within the statutory time period)
    ~ that the petitioner has at least one claim that is
    (i) The same or substantially the same as the respondent’s claimed invention; and
    (ii) The same or substantially the same as the invention disclosed to the respondent.
    (According to the Federal Register Notice, “the same or substantially the same means patentably indistinct.”)
    ~ that a claimed invention was derived from an inventor named in the petitioner’s application, and that the inventor from whom the invention was derived did not authorize the filing of the earliest application claiming such invention
    ~ for each of the respondent’s claims at issue
    (i) Show why the claimed invention is the same or substantially the same as the invention disclosed to the respondent, and(ii) Identify how the claim is to be construed.

These showings must be supported by substantial evidence, including at least one affidavit addressing communication of the derived invention and lack of authorization that, if unrebutted, would support a determination of derivation. The showing of communication must be corroborated.

The commentary in the Federal Register Notice encourages petitioners to “set forth their entire case and supporting evidence in their petitions.”

What happens after a derivation petition is filed?

  • By statute and rule, a derivation petition is reviewed by the Board of Patent Trials and Appeals.
  • As set forth in the Federal Register Notice, only petitions that satisfy the petition requirements will be accorded a filing date. The board may issue a notice of incomplete petition setting a time period of the earlier of one month or the expiration of the statutory deadline to file a compliant petition.
  • By statute and rule, an Administrative Judge at the Board of Patent Trials and Appeals will decide whether to institute a derivation proceeding. By statute and rule, that decision is non-appealable.

By statute, the USPTO may defer acting on a petition until three months after a patent is granted. According to the Federal Register Notice, the USPTO plans to take this flexibility even further:

Generally, once the petition has been accorded a filing date, the Office will hold the petition until the petitioner’s claim is otherwise in condition for allowance.

What happens in a derivation proceeding?

  • Derivation proceedings will be conducted in accordance with the new Rules of Practice for Trials before the board.
  • By statute and rule, the board will determine whether an inventor named in the earlier application derived the claimed invention from an inventor named in the petitioner’s application and, whether the earlier application was filed without authorization of the “true” inventor.
  • By statute and rule, the board may correct inventorship of one or more of the involved applications/patents. A party may seek correction of inventorship in accordance with the motions practice of the Rules of Practice for Trials.
  • By statute and rule, the board may refuse one or more claims in one or more of the involved applications/patents.

Arbitration and Settlement

  • By statute and rule, the parties can resolve any issue by binding arbitration, but the board will not be bound by any determination of patentability.
  • By statute and rule, the parties can terminate a derivation proceeding by filing a written statement reflecting a settlement agreement as to the correct inventorship of the claimed invention at issue.

Costly and Complex

The proposed rules highlight the costs and complexity of derivation proceedings. Applicants who believe that their inventions have been “stolen” may want to act promptly to gather appropriate evidence (including corroborating evidence) and should consider monitoring WIPO and USPTO patent application publications for the “first publication” of a derived claim. The proposed rules and commentary in the Federal Register notice also indicate that even an applicant who is confident of prevailing in a derivation proceeding may want to consider filing its own application as early as possible.

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