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Federal Circuit Corrects PTAB’s “Too Exacting” Diligence Standard

On November 15, 2016, a split panel of the Federal Circuit, consisting of Judges Moore and O’Malley, ruled that the antedating standard demanded by the Patent Trial and Appeal Board, requiring a “continuous exercise of reasonable diligence,” was too exacting and in conflict with Federal Circuit precedent.  Slip Op. at 5-6 (emphasis in the original).

The appeal, Perfect Surgical Techniques, Inc. v. Olympus America, Inc. (Appeal No. 2015-2043), arose from the Board’s inter partes review (“IPR”) decision holding each claim at issue in U.S. Patent No. 6,030,384 (“’384 patent”) unpatentable as anticipated or obvious over Japanese Application Publication No. H10-33551 A (“JP ’551”). In so finding, the Board determined that Perfect Surgical Techniques (“PST”) failed to antedate JP ’551 because it had not proven that the ’384 patent named inventor, Dr. Nezhat, was reasonably diligent in reducing his invention to practice. The Board criticized PST for not showing “sufficiently specific…facts and dates” of Dr. Nezhat’s diligence during specific portions of the diligence period and ultimately concluded that PST failed to demonstrate Dr. Nezhat’s “continuous exercise of reasonable diligence for the entire critical period.”  Slip Op. at 6.

Writing for the majority, Judge Moore faulted the Board for repeatedly characterizing PST’s burden as requiring proof of Dr. Nezhat’s “continuous exercise of reasonable diligence.”  Slip Op. at 6 (emphasis in original). The Court explained that a “patent owner need not prove the inventor continuously exercised reasonable diligence throughout the critical period; it must show there was reasonably continuous diligence.” Slip Op. at 7.  The panel stated that the diligence analysis simply seeks to assure that, in light of the evidence as a whole, “the invention was not abandoned or unreasonably delayed,” which is done by “weigh[ing] the collection of evidence over the entire critical period.  Slip Op. at 8.

According to the Federal Circuit, by fixating on specific portions of the diligence period where PST allegedly provided no evidence of Dr. Nezhat’s activities, the Board did not properly weigh PST’s evidence under the rule of reason.  Id.  Believing the Board compounded its error, the panel further criticized the Board for summarily dismissing the activities of Dr. Nezhat’s patent attorney, Mr. Heslin, affirming prior Federal Circuit precedent that an “attorney’s work in preparing a patent application is evidence of an inventor’s diligence.” Slip Op. at 10. The majority went as far as to say that the “Board was required to weigh Mr. Heslin’s testimony and evidence of activity as an extension of Dr. Nezhat’s.”  Slip Op. at 10-11.

In light of these findings, the panel vacated and remanded the case back to the Board to decide “whether all of PST’s evidence, considered as a whole and under a rule of reason, collectively corroborates Dr. Nezhat’s testimony that he worked reasonably continuously within the confines of his and Mr. Heslin’s occupations to diligently finalize the patent application during the 81-day critical period.”  Slip Op. at 13.

Judge Schall dissented from the majority, first finding that, in light of Federal Circuit and C.C.P.A. precedent, the Board in fact did apply the correct standard in evaluating Dr. Nezhat’s diligence. Dissent Slip Op. at 9. He then concluded that a 19-day stretch of inactivity during the diligence period when Dr. Nezhat controlled the draft application constituted substantial evidence to support the Board’s ultimate finding that Dr. Nezhat failed to demonstrate reasonable diligence during the entire critical period. Dissent Slip Op. at 16.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume VI, Number 327


About this Author

Brad Scheller Patent Litigation Attorney Mintz Law Firm

Brad Scheller is a trial attorney who focuses his patent litigation practice on representing clients in the automotive devices, thermoplastics, electronic components and consumer products industries in federal district court, before the Patent Trial and Appeal Board and at the International Trade Commission. With a background in mechanical engineering and over 14 years of experience practicing law, Brad has successfully represented patent owners in enforcing their rights against infringers and protecting those rights from challenges of invalidity, and has also successfully defended and...

Vincent M. Ferraro, Mintz Levin, Patent Litigation Licensing & Technology Transactions Strategic IP Monetization & Licensing IPRs & Other Post-Grant Proceedings Federal District Court

Vincent’s practice focuses on patent disputes in Federal District Courts and before the U.S. Patent Trial and Appeal Board. With over 10 years of experience, Vincent has handled patent disputes involving telecommunications, cellphone and smartphone technology, digital photography, image processing, electronic circuitry, electrical components, computer software and hardware, LCD technology, data mining, financing, mechanical devices, medical devices and implants, consumer products, GPS technology, e-commerce, and Internet security. In patent litigation cases, he guides clients through all phases of the case, including pre-suit due diligence, claim construction, discovery, depositions, hearings, and trial.

Vincent also has significant experience representing clients in post-grant proceedings before the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office, including inter partes review (IPR) and covered business method (CBM) patent review proceedings. He has represented both petitioners and patent owners in these proceedings.

Vincent also regularly counsels clients on their IP portfolio strategies and assists them in developing design strategies for their products. He works closely with inventors, analyzes new inventions, drafts U.S. patent applications, and prosecutes patents before the U.S. Patent and Trademark Office in various high-technology fields and on consumer products. He also renders patent freedom-to-operate and validity opinions.