March 16, 2013: derivation under new first-to-file patent system

What Is Derivation?

Derivation occurs when one obtains an invention from another. As the US moves from a first-to-invent to a first-to-file system under the American Invents Act (AIA) on March 16, 2013, derivation is an issue in two contexts: (1) as an exception to novelty defeating acts; and (2) in derivation proceedings that replace interferences.

What Does It Mean to Move from a First-to-Invent to a First-to-File Patent System?

Patents are awarded to inventions that are not already in the public domain. In any patent system, a line is drawn at a certain date. Information that is known to the public (i.e. in the “prior art”) before that date lacks novelty and is not patentable; information that is not known before that date is novel and may be patentable. On March 16, 2013, the novelty determining line in the US will move. Under pre-AIA law, the relevant date is the date of invention and this “first-to-invent” system sometimes requires inventors to produce evidence proving their date of invention. Under the AIA, this line will be moved to the “effective filing date” of a patent application.¹

How Does Derivation Defeat a Novelty Destroying Activity?

The AIA revises 35 USC §102, and defines certain activities that destroy novelty. Section 102 states, in part, that:  

a) NOVELTY: Prior Art.___A person shall be entitled to a patent unless___

(1) the claimed invention was patented, described in a printed publication, or in public use, on sale or otherwise available to the public before the effective filing date of the claimed invention. (2) the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122 (b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.

However, some disclosures and activities derived from true inventor(s) are disqualified from being novelty defeating. For instance, two exceptions to 35 USC §102(a)(1) arise when a disclosure is made one year or less from the effective date of the claimed invention and either (A) was made by someone who obtained the disclosed subject matter directly or indirectly from the inventor(s) or (B) prior to the disclosure, the disclosed subject matter was made public by the inventor or by another who obtained the subject matter directly or indirectly from the inventor(s).²

Similarly, two exceptions to 35 USC §102(a)(2) exist when (A) the subject matter in the disclosures appearing in applications or patents  were obtained directly or indirectly from the inventors or (B) the subject matter disclosed, prior to the subject matter being effectively filed, had been publicly disclosed by the inventor(s) or by one who directly or indirectly obtained the subject matter from the inventor(s).³  

How Does One Invoke Derivation to Disqualify Prior Art?

A patent applicant can preemptively invoke the derivation exception by including a statement in the patent application regarding prior disclosures by the inventor(s).⁴ Alternatively, during prosecution, the applicant can file an affidavit under 37 CFR § 1.130 attesting to facts showing that the subject matter of the disclosure, which is the basis of the rejection, was derived from the inventor(s). If the rejection is based on a prior filed application claiming the same thing as applicant’s application, a Rule 1.130 affidavit is not appropriate; rather, applicant must invoke a derivation proceeding.

What is a Derivation Proceeding?

A derivation proceeding determines whether an inventor in an earlier application derived the claimed invention from another. The AIA creates two types of derivation proceedings: (a) application-application/patent derivation, conducted at the USPTO;⁵ and patent-patent derivation, conducted in a district court.⁶

Are Derivation Proceedings Available for All Applications and Patents?

No. The point of a derivation proceeding is to ensure that the first person to file a patent application under the first-to-file system, is the true inventor. Therefore, derivation proceedings are only available to applications/patents in which all of the claims have always been directed to subject matter having a effective filing date of March 16, 2013 or later. Applications/patents with claims with effective filing dates earlier than March 16, 2013 are governed by the pre-AIA interference rules.

How Does an Applicant Invoke a Derivation Proceeding?

An applicant⁷ (“petitioner”) invokes a derivation proceeding by filing a petition under oath at the USPTO under 35 USC § 135. This petition must be filed within one year of the first publication⁸ by the earlier applicant (“respondent”) of at least one claim to an invention that is the same (not patentably distinct) as at least one of the petitioner’s claims. The petitioner’s application must be pending. The petitioner must “set forth with particularity” the basis for alleging derivation and provide supportive evidence and demonstrate that the earlier filing was made without authorization. Evidence presented to show communication from the alleged true inventor to the alleged deriving party must be in affidavit form and be corroborated. It is unlikely that the USPTO will grant a petition if the petitioner’s claim is not in condition for allowance. If the USPTO does not grant the petition, the decision is final and not appealable. Even if the petitioner satisfies all of the requirements, the USPTO may defer granting the petition until 3 months after the issuance of a patent or until a post grant review, reexamination or inter partes review ends.

How is a Derivation Proceeding at the USPTO Conducted?

A derivation proceeding at the USPTO is conducted at the Patent Trial and Appeals Board (PTAB) according to 37 CFR § 42. The PTAB has authority to correct inventorship, as circumstances dictate, and also has authority to handle patentability issues that might arise. Parties to a derivation proceeding may settle the dispute so long as the settlement is consistent with the record and is in writing. Parties to a derivation proceeding may also opt to have the proceeding handled by arbitration. A decision by the PTAB is appealable directly to the Federal Circuit.⁹ 

How does a Patent Owner Institute a Derivation Proceeding?

A patent owner can take action against another patent owner in civil court pursuant to 35 USC§ 291. The deadline for taking such action is one year from the issuance of the first patent containing at least one claim for an invention allegedly derived from the inventor in the complaining party’s patent. The name of the individual alleged to have derived the invention shall be included in the complaint.

What is the Best Strategy for Ensuring a Positive Outcome under the AIA Derivation Statutes and Rules?

Early patent application filing is the overall best strategy under the AIA. However, in order to take advantage of the derivation rules, an applicant must maintain good records of all publications of the invention and all communications to non-inventors. A successful showing of derivation will depend upon the quality of evidence submitted to support an affidavit and/or petition. Evidence of corroboration of events and writings as well as proof of the alleged deriving party’s lack of authority to file an application on the invention are critical. We encourage clients to establish systems for tracking and documenting disclosures of their inventions. We also urge clients to monitor US and PCT application publications of others to ensure timely filing of derivation petitions.