Addressing the issue of whether the patent owner had provided sufficient evidence of prior conception to establish inurement by third-party activity, the US Court of Appeals for the Federal Circuit reversed and remanded a Patent Trial and Appeal Board (PTAB or Board) decision, instructing the PTAB to determine whether the patent owner presented sufficient evidence that a prototype embodied all of the claim limitations. NFC Tech., LLC v. Joseph Matal, Case No. 16-1808 (Fed. Cir., Sept. 20, 2017) (Lourie, J).

NFC owns a patent related to near-field communication devices. HTC requested inter partes review of the patent, and the PTAB instituted review. During the proceeding, NFC presented evidence of a prototype to antedate the prior art relied upon by HTC. The PTAB found that there was insufficient corroboration to establish that the inventor conceived the claimed invention before ordering the prototype from a third party, or that the third party created the prototype by following inventor’s instructions. The PTAB concluded the claims were not antedated by the prototype and were therefore obvious over prior art. NFC appealed.

On appeal, the Federal Circuit conducted de novo review of the inurement issue and found that the PTAB’s findings and conclusions regarding the evidence presented by NFC were either inconsistent or failed to adequately consider evidence corroborating the inventor’s testimony. In particular, the Federal Circuit found that (1) contrary to the PTAB’s finding, a data sheet purportedly describing the claimed invention at a high level identified the inventor as the author; (2) the PCB layout for the prototype generated by the third party listed the inventor’s company, thus corroborating the inventor’s account of product development and later fabrication of the prototype; and (3) contemporaneous written communication corroborated the inventor’s account that he directed and communicated to the third party for fabrication of the prototype.

The Federal Circuit concluded that conception by the inventor was established because, under the rule of reason, the inventor’s testimony was properly corroborated by the totality of evidence. Because the PTAB did not decide whether the prototype embodied the claimed invention, however, the Court remanded that issue for the PTAB to decide before it could determine whether the patent owner antedated the prior art.