Frank E. Paulik and Robert G. Schultz v. Nabil Rizkalla and Charles N. Winnick

760 F.2d 1270, 226 U.S.P.Q. (BNA) 224, 1985 U.S. App. LEXIS 14775

• Court: Court of Appeals for the Federal Circuit
• Decided: April 22, 1985
• Docket: Appeal 84-787; Interference 99764
• Status: Published

Opinions

PAULINE NEWMAN, Circuit Judge.

This appeal is from the decision of the United States Patent and Trademark Office Board of Patent Interferences (Board), awarding priority of invention to the senior party Nabil Rizkalla and Charles N. Win-nick (Rizkalla), on the ground that the junior party and de facto first inventors Frank E. Paulik and Robert G. Schultz (Paulik) had suppressed or concealed the invention within the meaning of 35 U.S.C. § 102(g). We vacate this decision and remand to the Board.

I.

Rizkalla’s patent application has the effective filing date of March 10, 1975, its parent application. Paulik’s patent application was filed on June 30, 1975. The interference count is for a catalytic process for producing alkylidene diesters such as ethylidene diacetate, which is useful to prepare vinyl acetate and acetic acid. Paulik presented deposition testimony and exhibits in support of his claim to priority; Rizkalla chose to rely solely on his filing date.

The Board held and Rizkalla does not dispute that Paulik reduced the invention of the count to practice in November 1970 and again in April 1971. On about November 20, 1970 Paulik submitted a “Preliminary Disclosure of Invention” to the Patent Department of his assignee, the Monsanto Company. The disclosure was assigned a priority designation of “B”, which Paulik states meant that the case would “be taken up in the ordinary course for review and filing.”

Despite occasional prodding from the inventors, and periodic review by the patent staff and by company management, this disclosure had a lower priority than other patent work. Evidence of the demands of other projects on related technology was offered to justify the patent staffs delay in acting on this invention, along with evidence that the inventors and assignee continued to be interested in the technology and that the invention disclosure was retained in active status.

In January or February of 1975 the assignee’s patent solicitor started to work toward the filing of the patent application; drafts of the application were prepared, and additional laboratory experiments were requested by the patent solicitor and were duly carried out by an inventor. The evidentiary sufficiency of these activities was challenged by Rizkalla, but the Board made no findings thereon, on the basis that these activities were not pertinent to the determination of priority. The Board held that “even if Paulik demonstrated continuous activity from prior to the Rizkalla effective filing date to his filing date ... such would have no bearing on the question of priority in this case”, and cited 35 U.S.C. § 102(g)¹ as authority for the statement that “[w]hile diligence during the above noted period may be relied upon by one alleging prior conception and subsequent reduction to practice, it is of no significance in the case of the party who is not the last to reduce to practice”. The Board thus denied Paulik the opportunity to antedate Rizkalla, for the reason that Paulik was not only the first to conceive but he was also the first to reduce to practice.

The Board then held that Paulik’s four-year delay from reduction to practice to his filing date was prima facie suppression or concealment under the first clause of section 102(g), that since Paulik had reduced the invention to practice in 1971 and 1972 he was barred by the second clause of section 102(g) from proving reasonable diligence leading to his 1975 filing, and that in any event the intervening activities were insufficient to excuse the delay. The Board refused to consider Paulik’s evidence of renewed patent-related activity.

II.

The Board’s decision converted the case law’s estoppel against reliance on Paulik’s early work for priority purposes, into a forfeiture encompassing Paulik’s later work, even if the later work commenced before the earliest activity of Rizkalla. According to this decision, once the inference of suppression or concealment is established, this inference cannot be overcome by the junior party to an interference. There is no statutory or judicial precedent that requires this result, and there is sound reason to reject it.

United States patent law embraces the principle that the patent right is granted to the first inventor rather than the first to file a patent application.² The law does not inquire as to the fits and starts by which an invention is made. The historic jurisprudence from which 35 U.S.C. § 102(g) flowed reminds us that “the mere lapse of time” will not prevent the inventor from receiving a patent. Mason v. Hepbum, 13 App.D.C. 86, 91, 1898 C.D. 510, 513 (1898). The sole exception to this principle resides in section 102(g) and the exigencies of the priority contest.

There is no impediment in the law to holding that a long period of inactivity need not be a fatal forfeiture, if the first inventor resumes work on the invention before the second inventor enters the field. We deem this result to be a fairer implementation of national patent policy, while in full accord with the letter and spirit of section 102(g).

The Board misapplied the rule that the first inventor does not have to show activity following reduction to practice to mean that the first inventor will not be allowed to show such activity. Such a showing may serve either of two purposes: to rebut an inference of abandonment, suppression, or concealment; or as evidence of renewed activity with respect to the invention. Otherwise, if an inventor were to set an invention aside for “too long” and later resume work and diligently develop and seek to patent it, according to the Board he would always be worse off than if he never did the early work, even as against a much later entrant.

Such a restrictive rule would merely add to the burden of those charged with the nation’s technological growth. Invention is not a neat process. The value of early work may not be recognized or, for many reasons, it may not become practically useful, until months or years later. Following the Board’s decision, any “too long” delay would constitute a forfeiture fatal in a priority contest, even if terminated by extensive and productive work done long before the newcomer entered the field.

We do not suggest that the first inventor should be entitled to rely for priority purposes on his early reduction to practice if the intervening inactivity lasts “too long,” as that principle has evolved in a century of judicial analysis. Precedent did not deal with the facts at bar. There is no authority that would estop Paulik from relying on his resumed activities in order to pre-date Rizkalla’s earliest date. We hold that such resumed activity must be considered as evidence of priority of invention. Should Paulik demonstrate that he had renewed activity on the invention and that he proceeded diligently to filing his patent application, starting before the earliest date to which Rizkalla is entitled — all in accordance with established principles of interference practice — we hold that Paulik is not prejudiced by the fact that he had reduced the invention to practice some years earlier.

III.

This appeal presents a question not previously treated by this court or, indeed, in the historical jurisprudence on suppression or concealment. We take this opportunity to clarify an apparent misperception of certain opinions of our predecessor court which the Board has cited in support of its holding.

There is over a hundred years of judicial precedent on the issue of suppression or concealment due to prolonged delay in filing. From the earliest decisions, a distinction has been drawn between deliberate suppression or concealment of an invention, and the legal inference of suppression or concealment based on “too long” a delay in filing the patent application. Both types of situations were considered by the courts before the 1952 Patent Act, and both are encompassed in 35 U.S.C. § 102(g). The result is consistent over this entire period— loss of the first inventor’s priority as against an intervening second inventor— and has consistently been based on equitable principles and public policy as applied to the facts of each case.

The earliest decisions dealt primarily with deliberate concealment. In 1858, the Supreme Court in Kendall v. Winsor, 62 U.S. (21 How.) 322, 328, 16 L.Ed. 165 (1858) held that an inventor who “designedly, and with the view of applying it indefinitely and exclusively for his own profit, withholds his invention from the public” impedes “the progress of science and the useful arts”.

In Mason v. Hepburn, supra, the classical case on inferred as contrasted with deliberate suppression or concealment, Hepburn was granted a patent in September 1894. Spurred by this news Mason filed his patent application in December 1894. In an interference, Mason demonstrated that he had built a working model in 1887 but showed no activity during the seven years thereafter. The court held that although Mason may have negligently rather than willfully concealed his invention, the “indifference, supineness, or wilful act” of a first inventor is the basis for “the equity” that favors the second inventor when that person made and disclosed the invention during the prolonged inactivity of the first inventor. 13 App.D.C. at 96, 1898 C.D. at 517.

Other early cases affirmed these principles. Thomson v. Weston, 19 App.D.C. 373, 381, 1902 C.D. 521, 527, (1902) discussed the situation where a second inventor appeared “during the period of inactivity and concealment”. The decisions are consistent, and were codified in section 102(g) of the 1952 Patent Act.

The legislative history of section 102(g) makes clear that its purpose was not to change the law. As described in H.R.Rep. No. 1923, 82d Cong., 2d Sess. 17-18 (1951), section 102(g) “retains the present rules of [the case] law governing the determination of priority of invention”. The pre-1952 cases all dealt with situations whereby a later inventor made the same invention during a period of either prolonged inactivity or deliberate concealment by the first inventor, after knowledge of which (usually, but not always, by the issuance of a patent to the second inventor) the first inventor was “spurred” into asserting patent rights, unsuccessfully.

The decisions after the 1952 Act followed a similar pattern,³ as the courts considered whether to extinguish a first inventor’s priority under section 102(g). The cases show either intentional concealment or an unduly long delay after the first inventor’s reduction to practice. Some cases excused the delay, and some did not. A few examples will illustrate the application of the statute:

In Gallagher v. Smith, 206 F.2d 939, 41 C.C.P.A. 734, 99 USPQ 132 (1953), a seven-year delay (from 1938 to 1945) was excused in the absence of evidence of actual concealment or suppression, as against a later applicant who had a reduction to practice in 1943. Note that the applicant who had delayed was nonetheless the first to file. In Schnick v. Fenn, 277 F.2d 935, 47 C.C. P.A. 1174, 125 USPQ 567 (1960), a lapse of nineteen months was excused absent intentional concealment or suppression and in view of the mitigating circumstances of uncertain market demand for the invention. In Woofter v. Carlson, 367 F.2d 436, 54 C.C.P.A. 917, 151 USPQ 407 (1966), an eight-year delay after Carlson’s reduction to practice was not excused, on evidence that Woofter’s entry during this period had spurred Carlson into filing. The court found that there was deliberate concealment, and held that “[u]nder these circumstances, [Carlson] has forfeited its right to a patent”. 367 F.2d at 448, 54 C.C.P.A. at 931, 151 USPQ at 416.

In Brokaw v. Vogel, 429 F.2d 476, 57 C.C.P.A. 1296, 166 USPQ 428 (1970), Vogel filed a patent application in 1963, having reduced the invention to practice in 1957. Brokaw filed in 1959. The court observed that Vogel remained inactive until he learned of Brokaw’s issued patent, and that “there is nothing to show that any step was ever taken by Vogel during that time to make the invention available to the public and nothing tending to excuse Vogel’s inaction.” 429 F.2d at 480, 57 C.C.P.A. at 1301, 166 USPQ at 430. In Palmer v. Dudzik, 481 F.2d 1377, 178 USPQ 608 (CCPA 1973), a first inventor’s willful concealment of his invention, which continued until news of the junior party’s independent invention spurred him to action, required “forfeiture” of his right to the patent in favor of the later inventor, even though in this case the first inventor got to the Patent Office first.

Young v. Dworkin, 489 F.2d 1277, 180 USPQ 388 (CCPA 1974), held that a 27-month delay amounted to suppression. Young had refrained from filing a patent application until he had acquired the machines to practice his invention commercially. Focusing on the character of Young’s activity between his reduction to practice and filing date, the court found that during Young’s prolonged period of inactivity Dworkin conceived the invention and filed his patent application. In concurrence, Judge Rich observed that “it is not the time elapsed that is the controlling factor but the total conduct of the first inventor,” adding “[i]t may also be a relative matter, taking into account what the later inventor is doing too.” 489 F.2d at 1285, 180 USPQ at 395.

In Peeler v. Miller, 535 F.2d 647, 190 USPQ 117 (CCPA 1976), relied on by the Board, Miller was inactive during the four-year period following his reduction to practice, and the proffered excuse (that work of higher priority was done in other areas) was found inadequate. As noted by the Board, there are many similarities with the case at bar. The difference, however, is significant: Peeler had entered the field and filed his patent application while Miller remained dormant; Rizkalla entered the field, according to the record before us, after Paulik had renewed activity on the invention.

In Horwath v. Lee, 564 F.2d 948, 195 USPQ 701 (CCPA 1977), the court found an equitable estoppel based on Horwath’s “suppression or concealment” of the invention for 66 months. Horwath filed in December 1971, and traced his invention back to an invention disclosure drawn up in April 1967 for which research had begun in November 1965. Attempting to account for the delay between the invention disclosure and his patent application, Horwath presented evidence of research to perfect his invention in 1971, well after Lee had filed in 1969. The court found Horwath’s excuse inadequate. The same distinction exists as in other cases: the second inventor filed while the first inventor slept.

In Shindelar v. Holdeman, 628 F.2d 1337, 207 USPQ 112 (CCPA 1980),. cert. denied, 451 U.S. 984, 101 S.Ct. 2317, 68 L.Ed.2d 841 (1981), also relied on by the Board, there was a delay of two years and five months between reduction to practice and filing. This was held to be too long as against the second inventor who was the first (by two days) to file a patent application. The court held that the filing delay, attributed solely to the attorney’s workload, “raised an inference of suppression ... which has not been rebutted”. 628 F.2d at 1341, 207 USPQ at 116. The opinion is silent on the question of renewed work by the first inventor before the second inventor entered the field. Although the Board appeared to consider this case controlling as applied to Paulik, we do not see this case as controlling a situation which was not before it. The Shindelar court’s closing words are: “We reiterate that each case involving the issue of suppression or concealment must be considered on its own particular set of facts.” 628 F.2d at 1343, 207 USPQ at 117.

IV.

The decisions applying section 102(g) balanced the law and policy favoring the first person to make an invention, against equitable considerations when more than one person had made the same invention: in each case where the court deprived the de facto first inventor of the right to the patent, the second inventor had entered the field during a period of either inactivity or deliberate concealment by the first inventor. Often the first inventor had been spurred to file a patent application by news of the second inventor’s activities. Although “spurring” is not necessary to a finding of suppression or concealment, see Young v. Dworkin, 489 F.2d at 1281, 180 USPQ at 391-92 and citations therein, the courts’ frequent references to spurring indicate their concern with this equitable factor.

Some decisions used the word “forfeiture” to describe the first inventor’s loss of priority; but none interpreted section 102(g) as requiring an absolute forfeiture rather than requiring a balance of equities. In Brokaw v. Vogel, for example, the court said “the Mason v. Hepburn principle is not a forfeiture in the true sense; rather it is a rule according to which the patent right goes to the most deserving. Realistically, it is a forfeiture by the de facto first inventor of the right to rely on his earlier reduction to practice.” 429 F.2d at 480, 57 C.C.P.A. at 1302, 166 USPQ at 431. In Young v. Dworkin Judge Rich wrote “I cannot agree with the board that the question in this case is whether Young 'forfeited his right to a patent ’. But for Dworkin’s conflicting claim, Young forfeited nothing and would get a patent. All he forfeited ... was the right to rely on his prior actual reduction to practice in a priority dispute.” 489 F.2d at 1286, 180 USPQ at 395-96 (emphases in original).

In no case where the first inventor had waited “too long” did he end his period of inactivity before the second inventor appeared.⁴ We affirm the long-standing rule that too long a delay may bar the first inventor from reliance on an early reduction to practice in a priority contest. But we hold that the first inventor will not be barred from relying on later, resumed activity antedating an opponent’s entry into the field, merely because the work done before the delay occurred was sufficient to amount to a reduction to practice.

This result furthers the basic purpose of the patent system. The exclusive right, constitutionally derived, was for the national purpose of advancing the useful arts— the process today called technological innovation. . As implemented by the patent statute, the grant of the right to exclude carries the obligation to disclose the workings of the invention, thereby adding to the store of knowledge without diminishing the patent-supported incentive to innovate.

But the obligation to disclose is not the principal reason for a patent system; indeed, it is a rare invention that cannot be deciphered more readily from its commercial embodiment than from the printed patent. The reason for the patent system is to encourage innovation and its fruits: new jobs and new industries, new consumer goods and trade benefits. We must keep this purpose in plain view as we consider the consequences of interpretations of the patent law such as in the Board’s decision.

A foreseeable consequence of the Board’s ruling is to discourage inventors and their supporters from working on projects that had been “too long” set aside, because of the impossibility of relying, in a priority contest, on either their original work or their renewed work. This curious result is neither fair nor in the public interest. We do not see that the public interest is served by placing so severe a sanction on failure to file premature patent applications on immature inventions of unknown value. In reversing the Board’s decision we do not hold that such inventions are necessarily entitled to the benefits of their earliest dates in a priority contest; we hold only that they are not barred from entitlement to their dates of renewed activity.

V.

Paulik also appeals from the Board’s refusal to consider evidence offered during his rebuttal period. The Board relied on the provision in 37 C.F.R. § 1.251(b) that only rebuttal testimony can be taken during the rebuttal period, and held that since Rizkalla had taken no testimony during the period assigned to him for that purpose, there was nothing to rebut. The Board found that Paulik’s proffered rebuttal testimony was merely an enlargement of his testimony-in-chief, and that no reason was given why this testimony was not earlier presented. The Board also refused to consider a document (Exhibit 18) which had not been timely served or moved.

We discern no abuse of discretion in the Board’s application of these standard evidentiary rules.

VI.

Having established the principle that Paulik, although not entitled to rely on his early work, is entitled to rely on his renewed activity, we vacate the decision of the Board and, in the interest of justice, remand to the PTO for new interference proceedings in accordance with this principle.

VACATED AND REMANDED.

1 . 35 U.S.C. § 102(g) provides: A person shall be entitled to a patent unless ... (g) before the applicant's invention thereof the invention was made in this country by another who had not abandoned, suppressed, or concealed it. In determining priority of invention there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.

2 . As observed by the Industrial Research Institute, a first-to-invent system "respects the value of the individual in American tradition and avoids inequities which can result from a 'race to the Patent Office’ ”. Final Report of the Advisory Committee on Industrial Innovation, U.S. Dept. of Commerce, Sept. 1979, p. 174.

3 . For a thorough historical analysis see Judge Rich's concurring opinion in Young v. Dworkin, 489 F.2d 1277, 1282-87, 180 USPQ 388, 393-96 (CCPA 1974).

4 . The Board has recently drawn a distinction with cases where a first inventor who waited too long was nevertheless the first to file a patent application. The Board treated the constructive reduction to practice as evidence negating suppression despite the long period of inactivity, and in Connin v. Andrews, 223 USPQ 243 (Bd.Pat.Inf.1984), permitted the delaying senior party to rely on his early work.