Federal Circuit Affirms Patent Board in First Derivation Proceeding Appeal

The Federal Circuit has affirmed the decision of the Patent Trial and Appeal Board (PTAB or Board) in the first appeal of a derivation proceeding under the America Invents Act (AIA) litigated at the Board.

The case is Global Health Solutions LLC v. Selner.

The Leahy-Smith America Invents Act of 2011 changed how priority is determined by converting the US patent system from a first-to-invent to a first-inventor-to-file system.

As the court explained,

Prior to the AIA’s enactment, a first inventor could obtain a patent even if a second inventor filed an application for the same invention first, as long as the first inventor could prove she was the first to invent. That was the essence of our prior “first-to-invent” system. Under the AIA, by contrast, a first inventor will generally not be entitled to a patent if a second inventor files his application first. This is a consequence of our transition to a “first-to-file” system.

However, the AIA provides a limited opportunity for a first-inventor second-filer to obtain a patent despite another person filing his application first, where the first-filer derived the invention from the second-filer.

The first-inventor second-filer can try to prove that she conceived of the invention and communicated that invention to the first-filer before the first-filer filed his patent application. The AIA allows a first-inventor second-filer to pursue such a claim against a first-filer in a derivation proceeding.

In this case, explained the court,

Global Health Solutions LLC (“GHS”) and Marc Selner each filed a patent application covering the same subject matter. After discovering Selner’s application, GHS filed a petition for an AIA derivation proceeding against Selner, contending that, although Selner filed his patent application first, he was not the true inventor. Rather, according to GHS, that distinction belongs to its founder, Bradley Burnam, who is listed as the inventor on GHS’ patent application.

As the court noted,

Selner filed U.S. Patent Application 15/549,111 (“’111 Application”), entitled “Ionic Nanovesicle Suspension and Biocide Prepared Therefrom,” on August 4, 2017. The ’111 Application names Selner as its sole inventor. Four days later, on August 8, 2017, GHS filed U.S. Patent Application 15/672,197 (“’197 Application”), “Petrolatum-Based Delivery Systems And [sic] For Active Ingredients.” The ’197 Application names Burnam as the sole inventor.

Both patent applications claim a method for preparing a wound treatment ointment, comprising nanodroplets of an aqueous biocide (Polyhexamethylene Biguanide (“PHMB”)) permanently suspended in petrolatum jelly. Unlike prior art methods for making PHMB-petrolatum jellies, the methods disclosed in the applications don’t require emulsifiers, which can irritate a patient’s skin.

GHS alleged that Burnam conceived of the invention prior to Selner and communicated it to Selner; therefore, Selner allegedly derived his purported invention from Burnam.

As the court related,

Burnam and Selner met while Burnam was working for SteriWeb Medical, Inc. (“SteriWeb”), a company Burnam co-founded with Bertram Rosenthal. At that time, Selner, a doctor of podiatric medicine with a background in chemistry, was working for R&S Research, LLC (“R&S”), a company Selner separately co-founded with the same Mr. Rosenthal. SteriWeb and R&S shared office space and collaborated on commercial projects.

In 2013, Burnam, Selner, and Rosenthal determined that SteriWeb should make and sell a PHMB-petrolatum jelly. While developing that product, they decided to create a novel emulsifier-free PHMB-petrolatum jelly.

During the development process,

…someone – and the dispute presented to the Board largely related to identifying who this person was – conceived of an inventive process involving heating the petrolatum and PHMB separately to different temperatures before mixing them together.

According to GHS, Burnam conceived the process of heating petrolatum and PHMB to different temperatures before mixing, and then told Selner about it.

In contrast, Selner says he discovered and disclosed to Burnam the idea of heating the petrolatum before mixing it.

After reviewing the entire record and hearing oral argument, the Board found that GHS proved Burnam conceived the Invention and communicated it to Selner via email by 4:04 p.m. on February 14, 2014.

However, the Board also found that Selner proved he conceived of the Invention earlier that same day, by 12:55 p.m., based on another email exchanged between Selner and Burnam.

The court noted that

the Board found that Selner presented sufficient evidence corroborating his inventorship. This evidence consisted principally of a declaration from a law clerk to Selner’s attorney, who testified that she accessed Selner’s web-based email account hosted by AOL, Inc. (“AOL”) and, without modification, exported the emails that were later introduced into evidence.

GHS appealed.

The Federal Circuit noted that

to meet its prima facie burden in an AIA derivation proceeding, the petitioner must produce evidence sufficient to show (i) conception of the claimed invention, and (ii) communication of the conceived invention to the respondent prior to respondent’s filing of that patent application.

In response, a respondent can overcome the petitioner’s showing by proving independent conception prior to having received the relevant communication from the petitioner.

The court noted that a first-to-file respondent like Selner need only prove that his conception was independent:

Selner chose to prove his independent conception by proving that he conceived before Burnam. In doing so, Selner also overcame GHS’s prima facie showing.

Said the court,

in finding Selner was the first-to-invent, the Board also indirectly determined that he independently conceived and, thus, did not derive his invention from Burnam.

In the appeal, GHS argued that the Board erred in the following ways:

• by not requiring Selner to corroborate his claim of inventorship with evidence independent of himself;
• by improperly shifting the burden to GHS to disprove Selner’s purported conception, rather than making Selner prove his own conception; and
• by failing to apply the doctrine of simultaneous conception and reduction to practice.

The court was unpersuaded by these arguments.

For example, said the court,

the Board found that the language in Burnam’s email to Selner at 4:04 p.m. on February 14 “bears substantial resemblance to the language used by Marc Selner” in his email to Burnam hours earlier, which in the Board’s view was “circumstantial evidence that Marc Selner did send [the 12:55 p.m. email] . . . to Bradley Burnam.” …. All of this, in the Board’s view, further supported the reasonable inference that Burnam received and copied what Selner had previously disclosed to him.

Thus, the court affirmed the Board’s judgment for Selner.