Rule of Reason Applies to Priority

In Perfect Surgical Techniques, Inc., v. Olympus America, Inc., [2015-2043] (November 15, 2016), the Federal Circuit reversed the PTAB decision in an IPR invalidating claims 1, 4–6, 8, 9, 11, 12, 38, 41–44, 46, 47, and 49 of U.S. Patent No. 6,030,384.

The Board determined that PST failed to antedate the prior art because it had not proven that the inventor of the ’384 patent was reasonably diligent in reducing his invention to practice, and that the invention was anticipated or rendered obvious from the prior art.

The Federal Circuit found that the Board erroneously applied a heightened burden of proof which “infected” its analysis. The Federal Circuit said that the Board should have weighed evidence of priority of inventorship under a rule of reason.   Instead, the Board fixated on the portions of the critical period where PST did not provide evidence of the inventor’s specific activities to conclude the exercise of diligence was not “continuous.” The Federal Circuit said that under a rule of reason analysis, an inventor is not required to corroborate every day or what was done.

The Federal Circuit found that the Board compounded its error by summarily dismissing the activities of the inventor’s attorney.  An attorney’s work in preparing a patent application is evidence of an inventor’s diligence.  The Federal Circuit further found that the Board’s focus on gaps of inactivity also led it to make fact findings unsupported by substantial evidence.

The Federal Circuit instructed that on remand, the question before the Board is whether all of patent owner’s evidence, considered as a whole and under a rule of reason, collectively corroborates the inventor’s testimony that he worked reasonably continuously within the confines of his and his attorney’s occupations to diligently finalize the patent application during the critical period.

The claim construction issues revolved around the construction of “perforated,” in the claim language “wherein at least one of the jaws is perforated to permit the release of steam during use.” The Board reasoned that the specification, which states “the jaws may be perforated or otherwise provided with passages,”  described passages as another form of perforations and did not distinguish between these terms.” Because of this equivalence between perforations and passages, the prior art disclosure of passages anticipated the claims, which required perforations.  The Federal Circuit found that the Board used extrinsic evidence (a dictionary) to establish the equivalence of that perforations included passages.  The Federal Circuit agreed with the patent owner  that the description in the specification that the device “may be perforated or otherwise provided with passages” evidences a difference in meaning between passages and perforations. The Federal Circuit said that the specification’s separation of the terms perforated and passages with the disjunctive phrase “or otherwise” makes clear that the patentee intended that the term “perforated” is not the same as “passages.” The patentee claimed only jaws that are “perforated”; this claim does not extend to passages. In light of the intrinsic record, we conclude that the term “perforated” is not coextensive with or the same as “passages.”

Thus the Board’s finding that JP ’551 disclosed at least one “perforated” jaw because JP ‘551 referenced “a passage” cannot be supported. The Federal Circuit  vacate the Board’s decision invalidating claims 11, 38, 41–44, 46, 47, and 49 over JP ’551 and remanded for proceedings consistent with this construction.