IP Alerts

IP Alert
IP Alert: Derivation Proceedings

October 12, 2012

Among the changes introduced by the Leahy-Smith America Invents Act (AIA) is the implementation of a “first-to-file” system. Generally, under the first-to-file system, if there are two competing applicants for the same patentable invention, the first inventor to file will be awarded the patent. This is in contrast to the historical “first-to-invent” system, under which the first inventor to invent is awarded the patent.

An exception to the first-to-file rule exists where the first inventor to file has derived the invention from the later-filing inventor. The AIA requires the U.S. Patent and Trademark Office (USPTO) to conduct “derivation proceedings” upon petition of an applicant who believes that another inventor has derived a claimed invention from the applicant. The USPTO recently issued rules to implement these derivation proceedings. These rules will take effect on March 16, 2013, to coincide with the effective date for the first-to-file system.


Under the first-to-invent system, implemented in present law under the 1952 Patent Act, the USPTO has conducted administrative proceedings known as “patent interference proceedings” (or “interferences”) to determine priority of invention, such as between competing applications. Generally, the purpose of an interference proceeding is to determine which of two competing inventors for the same invention made the invention first. With the abolishment of the first-to-invent system, the AIA will eliminate interference proceedings and instead, in light of the derivation standard, will provide for derivation proceedings. Derivation proceedings are trial-like proceedings that will be conducted before the Patent Trial and Appeal Board (PTAB).

The rules are applicable to applications and patents having an effective filing date on or after March 16, 2013. Where one party’s application or patent has an effective filing date before this date, and the other party’s application or patent has an effective filing date after this date, the PTAB will decide on a case-by-case basis how to proceed.

A petitioner may file a petition to institute a derivation proceeding if the petitioner is an applicant for a United States patent. Reissue applicants are considered applicants for purposes of a derivation proceeding. The applicant must file the petition within one year of the first publication date of the respondent’s invention. A first publication is defined as “a patent or an application publication under 35 U.S.C. 122(b), including an international application designating the United States as provided by 35 U.S.C. 374.” International applications that are published in a language other than English will trigger the one-year period. Notably, public availability of a patent application in PAIR does not constitute “publication.”

Requirements for a Complete Petition to Provoke Derivation Proceedings

The petitioner must set forth the precise relief requested and demonstrate that the applicant has standing to bring the petition. Standing requires timely filing of the petition and the petitioner’s compliance with the pending application requirement. The petition must demonstrate that at least one of the claims in the petitioner’s application is “the same or substantially the same as the respondent’s claimed invention” and “the same or substantially the same as the invention disclosed to the respondent.”

The petition must also provide enough information for the PTAB to identify the subject patent or application. The petition further must show that “a claimed invention was derived from an inventor named in the petitioner’s application, and that [this] inventor . . . did not authorize the filing of the earliest application claiming such invention.” For each claim at issue in the claimed invention, the petition must also demonstrate “why the claimed invention is the same or substantially the same as the invention disclosed to the respondent.”

Also, the petition must identify how the claim is to be construed. Where the claim to be
construed contains a means-plus function or step-plus-function limitation as permitted under 35 U.S.C. 112(f), the construction of the claim must identify the specific portions of the specification that describe the structure, material, or acts corresponding to each claimed function.

Additionally, the petition must be supported by substantial evidence, including “at least one affidavit addressing communication of the derived invention and lack of authorization that, if unrebutted, would support a determination of derivation.” The showing of communication must be corroborated. Corroboration may take any form, and the PTAB will consider its sufficiency on a case-by-case basis, using a “rule of reason.” The petition must be made under oath.

A petitioner filing confidential information with the petition may file a motion to seal with a proposed protective order for the confidential information.

A petition is complete once the derivation fee has been paid, the petition complies with all of the requirements described above, and the petition has been served on the respondent. Only complete petitions will be accorded a filing date. If the petition is incomplete, the USPTO will give the petitioner one month from notice of the incomplete petition or until expiration of the statutory deadline for filing the petition, whichever is earlier, to complete the petition.

Action Following Petition

The PTAB has sole authority to decide whether or not to institute a derivation proceeding. Its decision is not appealable. Additionally, the PTAB has authority to defer action on a petition for derivation under certain circumstances. The PTAB will not resolve derivation issues between commonly owned applications or patents.

If the USPTO institutes a derivation proceeding, such proceeding will be conducted before the PTAB. The proceeding will be governed by the final trial practice rules issued by the USPTO in August. The petitioner has the burden of proof in a derivation proceeding.

The final decision of the PTAB will be entered into the files of all patents or applications involved in the proceedings. If the PTAB has rendered an adverse decision regarding any claims in a pending patent application, the USPTO will finally refuse those claims. Where the PTAB has rendered an adverse decision as to claims of a patent, the claims will be cancelled. The PTAB has the authority to enter a “split decision,” i.e., a claim-by-claim analysis, where warranted.

Generally, a PTAB decision and records of the proceeding are publicly available. Under certain circumstances, a party may file a petition objecting to the publication of the decision on the grounds that it discloses a trade secret or other confidential information that is not otherwise publicly available.

A party dissatisfied with a final decision in a derivation proceeding may appeal to the Court of Appeals for Federal Circuit, or may bring a civil action in an appropriate United States District Court. If an appeal is filed, the opposing party may elect to proceed instead via civil action.

Arbitration and Settlement

The parties may terminate the derivation proceeding by filing a written statement reflecting the agreement of the parties as to the correct inventors. Unless the PTAB finds the agreement to be inconsistent with the evidence of record, if any, it shall take action consistent with the agreement. Any written settlement or understanding of the parties shall be filed with the Director. On request, a settlement agreement can be treated as confidential and kept separate from the file of the subject patent or application.

For more information on derivation proceedings, please contact Fitch Even partner Kendrew H. Colton.

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