In Perfect Surgical v. Olympus America, Inc., the Federal Circuit found harmful error in the PTAB’s diligence framework and conclusions, thereby potentially lowering the bar required to establish diligence in PTAB cases. Case No. 2015-2043 (Fed. Cir. Nov. 15, 2016).
In the underlying IPR, the Board found a patent owner did not prove the inventor continuously exercised reasonable diligence throughout the critical period of time needed to antedate a prior art reference, due to three unexplained gaps: (1) an almost three-week period of time where the inventor had a draft application before he provided comments back to a patent attorney; (2) a long weekend without diligence activity; and (3) a two-and-a-half-week gap where the inventor’s patent attorney had a second draft of the application before he filed it.
The Federal Circuit found error in the Board’s approach as a whole, explaining that the Board had relied on the “erroneously heightened” and “too exacting” standard of whether the inventor had “continuously exercised reasonable diligence” throughout the critical period. It distinguished this erroneous standard from “reasonably continuous diligence,” which does not require an inventor to work to reduce his invention to practice every day or to have no uncorroborated gaps during the critical period:
“In determining whether an invention antedates another, the point of the diligence analysis is not to scour the patent owner’s corroborating evidence in search of intervals of time where the patent owner has failed to substantiate some sort of activity. It is to assure that, in light of the evidence as a whole, ‘the invention was not abandoned or unreasonably delayed.’. . . One must weigh the collection of evidence over the entire critical period to make such a determination.”
According to the Federal Circuit, the Board’s focus on an incorrect standard “infected its analysis” such that it did not properly weigh the patent owner’s evidence “under a rule of reason.” Considering the evidence under a rule of reason, the Federal Circuit found that that the patent owner was not required “to corroborate every day the [patent] application was worked on,” including the days of the first gap.
The Federal Circuit also found that the Board’s findings regarding the second gap were not supported by substantial evidence. Finally, regarding the third gap, it explained that a patent attorney is an agent of an inventor, and that it was error for the Board to ignore the attorney’s diligence in preparing the patent application on behalf of the inventor.
Accordingly, the Federal Circuit vacated and remanded the Board’s decision to determine whether the patent owner’s evidence “as a whole and under a rule of reason, collectively corroborates” the inventor’s testimony.