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Derivation – A USPTO Remedy for Theft of Inventions

April 03, 2012

Derivation proceedings under the America Invents Act will provide a powerful administrative remedy for theft of inventions by competitors who are the first to file patent applications for inventions derived from earlier inventors. The proposed rules carve out and preserve from interferences an important protection for the rights of first inventors, whose inventions are misappropriated by earlier patent applicants.

Issues of derivation arise in interferences when unauthorized applications are filed by joint venture partners, independent contractors, former employees, independent laboratories, or others with confidential knowledge of trade secrets or research that can be patented. The purpose of a derivation proceeding is to determine the “true” inventor rather than the “first” inventor of claimed subject matter and “to ensure that the first person to file the application is actually a true inventor.”

Derivation is an issue that has long been contested in interferences, and requires corroborated proof of an earlier conception of a claimed invention, and disclosure of the invention to another person who files a patent application claiming the disclosed subject matter. Derivation is an important principle in the traditional first-to-invent system that is preserved under amended § 135 of the America Invents Act, and the proposed rules do not suggest that the Board will deviate from substantive law established by Federal Circuit and Board precedent in derivation proceedings.

The amended statute in § 135(a) requires that a petition for a derivation proceeding “shall set forth with particularity the basis for finding that an inventor named in an earlier application derived the claimed invention from an inventor named in the petitioner’s application and, without authorization, the earlier application claiming such invention was filed.”

Under the proposed rules, “standing” requires the petitioner to present a claim to “the same or substantially the same invention” as the first applicant’s claim. Rule 42.405(a)(2)(i). The rules and commentary do not clarify whether the current “two-way” test for interfering subject matter will be applied in derivations, where the derived subject matter disclosed and the subject matter claimed by the first applicant differ, as with genus and species claims.

Proposed Rule 42.405(a)(2)(ii) further requires that a petition must present a claim that is “not patentably distinct” from the invention disclosed to the respondent. In interference practice, a claim is not “patentably distinct” if it is either anticipated by or obvious over another claim. A claim to a genus cannot be “patentably distinct” from a claim to a species that anticipates the genus, but a claim to a species or subcombination may be patentably distinct from a broader claim.

Issues of patentable distinctness arise in interferences, in identifying claims that do not directly interfere (because they do not define “substantially the same invention”) but that are nonetheless designated as corresponding to the interference count because they are anticipated by or obvious over the count. The judgment in an interference typically involves all claims in the involved applications that are not patentably distinct from the count, not just the claims that directly interfere.

The proposed rules and commentary do not discuss the important issue of how such claims will be treated in derivations. If the earlier-filed patent or application contains claims limited to specifically derived inventions, the issue is clear. However, it will often be necessary to determine the status of other claims that are not patentably distinct from the derived claims, reciting additional subject matter that was not conceived or communicated to the deriving party by the original inventor.

Derivation ordinarily requires a complete conception of subject matter claimed by an opponent, and the proposed rules do not consider the status of claims that are not solely the invention of the original inventor, but are instead the joint inventions of the two parties. The statute in amended § 135(b) grants the Board express authority to “correct the naming of the inventor in any application or patent at issue.”

The proposed rules do not indicate how the USPTO plans to exercise this authority “in appropriate circumstances” or how non-patentably distinct claims to joint inventions will be treated in derivations. This issue will be complicated, because the proposed rules indicate that derivations will be conducted in a single phase without a “count.” To the extent that derivations involve a number of claims of differing scope, some definition of the claims that define the same or substantially the same invention will be essential, to define the scope of the petitioner’s proofs of conception and communication.

Furthermore, proposed Rule 42.400(b) provides that the Board may “for good cause” authorize or direct the parties to address patentability issues that arise in the course of a derivation, and the commentary cites claim indefiniteness as an issue that might need to be resolved before derivation is addressed on the merits.

In order to provoke a derivation, proposed Rule 42.405(c) requires the petitioner to support the claim of derivation by “substantial” evidence including at least one declaration addressing communication and lack of authorization, and presumably a second declaration corroborating these facts. The USPTO commentary contemplates a procedure in which the original inventor “may copy an alleged deriver’s application, make any necessary changes to reflect accurately what the inventor invented, and provoke a derivation” by filing a petition. This procedure is also familiar in interferences based on derivation, as in Nextreme v. EnerDel (Patent Interference No. 105,770).

A derivation may be either a pre-grant proceeding between two applications, or a post-grant proceeding involving a patent and the petitioner’s application. The statute is seriously flawed in defining the event that will trigger the one-year statutory bar for filing a derivation petition, as follows:

Any such petition may be filed only within the 1-year period beginning on the date of the first publication of a claim to an invention that is the same or substantially the same as the earlier application’s claim to the invention….

Under a literal reading of the statute, the “first publication” of a claim by the original inventor would bar a derivation proceeding involving an earlier-filed application, in which the derived claim is presented more than a year after the original inventor’s first publication trigger, as the USPTO commentary recognizes.

Proposed Rule 42.403 paraphrases the statutory language, but the commentary explains that the Office considers that the statutory tirgger arises only from publication of the first claim filed by the earlier applicant. Whether this commendable interpretation limiting the unintended effect of the statute’s literal language will prevail will be resolved by the Federal Circuit or by remedial legislation.

Unlike the interference one-year bar based on the publication of a U.S. application under current § 135(b)(2), the USPTO commentary states that the statutory trigger in a derivation will be publication of a claim in the first U.S. or WIPO publication, including foreign-language publications. It will be necessary to monitor competitors’ international applications as well as U.S. published applications.

The derivation provisions will not take effect until March 16, 2013, and after that date will apply only to patents or applications containing at least one claim that has an effective filing date on or after March 16, 2013. Current § 102(g), which provides independent statutory authority for interferences based on derivation, will continue in effect after March 16, 2013, for applications and patents containing at least one claim that has an effective date prior to March 16, 2013.


This preliminary review of the proposed derivation procedure is based on the comments and rules provided in the Proposed Derivation Rules. It is intended to provide only a general overview of derivation practice, and is not a commentary on specific rules, procedures, costs or statutory requirements. The information and analysis may be incorrect or incomplete, and these comments do not necessarily represent my own views as to the correct or desirable interpretation of the statute or rules.