On August 26, in Global Health Solutions LLC v. Selner, the Federal Circuit reviewed its first derivation proceeding. The patent applications at issue claimed the same or substantially the same method for preparing an emulsifier-free ointment, where the key step involved heating the components separately. The Federal Circuit affirmed the Patent Trial and Appeal Board’s (PTAB) ruling that Selner independently conceived of the invention by proving earlier conception than Global Health Solutions’ (GHS) founder, Burnam.
On September 16, 2011, the Leahy-Smith America Invents Act (“AIA”) was enacted. The AIA introduced a fundamental shift in how the U.S. patent system recognizes priority. The U.S. transitioned from a first-to-invent system to first-to-file system. In a first-to-invent system, the first inventor could obtain a patent even if another inventor filed a patent application before them, so long as they could prove they invented it first. In contrast, in a first-to-file system, the first inventor loses if they are not fast enough, i.e., they do not beat the filing date of another inventor. However, there is one lifeline – a derivation proceeding – whereby an inventor has an opportunity to prove another inventor who filed first did not conceive of the invention but rather derived it from them. GHS took advantage of this lifeline and filed a petition for an AIA derivation proceeding, alleging that Selner was not the true inventor. The PTAB disagreed and GHS appealed.
GHS v. Selner is a classic example of opposing accounts. Burnam and Selner worked for different companies having a shared co-founder and collaborated on commercial projects. One such project involved the development of an emulsifier-free ointment which proved unsuccessful. Burnham subsequently formed GHS and somewhere along the way a key step for the ointment was discovered. Burnam claimed that he conceived of the key step and told Selner about it, while Selner claimed the opposite. To prevail, the Federal Circuit articulated that Burnam must show sufficient evidence of (1) conception and (2) communication of the invention to Selner before Selner’s filing date. Selner could overcome this showing by proving independent conception before receiving the communication from Burnam.
Ultimately, the PTAB relied on email exchanges between Burnam and Selner to determine conception and communication. The final decision came down to a matter of hours. The PTAB found that Burnam and Selner both conceived of the invention, corroborated in separate emails; however, Selner’s email to Burnam was timestamped about three hours earlier! According to the Federal Circuit, this email, along with a declaration from the law clerk that exported the emails, was sufficient evidence of Selner’s independent conception through his earlier conception.
This decision serves to: (1) clarify the focus on independent conception rather than first-to-invent in an AIA derivation proceeding; (2) highlight the need for record-keeping (both physical and electronic) to accurately document and corroborate inventions; and (3) remind of the importance of having appropriate intellectual property agreements in place with third parties before disclosing information.
For more information on this topic, please contact Fitch Even partner Steven M. Freeland or technical writer Lindsay Boehme, authors of this alert.
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Steven M. Freeland
Steven M. Freeland practices in all areas of intellectual property law, focusing primarily on the development, protection, and management of intellectual property. Steve assists clients with sophisticated patent portfolio management and the prosecution of complex patents, helping them to manage their patent assets using strategies tailored to further their business objectives.