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Applicant Is Not Entitled to the Narrow Exception of the Two-Way Test for Assessing Obviousness- Type Double Patenting When the PTO Is Not at Fault for the Delay That Causes the Improvement Patent to Issue Before the Basic Patent

May 06, 2009

Decision icon Decision

Last Month at the Federal Circuit - June 2009

Judges: Schall, Archer, Moore (author)

[Appealed from: Board]

In In re Fallaux, No. 08-1545 (Fed. Cir. May 6, 2009), the Federal Circuit affirmed the Board’s decision upholding the examiner’s rejection of the claims of U.S. Patent Application No. 10/618,526 (“the Fallaux application”) for obviousness-type double patenting in view of U.S. Patent Nos. 6,340,595 (“the ’595 patent”) and 6,413,776 (“the ’776 patent”) (collectively “the Vogels patents”).

This appeal involves a patent family that includes the Fallaux application. The first U.S. application in the family was filed on March 25, 1997, and issued on November 30, 1999. The Fallaux application was filed on July 11, 2003, claiming priority to the March 25, 1997, application. The Vogels patents are related to the Fallaux application by way of a single common inventor. The ’776 patent was filed on June 12, 1998, and issued on July 2, 2002. The ’595 patent was filed on July 21, 1999, and issued on January 22, 2002.

The Federal Circuit stated that in determining double patenting, a one-way test is normally applied, in which the examiner asks whether the application claims are obvious over the patent claims. The Court relied on its previous holding in In re Berg, 140 F.3d 1428 (Fed. Cir. 1998), that the two-way test “is a narrow exception to the general rule of the one-way test.” Id. at 1432. When applying the two-way test, “the examiner also asks whether the patent claims are obvious over the application claims.” Id. The two-way test arose out of the concern to prevent rejections for obviousness-type double patenting when the applicants filed first for a basic invention and later for an improvement, but, through no fault of the applicants, the PTO decided the applications in reverse order of filing, rejecting the basic application although it would have been allowed if the applications had been decided in the order of their filing. “The two-way test is only appropriate in the unusual circumstance, where, inter alia, the [PTO] is 'solely responsible for the delay in causing the second-filed application to issue prior to the first.’” Slip op. at 4 (quoting Eli Lilly & Co. v. Barr Labs., Inc., 251 F.3d 955, 968 n.7 (Fed. Cir. 2001)).

The Court found that the Board’s factual findings that Dr. Fallaux was entirely responsible for the delay that caused the Vogels patents to issue before the filing of the Fallaux application were supported by substantial evidence. The Court also found that Dr. Fallaux did not show, nor was there any evidence to suggest, that the PTO shared any responsibility for the delay. The Court found that there was no dispute that the specification of the March 25, 1997, application would have supported the Fallaux claims. Nonetheless, Dr. Fallaux elected to prosecute other applications and delay filing the Fallaux application until six years after the March 25, 1997, application was filed, during which time the Vogels patents were filed and issued. In view of the Board’s fact-findings, the Court held that the PTO was not responsible for the delay.

Next, the Federal Circuit addressed Dr. Fallaux’s argument that the delay should not be attributed to him because he prosecuted the Fallaux patents “in the ordinary course of business” and did not “proactivelymanipulate[] prosecution for an improper purpose or to gain some advantage.” Id. at 5 (alteration in original). The Court held that the rule is not, as Dr. Fallaux seemed to suggest, that an applicant is entitled to the two-way test absent proof of nefarious intent to manipulate prosecution. Rather, the two-way test carves out a narrow exception when the PTO is at fault for the delay that causes the improvement patent to issue before the basic patent.

The Federal Circuit agreed with the Board’s findings that the delay was entirely attributable to Dr. Fallaux and pointed to substantial evidence to uphold that finding. Dr. Fallaux argued that he filed the Fallaux application “to cover a potential product of a competitor” that he learned about during the prosecution of the applications in the Fallaux family. The Court found this significant because it showed that the timing of the issuance of the patents was the result of Dr. Fallaux’s decisions, not the PTO’s administrative delay. The Court stated that by electing to file the Fallaux application in 2003 after the issuance of the Vogels patents, Dr. Fallaux foreclosed even the possibility of the Fallaux application issuing before the Vogels patents. The Court thus found substantial evidence to support the Board’s fact-finding that it was Dr. Fallaux, not the PTO, who was responsible for the delay.

Finally, Dr. Fallaux argued that the Court’s previous cases refusing to rely on the two-way test were distinguishable because, unlike the applicants in those cases, Dr. Fallaux was not seeking an unjustified patent-term extension. According to the Court, the unjustified patent-term-extension justification for obviousness-type double patenting had limited force in this case. Nonetheless, the Court could not disregard all of its cases relying on this justification for obviousness-type double patenting.

Furthermore, the Court held that the harassment justification for obviousness-type double patenting is particularly pertinent here because the Fallaux application and the Vogels patents are not commonly owned. The Court noted that if the Fallaux application and the Vogels patents were commonly owned, the terminal disclaimer filed in this case would have been effective to overcome the double-patenting rejection. The Court further noted that the applicant created this defect through assignment by allowing ownership of the applications to be divided among different entities.

Summary authored by Jin Zhang, Esq.