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Court Vacates Grant of Priority After Defining Interfering Subject Matter

September 11, 2002

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Last Month at the Federal Circuit - October 2002

Judges: Gajarsa (author), Schall, and Bryson

In Slip Track Systems, Inc. v. Metal-Lite, Inc., No. 01-1187 (Fed. Cir. Sept. 11, 2002), the Federal Circuit vacated a SJ granting priority to Metal-Lite, Inc. (“Metal-Lite”), reversed a dismissal of Metal- Lite’s cross-claim for patent infringement, and remanded the case for further fact-finding on whether disputed header technology required testing to determine whether it worked for its intended purpose.

Slip Track Systems, Inc. (“Slip Track”) filed a complaint to institute an interference proceeding in district court pursuant to 35 U.S.C. § 291 following the issuance of U.S. Patent No. 5,127,203 (“the ‘203 patent”) assigned to Metal-Lite. The ‘203 patent claimed, in part, a header assembly designed to prevent dry wall from cracking under the shock of an earthquake. Slip Track‘s patent, U.S. Patent No. 5,127,760, which ironically issued the same day as the ‘203 patent, claims an identical header assembly. After the district court granted priority to Metal-Lite on SJ, Slip Track appealed to the Federal Circuit, contending that it had presented sufficient evidence regarding conception and reduction to practice to withstand SJ.

The Federal Circuit agreed with Slip Track, ruling that in a priority contest procedurally postured as a § 291 interference — where formal “counts” are not defined by the PTO, as in an interference under 37 C.F.R. § 1.601(f)— the court must define a single description of the interfering subject matter to properly undertake a priority analysis.

The Federal Circuit determined that the interference subject matter was limited to the header apparatus and did not include the wallboard. While both patents disclose the use of the header apparatus with wallboard within the specification, only the ‘760 patent includes the wallboard within the claims. Because the specification is not relevant when identifying interference subject matter, the wallboard limitation was not included in the interference. By drawing this distinction, the Court dispensed with Metal-Lite’s contention that Slip Track’s evidence of conception was insufficient. Because the wallboard limitation is not a part of the interference subject matter, Slip Track was entitled to the conception date demonstrated by its evidence.

The Court then reviewed Slip Track’s reductionto- practice evidence. Metal-Lite argued that Slip Track had failed to meet both prongs of the reduction to practice test, in that Slip Track’s prototype did not include all limitations of the claimed invention and the evidence did not demonstrate that the invention would work for its intended purpose. The Federal Circuit rejected Metal-Lite’s argument as to the first prong, in light of the holding that the claimed invention did not include a wallboard limitation, but concluded that a determination as to whether the evidence was sufficient to satisfy the second prong required more fact-finding.

The district court had found that Slip Track’s two prototypes of the invention were also insufficient evidence of reduction-to-practice. The first prototype used alternate materials to those used in the invention, and Metal-Lite argued that without constructing an actual embodiment of the invention out of the intended materials, the inventor could not know that the invention would work. The Federal Circuit rejected Metal-Lite’s position, stating that the relevant inquiry is whether the embodiment, despite being made of different materials, still had the potential to demonstrate that the invention would work for its intended purpose.

The district court had held that there was insufficient evidence corroborating the existence of the second prototype, despite several corroborating exhibits. The Federal Circuit remanded this issue with instructions to consider each piece of corroborating evidence in light of the interference subject matter.

The Federal Circuit also found that there was no abuse of discretion where the district court denied Metal-Lite’s request to modify a pretrail order, where Metal-Lite had not diligently pursued evidence of inequitable conduct prior to the expiration of the scheduled period for amending the pleadings.