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Junior Party Loses on Conception

March 14, 2002
Feldstein Ph.D., Mark J.

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Last Month at the Federal Circuit - April 2002

Judges: Clevenger (author), Mayer, and Gajarsa

In Rexam Industries Corp. v. Eastman Kodak Co., No. 01-1308 (Fed. Cir. Mar. 4, 2002) (nonprecedential decision), the Federal Circuit affirmed a district court’s award of priority in an interference proceeding to Eastman Kodak Company and Avery Dennison Corporation(collectively “Kodak”), holding that Rexam Industries Corporation (“Rexam”), the junior party, failed to prove prior conception by a preponderance of the evidence.

Rexam and Kodak had been engaged in an interference proceeding to establish priority over a count directed to “[a] flexible decorative sheet material suitable for use in surface panels, such as automotive body panels, . . . comprising a flexible outer layer having a smooth, glossy outer surface with a distinctiveness of image [DOI] value of 65 percent or greater . . . .” The count was identical to claim 1 of Rexam’s U.S. Patent No. 4,931,324 (“the ‘324 patent”).

To establish priority for the count, Kodak, the senior party, relied on the constructive reduction to practice of its filing date of November 3, 1987. Rexam, the junior party, had a filing date of September 8, 1988, for the ‘324 patent, but sought to establish October 28, 1986, the filing date of U.S. Patent No. 4,810,540 (“the ‘540 patent”) as its priority date since the ‘324 patent was a continuation- in-part of the ‘540 patent. The DOI limitation contained in the ‘324 patent, which is achieved by using a film having a surface roughness of less than 0.018 μm, was the key difference between the ‘324 and ‘540 patents, and was the focus of the decision denying Rexam priority to the count.

As understood by the Court, the recited DOI value can only be achieved by casting the outer layer of the decorative sheet material on a smooth carrier surface. In order to show conception, Rexam had to provide evidence of an appreciation or recognition of this relationship. Although not required to recognize the DOI in the exact words of the count, Rexam must at least show prior recognition of a genus of films with the required DOI, though not necessarily recognition of a specific DOI value. However, according to the Court, the evidence supported a finding that Rexam’s inventors did not understand the requisite properties of the carrier surface and, hence, did not conceive of the invention until after Kodak’s constructive reduction to practice.

Rexam had introduced evidence to show its prior conception, none of which was sufficient to meet its evidentiary burden. In the original interference proceeding before the Board, Rexam relied on statements from a third-party manufacturer, who, in 1986, had apparently judged certain Rexam samples to be a “good match” to their paint specifications. However, since there was no evidence that the manufacturer’s specifications included a DOI of greater than 65%, and that, even if the specifications did, that Rexam’s product was more than a commercially acceptable match and necessarily met this limitation, the Board found that Rexam could not establish priority.

In the district court proceeding, the court held that, prior to Kodak’s filing, Rexam’s inventors had not recognized or appreciated that they had obtained a DOI of more than 65%. Thus, Rexam did not have prior conception. Further, the court held that, even if the DOI had been recognized, Rexam had not shown that it exercised diligence in reducing the invention to practice from just before Kodak’s filing date up to Rexam’s reduction to practice.

On appeal, the Federal Circuit likewise held that for at least the reason that Rexam’s inventors had failed to recognize or appreciate the roughness properties of the casting surface necessary to achieve the DOI limitation, Rexam had not shown prior conception and was not entitled to priority in the interference. The Court attached no weight to the submission in an Information Disclosure Statement for the earlier ‘540 patent of a reference allegedly showing the relationship between smoothness and DOI. According to the Court, the patent attorney’s submission said little about what the inventors appreciated. Moreover, the Court found that the reference did not, in fact, disclose a connection between any specific casting smoothness and a DOI value.

The Court also discounted evidence that showed, at most, a desire on the part of Rexam to achieve a DOI of 80 percent in order to meet a manufacturer’s product specifications. As stated by the Court, a desire is not an enabling conception. The Federal Circuit also accepted the district court’s finding that a “hair test” performed on Rexam’s products, alleged by Rexam to be evidence of a DOI of over 90 percent, was not a reliable test and did not show prior conception. Further, the Court concluded, even if Rexam had made some samples meeting the DOI limitation, conception is not complete without understanding how the claimed subject matter may be made.

Thus, due at least to Rexam’s inability to show prior recognition of the DOI limitation, Rexam had not met its burden of demonstrating earlier conception by a preponderance of the evidence and the Federal Circuit affirmed the award of priority to Kodak.