Derivation: Possession versus Conception

The Patent Trial and Appeal Board (PTAB) denied three petitions to institute derivation proceedings, sought by Catapult Innovations against three patent applications assigned to adidas AG, finding that Catapult failed to establish a prior “conception.” DER2014-00002, Paper 19 (July 18, 2014); DER2014-00005, Paper 13 (July 18, 2014); DER2014-00006, Paper 19 (July 18, 2014). Catapult’s derivation petitions were the first to be filed under 37 C.F.R. § 42.405. To date, no derivation proceedings have been instituted.

While U.S. patent law is now a first-inventor-to-file system, derivation proceedings under the American Invents Act (AIA) provide a mechanism to ensure that the first person to file a patent application is actually the true inventor. Here, Catapult alleged that adidas AG’s patent application claims were derived from a two-day presentation and demonstration of an athletic activity monitoring system made to AWSE, a wholly-owned subsidiary of adidas AG.

The PTAB explained that in order to institute a derivation proceeding, the petition must “demonstrate[] substantial evidence, which if unrebutted, would support the assertion of derivation.” As to the substantive law of derivation, the PTAB clarified that it applies the jurisprudence previously developed under 35 U.S.C. 135(a), as it existed before the AIA. “[T]he party asserting derivation must establish prior conception of the claimed subject matter and communication of that conception to an inventor of the other party.”

The PTAB found that Catapult provided substantial evidence that Catapult disclosed the invention to AWSE; adidas AG’s claims were directed to an invention that is the same or substantially the same as the invention disclosed; Catapult had at least one qualifying claim; and adidas Ag’s applications were not authorized. However, Catapult did not provide evidence of prior conception, only prior possession. “Possession indicates little, if anything, about originality of invention. One who possessed the invention might have acquired it from someone else.” In effect, the PTAB required evidence that the petitioner itself did not derive the invention from another.

Two primary lessons may be derived from this set of decisions. First, patent practitioners should consider the state of pre-AIA derivation law before submitting a derivation petition. Second, inventors should maintain corroborated evidence of their work to establish an earlier conception of the claimed subject matter, not merely possession. This can be done by recording inventive acts in paper or electronic notebooks.

A decision on Catapult’s requests for reconsideration remains pending.