Fox Group, Inc. v. CREE, Inc.: Federal Circuit Allows Prior Inventor to Invalidate Patent with Single Iteration of Practice and Minimal Disclosure

The Federal Circuit has made it easier for prior inventors to invalidate an existing patent. In Fox Group, Inc. v. CREE, Inc., 2011-1576, (Fed. Cir. Nov. 28, 2012), the Court invalidated two major claims in an existing product patent as a prior inventor was able to prove reduction to practice through a single iteration. In doing so, the Court signaled its reluctance to read any requirements of repeatability or disclosure sufficient to enable into this section of patent law.

Background

Fox is the assignee of the ‘130 patent, which claims a low defect silicon carbide (“SiC”) crystal used in some types of semiconductor manufacturing.  Such crystals are grown into a boule and then are sliced into wafers.  The specific claims in contention were 1 and 19, which claimed SiC crystal of a specific quality and density parameters.

Fox’s competitor CREE was also in the business of researching SiC crystals.  In 1995, Cree grew an SiC crystal boule that was found to have exceptionally low defects, and from this boule they sliced a wafer for further examination (“1995 wafer”).  Cree presented this wafer at an international conference on SiC crystals in Kyoto the same year, and published an article highlighting the “breakthrough” in 1996.

In 2007, Fox commissioned a study of Cree’s wafer.  In 2011, Fox found that Cree’s 1995 wafer presented in fell within claims 1 and 19 of the ‘130 patent.

Fox sued Cree in 2010, alleging infringement, inter alia, of the ‘130 patent.  Cree responded by filing a motion for summary judgment of invalidity.  The district court granted Cree’s motion, and Fox appealed.

Cree Meets Burden it was a Prior Inventor with only Single Iteration

The district court’s holding of invalidity was based on 35 U.S.C. §102(g), which states that “if a patentee’s invention has been made by another, prior inventor who has not abandoned, suppressed, or concealed the invention, it will invalidate that patent.” Apotex USA, Inc. v Merck & Co., Inc., 254 F.3d 1031, 1035 (Fed. Cir. 2001).  On appeal to the Federal Circuit, Fox argued that Cree was not a prior inventor; or alternatively, that Cree had abandoned, suppressed, or concealed the invention.

On the issue of whether Cree was a prior inventor, Cree had the burden to prove that (1) it reduced its invention to practice first; or (2) it was the first party to conceive of the invention and then exercised reasonable diligence in reducing that invention to practice.”  Mycogen Plant Sci., Inc. v. Monsanto Co., 243 F.3d 1316, 1332.

Fox argued that under the second prong of the Mycogen test, “to conceive” implies that the inventor must have conceived something definite enough to be repeated and is actually repeatable by those skilled in the art without undue experimentation.  In this case, Fox argued that Cree failed to show that it also invented a process to make low defect SiC, or that it could even duplicate the process at all.

The Court, however, found that Cree was a prior inventor under the first prong, holding that “Cree reduced the invention to practice in 1995.”  The Court explained that the test for establishing reduction to practice requires that “the prior inventor must have (1) constructed an embodiment or performed a process that met all the claim limitations; and (2) determined that the invention would work for its intended purpose.”  The Court found that Cree met both prongs when it created the 1995 wafer, which met the specifications of claims 1 and 19 of the ‘130 patent.

Court Rejects Fox’s Demand for Repeatability

Fox next attacked Cree on time of invention.  Under §102(g), the prior inventor must have reduced to practice before the date of the patent at issue, which was May 4, 2000 for the ‘130 patent.  Fox argued again that Cree had not reduced to practice in 1995 because Cree said itself that “we are working on process repeatability issues that will result in consistent production of wafers of equal or better quality.” In essence, Fox extended its aforementioned argument that repeatability is necessary to prove it had reduced the invention to practice.  However, the Court declared that once Cree proved it reduced the invention to practice in 1995, “there is no requirement [for Cree] to have done so repeatedly.”  Thus, the Court found no genuine issue as to whether Cree reduced the invention to practice prior to Fox’s critical date.

Court Refuses to Read Enablement Requirement into Public Disclosure Requirement

The burden then shifted to Fox to prove that there was a genuine issue as to abandonment, suppression, or concealment by (1) showing that the prior inventor actively and intentionally suppressed or concealed; or (2) that concealment may be inferred from the inventor’s unreasonable delay in making the invention publicly known.  Dow, 267 F.3d at 1342.

Fox alleged the second prong, which can be supported in several ways.  The Court noted that failure to file a patent application, to describe the invention in a published document, or to use the invention publicly, within a reasonable time after first making the invention, would support an inference in an inventor’s unreasonable delay.  The Court also noted that under case law, prior art must be made available to the public in order to defeat another patent, but such prior art does not have to be disclosed within a patent application.

Fox attempted to expand the test by arguing that to make an invention publicly known, the description or publication must be enabling.  Given the purpose of the patent system to encourage knowledge sharing and Federal Circuit case law, Fox argued that such disclosure must explain how to make the invention and that Cree failed to do so.

The Court disagreed with Fox, noting that Fox referenced case law that involved process claims and not product claims.  The Court said that had the claims dealt with process, Fox’s contention would have been correct and Cree would have to disclose invention of a process.  But since the claims involved a product, the Court declared that Cree’s disclosure of the 1995 wafer at the SiC conference and the 1996 publication made the product known to the public.  Thus, the court held that Fox did not produce sufficient evidence raising any genuine issues of material fact to show that Cree suppressed or concealed its invention.

Thus, because Cree demonstrated it was a prior inventor and Fox could not show that Cree concealed the invention, the Court invalidated claims 1 and 19 of the ‘130 patent under §102(g)(2).

Only Claims at Issue Invalidated

The district court had invalidated the entire ‘130 patent, while the Federal Circuit invalidated only claims 1 and 19.  Fox argued that there was no justiciable controversy on the remaining claims and should not have been invalidated.

The Court noted that there must be a “continuing case or controversy with respect to withdrawn or otherwise unasserted claims” in order for there to be a case or controversy.  The Court determined that Fox only alleged infringement on claims 1 and 19 and both parties were on notice as such before the district court ruled on summary judgment.  Thus, the district court did not have jurisdiction over the unasserted claims, and the Court vacated the declaration of invalidity of all of ‘130’s claims except for 1 and 19.

Dissent: Public Must Receive the Benefit of an Invention; Requires More than Mere Disclosure of Existence

Judge O’Malley dissented in part from the majority.  While she agreed that Cree met the first prong of prior reduction to practice, she dissented from the majority’s view that Cree had not abandoned, suppressed, nor concealed its invention. 

Judge O’Malley cited evidence that she felt created a genuine issue that Cree abandoned, suppressed, or concealed its invention.  First, Cree had a policy of concealing its production methods, preventing the public from knowing more about the subject matter or methods of production.  Second, Cree did not file a patent application, also preventing a more thorough disclosure of the invention.  Third, Cree did not publicly use or commercialize the 1995 wafer that would have allowed reverse engineering.  Judge O’Malley also found that Cree’s lack of further research on the 1995 wafer using the same methods to created a genuine issue of abandonment.

Central to her dissent is the majority’s use of Apotex, which she says demands more than just existence of an invention.  To her, the public also additionally receive the “benefit” of an invention by being able to reverse-engineer the invention or receive detailed disclosures about the invention.  Measures such as commercialization or filing a patent application would fulfill as such, but Cree did not do so.  O’Malley was afraid that an inventor could simply disclose the existence of an invention and then do nothing with it, thus rendering the abandonment, suppression, or concealment doctrine meaningless.

Conclusion

The Federal Circuit has made it easier for prior inventors to invalidate a patent by allowing mere disclosure of the invention to act as both strong evidence of reduction to practice and as a defense to concealment.  Patent holders and prior inventors should contact experienced patent counsel to see how Fox may affect your exposure to patent claims.

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Tom Zuber

Jeff Zuber

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