IPS Group Inc. ("IPS") appealed from two decisions of the United States District Court for the Southern District of California granting summary judgment of non-infringement of U.S. Patents 8,595,054 and 7,854,310. Duncan Parking Technologies Inc. ("DPT") appealed from a related decision of the Patent Trial and Appeal Board ("the Board") in an inter partes review holding that claims 1–5 and 7–10 of the '310 patent were not shown to be unpatentable as anticipated under 35 U.S.C. § 102(e).
The Fed. Circuit reverse the Board's decision that claims 1–5 and 7–10 of the '310 patent are not unpatentable as anticipated; affirmed the district court's decision granting summary judgmentof noninfringement of the '310 patent; vacated the district court's decision granting summary judgment of noninfringement of the '054 patent.
IPS designs parking meter technology. It is run by founder and CEO Dave King and Chief Technical Officer Alexander Schwarz. The company manufactures multi-space parkingmeters and it has changed its focus to cellular phone technology. King conceived the idea for a credit-card enabled, solar-powered, single-space parking meter. Schwarz's's inventive contribution was to the development of how the various electrical components of the meter are interconnected and operate together.
The '310 and '054 patents are similar but do not have the same specifications. The '054 patent issued in 2013 from a PCT application filed on December 4, 2006, naming King and Schwarz as the inventors. It claims a credit card-enabled, solar-powered, single-space parking meter device that can be used to retrofit the internal components of existing parking meters. The '310 patent issued in 2010 from an application filed on February 27, 2008, more than a year after the '054 patent's application had been filed, naming as the inventors King and three engineers but not Schwarz. It claims a credit card-enabled, solar-powered, single-space parking meter.
IPS filed a complaint against DPT in the Southern District of California asserting infringement of the '054 and '310 patents. DPT petitioned in the Board for inter partes review of claims 1–5 and 7–10 of the '310 patent. The Board instituted a review on the ground that the '054 patent anticipates the '310 patent under 35 U.S.C. § 102(e). After the institution, IPS did not dispute whether, on the merits, the '054 patent anticipates the '310 patent claims. IPS instead argued in its Patent Owner Response that the anticipating portions of the '054 patent were solely King's invention, not that "of another" under 35 U.S.C. § 102(e), and therefore cannot be applied as prior art against the '310 patent claims. The PTAB agreed with IPS that the claims were not unpatentable.
DPT appealed from the Board's decision, and IPS appealed from the district court's summary judgments of noninfringement.
DPT argued in the Appeal that Schwarz was a joint inventor of the relevant portions of the '054 patent because he conceived the electrical system depicted in Figure 8. Thus, DPT contended that the '310 patent claims were anticipated by the '054 patent. In addition, DPT argued that the Board abused its discretion by denying DPT's motion for additional discovery of documents that concern the invention of the relevant portions of the '054 patent.
IPS responded that Schwarz's drawing the block diagram does not mean that he conceived the relevant electronics, and that "Schwarz's conception of aspects of Figure 8 not recited in the '310 claims is irrelevant." IPS further argued that the fact that "King communicated his idea in terms of the 'general' connectivity of certain components does not matter since that merely reflects the connectivity of those components as recited in the '310 claims." IPS did not dispute the Board's finding that the '054 patent would anticipate the '310 patent claims if it were prior art.
The Fed. Circuit agreed with DPT that the '054 patent anticipated the challenged claims of the '310 patent. The Board clearly erred in concluding otherwise. "A patent is anticipated under 35 U.S.C. § 102(e) if 'the invention was described in . . . a patent granted on an application forpatent by another filed in the United States before the invention by the applicant for patent.'"
The question on appeal was "whether the Board erred in concluding that the applied portions of the '054 patent were invented by King alone and not by King and Schwarz jointly. If Schwarz is a joint inventor of the anticipating disclosure, then it is "by another" for the purposes of §102(e)."
To be a joint inventor, one must: (1) contribute in some significant manner to the conception or reduction to practice of the invention, (2) make a contribution to the claimed invention that is not insignificant in quality, when that contribution is measured against the dimension of the full invention, and (3) do more than merely explain to the real inventors well-known concepts and/or the current state of the art.
DPT relied on the '054 patent's disclosure of a specific parking meter device, depicted in the figures and described in detail in the specification. IPS did not dispute that the '054 patent's embodiment disclosed all of the limitations of the '310 patent claims at issue. On appeal, DPT relied on Figure 8, a block diagram depicting the embodiment's electrical system, as anticipatory prior art "by another" disclosing the electrical connections and components claimed in the '310 patent. Figure 8 discloses each of the electrical components claimed in the '310 patent, along with a detailed diagram showing how each component is connected.
The Court noted that it was clear that Schwarz conceived much of the '054 patent's electrical system, including designing the diagram showing how all the electronic components are connected. Schwarz invented "how the various electrical components of the meter are interconnected and operate together." Schwarz's contribution to the invention defined by the'310 patent claims, as disclosed in the '054 patent, was significant in light of the invention as a whole. While IPS argued that Schwarz's role consisted of "drawing a schematic," "the record showed that creating the block diagram was not a minor task." As a result of Schwarz's contribution, the '054 patent discloses a parking meter device with a detailed electrical system, a challenge King described as one of "two big hurdles" to the invention. Thus, Schwarz's contribution, measured against the dimension of the full invention, was significant.
Further, the '054 patent's parking meter device, its sole embodiment, contains the specific electrical system disclosed in Figure 8. As the Board found, Schwarz conceived, at the very least, some aspects of that electrical system which are required by the electrical system limitations of the '310 patent claims. The record indicates that these aspects of the electrical system were a significant contribution to the invention claimed in the '310 patent. Thus, the anticipating embodiment was the joint invention of King and Schwarz, an inventive entity different from that of the '310 patent, and the '054 patent is prior art under 35 U.S.C. § 102(e).
The Court concluded that "[s]ince IPS does not dispute the Board's finding that this embodiment discloses every limitation of claims 1–5 and 7–10, we hold those claims of the '310 patent unpatentable as anticipated."
In some instances, company's own earlier patents could be applied as prior art during examination of or to challenge later patents. It is important to consider sets of inventors to avoid problems when company's earlier patents could become prior art "by another" to the claims in later applications/patents.
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