February 20, 2014

Russian to bring an invention into the U.S.

Solvay v. Honeywell and §102(g) invention “in this country”

Although recent statutory revisions have done away with 35 U.S.C. §102(g), patents with an effective filing date before 16 March 2013 are still governed by the old law. Section 102(g) provides that

A person shall be entitled to a patent unless… before such person’s invention thereof, the invention was made in this country by another inventor who had not abandoned, suppressed, or concealed it. In determining priority of invention under this subsection, there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other. [emphasis added]

These provisions were at the heart of the recent decision in Solvay S.A. v. Honeywell International (Judge Dyk writing for himself and Chief Judge Rader; Judge Newman dissenting).

Chlorofluorocarbons (CFCs) have many industrial uses, but unfortunately CFCs have undesirable effects on the stratospheric ozone layer. In 1989, laws to implement the Montréal Protocol mandated the phase-out of CFCs. These laws prompted many scientists to work on developing ozone-safe chemicals to replace CFCs. One of the more useful CFC replacements is 1,1,1,3,3-pentafluoropropane (also known by the trade name HFC-245fa). Researchers at the Russian Scientific Center for Applied Chemistry (RSCAC) spent much of the early 1990s developing industrially practical processes to manufacture HFC-245fa.

In 1994 Honeywell started a joint research agreement with the chemical engineers at RSCAC to perfect their processes. Russian inventors sent protocols to engineers at Honeywell, who replicated the Russian processes in the United States.

Solvay owns US 6,730,817 (‘817), which claims “[i]n a process for the preparation of [HFC-245fa]…, the improvement which comprises carrying out the reaction at a temperature and under a pressure at which [HFC-245fa] is gaseous and isolating and [HFC-245fa] from the reaction mixture by drawing off [HFC-245fa]… in a gaseous phase as… [it] is being formed.” Both Solvay and Honeywell manufacture hydrofluorocarbons including HFC-245fa, and both used manufacturing processes covered by Solvay’s ‘817 patent. When Solvay sued Honeywell for infringement, the district court held that Honeywell would infringe Solvay’s claim, but that the claim is invalid as anticipated under §102(g)(2). It is well established that invention can occur “in this country” where conception occurs abroad, but the invention is then reduced to practice in this country by agents acting on behalf of the foreign inventor. Holmwood v. Sugavanam, 948 F.2d 1236, 1238 (Fed. Cir. 1991).

Solvay defended ‘817’s validity on the grounds that §102(g) is limited to invention “made in this country.” Solvay advanced three specific arguments as to why Honeywell’s U.S. reduction to practice of RSCAC’s idea did not satisfy §102(g)’s “in this country” requirement: (1) RSCAC merely communicated the protocols to Honeywell, but never explicitly requested that Honeywell perform the procedures in the U.S.; (2) nothing about Honeywell’s performance of the procedures inured to RSCAC’s benefit; and (3) Solvay alleged a lack of diligence between RSCAC’s conception and Honeywell’s U.S. reduction to practice. The Federal Circuit disagreed with each of these arguments.

With regard to the first argument, the Federal Circuit first cited Cooper v. Goldfarb, 154 F.3d 132, 1332 (Fed. Cir. 1998) for the proposition that an express request is not necessary. The court then looked back to Learned v. Thompson, 191 F.2d 409, 415 (C.C.P.A. 1951) for guidance about what counts as an implicit request. Learned had sent a description of his invention to a U.S. government agency tasked with considering technology with military relevance. The government turned the invention over to an employee named Hunter, who not only reduced the described device to practice without Learned’s knowledge or consent, but also made improvements and filed a patent application on the improvement. The Learned court held that Learned could claim the benefit of Hunter’s reduction to practice date, because Learned had authorized the U.S. government to use the invention.

The panel majority in the instant case reasoned that RSCAC had evidenced at least as much authorization for Honeywell to practice RSCAC’s manufacturing methods as had Learned, so Honeywell was acting with RSCAC’s implicit authorization. Therefore, the lack of an explicit request by RSCAC that Honeywell practice RSCAC’s methods was not germane to the §102(g) inquiry.

Regarding the second argument, Solvay pointed out that, under the agreement between RSCAC and Honeywell, RSCAC owns a Russian patent on the manufacturing technique and Honeywell owns a U.S. patent. None of RSCAC chemists were named as inventors on Honeywell’s patent application. Therefore, Solvay argued that Honeywell’s actions in the United States did not “inure to the benefit of” RSCAC, as required by Cooper, 154 F.3d at 1332. However, because this state of affairs—RSCAC owning exclusive rights to the process in Russia; Honeywell owning exclusive rights in the U.S.—was explicitly contemplated by the joint research agreement, the court concluded that Honeywell’s U.S. actions still inured to RSCAC’s benefit. That is to say, even though RSCAC did not own any portion of the U.S. patent, RSCAC had still received its bargained-for compensation.

Finally, Solvay argued that neither the Russian patent nor the U.S. patent described enough detail about the processes that Honeywell performed. Therefore, Solvay argued that RSCAC/Honeywell had “concealed” the invention within the meaning of the use of the term in §102(g). At the district court level, the jury concluded that the Russian patent reported enough detail about the process that RSCAC could not be said to have “concealed” the process. Solvay v. Honeywell, 886 F. Supp.2d 396, 404 (D. Del. 2012). Although the Federal Circuit did not discuss this point in detail, it upheld the jury’s finding.

In other words, RSCAC invented the claimed process before Solvay. The RSCAC then disclosed the process in a Russian patent application, and sent instructions to Honeywell about how to perform the process. Honeywell acted on these instructions in the U.S. Based on this combination of events, the Federal Circuit concluded that the Russian inventors had invented “in this country” before Solvay, without “conceal[ing]” the invention.

Judge Newman dissented from this conclusion, arguing that allowing the secret activities of U.S. labs to anticipate a U.S. patent under §102(g)(2) creates a new class of possible secret prior art. Judge Newman attempted to distinguish the cases that the majority cited by noting that the cited cases concerned interferences under §102(g)(1), rather than §102(g)(2).

Of course, as the Solvay court notes (slip op. at 2) §102(g) is on its way out, having been removed by the recent American Invents Act. It will linger on for many years yet, because the old law continues to govern patents filed before the change of law, but eventually this ruling will cease to matter with regard to anticipation.

The longer-term significance of this opinion may possibly be its effect on defining what counts as invention “in this country.” Even in the post-AIA world, invention “in this country” continues to apply to the need for a foreign-filing license under 35 U.S.C. §184. Although it is not completely clear whether the requirements for invention “in this country” are the same for §§ 102 and 184, the limited authority on this point holds that they are. Sealectro Corp. v. L.V.C. Indust., 153 U.S.P.Q. 610, 614 (E.D.N.Y. 1967). Therefore, it is possible that this case could continue to affect international joint ventures even after §102(g) has faded from U.S. patent law. If so, then this case underscores the attention that must be paid, when drafting an international joint venture agreement, to comply with a variety of different countries’ laws concerning inventions made in each jurisdiction.