In ATI Technologies v. Iancu, 920 F.3d 1362 (Fed. Cir. 2019), the Federal Circuit reversed the PTAB’s decision that the Patent Owner had not presented sufficient evidence to swear behind several prior art references.  In doing so, the Federal Circuit reminded the PTAB, as well as practitioners alike, of the proper standard of proof for demonstrating the diligent reduction to practice of an earlier purported conception.

LG Electronics filed three IPR petitions against several ATI patents directed to unified graphics processing systems that process both vertex and pixel operations. LG asserted that the claims in each patent were unpatentable over three prior art patents. ATI opposed, arguing that it conceived its patented inventions before the earliest effective filing dates of the prior art patents. In support of its argument that these patents did not qualify as prior art , ATI submitted evidence of its conception, (constructive) reduction to practice, and diligence from conception to the constructive reduction to practice.  ATI’s evidence of diligence included a 60-page declaration from one of the inventors.  The declaration explained his efforts, together with those of other ATI employees, that led to the inventions claimed in the three ATI patents.  The declaration included  almost 1300 pages of documentation showing calendars for the project, together with metadata, logs, and folder histories.

The PTAB rejected ATI’s evidence of diligence.  As a consequence, the PTAB found various claims of the three ATI patents unpatentable over the three asserted prior art patents.  The PTAB concluded that ATI had failed to demonstrate “continuous reasonable diligence,” discounting the inventor’s declaration because it made clear that after the conception date, continuing efforts in the project were redirected “to include an optional feature that is not recited in the claims at issue.” Id. at 1372.  The PTAB determined that ATI had failed to “provide a reasonable way for [the PTAB] to determine whether unexplained lapses have not occurred.”    The PTAB also criticized ATI’s submission of 1300 pages of documentation for not being “self-explanatory” and for not explaining “meaningfully as to which tasks are reasonably necessary for reducing the claimed elements to practice, and which tasks are directed toward developing and testing … optional features.”  Id.

On appeal, the Federal Circuit reversed, holding that ATI demonstrated diligence from conception to constructive reduction to practice.  At the outset, the court criticized the PTAB for applying the wrong standard for diligence.  The Court observed that  “[a] patent owner need not prove the inventor continuously exercised reasonable diligence throughout the critical period,” only that “it must show there was reasonably continuous diligence.”  Id. at 1369 (citing Tyco Healthcare Grp. V. Ethicon Endo-Surgery, Inc., 774 F.3d 968, 975 (Fed. Cir. 2014).  Applying this standard, the court determined that ATI had provided sufficient evidence to demonstrate “reasonably continuous diligence.”  Id. at 1370.

“[A] patent owner need not prove the inventor continuously exercised reasonable diligence throughout the critical period [as the PTAB held]; it must show there was reasonably continuous diligence.”

First, the Court found that the ATI-inventor’s 60 page declaration clearly outlined the evolution of the project that led to the inventions claimed in ATI’s patents.  The Court also found that the declaration adequately explained the significance of the metadata, document logs, and folder histories present in the 1300 pages of documentation ATI provided.  Importantly, the court noted these submissions evidenced that at least one ATI project team member worked on the inventive design every single business day from the date of conception until the constructive reduction to practice.  Id. at 1371.

Second, the Court reminded the PTAB that “[d]iligence is not negated if the inventor works on improvements and evaluates alternatives while developing an invention[.]”  Id. at 1372 (citing In re Jolley, 308 F.3d 1317, 1328 (Fed. Cir. 2002)).  Thus, the court rejected the PTAB’s conclusions that ATI’s pursuit of optional features defeated the necessary diligence.

Third, the court admonished the PTAB for failing to provide any basis for its contrary finding that ATI was not diligent.  The PTAB did not, according to the court, raise any questions whatsoever about the evidence presented during the trial on diligence, or identify any lapses or gaps in activity from conception to constructive reduction to practice.

The Federal Circuit thus concluded that the PTAB erred in finding that ATI was not diligent.  And because the PTAB’s decision of unpatentability of each patent was based on this erroneous finding, the court reversed the PTAB’s decision of unpatentability of each of these patents.