General Instrument Corp., Inc. v. Scientific-Atlanta, Inc., SCIENTIFIC-ATLANT

• Decision Date: 09 June 1993
• Docket Number: INC,No. 92-1491,SCIENTIFIC-ATLANT,92-1491
• Citation: 995 F.2d 209,27 USPQ2d 1145
• Parties: GENERAL INSTRUMENT CORPORATION, INC., Plaintiff-Appellant v., Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 209

995 F.2d 209

27 U.S.P.Q.2d 1145

GENERAL INSTRUMENT CORPORATION, INC., Plaintiff-Appellant v. SCIENTIFIC-ATLANTA, INC., Defendant-Appellee.

No. 92-1491.

United States Court of Appeals Federal Circuit.

June 9, 1993.

Francis J. Murphy, Hopgood, Calimafde, Kalil, Blaustein & Judlowe, New York City, argued for plaintiff-appellant. With him on the brief were Stephen B. Judlowe, Glen M. Diehl and John E. Curtin. Also on the brief was Albert G. Bixler, Hangley, Connolly, Epstein, Chicco & Ewing, Philadelphia, PA, of counsel.

Joseph M. Skerpon, Banner, Birch, McKie & Beckett, Washington, DC, argued for defendant-appellee. With him on the brief were Joseph M. Potenza and Thomas L. Peterson.

Before NIES, Chief Judge, CLEVENGER and RADER, Circuit Judges.

CLEVENGER, Circuit Judge.

This case arises from an interference proceeding in the Patent and Trademark Office (PTO) to determine whether General Instrument Corporation, Inc. or Scientific-Atlanta, Inc. has the right to priority on an invention relating to methods of encrypting and decrypting video signals. The Board of Patent Appeals and Interferences (Board) determined that Scientific-Atlanta was entitled to priority. General Instrument appealed that decision to the United States District Court for the Eastern District of Pennsylvania pursuant to 35 U.S.C. § 146 (1988). Before trial, General Instrument restricted its appeal of the Board's priority decision to the single ground that Scientific-Atlanta's invention was unpatentable under 35 U.S.C. § 102(b) (1988) due to an allegedly invalidating public use more than one year before the filing date of Scientific-Atlanta's patent application. Scientific-Atlanta moved in limine to preclude all testimony regarding the alleged invalidating public use, arguing that the issue had not been "raised" before the Board and thus could not be raised in the section 146 district court proceeding. Rejecting General Instrument's contentions that testimony should be taken, the district court granted Scientific-Atlanta's motion in limine and entered judgment in favor of Scientific-Atlanta. General Instrument Corp. v. Scientific-Atlanta, Inc., No. 91-6923 24 USPQ 2d 1395, 1992 WL 176423 (July 16, 1992) (memorandum opinion and order). General Instrument appeals that judgment. We affirm.

I

Section 146 of Title 35 provides that "[a]ny party to an interference dissatisfied with the decision of the Board ... may have remedy by civil action." Consequently, such a party may timely file a complaint in an amenable federal district court challenging the decision of the Board awarding priority to another. The statute provides for review of the "decision" of the Board, which presumably encompasses both the decision itself and all issues raised by the Board's decision. This court, however, has held that the district court is also authorized to accept proffered testimony on issues raised by the parties during the interference proceedings in addition to issues raised by the Board's decision. Case v. CPC Int'l, Inc., 730 F.2d 745, 752, 221 USPQ 196, 202 (Fed.Cir.1984).

Case left open three questions, however. The court explicitly stated that "[w]hether under some circumstances a district court may properly restrict the admission of testimony on an issue raised before the board is not before us." Id., 730 F.2d at 752, 221 USPQ at 202. Similarly, the court in Case did not determine how one demonstrates that an issue has been raised before the Board in a manner sufficient to qualify it for testimonial admission in a section 146 proceeding. Finally, Case left undecided the question of whether a district court may admit testimony in a section 146 proceeding on an issue concededly not raised in any fashion before the Board.

In this appeal, we must decide whether the public use issue was raised before the Board for purposes of a subsequent appeal pursuant to section 146. If so, we must decide whether the district court nonetheless may exclude testimony on that issue. If not so raised, we must decide whether the district court nonetheless may admit such testimony, and if so, whether the district court properly excluded the testimony proffered in this case by General Instrument.

II

To determine whether the issue of an invalidating public use was "raised" during the interference proceedings, it will be useful to endure a brief excursion into the mechanics of interference proceedings. A common two-party interference before the PTO is an administrative proceeding expected to be concluded in 24 months. 37 C.F.R. § 1.610(c) (1992). Once the PTO sends a notice of declaration of interference to each party, 37 C.F.R. § 1.611(a) (1992), it also sets a period for filing preliminary statements and preliminary motions, a period that usually is three months. 37 C.F.R. § 1.611(d) (1992); 49 Fed.Reg. 48,416, 48,449 (Dec. 12, 1984).

A preliminary statement is a formal document that serves several purposes. Initially, it permits the issuance of show cause orders by an examiner-in-chief or the Board when it would be futile to take testimony. See 37 C.F.R. § 1.640(d)(3) (1992). It also limits a party's proof on date of invention, 37 C.F.R. § 1.629(c) (1992), ^* and provides notice of the opposing party's case at the close of the motions period in most situations. 49 Fed.Reg. at 48,439. A preliminary statement may be filed at any time during the period for filing motions. 37 C.F.R. § 1.621(a) (1992). It is filed in a sealed envelope and is usually unavailable to the opposing party until the examiner-in-chief in charge of the interference rules on the preliminary motions and directs that it be opened. 37 C.F.R. §§ 1.627(a), 1.631 (1992).

The "preliminary" motions are usually a critical part of an interference. Although the Board may consider any issue in order to prevent manifest injustice, 37 C.F.R. § 1.655(c) (1992), a party may not raise any issue at the final hearing that "properly could have been raised" by a preliminary motion pursuant to section 1.633, a motion to correct inventorship pursuant to section 1.634, or in an opposition to these motions if the motions were successful, unless the party shows good cause for the failure to raise the issue in time. 37 C.F.R. § 1.655(b) (1992). Thus,

the preliminary motions which a party files or does not file under § 1.633 can have far reaching consequences for both the outcome of the interference and subsequent ex parte prosecution. Consequently, it is imperative during the three-month period between declaration of the interference and the filing of preliminary motions to analyze long-range strategy with respect to ... priority and patentability issues in the interference.

Bruce M. Collins, Current Patent Interference Practice (P-H) § 1.3, at 5 (1989). The Board may consider any properly raised issue which, in addition to issues raised in preliminary motions, may include issues of unpatentability presented by the examiner-in-chief.

[I]f the examiner-in-chief becomes aware of a reason why a claim corresponding to a count may not be patentable the examiner-in-chief may notify the parties of the reason and set a time within which each party may present its views. After considering any timely filed views, the examiner-in-chief shall decide how the interference shall proceed.

37 C.F.R. § 1.641 (1992). The parties aid in identifying such issues pursuant to their duty to disclose information material to patentability. 37 C.F.R. § 1.56(a) (1992). Such information is submitted to the examiner-in-chief in information disclosure statements.

If the examiner-in-chief's rulings on the preliminary motions do not terminate the interference, the preliminary statements are served on the opposing party and opened. 37 C.F.R. §§ 1.631, 1.646 (1992). The examiner-in-chief sets the time for discovery and taking testimony as well as a date for a final hearing before a three-member board. 37 C.F.R. § 1.654 (1992). After the final hearing, the Board issues a final decision. 37 C.F.R. § 1.658(a) (1992). A party dissatisfied with the Board's decision may request reconsideration of that decision, 37 C.F.R. § 1.658(b) (1992), or it may seek judicial review by proceeding directly to the United States Court of Appeals for the Federal Circuit for review based on the record before the Board. 35 U.S.C. §§ 141-144 (1988). Alternatively, a party may proceed to a district court for a hybrid appeal/trial de novo proceeding in which the PTO record is admitted on motion of either party, but it may be supplemented by further testimony. 35 U.S.C. § 146.

III

We now turn to the facts of this case. The PTO declared an interference between senior party John Lowry, inventor of the subject matter of patent application No. 507,565 (the Lowry application) assigned to Scientific-Atlanta, and junior party Nuno Romao, inventor of U.S. Patent No. 4,594,609 (the Romao patent) assigned to General Instrument in October 1986.

The examiner-in-chief assigned to this interference proceeding set March 18, 1987 as the final deadline for filing preliminary statements and preliminary motions. Scientific-Atlanta filed a preliminary statement on March 18, 1987 in which Scientific-Atlanta indicated that "[a]n actual reduction to practice of [Scientific-Atlanta's] invention was first introduced into the United States by May 3, 1982." Upon reading Scientific-Atlanta's preliminary statement, someone familiar with Scientific-Atlanta's patent application would note that Scientific-Atlanta's reduction to practice date corresponded to the date the inventor demonstrated his product at the 1982 National Cable Television Association meeting and that this public demonstration had taken place more than one year before the June 24, 1983 patent application date. If the product publicly demonstrated had been Scientific-Atlanta's claimed invention, its showing would render the claims covering the invention invalid because an inventor is not entitled to a patent if the invention was in...