“The PTAB said it was the burden of the patent owner to prove diligence, which it is, but that burden to prove diligence is not a burden beyond all unreasonable belief to the satisfaction of the extraordinarily skeptical PTAB judge who prefers invalidation of claims.”
Earlier today, the United States Court of Appeals for the Federal Circuit overruled the determination of the Patent Trial and Appeal Board (PTAB) in three separate IPR proceedings. The Federal Circuit found the claims of U.S. Patent Nos. 7,742,053, 6,897,871, and 7,327,369 (i.e., the Unified Shader Patents) patentable on appeal. ATI Technologies ULC v. Iancu (Fed. Cir. April 11, 2019).
The question at issue was whether ATI Technologies was diligent from the moment of conception through to the constructive reduction to practice. There was no question that ATI’s conception had pre-dated the prior art of concern.
Upon reading this decision, it is difficult to understand exactly why or how the PTAB could get this issue so wrong. Indeed, this decision exemplifies why many criticize the PTAB as an institution.
The PTAB concluded that ATI Technologies did not prove that diligence had been established, indeed finding that the patent owner did not provide any proof upon which a finding of uninterrupted diligence could be based. The Federal Circuit, in an opinion authored by Judge Newman and joined by Judges O’Malley and Wallach, disagreed. Not only did ATI demonstrate diligence, but the proof they presented established daily diligence.
Furthermore, the Federal Circuit found that the PTAB applied the wrong standard for diligence. The proper standard is whether there was “reasonably continuous diligence.” The PTAB instead applied a “continuous reasonable diligence standard.” Judge Newman wrote:
ATI stated that the PTAB applied an incorrect definition of diligence, and LGE so conceded in its brief before it withdrew from this appeal. The Director instead describes as “boilerplate” the PTAB’s erroneous definition. However, it was not boilerplate, for the PTAB appeared to find a dis- positive difference between “continuous reasonable diligence” and “reasonably continuous diligence,” despite the documentary evidence of activity by ATI on “every business day.” We conclude that the PTAB applied the wrong legal standard for diligence. As explained below, under the proper legal standard, the record is clear that ATI exercised the requisite “reasonably continuous diligence.”
Even LGE conceded that the PTAB applied the wrong standard. This is patent law 101. The law of diligence is not complex or complicated. The standard is well-known and well-established. But getting the standard wrong is only the tip of the iceberg. Not only was there reasonably continuous diligence, but the evidence established diligence on every business day. How, then, can the PTAB explain or justify this decision? This type of evidence-be-damned approach to decision-making is precisely why the PTAB is so notorious among patent owners and this body has so fundamentally eroded the confidence in the U.S. patent system and in a U.S. patent grant.
As the evidence of record showed, ATI continued to increase the number of employees working on the invention until there were over 100 project managers and designers assigned, and at least one person from the project team worked on the invention every non-holiday business day.
It seems the PTAB was of the belief that the patent owner had to prove that there was continuous diligence with respect to each of the claimed elements, not the invention as a whole. But that is not the law. “Diligence is not negated if the inventor works on improvements and evaluates alternatives while developing an invention,” Judge Newman wrote, citing to In re Jolley, 308 F.3d 1317, 1328 (Fed. Cir. 2002). Indeed, the evidence presented thoroughly documented the development of the technology and explained why it was necessary to run the thousands of tests conducted—namely, to be able to “have something you can productize”.
The PTAB was unable to point to any delays or gaps in ATI’s activity, but somehow still found diligence lacking. The PTAB said it was the burden of the patent owner to prove diligence, which it is, but that burden to prove diligence is not a burden beyond all unreasonable belief to the satisfaction of the extraordinarily skeptical PTAB judge who prefers invalidation of claims.
Evidence matters, and the fact that patent owners like ATI are persecuted to the full extent of PTAB capabilities is precisely why reforms are so badly needed.
 The three IPRs were filed by LG Electronics, which withdrew from the appeal and cross-appeal. The USPTO intervened to support the PTAB’s decisions.