Natural Alternatives v Iancu, Fed. Cir. 2017-1962

In this decision, the United States Court of Appeals for the Federal Circuit (“CAFC”) reviews the adverse effect of the removal of a priority claim in a patent application forming part of a chain of patent applications. The CAFC affirmed the Patent Trial and Appeal Board’s (“the Board”) decision confirming the United States Patent and Trademark Office’s (“USPTO”) finding that Natural Alternatives International’s (“NAI”) patent claims could not claim priority to the first US patent application. [pg. 2]

Background

NAI had filed a chain of eight US patent applications “generally directed to increasing athletes’ endurance” between 1997 and 2011. The subject of the appeal is the eighth application, which developed into US Patent No 8,067,381 (“381 Patent”). [pg. 2] In each of its applications, NAI included a priority benefit statement under 35 USC § 120 (“§ 120”), claiming priority back to the filing date of the first US application, which developed into US Patent No 5,965,596 on October 12, 1999 (“596 Patent”). [pg. 2-3] Before the fourth patent application issued, NAI filed the fifth patent application on Nov 18, 2003, which claimed priority to the fourth through first applications. NAI then filed its sixth application on August 29, 2008 while the fifth application was pending. [pg. 3] A few days after filing the sixth application, NAI amended its fifth application to delete the benefit claim to the fourth through the first applications and to claim priority only to the 2003 provisional application. The sixth through eight applications subsequently issued as patents, “but with a statement seeking the benefit of the fifth through first applications in addition to the 2003 provisional application.” [pg. 3-4]

Litigation between Woodbolt and NAI involving the 381 Patent started in December 2011. In May 2012, Woodbolt sought inter partes reexamination of the asserted patent claims, arguing that the claim to priority of the 381 Patent is defective because NAI terminated their claim to the priority of the first four applications when the fifth application was amended, therefore breaking the chain of priority between the fourth and fifth applications. [pg. 4] NAI argued that the sixth application maintained its priority claim back to the first application because NAI did not amend the “Cross Reference of Related Applications” in the sixth application. [pg. 4] The examiner rejected the reexamined claims and closed prosecution. [pg. 4-5] NAI appealed the examiner’s decision to the Board, which affirmed the examiner’s rejections and denied NAI’s request for rehearing. NAI challenges the Board’s priority determination to the CAFC; arguing it erred in denying the 381 Patent priority back to the first US application in the priority chain. [pg. 5]

The Amendment Broke the Priority Chain

NAI first submits that the priority was “vested” with the sixth application once the sixth application met all the criteria of § 120. [pg. 6] NAI relies on Loughlin v. Ling,  which stated “[p]rovided the criteria in § 120 are met, applications ‘shall,’ without exception, receive the benefit of the earlier filing date.” The CAFC explains that a “specific reference” in the context of § 120 means that the application seeking the benefit needs to state that it claims the benefit of the earlier filed application’s filing date, identify each of the earlier filed application by number and explain how they are related to one another. [pg. 7] “NAI’s ‘vesting’ argument conflates properly claiming priority and demonstrating entitlement to priority.” Therefore, claims in a patent are not entitled to priority under § 120 until the owner proves entitlement to the USPTO, Board or CAFC. [pg. 8] The CAFC also noted that “we have previously acknowledged that amending an earlier filed parent application may affect the priority of its child applications.” [pg. 9] The Board found that the eighth application did not meet the “specific reference” requirement because the eighth application claimed benefit of the first application filing date by way of the fifth application and NAI had amended the fifth application to claim priority only to the 2003 provisional application. The Board did not err in making this determination. [pg. 10]

NAI also submits that the waiver of priority is limited to the instant application and does not extend to subsequent applications. [pg. 6] In its analysis, the Court starts by referring to the Manual of Patent Examining Procedure (“MPEP”), which mentions that “[a] cancellation of a benefit claim to a prior application may be considered as a showing that the applicant is intentionally waiving the benefit claim to the prior application in the instant application” [pg. 10-11] The USPTO noted that NAI interpreted this passage too narrowly, noting that “the intentional cancellation of a benefit claim pursuant to MPEP § 201.11 can similarly affect another application’s entitlement to a benefit claim.” [pg. 11] The CAFC notes that the MPEP does not have force of law and does not bind the CAFC. Nonetheless, the CACF reviewed § 201.11 and found that nothing in the text limits the scope of waiver to only the instant application and not downstream applications. [pg. 11]

NAI further argues that the Board erroneously viewed priority as a single growing chain rather than multiple fixed chains; that § 120 and the case law must be interpreted as providing for a new priority chain created at each new filing. [pg. 6] The CAFC notes that NAI neither explains why § 120 compels this interpretation, nor provides any case law to support this argument. The CAFC adds that “The Supreme Court has previously explained that under § 120, parent and continuing applications ‘are to be considered as parts of the same transaction, and both as constituting one continuous application, within the meaning of the law.’” [pg. 12]

Finally, NAI argued that viewing priority as a single growing chain limits its ability to seek protection. [pg. 6] The CAFC explains that by deleting the benefit claim in a Continuation-in-part (“CIP”) application, “the twenty-year patent term of the patent issuing from that CIP application would extend from the CIP application’s filing date instead of the parent application’s earlier filing date.” The CAFC notes however that under NAI’s theory of priority, NAI would “gain patent term on its fifth application while simultaneously shielding its child applications”, and that NAI cannot have it both ways. The CAFC therefore affirmed the Boards decision. [pg. 14]

Commentary

This decision confirms the importance of keeping a priority claim to the first patent in a chain of patent applications. Since NAI claimed priority to its earlier patent applications “by way of” the fifth application, the chain of priority was “broken” when it amended the fifth application to delete the benefit claim to the fourth through the first applications and to claim priority to only the 2003 provisional application. [pg. 3] It is therefore important for patentees to seek the services of able patent agents who will provide guidance to their clients, as well as high quality drafting for patent applications. For more information, please contact a PCK patent agent or IP lawyer.