In Re: Steed , 802 F.3d 1311 ( 2015 )

United States Court of Appeals
for the Federal Circuit
______________________
IN RE: THOMAS STEED, SOURAV
BHATTACHARYA, SANDEEP SESHADRIJOIS,
Appellants
______________________
2014-1458
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board, in No. 10/819,600.
______________________
Decided: October 1, 2015
______________________
SOURAV BHATTACHARYA, Fountain Hills, AZ, pro se.
NATHAN K. KELLEY, Office of the Solicitor, United
States Patent and Trademark Office, Alexandria, VA, for
appellee Michelle K. Lee. Also represented by JAMIE
LYNNE SIMPSON, AMY J. NELSON.
______________________
Before NEWMAN, CLEVENGER, and DYK, Circuit Judges.
NEWMAN, Circuit Judge.
Thomas Steed, Sourav Bhattacharya, and Sandeep
Seshadrijois (collectively “Steed” or “Applicants”) appeal
the decision of the United States Patent and Trademark
Office Patent Trial and Appeal Board (“Board”) affirming
the rejection of claims 37 and 39–51 of United States
Patent Application No. 10/819,600 (“the ’600 Application”)
2 IN RE: STEED
on the ground of obviousness, 35 U.S.C. § 103. 1 Remain-
ing claims 52–54 were subject to a restriction requirement
at the time of the Board proceeding and were not consid-
ered by the Board. Bd. Op. at 4–5. We now affirm the
Board’s decision.
The Invention
The ’600 Application, entitled “Web-Integrated On-
Line Financial Database System and Method for Debt
Recovery,” was filed on April 6, 2004, with priority
claimed to a provisional application filed on November 13,
2003. The invention is described in the specification as
directed to “a debt records and debt collection system and
database, and in particular to a web integrated debt
records and debt collection system that can be accessed
and operated across the Internet by a variety of users in a
variety of user roles.” ’600 Application, col.1, ll.16–19.
Claim 37 is stated to be representative:
37. A fully automated and web-integrated
debt recovery system including a user interface,
comprising different screen layouts for:
an administrator web page; and
a collector web page; and
a cross-bar switch, where the cross-bar switch
can turn on/off a
connection between any pair of databases; and
wherein:
the system is configured to aid an administra-
tor in a first plurality of roles;
the system is configured to aid a collector in a
second plurality of roles different from said first
plurality of roles;
1 Ex parte Steed, No. 2012-005735 (P.T.A.B. Jan.
23, 2014) (“Bd. Op.”).
IN RE: STEED 3
the administrator web page has first interface
elements specific to the first plurality of roles;
and the collector web page has second inter-
face elements specific to the second plurality of
roles,
wherein certain data is assigned to only the
first plurality of roles, the second plurality of roles
and/or an intersection of the first plurality of roles
and second plurality of roles.
The Examiner rejected all of the claims as obvious in
view of U.S. Pre-Grant Publication No. 2004/0019560
(“Evans”), alone or in combination with other references
(“the Evans Rejections”). The Evans publication is enti-
tled “System and Method for Debt Presentment and
Resolution” and was found by the Examiner to anticipate
the ’600 Application’s web-integrated debt recovery sys-
tem. After unsuccessfully attempting to distinguish the
Evans Rejections on the merits, Steed undertook to re-
move Evans as a reference in accordance with 37 C.F.R.
§ 1.131, a procedure called “swearing back” or “swearing
behind” “under Rule 131,” whereby the Applicant estab-
lishes that it was in possession of the claimed subject
matter before the effective date of the reference. The
Evans effective date is December 23, 2002.
To this end, during examination Steed submitted a
Rule 131 Declaration that included four exhibits, as well
as statements from Steed that Exhibit A showed “concep-
tion of the invention prior to the date of the Evans et al.
reference,” and that Exhibits B, C, and D showed “dili-
gence continuing to the constructive reduction to prac-
tice.” Rule 131 Decl., Paper No. 12 at ¶¶ 4–5 (Sept. 1,
2009). The Examiner found the Declaration and the
exhibits insufficient, stating that the evidence relied on to
show conception was “a high level presentation that does
not include any specifics of the actual invention, only a
broad overview of the idea” and that it “fail[ed] to disclose
any of the key elements of independent claim 37.” Office
4 IN RE: STEED
Action, Paper No. 17 at 3 (Dec. 12, 2009). The Examiner
found Exhibits B, C, and D to be insufficient for demon-
strating diligence, for “there are significant gaps of time
between each of the appendices A–D that amount to
entire years of diligence being omitted” with “a total of
about 63 months’ worth of time unaccounted for to show
due diligence with respect to the invention.” Id. at 4.
The Applicants filed two new exhibits consisting of
pages from the notebook of co-inventor Bhattacharya and
the diary of co-inventor Steed. These exhibits consisted of
over 150 pages of documents that Steed stated established
“both the inventive act and reduction to practice prior to
the publication date of Evans et al.” and “due diligence of
nearly 63 months.” Pet. for Revival and Amendment,
Paper No. 23 at 22, 28 (Sept. 14, 2010). The Examiner
found these exhibits, considered together with the Decla-
ration and earlier-filed exhibits, to be insufficient to show
conception or reduction to practice, and that the addition-
al documents “only succeed in accounting for a total of 6
months of time from the originally deficient 63 months.”
Examiner’s Action, Paper No. 34 at 4–6 (March 3, 2011).
Steed appealed to the Board. The appeal brief includ-
ed a Table entitled “Due Diligence/Continued Improve-
ment Track Record.” Bd. Appeal Br. 5. The Table is a
chronological listing of entries in the “Inventor Activity
Logs” and “Inventor Intranet Site Activity Logs,” stated to
show “diligence/continued improvement” supported by
“Additional Evidence (by Affidavit & Testimony).” Id.The “Inventor Activity Logs” referred to various “notebook
copies and computer dated files” included in Exhibit B-I
and B-II of the Board Appeal Brief. Id. at 28. The “In-
ventor Intranet Site Activity Logs” refer to “proof of
monthly payment to keep the intranet site up, which
hosted the software,” and the “Additional Evidence” refers
to “evidence by testimony or affidavit, which can of course
be enjoined as/when required” to prove diligence during
every week over a period of seven years. Id. at 28–29.
IN RE: STEED 5
During the Board hearing, the Board stated that it
could not consider any evidence not already of record
before the Examiner, referring specifically to the Table
and other materials presented at the hearing. Following
the hearing but before the Board’s decision, Steed filed
several motions, including: a “Motion to Set Oral Argu-
ments Summary on Record,” consisting of a summation of
points and arguments presented at the hearing; a “Motion
to Set Appeal Exhibits on Record (Post Oral Arguments)”
which asked the Board to accept and include in the record
the new material that Steed had brought to the oral
argument (viz., a PowerPoint presentation, inventor
logbooks, and two additional affidavits); and a “Motion for
Default (Post Oral Arguments)” stating that the Examin-
er had not submitted a responsive Answer to Steed’s
Briefs, and that Steed is therefore entitled to a default
judgment.
Steed states, on appeal to this court, that the Board
did not rule on these motions and this failure warrants
judgment in favor of Steed, for Steed states that a favora-
ble ruling on any of these motions would have resulted in
sufficient evidence to demonstrate reduction to practice or
conception and diligence, before the effective date of the
Evans reference. In its decision, the Board stated that it
could not consider any new argument or new evidence
without a showing of good cause why the argument or
evidence was not previously presented to the Examiner,
citing 37 C.F.R. § 41.37(c)(1)(vii) (2011) (“Any arguments
or authorities not included in the brief . . . will be refused
consideration . . . unless good cause is shown”) and
§ 41.47(e)(1) (“[A]ppellant may only rely on evidence that
has been previously entered and considered by the prima-
ry examiner and present argument that has been relied
upon in the brief.”). Referring to the Table, the Board
stated:
[B]ecause neither the chart itself nor the contents
of the chart are set forth in the Declaration, it is
6 IN RE: STEED
considered argument insufficient to establish spe-
cific facts to support due diligence.
Furthermore, even if the Chart was set forth in
the Declaration, the chart merely identifies that a
piece of evidence corresponds to a certain date,
but does not explain what fact that piece of evi-
dence is meant to support as having occurred on
that date.
Bd. Op. at 15. The Board ruled that Steed had not set
forth specific facts to establish dates and acts of either
conception or reduction to practice. The Board stated that
the reduction to practice assertions at oral argument “are
not set forth in the Appeal Brief or the Reply Brief, and
are thus considered waived . . . . Appellants have not set
forth sufficient facts to support an actual reduction to
practice.” Bd. Op. at 7–8.
The Board then reviewed and affirmed the Examin-
er’s rejection on the ground of obviousness based on the
Evans reference. This appeal followed.
DISCUSSION
The principal issue on appeal is whether Steed ante-
dated the Evans reference in accordance with the re-
quirements and law implemented by Rule 131, for Steed
bears the burden to establish “facts . . . in character and
weight, as to establish reduction to practice prior to the
effective date of the reference, or conception of the inven-
tion prior to the effective date of the reference coupled
with due diligence from prior to said date to a subsequent
reduction to practice or to the filing of the application.”
37 C.F.R. § 1.131(b). Steed argues that the Declaration
and exhibits meet the requirements of either actual
reduction to practice or conception plus diligence.
IN RE: STEED 7
Standard of Review
When the issue of priority concerns the antedating of
a reference, the applicant is required to demonstrate, with
sufficient documentation, that the applicant was in pos-
session of the later-claimed invention before the effective
date of the reference. Demonstration of such priority
requires documentary support, from which factual find-
ings and inferences are drawn, in application of the rules
and law of conception, reduction to practice, and diligence.
The purpose is not to determine priority of invention—the
province of the interference practice—but to ascertain
whether the applicant was in possession of the claimed
invention sufficiently to overcome the teachings and effect
of an earlier publication of otherwise invalidating weight.
Thus, the facts and law of conception focus on wheth-
er the evidence presented by the applicant demonstrates
that the inventor had a definite idea of the invention, as it
would thereafter be applied in practice. The principles
are legal, but the conclusions of law focus on the evidence,
for which the Board’s factual findings are reviewed for
support by substantial evidence.
Similarly, actual reduction to practice under Rule 131
is a question of law, and depends on the evidence that the
invention, as conceived, was shown to work for its intend-
ed purpose, before the date of the adverse reference. The
Board applies the standards of precedent. See, e.g.,
Holmwood v. Sugavanam, 948 F.2d 1236, 1238 (Fed. Cir.
1991) (“[A]n applicant must show that ‘the embodiment
relied upon as evidence of priority actually worked for its
intended purpose.’”) (citation omitted).
On appellate review, we review the Board’s underly-
ing findings for support by substantial evidence, and give
plenary review to the Board’s conclusions of law based on
those findings. See In re Jolley, 308 F.3d 1317, 1320 (Fed.
Cir. 2002) (“If the evidence in record will support several
reasonable but contradictory conclusions, we will not find
8 IN RE: STEED
the Board’s decision unsupported by substantial evidence
simply because the Board chose one conclusion over
another plausible alternative.”).
Issues of diligence concern the period just preceding
the effective date of the adverse reference, to the actual or
constructive reduction to practice. Diligence turns on the
factual record, and we review Board determinations as to
diligence for support by substantial evidence in the rec-
ord. While stating that it did not need to reach the issue
of diligence because conception had not been demonstrat-
ed, the Board nonetheless found the evidence demonstrat-
ing diligence to be insufficient.
The Ruling of Waiver
The Board held that “assertions that the claimed in-
vention was actually reduced to practice in December of
1997, and at the latest by August of 2000 are not set forth
in the Appeal Brief or the Reply Brief, and are thus
considered waived.” Bd. Op. at 6. We discern no such
waiver. To the contrary, the appeal briefs included well
over a hundred pages of exhibits and arguments, all
directed to actual reduction to practice. Although the
Board concluded that the evidence did not establish an
actual reduction to practice, the issue was not omitted
from the appeal briefs.
Steed’s briefs before the Board are clear that Steed
was attempting to establish conception, diligence, and
actual reduction to practice. The flaw in Steed’s proofs
was in the content of the documentary evidence, not in
any purported waiver. It is beyond debate that Steed was
attempting to swear back of Evans, and that this was the
focus of the evidence and argument presented to the
Examiner and the additional documents and affidavits
presented to the Board.
Steed stated in the Board Appeal Brief that “Appli-
cants are also able to establish the invention date, to
IN RE: STEED 9
1997.” Bd. Appeal Br. 17. In the Board Reply Brief Steed
stated: “Appellants invention . . . has been and continues
to be real-world software that was executed on an internal
hosting website beginning in 1997.” Bd. Reply Br. 19.
These assertions are grounded in the Rule 131 Declara-
tion filed with the Examiner, where Steed averred that
“we . . . constructively 2 reduced to practice before Decem-
ber 23, 2002.” Rule 131 Decl., Paper No. 12 (Sept. 1,
2009).
Steed’s references to activity earlier than the Evans
effective date negate the Board’s ruling that Steed waived
the issue of actual reduction to practice. Steed pressed
this issue before the Board during oral argument, arguing
that the inventors conceived the invention and actually
reduced it to practice “about five years before” the Evans
date, in “the second half of ’97.” Bd. Hr’g Tr. at 9. De-
spite its charge of waiver, the Board appears to have
considered the relevant information.
Actual Reduction to Practice
The burden of showing actual reduction of practice is
on the party seeking its benefit. In re NTP, Inc., 654 F.3d
1279, 1291 (Fed. Cir. 2011). To demonstrate an actual
reduction to practice, the applicant must have: (1) con-
structed an embodiment or performed a process that met
all the limitations of the claim and (2) determined that
the invention would work for its intended purpose. In re
Omeprazole Patent Litig., 536 F.3d 1361, 1373 (Fed. Cir.
2008).
2 At that time Steed was acting pro se and misstat-
ed the usage “constructively,” but the intended meaning is
clear. See Erickson v. Pardus, 551 U.S. 89, 94 (2007) (“A
document filed pro se is ‘to be liberally construed.’”).
10 IN RE: STEED
In examining the substance of Steed’s assertions of
reduction to practice, the Board found that Steed did not
provide, with the Rule 131 Declaration, evidence adequate
to demonstrate an actual reduction to practice before the
Evans effective date. Steed argues that the Board ignored
two statements in the appeal briefs, which Steed states
set forth proof of an actual reduction to practice. Steed
had stated in the appeal brief that the “Evans et al appli-
cation file date is in December 2002, while Applicants had
a working prototype much before December 2002.” Bd.
Appeal Br. 16. Steed had also stated in the Reply Brief,
responding to the Examiner’s Answer, that “Appellants
invention . . . has been and continues to be real-world
software that was executed on an internal hosting website
beginning in 1997.” Bd. Reply Br. 19.
The Board held that Steed did not provide facts show-
ing any specific dates or events of actual reduction of
practice but only presented statements of generalized
activity. Steed responds that these statements were
supported by two independent third-party witnesses,
whose affidavits were offered and discussed during the
Board hearing. Steed states that these witnesses corrobo-
rate the inventors’ activities and support the asserted
reduction to practice, and complains that the Board
refused to receive the affidavits into evidence because
they were not provided until the Board hearing. Steed
states that these “two non-inventor witness affidavits . . .
place the ARTP [actual reduction to practice] at a date no
later than June 2000 and August 2000.” Appeal Br. 8.
The Board declined to rely on these two affidavits or
other materials presented for the first time at the Board
hearing, telling Dr. Bhattacharya, who argued on behalf
of the Applicants, that “we cannot rely on any information
in [the materials presented for the first time at the Board
hearing] in rendering our decision . . . . I’m sorry sir, you
cannot submit evidence here. That’s the problem.” Bd.
Hr’g Tr. 3, 7; see 37 C.F.R § 41.47(e)(1) (“[A]ppellant may
IN RE: STEED 11
only rely on evidence that has been previously entered
and considered by the primary examiner and present
argument that has been relied upon in the brief or reply
brief.”)
Steed argues that these third-party affidavits were
not new evidence because they were listed on the Table
included in the Appeal Brief to the Board. Steed states
that the two affidavits “were presented in [the Table].
Rightmost column for the row of the year 2000, in the
Appeal brief, and also hand carried during the Oral
Hearing.” Appeal Br. 10. Steed states that the Table
shows work “[d]uring every week of 2000.” Bd. Appeal Br.
5. The Board stated that it did not consider the Table
because it had not previously been provided to the Exam-
iner. The Board also stated that the Table appears to be
directed to diligence starting in 1997 and does not explic-
itly describe the claimed system. The Board found that
the Table does not identify any specific activity on any
specific date or provide any details to relate such activity
to the claims on appeal. Bd. Op. at 15.
A note to the Table stated: “If Examiner or Appeal
Board has any question re: the above data and how they
can be traced to the Exhibits, please call the Inventors.”
Bd. Appeal Br. 29. Steed criticizes the Examiner and the
Board for not having called the Inventors as requested.
We do not discern a breach of agency duty, for although it
might indeed have assisted this pro se applicant to be
advised of the insufficiencies in the evidence, the Examin-
er had already responded that specific dates and activities
were lacking from the materials provided. See, e.g., Office
Action, Paper No. 34 at 4–6 (March 3, 2011). The Board
criticized the “hundred pages” of documents as being
“replete with shorthand notations, incomplete records of
phone conversations, and technical terminology spread
out over many years . . . we find many of these documents
almost completely incomprehensible without the Appel-
12 IN RE: STEED
lants providing context.” Bd. Op. at 8. On our review,
this criticism is accurate.
No specific dates or acts tied to the several elements
of the claims are referenced in the inventors’ Declaration
and the exhibits. The Declaration states that the inven-
tion was “reduced to practice before December 23, 2002”
and that “from about November 26, 1997 through April 6,
2004 (the filing date of the . . . application) . . . we engaged
in a diligent and reasonably continuous effort . . . to
develop, market, manufacture, and seek patent protection
for the invention.” Rule 131 Declaration, Paper No. 12
(Sept. 1, 2009). The Board observed that although Steed
provided many exhibits, they did not identify any specific
pages or text as showing an actual reduction to practice.
The Board stated that it was “incumbent upon Appellants
to explain the content of the Exhibits, and any relevant
relationships between different portions of the Exhibits.”
Bd. Op. at 9–10; see In re Borkowski, 505 F.2d 713, 719
(CCPA 1974) (“It was appellants’ burden to explain the
content of these notebook pages as proof of acts amount-
ing to reduction to practice.”).
We agree that the exhibits are not self-explanatory,
and the Examiner had adequately warned the applicant,
stating in the Final Office Action that “most of the notes
included for the [year] 2000 are all notes to call people
without actually including what phone calls were being
made about and what was being accomplished with
reference to the invention” and “there are 57 months of
time unaccounted for in applicant’s attempt to show due
diligence,” among other things. Office Action, Paper No.
34 at 5–6 (March 3, 2011). In an earlier Office Action, the
Examiner stated that “Appendix A . . . does not include
any specifics of the actual invention” and “there are
significant gaps of time between each of the Appendices
A-D that amount to entire years of diligence being omit-
ted.” Office Action, Paper No. 17 at 3–4 (Dec. 9, 2009).
IN RE: STEED 13
On this appeal, Steed argues that there were “multi-
ple, unambiguous and irrefutable statements” that
showed actual reduction to practice in 1997 and no later
than mid-2000, based on the Declaration and exhibits and
the Table and the two third-party affidavits. Appeal Br.
8. Steed points to the “tabular summary, with a footnote
inviting USPTO examiner to engage in detail discussion.”
Appeal Br. 15–16. Steed does not offer or identify specific
dates or events in relation to the claims and the various
steps thereof.
Steed argues that the two third-party affidavits were
properly before the Board, stating that 37 C.F.R.
§ 41.47(e)(2) permits new evidence for good cause. This
regulation does not so provide. Section 41.47(e)(1) states
that appellants before the Board shall “only rely on evi-
dence that has been previously entered and considered by
the primary examiner and present argument that has
been relied upon in the brief or reply brief.” The excep-
tion stated in § 41.47(e)(2) only allows appellants to rely
on a new argument when it is based upon a recent deci-
sion of either the Board or a court. See 37 C.F.R.
§ 41.33(d)(2) (“All other affidavits or other evidence filed
after the date of filing an appeal . . . will not be admit-
ted.”).
We agree with the PTO argument, on this appeal,
that
[T]he Board cannot be faulted for not reviewing
evidence that was not presented to it or to the Ex-
aminer. To the extent Appellants have better
proof of an earlier actual reduction to practice or
conception date, the proper remedy is to file a con-
tinuation application and present the evidence to
the Examiner in the first instance.
PTO Br. 24. We conclude that substantial evidence
supports the Board’s findings, and the ruling that Steed
did not establish an actual reduction to practice before the
14 IN RE: STEED
Evans effective date of December 23, 2002. That ruling is
sustained.
Conception and Diligence
An inventor can antedate a Section 103 reference by
showing that the invention was conceived before the
effective date of the reference, with diligence to actual or
constructive reduction to practice. 37 C.F.R. § 131(b).
Conception is “the formation, in the mind of the in-
ventor, of a definite and permanent idea of the complete
and operative invention, as it is thereafter to be applied in
practice.” Mergenthaler v. Scudder, 11 App. D.C. 264, 276
(D.C. Cir. 1897); see Coleman v. Dines, 754 F.2d 353, 359
(Fed. Cir. 1985). The Board found that the evidence that
Steed provided did not establish conception before the
Evans effective date, and that Steed did not adequately
explain the exhibits and how they showed conception of
the claimed subject matter, or when such conception
occurred. The Board recognized that the Table “identifies
that a piece of evidence corresponds to a certain date” but
criticized the absence of evidence to “explain what fact
that piece of evidence is meant to support as having
occurred on that date.” Bd. Op. at 15.
The Board found that the exhibits did not provide in-
formation sufficient to establish that the inventors con-
ceived the claimed invention before the Evans date, or to
establish diligence to reduction to practice. See MPEP
§ 715.07(a) (Feb. 2003) (“Under 37 C.F.R. § 1.131(a), the
critical period in which diligence must be shown begins
just prior to the effective date of the reference or activity
and ends with the date of a reduction to practice, either
actual or constructive.”). Although the claimed invention
is a method conducted by computer software, this does not
avoid the need for sufficient evidentiary specificity.
The Board’s conclusion that conception or reduction to
practice before the Evans date was not established is
IN RE: STEED 15
based on findings that are supported by substantial
evidence and must be sustained. Thus the Evans publica-
tion remains as a reference. The PTO held that this
reference served to invalidate the Steed claims on the
ground of obviousness.
Obviousness
On this appeal Steed simply states that Evans “signif-
icantly non-overlaps with the current invention.” The
PTO points out that Steed advances no substantive ar-
guments of non-obviousness. PTO Br. 8. This is correct.
In the absence of a reasonable showing that the Examiner
and the Board erred in deeming the Steed system obvious
in view of the Evans Rejections, the rejection must be
sustained.
Due Process
Steed states that the Examiner and the Board violat-
ed due process by not contacting the Applicant as re-
quested by the footnote to the Table, by not considering
the third-party affidavits, and by failing to respond, in the
Examiner’s Answer, to all of the arguments presented by
Steed. Appeal Br. 16–17. We do not discern a failure of
due process, or unfairness, on the record of the PTO
proceedings. The appropriate issues were raised, and
Steed’s submissions appear to have been fairly considered
by the Examiner and the Board.
Steed also argues that the Board erred in failing to
rule on Steed’s three post-hearing motions. Steed states
that these motions would have “set the correct evidences
on record, as well as led to a Summary Judgment against
the USPTO (due to USPTO Examiner failing to comply
with MPEP rules.” Appeal Br. 22–23. In the circum-
stances, and recognizing that the motions relate to the
Board hearing and did not conform to Board regulations,
we do not discern reversible error in the Board’s omission
of reference to or specific action on these motions.
16 IN RE: STEED
CONCLUSION
Substantial evidence supports the Board’s factual
findings, and the Board correctly applied the law in ruling
that Steed did not establish possession of the invention
described and claimed in the ’600 Application before the
effective date of the Evans reference. Thus the claims
were properly rejected on the ground of obviousness in
view of the Evans Rejections. The Board’s decision is
affirmed.
AFFIRMED