PTAB Invalidation of Synthetic Oil Patent Vacated

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By Peter Leung

Nov. 8— REG Synthetic Oils LLC will have another chance to defend some hydrocarbon-related patent claims after a federal appeals court Nov. 8 said an e-mail chain that helped show the invention was conceptualized before a piece of prior art was published was wrongly excluded in a patent validity challenge proceeding ( REG Synthetic Fuels, LLC v. Neste Oil OYJ , 2016 BL 372050, Fed. Cir., No. 2015-1773, 11/8/16 ).

The U.S. Court of Appeals for the Federal Circuit, however, affirmed the Patent Trial & Appeal Board's ruling that several other claims in U.S. Patent No. 8,231,804 are anticipated by another piece of prior art.

The case clarifies which types of evidence may be considered inadmissible hearsay in PTAB proceedings.

Better Hydrocarbons

Neste Oil OYJ filed for inter partes review challenging the validity of a patent covering methods for making a type of hydrocarbon chain that is ideal for certain uses, such as insulation. The board found that claims 1, 3, 4 and 8 lacked novelty in light of one piece of prior art, referred to as Craig, and claims, 1-3, 5 and 8 were anticipated by another piece of prior art, referred to as Dindi.

The PTAB rejected REG's argument that the invention was conceptualized before Dindi was published. In doing so, the board excluded from evidence most parts of an e-mail chain that showed the inventor telling a business partner that he had achieved the purity level required for the invention.

The '804 patent was filed when the inventor could claim a priority date based on the invention's date and a continuing effort to reduce it to practice. The America Invents Act, which passed in 2011, changed the law so that the first inventor to file the patent application has priority.

Communication vs. Content

The Federal Circuit said the PTAB incorrectly applied the hearsay rule. Although the e-mail chain is potentially hearsay, REG offered it for the non-hearsay purpose of showing that the inventor thought he'd achieved the desired purity level, the court said. Where a communication has legal significance, it is not hearsay, it said.

This e-mail communication was legally significant because it shows the inventor told a third party about the conception of his invention at a particular date, the court said. When combined with two pieces of evidence not in dispute, the e-mail chain establishes that the invention was conceived before the Dindi prior art, it said.

The court vacated the PTAB's ruling on the conception issue, remanding for further analysis and fact-finding on claims 2 and 5. It affirmed the PTAB's ruling that claims 1, 3, 4 and 8 were anticipated by the Craig prior art.

Judges Sharon Prost, Richard G. Taranto and Raymond T. Chen decided the case, with Chen writing the opinion. Foley & Lardner LLP represented REG. Finnegan, Henderson, Farabow, Garrett & Dunner LLP represented Neste.

To contact the reporter on this story: Peter Leung in Washington at pleung@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

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