PATENT INTERFERENCESHARING THE EXPERIENCE

PRESENTATION TO

FPPT’S

NATIONAL ANNUAL CONFERENCE

May 30, 2003

Technology or Patent• Photosensitivity phenomena discovered at CRC by Dr. Ken Hill in 1978,

setting the stage for the second invention - how to produce fibre Bragg gratings.

• Bragg gratings

• Key Patents– Slit mask patent (5,104,209) – filed Feb 19, 1991;

issued April 14, 1992– Continuation in Part (CIP) of 209 - filed Dec 20, 1991;

issued June 1, 1993– Phase Mask patent (5,367,588); filed Oct 29, 1992;

issued Nov 22, 1994

Significance of Bragg gratings

• One of four major milestones in the development of optical communications

– Invention of Laser (1950’s)– Development of low loss optical fibre

(1970’s)– Invention of optical fibre amplifier

(1980’s)– Invention of Bragg gratings

(1990’s)

Applications

• WDM systems to increase system capacity

• More stable Lasers• Dispersion compensation• Sensors• Many others

Exploitation of Technology by CRC

• Cross–license with United Technologies Corporation (UTC)

• Licensed to 30 major companies; 6-7 in Canada

• $10 million in royalties to CRC and $30 million to UTC, to date

• $3 million to CRC in 2001

Declaration of Interference

• What is Interference?

• Three Parties– CRC - Phase Mask Patent (Hill 5,367,588)

Filed - October 29, 1992; issued - November 22, 1994

– Lucent - Anderson Patent 5, 327, 515 Filed - January 1993; issued - July 5, 1994

– Dr. Elias Snitzer, Rutgers University - Application 08/310,426

Original filing - October 20, 1992 CIP - September 22, 1994

Declaration of Interference (continued)

• February 1999 - Declaration of Interference. CRC receives a complicated 39-page document with 14 days to identify lead counsel, back up counsel and requirement to file significant documentation

Fight or Flight ?

• Funding the Defense– Typical cost for Interference - $3-4

million)– CRC Royalties spent very quickly - 25% to

inventors, 25% to Corporate and 50% to the lab. No cash in the bank

– Where are the millions going to come from?

Fight or Flight (continued)

• Identifying the Right Law Firm – Complicated filing requirements with specification

covering everything from how to file papers, to labeling of exhibits, location of holes, and time table, to restrictions on motions, oppositions, and replies

– Many interferences cases are lost simply because many legal firms are not able to follow all the complicated procedures (since interference cases are so rare)

– Lack of in-house experience (Department of Justice Legal Counsel) - “Interference – what is that !!!”

Fight or Flight (continued)

• CRC’s Patent Firm researched U.S.-based firms that could handle interference and suggested Antonelli, Terry, Stout and Krauss, (ATSK) LLP in Arlington, VA

• A medium firm - not as expensive, but good track record of success

• Contract raised between ATSK and Department of Justice, even though CRC was paying the shot

• Every time we increase the amount of contract, which we had to do, we had to provide justification to Dept of Justice (even though they had no idea of what was going on – they helped with negotiations on fees)

Fight of Flight (continued)

• Convincing CRC’s Partner to Join the Fight, June 1999

– UTC’s initial reaction:• Why should UTC pay for defending CRC’s patent?• If CRC were to lose one of its key patents, why should UTC not

reserve the right to renegotiate the respective royalty shares in light of a much weakened patent portfolio belonging to CRC?

• Working-level buy-in sought and obtained – later sent a written document to help convince UTC’s senior management.

– UTC agreed to cover 50% of the cost up to a maximum of $200,000 (U.S.) for Phase One. Furthermore, UTC agreed not to change the royalty shares, even if CRC were to lose the case.

– Of the $200,000 (U.S.) budgeted, $152,000 was spent during Phase One.

Fight or Flight (continued)

• Senior Management Buy-in Essential– CRC President gets Deputy Minister support for the

other 50%

• Managing Expenses– Working closely with the legal firm to assign

probability of success to each motion– Guestimating cost for each motion– Filing selective motions only – Keeping low profile with Lucent– Regular financial reports to UTC (maintaining trust)– Regularly briefed my counterpart at UTC

Phase One:February 1999 - January

2001• Before determining first to invent, the

Board gives each party an opportunity to raise any issues through preliminary motions. Board then gives its Preliminary Decision before entering Phase Two, in which Board rules on each party’s invention date through its final decision.

Assessing CRC’s Case• Factors against us

– CRC filing date of October 29,1992 was 9 days after Snitzer’s October 20, 1992;

– Lucent filed on January 1993, but most likely had an invention date earlier than CRC’s filing date.

– Invention evidence in Canada was inadmissible - our biggest handicap

– Dr Snitzer - an extremely intelligent and smooth scientist with 100 or so patents to his credit, making him a formidable adversary for cross examination.

– Chances of winning on invention date considered very slim - almost nil

CRC Strategy with Snitzer

• Do everything during Phase One to eliminate Snitzer – attack him on all possible angles including a suicide attack (prior art which could kill all three patents)

Strategy with Lucent• CRC had no conflict with Lucent - AT&T, the

parent corporation, had a license from UTC for the patents.

• Wanted to join forces, even offered a free license (for which they later paid $1.5 million - our famous half hour telephone conference call

• In any event, did not want to attack them too seriously. Lucent’s victory would have had minimal impact on CRC, we theorized. Therefore, we wanted to tread softly in the event both lose.

Preparing CRC’s Preliminary Motions

• Filed a total of ten preliminary motions by pulling together information from a number of sources including the following:– Technical analysis and other information supplied by

UTC and CRC– Information and arguments from patent prosecution

histories (so called file wrappers)– Prior art searches– Brain storming workshops , numerous telephone

discussions– Input from expert witnesses– Input from our patent agent

CRC’s Main Preliminary Motions

• Lack of written description (claims 26, 28, 35 and 39)• Snitzer description is not enabling - i.e. it does not enable

one skilled in the art to reproduce results of claimed invention without undue experimentation.

• Does not disclose the best mode• Reissue of 588 based on claims 209 and 739• Significant number of CRC claims do not correspond to

the Count (succeeded in having claims 2,12,13,14,15,16 and 24 declared as not corresponding to the count in the preliminary decision)

• Prior Art - Rubinov, a Russian scientist (poison pill strategy) - luckily, as it turned out later on, this motion was rejected.

CRC’s Main Preliminary Motions (continued)

• Derivation by Snitzer and inequitable conduct

• Amplitude versus phase mask ( this would have been the obvious angle to pursue, but we did not take this tack due to the presiding Judge on the Appeal Board in Phase One who ruled in favour of Snitzer and was now on the Board for the interference case)

• Opposition Motions– Each party filed opposition to the motions of other two

parties

• Reply Motions– Each party had yet another chance to file replies to other

two parties oppositions

• Hearing - July 2000– Lapsed time of about 18 months from start of

Interference proceedings – After having received written input from three parties

(some 36” of paper at least), a panel of three Judges held a day-long hearing of oral arguments from each party

CRC’s Main Motions (continued)

Preliminary Decision - Jan 2001 (85 page document)

• Lack of enablement - denied• Lack of best mode - denied• Prior art by Rubinov - denied• Re-issue of 588 - denied• Derivation and inequitable conduct -

not considered

Preliminary Decision - Jan 2001 (85 page document)

(continued)• Lack of written description - partial success

(invalidated Snitzer’s claims 26, 28, 35 and 39)• Some of CRC’s motions do not correspond to

interference - partial success (claims 2, 3, 4, 12, 13, 14, 15, 16 and 24 declared outside of interference - zero order nulled mask and chirping)

• Interference redefined - no practical claims, only conceptual claims for the use of phase mask remain as part of interference.

• WE PUT ON A BRAVE FACE AND DECLARED PARTIAL VICTORY

The battle heats up as new foe enters picture

• Snitzer sells/assigns his application to Corning Corporation in May 2001

• The bar raised to new heights (Corning’s history of shutting out competition through patent strangulation and litigation against infringing firms)

• Corning hires one of the largest law firms in Washington, as if their own army of legal staff was not enough

The battle heats up as new foe enters picture

• Reaffirmation that CRC Senior Management is prepared to continue the war

• Replenish the war chest, as Justice Canada instructed to increase contract with ATSK from $450,000 to $750,000 U.S.

• Second Agreement with UTC to continue financing the war chest

• UTC agreed to share 50% of the cost for Phase Two.

Attempts At Settlement

• Requirement of the U.S. PTO prior to commencing next phase

• Three attempts at settlement go nowhere

• Snitzer demanded $25 million• Snitzer and Corning seemed too

confident of victory

Second Phase(Jan 2001 - August 2002)

• OBJECTIVE OF PHASE TWO– Now that the interference matter was clarified, the

objective of phase two was to determine who invented first.

• PROCESS– Cross-examinations (none in Phase One; Phase Two relied

heavily on this)– Briefs– Opposition briefs– Reply briefs– Hearing - April 2002– Final decision

Invention DatesCRC

Had considerable evidence that the invention was reduced to practice in 1991. Unfortunately any evidence in the form of activities performed in Canada was not allowed in the US before the Free Trade Agreement.• Conception date - September 8, 1992 - based on a

receipt from S. Cooperman, the journal production editor • Constructive reduction to practice - October 29, 1992

(filing date)• Reasonable diligence between Sept 8, 1992 and Oct 29,

1992??

Invention Dates

CRC argued that preparation of the patent application by a patent agent registered in the US constituted diligence, based on previous case law. Success of this argument was not assured since the patent agent was not based in the U.S.

– Our invention date was likely to be limited to October 29, 1992 rather than September 8, 1992, which would have been the best outcome for us.

Derivation ArgumentCRC’s second hope• Snitzer was the guest editor of 1993 Annual Review of Materials

Science and had invited CRC’s Dr. Hill to submit a paper on photosensitivity research.

• Dr. Hill sent a fax on April 24, 1992 to Snitzer. Snitzer denied ever receiving this fax.

• Dr. Hill sent the manuscript to S. Cooperman which she received on September 8, 1992. She sent this to Snitzer.

• Snitzer denied receiving it, having it in his files, nor ever reading it.

• CRC’s counsel assigned a very low probability to success to this motion (10%) and in fact did not even want to proceed with it. CRC insisted that they do. In any event, we were quite prepared to lose and had planned to appeal.

Snitzer/Corning• Filing - October 20, 1992• Conception date - July 22, 1992 - based on oral

discussion between Dr. Prohaska and Dr. Snitzer• July 29, 1992 - Invention disclosure submitted to

Rutgers University• Corroboration by Dr. Stubbs and Dr. Rishton• Were Snitzer to succeed in establishing

conception date of July 22 or July 29, CRC’s derivation argument would not apply since he could substantiate the invention before reading CRC’s manuscript.

Lucent/Furukawa

• Filing date – Jan 1993• Conception date – April 1992• Reasonable diligence between July 21,

1992 to Jan 1993• Cross – Examinations

– Dr. Snitzer (in front of Judge Medley)

– Dr. Mizrahi– Dr. Erdogan

– Sandra Cooperman– Dr. Hill– Dr. Stubbs– Dr. Rishton– Dr. Prohaska

Final Decision - a 66-page document handed down on August 7,

2002CRC

– Invention date - October 29, 1992 and not September 8, 1992 due to lack of reasonable diligence

Lucent – Invention date of Nov 1992 due to lack of reasonable

diligenceSnitzer

– Invention date of October 17, 1992 when words “Phase Mask” were first introduced to the patent application and not July 22, 1992

Derivation Argument– Sandra Cooperman– Introduction by Snitzer (a lucky break)

Pleasantly surprised that we won based on the derivation argument

Appeal (a possible phase three)

• Oct 7, 2002 (5:00 p.m. - last moment for appeal) - Corning files appeal at the 12th hour in CAFC (Court of Appeals for the Federal Circuit - our happiness and celebration short lived)

• Oct 28, 2002 - CRC elected to go to the District Court - a more lengthy and expensive route - we had a number of reasons to go that way.

• Nov 27, 1992 - Corning decides not to fight in District Court

• WE WON THE WAR OF ATTRITION AND TEAM CANADA PREVAILED ONCE AGAIN!!!

• A HAPPY ENDING (AT LEAST F0R CRC)