## Facts

- Peeler, Godfrey, and Furby (Peeler) filed a patent application on January 4, 1968 for an improved hydraulic (power transmission) fluid intended to reduce cavitation erosion associated with certain phosphate ester fluids.
- Peeler’s application later issued as U.S. Patent No. 3,591,506 in 1971 and was assigned to Chevron Research Company.
- David R. Miller (Miller), an employee of Monsanto Company, had also been working on the same general idea and assigned his rights to Monsanto.
- Monsanto filed Miller’s patent application on April 27, 1970, while Peeler’s patent was already issued.
- The PTO declared an interference between Peeler (senior party) and Miller (junior party) involving five counts directed to phosphate ester power transmission fluids containing small amounts of volatile halocarbon additives, and methods of inhibiting cavitation damage by maintaining those additives in the fluid.
- Counts 6 and 8 were treated as representative, requiring (among other limits) 0.01–10% by weight of a halocarbon additive (containing only halogen atoms and at least one carbon atom), with a boiling point below 75°C, and halogen substituents limited to chlorine, bromine, fluorine, or combinations of those.
- Peeler took no testimony and relied on its January 4, 1968 filing date for priority.
- Miller relied on stipulated affidavit evidence from himself, Monsanto co-workers, and Monsanto patent attorney William Black.
- Miller’s efforts began in 1964 after problems were observed in British “Trident” aircraft using Monsanto’s SKYDROL 500A hydraulic fluid; Miller suspected cavitation and searched for additives to reduce cavitation damage.
- In 1965 ultrasonic vibrating probe tests, Miller found water could substantially reduce cavitation damage in SKYDROL 500A, and later investigated halocarbon materials as additives.
- Miller pointed to an April 1966 preliminary disclosure of the invention to Monsanto as the basis for an earlier reduction to practice.
- The record showed Monsanto took no patent-related action until October 1968, when it assigned Black to handle the matter; Monsanto did not file until April 1970.
- The PTO Board of Patent Interferences (with one dissent) awarded priority to Miller, treating the 1966 disclosure and related work as a reduction to practice.
- Peeler appealed to the U.S. Court of Customs and Patent Appeals.

## Issues

1. Whether the Board erred in finding that Miller had actually reduced to practice, by April 1966, the invention defined by the interference counts.
2. Whether Miller, as the junior party, proved an invention date earlier than Peeler’s January 4, 1968 filing date through reduction to practice or through conception plus diligence.
3. Whether the evidence offered by Miller (largely affidavits and internal activity at Monsanto) sufficiently established the claimed combination and that it worked for its stated purpose.

## Decision

- The court reversed the Board’s award of priority to Miller.
- The court held Miller did not prove an actual reduction to practice of the invention as defined by the counts before Peeler’s January 4, 1968 filing date.
- The court further concluded the record did not support awarding Miller priority based on earlier work followed by the extended period of inaction before Monsanto pursued and filed the application.
- Priority on the five counts was awarded to Peeler.

## Legal Principles

- In a PTO interference, the junior party bears the burden to prove priority over the senior party’s effective date.
- To win priority, the junior party must prove either:
  - conception and actual reduction to practice before the senior party’s date, or
  - conception before the senior party’s date and reasonable diligence through the relevant period to a later reduction to practice or to filing.
- Actual reduction to practice requires proof that an embodiment within the scope of the counts was made and shown to work for its intended purpose; work that does not establish the claimed combination and its performance is not enough.
- Evidence offered to prove an inventor’s earlier date must be sufficiently specific and corroborated; general statements or proof of related research do not establish reduction to practice of the subject matter defined by the counts.
- Long, unexplained gaps between the asserted early work and later patent activity can defeat a claim of diligence.

## Conclusion

The C.C.P.A. reversed the PTO Board’s priority award to Miller because the April 1966 Monsanto disclosure and related testing did not establish that Miller had made and successfully tested the specific halocarbon-containing phosphate ester fluid and method required by the counts, and the subsequent delay before Monsanto pursued and filed an application prevented Miller from carrying the junior party’s burden; Peeler therefore retained priority based on its January 4, 1968 filing date.


Peeler v. Miller, 535 F.2d 647 (1976)