Cargill owns several patents related to more-stable fry-grease made from canola oil and sued Canbra (and others) for infringement. The trial court found that two of the patents were invalid as on-sale before the priority date and that the other two were unenforceable due to inequitable conduct. Cargill appealed.
A. Inequitable Conduct: A holding of unenforceability due to inequitable conduct requires two findings: That the patentee “(1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the U.S. Patent and Trademark Office.”
Information is material if either (1) “there is a substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent” or (2) the information falls within the scope of the current Rule 56. (Reprinted below). Intent is often inferred from the facts and circumstances surrounding the “bad” conduct.
A district court’s determination of materiality and intent are reviewed only for clear error.
Materiality: Here the applicant failed to disclose two sets of test data that suggested a similarity between the invention and a prior art formulation. The district court found them to be “unquestionably” material and the CAFC panel agreed. In particular, the panel refuted the Cargill’s good faith assertions about materiality — reaffirming that “materiality is determined from the viewpoint of a reasonable patent examiner, and not the subjective beliefs of the patentee.”
Intent: The court indicated that there were several instances when the applicant should have brought-forth the prior art — such as when the patentee argued on five occasions that the invention was a nonobvious change from the prior art (even though the test data showed that they were similar).
An applicant should know information is material when the examiner repeatedly raises an issue to which the information relates. . . . The repeated nature of that rejection demonstrates that the applicant should have been aware of the materiality of the omitted test data, and, therefore, the district court properly considered it as significant circumstantial evidence of an intent to deceive the PTO about the evidence relevant to the application.
- This decision was written by Judge Kent Jordan of the Third Circuit sitting by designation.
- 37 CFR 1.56 (Rule 56) reads as follows:
[I]nformation is material to patentability when it is not cumulative to information already of record or being made of record in the application, and (1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim, or (2) It refutes, or is inconsistent with, a position the applicant takes in: (i) Opposing an argument of unpatentability relied on by the Office, or (ii) Asserting an argument of patentability.
A prima facie case of unpatentability is established when the information compels a conclusion that a claim is unpatentable under the preponderance of evidence, burden-of-proof standard, giving each term in the claim its broadest reasonable construction consistent with the specification, and before any consideration is given to evidence which may be submitted in an attempt to establish a contrary conclusion of patentability.