Vacatur: Judge Posner Agrees to Vacate Inequitable Conduct Holding Based on Settlement Agreement

New Medium v. Barco (N.D. Ill. 2009)

Seventh Circuit Appellate Judge Richard Posner heard this case sitting by designation in the Northern District of Illinois. The final judgment is interesting in relation to the Federal Circuit’s recent refusal to vacate the district court’s opinion after the PTO retreated in Tafas v. Dudas.

In a 2008 decision, Judge Posner held New Medium’s asserted patents unenforceable due to inequitable conduct during ex parte reexamination of the patents. Notably, Judge Posner found that the inventor/owner Carl Cooper had made false statements to the PTO regarding his association with the expert who had submitted declarations in the reexamination. Notably, in his declaration to the PTO, Mr. Cooper stated that he had “never met or talked with any of these experts” prior to contacting them to submit reports. Judge Posner found that statement “false” since Cooper had solicited and paid for a bid from one of the experts (Klughart) seven years prior. Judge Posner also found that Cooper and Klughart’s testimony about forgetfulness difficult to believe: “I conclude that Klughart is not neutral and that his forgetfulness may be strategic. . . . Cooper testified that when he submitted his report in August of 2001 he had forgotten his prior dealings with Klughart. I do not believe that testimony. . . . I am also disturbed by the statement in Cooper’s brief that ‘Mr. Cooper didn’t think his past contact with Dr. Klughart was ‘material’ and that’s why he didn’t disclose it.’ That is an admission that Cooper lied in his declaration, though I imagine it [the admission] is unintended.”

Following Judge Posner’s decision, the parties decided to settle the case. As part of the settlement, Judge Posner issued an order vacating its prior inequitable conduct decision: “By agreement of the parties, the Court vacates its Order of October 16, 2008 (Docket 857) declaring United States Patents Nos. 5,424,780 and 6,529,637 unenforceable.”

Elimination of the inequitable conduct decision allows Cooper to continue to assert the patent. Ongoing defendants include Microsoft and Vizio. (See IP Innovation LLC v. Vizio, 08-cv-00393 (N.D. Ill.))

66 thoughts on “Vacatur: Judge Posner Agrees to Vacate Inequitable Conduct Holding Based on Settlement Agreement

  1. “In other words, the innocent purchaser of stolen goods is now viewed as the rightful owner of the goods, even against the person from whom they were stolen. ”

    Yet another great blunder of modern jurisprudence. Although, given the presence of insurance corps it makes more sense than letting an “innocent” purchaser of “rights” in a patent enforce that patent against someone else when the patent should have been invalidated.

  2. *****Let me ask you Ken, should an innocent buyer of a stolen watch be allowed to keep it if the watch is found to be a stolen watch? What if the actual owner is found? *******

    It used to be the law that people who innocently bought stolen goods lost those goods once they were tracked down, and the goods were returned to the original owner. Many people’s lives were ruined by this law.

    The old law benefited insurance companies because the original victim might have received recovery from their insurance company. But how does the downstream victim get insurance for goods they buy that turn out to be stolen? So, decades ago, laws were changed to protect the innocent at the expense of insurance companies.

    In other words, the innocent purchaser of stolen goods is now viewed as the rightful owner of the goods, even against the person from whom they were stolen. I don’t know for sure, but I think that even goes for unique goods. What would happen if someone bought a famous painting that had been stolen, and they did not know it was stolen and really thought they were purchasing the painting from the rightful owner (e.g., an impersonator). I don’t know how it would come out. Does anyone know?

  3. “6 – where is the comma you refer to?”

    “I said Equity > law, when equity is applicable. ”

    After “law”.

    ” Courts are using equity, which is subservient to law, to nullify acts of Congress and the Executive branch. ”

    Should do it more if what you say is true.

    ” This is a core concept of Anglo-American jurisprudence:”

    Then Anglo-American jurisprudence is flawed to its core and needs to be reconstructed from the grounds up.

    “In my opinion, absent a Constitutional infirmity, the Courts must not be able to nullify such an act. ”

    Your opinion is defective sir, you should reconsider it.

    “It is within Congress’ power to allow such equitable powers to be used to invalidate a patent. However, I see no language in the current statutes that allow this. ”

    I’m nearly 100% sure that situations that are decided upon equity are not usually written into the law, although they sometimes are.

    I don’t know Ken, you’re a lawyer, but you seem to not recall the history of equity at all or what it is. I appreciate your instruction, but what you say does not jive with reality, so far as I can see. I have not made much of an inquiry into the matter so I cannot pretend to naysay you with confidence, but I will just say that what you’re telling me doesn’t seem to be right.

    “However, once conveyed, the patent should be allowed to be enforced by an innocent purchaser of the intellectual property rights.”

    Maybe they shouldn’t have bought it in the first place. Maybe we shouldn’t even allow such “rights” to be sold. And even if all of those are answered in the negative, maybe the buyer should beware.

    Let me ask you Ken, should an innocent buyer of a stolen watch be allowed to keep it if the watch is found to be a stolen watch? What if the actual owner is found? What if no owner is found?

  4. Ken,

    You may have to “dummy that down” for 6 to understand. Try without the words jurisprudence, mandate, politic, infirmity, subservient, nullify, and ultra vires.

  5. Dear 6:
    Equity yield to law when the law applies. In other words, if the law works against fairness, it matters not, because the law always trumps equity. This is a core concept of Anglo-American jurisprudence: the mandate of the body politic always prevails against the desires of the judge absent a Constitutional infirmity in the law. That sets up the problems that I see with the current equitable fraud doctrine employed to render patents invalid or unenforceable. Courts are using equity, which is subservient to law, to nullify acts of Congress and the Executive branch. You see a patent is a hybrid entity, part legislation and part contract. In my opinion, absent a Constitutional infirmity, the Courts must not be able to nullify such an act. They do, however, nullify such acts as a matter of course. It is my opinion that invalidity based upon inequitable conduct should only be allowed by the USPTO and not Article III tribunals. It is within Congress’ power to allow such equitable powers to be used to invalidate a patent. However, I see no language in the current statutes that allow this. Therefore, I believe that it is ultra vires for the Courts to invalidate/unenforceable patents absent the same failing to comport with Title 35. This is not to say that one who failed to procure the patent without comporting with the duty of candor with the USPTO. It is perfectly find to hold that the patent is unenforceable as to that party. However, once conveyed, the patent should be allowed to be enforced by an innocent purchaser of the intellectual property rights.

  6. “Ken isn’t equity > all other lawl when equity is applicable?

    Posted by: 6 | Nov 23, 2009 at 08:32 AM”

    6 – where is the comma you refer to?

    Not only should Ken know that are you NOT an attorney (as he has visited this blog before), Ken should know that the English language is NOT something you understand well.

    If I may be so bold as to interpret, Ken was trying to point out that you are conflating equity and law by trying to state a relative position between the two “when equity is applicable”.

  7. “Equity is not law. Christ I am beginning to see what is wrong with our country. Please tell me that you are not an attorney.”

    I am not an attorney.

    I never said Equity was law. I said Equity > law, when equity is applicable. The comma has been added for your reading comprehension.

  8. “Congress has clear set forth its control on how a patent may be invalidated.”

    Ken, I don’t think this argument works.

    Through 35 USC 282 Congress has said that patents can be found invalid and also separately provided that they may be found unenforceable.

    The plain meaning is that even a valid patent can also be unenforceable. But even more importantly, how could such the statute overrule previous case law on unenforceability when it says nothing at all about what the standard for finding a patent unenforceable is.

  9. Dear 6:
    Equity is not law. Christ I am beginning to see what is wrong with our country. Please tell me that you are not an attorney.

  10. Ned:
    The District Courts have no power to exist under the Constitution. Only the Supreme Court has power to exist under the Consitution. The District Courts are allowed to exist at the whim of Congress. Therefore, your assertion is incorrect.

  11. Dear Cert Denied:
    I believe that the section you provided actually supports my position. Congress has clear set forth its control on how a patent may be invalidated. There is nothing in there that states equity may be employed. As such any cases law before enactment of this statute are irrelevant.

  12. Ken & Ned: More to the point, I think, Section 282(1) of the statute (i.e. as passed by the Article I and II entities) makes unenforceability a legal defense. An Article III judge gets to decide that point, since it is a defense to infringement.

  13. Ken, finally, patents have been held unenforceable for fraud on the court. See, Keystone Driller, US Supreme Court. Back in the day, the action at scire facias coming out of England was in equity and was based on fraud.

  14. Ken, other than the constitution, the laws of the United States. I half remember cases where the patent was held invalid because it was addressed to illegal subject matter, i.e, gambling and the like.

  15. Ken Brooks: “For example, were a reference found to be material but no sufficient to render a claim obvious or anticipated from where does an Article III tribunal derive the power within the Constitution to nullify the resultant act of the Article I and Article II tribunals, the issue patent?”

    The constitution.

  16. In fact, if a patent prosecutor DOES bend over backwards to help the examiner, citing all of the patents he found in a search, he can be accused of I.C. for burying a reference.

    Submitting reams of cumulative art is not “helping the Examiner.” Moreoever, as far as I know, nobody has ever lost patent rights because they “buried a reference.”

    The banality of current I.C. doctrine w/r/t the duty to disclose is absurd. And if I.C. is so easy to avoid, why is it that the market, an unbiased indicator, prices i.p. insurance at such a high premium?

    IP insurance is high because if you’re handling thousands of cases in pending in Europe and the US, the odds of a docketing slip-up is high. It has little or nothing to do with disclosure of references. If disclosure of relevant prior art was such a major concern, we’d expect much more disclosure by applicants in the software/computer-implemented art units who are notorious for failing to disclose relevant prior art (gosh, I wonder why).

  17. smashmouth: Without evidence

    Let’s put it this way: the last time we discussed such evidence, a junkyard dog wandered by here and threatened to take a leak on DC’s prize-winnning roses.

  18. I have found very little support for Article III tribunals to nullify the combined actions of the Article I and Article II tribunals as defined by the United States Constitution when the Artcile I and Article II tribunals act in concert. In fact, in light of the Steel Seizure Cases, I really do not find any support in the 1789 judiciary act for the use of the equitable jurisdication of an Article III tribunal to nullify the combined acts of the Article I and Article II tribunals, i.e., the issuance of a patent, absent clear violation of one of the articulate provisions in Title 35. I really believe that unless it could be proven that unless the act complained of during the prosecution would reneder a patent invalid under one of the expressed provisions of Title 35, a court is on tenuous grounds with respect to invalidating a patent. For example, were a reference found to be material but no sufficient to render a claim obvious or anticipated from where does an Article III tribunal derive the power within the Constitution to nullify the resultant act of the Article I and Article II tribunals, the issue patent?

  19. “Not presumed. FC opinions often bend over backwards to insist that some evidence of the specific intent to deceive the office must be found regardless of materiality.

    Posted by: Just Visiting | Nov 20, 2009 at 01:55 PM”

    You’re correct in terms of the black-letter law stated by the Federal Circuit in cases such as Kingsdown or more recently in Monsanto v. Bayer. But as a practical matter, when an applicant withholds a highly material reference, he/she/it then has to give a “plausible explanantion” for doing so–in effect, the entity accused of IC has to rebut a presumption that they acted with bad intent. See pp. 18-20 of Monsanto. Link: link to cafc.uscourts.gov

    BTW, in this case Bayer deserved what it got.

  20. “a finding of greater materiality of an omitted reference means that proof of intent to deceive is relaxed (or perhaps even presumed”

    Not presumed. FC opinions often bend over backwards to insist that some evidence of the specific intent to deceive the office must be found regardless of materiality.

  21. “I’m saying that there are some practitioners who nearly always engage in inequitable conduct because they are sleazebags who know they can get away with it most of the time. Why defend them?”

    quoted from Malcolm Mooney’s post of Nov 20, 2009 at 12:19 PM

    Without evidence (and since you’re alleging fraud, it should be clear and convincing evidence) there is no more reason to believe your hyperbolic ranting than to believe that creationists are correct in believing that God created the world in 7 days.

  22. “…on the other hand, Ned Heller, I may have mistaken the effect of lying in an inventor declaration as going to the materiality prong when in fact it goes to the intent prong. If so, I’ll graciously own up to the error – with thanks for the correction – to whoever calls me out. Fewer than all the neurons are firing at 4:00 AM.

    Posted by: KWC | Nov 20, 2009 at 04:21 AM”

    Although I am not Ned Heller, I’ll take a stab at answering your remark.

    IIRC, current Federal Circuit case law holds that materiality and intent are interrelated–a finding of greater materiality of an omitted reference means that proof of intent to deceive is relaxed (or perhaps even presumed); OTOH, if materiality is slight, the defendant bears a greater burden of proving deceptive intent. Judge Newman has complained in dissent that this interrelation conflates materiality and deceptive intent, but a majority of the Federal Circuit has ignored her.

    In summary, your uncertainty of which prong is implicated actually reflects current Federal Circuit case law.

  23. “This is almost as lame as the guy in the other thread arguing that IC was unfair because litigators don’t get sanctioned for making misrepresentations in court. The mind reels. But nobody whines and cries more than a PTO-hating prosecutor — and remember this is a PTO that is exceedingly generous to certain art units, even going out of its way to allow legally dubious claiming paradigms to keep a patent bubble inflated.”

    Lets take this in two parts.

    First, if a litigator makes a material misrepresentation about the scope of the claims to a jury, how is that any different than a prosecutor making a material misrepresentation to the PTO?

    If the prosecutor lies (and the lie is bought), the patent only acquires a presumption of validity.

    If the litigator lies (and the lie is bought by a less tech-savvy judge and jury), then the patent is enforced against the other party.

    I don’t see the distinction in kind between the two acts.

    Second, just because some PTO examiner’s behave properly, or bend over backwards to satisfy the applicant, doesn’t mean that ALL examiner’s are behaving properly.

    In fact, if a patent prosecutor DOES bend over backwards to help the examiner, citing all of the patents he found in a search, he can be accused of I.C. for burying a reference. But if he makes an effort to determine the most valid and relevant pieces of art, discarding those he thinks have no bearing on the claims, he can be accused of I.C. for not disclosing a reference.

    The banality of current I.C. doctrine w/r/t the duty to disclose is absurd. And if I.C. is so easy to avoid, why is it that the market, an unbiased indicator, prices i.p. insurance at such a high premium? Could it be that special rules for malpractice before the PTO makes such suits easier to file and win?

  24. Aren’t you the one who’s always on this site claiming that practitioners routinely engage in inequitable conduct?

    I’m saying that there are some practitioners who nearly always engage in inequitable conduct because they are sleazebags who know they can get away with it most of the time. Why defend them?

    Aren’t you the one who constantly claims that just about every single examiner interview is an exercise in inequitable conduct?

    No, just an opportunity for misconduct that can be difficult to spot because of the lack of a complete record. Again, those of us who’ve practiced for years on the prosecution and litigation side know how these things work. Why lie about it?

    Because the “schlub” is usually not even careless (much less intentionally deceiving anyone).

    Keep your head in the sand. It probably belongs there.

    Examiner misconduct is far more common than patent prosecutor misconduct, as all patent prosecutors know.
    This is almost as lame as the guy in the other thread arguing that IC was unfair because litigators don’t get sanctioned for making misrepresentations in court. The mind reels. But nobody whines and cries more than a PTO-hating prosecutor — and remember this is a PTO that is exceedingly generous to certain art units, even going out of its way to allow legally dubious claiming paradigms to keep a patent bubble inflated.

  25. If Mooney actually worked for a living (he seems to spend all of his time here) he would never call for draconian IC sanctions because he would realize how silly it is to penalize someone for making a so-called “bogus” argument, particularly when the client instructs them to do so – not for any cloak and dagger reason, but just because thats what the client came up with.

  26. “Patents can destroy companies, … -whine whine whine- … get money money out of people (???), … -whine whine-…”

    Hey Mark Man, the Jerry Springer show is down the hall. (Actually, its probably Mooney, which is even more reason to send him to the Jerry Springer show).

  27. “He signed an oath …”

    There you go making stuff up again Mooney. The expert signed an oath not the inventor/applicant. The applicant made “false statements” regarding his association and later alleged that he “forgot” his association. Again, so what?

    “What planet are you from”

    I’m from Earth Mooney, you know the third one out from that big bright one. But I guess that may not be a place you recognize. My planet Earth actually smells good and there aren’t conniving inventors behind every bush, just waiting to make off the record statements in Examiner interviews…

  28. “As every patent litigator knows, patent prosecutors play enough games that don’t rise to the level of inequitable conduct (eg, making utterly bogus arguments in the hope that an overworked examiner will be impressed by the big words in the argument). When they cross the line, the patents should be dead. Patents can destroy companies, they can be used to get a lot of money out of people — there are reasons we reward them of course — but when you get such a powerful property right from the government, you better be playing fair in getting it.”

    Why not hold examiner’s to the same I.C. standard? It’s extremely common to get a response of “Applicant’s arguments have been rejected, all claims are rejected under the same cited art as the past office action for the same reasons. This action is FINAL.”

    Never mind that the examiner failed to consider limitations in dependent claims, or failed to provide evidence of all limitations in the independent claims, or failed to provide support for their “finding” that element X is well known and obvious.

    Examiner misconduct is far more common than patent prosecutor misconduct, as all patent prosecutors know. The difference is, when an examiner commits misconduct, he gets a pat on the back.

    If the applicant has the gall to challenge the examiner on appeal, it’s up to the applicant to pay for the examiner’s error. And if the examiner realizes he is in error, he will merely withdraw the last action and issue a new action, probably a continuation from the previous cited art.

    Yeah, patent prosecutors are really the ones we should be worried about. Pull the other one, it’s got bells on.

  29. “If the suppressed evidence is actually presented to the court and/or jury and the claims sustained, are we to say that but for the non disclosure the claims would not have issued?”

    What if a lie/deliberate omission affects when the patent would have issued, or allows avoids making a real case that would have placed limiting remarks on record, resulted in enormous expense or otherwise materially inconvenienced the patentee or his attorney.

    I think the “would not have issued but for” standard is too high a standard for finding inequitable conduct if the goal is to deter attempts to deceive. On the other hand the “reasonable examiner would find the reference important to the patentability” is probably hopelessly vague and probably results in too much stuff being submitted to the PTO.

  30. “It really is not terribly difficult to avoid inequitable conduct. Almost of us manage to avoid it, like 99.99 or more. So why whine and cry when some careless schlub gets nailed? Better to celebrate the fact that someone has learned a lesson.”

    Aren’t you the one who’s always on this site claiming that practitioners routinely engage in inequitable conduct? Aren’t you the one who constantly claims that just about every single examiner interview is an exercise in inequitable conduct?

    What gives?

  31. …on the other hand, Ned Heller, I may have mistaken the effect of lying in an inventor declaration as going to the materiality prong when in fact it goes to the intent prong. If so, I’ll graciously own up to the error – with thanks for the correction – to whoever calls me out. Fewer than all the neurons are firing at 4:00 AM.

  32. Hi Ned Heller. On the issue of materiality, I believe that inventor declarations are held to higher standards than, for example, failure to submit a reference. I don’t have a copy of Chisum in front of me at the moment, but my recollection is that there is case law out there to the effect that lying in an inventor declaration is highly probative of materiality, or perhaps even per se material. I haven’t read the opinion, but just based on the information developed in this thread, the conclusion that Posner probably would have been overturned may be a bit strong.

  33. MarkMan, see the Karp post at 3:59 for more. But materiality is a major issue in determining whether there was inequitable conduct. Posner’s original opinion was long on the fact of a lie, but short on materiality. He probably would have been overturned.

    What I said in my post is what many in the patent bar have been arguing for a long time. Materiality is gestalt in the abstract, which is why I suggest that the validity of the claims in light of the suppressed evidence or whatever be litigated and decided. If the suppressed evidence is actually presented to the court and/or jury and the claims sustained, are we to say that but for the non disclosure the claims would not have issued? You should agree that the answer is no. And if the answer is no, there is no inequitable conduct, not because there was no misrepresentation, but because it was not material.

    The facts in this case suggest the claims would not have been confirmed by the PTO without the false affidavit of the inventor Cooper. But, how do we know that? That is pure speculation.

  34. MM: “It really is not terribly difficult to avoid inequitable conduct.”

    How? Oh yeah, work at the PTO.

    MM: “Almost of us manage to avoid it, like 99.99 or more.”

    Like… 100% of you examiners “manage to avoid it.”

    MM: “So why whine and cry when some careless schlub gets nailed? Better to celebrate the fact that someone has learned a lesson.”

    Because the “schlub” is usually not even careless (much less intentionally deceiving anyone). You may celebrate when a random individual gets shafted, most of us don’t.

  35. “Among scores of prosecutors I know and have known through the years, the number of whom who have been implicated in behaving inequitably before the PTO (during prosecution or afterwards) is precisely *one*.”

    What do you mean by “implicated”? An inequitable conduct counterclaim “implicates” the prosecuting attorney, and such counterclaims are filed routinely–reflexively, even. So unless the scores of prosecutors you know have never had one of their patents litigated, you must mean that there hasn’t been a final judgment that they behaved inequitably.

  36. I apparently was so subtle that you missed my point.

    Actually what happened was that I tried to make your comment relevant to the thread. And then you ruined it.

  37. MM,

    I apparently was so subtle that you missed my point. I was pointing out that, in saying “pure unadulterated whining,” you were being your usual “so predictable” self. I just wanted to be clear and not have you get a misimpression.

  38. “Pure unadulterated whining”

    So predictable MM.

    I agree. Every time there is a post about inequitable conduct a bunch of sockpuppets post about how it’s the worst thing ever and oh so unfair.

    It’s almost as if they resented the extra work it takes to be honest.

    Of course litigators who make bogus arguments are a problem. But they do get sanctioned by judges **all the time**. What do you think the reaction of the patent bar would be if the PTO started regularly sanctioning applicants for making bogus arguments? Hint: you’ll want some earplugs.

    Among scores of prosecutors I know and have known through the years, the number of whom who have been implicated in behaving inequitably before the PTO (during prosecution or afterwards) is precisely *one*, and that person was a very fresh associate doing what the client demanded before having a chance to examine the file history of the related applications. The result of the action was essentially a “stern letter” from the PTO (does the PTO still issue those?).

    It really is not terribly difficult to avoid inequitable conduct. Almost of us manage to avoid it, like 99.99 or more. So why whine and cry when some careless schlub gets nailed? Better to celebrate the fact that someone has learned a lesson.

  39. How about bogus arguments by litigators? Should they cause a patent to be unenforceable?

    [eye roll]

    Pure unadulterated whining.

  40. Markman wrote:

    As every patent litigator knows, patent prosecutors play enough games that don’t rise to the level of inequitable conduct (eg, making utterly bogus arguments in the hope that an overworked examiner will be impressed by the big words in the argument). When they cross the line, the patents should be dead.

    How about bogus arguments by litigators? Should they cause a patent to be unenforceable? Try for an overly broad claim construction for one claim and get the whole family held unenforceable? And where is the line? Is using big words really grouds to trash a patent (and the career of the prosecutor)? Does the big word rule only apply against prosecutors or litigators too?

  41. “Patent inequitable conduct relates to disclosure of material information to patentability of an invention. Good or bad intention is irrelevant. It only deals with non action – omission in submitting required information to the patent office. That’s it.”

    Not true. Materiality and Intent are two prongs that the court reviews and balances, or at least is supposed to. Read the Kingsdown decision or any number of Rader or Newman decisions/dissents.

    Not legal advice, MHO, YMMV, etc.

  42. I don’t know if any patent should be declared unenforceable due to a misrepresentation during prosecution unless the jury has held at least one claim that was allowed as a result invalid. If the patent is valid, the lie was not all that material in the first place.

    Well, I am glad you are not making the rules. Inequitable conduct is an equitable issue (and falls squarely within what we would historically consider “equitable”), and there is no right to trial by jury on equitable issues. If the patent would have issued regardless of the deception, the patentee should not have been deceiving. Procuring a patent when it meets the requirements of patentability is a privilege, not a right. If you deceive the patent office in getting that patent, courts ought to have the discretion to take the patent away from you. Period. As every patent litigator knows, patent prosecutors play enough games that don’t rise to the level of inequitable conduct (eg, making utterly bogus arguments in the hope that an overworked examiner will be impressed by the big words in the argument). When they cross the line, the patents should be dead. Patents can destroy companies, they can be used to get a lot of money out of people — there are reasons we reward them of course — but when you get such a powerful property right from the government, you better be playing fair in getting it.

  43. LHU:
    my post was directed to the judge’s finding that:
    “That is an admission that Cooper lied in his declaration”.
    Intentionally leaving out the bad and ugly stuff obviously can rise to the level of IE conduct. duh.

  44. It is not remarkable that the expert had prior contact with the patentee. So what?

    So what? He signed an oath that he said he did not have prior contact with the expert, to facilitate receipt of an award from the government.

    What planet are you from?

  45. Patent inequitable conduct relates to disclosure of material information to patentability of an invention. Good or bad intention is irrelevant. It only deals with non action – omission in submitting required information to the patent office. That’s it

    Patent inequitable conduct is between the inventor and a federal government agency. Individuals cannot void the federal law requirement of submitting material information to the patent office via a private settlement agreement.

    Patent inequitable conduct has nothing to do with lieing to the court about meeting or talking to an expert or disbeleaving an expert. The judge can void a patent under the clean hands doctrine or some other non-patent doctrine for lieing to the court, but don’t bastardize patent inequitable conduct into something it is not simply because it has “conduct” and “inequitable” in its name.

  46. “never met or talked with”?
    that kinda leaves the door open for semaphore flag signaling, e-mailing, snail mailing, etc. does it not? maybe the declaration was literally truthful.

  47. Why in the world would a defendant agree to settle when the patent has been found invalid due to IC? Is this one of those “reverse payment” settlements, where the patentee pays the “infringer” not to break their patent? Are those illegal yet?

  48. That the inequitable conduct occurred during a re-exam, e.g. before the PTO, makes this ruling seem a little odd. If the alleged conduct had occurred during trial, the vacatur be easier to accept.

    That being said, the declarant is accountable for his statements regardless of any association with the applicant or patentee. It is not remarkable that the expert had prior contact with the patentee. So what? It is perfectly equitable, acceptable and legal for an applicant/inventor to make declarations on their own behalf, who is more self interested in a proceeding than the applicant?

    Criminal sanctions? TJ, what have you been smoking this morning?

    “Smells pretty bad to me”

    Everything smells bad in your world Mooney…

  49. It would be nice to know more about the reasons for vacating the order. Mere agreement does not seem sufficient cause.

  50. TJ,

    I would be OK with stricter IE results as long as the patent office removes any and all disclosure obligations like every other patent system in the world.

  51. I don’t know if any patent should be declared unenforceable due to a misrepresentation during prosecution unless the jury has held at least one claim that was allowed as a result invalid. If the patent is valid, the lie was not all that material in the first place.

    On the vacatur issue, New Medium may have prevailed on appeal. If the order is not vacated, New Medium would not have and could not have settled as its patent would have been essentially voided. The vacatur was absolutely necessary and in the interests of justice.

    As to other defendants in other cases, they have the right to prove inequitable conduct there with the Posner opinion as a roadmap. The just cannot short circuit the process by taking advantage of the first case.

  52. When a misrepresentation made to the Patent Office is not associated with facts which render the patent inherently invalid, a court should have equitable jurisdiction to impose penalties against the patent owner that are less severe than the invalidation of the patent.

    As a supporter of inequitable conduct doctrine, I actually like that idea. But will you also support the flip side? That is, if the misrepresentation is willful, renders the patent invalid, and reflects deliberate fraud, can the court impose MORE severe sanctions than invalidating the patent, such as fines or prison? If you defraud the IRS, we don’t normally just seek full compensation (i.e. back taxes)–we send the fraudster to jail as punishment.

  53. The sad thing is that all I can help but remember are the words I once heard from some lawyer explaining how legal ethics work in practice: “It’s legal so long as nobody objects.”

  54. When a misrepresentation made to the Patent Office is not associated with facts which render the patent inherently invalid, a court should have equitable jurisdiction to impose penalties against the patent owner that are less severe than the invalidation of the patent.

    Why aren’t things like this treated like the criminal fraud that they are? Misrepresentations may not effect the question of whether a patent is valid, but they’re still misrepresentations under oath. There should be penalties for those, even if they don’t effect the validity of the patent.

  55. You can be sure MS and Visio will raise the same i.c. issues (if they haven’t already) – with the record from NDIL being fully developed, it shouldn’t be a problem for them to plead i.c. with the higher level of specificity now required by the CAFC.

  56. Notably, in his declaration to the PTO, Mr. Cooper stated that he had “never met or talked with any of these experts” prior to contacting them to submit reports. Judge Posner found that statement “false” since Cooper had solicited and paid for a bid from one of the experts (Klughart) seven years prior.

    Smells pretty bad to me.

  57. David French writes:

    When a misrepresentation made to the Patent Office is not associated with facts which render the patent inherently invalid, a court should have equitable jurisdiction to impose penalties against the patent owner that are less severe than the invalidation of the patent. This could include denial or suspension of the injunction for a period of time, waiver or reduction of past damages or a stipulation as to a ceiling on future damages (e.g. a compulsory license).

    The courts seem to have gotten themselves into a corner where, if something inappropriate has occurred, a patent has to be rendered unenforceable. They should have more flexibility.

Comments are closed.