Ring Plus v. Cingular Wireless

By Jason Rantanen

Although the court ultimately reversed the determination of inequitable conduct based on a lack of intent, its discussion of materiality is significant because the misrepresentation at issue occurred in the patent itself, in the form of statements about a prior art reference.  Prosecutors may want to take special note of this opinion in crafting their Background of the Invention sections. 

Ring Plus, Inc. v. Cingular Wireless Corp. (Fed. Cir., August 6, 2010)
Panel: Lourie, Gajarsa and Moore (author)

Ring Plus is the assignee of Patent No. 7,006,608 (the '608 patent), which relates to a software based algorithm and method for generating and delivering messages over a phone line that replace or overlay a ring-back signal.

After granting summary judgment of noninfringement, the district court held a bench trial on the unenforceability of the '608 patent.  Following the bench trial, the district court concluded that the '608 patent was unenforceable due to inequitable conduct.  Ring Plus appealed both determinations, along with the denial of its motion to disqualify Cingular's counsel. 

Inequitable conduct: Materiality but no Intent
The district court's inequitable conduct determination was based on two alleged misrepresentations concerning the substance of two prior art references, Strietzel and Sleevi.  The district court found that the first misrepresentation was in the Background of the Invention section of the '608 patent, which asserted that both references proposed hardware based systems but no software to operate those systems.  Contrary to this assertion, the district court found, one of skill in the art would have understood the references to disclose software-based algorithms.1 

The panel agreed that this was a material misrepresentation.  Although neither reference explicitly disclosed software, the panel could not say that the district court clearly erred in finding that a person of ordinary skill in the art would have understood the references to disclose software-based algorithms. 

In arriving at the conclusion that the statement about the contents of the prior art constituted a misrepresentation, the panel rejected the contention that it was merely attorney argument.  The court did not address this issue in any depth, merely stating that because the statement was a misrepresentation, it "was outside the boundas of permissible attorney argument."  Slip Op. at 9.

Comment: I am a troubled by the court's cursory statement on this point because of the ambiguity it creates.  These types of sweeping assertions, made without addressing the substance of the argument or citing relevant authorities, are the kinds of things that are likely to tie attorneys and judges in knots.  Indeed, the court's quotation from Rothman is particularly perplexing, as Rothman reached the opposite conclusion on similar facts.  At a minimum, one would expect the court to explain why Rothman does not apply.

Ultimately, however, the panel concluded that Cingular had failed to present clear and convincing evidence of intent to deceive.  In arriving at this conclusion the court noted that the references were ambiguous as to operating software, and the prosecuting attorney's testimony gave rise to the inference that the applicants believed that the two references did not disclose software for operating a telephone system.  Because this inference was as reasonable as the district court's inference of deceptive intent, the district erred in its finding of deceptive intent.

Other holdings
The panel also addressed Ring Plus's challenge to the district court's construction of two claim terms, which formed the basis of the noninfringement ruling.  The court affirmed the district court's construction, relating to the sequence of steps in the '608 patent.  In addition, the court rejected Ring Plus's argument that Cingular's counsel should have been disqualified for ex parte contact with a Ring Plus director and officer.  The court concluded that there was no evidence of impropriety under Fifth Circuit law.

1The district court also found that the applicants made a misrepresentation about these references during prosecution; the panel concluded that this statement was not a misrepresentation.

52 thoughts on “Ring Plus v. Cingular Wireless

  1. Also, Malcolm, while at times I think your views are just a bit hard a.., I take back the bit about extremism in the pursuit of justice, unless that is, you think such extremism appropriate.

  2. Well at least they are weighing the equities. I also appreciate the admonishment of the trial judge for relying upon a witness without any objective support for the witness’ testimony. Maybe Crouche’s blog is being read by the judges.

  3. A reference shows X. The examiner cites the reference for showing X. After a couple office actions and responses, a new patent attorney (associate) picks up the case and makes a an argument that includes the statement that the reference under discussion here does not disclose X. The examiner allows the case based upon the prior art not showing something different, element Y. The examiner knows perfectly well that the reference under discussion here does in fact disclose X.

    Now the case goes to trial. The reference is submitted to the jury and the claims upheld as not invalid. You are to court deciding inequitable conduct. What is your decision here?

    If those are the only facts, I’d probably find no inequitable conduct.

    On the other hand, if the associate was deposed and admitted on the stand that he knew that the reference disclosed X but lied about it to deceive the Examiner because the client demanded that he do so, then there was inequitable conduct and the patent is not enforceable.

    Are you starting to get it, Nedstrodamus?

  4. Why do you believe it to be a hack-type of move, and dangerously close to malpractice?

    It was I who wrote the spec. By simply repeating in the “background” section content already found elsewhere in the spec, no new matter was added, no new disclosure was made, the examiner’s formal requirements were satisfied, the cost was minimal, and the result was entirely predictable and in no way changed the disclosure represented by the patent application.

    Why is that close to “malpractice”, however you define malpractice? Because the client’s needs were met lawfully, economically, intelligently, and in a timely manner?

  5. To appease the examiner and satisfy the client, I cut-and-pasted portions from elsewhere in the spec.

    Really? That sounds like a complete Hack-type of move, not to mention dangerously close to malpractice.

    Ned – “a new patent attorney (associate) picks up the case” – what, that’s supposed to be some type of excuse for unethical conduct? Gee, your honor, I was new? Is that the type of mentoring ya do? (I suppose they gotta have ya do somethin).

  6. Malcolm, on negligently false statements, how would you handle this hypothetical:

    A reference shows X. The examiner cites the reference for showing X. After a couple office actions and responses, a new patent attorney (associate) picks up the case and makes a an argument that includes the statement that the reference under discussion here does not disclose X. The examiner allows the case based upon the prior art not showing something different, element Y. The examiner knows perfectly well that the reference under discussion here does in fact disclose X.

    Now the case goes to trial. The reference is submitted to the jury and the claims upheld as not invalid. You are to court deciding inequitable conduct. What is your decision here?

  7. Malcolm, litigators make negligently false statements all the time for the very purpose of deceiving the court, yet we seem to allow this practice. While the ex parte nature of patent prosecution should otherwise suggest that we should not tolerate such behavior from patent prosecutors, I still think it must be shown that the statements resulted in at least one invalid claim. Otherwise, the false statements were of no consequence in the end.

    That said, the patent office should consider some sort of discipline.

  8. Their brief seems to suggest that even negligently false statements made with the requisite intent to deceive would be enough.

    Why wouldn’t it be? What possible reason could their be for excusing such behavior?

  9. re: the background section

    Yes, I know that there is no strict requirement for a “background section”. In fact, I’m not aware of any requirement to have any discrete “sections” at all.

    To appease the examiner and satisfy the client, I cut-and-pasted portions from elsewhere in the spec.

  10. Malcolm, but the courts have already held that the scienter necessary has to be more than gross negligence. I would argue that people who make statements without any reliable basis for knowing if they are true or not, such as — the prior art (not just the references of record) does not show something — are being grossly negligent.

    I sense the PTO wants more. Their brief seems to suggest that even negligently false statements made with the requisite intent to deceive would be enough.

    Malcolm, is that you sense of it as well?

  11. Before someone gets a bright idea, 37 C.F.R. 1.77(b) says “should include” a background of the invention. That’s not a basis for denying a patent.

  12. I’ve heard of it anecdotally, but never worried about it substantively. We include about a 1 paragraph background to lay out the field of the invention and the general problem that it addresses. I’ve only had to amend that paragraph for European prosecution, which is to be expected.

    Backgrounds are not a section 112 requirement. 37 C.F.R. 1.53(b) and 1.71 pretty comprehensively limit what the examiner can require (a description pursuant to 1.71 and at least one claim pursuant to 1.75, and any drawing required by 1.81(a)). 37 C.F.R. 1.71(b) requires you to describe the invention “in such manner as to distinguish it from other inventions and from what is old,” but doesn’t appear to require that you admit in the specification what is old (“set forth the precise invention for which a patent is applied, in such manner…”) If you look at the headings for 1.71-75, the background is the one section that is not mentioned in the regulations.

  13. I once omitted to provide a Background section.

    The result was an examiner objection, and a specific request that a Background section be supplied.

    Anybody else have this happen?

  14. Ned,

    I agree with Mooney on this one. The Restatement (Second of Torts) summarizes the common law state-of-mind requirement for fraud as follows:

    § 526 Conditions Under Which Misrepresentation Is Fraudulent (Scienter) A misrepresentation is fraudulent if the maker (a) knows or believes that the matter is not as he represents it to be, (b) does not have the confidence in the accuracy of his representation that he states or implies, or (c) knows that he does not have the basis for his representation that he states or implies.

    I think that the third possibility goes to Mooney’s point: really genuinely believing something to be true with no reasonable basis in fact can still be fraud. However, I will acknowledge that you have a point: criminal fraud has had a spectrum of definitions from ones in which the accused does not need to know that a fact is false, but intends that the target do something that it otherwise would not do by communicating that fact to it, to ones that require actual knowledge of falsity. What Mooney’s arguing is a known or should-have-known standard that is not necessarily unreasonable when you consider that inequitable conduct is not a criminal charge.

  15. 3) at the time the statement was made, the person making the statement knew the statement was false;

    Sorry, Ned. This allows lunatics/pathological liars to make false statements to the PTO with impunity. There’s got to be a requirement for reasonableness, else we get folks sticking their heads in the sand or brainwashing themselves to “really believe” their own lies. Yes, it actually happens. See, e.g., Tony Perkins.

  16. as the word misrepresent itself implies knowledge of falsehood…

    …most people would take it that way

    Except those that called you a loon (which is to say, everyone that cared to comment).

    But hey – no biggie – I get your drift. One comment I do have is your number 4) seems a bit too “tight” – If indeed a claim shouldn’t be there, there are other methods of obtaining relief. If you lie cheat and steal to get a claim that ends up as being legitimate, the notion of “unclean hands” goes unpunished. You have way too much a liking for a no-harm, no-foul mentality that in real life will have absolutely no meaning as to the reason why the rule is in place to begin with.

  17. ping, my effort here is to urge the Feds in the future to clarify its holdings a bit more. If a person believing the statement to be true says something false, the person should not be said to have misrepresented anything as the word misrepresent itself implies knowledge of falsehood. Regardless of legalities, most people would take it that way.

    Thus, in this case, I would have hoped the Feds to decide the case by stating that as the prosecuting attorney believed the statements he made were true, and the evidence is such that such a belief was possible, there was no misrepresentation.

    Circling back to the elements of proof, they should be

    1) a statement of fact was made to the PTO;
    2) the statement was false;
    3) at the time the statement was made, the person making the statement knew the statement was false;
    4) the statement was made with the specific intent to obtain a “material” advantage or to obtain a patent claim that was would not have been granted but for the misrepresentation.

    One more comment: from the PTO brief in the Therasense case, it appears the PTO is trying to eliminate “materiality” from the criteria for misrepresentations.

  18. Babel,

    I was just playing nice with Ned, so that he might actually try to comment on my original comment.

    In fact, your representation that a misrepresentation automatically incorporates intent is itself a (presumably) innocent misrepresentation.” – way too nuanced for Ned.

  19. weary

    If it modifies the adjective “same”, then it’s an adverb and you are right to move the “the” in front of “same” and use the adverbial form — “exactly.”

    But it looks to me that with “the” in front of “exact,” “exact” is an adjective that modifies the noun-phrase “same thing” so “the exact same thing” is also right.

  20. Using the word “especial” is especially annoying — use “special”; it’s much more common, means the exact same thing, and it doesn’t distract the reader.

    I agree with you, Mark. I also find the phrase “the exact same thing” particularly annoying. “Exact” is an adjective, but it doesn’t modify “thing,” does it? Perhaps “it means exactly the same thing” would be better.

  21. Free advice that’s worth every penny:

    Stating what something does will generally put you in a much stronger position than stating what it doesn’t do. This goes for writing a background, drafting claims and claim amendments, too. The exception is when an omission of an element or step is critical to the claimed invention.

    It seems like the person who drafted the spec was trying to argue that the prior art does not teach the claimed invention. Why would you want to do that before prosecution begins? That’s like making a bid before you look at your cards.

    State in the background what the prior art teaches, not what it doesn’t teach. If you must set up that argument (i.e., your invention is only an improvement or “the next step” over the prior art), then state how your invention is superior to said prior art rather than “the prior art doesn’t teach ___.”

    Arguing in court whether or not the prior art teaches (or reasonably suggests) the software that is necessary to run the hardware is a waste of everyone’s time. It could have easily been avoided, not by refusing to submit a background, but by writing concisely and stating “just the facts.”

  22. “Prosecutors may want to take especial note of this opinion in crafting their Background of the Invention sections.”

    Using the word “especial” is especially annoying — use “special”; it’s much more common, means the exact same thing, and it doesn’t distract the reader.

  23. You guys are using Google and Wiki as your legal authority? Lazzzyy.

    Since when did either one become a legal authority?

    Please disabuse yourselves of the mistaken idea that a misrepresentation automatically includes intent. The Wiki “definition” of misrepresentation provide by Ned is closer to a definition of legal fraud, which definition requires misrepresentation.

    If you intentionally misrepresent facts to a person, and you intend that person to rely on the facts as misrepresented, and the person is harmed by their reliance, you are liable for fraud.

    Often there is a “knew or should have known to be false” element specified with respect to the falsity of the statement. But a defense to fraud is that the misrepresentation was made without intent to mislead.

    One can honestly and innocently represent a fact — that is still a misrepresentation. In fact, your representation that a misrepresentation automatically incorporates intent is itself a (presumably) innocent misrepresentation.

  24. Ned,

    Lest I become like you and so obstinate as to appear incorrigible,

    I googled the word “misrepresentation” and both our definitions came up. Yours is as correct as mine. Mine is as correct as yours. The key being that “intent” is not always a part of the definition (being wrong without intent is an appropriate definition). I will take your statements to be to the definition in which intent is a factor.

  25. You’ve got to a real nut case Ned. 37 CFR 1.26 (b). And then an International. Mistake?
    If I were a squirrel I would still pass you up as being a defunct example of DNA gone awry.

  26. Mental note to self: in addition to everything else, Ned believes that the “weapons of mass destruction” excuse to invade Iraq was one that was sincerely held by the Bush Administration.

    You crack me up, Ned.

  27. ping, what are the elements of “misrepresentation?” I give you a shortcut and list them:

      A misrepresentation occurs when one party makes a false statement with the intention of inducing another party to contract. For an action to be successful, some criteria must be met in order to prove a misrepresentation. These include:

      A false statement of fact has been made,
      The statement was directed at the suing party and
      The statement had acted to induce the suing party to contract.

    link to en.wikipedia.org

    Now, if the statement is arguably true and the party making the statement believed them to be true, has there been a legal misrepresentation?

    Turning to Michael Moore, what he did is eliminate an element of what it takes to lie. Guess what the element is? Clue, it is the same element missing in this case.

  28. “Best to leave others’ work to themselves and stick to characterizing your invention.”

    Ping,

    Agreed. No matter what you say about any reference (even exactly the same words used by it) you’ll be second-guessed.

  29. Ned,

    The non-answer you just gave, that you ascribe the role of “Michael Moore” to me, is a great example of you taking that very role.

    You in no way addressed the point I raised. You, instead tell a story and mix up the roles. Try again, and try to simply stick to my post of 11:14 AM – if you can.

  30. Ping, you as always make as much sense as Michael Moore does when he explains just how Bush “lied.” I remembered the interview Bill O’Reilly had with Michael Moore at the Democrat convention in 2004. O’Reilly summed up the state of the intelligence that uniformly showed that Saddam had weapons of mass destruction. He pointed out that everyone who had reviewed this intelligence, including Bill Clinton, including Hillary Clinton, including all the Democrat candidates for president prior to the invasion of Iraq, had all come to the same conclusion that Bush did: Saddam Hussein had weapons of mass destruction. He then asked the corpulent and sweaty Michael Moore just how he could contend that Bush lied?

    Michael Moore paused to consider the question, a scowl suddenly enveloping his brow. We thought that O’Reilly had him. Then Moore brightened. He said with a growing smile emerging from the folds of flesh surrounding his slobbering mouth, “But, there were no weapons of mass destruction. Were there?”

  31. On the issue of “argument” vs. “statement of fact,” is important to note that the references cited in the background were not included in an IDS. One could infer therefore, if the statements were in fact false, that the purpose for the false statements was to induce the examiner not to look at the references himself. This is more than just attorney argument, but an attempt to mislead the examiner.

    In contrast, even assuming the statements were in fact false, if the attorney listed the references on an IDS knowing that the examiner would be required to read the references and form his own opinion, the statements would be more “argument” then a false “statement of fact.”

    Is further important to note that the attorney is not a person of ordinary skill in the art. If the ordinary reader would not understand the implications of a reference that that does not expressly disclose what the attorney says it does not expressly disclose, it must be inferred that the attorney believed what he said was true. This is quite a bit different from an affidavit submitted by one of ordinary skill in the art who would be presumed to know the inferences of a reference that that does not expressly disclose something.

  32. Ned,

    Ocham would simply say that your statement of Misrepresentation requires both a false statement of fact and the intention to deceive” is just wrong.

    One can say “something” and be wrong about what they are saying (thus misrepresent that “something”) and while being wrong, quite literally believe that what they say is correct (and thus lack intent to deceive).

    In fact, You provide quite a few examples of this. You are quite wrong quite often, yet you firmly believe that you are correct and thus there is no intent to deceive in the wrong things that you say.

  33. Ping, this case is downright weird. It seems that the Federal Circuit sustained a finding of misrepresentation while the same time holding that there was no intent to deceive. This seems to imply that what the Federal Circuit means by “misrepresentation” is that a statement of fact is not true, meaning false. The more traditional understanding of the term is that misrepresentation means a false statement of fact with an intent to deceive. If there is no intent to deceive, there can be no misrepresentation even if the statements are false.

    The District Court holding that there was a misrepresentation was based upon its finding that the two references unambiguously disclosed the use of software algorithms, and because of this, there was both a “misrepresentation” [read "false statement"] of material fact and an intent to deceive.

    The prosecuting attorney maintained to the bitter end that the two references did not disclose software, and that his statements in the background section both were and still are accurate.

    The Federal Circuit agreed that the two references did not expressly disclosed software, but agreed with the finding of the District Court that those skilled in the art would recognize the algorithms described in the referenced patents to be software algorithms. The Federal Circuit went on to hold that there was no “intent” to deceive because the references do not unambiguously disclose software.

    While I think the court was quite correct in its finding of lack of intent to deceive, I find it hard to believe that the finding of “misrepresentation” itself could be sustained under these facts. Misrepresentation requires both a false statement of fact and the intention to deceive. If there is no intention to deceive because the speaker believes the statements to be true, there can be no misrepresentation even if it turns out that the statements are literally false.

    So I think the holding of the Federal Circuit should have been the following:

    The holding of the District Court is reversed because there was no misrepresentation on the grounds the statements were believed to be literally true at the time and they were made and were not obviously false.

  34. Aside from constituting an admission, the dicta in this case is exactly why I rarely, if ever, discuss prior art in the background section. It also, costs the client more money.

  35. Yes, the “Abstact” of a referenced patent is NOT a good characterization of its 102 or 103 teaching content, and is not even supposed to be – it is supposed to be an abstract of what is being claimed, and is often ambiguous even as to that.

  36. EG,

    Even just using exact words without any interpretation can be trouble inducing – “Why did you choose those particularwords? – type of questions can be invoked – prevarication can take many forms , from selected truths to partial truths to outright lies.

    Best to leave others’ work to themselves and stick to characterizing your invention.

  37. “Prosecutors may want to take especial note of this opinion in crafting their Background of the Invention sections.”

    Jason,

    A very astute observation that hit me right away. As Paul Morgan also observes, “characterizing” references anywhere in the patent specification (and especially the Background section) is fraught with peril. Also, citation of references of any kind in the Background section presents another issue that will haunt the patent prosecutor, namely Admitted Prior Art (APA). Better to use the exact words out of, for example, the abstract of the cited reference without any interpretation of what those words mean or suggest.

  38. So in a 371 US national stage of a PCT appl from say China, we have to amend the spec to delete any statements about prior art. We then explain, to the Chinese attorney, that here, in the land of the free, home of free speech, we do this because we live in a climate of fear. We explain to them that in our country, a judge may think that an honest mistake about the prior art might be regarded as an attempt to pull a fast one.

    This sure sends sort of a mixed message about our system, especially next time we try to lecture them about theirs.

  39. Just to stir the pot…

    Inferences should go both ways.

    Actually, the inferences are supposed to be tilted towards the applicant – intent to deceive must be more likely than any other possible inferred intention, no?

  40. “So an intent to deceive is not material if you shouldn’t have been able to get away with it?”

    Um, if my actions make the deception difficult to get away with or outright impossible (e.g., I submit the mischaracterized art for independent Examiner consideration), then yeah, a reasonable person could conclude I didn’t intend to deceive. Inferences should go both ways.

  41. Having warned about this risk for years, it was interesting to see this case.
    However, the problem is not from merely citing some prior art in the specification. In fact that can be very useful in some cases for 112 enablement support and/or alternative enablements for claim element interpretation breadth with a requisite “incorporation by reference” statement, or, for supporting “problem-solution” requirements for foriegn equivalent applications.
    The U.S. problem is in unnecessary “characterizing” of that cited art. That is, what is being said or not said about that art. Especially, impliedly suggesting what a reference does NOT teach. Or implying that there is no more material art than that which is cited.

  42. During prosecution, the examiner must have known about both this reference and the applicant’s assertions about its content. So at the time, the examiner had the chance to disagree with plaintiff’s assertion concerning the reference. He evidently did not disagree.

    So an intent to deceive is not material if you shouldn’t have been able to get away with it? That’s good to know. From here on out, I’ll limit my inequitable conduct to misrepresentations that the examiner should catch. If he does catch them, I strike them. If not, I have “tacit agreement” and considerable deference to the agency’s “finding of fact.” I can’t lose!

  43. So the solution is to just preface every statement about a reference, whether in the specification or during argument, with a weasel phrase like:”As best understood…”

    During prosecution, the examiner must have known about both this reference and the applicant’s assertions about its content. So at the time, the examiner had the chance to disagree with plaintiff’s assertion concerning the reference. He evidently did not disagree.

    By not providing at least some deference to the examiner’s tacit agreement with the applicant, the Court seems to imply either that the examiner has no independent judgment, or that he was not paying attention. This seems contrary to principles of administrative law, in which agency findings of fact are given considerable deference.

  44. Is the court saying that a “misrepresentation” cannot be attorney argument because it crosses the line from argument to un-truth?

    I haven’t read the case or the underlying patent, but it seems that there could be a difference between what a reference “proposes” (sets forth expressly) vs. what that reference might mean to a skilled person reading the reference in light of the whole state of the art.

    Again, this decision is going to make patent attorneys want to say as little as possible. Why discuss the prior art at all? Just send it in an IDS and let the Examiner figure it out. Right, Malcolm?

    (I’m having a Newcaslte Brown Ale, how about you?)

  45. Ah yes, the Background section bugaboo. Another reason to make it even less specific and more weakly disparaging of the prior art.

    Here’s a hypothetical. Imagine you are working on series of applications for a company in a particular, relatively narrow field. The applications include a background section discussing how there is a need in the art for a method of achieving X without Y.

    After a few years of filing applications in this area, it occurs to you that the first application (unrelated to the most recently filed application except that the most recently filed application includes additional improvements on the subject matter) actually solved the problem referred to by the Background (or purported to … the claims were granted).

    Assuming it’s unchanged, isn’t the Background Section of the specification of the most recently filed application an affirmative mis-statement of the state of the art at the time of filing?

    Does the answer change if the most recently filed application is a CIP of a CIP off the first application, and none of the claims in the most recently filed application are entitled to the earlier priority date?

    It’s Friday. Discuss over a beer.

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