By David Hricik, Mercer Law School
Over on the main page, Dennis has written up GS CleanTech Corp. and Cantor Colburn LLP v. Adkins Energy LLC (Fed. Cir. 2020) [Fed Cir Decision][DCT Decision] (does Dennis ever sleep?), which affirms a holding of inequitable conduct.
That finding can ruin careers. Dennis examined the merits: I want to examine the procedure used on appeal. (I’ve taught civil procedure for decades now, and served as a clerk on the court a few years ago… this case is in need of correction by the full court or the panel on rehearing — whether it changes the outcome, or not, a point on which I have no view.) Whatever the merits, the panel mistates key issues of appellate review of inequitable conduct and contradicts prior panel decisions and even Therasense itself — and does so in a way that radically increases the scope of this equitable defense while, at the same time, failing to analyze the equities, oddly enough.
Specifically, first, the panel states the the standard of review of a fact finding of materiality underlying inequitable conduct is for abuse of discretion. That is just flat wrong. “[W]e review the district court’s findings of materiality… for clear error.” Am. Calcar, Inc. v. Am. Honda Motor Co., 768 F.3d 1185, 1189 (Fed. Cir. 2014). Accord, Regeneron Pharm., Inc. v. Merus N.V., 864 F.3d 1343, 1351 (Fed. Cir. 2017).
Worse, invalidity “under the on-sale bar is a question of law with underlying questions of fact.” Robotic Vision Sys., Inc. v. View Eng’g, Inc., 249 F.3d 1307, 1310 (Fed. Cir. 2001). Accord, The Medicines Co. v. Hospira, Inc., 881 F.3d 1347, 1350 (Fed. Cir. 2018). The panel examines for abuse of discretion of, not just the underlying factual questions, but the legal question. That is wrong. Indeed, it applied abuse of discretion to whether the invention was ready for patenting, which is also wrong.
As stated, reviewed the findings of intent to deceive for abuse of discretion: that’s wrong. “This court reviews the district court’s factual findings regarding what reasonable inferences may be drawn from the evidence for clear error.”
Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276, 1291 (Fed. Cir. 2011)
And, third, the panel never (as the district court apparently failed to do) analyzed equitable balancing — given the circumstances should the entire patent be held unenforceable? I’ve often observed that nothing in Therasense changed the rule that, if the accused infringer meets its burden of showing both materiality and intent, “then the district court must weigh the equities to determine whether the applicant’s conduct before the PTO warrants rendering the entire patent unenforceable.” Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276, 1287 (Fed. Cir. 2011).
The panel applied the standard of review on the ultimate issue — equitable relief — to fact findings and legal conclusions. It’s a slippery slope, and one with severe consequences to the boundaries created by Therasense: it allows district courts to make clear errors on factual findings and legal conclusions, but be affirmed on appeal so long as they do not abuse their discretion. Finally and in addition, lack of careful appellate review will lead to OED investigations into practitioners, as well as ruined businesses and scientific careers.