Will the Court Correct the Mess that is GS CleanTech Corp. v. Adkins Energy LLC?

by David Hricik, Mercer Law School

In my earlier post, I noted some of the clear errors in the panel decision in GS CleanTech Corp. and Cantor Colburn LLP v. Adkins Energy LLC (Fed. Cir. 2020) .  The patentee has filed for rehearing en banc, and the petition is here.  I wish I had time to write an amicus brief in support, but after giving a CLE today about the case (here is link but you have to buy it, I think) and reading that brief, I believe the problems with the case run far deeper than I originally thought and even deeper than that brief points out.

Here’s why.

When inequitable conduct is asserted, often it is bifurcated from validity/infringement. Where either a jury finds invalidity, or as in CleanTech the judge did on summary judgment, and that finding is based upon allegedly withheld art, the patent owner will need to appeal (to avoid CleanTech). But, there is, under those circumstances, no final judgment.

Nor will any judgment fall within any exception — at least not very often. The patentee likely won’t be able to seek appeal under Fed. R. Civ. P. 54(b), because it only applies if there are multiple claims or multiple parties, so in a single-patent-single-defendant case, it wouldn’t likely be available.  While possibly a trial court could certify a case for appeal under 1292(b), that requires there be a controlling question of law and substantial ground for disagreement, that won’t often be the case and the Federal Circuit has to also agree to certification.  The collateral order exception won’t apply because the order won’t be separate from the merits. Any judgment will not (unless a preliminary injunction was granted and then dissolved because of an invalidity finding) grant or deny, an injunction (it will decide no liability and that’s not the same as denial of an injunction).  Mandamus won’t be available.

So, the appeal will be from the judgment entered after the inequitable conduct trial.  The CleanTech case held that “abuse of discretion” applies to review of inequitable conduct — to the findings of materiality (even though in CleanTech it was a question of law based on underlying facts), to the fact findings of knowledge of materiality, and to the finding of intent to deceive.  Standard of appellate review on materiality will be much looser than if validity had been appealed, in other words. The standards of review for knowledge of materiality and of intent will be looser than TheraSense, too.

But it gets worse if summary judgment was the basis for invalidity (and, so, materiality).

On appeal of summary judgment, facts are viewed in the light most favorable to the non-moving party and all reasonable inferences are taken in the non-movant’s favor.  So, in CleanTech the panel should have, without deference to the trial court, asked whether there was no genuine issue of disputed fact and no reasonable jury could find other than, by clear and convincing evidence, there had been an offer to sale (and not an experimental one) that invalidated a claim.  Under the panel decision, instead, the question is whether the district court abused its discretion in making that determination.

None of that makes sense.

But what does make sense is that any litigator representing a patentee who loses on invalidity must do whatever is reasonably possible to appeal because otherwise the CleanTech approach will apply. And, of course, it will permit creative defense lawyers to argue to trial courts that (somehow) determining the propriety of summary judgment is not conducted as the Supreme Court has repeated admonished (most recently in Tolan v. Cotton).

I hope the full court realizes the panel decision — whether the result is right or not — is from a procedural view irreconcilable with Therasense and settled standards of review, and, further, will result in efforts to try piecemeal appeals that will waste judicial resources and, if uncorrected, lead to improper findings of inequitable conduct.

About David

Professor of Law, Mercer University School of Law. Formerly Of Counsel, Taylor English Duma, LLP and in 2012-13, judicial clerk to Chief Judge Rader.

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