Important Unenforceability Case – CAFC Affirms Multiple Counts of Misconduct

Nilssen v. Osram Sylvania (Fed. Cir. 2007)

In a unanimous panel opinion, the CAFC has affirmed a district court finding that Ole Nilssen’s patents are unenforceable due to inequitable conduct. Although Nilssen prosecuted his own patents pro se, the CAFC cut him no slack since he was smart enough to “cite the [MPEP], patent statutes and regulations, and case law during prosecution.”

Unenforceability of Non-Asserted Patents: In a related family of patents, misconduct during prosecution of one of the patents can lead to the whole family being found unenforceable. Reversing that theory, the CAFC agreed that the lower court properly found several of Nilssen’s non-asserted patents to be unenforceable. (Although the court did not create any strict limit on the potential bleed-through, it should be noted that Nilssen originally asserted infringement of those patents, but later dropped those claims.)

Expert Testimony: Following Ferring, the CAFC agreed that Nilssen’s failure to disclose a close relationship with his 132 declarant constituted inequitable conduct.

Small Entity Fees: Although not during prosecution, pretending to be a small entity when paying maintenance fees can also lead to unenforceability. Here, the court found that payment of the small entity fee after licensing to Philips demonstrated an “obvious intent to mislead.”

Priority Claims: Misleading priority claims can also constitute inequitable conduct.


17 thoughts on “Important Unenforceability Case – CAFC Affirms Multiple Counts of Misconduct

  1. 17

    Wow Sutterman, arent you a regular class act, or so you think. Sitting around waiting for someone to sue me??….right. I hired one of the largest firms in Denver a month before my patent issued, and gave them a 50K retainer to get started. Its a mater of record who sued who…you havent a clue what your even talking about Sutterman.
    while you sit around thinking your such a superior individual (passing un-educated judgement) the firm I hired sat around and waited until I was sued in Ohio, before getting around to filing my action in Colorado as they were hired and pre-paid to do….so it appears your the one with a need to visit someone for a reality check Mr. Aspergers, you’ve got your facts backwards.
    Smart guys like you are usually only good at smarting off behind closed doors, & seldom have enough true heart or integrity to back it up…but hey, I could be wrong…look me up sometime and we’ll see if your as good at mischaracterizing in person, as you are behind closed doors Mr.Sutterboy, I bet not.

  2. 16

    Ole Nilssen got what he diserved… however, with regards to all the self-serving comments about pro se applicants … sounds like a coin flip with lots of wasted hours during litigation as no lawyer can guarantee an outcome anyway

    to the self-serving attorneys looking at juiced fees from clients vis-a-vis the new rules … good luck with that … to have allowed the rules to get this far does not speak terribly well of any “expertise” in working the rules let alone the law … do any of the folks causing all of this conmsternation and anguish even have law degrees? how many years before the majority of your work will essentially be disclovery plus Markman and for the few lucky ones, trial … all the rest will be outsourced.

    i agree with Michael L. Slonecker … how about clarifty in the application of 102 / 103 / 112 and an explanation or standard for use of dictionaries or the specification for claim elements? what about a real obviousness test instead of the KSR punt? how about defining a PHOSITA? what about clarity in classification along with clearer issues on Festo/DOE? how about real database indexing with cross-referencing for examiners in particular groups? so many issues that can be solved by not diverting the fees of the PTO to other pork barrel projects.

    these are simple issues of substance … and if you want to mortgage the house to take on the man — this country was built on risk …

  3. 15

    Nilssen – Without any action on your part, 6-large corporations filed suit on you a few weeks after your patent issued. Your just sitting around, your patent issues, and 6-large corporations sue you. Right. The attorneys left you hanging because you could not pay them. Its their fault, not yours. The judge entered a default against you because you didn’t have the money to pay for bus fare to the proceedings. The Colorado court notifies the defendants of a Colorado lawsuit against them, which you think is an unnecessarily process. The defendant’s respond to the lawsuit as filed against them rather than the lawsuit existing in your mind, so they are acting disingenuously. I stopped reading the rest of your post because it is clear as to why you lost. Look at the very first post of this thread: “I know an examiner who examined many of his applications. Nilssen used to drive him crazy and he’d complain to the examiner’s boss and director about his alleged intellectual dishonesty.” You live in your own fantasy world. If you have any money left, maybe see a psychiatrist to see how to deal with your Aspergers problem. In any event, at least your $500,000 gave you a whole host of new things to mischaracterize and bitch about the rest of your life.

  4. 14

    Pro-Se and Jed Margolin, I’m not unsympathetic to your own stories. But as I said before, Nilssen didn’t get the shaft b/c he was pro se. Nilssen lost b/c he tried to cheat and got caught. You have to be pretty attuned to the system to cheat the way he tried to (which leads me to think that he could have made a decent living as a patent practitioner if he hadn’t been so interested in cheating). If anything, the CAFC was more forgiving toward him than it otherwise would have been precisely b/c he was pro se. If he’d been a lawyer and tried this, they’d have been all over him (and he’d likely be disbarred to boot).

  5. 12

    Not everyone can afford an attorney…keep that in mind. It took me 4 lawyers, a half a million dollars, and 7 years just to get to trial, and when I got thier, I was alone (the attorneys had convieniently found something else more lucritive to do once I ran out of money, so they left me hanging bacically)

    I prepared for trial…alone. I tried the case before a jury…alone. And dont ask me how, but I prevailed at trial alone as well.

    But was it a victory?….

    May will mark the 10th aniversary of my nightmare. Its cost me 10 years of my life, and all my life savings, and this past May my home (which I grew up with my parents in) was forclossed on.
    Did I choose to litigate? No, as a mater of fact 6-large corporations filed suit on me a few weeks after my patent issued (my then attorney dropped the ball, thus allowing them an unnesesary oportunity to file an action against me for interference with buiseness relations, unfair competition, and a few other B. S. claims in a venue 1500 miles away). That was May-1998
    My then attorney filed an infringement action in response 9 days later. My case was then transfered to Ohio based upon a non-sense argument of “first to file” by the infringing companies (Mac Tools, Snap-On Tools, Matco Tools, Cornwell Tools, Tools USA, and oh, I almost forgot, an ass-wipe named Raymond Steck of Steck Manufacturing who was supplying the other big-boys listed (he had convieniently indemnified them, so he could continue reaping the rewards of infringment)
    In late 1999, after spending $250K, I ran out of money, and judgement by default was entered against me for failure to attend the proceedings.
    With the help of some close friends, I managed to scrape together enough money to hire a local young attorney to file appeal to the CAFC, to address the innitial juristiction defects we had preserved when my action was transfered to Ohio, see Hildebrand v. Steck et al (Fed Cir 2002).
    We prevailed, and the CAFC ordered a remand noting that I had violated no protected right, had committed no tortious acts either within or without the state of Ohio, and had conducted no tortious buiseness anywhere.
    On remand, Ohio dismissed (now) defendants frivolous “first filed’ Ohio action, and transfered my case back to Colorado.
    It starts getting interesting now. Colorado handles the case as an Ohio innitiated case (instead of a return of one of thier own Colorado innitiated cases)and assigns an altogether new 2002 case number. Colorado then unnecesarily serves a copy of my innitial complaint on defendants , and 5 days later defendants take advantage of the oversight of the court and disengenuously act as if its an altogether new action (rather then an ongoing 1998 complaint), and respond by filing counter claims against me.
    What kind of counter claims?? The EXACT SAME ONES the CAFC had already ruled on and dismissed, and get this; they also claimed (as defense) that the court lacked jurisdiction over them, thus venue in Colorado was improper, and quote;

    “This case should be transfered to the United States District
    Court for the Southern District of Ohio, pursuant to 28 USC 1404(A)”

    Yes, defendants were that bold gentlemen, but it gets even better.

    The case was then eventually re-set for a trial date of April 21, 2003. In the mean time we obviously filed a motion for summary judgement asking that defendants duplicative frivolous claims be dismissed (citing the Federal Circuits previous decision in the case), and Defendants filed motion for summary claiming my patent was invalid based upon prior art, the typical inequitable conduct BS, and 5 or 6 other “kitchen sink” defenses.

    Three days away from trial, the court denied our summary motion (ignoring the Federal Circuit Decision), stating; :the only issue before the CAFC was the question of jurisdiction, and in the same breath, granted defendants pending Motion for Summary Judgement. Once again my patent was invalidated and my case and claims were dismissed, and once again defendants previously adjudicated frivolous counter-claims were hanging over my head.
    We then filed a motion for reconsideration (that was April-2003, and over the following 14 months, several additional motions at a cost of around 30K had to be filed before the judge got around to realizing that the defendants had misled him by claiming a piece of prior they submitted was more relevant than anything previously before the examiner,rendering my patent invalid for obviousness.
    Why was the defendants position misleading? (I’m being polite), because the only way defendants could pull off attempting to convince the judge that the newly cited reference was more relevant (and not merely cumulative) was to withhold from the judge 3 of the 7 cited prior art references reviewed during examination and issuance. Isn’t that Ironic, being accused of inequitable conduct by defendants, while they actually commit it.
    Reconsideration was then granted, but once again I was out of money. Faced with counter claims against me, I had no choice but to go to trial to defend myself. Ironically, the first day of trial defendants dismissed thier counterclaims against me before the jury came in. They obviously didn’t want the jury to know they had innitiated the litigation in Ohio first (and surely didn’t want to take the chance of being before the CAFC (and the posibility of wilfulness being found for thier disengenuous nonsense)
    All you attorneys need to know I wouldnt wish what I’ve gone through on anyone. Feel free to go on to pacer and review the 60(b) motion filed following trial (fraud is an understatment of the evidence we found documenting defendants backdating of development and sales).
    I proved I was entitled to lost profits, and now I could use someones assistance in getting through pending motions proving fraud and withheld sales, (not to mention other infringers).
    The CAFC recently upheld the validity, so a great deal of the work is done. I’d be willing to entertain one of you experts coming on board and helping to get the money I’m entitled to based upon the evidence within the pending rule-60 motions, etc.
    As pacer’s filings reflect, recently the judge denied the rule 60 motions mistakenly claiming they were filed untimely, but as you’ll see if you review the docket itself, once again the clerk and court failed to take into account the proper day judgement was actually entered in 2005, and also failed to look at a 2005 or 2006 calender to see that the final do dates fell on weekend days, rendering monday filings proper and timely.
    If anyone wants to step up and assist, it would be greatly appreciated. All a person needs to review to get the just of this case (and the amount of possible amended damages as a result),is the rule 60 filing (and attachments), defendants rediculous reply (and failure to address the evidence), and
    the filings that followed.
    I vested 10 years and all my life savings into defending myself and patent from frivolous claims, and with do respect,it may come easy to some of you to ridicule and crack jokes about pro-se litigants (and in some instances your probably right to a certain degree), but at the end of the day when all the laughing is done, are any of you willing to step up and consider assisting someone who is willing to share all he has worked for in exchange???
    I can be reached anytime at 303-995-9533 and my e-mail is PRO41WILLYS at aol.
    I can assure you, theres never a dull momemt in this case. D.L.Hildebrand
    Denver, Colorado

  6. 11

    Come on now, when an agent has been in the business long enough, the agent acquires the legal background necessary to competently write/prosecute applications. Otherwise, the agent wouldn’t last “long enough.”

  7. 10

    I’m sure now he’ll take the usual course and sue the patent attorney representing him for malpractice. … Oh … wait a minute … he represented himself. Bwahahahah!!!!!!!!

  8. 8

    “However, the patent process is a complicated one, one that requires both technical and legal credentials in order to effectively prosecute patents for inventors.”
    I don’t think it’s news, but you don’t have to be a lawyer to write a patent application. If anyone thinks otherwise, they should bone up on the requirements for the agent’s exam.

  9. 7

    There’s little that gives me more joy than seeing someone who thinks he can beat the system get chewed up and spit out by the very system he sought to beat.

    I have no sympathy for pro se inventors who think they can act as their own patent attorney. Don’t come crying when you mess up under the rules we have to play by.

    Want the PTO to cut down on the backlog? Instead of bending over backwards to help pro se applicants, hold them to the kind of formalistic objections and rejections we get for not putting the right statement on a separate page on an appeal brief or not including a statement of the status of all claims ever filed in the case in every amendment. When enough applications are held abandoned for failure to file a timely complete response maybe they will seek the help they really need.

  10. 6

    I think the CAFC was too forgiving- I this wasn’t simply a matter of some guy working pro se who “unfortunately” got screwed by the system. Nilsson learned the system and deliberately tried to sleaze his way through it, to gain undeserved rents via the patent system. Although not stated in the CAFC’s decision, I think he even deliberately transposed one of the numbers in a priority claim to get around some prior art. It’s because of guys like him that we wind up with “patent reform”. I’m glad his whole portfolio is dead – it’s what he deserved.

  11. 5

    Perhaps it is just me, but I am not at all comfortable with the concept of tossing an entire portfolio of patents out the window based upon “process” versus “substance”, and particularly when even the CAFC acknowledges that many of points raised by the district court concerning the “process” were close calls that might have gone either way. Have things now devolved into two different standards, one for “process” satisfied by a proponderance of evidence and “substance” satisfied by a clear and convincing standard? I think it odd that the district court rendered its decision entirely on the patentee’s actions and demeanor during the prosecution process, without even mentioning if any of the tossed patents measured up to the standards of 101, 102, 103 and 112. Yes, the ex parte nature of prosecution can be ripe for abuse, but is the wholesale invalidation of patents a fair and reasonable response, or is it a bit draconian in nature? Using merely one example, is a failure to mention litigation in the absence of discovery because something meaningful and relevant might later turn up a fair rule, or merely a trap for the unwary? Yes, evidence may turn up that is material and must be disclosed, but then again it may not.

    Perhaps the patentee was a bit rude, lewd and crude by actually placing on paper what many prosecutors are often tempted to do, but has decorum and courtesy before the PTO risen to such a level that the failure to heed its warning should take precedence over the question of whether or not a claimed invention satisfies the substantive requirements of Title 35? I do not recall a statutory “non-rudeness” requirement appearing in Title 35.

    This is a case where 37 CFR seems to have carried the day almost entirely, but I do have to wonder how many of those rules cited by the district court would withstand a legal challenge. One issue that immediately comes to mind is that of small entity status. 35 USC 41(h) speaks to several classes, one of which is a small business as defined in Section 3 of the Samll Business Act. The other two classes, under any ordinary rule of statutory construction, a separate matter altogether in that the authority to define same by rulemaking is conferred with the PTO. I am quite curious to find out where rulemaking authority is conferred permitting the PTO to define a small business in the manner it has with all of the prerequisites that must be met, such as the no-no about a grant of rights via license to a non-small entity.

    While this case is concededly an extreme example of how not to conduct oneself before the PTO, it seems to presage just where the law is heading in the name of patent reform…more “process” traps for the unwary, for which applicants get to shoulder an ever increasing financial burden. Somehow “substance” appears to be taking a back seat.

  12. 4

    The old rule still applies: He who is his own attorney has a fool for a client —– and a knave for a lawyer.

  13. 3

    Yeah, the end of the decision confirms the old adage that “he who represents himself has a fool for a client” and that patent application drafting and prosecution should be left to those who know:

    A few closing comments are in order. Each of the issues on which the district court found inequitable conduct generated defenses by Nilssen that were not per se unreasonable when considered in isolation. The CFLA was not beyond an interpretation contrary to what the district court adopted. Nilssen did pay some fees that were large entity fees. Failure to cite the Motorola litigation to the PTO may have been an oversight, as perhaps failure to cite prior art might have been. Perhaps Nilssen did not expressly assert an unjustified earlier priority date to obviate prior art.

    However, this case presents a collection of such problems, which the district court evaluated thoroughly and considered, including making credibility findings, and it concluded that the record and testimony indicated repeated attempts to avoid playing fair and square with the patent system. Mistakes do happen, but inadvertence can carry an applicant only so far. Thus, we cannot find that the court’s holding of unenforceability was an abuse of discretion. Perhaps some of the errors were attributable to Mr. Nilssen’s representing himself during the prosecution of his patents. It surely was true that he knew more about the subject matter of his inventions than most, or even any, attorney. That is almost always the case with an invention, particularly one dealing with complex subject matter. However, the patent process is a complicated one, one that requires both technical and legal credentials in order to effectively prosecute patents for inventors. The same credentials are generally required to prosecute patents on one’s own inventions. Mr. Nilssen, while apparently gaining considerable knowledge of the patenting process, thought he didn’t need professional patent help. The result of this case, regrettably, proves that he was wrong.

  14. 1

    I know an examiner who examined many of his applications. Nilssen used to drive him crazy and he’d complain to the examiner’s boss and director about his alleged intellectual dishonesty. I’m sure that examiner will be wearing a big-ass grin today.

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