Important Inequitable Conduct Decision: Defendant Must Prove its Case

Star Scientific v. R.J. Reynolds Tobacco (Fed. Cir. 2008)

After a bench trial, the district court held that Star’s tobacco curing patents were unenforceable due to inequitable conduct during prosecution and invalid as indefinite. This post will discuss the inequitable conduct issues.

The Star patents are directed at a method of making healthier tobacco (same nicotine, but fewer nitrites and other chemicals). Higher end organic or green tobacco is perhaps the only growth market in the lagging US market. The inequitable conduct issues in this case revolve primarily around a letter received by the prosecuting attorneys from a Star scientist indicating that Chinese tobacco already had lower levels of nitrites due to “their use of old [radiant heat] flue-curing techniques.” Neither the letter nor a set of similar data were ever disclosed to the PTO.

An accused infringer can defang a patent by showing the patentee guilty of inequitable conduct during prosecution. To successfully prove inequitable conduct, the accused infringer must present “evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the [PTO].” An issued patent is presumed valid and enforceable – thus, the “burden of proving inequitable conduct lies with the accused infringer. The patentee need not offer any good faith explanation unless the accused infringer first carried his burden to prove a threshold level of intent to deceive [and materiality] by clear and convincing evidence.” Further, “[e]ven if a threshold level of both materiality and intent to deceive are proven by clear and convincing evidence, the court may still decline to render the patent unenforceable.”

“The need to strictly enforce the burden of proof and elevated standard of proof in the inequitable conduct context is paramount because the penalty for inequitable conduct is so severe, the loss of the entire patent even where every claim clearly meets every requirement of patentability.

. . .

[C]ourts must ensure that an accused infringer asserting inequitable conduct has met his burden on materiality and deceptive intent with clear and convincing evidence before exercising its discretion on whether to render a patent unenforceable.

. . .

If a threshold level of intent to deceive or materiality is not established by clear and convincing evidence, the district court does not have any discretion to exercise and cannot hold the patent unenforceable regardless of the relative equities or how it might balance them.

Specific Intent: As the CAFC held the 1995 Molins case, the intent requirement is “specific intent to . . . mislead[] or deceiv[e] the PTO.”

“Rather, to prevail on the defense, the accused infringer must prove by clear and convincing evidence that the material information was withheld with the specific intent to deceive the PTO.”

When circumstantial evidence is used to prove intent, that evidence “must still be clear and convincing” and intent to deceive the PTO must be “the single most reasonable inference able to be drawn from the evidence.” As a flat rule, information is not material if it is cumulative to that already disclosed.

In this case, prosecution was begun at the Sughrue Mion firm and then moved to the Banner Witcoff firm. RJR’s theory of intent was that the firm switch was necessary to avoid disclosing the letter. Star’s witness stated that the “reasons behind the replacement of the Sughrue firm were that a key partner passed away and that [the witness] observed a Sughrue attorney perform unsatisfactorily in an unrelated prosecution.” The district court, however, rejected that testimony as unbelievable. On appeal, however, the CAFC reversed:

“[E]ven if Star’s explanations are not to be believed, it remained RJR’s burden to prove its allegation regarding the reason for the Sughrue firm’s dismissal. RJR cannot carry its burden simply because Star failed to prove a credible alternative explanation.”

Here, the court found that RJR had simply not proven its case:

“RJR failed to elicit any testimony or submit any other evidence indicating that Star knew what the Burton letter said prior to replacing the Sughrue firm, or that the letter was a reason for changing firms. RJR admitted at oral argument that it failed to even ask [Star’s] executives about these critical facts, and RJR failed to identify any testimony or other evidence when specifically asked by us to do so in supplemental briefing. Further, a review of the record shows that Williams actually testified, in response to a different question, that he had never seen the Burton letter prior to his deposition in the present litigation. This statement was never impeached, questioned, or explored by RJR’s counsel. RJR identified Perito, Star’s chairman, as the officer who made the decision to terminate the Sughrue firm, but Perito was never asked whether he had knowledge of the Burton letter or whether it played any role in his decision to change firms.

In the end, the court concluded, that RJR had simply failed to provide sufficient facts to support an inference of intent to deceive. Reversed and Remanded.

Notes:

  • The decision gave Star’s stock (STSI) a nice bump:

Of course, there is no “legal” impact, but I query the importance of the fact that both prosecution firms (Sughrue Mion and Banner Witcoff) are well known and well respected in the legal communities.

21 thoughts on “Important Inequitable Conduct Decision: Defendant Must Prove its Case

  1. 21

    Lionel, I thought everybody reading this blog knows that enablement of the claimed subject matter is not a burden that the claim itself has to discharge. As to your “on point”, in this thread that’s “inequitable conduct”, isn’t it. I just dislike the way some contributers are so quick to criticise, when they themselves are hardly perfect. It makes me snarky (as JAOI so kindly pointed out, many moons ago) and I haven’t learned my lesson yet. As to Malcolm Mooney’s post immediately above, I think he’s a student of EPO jurisprudence on clarity of the claim, support for the claim and sufficiency of disclosure of the claimed invention, and I look forward to reading the riposte from pds. Or from you.

  2. 20

    pds “The purpose/result does not and should not have to be non-obvious or inventive.”

    Never said that it should be. I said “Unless the purpose/result itself is deemed to be non-obvious or inventive, the claimed method should set forth steps for achieving that goal WITHOUT forcing would-be infringers (or Examiners) to guess what parameters fall within the scope of the claims.”

    The reason for this is to prevent Rochester-style claiming, where the inventor attempts to claim his method not as a series of concrete, well-defined (i.e., definite) steps but as a vague concept, “A method for making the improved X that everybody wants, wherein said method comprises making X using water, wherein said water is substantially pure.”

    When the prior art methods use water that one of skill would recognize as substantially pure but “it can’t be because otherwise the patent wouldn’t have issued” then this claim should be found insufficiently definite. What is the level of purity in definite reproducible terms? It must be laid out. Otherwise the scope of the claim is anyone’s guess, or I should say it is the Federal Circuit’s guess.

    Those of you who think patentees are being treated unfairly by the CAFC should rejoice at Judge Michel’s finding here. If you thought the “fragile gel” case created a mess, that mess is now covered by VomSorb. Enjoy.

  3. 19

    Max,

    This is a blog, not a formal document. Try staying on point. pds’ legal point was correct – claims have to be enabled by the written description, they do not have to be enabling themselves.

  4. 18

    What are these “cannons” of claim drafting, please. I’ve heard of those having claims asserted against them being in the position of looking down the barrel of the gun pointed at them, but you mean something else pds, do you not? Can we agree, that unambiguous English is a minimal requirement, for those who aspire to draft claims?

  5. 17

    “Unless the purpose/result itself is deemed to be non-obvious or inventive, the claimed method should set forth steps for achieving that goal WITHOUT forcing would-be infringers (or Examiners) to guess what parameters fall within the scope of the claims.”

    To paraphrase Scalia, what kind of gobblygook is this?

    The purpose/result does not and should not have to be non-obvious or inventive. Also, the claim method DOES NOT have to set forth the steps for acheiving that goal. Claims are only required to distinguish the claimed invention, not enable it (i.e, claims are not required to “set forth steps for achieving that goal”).

    The evidence mounts for you not being a patent attorney and/or ever having to draft a set of claims. However, if you actually draft claims and these are the cannons for claim drafting you employ, I feel *really* *really* sorry for your clients.

    Suggestion …. you do your best trolling with the high-level topics. If I were you, I would avoid discussions of details, as you are definitely out of your element.

  6. 16

    “Never mind that removing nitrosamines was the alleged problem to be solved by the method. Never mind that earlier methods reduced nitrosamines, at least in part, by increasing aeration during drying. And never mind that aerobic conditions and the resultant absence of nitrosamine were recognized in the art by the patentee’s own scientists and their attorneys. … Note that these same irritating issues arise in product-by-process claims and in claims with excessive preambles.”

    I’m not sure exactly what your complaint is, except that you are irritated by preambles, but your comments appear to have little to do with definiteness. You’d be a lot more persuasive if you could argue Section 112 or Section 101 issues without confusing them with anticipation and obviousness.

  7. 15

    “How non-anaerobic does it need to be? Enough that it prevents formation of the nitrosamines.”

    Gosh, how helpful. Never mind that removing nitrosamines was the alleged problem to be solved by the method. Never mind that earlier methods reduced nitrosamines, at least in part, by increasing aeration during drying. And never mind that aerobic conditions and the resultant absence of nitrosamine were recognized in the art by the patentee’s own scientists and their attorneys.

    This claim is apparently drawn to *really* *really* aerobic conditions that result in *really* *really* undetectable nitrosamine levels. It must be so because … because … because … well, because the CAFC has turned indefiniteness into a virtually useless tool for invalidating patents. Strangely, this change has occurred during a time period in which the CAFC has labored to teach lawyers that construing a claim to preserve its validity is almost always incorrect. Now we are told that if Federal Circuit judge can be persuaded of *any* construction, the claim is not indefinite. I have difficult reconciling the two universes.

    The question is: what is the point of requiring a claim to be “definite”? This was a method claim. The method has a purpose — that’s quite clear. Unless the purpose/result itself is deemed to be non-obvious or inventive, the claimed method should set forth steps for achieving that goal WITHOUT forcing would-be infringers (or Examiners) to guess what parameters fall within the scope of the claims.

    Note that these same irritating issues arise in product-by-process claims and in claims with excessive preambles. Message to CAFC: end the nonsense.

    And following up on a discussion from a few weeks back: has any district court reached a finding of willful infringement after the CAFC overturned a previous finding of non-infringement or invalidity? That would be amusing.

  8. 14

    “I wonder if the district court was influenced by the fact that it was R.J. Reynolds? Rather a history of inequitable conduct there. While we are wondering. :-)”

    Except that the patents at issue were Star Scientific’s patents.

  9. 13

    Leopold,

    I agree with you. The meaning of “anaerobic condition” in the context of this Claim is not something one of ordinary skill in the art would have trouble understanding. In particulr the term “anaerobic” is a fairly common term, and certainly not as exotic as “fragile gel” in the Halliburton case.

  10. 12

    “good point, MM.”

    No it’s not. He’s wrong. The claim says that you create an airflow sufficient to prevent an anaerobic condition. How non-anaerobic does it need to be? Enough that it prevents formation of the nitrosamines. Can someone skilled in the art figure set up this process without undue experimentation? Apparently. Can a practiced method be evaluated to see if it infringes? Apparently. Then it’s not indefinite. It might be obvious, it might be anticipated by the radiant flue method, but it’s not indefinite.

    Malcolm also has a habit of trying to zoom in on the one feature of a claim that is “new.” That’s certainly irrelevant to definiteness, and usually isn’t nearly as relevant to anything as he seems to think.

  11. 10

    “I think the difference is that the PHOSITA/the district court could put a number on O2 concentration that means “anaerobic” (i.e., low enough oxygen such that there’s only X amount of the chemical made – measure the O2 concentration indirectly).”

    The difficulty with selecting that functional definition in this context is the circular nature of the claims and their relationship to the prior art.

    Claim 4

    “A process of substantially preventing the formation of at least one
    nitrosamine in a harvested tobacco plant, the process comprising:

    drying at least a portion of the plant, while said portion is uncured,
    yellow, and in a state susceptible to having the formation of
    nitrosamines arrested, in a controlled environment and for a
    time sufficient to substantially prevent the formation of said
    at least one nitrosamine;

    wherein said controlled environment comprises air free of
    combustion exhaust gases and an airflow sufficient to
    substantially prevent an anaerobic condition around the
    vicinity of said plant portion; and

    wherein said controlled environment is provided by controlling at
    least one of humidity, temperature, and airflow.”

    To the extent there is anything new in that claim (i.e., not a recitation of a desired result or an old method), it lies in the “airflow sufficient to substantially prevent an anaerobic condition” passage. That passage alone captures the inventors alleged “discovery” that preventing an anaerobic condition prevents nitrosamine buildup.

    Okay, so what does Judge Michel say about this? Try to follow:

    “the intrinsic record provides a standard for measuring that degree and assessing the bounds of “anaerobic condition” as required by Datamize, namely the level of TSNA formation. In fact, the claims explicitly refer to the standard, requiring that the tobacco be cured in a “controlled environment” that prevents an “anaerobic condition” in order to “substantially prevent the formation of at least one nitrosamine.”

    That’s completely circular reasoning. How can somebody claim a method of creating a special version of X merely by throwing in phrase that “X ix created under conditions such as that non-special versions of X do not form”? Such claims are indefinite because they are meaningless. “The sky is blue because it isn’t magenta.” Gee, thanks.

    Compound this vagueness with the other elephant in the room: the fact that the inventors knew of other curing methods that read on *every limitation* of the claim *except* for the *degree* of the desired outcome of the method. And that’s only if we ignore the infamous letter where one of the scientists admits that the old radiant flue method produces tobacco that lacks nitrosamines.

    The more I read this opinion, the more baffled I become that the CAFC did what it did. I can only assume it’s because they know the patent is going down on other grounds but, for some strange reason, they liked these facts as a foundation for their attempt to “clarify” inequitable conduct case law.

  12. 9

    I wonder if the district court was influenced by the fact that it was R.J. Reynolds? Rather a history of inequitable conduct there. While we are wondering. :-)

  13. 8

    “Of course, there is no “legal” impact, but I query the importance of the fact that both prosecution firms (Shugrue Mion and Banner Witcoff) are well known and well respected in the legal communities.”

    This comment strikes me as fishing for data points to uphold a pre-existing opinion. (My apologies if this comes across as overly harsh. It is meant as constructive criticism. I have nothing but the highest regard for DC, his objectivity, professionalism and the Patently-O blog.)

    The District Court clearly was not swayed by any “prestige” factor associated with the attorneys who prosecuted the patent. The Federal Circuit opinion also seems devoid of any such influence and appears to be primarily concerned with keeping the inequitable conduct doctrine within proper bounds rather than being influenced by the identity of the attorneys involved.

  14. 7

    Zak,

    I think the difference is that the PHOSITA/the district court could put a number on O2 concentration that means “anaerobic” (i.e., low enough oxygen such that there’s only X amount of the chemical made – measure the O2 concentration indirectly).

    In Halliburton, non one could put their finger on any number that meant “fragile gel.” Re-look at the Halliburton case and FIG. 3. There was nothing in the spec or in PHOSITA’s knowledge to say which of the four curves at 70 minutes is a fragile gel.

    Yes, I agree that the patentee would point to 25% torque as a great cut-off for fragile gels, but the spec spoke to how fast it spikes and/or drops off. They all did that.

    Tough cases, especially if you think that the inventor at the time of invention in the Halliburton case probably would have looked at FIG. 3 and picked out the fragile gels without even having to think about it, but the patent drafter simply didn’t capture the attributes of a fragile gel correctly*.

    (*correctly = good enough to stand up in a trial and on appeal).

  15. 6

    Malcolm,

    “Michel’s reversal of [the indefinitenss finding] is hand-waving gobbledygook”

    I could not agree with you more. Especially considering that the claims at issue are very strikingly similiar to the claims at issue in HALLIBURTON ENERGY SERVICES, INC, decided January 25, 2008, which was also penned by Judge Michel. In that case, Judge Michel held that the claims were indefinite. Odder still, Judge Michel cited Halliburton in this opinion.

    Seriously, I am missing some defining difference between these cases or is the judge contradicting himself? Considering that I am reading these cases at 1:00 in the morning, it could very well be that I am missing something.

  16. 5

    “I think you mean abstruse.”

    Yes, although I’m not sure that I ever heard of the word until now. ;)

  17. 4

    “By the way, the claims at issue in this case are disturbingly obtuse.”

    I think you mean abstruse. “Obtuse” might refer to the reader, but not to the claims. In any event, I think you’re wrong, and Judge Michel’s concise opinion on the indefiniteness seemed quite reasonable to me.

    I’d be willing to bet that RJR had a half-ton of evidence as to why the accused process wasn’t anaerobic, even though they feigned an inability to understand the term.

  18. 3

    “It’s a strange clealy erroneous standard (CAFC standard for the first stage inquiry) when an appellate court practically ignores the District Court’s expressed view that he finds a witness not credible.”

    Agreed. Judge Michel is playing defense here but he won’t be able to stop the rising tide. Stink stinks, and all the “clear and convincing” requirements in the world aren’t going to keep defendants from protecting themselves. No defendant in their right mind would have let the circumstances that plainly presented themselves in this case go unnoticed by a court.

    If nothing else, the patentee’s “explanations” and arguments about cumulativeness and materiality can serve as useful admissions when evaluating prior art or infringement. A well-drafted inequitable conduct brief can be a very useful tool for pushing a patentee into a corner devoid of resources except, perhaps, for piece of rope.

    By the way, the claims at issue in this case are disturbingly obtuse. It’s easy to understand why the judge reached for indefiniteness to smash them, and it’s also easy to understand why Michel’s reversal of that finding is hand-waving gobbledygook. Perhaps the CAFC is also growing tired of the “scourge” of indefiniteness arguments they are being asked to review.

  19. 2

    Another peculiar aspect of IC demonstrated in this case is the standard of appellate review. It’s a strange clealy erroneous standard (CAFC standard for the first stage inquiry) when an appellate court practically ignores the District Court’s expressed view that he finds a witness not credible.

  20. 1

    From the opinion:

    “Star filed the present suit on May 23, 2001, alleging that RJR infringed claims 4, 12 and 20 of the ‘649 patent. As the litigation proceeded, Rivard periodically filed supplemental IDSs to the ‘144 application to disclose to the PTO some of the additional prior art raised by RJR against the ‘649 patent during discovery. For example, on June 12, 2001, Rivard disclosed RJR’s Application Serial No. 09/735,177, which was published on April 26, 2001. Rivard also disclosed RJR’s interrogatory responses regarding invalidity along with the cited references. These disclosures continued after the ‘144 application was allowed in January 2002. In April 2002, the issue fee for the ‘144 application was paid.

    In June 2002, while waiting for the ‘144 application to issue as a patent, Rivard became aware of the Burton letter and Curran data when Star’s trial counsel, Crowell & Moring (“Crowell”), informed him that RJR had raised those documents in the litigation. Rivard’s initial reaction was that they should be disclosed out of an abundance of caution. Several Crowell attorneys exchanged e-mails amongst themselves discussing whether they thought the Burton letter and/or Curran data was required to be disclosed to the PTO given that the ‘144 application had yet to be issued; several agreed that it
    may be best to “err on the side of disclosure.” J.A. at A10998-99.

    Meanwhile, Rivard and Hoscheit at the Banner firm conferred and ultimately decided that the Burton letter and the Curran data were not material and thus did not need to be disclosed to the PTO. They were never disclosed to the PTO.”

    Seems like an awful lot of time was spent worrying about this letter when it was so “clearly” cumulative to those interrogatory responses. What is the probability that an Examiner will spend their time carefully reading reams of interrogatory responses and other court filings submitted in an IDS after substantive examination has ended but before the issue fee has been paid? 20%? 30%

    Likewise, after the issue fee is paid, what are the odds that an Examiner would carefully read a short letter that was submitted in an IDS after the Application was pulled from issuance? 99%? or 100%

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