Ohio Willow Wood Company v. Alps South (Fed. Cir. 2016)
Professor Rantanen wrote about the 2013 Federal Circuit OWW v. Alps decision that, inter alia, reversed the lower court’s determination of no inequitable conduct by the patentee OWW. (U.S. Patent No. 5,830,237, covering a gel-cushion used for prosthetics). The setup involves two ex parte reexaminations initiated by Alps. On remand, the district court found no inequitable conduct during the first reexamination but that OWW did commit inequitable conduct during the second reexamination. On appeal, the Federal Circuit affirmed both findings.
Starting from the end, the aforementioned second reexamination was based upon a competitor’s prior art advertisement for a different product along with testimony from the competitor’s engineer (Comtesse) who explained in his submitted testimony how the product worked (in the same way as OWW’s claimed invention). However, the Board found Comtesse’s testimony unreliable based upon OWW’s statements that he was a “highly interested” and receiving royalties from the competing product. During the reexamination, OWW also told the USPTO that there was “no other evidence of any sort” corroborating Comtesse’s statements. Following these arguments, the USPTO Board confirmed patentability of the claims. It turns out that OWWs statements were untrue and that at least one person involved in the reexamination for OWW (Colvin) was aware of evidence from the parallel litigation that corroborated Comtesse’s statements.
The court found (1) that Mr. Colvin was aware that OWW’s reexamination counsel had represented to the Board that Mr. Comtesse’s testimony was entirely uncorroborated; (2) that Mr. Colvin was aware of materials that corroborated Mr. Comtesse’s testimony; and (3) that Mr. Colvin failed to correct his counsel’s misrepresentations.
All these conclusions came together to confirm a finding that Colvin had intent-to-defraud the USPTO.
Faulty Screen: The key to all of this here was that information from the litigation seeped into the reexamination prosecution. Interestingly, it was the same law firm handling both litigation and the reexamination. However, the firm had established an “ethical screen to separate the attorney handling OWW’s reexamination proceedings from the attorneys handling OWW’s litigation matters.” The Federal Circuit seemingly found no inequitable conduct problem with use of a screen that results in keeping relevant documents from the hands of patent prosecutors. Rather the problem for OWW occurred because one of OWW’s employees was deeply involved with both the litigation and the reexamination prosecution.
Attorney Fees and Mootness: Although the courts had already found the patents unenforceable due to inequitable conduct in the second reexamination, ALPS asked that the Federal Circuit find them doubly unenforceable based upon misconduct in the first reexamination. That seems like a moot point – unenforceable is unenforceable. However, the Federal Circuit chose to rule on the issue (ultimately finding no inequitable conduct) because of the potential fee award under 35 U.S.C. 285.
A judgment of unenforceability based on both the first and second reexaminations would expose OWW to a larger attorney fee award than a judgment based on the second reexamination alone. It was therefore proper for Alps to press its argument as to the first reexamination by way of a cross-appeal.
This is a fairly substantial ruling and may end up offering additional power to defendants who wish to continue to pursue non-infringement and invalidity claims even after winning the case. If broadly applied in this manner, then the ruling is also probably wrong.