Tag Archives: Inequitable Conduct

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In re Metoprolol Succinate Patent Litigation (Fed. Cir. 2007).

Astra holds the patent on Toprol-XL (Metoprolol succinate) and sued several generic ANDA filers. On summary judgment, a Missouri Federal court held Astra’s patent invalid for improper obvious-type double patenting and unenforceable. Astra appealed for inequitable conduct during prosecution.

Double-Patenting: A later patent claim will be invalid for obviousness-type double patenting if it is not patentably distinct from an earlier claim from a commonly-owned patent. This analysis involves construction of both sets of patent claims.

[T]he critical inquiry remains whether the claims in the [prior] application define an obvious variation of the invention claimed in the … patent [at issue].

Normally, obviousness-type double patenting is avoided by filing a terminal disclaimer. Here, however, a secret inventorship and ownership dispute prevented such action.

Invalidity affirmed.

Inequitable Conduct: On summary judgment, the district court also found the patent unenforceable based on Astra’s failure to notify the PTO of the inventorship dispute during prosecution.  Inequitable conduct, however, is rarely found on summary judgment. Here, the CAFC saw potential holes in proof of intent — finding that the “district court erred in equating the presence of an incentive with an intent to deceive on summary judgment.”

Dissent: Judge Schall dissented

CAFC: “Near the Edge” Not Indefinite; Curing Inequitable Conduct

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PatentLawPic001Young v. Lumenis, Inc. (Fed. Cir. 2007)

Dr. Young invented a surgical method of declawing a cat using lasers. (feline onychectomy).  Lumenis makes surgical lasers that were allegedly during unauthorized infringing surgeries.

Lumenis is a manufacturer, seller, and distributor of surgical laser instruments that were alleged to have been used to perform Young’s patented surgical procedure.

Young filed an infringement suit and Lumenis counted with an inter partes reexamination. (Patent 6,502,579). The PTO issued an office action rejecting the claims and the district court found the patent invalid and unenforceable

Indefinite: In particular, the district court found the word “near” to be indefinite as it was used in claimed step: “forming [an] incision in the epidermis near the edge of the ungual crest.”  Although the district court roughly understood its meaning, it found “near” to be indefinite because it “fails to distinguish the invention over the prior art and does not permit one of ordinary skill to know what activity constitutes infringement.”

On appeal, the CAFC reversed — noting again that claims are indefinite only when they are “not amenable to construction or are insolubly ambiguous.”  An indefiniteness ruling necessarily requires claim construction and examination of any intrinsic evidence. Here, the intrinsic evidence resolves the meaning of near — with both a drawing and reference to cat-sized measurements.  Here, the court distinguished the infamous Amgen case that found “about” to be indefinite: in Amgen, the potential error range of “about” was quite wide and the term had been added to the claims post-filing.

Inequitable conduct — better late than never: The CAFC also disagreed with the lower court’s finding of inequitable conduct — finding that Young’s late submission of contrary deposition statements cured any potential problem: “The essence of the duty of disclosure is to get relevant information before an examiner in time for him to act on it, and that did occur here.”

Reversed

A Dangerous Prosecution Trap

Claim Drafting Tips, Patent, Patent Prosecution, , , ,

ForkBy Paul F. Morgan

I recently retired from a position in which I was also providing legal advice to patent application prosecution attorneys and others.  I had noted the following relatively frequent source of legal confusion in current law for some patent examiners, with the result that some patent prosecutors were being dangerously misled by incomplete examiner rejections. Hence, this warning note.   

A prior U.S. PTO published patent application can qualify as prior art under multiple portions of 35 U.S.C. §102 – resulting in varying effective dates, and requiring different attorney or agent responses. Often, the multiple effective dates are not reflected in examiner rejections.  However, getting a patent application allowed incorrectly can be fatal to the patent’s validity or even lead to inequitable conduct accusations.  Legal misunderstandings of the patent examiner during ex parte prosecution do not create a valid legal excuse for prosecuting attorney legal errors.

A published US patent application has a §102(e) prior art date as of that application’s filing date, and also a §102(a) or §102(b) prior art date as of its publication date. The office action rejection should discuss both dates if the publication date was prior to the rejected application.  But, even if the examiner’s rejection was legally incomplete, the applicant’s attorney must still overcome both, correctly.

If the published application was commonly owned at the time of its invention, a §102(e)/103 rejection can be overcome by asserting common ownership under §103(c).    The protections of §103(c) do not apply to 102(a) or 102(b) prior publications.  Rather, that section only applies to 102(e),(f) and/or (g)!  Furthermore, §103(c) only applies to obviousness issues, not anticipation. Nor does §103(c) eliminate what should have been an alternative rejection for double patenting.  

Obviously, a §102(b)/103 reference from an application publication date more than a year before the subject application date cannot be eliminated, only argued over.   While a §102(a)/103 rejection might be overcome by presenting evidence of an earlier invention date, that avenue is considerably more difficult and dangerous.  In particular, patents obtained via 37 CFR 1.131 declarations of alleged prior invention have a poor litigation record. Where appropriate, 102(a) prior art may be overcome by perfecting a valid priority claim to an earlier application. 

One final related danger that arises from the fact that most U.S. applications are now  published within 18 months of their first filing date.  Even self-publications qualify as 102(b) prior art.  That means that patent applications on improvement inventions from the same client, especially with different or partially different inventors, need to be filed ASAP to avoid prior-filed basic applications from becoming prior art under §102(a) or (b) against the improvement applications [which cannot be avoided by §103(c).]

The above, of course, is oversimplified, and other commentators may wish to “chip-in.” with practical advice.

Notes:

  • Paul Morgan recently retired, as the Assistant General Patent Counsel
    for a major U.S. Corporation, after 44 total years of patent practice.

What a Mess: Inequitable Conduct Based on Failure to Submit

Patent

McKesson Information Solutions v. Bridge Medical (Fed. Cir. 2007)

[UPDATED] McKesson lost at the district court — the judge found that its patent was unenforceable due to inequitable conduct during prosecution.  The bad-deeds involved McKesson’s patent attorney who failed to submit three material pieces of information. On appeal, the CAFC affirmed.

The key facts in this case involved two similar applications pending before the PTO.  The three documents from the first case that were not cited in the second included: a prior-art patent; offices-actions; and the grant of the first case. The court found no clear error in the finding of materiality of these omissions or intent to deceive.

Judge Newman dissented:

It is not clear and convincing evidence of deceptive intent that the applicant did not inform the examiner of the examiner’s grant of a related case of common parentage a few months earlier, a case that was examined by the same examiner and whose existence has previously been explicitly pointed out by the same applicant. Nor is it clear and convincing evidence of deceptive intent that the applicant did not cite a reference that the applicant had cited in the same related case, and that had been explicitly discussed with the same examiner in the related case.

…

In Kingsdown, we observed that, "To be guilty of inequitable conduct, one must have intended to act inequitably." 863 F.2d at 872. That standard was not met here. This court returns to the "plague" of encouraging unwarranted charges of inequitable conduct, spawning the opportunistic litigation that here succeeded despite consistently contrary precedent.

This is a major opinion for prosecutors. A further post will follow in June.

Patently-O TidBits on Patent Reform

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  • John Sullivan, GC of the Commerce Department, has written a letter to support [UPDATED] Patent Reform [but not H.R. 1908].  The Commerce Department suggests reforms that would require applicants to submit higher-quality patent applications.  In reality, this can be translated as adding the submission requirements of accelerated examination to every case.  That approach is likely quite costly for applicants. However, it is undeniable that patent quality is a two-way street.  Low quality patent applications regularly lead to low quality patents.  A head-in-the-sand approach will not work here. The patent community should come-together with a set of best-practices for patent application drafting that can be implemented as rules. These practices should include definitions for claim terms; a more helpful discussion of prior art; a date of invention.  Done correctly, a few simple changes in the patent document could eliminate many of the current validity and claim construction issues that are so alive today. To be practicable for prosecuting attorneys, these reforms should be coupled with reform of the ‘rules’ of inequitable conduct, which are currently in a state of disarray. [Commerce Dept Letter].
  • The Commerce Dep’t letter opposed a number of particulars of currently proposed legislation, including first-to-file.
  • The House IP subcommittee has approved the language of H.R. 1908. It now goes to the full judiciary committee for a vote.
  • PTO Solicitor John Whealan has been seconded to the US Senate to iron-out the patent reform details. Stephen Walsh, a career PTO official, will reportedly Whealan’s shoes as Solicitor. Congratulations to both men!
  • A large number of biotech companies have also provided their statement regarding reform. The group opposes "apportionment of monetary damages for patent infringement, expansive PTO rule making authority, an open-ended post grant opposition system, and a narrow grace period." [Coalition letter]

Other TidBits:

  • Patently-O has taken-on its first advertising contract — Patent Supply Co. (See the left toolbar). 
  • Etherton Law Group in Phoenix needs you (so long as you are a quick-witted patent attorney with a couple-years experience). [LINK]
  • At BIO2007, biotech business executives were asked to rate on a scale of 1-10, the most helpful actions that that the federal gov’t could take.
    • Price controls: 71% rated 8-10;
    • International harmonization of patent laws: 59% rated 8-10;
    • Increase funding for biomedical research: 59% rated 8-10;
    • Increase funding for biofeuls: 41% rated 8-10. (Survey by Peter D. Hart Research Associates).

Patent Reform: Damage Apportionment

All Elements, Damages, Patent

The influential Intellectual Property Owner’s Association continues to push for patent reform. In particular, the IPO board has voted to support a modification of the rules on damages. The change would explicitly require apportionment of damages. In other words, damages for patent infringement would never be more than the economic value attributable to the innovation.

Proposed amendment:

Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement but in no event less that a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.

Where an infringer shows that an apportionment of economic value is necessary to assure that damages based upon a reasonable royalty do not exceed the economic value properly attributable to the use made of the invention, such apportionment shall exclude from the reasonable royalty calculation the economic value shown by the infringer to be attributable to the infringer’s incorporation into the infringing product or process of features or improvements, whether or not themselves patented, that contribute economic value to the infringing product or process separately from the economic value properly attributable to the use made of the invention.

Where the claimant shows that the use made of the invention is the basis for market demand for an infringing product or process, the royalty may be based upon the entire market value of the products or processes provided to satisfy that demand.

The court shall identify all factors relevant to the determination of a reasonable royalty under this section and the court or the jury, as the case may be, shall consider such factors in making the determination.

When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed. Increased damages under this paragraph shall not apply to provisional rights under section 154(d) of this title.

The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances.

IPO also supports changes to the inequitable conduct jurisprudence:

IPO supports legislation to (1) limit or eliminate the unenforceability defense based upon inequitable conduct in patent litigation, (2) eliminate the requirement to disclose the best mode contemplated by the inventor of carrying out the invention, and (3) allow enhanced patent infringement damages to be awarded for “willful” infringement only in limited circumstances, such as those set forth in IPO’s Amicus Brief filed in In Re Seagate Technology LLC.

False Declarations: The Chosen Instrument of an Intentional Scheme to Deceive the PTO

Patent

eSpeed v. BrokerTec (Fed. Cir. 2007).

ESpeed is the software-wing of the Wall-Street brokerage Cantor Fitzgerald. Its patents relate to software for replacing the “open outcry” feel of the market floor.

Judge Jordan of Delaware found eSpeed’s patents unenforceable, and on appeal, the CAFC affirmed.

Inequitable Conduct: A patent will be unenforceable if the patent was procured through inequitable conduct. Inequitable conduct does not require a showing of fraud, but it does require actions that materially affect the patentability of the invention coupled with an intent to deceive the PTO. “Once a district court has found a threshold level of both materiality and intent to deceive, the district court must balance the evidence to determine if equity should render the patent unenforceable.”

Level of Review: Because of base in equity, inequitable conduct findings are reviewed for clear error.

Materiality: Initially, eSpeed initially failed to disclose its own prior “Super System.”  When eSpeed’s counsel eventually learned of the system, they went overboard — filing multiple declarations on behalf of the inventors regarding the prior art system as well as thousands of pages of documents. One declaration included a statement that certain features in the claimed invention were not found in its own prior system. Unfortunately for eSpeed, the court found that statement to be knowingly false and material.

Intent: Intent to deceive may be inferred, especially from direct statements by the patentee:

The applicants submitted the declarations at issue in an apparent attempt to purge possible inequitable conduct … Instead of being candid, [one] declaration disingenuously states that the Super System did not include [the claimed element]. The district court was free to draw an inference that these declarations were “the chosen instrument of an intentional scheme to deceive the PTO” because “[t]he affirmative act of submitting an affidavit must be construed as being intended to be relied upon” Refac.

Unenforceability affirmed.

Notes:

  • The language: “chosen instrument of an intentional scheme to deceive the PTO” comes from the 1983 CAFC decision Rohm & Haas Co. v. Crystal Chem. That case includes other choice language, including: “In contrast to cases where allegations of fraud are based on the withholding of prior art, there is no room to argue that submission of false affidavits is not material.”

Cargill v. Canbra: Extensive Prosecution Increases Likelihood of Inequitable Conduct

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Cargill T-Shirt Cargill v. Canbra Foods (Fed. Cir. 2007).

Cargill owns several patents related to more-stable fry-grease made from canola oil and sued Canbra (and others) for infringement.  The trial court found that two of the patents were invalid as on-sale before the priority date and that the other two were unenforceable due to inequitable conduct.  Cargill appealed.

A. Inequitable Conduct: A holding of unenforceability due to inequitable conduct requires two findings: That the patentee “(1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the U.S. Patent and Trademark Office.”

Information is material if either (1) “there is a substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent” or (2) the information falls within the scope of the current Rule 56. (Reprinted below). Intent is often inferred from the facts and circumstances surrounding the “bad” conduct.

A district court’s determination of materiality and intent are reviewed only for clear error.

Materiality: Here the applicant failed to disclose two sets of test data that suggested a similarity between the invention and a prior art formulation. The district court found them to be “unquestionably” material and the CAFC panel agreed. In particular, the panel refuted the Cargill’s good faith assertions about materiality — reaffirming that “materiality is determined from the viewpoint of a reasonable patent examiner, and not the subjective beliefs of the patentee.”

Intent: The court indicated that there were several instances when the applicant should have brought-forth the prior art — such as when the patentee argued on five occasions that the invention was a nonobvious change from the prior art (even though the test data showed that they were similar).

An applicant should know information is material when the examiner repeatedly raises an issue to which the information relates. . . . The repeated nature of that rejection demonstrates that the applicant should have been aware of the materiality of the omitted test data, and, therefore, the district court properly considered it as significant circumstantial evidence of an intent to deceive the PTO about the evidence relevant to the application.

The implication here: A large prosecution history increases the likelihood of an inequitable conduct finding. Finding of inequitable conduct affirmed.

Notes

  • This decision was written by Judge Kent Jordan of the Third Circuit sitting by designation.
  • 37 CFR 1.56 (Rule 56) reads as follows:

[I]nformation is material to patentability when it is not cumulative to information already of record or being made of record in the application, and (1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim, or (2) It refutes, or is inconsistent with, a position the applicant takes in: (i) Opposing an argument of unpatentability relied on by the Office, or (ii) Asserting an argument of patentability.

A prima facie case of unpatentability is established when the information compels a conclusion that a claim is unpatentable under the preponderance of evidence, burden-of-proof standard, giving each term in the claim its broadest reasonable construction consistent with the specification, and before any consideration is given to evidence which may be submitted in an attempt to establish a contrary conclusion of patentability.

Shield vs. Sword: CAFC Finds Inequitable Conduct But Not Antitrust Fraud

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PatentlyO2006047Dippin’ Dots v. Mosey and Dots of Fun (Fed. Cir. 2007).

[Note: This is the second post discussing Dippin’ Dots. Read Part I on claim construction] 

Inequitable Conduct: DD had used used part of its claimed method to make and sell Dippin’ Dots at a local fair more than one year before filing its application.  DD did not disclose that information to the PTO but did disclose information about the product’s market success that occurred after filing.

The CAFC affirmed that those facts properly led to a finding of inequitable conduct — showing both materiality and intent.

The prior sales were clearly were highly material as they served as the basis for invalidating the patent.  Intent to deceive was shown (even without a ‘smoking gun’) since DD touted some sales while concealing others.

Walker Process Antitrust Claims: A finding of inequitable conduct does not, by itself, support a finding of ‘common law fraud’ as required by Walker Process. Rather, a showing of fraud requires “a higher threshold showing of both materiality and intent.” Likewise, in these antitrust claims, both materiality and intent must survive on their own merits — without the balancing used in inequitable conduct determinations.

Where the fraud is based on an omission, the appellate panel held that intent must be shown with evidence that is “separable from the simple fact of omission.”

For instance, evidence may establish that a patent applicant knew one fact and presented another, thus allowing the factfinder to conclude that the applicant intended by the misrepresentation to deceive the examiner. That is not the case with an omission, which could happen for any number of nonfraudulent reasons—the applicant could have had a good-faith belief that disclosure was not necessary, or simply have forgotten to make the required disclosure.

Here, there was no additional evidence showing intent — giving the DD the win (on this minor point).

The Difference in proof for inequitable conduct and antitrust claims is discussed as the difference between a shield and a sword.

Weighing intent and materiality together is appropriate when assessing whether the patentee’s prosecution conduct was inequitable. Molins. However, when Walker Process claimants wield that conduct as a “sword” to obtain antitrust damages rather than as a mere “shield” against enforcement of the patent, they must prove deceptive intent independently. The defendants have not done so here to the extent necessary for a reasonable jury to find Walker Process fraud.

Patently-O TidBits

Patent

CrumbsRonald A. Katz: Five of the licensing guru’s patents have been put up for reexamination.  The requester is Patent Attorney John Welsh [Link].

Inequitable Conduct: Supreme Court has denied certiorari in Ferring v. Barr. The CAFC found the patent unenforceable because the patentee had submitted scientific declarations in support of patentabiliity but did not explicitly disclose that the scientists had financial relationships with the patentee. [Link].

LondonBusiness Methods and Software Patenting in the UK: The court gives its new patentability test . . . [IPKat]

(1) properly construe the claim
(2) identify the actual contribution;
(3) ask whether the contribution falls solely within the excluded subject matter;
(4) check whether the contribution is “technical” in nature.

Voda: Can anyone tell me what is happening with this case still pending at the CAFC?

WelchBlogger on the Move: Noted Bostonian and TTABloger John Welch is moving from Foley to the Lowrie Lando firm. Hopefully the excellent writing will continue. [TTABlog]

James Amend, Mediator: AmendThe CAFC is exploring alternative dispute resolution and has begun to make mediation mandatory for certain pending cases. To bolster the process, the court has appointed James Amend to head the mediation program. I worked with Mr. Amend when I was at K&E and expect to see more pending appeals settle. [Link]

Object when jury instructions include disputed claim constructions

Patent, Patent Cases 2006, ,

Serio-US v. Plastic Recovery Tech (Fed. Cir. 2006).

The jury found that PRT did not infringe Serio’s patents on automatic trash dumpster locks.   

Post-Trial Practice: After the jury’s finding, the plaintiff did not move for JMOL or a new trial — thus forclosing an appeal on the question of infringement except for prejudicial error (which was not found). In addition, the plaintiff did not object to the jury instructions which included the court’s claim interpretations — without an objection these instructions cannot be overtuned unless they are a "miscarriage of justice."  No miscarriage was found.

Exceptional case: The lower court did not find this to be an exceptional case — a finding affirmed on appeal:

Exceptional cases usually feature some material, inappropriate conduct related to the matter in litigation, such as willful infringement, fraud or inequitable conduct in procuring the patent, misconduct during litigation, vexatious or unjustified litigation, conduct that violates Federal Rule of Civil Procedure 11, or like infractions. . . . Absent misconduct in the litigation or in securing the patent, a trial court may only sanction the patentee if both the litigation is brought in subjective bad faith and the litigation is objectively baseless.

Because there was evidence that the case was not brought in bad faith, the refusal to award attorney fees was justified.

Notes:

Noonan’s Corner Office: IDS Rule Changes

Patent,

By Kevin Noonan.

The U.S. Patent and Trademark Office, having encountered open hostility to some recent proposals, is again trying to address the issues of patent pendency and quality by proposing new rules regarding Information Disclosure Statements.

An Information Disclosure Statement is a document through which an applicant can fulfill (in part) the duty of disclosure under Rule 56 of Patent Office regulations. Using an IDS, an applicant can identify and submit copies of prior art references, including U.S. patents, U.S. and foreign patent applications (including international applications) and scientific references, as well as other documents such as product manuals, advertisements, and any other printed publication. Although there are no separate requirements that an IDS must be filed, the Office does impose a fee for filing an IDS after the first action on the merits, and will not consider an IDS filed after a final rejection or notice of allowance without good cause. There is currently no limit on the number of documents that can be submitted with an IDS.

The new proposals do away with the fees associated with “late” filing of an IDS. However, the proposal will permit an applicant to submit no more than 20 references without explanation. If more than 20 documents are submitted, the applicant will be subject to “increasingly more stringent” requirements to explain the significance of the documents. These requirements will also apply to applicants who submit “very long” documents (a term that is not very precisely defined).

The latest proposals seek once again to shift the burden for examination from the Examiner to the applicant, and to require increased assertions on the record regarding patentability over the prior art. It appears that the Office has no confidence that the examining corps, properly supported in both numbers and resources, can perform its tasks properly and efficiently. In response, the Office continues to produce proposals that are inconsistent with the reality that the inequitable conduct “defense” will certainly inhibit if not preclude applicants’ counsel from providing precisely the sort of information the proposal is designed to seek.

Note: Kevin Noonan is a partner at MBHB LLP in Chicago.

Links. http://www.uspto.gov/web/offices/pac/dapp/opla/presentation/focuspp.html

http://www.uspto.gov/web/offices/com/sol/notices/71fr38808.pdf

Dennis Crouch

crouch@mbhb.com Sent from my mobile phone (please excuse the thumbspeak and typos).

Jury Trial Not Required For Inequitable Conduct Issues

Patent, Patent Cases 2006

ComputerAGFA v. CREO Products (Fed. Cir. 2006).

In patent litigation involving patented computer-to-plate printing technology, the Massachusetts district court held a bench trial on the issues of inequitable conduct and enforceability before a jury trial on infringement and invalidity. In that bench trial, the patent was found unenforceable.

AGFA appealed — asserting that inequitable conduct and enforceability should have been tried by a jury. The CAFC disagreed — holding that the Seventh Amendment right to a jury trial does not extend to questions of inequitable conduct and enforceability.

Dissent by Newman:

The panel majority holds that the factual questions of both intent to deceive and materiality of deceptively withheld information are not subject to the jury right. This is a departure from the established jury right, for materiality and intent are quintessential questions of fact, and have been tried to a jury throughout the nation’s history. There is no basis for removing these factual questions from the jury when the jury is trier of fact. I respectfully dissent from the court’s holding that there is no right to a jury, and that the jury demand can be rejected at the trial court’s discretion.

More to come later . . .

Inventor’s Post-filing Publication Disparaging Invention Leaves Patent Unenforceable

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AIPLATalk217Research Corporation Technologies v. Microsoft (D. Az. 2006).

After a bench trial, Arizona District Court Judge Manual Real of found that RCT’s patents were unenforceable based on inequitable conduct that occurred during prosecution of the patents in suit. And, because it was an “exceptional case,” the judge granted Microsoft’s request for $8 million in attorney fees.

Back in 2001, RCT sued Microsoft for its patents directed to a “blue noise mask” used in halftoning digital images.  The new procedure was touted in the patent application as being “visually pleasing” and lacking “low frequency graininess at every level of gray.”  At the same time the inventors published a paper that reported resulted of “visually annoying clumps” with graininess.  In the paper, the inventors reportedly rejected the claimed algorithm in favor of another technique that was inconsistent with the patent.  That paper was never submitted to the PTO. 

The court found this seemingly contradictory information material because a “reasonable Patent Examiner clearly would have considered [the contradictory information] important to at least the written description and enablement requirement for patentability.”  For intent, the judge found that:

It is not credible that they did not know that a reasonable Examiner would consider it important to know that patent applicants’ reported efforts to practice the applications’ disclosed No K technique had led to “visually annoying clumps,” not the “visually pleasing” images promised by the patent applications and their patent claims.” 

In addition, the inventors were awful on the stand — one was “not credible” and the other “evasive.” Thus, further supporting the finding of intent to mislead the PTO.

AIPLATalk218According to a release by Microsoft’s attorney John Vandenberg*, the patents previously had been asserted against Hewlett-Packard Company, Seiko Epson Corporation, and Lexmark International, each of whom had settled out of court and taken a license. In awarding Microsoft attorney fees, the Court found it to be an “exceptional case” and that RCT knew or should have known of the inequitable conduct before the Patent Office. 

A couple of readers wrote-in to identify Judge Manny Real as a legendary old-school federal judge, and former chief judge in the central district of California. It appears that Judge Real is sitting by designation for this patent case. 

DJ Counterclaims Allow Adjudication of Invalidity Counterclaims Even After Noninfringement Decision

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The Old Town Canoe Company: Our First Hundred YearsOld Town Canoe v. Confluence Holdings (Fed. Cir. 2006, 05–1123).

Old Town sued Confluence, asserting infringement of its patent covering layered polyethylene canoes. Confluence filed declaratory judgment counterclaims of invalidity and unenforceability.

After a few days of trial, the judge called it quits — first ruling that as a matter of law, the patents were not infringed, and the next day taking further arguments and ruling that the patents were not invalid and not unenforceable.

On appeal, the CAFC majority agreed that the claims were not infringed (based on claim construction) and then bit into the validity analysis.

Enablement: Because the time and temperature settings of the canoe manufacturing process were not disclosed, a jury could find that undue experimentation was required.

Best mode: Best mode requirement only applies to the claimed invention. However, the defendant’s evidence that a preferred mode had not been disclosed to the PTO was enough to overcome the Court’s judgment as a matter of law.

Inequitable Conduct: Without evidence of intent, the patentee’s failure to disclose the best mode is not “material” as a matter of law.

J. Mayer’s Dissent: Dissenting-in-part, Judge Mayer argued that after the district court decided that the defendant did not infringe, the declaratory judgment jurisdiction of the counterclaims vanished.  Those counterclaims became moot.  Thus, the lower court’s decision on validity and enforceability should be vacated.

Practice Strategy: This case is a prime example of why a defendant should include declaratory judgment counterclaims rather than just defenses.  With counterclaims, the plaintiff will need the defendant’s agreement to end the case.

CAFC: Failure to submit full translation of prior art reference did not satisfy intent requirement of inequitable conduct

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Atofina v. Great Lakes Chemical Corp., (Fed. Cir. 2006)

by Bradley Crawford

Atofina sued Great Lakes for literally infringing its U.S. Patent No. 5,900,514 titled “Synthesis of Difluoromethane.” The district court determined the ‘514 patent was (i) not literally infringed; (2) anticipated (only claims 1, 2, 6, 7, 9, and 10); and (3) unenforceable because of inequitable conduct. Atofina appealed.

Infringement: The CAFC ruled the claims were not literally infringed. The district court’s use of scientific and technical dictionaries to construe the word “catalyst” was acceptable as the dictionary definition comported with the intrinsic evidence.

The intrinsic evidence (1) supported the district court’s claim construction, and (2) evinced a surrender of subject matter. Regarding the second point, the CAFC noted that “it frequently happens that patentees surrender more through amendment than may have been absolutely necessary…” and “we have not allowed them to assert that claims should be interpreted as if they had surrendered only what they had to.” (Note: The take home message here is obvious, so I won’t belabor the point.)

Anticipation: The CAFC also ruled claims 1, 2, 6, 7, 9, and 10 were not anticipated because the district court incorrectly interpreted a broad genus as anticipating a narrower genus, which is inconsistent with the Titanium Metals case. See 778 F.2d 775 (Fed. Cir. 1985).

Unforceability: And finally, the CAFC found the ‘514 patent not unenforceable due to inequitable conduct and it did not remand.

During prosecuting of the application that matured into the ‘514 patent, Atofina submitted a partial translation (a Derwent Abstract, to be precise) of the Japanese language reference JP 51-82206, to the U.S. Patent and Trademark Office, even though it had a full translation in its possession. At trial, the district court ruled Atofina committed inequitable conduct by (1) failing to disclose the full translation of JP 51-82206, which was deemed highly material because it anticipated several claims and (2) Atofina had the requisite intent to deceive the U.S. Patent and Trademark Office because it failed to disclose the translation and it mischaracterized the reference.

On appeal, Atofina argued that materiality was found only because the reference was alleged to anticipate, and since the anticipation was wrong, the determination of materiality was also wrong. Atofina also argued that the district court failed to consider evidence of good faith, i.e., Atofina’s “reference in the prosecution history to page numbers of the full translation of JP 51-82206,” the submission of the Derwent Abstract and the citing of JP 51-82206 in the patent specification.

Great Lakes argued the full translation was highly material because (1) it was anticipatory, (2) JP 51-82206 was cited in the European counterpart to the ‘514 patent and the European patent only issued after Atofina incorporated an additional limitation into the claims. Intent was shown by (1) Atofina’s failure to disclose the full translation of the Japanese language reference, (2) Atofina’s mischaracterizing prior art references, and (3) withholding “poor results.” Great Lakes also argued there was no evidence of good faith by Atofina.

The CAFC did not decided the issue of materiality, but it did focus on intent. The CAFC found that the failure to submit the full translation was not, in and of itself, enough to establish intent; a “factual basis for a finding of deceptive intent” was required. The CAFC also found (1) Atofina’s comments were consistent with the Derwent Abstract and the full abstract, (2) Atofina did not try to hide information or mislead the Patent and Trademark Office.

Judge Dyk filed an opinion, concurring in part and dissenting in part. Judge Dyk agreed with the majority’s decision, but he would remand for further consideration by the district court.

Note to all patent prosecutors out there. This case exemplifies the old maxim, “penny wise, but pound foolish.” Atofina did not submit the full translation, even though the full translation was in its possession. (Why, is an interesting question. If they didn’t think it was a problem, why not just submit it?) Instead, Atofina submitted the Derwent Abstract and made comments about what the reference discloses. By doing so, they saved the cost of preparing a translation, which, admittedly, can be expensive if it is a very large reference. However, they left themselves open to a charge of inequitable conduct. I expect that they paid many tens of thousands of dollars (if not more) defending themselves from this allegation first at trial and then on appeal. If they would have simply paid for the complete translation and then submitted it to the Patent and Trademark Office, they would likely have saved money in the long run and obviated any allegation of mischaracterizing the reference. If you find yourself in a similar situation, I think you have to ask yourself if saving the cost of the translation is worth the risk of (1) having to defend against a charge of inequitable conduct based on misleading the Patent and Trademark Office or mischaracterizing the reference, and (2) having any patent that ultimately issues invalidated for inequitable conduct.

Bradley W. Crawford is a attorney at MBHB LLP focusing his efforts on patent litigation, prosecution, and counseling.  Prior to joining MBHB, Mr. Crawford worked in the areas of synthetic organic chemistry as well as medicinal chemistry.

CAFC: Claimed “Acid” Precludes Coverage for “Salts”

Patent, ,

Kao CorporationKao Corporation v. Jergens Company (Fed. Cir. 2006, 05–1038).

by Bradley Crawford

This is a patent infringement case about removing “keratotic plugs,” i.e., blackheads, from facial skin. The claimed method encompasses a method for removing the keratotic plug by using a cosmetic article (not defined in the application but the “keratotic plug remover” is described in the specification as a “poultice” or a “cosmetic paste”), the method comprising 1) wetting the skin or the cosmetic article, 2) applying the cosmetic article to the skin and then 3) removing the cosmetic article after drying. The cosmetic article comprises 1) a substrate – essentially a backing material, and 2) a layer comprising a poly (alkyl vinyl ether maleic acid) copolymer or a poly(alkylvinyl ether maleic anhydride) copolymer.

The defendant’s product was used to remove blackheads and it contained the claimed poly(alkyl vinyl ether maleic acid) copolymer or a poly(alkylvinyl ether maleic anhydride) copolymer, but it also contained 2% by weight of aminomethyl propanol (a base that reacts with some of the acid groups in the copolymer).

The District Court construed poly(alkyl vinyl ether maleic acid) copolymer or a poly(alkylvinyl ether maleic anhydride) copolymer to not include the salt form of the copolymer because the “plain meaning” of the claims precluded salts. The District Court also relied on the fact that the patentee later filed an application specifically directed towards the salts of the copolymers claimed in the patent in suit – this was seen as evidence that the patent in suit did not cover salts. The CAFC also made note of this fact and relied on it.

(Note to all of the chemical patent drafters out there, if you are claiming compounds that contain acids or bases, you have to disclose and claim the corresponding salts. You just have to.)

Ultimately, the District Court found the patent to be valid and enforceable, but not infringed.

On appeal, the defendant argued the patent was invalid for: 1) lacking written description, 2) being obvious, and 3) inequitable conduct, while the patentee argued there was infringement. The CAFC rejected all of these arguments.

The District Court found there was written description for a claim amendment made by the patentee and the CAFC, while sympathetic to the patentee’s argument, found that the District Court’s judgment was not “clearly erroneous.”

The obviousness argument was based on a lack of “unexpected results.” More specifically, the defendant alleged both procedural and substantive arguments, including 1) the district court failed to use the closest prior art and 2) the district court failed to properly assess the “totality of the evidence.”

The inequitable conduct allegation was based on the patentees presenting only the most positive data to the Patent Office. The parties agreed that the non-disclosed material was material but the CAFC did not find the requisite intent because the missing data was eventually presented to the examiner. The CAFC was sympathetic to the defendant’s argument, but was unwilling to disturb the District Court’s decision as it was not abuse of discretion.

The CAFC also rejected the patentee’s infringement argument and distinguished two cases that stood for the proposition that “a claim that recites an acid may be literally infringed by the salt of the acid, where both have the same functionality.”

For an unexplained reason, the patentee did not assert infringement under the doctrine of equivalents.

Two concurring in part and dissenting in part opinions were also filed.

Bradley W. Crawford is a attorney at MBHB LLP focusing his efforts on patent litigation, prosecution, and counseling.  Prior to joining MBHB, Mr. Crawford worked in the areas of synthetic organic chemistry as well as medicinal chemistry. 

CAFC: Gross Negligence Does Not Constitute Inequitable Conduct

Patent, Patent Cases 2006

AIPLATalk150M. Eagles Tool v. Fisher Tooling (Fed. Cir. 2006, 05–1224).

On summary judgment, the district court found that Fisher’s patent was unenforceable due to inequitable conduct.  Specifically, the court found that a device that the patentee had been selling for twenty years contained many of the same components present in the patented invention and thus would have been material to the examiner’s analysis.  It was also undisputed that the inventors were familiar with the prior-art device.

On appeal, the CAFC took an opportunity to caution against overzealous findings of inequitable conduct:

Although it is not impermissible to grant summary judgment of inequitable conduct, this court “urges caution” in making an inequitable conduct determination at the summary judgment stage.

Here, the patentee took the position that “even if the failure to disclose the [prior art] constituted gross negligence, that cannot be the sole basis for finding an intent to deceive.”  The CAFC agreed.

The district court’s finding of inequitable conduct . . . essentially amounted to a finding of strict liability for nondisclosure. Such is not the law. Even if there were evidence of gross negligence in nondisclosure, which was not found, that would not necessarily constitute inequitable conduct.

Reversed.

J. Newman: Inequitable Conduct Charges Again on the Rise

Patent, Patent Cases 2006

Ferring v. Barr Labs (Fed. Cir. 2006).

The Ferring decision seems to have again expanded the scope of inequitable conduct in patent cases.  In a twenty-page dissent, Judge Newman took issue with this expansion.

I agree with J. Newman that inequitable conduct is “a serious charge” that should not be taken lightly. In the past, the defense has been “grossly misused . . . with inequitable conduct charged in almost every case in litigation.”  Certainly, these charges do nothing to help the current popular distrust of the patent system.

After the CAFC decision in Kingsdown v. Hollister (requiring objective evidence of material misconduct + intent to deceive), charges of inequitable conduct were pushed to the background and taken-out of many cases. However, in this decision, Newman sees a revival:

My colleagues on this panel have regressed to that benighted era, rejecting the efforts of Kingsdown to bring objectivity to charges of inequitable conduct, instead reviving the culture of attack on inventor rights and attorney reputations based on inference and innuendo. My colleagues, endorsing several novel and unsupportable presumptions of wrongdoing, do injury to the reasonable practice of patent solicitation, even as they defy the rules of summary judgment.

Here, Newman argues, the panel has found materiality based on a “should have known ” standard:

The panel majority, steeped in adverse inferences, holds that good faith is irrelevant and presumes bad faith. Thus the court resurrects the plague of the past, ignoring the Kingsdown requirements of clear and convincing evidence of a misrepresentation or omission material to patentability, made intentionally and for the purpose of deception. I respectfully, but urgently, dissent.

Links:

Patentee Must Disclose Affiliations of Declarants

Patent, Patent Cases 2006

Ferring v. Barr Labs. (Fed. Cir. 2006).

By Grantland Drutchas

Ferring is a rather interesting CAFC decision on inequitable conduct. The CAFC affirmed summary judgment of inequitable conduct based solely on the applicant’s failure to disclose that individuals who submitted declarations in support of the patentability of the claims had affiliations with the assignee of the application.

One of the declarants was an employee of the assignee, one was a paid consultant; but the third was simply a researcher (presumably a clinician) whose employer had assisted with some clinical studies for the assignee and received some funding for those clinical studies from the assignee. The CAFC found the failure to disclose each of these relationships was material.

The appellate panel also held that an inference of intent can be found when the patentee fails to show a “credible explanation” for the patentee’s deception of the PTO. Importantly, the Court found that the patent holder has the burden to prove the credible explanation. Simply arguing plausible or possible explanations for the deception is not enough to rebut an inference of intent to deceive.

Grant Drutchas, a founding partner of MBHB, has nearly 20 years of experience in the practice of intellectual property law, with a particular emphasis on litigation, licensing, and client counseling.