Patent Related Misconduct Issues in U S Litigation

Patent-Related Misconduct Issues in U.S. Litigation

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Patent-Related Misconduct Issues in U.S. LitigationJoel Davidow

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1Oxford University Press, Inc., publishes works that further Oxford Universitys objective of excellence in research, scholarship, and education. Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Mexico City Nairobi New Delhi Shanghai Taipei Toronto Madrid Melbourne

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Copyright 2010 by Oxford University Press, Inc.Published by Oxford University Press, Inc. 198 Madison Avenue, New York, New York 10016 Oxford is a registered trademark of Oxford University Press Oxford University Press is a registered trademark of Oxford University Press, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Oxford University Press, Inc. _____________________________________________ Library of Congress Cataloging-in-Publication Data Davidow, Joel, 1938Patent-Related Misconduct Issues in U.S. Litigation / Joel Davidow. p. cm. Includes bibliographical references and index. ISBN 978-0-19-533720-4 ((pbk.) : alk. paper) 1. Patent suitsUnited States. 2. Patent infringementUnited States. 3. Patent laws and legislationUnited StatesTrial practice. 4. Patent practiceUnited States. I. Title. KF3155.D37 2010 346.7304'86dc22 2009042480 _____________________________________________ 1 2 3 4 5 6 7 8 9 Printed in the United States of America on acid-free paper Note to Readers This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is based upon sources believed to be accurate and reliable and is intended to be current as of the time it was written. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Also, to conrm that the information has not been affected or changed by recent developments, traditional legal research techniques should be used, including checking primary sources where appropriate. (Based on the Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations.)

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Contents

INTRODUCTION

xi

PART I: Patent Prosecution Misconduct CHAPTER 1: Improper Conduct as to Invention A. Obtaining a Patent on a Product or Process the Patentee Knows He Did Not Invent B. Inaccurate or Incomplete Disclosure of Inventorship C. Failure to Disclose Sales or Oers to Sell that Occurred More Than One Year Before Patent Application CHAPTER 2: Inadequate Disclosure (of the Invention, How to

1 34 4 7

Practice It, or How to Practice It Optimally)A. Lack of Description B. Lack of Enablement C. Failure to Disclose (or Concealment of ) the Best Mode for Achieving the Invention 1. Burden of Proof 2. Inventors View of Best 3. Best Mode to Achieve the Claims, or the Claim Plus Necessary Adjuncts? a) Relation of Best Mode to What Was Claimed b) Best Mode for Less than All Uses 4. Adequacy of Disclosure 5. How May Adequate Disclosure Be Proved or Disproved? 6. Must Brand Names and Model Numbers of Inputs Be Disclosed? 7. Will Best-Mode Violations Justify Conduct Sanction? CHAPTER 3: Inequitable Conduct in Obtaining the Patent A. Failure to Meet Duty to Disclose to the PTO 1. Duty of Disclosure 2. Who Has the Duty 3. Scope of the Duty 4. Timing of Disclosure

910 11 12 13 14 15 15 16 16 16 17 18

1921 21 23 24 24

vi Contents5. Meaning of Noncumulative 6. Types of Nondisclosure a) Inventorship b) Prior Use or Sales c) Facts Suggesting Obviousness d) Prior Art Writings e) Relevant Case Histories f ) Important PTO History g) Patentees Own Inventive Eorts h) Defects in Fee Reduction Requests i) Best-Mode Violations as Inequitable Conduct j) Failure to Provide Translation of Foreign Language References k) Burying References Balancing Test re: Materiality and Intent False Statements 1. Intent 2. False Statements Distinguished from Omissions 3. Typical Cases a) Falsied Test Results Due to Manipulation of the Conditions, Data, etc. b) False Attribution of the Disinterestedness of Providers of Expert Declaration Supporting Patentability c) Petitions to Make Special d) Small-Entity Status e) Misclaiming Priority Infection of Related Patents Prosecution Laches False Statements to PTO by a Third Party 25 25 26 27 28 28 29 30 30 31 31 31 35 35 37 37 39 39 39 40 41 42 42 43 43 45

B. C.

D. E. F.

CHAPTER 4: Relevant Procedural Issues Attorney-Client Privilege Inventorship Is a Triable Issue of Fact but Correction Is Possible Summary Judgment Is Sometimes Feasible Inequitable Conduct Is an Issue for the Judge, Sitting as an Equity Court, but the Jury May Be Assigned an Advisory Role E. Jury Trial Is Required for Overlapping Equitable and Non-Equitable Issues CHAPTER 5: Strategies in Litigating PTO Conduct Defenses A. B. C. D. Strategies Regarding Inventor Evidence Best Mode Discovery Proving or Disproving Concealment of Best Mode Inequitable Conduct Discovery 1. Prior Art Search A. B. C. D.

4748 48 48

49 50

5152 52 53 54 54

Contents vii2. Discovery of the Patent Prosecution Attorney, Including One Who Is Plaintis Trial Counsel E. Pleading Inequitable Conduct: Rule 9(b) F. Summary Judgment

54 56 57

PART II: Patent Litigation Misconduct CHAPTER 6: Types of Litigation Abuse A. Delay or Unconscionability in Suing: Laches and Estoppel 1. Statutory Laches 2. Equitable Laches 3. Equitable Estoppel/Implied License 4. Ambush and Unclean Hands B. Reckless Cases or Reckless Pleadings: Rule 11 and its Requirements C. Discovery Misconduct or Recalcitrance: Rule 37 Sanctions D. Egregious Litigation Conduct in a Losing Case: 35 U.S.C. 285 E. Assessment of Fees against Attorneys Who Cause Excess Costs and Fees to the Opposing Side: 28 U.S.C. 1927 F. Threats by Patent Holders: Appropriate Scope of Rights CHAPTER 7: Procedural Issues in Raising Litigation Misconduct Issues A. Laches or Estoppel Can Be Litigated at the Outset B. Section 285 Awards Burden of Proof C. The Relationship Between Rule 37 and Section 285 1. Sanctions for Frivolous Patent Appeals D. Compensable Items CHAPTER 8: Litigation Strategies A. Filing Rule 11 Motion Promptly B. Discovery of Plainti to Probe Basis for the Case

59 6162 62 63 63 63 64 66 68 70 71

7374 74 75 76 78

7980 80

PART III: Patent Misuse and Antitrust Misconduct CHAPTER 9: Misuse DefensesSubstantive Standards A. History of the Misuse Defense B. Clauses Leading to Misuse Contentions 1. Tie-In Clauses 2. Tie-Out Clauses 3. Price Clauses 4. Post-Expiration Royalties 5. Grantback Clauses 6. No-Challenge Clauses 7. Settlements 8. Acquisition of Competing Technologies

83 8586 88 88 91 92 93 95 97 99 100

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ContentsC. Clauses that Will Seldom Engender Misuse or Antitrust Conclusions 1. High Royalties 2. Discriminatory Royalties 3. Field of Use Restrictions 4. Geographic Restrictions 5. Export Restrictions 6. Quantity Restrictions 7. Non-Exclusive Grantback Clauses 8. Packages of Patents 9. Royalties on Unpatented or Unused Products D. Horizontal Antitrust Oenses and Misuse Defenses E. Relevance of the Antitrust Guidelines CHAPTER 10: Antitrust Counterclaims A. Patentees Cartel Conduct 1. Sham Cross-Licenses or Settlements a) Pharmaceutical Settlements 2. Anticompetitive Patent Pooling a) DOJ Clearances for MPEG-2 and DVD Pools 3. Boycotts B. Patentees Single Firm Abuses (Attempt to Monopolize or Monopoly Maintenance) 1. Elements of Monopoly Oenses 2. Walker Process Claims 3. Handgards Claims C. Abuse of the Standard-Making Process D. Antitrust Claims Against Accused or Potential Infringers E. RICO Claims or Counterclaims CHAPTER 11: Procedural Issues in Litigation of Patent Antitrust Issues A. B. C. D. Standing Compulsory Counterclaim Relevancy of Rule 9(b) Bifurcation/Role of Judge and Jury 1. Bifurcation of Trials 2. Advisory Jury 3. Dismissal of Counterclaims and Defenses 4. Jurisdiction E. Choice of Law F. Remedies CHAPTER 12: Litigation Strategy A. In Misuse Cases B. As to Walker Process

101 101 101 102 103 104 104 104 105 105 106 106

109110 110 111 113 114 114 115 116 117 124 129 130 131

133134 134 135 136

136 137 139 139140 141

143144 145

Contents ixC. As to Handgards Cases D. As to Antitrust Rule of Reason Counterclaims E. Conclusion: General Advice 1. Avoid Contradictions 2. Avoid Being Injured by Friendly Fire 3. Use Deposition Redirect with Summary Judgment in Mind APPENDICES A. Excerpts from the Manual of Patent Examiner Practice B. U.S. Patent Law, Title 35 C. Antitrust Guidelines for the Licensing of Intellectual Property 149 167 173 145 146 146 146 147 147

BIBLIOGRAPHY TABLE OF CASES INDEX

203 209 229


Introduction

A. Basic Issues: Infringement; Novelty B. Bad Conduct Issues C. Oensive Use of Bad Conduct Contentions D. Degrees of Fault and Their Consequences

xii xii xiii xiv

xi

xii

Introduction

This book deals with conduct issues that can arise in U.S. patent-related litigation, including antitrust claims against the patent holder.1 Although the book deals primarily with defenses and counterclaims, it also covers declaratory judgment actions, stand-alone antitrust cases and sanctions (fee) motions by either side.

A. Basic Issues: Infringement; NoveltyThe basic defense in patent infringement litigation is non-infringement, i.e., that the asserted patent claims, properly construed, do not read on the accused product or process. As to this issue, the plaintiff has the burden of proof, by a preponderance of the evidence. The most common affirmative defense in such cases is that the patent is not valid, either because the invention was not novel,2 was obvious,3 or was otherwise unpatentable.4 As to these issues, defendant has the burden of proof, which burden is set high (clear and convincing evidence) because granted patents benefit from a presumption that the United States Patent and Trademark Office (PTO) acted correctly.5

B. Bad Conduct IssuesThe wild cards in patent litigation are bad conduct allegations. For a firm anticipating or facing infringement charges, establishing bad conduct by the patentee or patent holder or enforcer can accomplish two things. First, proof of laches or estoppel, inadequate disclosure, inequitable conduct, or misuse will allow the defendant to prevail even though the patent may be both valid and infringed. Second, as will be discussed, allegations that the plaintiff sued on an invalid or unenforceable patent, or possessed little or no proof of infringement, will not only allow the defendant to prevail but may well shift the risks or costs of the litigation. Normally, in U.S. litigation, each side bears its own fees and costs. On the other hand, if the defendant can show that the plaintiff should have known that the patent was invalid, unenforceable or not

1. Patent holder may refer not only to the patentee, but also to an assignee, or to an exclusive licensee authorized to enforce the patent. 2. 35 U.S.C 102. 3. 35 U.S.C 103. 4. See 35 U.S.C. 101 (nonstatutory subject matter, lacks utility), and 112 (claims not enabled, claims lack written description, claims indefinite). 5. 35 U.S.C 282; See Smithkline Diagnostics v. Helena Labs. Corp., 859 F.2d 878 (Fed. Cir. 1988).

Introduction

xiii

infringed, such defendant can go beyond the American rule and win an award of fees and costs that perhaps will even be multiplied if antitrust law is implicated. Conversely, if a clearly meritorious infringement suit is delayed and made extra costly by recalcitrance and the assertion of frivolous defenses, fees and costs may be awarded to the prevailing patent holder.

C. Oensive Use of Bad Conduct ContentionsA conduct defense can sometimes be asserted offensively, among other ways, by filing a declaratory judgment action against the patent holder alleging invalidity based on certain types of bad conduct. Doing this has been made easier by the U.S. Supreme Courts MedImmune6 decision, which holds that a firm may take a license on a patent and still have standing to attack the patents validity by means of a declaratory judgment action. Also, patentee misconduct can be asserted as a basis for counterclaims or separate damage actions. Such counterclaims or such separate suits usually involve allegations of antitrust law violation, but can include tort claims such as tortious interference or defamation, and on rare facts, Racketeer Influenced and Corruption Organizations Act (RICO) claims. In sum, successful assertion of a conduct defense, claim, or counterclaim can bring three levels of reward to an accused infringer. (1) Any such defense, if successful, brings the defendant legal peace and perhaps legal security. The alleged infringement is excused and/or need not be defended. (2) In cases in which the conduct is egregiously bad, the reward for prevailing may be not only defeat of the claim but also an award of the costs of defense, including attorneys fees. Such award is usually granted under the Patent Act, 35 U.S.C. 285. Requests for fee awards are only proper after the movant has prevailed on the merits, and thus are neither defenses nor counterclaims. (3) In cases in which the bad conduct is proved to have been aimed at the likely monopolization of the product or service market covered by the patent and its substitutes, the successful defendant is deemed to be a benefactor to the consuming public under the antitrust laws, and is awarded three times its damages, including its cost of defense, plus the fees and costs involved in asserting the antitrust claim.7 Successful RICO claims would also entitle defendant to treble damages, but court rulings have made this defense difficult to invoke in patent litigation.8

6. MedImmune v. Genentech, 127 S. Ct. 764, 777 (2007). 7. Clayton Act 4. 8. See Chapter 10, E. RICO Claims or Counterclaims, infra.

xiv

Introduction

D. Degrees of Fault and Their ConsequencesAs will be demonstrated in subsequent chapters, the various levels of sanctions force trial judges and appellate courts to seek to define subtle gradations of fault. For instance, an unexplained failure to cite a relevant reference may be deemed so lacking in fault that no sanction is appropriate. If the omission is slightly more suspicious, inequitable conduct may be found, leading to unenforceability and the loss of an infringement suit. Such inequitable conduct can justify a finding that the lawsuit based on that patent was recklessly brought, leading to a shifting of legal fees to the losing plaintiffs. The courts must weigh whether the inequitable conduct caused the bringing of the infringement suit to be egregiously unwarranted. Deciding factors might be whether the crucial facts about the conduct were frankly admitted during the litigation or were elicited only due to pressure from the defendant. Lastly, it must be determined whether (1) the omission or commission amounts to the fraudulent obtaining of a market-dominating patent and thus an undeserved monopoly; or (2) the patent was used as an instrument of illegal monopolization or cartelization. Either justifies an award to an injured rival of treble damages, including defense costs, under antitrust law standards, specifically, the Sherman and Clayton Acts. Conduct defenses comprise virtually all affirmative defenses that can be asserted by an accused infringer, except, as noted above, the defenses that the patent is invalid as anticipated or obvious. It is the thesis of this book that conduct defenses or counterclaims raise issues that, for ease of review, can be grouped into three broad categories of conduct: (1) in the patenting process, (2) during patent litigation, (3) in the licensing or exploiting of the invention. In regard to each category, this book will first set out the conduct standards and then examine procedural and evidentiary issues relating to when and how the issue can be raised and resolved. Final sections of each chapter will deal with tactics and strategy. At the trial level, patent cases are triable in any federal district court. The aberration is that plaintiffs favor rocket dockets and/or districts with trial judges known for patent law expertise.9 These have included the Eastern District of Virginia, the Eastern District of Texas, the District of Delaware, and the Western District of Wisconsin. However, attitudes, personnel, and practicalities change over time. Forum shopping remains important. Patent plaintiffs can utilize the prompt procedure and broad, in rem relief granted to the U.S. International Trade Commission (ITC) by Section 337 of the Tariff Act. However, to invoke ITC remedies, patent holders must show

9. Cono A. Carrano, Cecil E. Key & Brian Su, Rocket Dockets: Coming Soon to a Venue Near You?, Intell. Prop. Today, 10 (December 2006).

xv

that they or their licensees have significantly practiced one patent in the United States, that is, that a domestic industry exists to be harmed.10 Parallel ITC and district court proceedings are allowed, since the ITC cannot grant damages and the district court cannot issue injunctions against importation of classes of merchandise.11 Thus, this book will discuss ITC cases and strategies. All appeals of district court, ITC and PTO patent rulings since 1981 are channeled by law to the Court of Appeals for the Federal Circuit (CAFC). Cases deemed to have greater antitrust than patent content are not channeled to the CAFC. The CAFC will defer to the antitrust jurisprudence of the circuit in which a mixed patent-antitrust case originated, unless proper resolution of the issue is viewed as crucial to sound patent law and policy.12 We now examine the three types of conduct issues, in turn, in the following sections.

10. See 19 U.S.C. 1337(a). 11. See 19 U.S.C. 1337 (c), (f), (l). 12. See Chapter 11, D. Choice of Law, infra.


PAR T

IPatent Prosecution MisconductGenerally, any arguable failure to earn or draft a proper patent can be transformed into a defense by an accused infringer. Thus, as will be reviewed here, failure to name all inventors; prove earliest invention; describe early sales fully; or show how to enable the invention, and do so optimally, etc., can result in loss of patent rights. The unique features of a finding that bad patenting conduct was most likely intentional, however, are that it can lead to the unenforceability of an otherwise sound patent, as well as to litigation sanctions and attorney fee awards.


CHAP T ER

1Improper Conduct as to Invention

A. Obtaining a Patent on a Product or Process the Patentee Knows He Did Not Invent B. Inaccurate or Incomplete Disclosure of Inventorship C. Failure to Disclose Sales or Oers to Sell that Occurred More Than One Year Before Patent Application

4 4 7

3

4

Chapter 1 Improper Conduct as to Invention

A. Obtaining a Patent on a Product or Process the Patentee Knows He Did Not InventThis conduct includes obtaining a patent on a derivative invention or one in which there is known anticipation; that is, the patentee knew that his claimed invention was, or might have been, disclosed by another or already in existence, but did not reveal such to the United States Patent and Trademark Office (PTO). The classic case is Union Camp Corp. v. Lewis1 in which a lawyer for the undeserving patentee induced an earlier inventor to stay silent in exchange for a share of undeserved royalties.2 The Court of Appeals for the Federal Circuit (CAFC), in C.R. Bard,3 held that absent clear evidence of intentional fraud, a mere error in inventorship creates no misuse or counterclaim right.4 The Patent Act, 35 U.S.C. 256, 2nd para., provides that if an error is correctable, no invalidity should result. If inventorship is corrected, even on reissue, there is no invalidity.5

B. Inaccurate or Incomplete Disclosure of InventorshipInventorship is governed by Sections 101, 116, 117, and 118. Section 101 states that the inventor, and only the inventor, receives the patent rights:Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title [35 U.S.C.S. Sections 1 et seq.].6(emphasis added)

Thus, including the proper inventor(s) on the application is a crucial aspect of the patent process, as those listed receive exclusive rights. Failing to disclose all inventors can be a harmless omission, for instance, if all inventors were part of team and were committed to assigning the patent to the firm.7 The omission of an independent co-inventor, on the other hand, usually has

1. 385 F.2d 143, 144 (4th Cir. 1967). 2. See Davidow, United States Antitrust Law and International Transfers of Technology, Proceedings 1974 Fordham Corporate Law Institute 177, 180 (M. Bender 1975). 3. C.R. Bard Inc. v. Mc Systems, Inc., 157 F.3d 1340 (Fed. Cir. 1998). 4. Id. at 135355. 5. Id. at 135254. 6. 35 U.S.C. 101. 7. See, e.g., Pro-Mold Tool Co. v. Great Lakes Plastics, Inc., 75 F.3d 1568, 1576 (Fed. Cir. 1996) (failure to name inventors son as co-inventor was harmless).

Inaccurate or Incomplete Disclosure of Inventorship 5

serious consequences. This is because each such inventor would have an independent right to license the invention.8 Correction of inventorship is quite possible, however. First, Section 116 provides for correction during prosecution:Whenever through error a person is named in an application for patent as the inventor, or through error an inventor is not named in an application, and such error arose without any deceptive intention on his part, the Director may permit the application to be amended accordingly, under such terms as he prescribes.9

In a related matter, Section 117 governs when the inventor has died or become incapacitated:Legal representatives of deceased inventors and of those under legal incapacity may make application for patent upon compliance with the requirements and on the same terms and conditions applicable to the inventor.10

Section 118 allows a similar mechanism of substituted application for cases when the inventor is not involved:Whenever an inventor refuses to execute an application for patent, or cannot be found or reached after diligent effort, a person to whom the inventor has assigned or agreed in writing to assign the invention or who otherwise shows sufficient proprietary interest in the matter justifying such action, may make application for patent on behalf of and as agent for the inventor on proof of the pertinent facts and a showing that such action is necessary to preserve the rights of the parties or to prevent irreparable damage; and the Director may grant a patent to such inventor upon such notice to him as the Director deems sufficient, and on compliance with such regulations as he prescribes.11

If inventorship must be corrected after prosecution of the patent, Section 256 applies:Whenever through error a person is named in an issued patent as the inventor, or through error an inventor is not named in an issued patent and such error arose without any deceptive intention on his part, the Director may, on application of all the parties and assignees, with proof of the facts and such other requirements as may be imposed, issue a certificate correcting such error.

8. 9. 10. 11.

Harrington Mfg. Co. v. Powell Mfg. Co., 815 F.2d 1478 (Fed. Cir. 1986). 35 U.S.C. 116. 35 U.S.C. 117. 35 U.S.C. 118.

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Chapter 1 Improper Conduct as to Invention The error of omitting inventors or naming persons who are not inventors shall not invalidate the patent in which such error occurred if it can be corrected as provided in this section. The court before which such matter is called in question may order correction of the patent on notice and hearing of all parties concerned and the Director shall issue a certificate accordingly.12

Courts tend to favor correction over invalidation if no bad faith is involved.13 An interesting example is the Excimer laser case before the ITC, in which an eye surgeon from Columbia University affiliated with VISX told the PTO he was the only inventor, but in fact he had actually worked with a top laser scientist from IBM in developing the way to use surgical lasers for eyesight correction. The IBM scientist was deemed a co-inventor, and the invention could be licensed from IBM, as well as VISX, destroying the infringement suit and perhaps proving inequitable conduct in not accurately describing IBMs role to the PTO.14 Although issues about leaving out an inventor will more likely result in correction than invalidation, there are cases in which it has been disastrous. For instance, where a dominant firm sued a rival company run by a former employee, proof by the rivals president that he was an omitted co-inventor of the patent in suit led to an antitrust victory and an antitrust damage award of three times the cost of defense.15 Procedurally, a Section 256 action to correct inventorship is treated as an equitable action and thus does not require a jury trial.16 However, if the plaintiff sues the named inventor for fraud, claiming that he (plaintiff ) was a or the true inventor, and seeks Section 256 correction, the CAFC has held that it is error for the court to decide the Section 256 issue prior to the fraud jury trial that raised the same issues.17 In Franks Casing Crew & Rental Tools, Inc. v. PMR Technologies,18 the court affirmed a finding of unenforceability when the two inventors named in the application had deliberately concealed the true inventors involvement in the conception of the invention claimed. These inventors were deemed to have engaged in a pattern of intentional conduct designed to deceive the attorneys and the PTO as to who the true inventors were.19 It is not clear that this was an instance of derivation or that the finding of inequitable conduct was based upon such a circumstance. In affirming, the CAFC noted that the

12. 13. 14. 15. 16. 17. 18. 19.

35 U.S.C. 256. See, e.g. Pro-Mold, supra, n.7. In re Certain Excimer Lasers, Initial Decision, 9899, 337 TA (12/26/99). Conceptual Engineering Associates, Inc. v. Aelectronic Bonding, Inc., 714 F.Supp. 1262 (D.R.I. 1989). Discussed further in Part III, Patent Misuse and Antitrust Misconduct, infra. Ethicon v. U.S. Surgical Corp., 135 F.3d 1456 (Fed. Cir. 1998). Shun v. Intel Corp., No. 061249 (Fed. Cir. 8/24/07). 292 F.3d 1363 (Fed. Cir. 2002) infra at subsection 6, a). Inventorship. Id. at 1376.

Failure to Disclose Sales or Offers to Sell

7

district court had focused on evidence that the named inventors had omitted the true inventor as part of a deliberate schemeto claim the patent for themselves by omitting him from participation.20

C. Failure to Disclose Sales or Oers to Sell that Occurred More Than One Year Before Patent ApplicationSince a patent application is unacceptably late for a product or process that was on sale more than a year ago, there is a duty to disclose all relevant events, even if not thought fatal by the inventor or his lawyer.21 Sales, even of a product containing less than all features of the claimed invention, may still have to be disclosed to the PTO.22 As will be discussed, infra, an inequitable conduct finding or even an antitrust claim can be premised on concealment of evidence that the patent is subject to an on-sale bar.23 Not all failures to disclose, however, amount to inequitable conduct. There may be no clear evidence of intent to deceive.24 Some cases seem to suggest that proof of failure to disclose a known material reference places a burden on the patent owner to produce evidence of good faith. In Dayco Products,25 the court stated: intent to deceive cannot be inferred simply from the decision to withhold the reference where the reasons given for the withholding are plausible.26 This suggests that there may be some burden on the patentee to give reasons for withholding a known material reference. Such a rule could rest on the theory that if a party has unique access to a reference and fails to produce it, a factfinder may infer that the evidence is unfavorable to the party.27 In Dippin Dots, the CAFC affirmed a finding of inequitable conduct based on the withholding of information concerning a fifteen-month old sale of what became the patented product, even though it was changed somewhat by the time of the patent application. The opinion notes that disclosure of

20. Id. 21. See, e.g., Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965). 22. Dayco Prods.Inc. v. Total Containment, Inc., 329 F.3d 1358, 1363 (Fed. Cir. 2003); Dippin Dots, Inc. v. Mosey, 476 F.3d 1337 (Fed. Cir. 2007). 23. Publications Intl. v. Western Publg Co., 1994-1 Trade Cas. (CCH) 70, 540 at 71, 933 (N.D. Ill. 1994)(allegation of knowing failure to disclose early sales satisfies Rule 9(b)). 24. See, e.g., FMC Corp. v. Manitowoc Co., 835 F.2d 1411, 1415 (Fed. Cir. 1987). 25. Dayco Products, Inc. v. Total Containment, Inc., supra. 26. Id. at 1367. 27. See, e.g., Gillette Co. v. S.C. Johnson & Son Inc., 919 F.2d 720 (Fed. Cir. 1990).

8

Chapter 1 Improper Conduct as to Invention

early sale information is important because the examiner cannot know of it on his own. Therefore, the panel rejected the argument that the applicant honestly believed that the earlier version was not finalized. In Brasseler U.S.A. I, L.P. v. Stryker Sales Corp., the CAFC affirmed summary judgment of inequitable conduct for failing to disclose prior sales.28 The attorney responsible for preparing the application had been instructed to file quickly to beat the upcoming one-year bar.29 In reality, the application was barred before it was even filed. The CAFC not only affirmed the rulings that the claims were barred by Section 102(b) and that the patent was unenforceable, but further held that an attorney who was told to file the application in three days had a duty to inquire further into when exactly the sale had occurred.30 In Allen Engineering Corp. v. Bartell Industries,31 Allen sued Bartell for infringing a utility patent. Bartells defense was partially based on the patents invalidity due to an on-sale bar and also on inequitable conduct for a failure to disclose the activity that gave rise to the on-sale bar. The bar was allegedly created by the sale of one of Allens products. The CAFC reversed the district courts determination that the patent was not invalid because of the sales and remanded after clarifying the standards to apply.32 The court did, however, affirm the holding that there had been no inequitable conduct. Defendant had argued in essence, that the Red Rider [by Allen] was so material that its nondisclosure justifies an inference of an intent to deceive,33 but the court disagreed, repeating the standard rule that intent is a separate component of inequitable conduct that usually must be proved by more than the fact of nondisclosure. In short, even clear evidence of nondisclosure of an allegedly invalidating sale was insufficient in itself to establish intent to deceive.

28. 29. 30. 31. 32. 33.

267 F.3d 1370 (Fed. Cir. 2001). Id. at 1374. Id. at 138485. 299 F.3d 1336 (Fed. Cir. 2002). Id. at 1354. Id. at 135152.

CHAP T ER

2Inadequate Disclosure (of the Invention, How to Practice It, or How to Practice It Optimally)

A. Lack of Description B. Lack of Enablement C. Failure to Disclose (or Concealment of ) the Best Mode for Achieving the Invention 1. Burden of Proof 2. Inventors View of Best 3. Best Mode to Achieve the Claims, or the Claim Plus Necessary Adjuncts? a) Relation of Best Mode to What Was Claimed b) Best Mode for Less than All Uses 4. Adequacy of Disclosure 5. How May Adequate Disclosure Be Proved or Disproved? 6. Must Brand Names and Model Numbers of Inputs Be Disclosed? 7. Will Best-Mode Violations Justify Conduct Sanction?

10 11 12 13 14 15 15 16 16 16 17 18

9

10

Chapter 2 Inadequate Disclosure

The Patent Act, 35 U.S.C. 112, imposes on the patentee three related duties: first, to describe the whole claimed invention; second, to disclose enough detail to enable readers to achieve the invention without undue experimentation; and third, to teach, rather than conceal, any best mode attainable for the invention. The relevant text states that:A written description of the invention, and of the manner and process of making and using it . . . to enable any person skilled in the art to which it pertains . . . to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.1

Accused infringers are thus free to attack the patent on Section112 grounds, arguing that one or more of the above requirements has not been met.

A. Lack of DescriptionFailure to describe the invention sufficiently to distinguish it from prior art can be fatal to a patent if combined with other violations, but seldom is in and of itself. Generally, the specification and/or figure constitute the key description, especially as to a mechanical invention.2 If the PTO is satisfied with the description, the courts are likely to defer to that judgment. Lack of a broad but detailed description may cause the narrowing of the enforceable scope of a patent, or a reason to resist new claims, but a weak description cannot be said to injure either the United States Patent and Trademark Office (PTO) or the public and thus normally does not create grounds for a conduct defense.3 Moreover, if testimony indicates that the description is not sufficient to practice the invention, the case fails on lack of enablement grounds.4

1. 35 U.S.C. 112 (2000). See Appendix B. 2. See, e.g., Omark Industries, Inc. v. Textron, Inc., 688 F.2d 1242 (9th Cir. 1982)(omissions in the description can be remedied by referring to drawings, thus satisfying the written description requirement). 3. See, e.g., Ariad Pharms., Inc. v. Eli Lilly & Co., 560 F.3d 1366 (Fed. Cir. 2009)(patent invalid under 112 for lack of a written description when specification failed to disclose molecules capable of reducing transcription factor activity, but no inequitable conduct in patent prosecution because there was no showing that errors and nondisclosures were intentional); LiebelFlarsheim Co. v. Medrad, Inc., 481 F.3d 1371, 82 U.S.P.Q.2d (BNA) 1113 (Fed. Cir. 2007)(The trial courts holding that two patents were invalid under 112, and 102 was affirmed due to evidence that there was no compliance with written description and enablement requirements, the trial courts finding that inequitable conduct counterclaim was moot was not erroneous). 4. See, e.g., Univ. of Rochester v. G.D. Searle & Co., 358 F.3d 916 (Fed. Cir. 2004), rehearing, en banc, denied, 375 F.3d 1303 (Fed. Cir. 2004), cert. denied, 2004 U.S. LEXIS 7905 (2004).

Lack of Enablement

11

B. Lack of EnablementThe enablement requirements, as set out by the Court of Appeals for the Federal Circuit (CAFC), are that the inventor must describe at least one complete embodiment of the invention, must teach an objective way of making it, and must teach at least one way to use it.5 Details can be left to the skill of those in the art, as long as undue experimentation is not required to go from the patent to the usable invention.6 If the specification fails to enable persons of skill to practice the invention, the patent will be declared invalid, but few patents are that vague; lack of enablement is very hard to disguise, and seldom leads to fee awards.7 In Union Pac. Resources Co. v. Chesapeake Energy Corp., even findings that one of skill in the art would not understand how to determine an element necessary for the invention, and that the means to compare information were not defined were not sufficient to constitute inequitable conduct.8 If claims are invalid as not enabled due to the necessity of undue experimentation, it is possible that the court might not even reach additional issues, including obviousness, anticipation, and inequitable conduct.9 If the patent holder sues for infringement a firm that makes an embodiment of the invention not directly taught by the patent, the courts will deny such broad scope to the claims if it is shown that an untaught embodiment works unpredictably unless modified.10 The CAFC has stated that [t]he issue of whether a reference would be considered important by a reasonable examiner in determining whether a patent application is allowable, including whether the invention is enabled, is a separate issue from whether the invention is actually enabled.11 It is usually difficult to conceal a lack of enablement. Thus, bad-conduct allegations usually concern alleged concealment of the best mode, discussed next.

5. See, e.g., Crown Operations Intern. Ltd. v. Solutia, Inc., 289 F.3d 1367, 137879 (Fed. Cir. 2002). 6. Adarg v. Fishof, 286 F.3d 1346, 135558 (Fed. Cir. 2002). 7. See, e.g., Union Pac. Resources Co. v. Chesapeake Energy Corp., 236 F.3d 684 (Fed. Cir. 2001) (lack of enablement and indefiniteness found, but no inequitable conduct found or attorneys fees awarded). 8. Id. 9. See, e.g., Enzo Biochem, Inc. v. Calgene, Inc., 188 F.3d 1362, 1369 (Fed. Cir. 1999)(undue experimentation was necessary to practice the patented technology in cells other than E. coli). 10. See Amgen v. Chugai Pharm. Co., 927 F.2d 1200, 1212 (Fed. Cir. 1991), cert. denied, 112 S. Ct. 169 (1991). 11. Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 123839 (Fed. Cir. 2003)(concluding that district court finding of inequitable conduct was not contradictory to its denial of a motion for summary judgment based on lack of enablement).

12


C. Failure to Disclose (or Concealment of) the Best Mode for Achieving the InventionA useful one-sentence statement of the best mode rule is provided by the CAFC in Hybritech:12 In order to find a best mode violation, it must be shown that the applicant knew of and concealed a better mode than it disclosed.13 In practice, best mode defenses are the easiest of the three lack-ofdisclosure defenses to credibly assert. Furthermore, confusion as to key questions regarding the best mode obligation leaves an open field for argument.14 Also, inventors, being prideful craftsmen, tend to testify that every input they chose was the best available, and no patent specification describes every input and procedure in full detail. Something is always left unsaid. Still, the defense is far easier to assert than to win. As of 2002, the CAFC noted that only seven patents had been voided on this ground over a forty year period.15 It is beginning to appear that the CAFC seeks to stem a potential plague of knee-jerk, hyper-technical best mode defenses, by insisting on real proof of public injury, as it did when inequitable conduct charges became ubiquitous.16 How to resolve ambiguities in best mode inquiries is colored by ones view of the purpose of the rule. Surely, a purpose of a best mode disclosure requirement is to prevent patentees from defrauding those who license their invention. If licensees pay the asked royalty to practice the invention, and then cannot do so very well, or not as well as the patentee, they have in a sense been cheated, because the inventor obtained exclusivity in exchange for supposed full disclosure, but did not meet his end of the bargain with the public. The existence of such a scheme becomes particularly evident if the inventor seeks a second royalty, or payment, for a trade secret license under which the best mode will finally be adequately disclosed. Best mode violations are fatal even if unintentional,17 but evidence of intent to conceal or mislead makes adverse rulings more likely and can lead to attorney fee awards to the successful defendant.18 As the court emphasized in Consolidated Aluminum, disclosure of the best mode is statutorily required, making failure to disclose the best mode inherently material, and therefore sufficient to reach the minimum

12. Hybritech, Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367 (Fed. Cir. 1986). 13. Id. at 1384. 14. See generally, Carlson, Dale L., Katarzyna Przychodzen, and Petra Scamborova Patent Linchpin for the 21st Century?Best Mode Revisited, 45 IDEA 267 (2005). 15. See Bayer AG v. Schein Pharmaceuticals, Inc., 301 F.3d 1306, 1316 (Fed. Cir. 2002). 16. Kimberly-Clark Corp. v. Johnson & Johnson, 745 F.2d 1437, 1454 (Fed. Cir. 1984). 17. See Graco, Inc. v. Binks Mfg. Co., 60 F.3d 785 (Fed. Cir. 1995). 18. See, e.g., Consolidated Aluminum Corp. v. Foseco Intl, Ltd., 910 F.2d 804 (Fed. Cir. 1990).

Failure to Disclose the Best Mode for Achieving the Invention 13

level of materiality necessary for a finding of inequitable conduct.19 However, the court continued to state that, though failure to disclose the best mode is not excused even if unintentional,20 inequitable conduct requires a threshold level of intent.21 Therefore, failure to disclose the best mode will not constitute inequitable conduct in every case.22 Commentators have bemoaned the lack of clarity and predictability in best mode rulings.23 The CAFC has noted that The words of the statute are not without ambiguity.24 The appeals court has stated, in reversing a district court ruling, that lower court judges have misunderstood the principles supposedly discernible from earlier CAFC decisions in this field.25 Two possible problems are that it is unclear how to prove what the inventor really thought or what evidence to use to show that the disclosure was not adequate. The CAFC cases state the two basic best mode issues fairly consistently. Once the issue has been raised in defense, the court must determine (1) whether the inventor subjectively had in mind a best mode for achieving the invention at the time of filing the application for patent; and (2) if the inventor(s) had a best mode in mind, whether the disclosure in the patent adequately disclosed that best mode to those of ordinary skill in the art (an objective issue). Both concepts have been somewhat clarified over time. A mode is understood to include a method, an input or even a crucial measurement, such as an ideal temperature, as opposed to a range of temperatures. The only mode that must be disclosed is one conceived of before filing for the patent. Later improvements need not be disclosed for free, even if a reissue is sought.26

1. Burden of ProofSince success in a best mode defense would invalidate a patent that the PTO thought was deserved, the courts have regularly held that the burden of proof is on the accused infringer, and that each of the two elements must be proved

19. Id. at 808 (referencing J.P. Stevens & Co., Inc. v. Lex Tex Ltd., Inc., 747 F.2d 1553, 1559 (Fed. Cir. 1987)). 20. Spectra-Physics Inc. v. Coherent, Inc., 827 F.2d 1524, 1535 (Fed. Cir. 1987), cert. denied, 484 U.S. 954 (1987). 21. J.P. Stevens, 747 F.2d at 1560. 22. Id. at 1553. 23. Moys Walker on Patents, 7.41, 7140, 7143, (the proper extent of the best mode requirement is subject to considerable uncertainty and dispute.). 24. Wahl Instruments, Inc. v. Acvious, Inc., 950 F.2d 1575, 1579 (Fed. Cir. 1991). 25. Id. at 1580. 26. See Engel Indus. Inc. v. Lockformer Co., 96 F.3d 1398 (Fed. Cir. 1996); Transco Products Inc. v. Performance Contracting, Inc., 821 F.Supp. 537 (N.D. Ill. 1993), revd in part, vacated in part, & remanded in part, 38 F.3d 551, (Fed. Cir. 1994), cert. denied, 513 U.S. 1151 (1995).

14


by clear and convincing evidence, a standard higher than mere preponderance of the evidence.

2. Inventors View of BestIt is well accepted that if the inventor never knew of a best mode, or never subjectively determined that the mode being used was better than alternatives, the inquiry is over, even if his colleagues knew of it.27 Even here, all is not simple. The inventor may testify that he or she had no favorite, but documents may contradict this, or such testimony may be deemed to be incredible. Despite the word subjective, the court may attribute a view to the inventor based on circumstantial evidence other than testimony. In such circumstances, however, meeting the clear and convincing standard would often be difficult. Similarly, hard questions arise if the inventor says he selected the best of the inputs he tried, but that he had no certainty that he had found the very best mode, because he decided to go with what he had found rather than spend more time trying inputs from other sources. In such circumstances, it would seem that any use of the word best is not meaningful in terms of the intent of the statute. The CAFC, in Wahl Instruments, Inc.,28 stressed that any inventor, pressed hard, could hardly deny that input or method choices he made were best in some way:A requirement for routine details to be disclosed because they were selected as the best for manufacturing or fabrication would lay a trap for patentees whenever a device has been made prior to filing for the patent. The inventor would merely have to be interrogated with increasing specificity as to steps or material selected as best to make the device. A fortiori, he could hardly say the choice is not what he thought was best in some way. Thus, at the point he would testify respecting material or source or detail which is not in the patent, a failure to disclose the best mode would, ipso facto, be established.29

An unsettled issue is whether the word subjective means that a best mode attack may be sustained when the facts indicate that although the inventor preferred and failed to disclose a particular mode, that mode was not any better than other modes. The imprecise way in which the word subjective is used in some opinions might suggest that inadequate disclosure, even of average modes, is bad enough to forfeit a patent. However, some CAFC opinions suggest a rejection of such formalism. In Young Dental,30 the CAFC

27. 28. 29. 30.

Glaxo Inc. v. Novopharm Ltd., 52 F.3d 1043 (Fed. Cir. 1995). Wahl Instruments, Inc. 950 F.2d at 1581. Id. at 1575. Young Dental Mfg. Co. v. Q3 Special Prods., 112 F.3d 1137 (Fed. Cir. 1997).


concluded that the undisclosed item was easily approximated by those skilled in the art. Faced with proof that the inventor had once called his mode a trade secret, the opinion stated that concealing secrets that are not commercially valuable does not rise to the level of a best mode violation.31 Furthermore, the formulation that there must be proof that the inventor concealed a better mode than she disclosed32 indicates that the proponent of the defense does need to convince the court that the undisclosed mode was in fact better that those stemming from the disclosure. It seems likely that this type of common sense will work its way down to the trial courts. If the invention is made by multiple inventors, the issue that arises is whether the subjective best mode requirement is met if fewer than all the inventors favor it. Two cases on the topic give opposite answers.33

3. Best Mode to Achieve the Claims, or the Claim Plus Necessary Adjuncts?There remains continued uncertainty concerning (1) the extent to which an inventor is required to disclose a mode that is necessary to optimum success but is not claimed; and (2) whether there is a duty to disclose a best mode for some but not all uses. a) Relation of Best Mode to What Was Claimed In Teleflex,34 the panel stressed that the best mode requirement must begin and remain focused on the language of the claims.35 Nevertheless, in Dana Corp.,36 a best mode violation was found due to non-disclosure of a fluoride surface treatment that was crucial to optimum results of a valve-stem seal, even though no surface treatment was claimed. The emerging consensus appears to be that non-claimed elements must be disclosed if they are critical to achieving optimum results from the claimed

31. Id. at 1141. 32. See Hybridtech, supra, n.56. 33. See Melissa N. McDonough, Note: To Agree or Not to Agree: That is the Question When Evaluating Best Mode Preferences of Joint Inventors After Pannu v. Iolab Corp., 80 S.Cal. L. Rev. 151 (2006); Pannu v. Iolab Corp., 155 F.3d 1344 (Fed. Cir. 1998); Graco, Inc. v. Binks Manufacturing Co., 60 F.3d 785 (Fed. Cir. 1995); See also Union Carbide Corp. v. Dow Chem. Co., No. 75-G-79, 1981 U.S. Dist. LEXIS 17790 (S.D. Tex. July 8, 1981), aff d, 682 F.2d 1136 (5th Cir. 1982). 34. Teleflex Inc. v. Ficosa North American Corp., 299 F.3d 1313 (Fed. Cir. 2002). 35. Id. at 1330. 36. Dana Corp. v. IPC Ltd. Partnership, 860 F.2d 415 (Fed. Cir. 1988); accord, Chemcast Corp. v. Arco Ind. Corp., 913 F.2d 923 (Fed. Cir. 1990).

16


invention, but need not be disclosed if they improve the product or process in ways that are independent of the performance of the invention.37 For instance, a protective coating for a high-speed generator can be retained as a trade secret because the coating does not affect the speed. Also, failure to list a best mode does not infect claims that do not need such mode.38 b) Best Mode for Less than All Uses Usually, a best mode is one that always applies, so that the best mode for a single use of the invention, or to meet the needs of certain customers only, is not a best mode.39 Thus, the best mode for meeting a big customers needs does not have to be disclosed in the specifications.

4. Adequacy of DisclosureAs to the second test, disclosure need not be exact if those skilled in the art can arrive at the best mode, or its equivalent, without undue experimentation. This means that brand names and model numbers of inputs need not be set out if such information is well known, or easily obtained or approximated. Inadequate disclosure can take three forms. In the most extreme, the patent simply never mentions the needed input or procedure. Total lack of disclosure is usually going to be deemed inadequate if the input is needed and not obvious to those in the art. A second level of inadequate disclosure is one in which a needed input is mentioned, but it would be impossible or unduly difficult to isolate the necessary one, thus resulting in inability to produce a working version of the invention. Such lack of disclosure thus could result in findings of both lack of enablement and concealment of best mode. The third level of objectionable nondisclosure is one in which the specification enables production of a commercially useful product, but one not as good as the inventors best mode if the best mode had been revealed more clearly.

5. How May Adequate Disclosure Be Proved or Disproved?If the invention has been licensed, the adequacy of disclosure would seem to be determinable by finding out what methods or inputs the licensees obtained

37. See Stephen B. Wolmsley, Best Mode: A Plea to Sacrifice or Reform this Broken Requirement of U.S. Patent Law, 9 Mich. Telecomm & Tech. L. Rev. 126 (2002). 38. See Amgen, supra. at n.10. 39. See Teleflex v. Ficosa, 299 F.3d at 1313.


after reading the patent disclosures and how well they worked compared to the products or processes of the inventor. The alternative is to have an expert, or one of skill in the art, opine or testify that it would probably be difficult to find the best mode based on the specification or other disclosures in the patent. Such testimony could, of course, be contradicted by a rival expert or by a second witness from the field. Of course, if the patent has never led to licensed products, or even unlicensed copies, expert testimony may be the only way to resolve the issue of whether the disclosure is adequate. But what if licensed products have been produced and the accused infringer relies only on an expert, having never taken discovery from licensees concerning their experience in reading the patent and using it? The authors view is that defendants avoidance, without excuse, of licensee or other real world evidence should provide grounds for rejection of proffered expert testimony and summary dismissal of the defense, especially if there is some evidence of successful utilization of the patent by others. For instance, in Young Dental,40 supra, the court lists as a ground for rejection of the defense the fact that the infringer was able to find the supposedly undisclosed input, by asking a seller of such products for advice.41 A troublesome holding in this area is that proof that rivals were able to duplicate the best mode by reverse engineering will not excuse a failure to disclose it.42 Perhaps the standard of avoiding the need for undue experimentation can resolve close cases. In any event, requiring the proponent of the defense to examine how licensees achieved their results is not inconsistent with the holding of the above case.

6. Must Brand Names and Model Numbers of Inputs Be Disclosed?In general, it is not customary in patent specifications to list the brand names or model numbers of favored inputs. The CAFC has said that there is no per se requirement to provide names for sources of materials absent evidence that the name of the source would not be known or easily available.43 The PTO does not encourage such disclosure. Nevertheless, the lack of such information provides an immediate basis for a best mode concealment allegation. Application of the above guideline has not always produced consistent results. In Chemcast Corp. v. Arco Industries Corp.,44 the disclosures were deemed too

40. 41. 42. 43. 44.

112 F.3d at 1137, supra, at n.30. Id. at 1145. Randomex, Inc. v. Scopus Corp., 849 F.2d 585 (Fed. Cir. 1988). Wahl, supra, at 1584, n.24. 913 F.2d 923 (Fed. Cir. 1990).

18 Chapter 2 Inadequate Disclosure

limited to assist in finding an input supplier. Key factors appear to be whether the input is custom-made or off-the-shelf, and whether the input is one that the industry expects to use.45 Best mode rulings indicate that the adequacy of disclosure is tested not only in terms of what those of skill in the art understand, but also what their input suppliers can contribute. In other words, if the patent teaches a machine and the best mode involves fasteners, adequacy of disclosure is tested in terms of what fasteners would be supplied if a machine maker showed the patent specification to his fastener supplier.46

7. Will Best-Mode Violations Justify Conduct Sanction?Although the best mode requirement is controversial, egregious violations of it have led to serious sanctions beyond unenforceability. In Foseco, the courts conclusion that the patent taught a purposely inferior mode led to a finding of inequitable conduct.47 In Nobelpharma,48 a best mode violation, combined with concealment of a too-early invention date, led to a finding of a Walker Process antitrust violation,49 resulting in a treble-damage award to the accused infringer. Failure to disclose the best mode will render the patent unenforceable, but does not in itself constitute inequitable conduct or an antitrust violation.50 However, if there is clear evidence that the nondisclosure or misdisclosure was for a bad purpose, inequitable conduct can even be found and fees awarded.51 In very rare cases, such as Nobelpharma,52 the totality of the facts may support a finding that suing with a knowingly concealed best mode may be characterized as an illegal attempt to monopolize in violation of Sherman Act, Section 2, mandating a fee award of three times the costs of defense.53

45. See also United States Gypsum Co. v. Natural Gypsum Co., 74 F.3d 1209 (Fed. Cir.1996) (industry witness knew of no source for the input). 46. See, e.g., Wahl, supra, at 1581 (anyone seeking to make the device would have to do no more than present the drawing in the patent to an experienced plastics fabricator.). 47. Consolidated Aluminum Co. v. Foseco Intl Ltd., 910 F.2d 804 (Fed. Cir. 1990)(attorneys fees were not awarded for reasons peculiar to the way the case was litigated.). 48. Nobelpharma Ab v. Implant Innovations, 141 F.3d 1059 (Fed. Cir. 1998). 49. Discussed infra, at Chapter 7, D. Compensable Items. 50. Gardco Mfg., Inc. v. Herst Lighting Co., 820 F.2d 1209, 1213 (Fed. Cir. 1987)(inequitable conduct and invalidity are distinct and without commonality either as claims or in a relation to the underlying fact issues.). 51. See, e.g., Ameritek, Inc. v. Carolina Lasercut Corp., 42 U.S.P.Q.2d 1411 (Fed. Cir. 1996). 52. Nobelpharma, discussed in Section III, infra. 53. Id.

CHAP T ER

3Inequitable Conduct in Obtaining the Patent

A. Failure to Meet Duty to Disclose to the PTO 1. Duty of Disclosure 2. Who Has the Duty 3. Scope of the Duty 4. Timing of Disclosure 5. Meaning of Noncumulative 6. Types of Nondisclosure a) Inventorship b) Prior Use or Sales c) Facts Suggesting Obviousness d) Prior Art Writings e) Relevant Case Histories f ) Important PTO History g) Patentees Own Inventive Eorts h) Defects in Fee Reduction Requests i) Best-Mode Violations as Inequitable Conduct j ) Failure to Provide Translation of Foreign Language References k) Burying References B. Balancing Test re: Materiality and Intent C. False Statements 1. Intent 2. False Statements Distinguished from Omissions 3. Typical Cases a) Falsied Test Results Due to Manipulation of the Conditions, Data, etc.

21 21 23 24 24 25 25 26 27 28 28 29 30 30 31 31 31 35 35 37 37 39 39 39

19

20 Chapter 3 Inequitable Conduct in Obtaining the Patent b) False Attribution of the Disinterestedness of Providers of Expert Declaration Supporting Patentability c) Petitions to Make Special d) Small-Entity Status e) Misclaiming Priority D. Infection of Related Patents E. Prosecution Laches F. False Statements to PTO by a Third Party

40 41 42 42 43 43 45

Failure to Meet Duty to Disclose to the PTO

21

The inequitable conduct defense is named such because it is an application of the principle that a person seeking equitable relief (enjoining infringement) must come to the court with clean hands. The U.S. Supreme Court has, since 1945, held that a patentee who fails in the duties of disclosure or misleads the United States Patent and Trademark Office (PTO) lacks clean hands and thus should be denied enforcement of the affected patent.1 However, an unenforceable patent remains valid in various technical senses.

A. Failure to Meet Duty to Disclose to the PTOUnclean hands charges may relate to conduct outside the PTO, such as presenting false evidence to a court, but the great bulk of the litigated issues relate to the patentees conduct as applicant.2 Conduct issues usually involve either (1) failure to disclose material prior art or key facts; or (2) submission of false or misleading statements in support of the application. The position of the Court of Appeals for the Federal Circuit (CAFC) is that:[a] patent may be rendered unenforceable for inequitable conduct if an applicant, with intent to mislead or deceive the examiner, fails to disclose material information or submits materially false information to the PTO during prosecution.3 The party urging unenforceability must show by clear and convincing evidence that the applicant met thresholds of both materiality and intent.4

1. Duty of DisclosureBecause obtaining a patent is an ex parte process (no opponent), the law imposes a duty of candor on the applicant to disclose all material prior art of which he is aware. Such duty is codified at 37 C.F.R. 1.56. Failure to submit material information can be cured by submitting it later in a proceeding, or even in re-examination, so long as the examiner has the opportunity to consider it before closing the file and allowing the patent.5

1. Precision Instrument Mfg. Co. v. Auto Maintenance Mach. Co., 324 U.S. 806, 814 (1945). 2. Precision Instrument Mfg., 324 U.S. at 81011 (patentee falsely asserted during interference proceedings that he was the sole inventor of the product). 3. Digital Control Inc. v. The Charles Mach. Works, 437 F.3d 1309, 1313 (Fed. Cir. 2006). 4. Molins PLC v. Textron, 48 F.3d 1172, 1178 (Fed. Cir. 1995); Dippin Dots, Inc. v. Mosey, 476 F.3d 1337, 1345 (Fed. Cir. 2007). 5. Young v. Lumenis, Inc., 492 F.3d 1336, 1348 (Fed. Cir. 2007).

22

Chapter 3 Inequitable Conduct in Obtaining the Patent

As set forth in Section 1.56, the duty includes a duty on the part of these individuals to disclose to the PTO all information known to that individual to be material to patentability of the invention being claimed. Rule 56 specifically sets forth a definition of materiality, so as to put applicants and their attorneys and agents on notice as to what information must be submitted. Effective March 16, 1992, and continuing until today, Rule 56 has defined materiality as follows: (b) Under this section, information is material to patentability when it is notcumulative 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.

For patents whose applications were filed after March 1992, the CAFC has indicated that it is proper to look to the current version of Rule 56.6 In applying this version of the rule, it gives deference to the PTOs formulation at the time an application is being prosecuted before an examiner in regard to the standard of conduct it expects to be followed in proceedings in the PTO. However, in some circumstances, courts continue to apply the so-called reasonable examiner standard which was the standard of Rule 56 before it was amended. They hold that the new standard was not intended to constitute a significant substantial break with the pre-1992 standard, but rather was intended to give more precise guidance to applicants and their attorneys. Under the reasonable examiners standard, information is deemed material if there is a substantial likelihood that a reasonable examiner would have considered the information important in deciding whether to allow the application to issue as a patent.7 This does not conflict with the opinion expressed by the court before the change in the rule: To be material, a misrepresentation need not be relied on by the examiner in deciding to allow the patent. The matter misrepresented need only be within a reasonable examiners realm of consideration.8

6. See Purdue Pharma L.P. v. Endo Pharmaceuticals, 77 U.S.P.Q.2d 1767 (Fed. Cir. 2006); Brano Indept. Living Aids, Inc. v. Acorn Mobility Sorus. LTD., 394 F.3d 1348 (Fed. Cir. 2005). 7. Ferring B. V. v. Barr Labs., Inc., 437 F.3d 1181 (Fed. Cir. 2006). 8. Merck & Co., Inc. v. Danbury Pharmacal, Inc., 873 F.2d 1418, 1421 (Fed Cir 1989).


23

There is no but for test for materiality.9 If withheld art is regarded as sufficient to invalidate the patent, or if a misstated or omitted fact would have done so, inequitable conduct is usually held to have been clearly shown. In fact, evidence of but for fraud will likely lead to attorney fee sanctions or, if market domination results, antitrust guilt including treble damages. The close issues of inequitable conduct occur when the finder of fact concludes that the withheld art or misstated fact would probably not have defeated patentability. 10 In such cases, the patent is declared unenforceable to maintain the duty of disclosure and protect the integrity of the ex parte patenting process. Intent must be found, but circumstantial evidence can be sufficient.11

2. Who Has the DutyEach individual associated with the filing and prosecution of a patent application has a duty of candor and good faith toward the PTO.12 The duty of candor and good faith extends to the inventors, the attorneys who prepare and prosecute the application, and every other person who is substantively involved in the preparation or prosecution of the application or who is associated with the inventor or the entity to which the application has been assigned. Knowledge of prior art by the applicants colleagues is not imputed to those actually involved in the prosecution.13 Additionally, because the duty applies only to individuals and not to organizations, uninvolved employees of a corporation to which the inventor has an obligation to assign the patent are under no duty to submit information that may be material to patentability.14

9. Molins PLC v. Textron, Inc., 48 F.3d 1172 (Fed. Cir. 1995). 10. See, e.g., A.B. Dick Co. v. Burroughs Corp., 798 F.2d 1392, 1396 (Fed. Cir. 1986). Years ago, some litigants attempted to depose patent examiners in order to press issues about relevance and whether they were misled. Statutory changes largely block such stratagems at present. See discussion, infra, at I-5(C). 11. Kingsdown Medical Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988). 12. 37 C.F.R. 1.56(a). 13. See, e.g., Insultherm, Inc. v. Tank Insulation Intl, 54 F.3d 731 (Fed. Cir. 1995)(The party alleging inequitable conduct must show a patentees knowledge of the undisclosed art because a patentee cannot disclose what is unknown to him.); FMC Corp. v. Manitowoc Co., 835 F.2d 1411, 1415 fn. 8 (Fed. Cir. 1987)(Applicant refers to the patentee and the attorney who prosecuted). 14. 37 C.F.R. 1.56(c).

24


3. Scope of the DutyThere is no duty to seek out prior art, only to disclose relevant, material references known to the patent prosecution team.15 Relevant references are those which a diligent patent examiner would want to think about in considering anticipation or obviousness issues. Material references are ones that are closer to the claimed invention than the submitted references.16 One area of ambiguity, or confusion, in regard to the cumulativeness standard is how it relates to the relevance standard. Relevant prior art has been alternatively described as art a reasonable patent examiner would want to see, or as reasonably related to the invention.

4. Timing of DisclosurePTO regulations set out when information must be disclosed, usually suggesting disclosure within ninety days of filing the application or, if discovered after filing, ninety days of its discovery.17 Specifically, the Manual of Patent Examiner Practice (MPEP) states:Submit information promptly. An applicant, attorney, or agent who is aware of prior art or other information and its significance should submit same early in prosecution, e.g. before the first action by the examiner, and not wait until after allowance. Potentially material information discovered late in the prosecution should be immediately submitted. That the issue fee has been paid is no reason or excuse for failing to submit information.18

One commentator says that the earlier the disclosure of a known piece of information relative to the examination the better.19 If material information is disclosed to the PTO only after the examiner has allowed a patent to issue or otherwise adopted the position of the applicant, it is likely that an accused infringer will later argue that the examiner was sandbagged.20

15. Cordis Corp. v. Boston Sci. Corp., 188 Fed. Appx. 984, 987 (Fed. Cir. 2006)(citing FMC Corp. v. Hennessy Indus., Inc., 836 F.2d 521, 526 n.6 (Fed. Cir. 1987)(one should not be able to cultivate ignorance, or disregard numerous warnings that material information or prior art may exist, merely to avoid actual knowledge of that information or prior art.)). 16. See Molins, supra, at n.9. 17. 37 C.F.R. 1.97 (2003). 18. MPEP, note 50, 2004 (12)(citing Elmwood Liquid Prods., Inc. v. Singleton Packing Corp., 328 F.Supp. 974 (M.D. Fla. 1971)). 19. Boulware, Margaret A., and Tamsen Valoir, Inequitable Conduct, 619 PLI/Pat. 1245, 1252 (2000). 20. David Hricik, Aerial Boundaries: The Duty of Candor as a Limitation on the Duty of Patent Practioners to Advocate for Maximum Patent Coverage, 44 S. Tex. L. Rev. 205, 22829 (2002)


25

5. Meaning of NoncumulativeThere is a temptation to reason that any relevant art is perforce noncumulative. The better reasoning seems to be the opposite, namely, that an accused infringer asserting the materiality of unsubmitted or sketchily described art must show, first, that it would have been of sufficient potential interest to meet some relevance test, and, second, that it was closer to the invention than art already submitted to, or known by, the examiner.21 The judges conclusion that the patent would have been granted even if a withheld reference had been submitted does not alter the rule that unexcused withholding results in unenforceability.22 Nor is it relevant that the bad conduct was only related to a claim that it is not sued upon. If any claim of the patent in suit was obtained inequitably, the whole patent is unenforceable.23 As noted above, the regulation states that it will usually be inequitable conduct to withhold facts that tend to refute an argument made for patentability. Thus, use of the argument that there were no prior innovations using a 12-volt battery could justify an inequitable conduct finding if applicant knew of any such reference and did not submit it, even if the argument was unimportant. On the other hand, advocates are allowed to make arguments based on opinions even if such are ultimately deemed unsound.24 One CAFC decision, Penn Yan,25 led to the assumption that submission of a key reference along with a myriad of irrelevant ones might be deemed a form of concealment. However, a later case refused to apply the new doctrine when the facts were less egregious.26

6. Types of NondisclosureCase law indicates that omissions regarding a wide variety of subjects may raise issues of inequitable conduct, as shown, for instance, in the following.

21. 22. 23.

24. 25. 26.

(indicating that examiners have a financial incentive not to re-open reexamination once they have allowed an application). Halliburton Co. v. Schlumbarger Tech. Corp., 925 F.2d 1435 (Fed. Cir. 1991). See In re Baxter Travenol Labs, 952 F.2d 388 (Fed. Cir. 1991). J.P. Stevens & Co., Inc. v. Lex Tex Ltd., Inc., 747 F.2d 1553, 1561 (Fed. Cir. 1984), cert. denied, 474 U.S. 822 (1985); Lummus Industries, Inc. v. D.M. & E. Corp., 862 F.2d 267, 274 (Fed. Cir. 1988). See, e.g., Young v. Lumenis, Inc., 492 F.3d at 1348. Penn Yan Boats, Inc. v. Sea Lark Boats, Inc., 479 F.2d 1328 (5th Cir. 1973). Molins Plc v. Textron, 48 F.3d 1172, 118283 (Fed. Cir. 1995).

26


a) Inventorship Courts have emphasized that patents and applications must identify the true inventor(s), including all inventors involved in the case of a collaborative effort.27 Omission of an inventor can be sufficient for a court to find inequitable conduct.28 A prime example is Franks Casing Crew & Rental Tools, Inc. v. PMR Techs., Ltd., in which the court stated: if unenforceable due to inequitable conduct, a patent may not be enforced even by innocent co-inventors. One bad apple spoils the entire barrel. The misdeeds of co-inventors, or even a patent attorney, can affect the property rights of an otherwise innocent individual.29 Similarly, in University of West Virginia v. Van Voorhies, the CAFC again cited Stark to support the notion that innocent inventors may not enforce patents tainted by inequitable conduct.30 The determination of the proper inventor was traditionally based on who contributed to the invention as claimed, which allowed applicants to omit potential inventors, who contributed to the inventive effort, but not what was actually claimed.31 However, in PerSeptive Biosystems, Inc. v. Pharmacia Biotech, Inc.,32 the CAFC appeared to abandon this rule in favor of allowing a court to find inequitable conduct when the inventive entity is misnamed, regardless of what was actually claimed in the issued patent. In PerSeptive Biosystems, the district court adopted the narrower view of the term error, finding that the deliberate act of leaving two collaborators off of the patentsin-suit prevented correction under the Patent Act, 35 U.S.C. 256, regardless of which scientists contributions were actually claimed in the patents, and holding all three patents unenforceable for inequitable conduct.33 On appeal, PerSeptive Biosystems argued that it narrowed its patent claims during prosecution, removing the inventorship problem, but the CAFC held that these removed claims were the genesis of the claimed invention and led the named inventors to understand the subject matter that remained34

27. 12 Fed. Cir. B.J. 285, 298 (citing Kennedy v. Hazelton, 128 U.S. 667, 672 (1888)); 35 U.S.C. 102(f ), 116 (2000). See discussion of statutory inventorship requirements, infra, Section I-1(B). 28. Franks Casing Crew and Rental Tools, Inc. v. PMR Techs., 292 F.3d 1363,1376 (Fed. Cir. 2002) (affirming holding of inequitable conduct based on omission of an inventor. Brother co-inventors deliberately omitted another co-inventor from the patent and acted to hide his involvement in the invention throughout the patent prosecution process). 29. Id. at 1377 (quoting Stark v. Advanced Magnetics, Inc., 119 F.3d 1551, 1556, 43 U.S.P.Q.2d (BNA) 1321, 1325 (Fed. Cir. 1997)). 30. 278 F.3d 1288, 61 U.S.P.Q.2d 1449 (Fed. Cir. 2002). 31. 12 Fed. Cir. B.J. 285, 286 (2002). 32. 225 F.3d 1315 (Fed. Cir. 2000). 33. 12 Fed. Cir. B.J. at 30607 (citing PerSeptive Biosystems, Inc. v. Pharmacia Biotech, Inc., 12 F.Supp.2d 69 (D. Mass. 1998), aff d 225 F.3d 1315 (Fed. Cir. 2000)). 34. 225 F.3d at 1319.


27

and thus rejected the argument. Interestingly, the court dealt with inventorship in an unprecedented manner, stating that the named inventors had intentionally misrepresented their relationship with the unnamed inventive entity during prosecution35 even though the collaborative relationship and the initial invention were in fact disclosed.36 The CAFC concluded that the disclosures involved half-truths and material omissions, and noted that under Section 102(f), the collaborative efforts of three unnamed inventors were important to the patentability inquiry, ignoring what was actually claimed.37 This decision represents the first change in the courts treatment of Rule 56 since its revision in 1992, essentially lowering the bar for materiality or perhaps removing the materiality inquiry when looking at representations related to inventorship.38 In its most recent case concerning inventorship, the CAFC concluded that a later-issued patent would not be invalidated for an error in inventorship if there was an overlap in inventors. In this case, the provisional application listed one inventor, while the later filed, and identical, non-provisional application listed five.39 b) Prior Use or Sales Information regarding prior use or sales activity may conceivably raise invalidity issues.40 In Ameritek, Inc. v. Carolina Lasercut Corp.,41 the CAFC affirmed a district court decision that failure to disclose during prosecution certain sales that would have cost the applicant their patent was inequitable conduct and created an exceptional case warranting attorney fees. The district court had based this finding on a jury determination that the inventor applicant had intended to deceive, and went on to conclude that this conduct was imputed to the company, which had continued to pursue the infringement litigation despite learning of the inequitable conduct during prosecution.42 A more complex form of this issue arose in the Kaiser litigation.43 In Geneva II,44 the CAFC affirmed a district court decision that whether parties

35. 36. 37. 38. 39. 40.

41. 42. 43. 44.

Id. at 1322. Id. at 132527. Id. at 1322. 12 Fed. B.J. at 317. E.I. DuPont de Nemours and Co. v. MacDermid Printing Solutions, LLC., 525 F.3d 1353 (Fed. Cir. 2008). Parson Podiatry Lab. v. KLM Lab., 984 F.2d 1182, 1189 (Fed. Cir. 1993); Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., supra, at n.28 (nondisclosure of on-sale activity found to constitute inequitable conduct, citing willful ignorance of possible on-sale bar). 42 U.S.P.Q.2d 1411 (Fed. Cir. 1996). Id. at 1413. Kaiser Found. Health Plan v. Abbott Labs., Inc., 552 F.3d 1033, 1048 (9th Cir. 2009). Abbott Labs. v. Geneva Pharms., Inc., 182 F.3d 1315, 131819 (Fed. Cir. 1999).

28 Chapter 3 Inequitable Conduct in Obtaining the Patent

to prior sales were aware that the product contained the compound at issue was immaterial for Section 102(b) purposes. Though neither the buyers nor sellers knew of this fact at the time of the sales, the patent was invalidated by the on-sale bar. The court cited J.A. LaPorte, Inc. v. Norfolk Dredging Co.,45 which Abbott failed to include in documents submitted to the PTO, despite citing it in a brief during the litigation of the prior sales. c) Facts Suggesting Obviousness Information must be disclosed regarding products or processes connected to, or known by, the inventor and his agents that could raise issues of obviousness or other grounds for invalidity.46 d) Prior Art Writings Prior art includes not only patents and applications, but also publications or catalogs that show prior art. In Golden Hour Data Systems, Inc. v. emsCharts Inc.,47 the patent was found unenforceable partially due to a law students failure to cite a brochure describing the prior art. Though the patentee cited the prior art in the original Information Disclosure Statement (IDS), it had been disclosed in a manner that obscured its true relevance. Most notably, the student used text from an irrelevant part of the brochure in a later filing with the PTO, but never corrected the original misstatements in the IDS, clarified the significance of the prior art, or submitted the brochure.48 The need to disclose prior art is limited, however, to material art.49 In Larson v. Aluminart, three items of prior art not disclosed were not material because they were cumulative of prior art already before the panel.50 If the

45. 787 F.2d 1577 (Fed. Cir. 1986)(activities of a third party created an on-sale bar which invalidated the asserted claims of the patent). 46. Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1234 (Fed. Cir. 2003) (affirming holding of unenforceability based on failure to disclose a non-prior art article, because the article would have been relevant to the examiners consideration of enablement). 47. 2009 U.S. Dist. LEXIS 30108 (E.D.Tex. 2009). 48. The jury trial found infringement of the patent, placing this case in the series of recent cases knocking out objectively valid patents for inequitable conduct. See discussion of Larson v. Aluminart Products, infra, Chapter 3, Section A, subsection 6,d.) Prior Art Writings. 49. See, e.g. GFI, Inc. v. Franklin Corp., 265 F.3d 1268 (Fed. Cir. 2001)(nondisclosure of prior art references considered inequitable conduct based on intent inferred from proof that applicant knew or should have known of materiality); Life Technologies, Inc. v. Clontech Labs., Inc., 224 F.3d 1320 (Fed. Cir. 2000)(intent analysis not reached when applicants non-disclosure of reliance on cited prior art reference was not material). 50. Larson Mfg. Co. of South Dakota, Inc. v. Aluminart Products, Ltd., 2008-1096, 1174, slip-op. at 3 (Fed. Cir. Mar. 18, 2009); See also, Environmental Designs Ltd. v. Union Oil Co., 713 F.2d 693, 698 (Fed. Cir. 1983), cert. denied, 464 U.S. 1043 (1984).


29

examiner knows of prior art that is not submitted by the applicant, such failure to submit is generally not material, because [w]hen a reference is before the examiner, whether through the examiners search or the applicants disclosure, it cannot be deemed to have been withheld from the examiner.51 Furthermore, the threshold level of intent is not met when the art is cited in another application pending before the examiner at the same time.52 A divisional application may save an application infected by the omission of material prior art. For example, in Baxter Intl, Inc. v. McGaw, Inc., the court stated that where the claims are subsequently separated from those tainted by inequitable conduct through a divisional application, and where the issued claims have no relation to the omitted prior art, the patent issued from the divisional application will not also be unenforceable due to inequitable conduct committed in the parent application.53Prior art is not limited geographically, and an applicant must submit even prior art that is cited in related foreign applications.54 Such prior art is especially material when it was used to reject the same or similar claims in the foreign application, or has been found to be relevant for some other reason. The rationale is expressed in Gemveto Jewelry Co. v. Lambert Bros., Inc.,55 in which the court stated that a double standard of accountability would allow foreign attorneys and their clients to escape responsibility for fraud or inequitable conduct merely by withholding from the local correspondent information unfavorable to patentability and claiming ignorance of United States disclosure requirements. e) Relevant Case Histories Litigation, or evidence or findings from litigation, relevant to the validity of the claimed invention must be disclosed.56

51. 52. 53. 54. 55.

Scripps Clinic & Research Found. v. Genentech, Inc., 927 F.2d 1565, 1582 (Fed. Cir. 1983). FMC Corp. v. Hennessy Industries, Inc., 836 F.2d 521 (Fed. Cir. 1987). Baxter Intl, Inc. v. McGaw, Inc., 149 F.3d 1321, 1332 (Fed. Cir. 1998). MPEP 2001.06(a). 542 F.Supp. 933, 943, 216 U.S.P.Q. 976, 985 (S.D.N.Y. 1982)(patent was held invalid or unenforceable because patentees foreign counsel did not disclose to patentees U.S. counsel or to the PTO prior art cited by the Dutch Patent Office in connection with the patentees corresponding Dutch application). 56. Golden Valley Microwave Food, Inc. v. Weaver Popcorn Co., Inc., 837 F.Supp. 1444, 146566 (N.D. Ind. 1992) (holding that evidence in a prior litigation regarding related subject matter was material and should have been disclosed); Newell Window Furnishings v. Spring Window Fashions Div., Inc., 53 U.S.P.Q.2d 1302, 1331 (N.D. Ill. 1999)(holding that a withheld district court judges order denying a preliminary injunction in a prior suit involving applicants design patent was material to the prosecution of applicants co-pending utility patent application) revd on other grounds, 15 Fed. Appx. 836, 839 (Fed. Cir. 2001) (unpublished); Critikon, Inc. v. Becton Dickinson Vascular Access, 120 F.3d 1253, 1259 (Fed. Cir. 1997)(As a minimum

30


The failure to disclose litigation related to the patent at issue,57 or testimony from a prior proceeding,58 has been held to be a type of inequitable conduct. f ) Important PTO History Related or similar PTO proceedings or results that may be of interest to the examiner must be disclosed.59 In Larson v. Aluminart, a patentee failed to disclose two office actions issued in the prosecution of a continuation application that originated from the application that resulted in the patent at issue, the district court found inequitable conduct.60 Because these office actions were material, the CAFC remanded for a reconsideration of deceptive intent. A nondisclosure of a Board finding may also constitute inequitable conduct. In Li Second Family Ltd. v. Toshiba Corp.,61 such nondisclosure concerned a Board finding of non-entitlement to the benefit of an earlier filing in a related co-pending application. This failure to disclose, coupled with an improper priority claim, led the court to find inequitable conduct. g) Patentees Own Inventive Efforts Because Section 102(d) denies patents to inventions already patented by the applicant in a foreign country more than twelve months before the filing of the U.S. application,62 the duty to disclose includes the patentees own prior inventions, patents, and applications, including such efforts conducted

57. 58.

59.

60. 61. 62.

the applicant should call the attention of the [Patent] Office to the litigation, the existence and the nature of the allegations relating to validity and/or fraud, or inequitable conduct relating to the original patent, and the nature of the litigation materials relating to these issues)(quoting, in part, from MPEP 2001.06(c) (1994)); Boehringer Ingelheim Vetmedica, Inc. v. Schering-Plough Corp., 68 F.Supp.2d 508, 549 (D.N.J. 1999)(In sum, although the opinions addressing inequitable conduct based upon information gathered in related litigation are few in number, the opinions teach clearly that Rule 56 and traditional inequitable conduct law apply to information gathered from related litigation). Nilssen v. Osram Sylvania, Inc., 528 F.3d 1352, 1356 (Fed. Cir. 2008). Winbond Elecs. Corp. v. Intl Trade Commn., 262 F.3d 1363 (Fed. Cir. 2001)(failure to disclose inventorship testimony from prior ITC investigation to the PTO after request for certificate of correction not inequitable conduct because no intent). Akron Polymer Container Corp. v. Exxel Container, Inc., 148 F.3d 1380 (Fed. Cir. 1998)(discussing; Monsanto Co. v. Mycogen Plant Science, Inc., 61 F.Supp.2d 133, 19697 (D. Del. 1999)(noting that applicants should discuss co-pending applications that are material to patentability)). Larson v. Aluminart, supra, n.50. 231 F.3d 1373 (Fed. Cir. 2000)(found inequitable conduct based on an intent to deceive standard). 35 U.S.C 102(d).


31

abroad. Still, failure to disclose ones own prior art is not always material. In Unidynamics Corp. v. Automatic Products International, Ltd., the accused infringer claimed unenforceability based on patentees failure to disclose his own prior art device and the related utility application.63 The court rejected this argument, agreeing with the patentee that the device was merely cumulative of an item of prior art asserted during prosecution,64 and that the application did not even describe the point of novelty of the patent at issue.65 h) Defects in Fee Reduction Requests Facts that would have cast doubt on an applicants right to lower fees or time extensions from the PTO must be disclosed.66 Even though such assertions are not material to patentability, willful use of false testimony in requesting such provisions can lead to a finding of inequitable conduct.67 i) Best-Mode Violations as Inequitable Conduct Omission or concealment of the best mode, discussed at section I-2(C), if deemed intentional, can constitute inequitable conduct.68 j) Failure to Provide Translation of Foreign Language References 37 C.F.R. 98 expressly provides: If a written English-language translation of a non-English language document, or portion thereof, is within the possession, custody, or control of, or is readily available to [the applicant], a copy of the translation shall accompany any IDS. If no translation into English is available to an applicant citing a foreign reference in an IDS, Rule 98 states that a concise explanation of the relevance of the reference, as understood by the most knowledgeable person in the applicants employ involved in the prosecution of the patent application, is to be submitted as part of the IDS. There is very little case law that provides information on an applicants duty to translate foreign references. In one case,69 a U.S. patent agent received a

63. 157 F.3d 1311 (Fed. Cir. 1998)(intent not even addressed as materiality failed). 64. Id. at 1324. 65. Id. (based on these findings, district court ruling that there was no inequitable conduct as a matter of law was affirmed). 66. Monolith Portland Midwest Co. v. Kaiser Aluminum & Chem. Corp., 407 F.2d 289, 296 (9th Cir. 1969). 67. Id; See also, General Electro Music Corp. v. Samick Music Corp., 19 F.3d 1405 (Fed. Cir. 1994). (inequitable conduct defense supported by a f

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Patent Related Misconduct Issues in U S Litigation