Filewrapper® | A patent, trademark, and copyright law blog - Inequitable conduct

Federal Circuit to consider overhaul of inequitable conduct standards en banc

Mon, 26 Apr 2010 13:09:00-0500

In an order today, the Federal Circuit granted rehearing en banc in Therasense, Inc. v. Becton, Dickinson & Co. The order indicates the court will be reconsidering its precedent on virtually the entire gamut of issues relating to inequitable conduct. Specifically, the questions presented are:

Should the materiality-intent-balancing framework for inequitable conduct be modified or replaced?
If so, how? In particular, should the standard be tied directly to fraud or unclean hands? See Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 (1945); Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238 (1944), overruled on other grounds by Standard Oil Co. v. United States, 429 U.S. 17 (1976); Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240 (1933). If so, what is the appropriate standard for fraud or unclean hands?
What is the proper standard for materiality? What role should the United States Patent and Trademark Office's rules play in defining materiality? Should a finding of materiality require that but for the alleged misconduct, one or more claims would not have issued?
Under what circumstances is it proper to infer intent from materiality? See Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988) (en banc).
Should the balancing inquiry (balancing materiality and intent) be abandoned?
Whether the standards for materiality and intent in other federal agency contexts or at common law shed light on the appropriate standards to be applied in the patent context.

The court explicitly allows for the filing of amicus briefs without leave of court, and also specifically invites the USPTO to file such a brief.

For the order granting rehearing en banc, click here.

For the original panel opinion (affirming the district court's finding of inequitable conduct), click here.

More detail of the original panel opinion after the jump.

[More]

Disclosure of compounds without link to claimed method fails to meet written description requirement

Tue, 14 Apr 2009 10:24:00-0500

In a recent decision, the Federal Circuit reversed a district court's denial of judgment as a matter of law after a jury determined the asserted claims of an invention were not invalid under the written description requirement. The court, however, affirmed the district court's determination of no inequitable conduct.

The Federal Circuit held the jury lacked substantial evidence for its verdict. Specifically, the court noted that vague functional descriptions are essentially invitations for skilled artisans to conduct further research and therefore are not sufficient description to meet the written description requirement of § 112. The specification disclosed three classes of compounds that could be used in the claimed methods. However, it only disclosed specific examples of one of the classes of compounds, and did not disclose any examples of the described compounds actually linked to use in the claimed method. The patentee was further hampered in that the jury held the patent was entitled to a priority date of 1989, but most of the patentee's testimony and other evidence regarding the written description issue centered on the application's filing date in 1991. The court held none of this evidence could support the jury's verdict, as it was directed to the wrong timeframe. Therefore, the court held the written description requirement not met, and the asserted claims invalid.

The court affirmed the district court's holding of no inequitable conduct. Neither party contested the relevant acts (failing to correct a figure and to disclose certain non-prior art references that were relevant to patentability) were properly held material. The Federal Circuit agreed with the district court that there was insufficient evidence of intent to deceive to support a finding of inequitable conduct.

More on Ariad Pharms., Inc. v. Eli Lilly & Co. after the jump.

[More]

Failure to raise KSR post-trial but pre-judgment results in waiver

Thu, 05 Mar 2009 17:26:00-0500

In a recent decision, the Federal Circuit affirmed a jury's verdict of infringement, no obviousness, and no inequitable conduct. On appeal, the defendant for the first time argued the jury's verdict should be reversed in light of KSR.

The Federal Circuit held the argument had been waived. The jury reached its verdict on December 8, 2006. Post-trial motions were fully briefed on February 20, 2007, and KSR was decided on April 30, 2007. However, the district court did not rule on the post-trial motions until August 23, 2007, and final judgment was not entered until August 24. Given the four month gap between the decision in KSR and the rulings on the post-trial motions, the Federal Circuit held the defendant was required to raise the issue before the district court. As a result, the court considered the argument waived.

The Federal Circuit also rejected the defendant's arguments regarding noninfringement and inequitable conduct.

More detail of Rentrop v. Spectranetics Corp. after the jump.

[More]

High materiality without explanation for nondisclosure leads to inference of intent to deceive

Fri, 17 Oct 2008 10:59:00-0500

In a recent decision, the Federal Circuit affirmed a district court's finding of inequitable conduct for one patent but reversed on a second, affirmed a finding of no invalidity of the second patent, but vacated the finding of infringement after modifying the district court's claim construction of a claim term. The court also reversed the finding of indefiniteness of a third patent.

The court continued its recent discussions of when (if ever) an inference of intent to deceive is permissible to support an inequitable conduct finding where there is no independent evidence of such intent. Here, the majority affirmed the district court's inference of intent based on high materiality, proof of knowledge of the withheld art, and a lack of credible explanation for the nondisclosure. Judge Lourie dissented, arguing the majority conflated intent with materiality. Given the apparent disagreement on this issue, a case presenting the issue of when (or whether) such an inference is permissible seems to be a candidate for en banc review.

More detail of Praxair, Inc. v. ATMI, Inc. after the jump.

[More]

No evidence of intent to deceive, no inequitable conduct

Wed, 10 Sep 2008 09:04:00-0500

In a recent decision, the Federal Circuit reversed a district court's grant of summary judgment of inequitable conduct against the patentee. At issue was whether the patentee's failure to disclose a letter describing an aspect of the prior art constituted inequitable conduct. The court reversed finding that the alleged infringer had failed to provide sufficient facts to support an inference of intent to deceive.

The defendant's theory involved a plan by the patentee to switch law firms once it appeared the first firm intended to disclose the letter, and preventing the second firm from discovering the existence of the letter. The opinion provided a clear look of how the Federal Circuit will analyze inequitable conduct. The court teed up its analysis by stating:

To successfully prove inequitable conduct, the accused infringer must present "evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the [PTO]." Further, at least a threshold level of each element -- i.e., both materiality and intent to deceive -- must be proven by clear and convincing evidence. And even if this elevated evidentiary burden is met as to both elements, the district court must still balance the equities to determine whether the applicant's conduct before the PTO was egregious enough to warrant holding the entire patent unenforceable. Thus, even if a threshold level of both materiality and intent to deceive are proven by clear and convincing evidence, the court may still decline to render the patent unenforceable.

Most important to the court was that an accused infringer proves threshold levels of intent to deceive the PTO and materiality with clear and convincing evidence. The clear and convincing standard requires that the evidence be strong enough to show that an inference of intent to deceive is the "single most reasonable inference able to be drawn from the evidence." In this case, there was simply "no evidence, direct or indirect," to support the inference the defendant sought to draw. As a result, the finding of inequitable conduct was reversed.

More on Star Scientific, Inc. v. R.J. Reynolds Tobacco Co. after the jump.

[More]

Finding of inequitable conduct without considering materiality vacated

Wed, 06 Aug 2008 09:51:00-0500

In a decision on Friday, the Federal Circuit reversed a district court's summary judgment of invalidity and noninfringement and subsequent finding of inequitable conduct. The court also vacated the district court's exceptional case finding and the associated award of attorney's fees.

The plaintiff was initially awarded partial summary judgment of infringement of six patents. The district judge then assigned a special master to examine the remaining issues in the case, including invalidity and inequitable conduct. The case was then transferred to a new judge who, without written opinion, overturned the plaintiff's ruling of summary judgment and awarded partial summary judgment of noninfringment and invalidity. The judge then held a brief bench trial on the issue of inequitable conduct, where the plaintiff was only allowed to present inventor testimony regarding candor and good faith; all evidence of materiality was precluded. After this trail, the court, from the bench, made a ruling of inequitable conduct against the plaintiff, ruled the case was exceptional under § 285, and awarded attorney's fees.

The Federal Circuit reversed, vacated, or remanded every ruling made by the trial court. Specifically, the court held that in order to support a finding of inequitable conduct, there must be threshold findings of both materiality and intent to deceive. Here, the district court only examined intent, rendering the record insufficient to support a holding of inequitable conduct. The court also held the district court's findings regarding intent to deceive were clearly erroneous. On top of that, the court held the summary judgment rulings "lack[ed] findings for judicial review," and that "the record show[ed] many potential issues of fact that would prevent entry of summary judgment." Given the district judge's handling of the case, the court further ordered the case reassigned to a new trial judge on remand.

More on Research Corp. Tech., Inc. v. Microsoft Corp. after the jump.

[More]

Federal Circuit provides more post-KSR guidance for obviousness for chemical compounds

Thu, 24 Jul 2008 11:46:00-0500

In a decision Monday, the Federal Circuit affirmed a district court's decision finding asserted claims of a patent valid and enforceable. Specifically, the court affirmed a finding that the asserted claims were nonobvious as a matter of law, and that the evidence did not support a finding of inequitable conduct.

The Federal Circuit, applying KSR Int'l Co. v. Teleflex Inc. in the context of similarly-structured chemical compounds stated: "[P]ost-KSR, a prima facie case of obviousness for a chemical compound still, in general, begins with the reasoned identification of a lead compound." In this case, because there was no adequate explanation for why the defendant's asserted "lead compound" would actually be used by one of ordinary skill in the art, the patent was not shown to be obvious.

The defendants also brought several accusations of inequitable conduct, the court found none of them to be persuasive. The court held that in order to have a finding of inequitable conduct there must be a clear intent to deceive the Examiner and this is a very high standard. In this case, some questionable conduct had occurred, but ultimately the court said it was clear that no intent to deceive had existed. Therefore, no inequitable conduct had occurred.

More on Eisai Co. v. Dr. Reddy's Labs., Ltd. after the jump.

[More]

Failure to consider evidence of good faith leads to reversal of inequitable conduct finding

Wed, 25 Jun 2008 13:37:00-0500

In a decision last week, the Federal Circuit affirmed a district court's finding of no infringement and invalidity for obviousness, and reversed the district court's finding of unenforceability due to inequitable conduct.

The Federal Circuit, citing KSR, noted that an obviousness analysis can take account the inferences and creative steps that a person of ordinary skill in the art would employ, and held that there was a only small logical gap between the prior art and the claim at issue that could be closed by a person of ordinary skill in the art pursuing known options within his or her technical grasp and therefore the claim was obvious.

Regarding inequitable conduct, the court reaffirmed that intentionally misleading or false statements made in a petition to make special can lead to a finding of unenforceability, even if the statements do not relate to the patentability of the invention, as long as the false statement succeeds in obtaining expedited review of the application. Here, however, the evidence was just as susceptible to the inference that intentional misrepresentations occurred as to the inference that the statements were either innocent, not misleading, or both. As stated by the court:

Whenever evidence proffered to show either materiality or intent is susceptible of multiple reasonable inferences, a district court clearly errs in overlooking one inference in favor of another equally reasonable inference. All reasonable inferences must be drawn from the evidence, and a judgment then rendered on the evidence as informed by the range of reasonable inferences.

Here, the district court clearly erred because it failed to give due weight to evidence of good faith that would call for inferences contrary to a finding of deceit. As a result, the finding of inequitable conduct was reversed. The district court also affirmed the finding of noninfringement.

More detail of Scanner Tech. Corp. v. ICOS Vision Sys. Corp. after the jump.

[More]

Finding of inequitable conduct affirmed, Judge Rader expresses concern over resurgence of defense

Wed, 14 May 2008 16:00:00-0500

In a decision today, the Federal Circuit affirmed a district court's finding of inequitable conduct resulting from Rule 132 declarations that were used to overcome obviousness and anticipation rejections. The declarations used a difference in half-lives to distinguish the claimed composition over the prior art, however, it failed to indicate that the comparative half-lives were calculated using different initial dosages. The court determined that, despite having the underlying raw data before the examiner, the failure to explicitly indicate the difference was sufficient to support the finding of inequitable conduct.

Judge Rader filed a dissent focusing on a resurgence of the inequitable conduct defense and suggested the court revisit and reinvigorate the holding in Kingsdown which stemmed the earlier "plague" of inequitable conduct claims.

More detail of Aventis Pharma S.A. v. Amphastar Pharms., Inc. after the jump.

[More]

License under method patent not limited to use with licensor's products absent express limitation

Fri, 18 Apr 2008 08:49:00-0500

In a decision Wednesday, the Federal Circuit affirmed-in-part, vacated-in-part, and reversed-in-part a district court's decision regarding two patents. The district court held the broadest claims of both patents invalid and not infringed, and dismissed claims of inequitable conduct relating to the patents.

The Federal Circuit affirmed with respect to one patent, but vacated and reversed with respect to the other. Regarding the first patent, the court held there was no genuine issue of material fact that a product embodying all the claim limitations was in public use before the critical date. There was also no genuine issue of material fact that the defendants were licensed under the patent, as the license grant was not limited to use with the plaintiff's products.

With regard to the second patent, however, the court held the defendant's motion for summary judgment of invalidity was not properly supported, and vacated the finding of invalidity. Further, there were insufficient findings in the district court's summary judgment order to support a finding of noninfringement of the second patent. The court also reinstated the defendant's claims of inequitable conduct, as not all claims of the patents had been found invalid, making an additional finding of unenforceability not moot.

More detail of Zenith Electronics Corp. v. PDI Commc'n Sys., Inc. after the jump.

[More]

Denial of injunction against sending letters asserting infringement affirmed

Thu, 10 Apr 2008 09:59:00-0500

In a decision Tuesday, the Federal Circuit affirmed the denial of a preliminary injunction seeking to prevent a patentee from representing to the defendant's customers that the defendant's product potentially infringed the plaintiff's patent. The patent at issue had a lengthy and complicated prosecution history that included an interference proceeding. In that proceeding, the BPAI ruled another party properly had priority in the invention. The patentee filed an action pursuant to § 146, and the parties eventually settled, with the party that prevailed at the BPAI conceding priority and receiving a license under the patent. In another proceeding in which the patentee was not a party, a district court held that the patentee had abandoned, suppressed, or concealed his invention.

The defendant argued that because of the issues relating to priority and abandonment, suppression, and concealment (as well as inequitable conduct issues), the plaintiff's assertions of infringement were in bad faith, and sought an injunction to prevent the plaintiff from representing to the defendant's customers that its products potentially infringed. The district court rejected this, finding the four-factor test did not warrant an injunction.

The Federal Circuit affirmed, finding the action not objectively unreasonable, as the case was not so clear-cut to make the district court's decision an abuse of discretion. However, while the court noted the defendant's chances on appeal were "slim," the appeal was not "clearly hopeless," and declined to award the plaintiff its fees for the appeal.

More detail of Judkins v. HT Window Fashion Corp. after the jump.

[More]

Federal Circuit: And can mean or, if it makes the claim make sense

Tue, 08 Apr 2008 17:27:00-0500

In a decision last week, the Federal Circuit affirmed a district court's permanent injunction against a defendant to prevent infringement of a patent. The district court held the patent not invalid and infringed, based in part on a claim construction that construed the word "and" to mean "or." Specifically, based on the specification and other claims, the court determined such a construction was consistent with the intrinsic evidence. The court also rejected each of the defendant's affirmative defenses.

The Federal Circuit affirmed. Turning first to claim construction, the court held "and" can be interpreted to mean "or" in claim language when the specification warrants that construction. In this case, interpreting "and" as requiring both elements would have rendered some dependent claims meaningless, as well as excluded the preferred embodiment from the claims. The court also affirmed the rejection of the affirmative defenses of inequitable conduct, obviousness, enablement. Notably, in discussing the obviousness issue, the court stated: "a flexible TSM test remains the primary guarantor against a non-statutory hindsight analysis such as occurred in this case." It will be interesting to see whether the non-TSM grounds for an obviousness rejection outlined in the USPTO's examination guidelines will survive scrutiny by the Federal Circuit.

More detail of Ortho-McNeil Pharm., Inc. v. Mylan Labs., Inc. after the jump.

[More]

Section 121 safe harbor applies only to divisional, not continuation-in-part; later patent invalid

Wed, 12 Mar 2008 21:50:00-0500

In a decision last week, the Federal Circuit construed the scope of § 121's allowances for subsequent patent applications directed toward nonelected inventions in response to a restriction requirement. There were three patents at issue, one directed to pharmaceutical compounds, one to compositions containing those compounds, and a third covering methods of suing the compounds. The method of use patent was derived from a continuation-in-part application filed after a restriction requirement in the original application. The district court held that notwithstanding how the application was styled, it was entitled to the original application's priority date.

The Federal Circuit disagreed, holding that § 121, by its terms, is limited to divisional applications. As a result, the method of use patent was not entitled to the earlier filing date, and was invalid for obviousness-type double patenting based on the composition patent. The court affirmed the district court's findings that the best mode requirement was not violated and that no inequitable conduct had occurred.

More detail of Pfizer, Inc. v. Teva Pharms. USA, Inc. after the jump.

[More]

Disclosure of prior art abstract only when more relevant detail known results in inequitable conduct

Mon, 28 Jan 2008 08:34:00-0500

In a decision Friday, the Federal Circuit affirmed a district court's finding of inequitable conduct based on nondisclosure of details of a poster presentation presented at a scientific conference. While the patentee disclosed the abstract during prosecution of the patents-in-suit, notes taken by one of the patentee's employees with much more detail of what was actually presented at the conference were not. The court affirmed the conclusion that these notes were highly material, because they directly contradicted statements made by the patentee during prosecution in support of patentability.

The court also affirmed the finding of intent to deceive. The notes had been widely circulated among the patentee's scientists working in the field of the invention, and the prosecuting attorney was aware of them. The attorney stated that while he was aware of the notes, he did not know or understand the contents of the notes, even though he discussed them with the employee who took the notes. The district court found this statement not credible, and the Federal Circuit found no clear error. As a result, the finding of inequitable conduct, and therefore unenforceability, was affirmed.

There were three related patents also at issue, and the court likewise affirmed the holding of unenforceability as to those patents. Although the patentee dismissed its infringement claims under those patents with prejudice and offered a covenant not to sue after the first appeal in this case, the court held that because the alleged infringer maintained its claim for attorney fees under § 285, the issue of inequitable conduct was still within the district court's subject matter jurisdiction. As a finding of inequitable conduct necessarily results in unenforceability of the patents, the court affirmed the unenforceability of the three related patents.

More detail of Monsanto Co. v. Bayer Bioscience N.V. after the jump.

[More]

When market entry fee part of damages for patent infringement, permanent injunction inappropriate

Mon, 21 Jan 2008 09:27:00-0500

In a recent decision, the Federal Circuit affirmed a finding of infringement of a patent relating to the detection and classification of Hepatitis C Virus, but remanded the case for a determination of anticipation.

In arguably the most interesting aspect of the decision, the court vacated the permanent injunction entered against the defendant. The plaintiff asked for and was awarded damages to compensate for the amount the defendant would have had to pay the plaintiff for a "market entry fee." As a result, the court reasoned the plaintiff could not assert that it would be irreparably harmed by future sales by the defendant, having already been compensated for the harm caused by the defendant's entry to the market. The court therefore instructed the district court on remand to determine the amount of royalty due on the defendant's compulsory license under the patent going forward.

The court briefly mentioned the issue of willful infringement after In re Seagate Technology, LLC, but only noted that there was no evidence of objective recklessness by the defendant and therefore the finding of no willful infringement was appropriate. The court also gave a reminder to parties and lawyers of the potential consequences when being too cavalier toward obligations under the Federal Rules of Civil Procedure. As explained in the court's footnote 4:

This case aptly demonstrates the pitfalls of playing fast and loose with rules of discovery. Conclusory expert reports, eleventh hour disclosures, and attempts to proffer expert testimony without compliance with Rule 26 violate both the rules and principles of discovery, and the obligations lawyers have to the court. Exclusion and forfeiture are appropriate consequences to avoid repeated occurrences of such manipulation of the litigation process.

More detail of Innogenetics, N.V. v. Abbott Labs. after the jump.

[More]