Federal Circuit affirms inequitable conduct finding, Judge Newman not happy about itMay 18, 2007

In a second opinion today, the Federal Circuit affirmed a district court's finding of inequitable conduct based on the nondisclosure of three pieces of information to the USPTO. The patentee had two similar pending applications at the USPTO, and in fact had cited the same prior art in both applications via information disclosure statements. In addition, a continuation-in-part (CIP) was filed based on the first application, and several claims were allowed in that application. In the other, however, the examiner made additional rejections and discovered another relevant prior art reference.

In the first application, the prosecuting attorney did not disclose the prior art reference or the rejection in the second application. Similarly, the attorney did not disclose the notice of allowance from the CIP. The district court found each of these nondisclosures material, and the fact that the applications were so related, along with the proximity in time (17 days) between when the prosecuting attorney found out about the new prior art reference and arguments made that were arguably inconsistent with the state of the prior art given the teachings of that reference. While there was some evidence that these omissions were made without deceptive intent, the court ultimately found that the evidence as a whole, showed the necessary intent. Accordingly, the court found that substantial evidence supported the district court's determination of inequitable conduct, and affirmed the finding of unenforceability.

Judge Newman dissented. Although only two pages in length, her dissent expresses her belief that this case is a return to "the 'plague' of encouraging unwarranted charges of inequitable conduct" that the court cautioned against in the Kingsdown case.

More detail regarding McKesson Info. Solutions, Inc. v. Bridge Med., Inc. after the jump.

The patent at issue relates to a patient identification system that uses a three-point communication architecture. Generally, the system is made up of a computer system, a base station, and a portable handheld terminal; the court refers to this as the "three node" approach to the system. While the application that led to the '716 patent was pending, there was another, similar application pending at the same time, directed toward a very similar invention and with very similar claims. The prosecuting attorney disclosed the existence of this second application to the examiner in the first application (Examiner Trafton), and the same prior art was disclosed to the USPTO in both applications via information disclosure statements. In response to a first rejection, the prosecuting attorney stated that the cited prior art references did not, either alone or in combination, teach the "three node" system. In response, on December 8, 1987, Examiner Trafton rejected several claims over two different prior art references, Blum and Pejas, but indicated that one claim would be allowable if rewritten in independent form. The patentee accepted this offer, filed a continuation with the appropriate amendment on June 8, 1988. The claims were allowed on February 27, 1989. While this application was pending, a CIP was also filed, and the CIP had nine claims allowed on December 16, 1988.

On February 26, 1987, the examiner in the second application, Examiner Lev, rejected the claims in that application based on the combination of Blum and Pejas. The prosecuting attorney did not disclose this rejection to Examiner Trafton, although, as noted previously, he made a similar rejection in December 1987. In response to an amendment, on October 23, 1987, Examiner Lev had a telephone interview with the prosecuting attorney, where they discussed a previously unknown reference, a prior art patent to Baker. This conversation took place 17 days after the argument in the first application that the prior art did not disclose the "three node" system, but the Baker patent was not disclosed in the first application. Also, although the claims in the two applications were quite similar, the notice of allowance in the first application was not disclosed to Examiner Lev in the second case to be considered for possible double patenting issues.

Based on these three nondisclosures, (1) the Baker patent in the first application, (2) the February 26, 1987 office action from the second application in the first application, and (3) the CIP application's notice of allowance in the first application, the district court found inequitable conduct. Specifically, the court found all three of these nondisclosures material under the "reasonable examiner" standard, and that there was intent to deceive based on circumstantial evidence surrounding the prosecution of the two applications, such as the short time between when the attorney found out about the Baker patent and when prior action had been taken in the first application, the high degree of materiality of the various items not disclosed, and the implausibility of the various explanations given by the prosecuting attorney at trial.

The court affirmed in all respects. First, the court rejected the contention that the Baker reference was cumulative to other prior art of record, finding that it more clearly described the "three node" system that the art of record. With regard to intent to deceive, the court found that it was within the district court's discretion to find the testimony of the prosecuting attorney not credible. The attorney had no independent recollection of the prosecution of the '716 patent, so the court could properly discount this testimony as "the product of newly developed hindsight." If the attorney had considered Baker and found it not to be material, he should have made a reference stating such in the prosecution file, including the reason for discarding it. See MPEP § 2004(18). As a result, based on the circumstantial evidence of intent, such as the relatedness of the applications and claims and the short period of time between the attorney's knowledge of the Baker reference and action in the application, the court found the lower court's conclusions supported by substantial evidence.

The court made similar findings with regard to the other two nondisclosures. For example, the court held that while the attorney disclosed the existence of the related applications, this was not a constructive disclosure of the office actions taken in the similar applications. It was also insufficient to overcome the circumstantial evidence of intent that the same examiner examined both the patent-in-suit and the application whose notice of allowance was not disclosed, because there was no evidence that the examiner actually remembered the allowance in the other application and realized its materiality. Further, the MPEP explicitly stated at the time that an attorney should not assume that an examiner "retains details of every pending file in his mind when he is reviewing a particular application." Therefore, the lower court's findings for these two omissions were likewise supported by substantial evidence.

Judge Newman, in a brief but strongly-worded dissent, fears the court's treatment of inequitable conduct allegations is heading back to the era before Kingsdown, when the en banc Federal Circuit stated that allegations of inequitable conduct were a "plague" in patent infringement litigation. Further, she concluded that the required finding of intent was not present, but rather that the most that was shown here was mistake. In her words:

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

Whether or not the examination was perfect, invalidation based on the charge of withholding material information for purposes of deception requires more than was here shown. To avoid the inequity resulting from litigation-driven distortion of the complex procedures of patent prosecution, precedent firmly requires that the intent element of inequitable conduct must be established by clear and convincing evidence of deceptive intent — not of mistake, if there were such, but of culpable intent.

Time will tell whether Judge Newman's concerns about inequitable conduct allegations are well-founded.

To read the full decision in McKesson Info. Solutions, Inc. v. Bridge Med., Inc., click here.

← Return to Filewrapper

Stay in Touch

Receive the latest news and updates from us and our attorneys.

Sign Up