Inequitable Conduct — Standards of Review

In an unusual disposition in Sensormatic Electronics LLC v. Von Kahle, et al., 2009-1193 (Fed. Cir. Feb. 17, 2010), the Federal Circuit issued an “order” affirming the district court with a brief explanation of the issues on appeal, rather than a perfunctory Rule 36 Judgment containing no explanation.  It will be interesting to see if the court follows up with a Rule 36 Judgment.  Absent a judgment by the panel, I’m curious whether the losing party is procedurally in a position to request a panel rehearing, request rehearing en banc, or petition for certiorari.

The court’s order is available here: [Read].

Inequitable Conduct Issues

At the district court, the defendant asserted inequitable conduct by the inventors for failure to cite during original examination a reference that was later cited by an examiner during a reexamination of the patent.  The inventors stated that they did not believe the reference was material and therefore did not cite the reference to the PTO in the original prosecution of the patent.  The district court judge found the inventors’ testimony credible and therefore made a factual finding that the inventors did not have the requisite intent for inequitable conduct.  In the “order” above, the Federal Circuit “affirmed” the district court.

The Federal Circuit stated its standard of review of a district court’s unenforceability decision in Scanner Technologies v. Icos Vision Systems, 528 F.3d 1365(Fed. Cir. 2008) by stating:

The ultimate question of inequitable conduct is committed to the discretion of the district court and we review the court’s determination that the patentee engaged in inequitable conduct for abuse of discretion. Modine Mfg. Co. v. Allen Group, Inc., 917 F.2d 538, 541 (Fed. Cir. 1990), cert. denied, 500 U.S. 918 (1991). An abuse of discretion occurs when (1) the court’s decision is clearly unreasonable, arbitrary, or fanciful, (2) the court’s decision is based on an erroneous construction of the law, (3) the court’s factual findings are clearly erroneous, or (4) the record contains no evidence upon which the court rationally could have based its decision. Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223, 1229 (Fed. Cir. 2007).


In order to establish inequitable conduct, the party challenging the patent is required to establish by clear and convincing evidence that the patent applicant “(1) either made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the U.S. Patent and Trademark Office.” Symantec Corp. v. Computer Assoc. Int’l, Inc, 522 F.3d 1279, 1296 (Fed. Cir. 2008) (quoting Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1363 (Fed. Cir. 2007). Both intent and materiality are questions of fact, and must be proven by clear and convincing evidence. Young v. Lumenis, Inc., 492 F.3d 1336, 1344 (Fed. Cir. 2007). We review a district court’s findings on the threshold issues of materiality and intent for clear error. Pfizer, Inc. v. Teva Pharms. USA, Inc., 518 F.3d 1353, 1366 (Fed. Cir. 2008). Under the clear error standard, the court’s findings will not be overturned in the absence of a “definite and firm conviction” that a mistake has been made. Id. “Once threshold findings of materiality and intent are established, the district court must weigh them to determine whether the equities warrant a conclusion that inequitable conduct occurred.” Flex-Rest, LLC v. Steelcase, Inc., 455 F.3d 1351, 1363 (Fed. Cir. 2006) (quoting Purdue Pharma, 438 F.3d at 1128).


One of the issues asserted by the appellant/defendant in the oral argument of Sensormatic was that one of the inventors (who was accused of inequitable conduct by the defendant) stated at trial that if he had it to do over again, he would not cite the reference in question to the examiner.  [Listen].  This assertion went unchallenged — during oral argument at least.
The statement of “If I had it to do over again, I’d do it again” may sound familiar to those familiar with the McKesson v. Bridge Medical, 487 F.3d 897 (Fed. Cir. 2007) case.  The patent attorney accused of inequitable conduct in that case stated that if he had it to do over again he would not have cited the information in question.  In McKesson, however, the district court judge found intent and the Federal Circuit affirmed.  In Sensormatic, the district court judge found no intent and the Federal Circuit has now affirmed.  Hence, this demonstrates the significance of the “clear error” standard of review for the intent prong in inequitable conduct cases and the importance of prevailing at the district court level.


Use of Summary and Abstract for Claim Construction

For those of you that are concerned that judges might put too much emphasis on statements in the Abstract and Summary of a patent, you might find this part of the Sensormatic oral argument interesting in that some of the judges appeared willing to read in a limitation of “abruptness” into the claims without first identifying some sort of textual “hook” from the claims. [Listen] and [Listen].  The inventors asserted that they understood the claims to include an abruptness limitation even though that language apparently does not appear in the claims.


You can listen to the entire oral argument in Sensormatic here: [Listen].

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