CAFC Affirms Finding of Inequitable Conduct for Failing to Disclose Information

McKesson Information Solutions, Inc. v. Bridge Medical, Inc. (2006-1518), May 18, 2007

If there was any ambiguity in the "when in doubt, disclose, disclose, disclose!" mantra for patent prosecutors, the CAFC dropped a whopper on Friday, when the court affirmed a finding of inequitable conduct, when the patentee failed to fully disclose information to the USPTO on three related applications.

The issue revolved around McKesson's '716 patent, which was prosecuted alongside a related application (the '149 application) which had a similar disclosure ("so similar, in fact, that [the applicant] initially disclosed the same body of prior art with both applications."). Also, during prosecution of '716 patent, a continuation-in-part was filed (the '195 application).

The '716 patent and the CIP were handled by one examiner (Trafton), while the '149 application was handled by another examiner (Lev). The '149 application and the CIP were both issued prior to the '716 patent.

The CAFC affirmed that three actions by the patentee, individually and cumulatively, rose to the level of inequitable conduct:

Action #1: During prosecution of the '149 application (under examiner Lev), prior art rejections were made that forced the applicant to cancel certain claims. The applicant notified the '716 patent examiner (Trafton) of the '149 application, but the one of the cited references (Baker) was not disclosed. The CAFC agreed with the findings of the district court:

Using Dayco as a guide, the court continued its analysis by explaining that Examiner Lev's "rejections are material if the rejected claims were 'substantially similar' to the claims pending before Examiner Trafton." . . . Based on this standard, the court found that Examiner Lev's February 26, 1987, rejection of claims 15 and 16 in the '149 application would have been important to Examiner Trafton's examination because those claims, which "disclosed all three nodes of the '716's patient identification system, with the identical means of communication among the core structures," "substantially overlapped with the limitations of Claim 1 of the '716 patent." . . . Moreover, the court explained, this rejection would have been of additional importance to Examiner Trafton because it contradicts the argument for patentability [the prosecuting attorney] made to Examiner Trafton on October 6, 1987 . . . This finding was buttressed by the court's observation that [the prosecuting attorney] "acquiesced" to Examiner Lev's rejection by canceling claims 19 through 24.

Action #2: The examiner's rejection of the '149 application (Lev) was not detailed to the examiner handling the '716 patent (Trafton), even though the art was already before the examiner. Relying on Li Second Family v. Toshiba (link), the CAFC stated:

Here, as in Li Second Family, we are presented with a situation in which (1) the examiner of one application (Trafton) was not apprised of the adverse decisions by another examiner (Lev) in a closely-related application; (2) the applicant disclosed the closely-related application only in the context of prior art cited in that application, but failed to mention the adverse decisions; and (3) the applicant made statements to the examiner inconsistent with the other examiner's decisions, i.e., that nothing in the prior art disclosed three-node communication. Given such a tight correlation between the facts at hand and those in Li Second Family, we must reject McKesson's attempt to distinguish that case. Accordingly, we hold that the district court did not clearly err in finding that [the prosecuting attorney] intended to deceive the PTO by not disclosing the two rejections in the '149 application to Examiner Trafton.

Action #3: Failing to disclose the allowance of the CIP to the examiner of the '716 patent, which could have "conceivably" triggered a double-patenting rejection:

Material information is not limited to information that would invalidate the claims under examination . . . "As stated, the test for materiality is whether a reasonable examiner would have considered the information important, not whether the information would conclusively decide the issue of patentability." . . . With that test for materiality in mind, the district court's stated basis for finding materiality—the conceivability of a double patenting rejection—is not incorrect because allowance of the three-node system of the '372 patent claims plainly gives rise to a conceivable double patenting rejection, particularly in light of Examiner Lev's conclusion during
examination of the '149 application that the addition of Baker's unique address limitation to the three-node system of Sunstedt was obvious. . . . Under the correct test for materiality, the allowance of claims to a three-node communication system is material.

Judge Newman's dissent:

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

There is much more in this case, and it is one that will surely spawn numerous comments and articles in the months to come.

Federal Circuit opinion (link) (50 pages)

E.D. Ca. opinion (link) (50 pages)