ED Tex: Attorney Does Not Have to "Do the PTO's Job For Them" To Negate Inequitable Conduct

Tyco Healthcare Group LP v. Applied Medical Resources Corp., No. 9:06-CV-151 (E.D. Tex., June 26, 2009 Order) (Giblin, K.)

Tyco sued Applied Medical for patent infringement. One of the asserted patents was previously subjected to an interference (when the patent was at an application stage), where Tyco argued that the other patent was invalid over a prior art reference ("Yoon"). After the argument was made of record, the BPAI ultimately entered a judgment that there was no interference-in-fact, based on the agreement of the parties. In a footnote, the BPAI directed the Examiner to consider the prior art in connection with the application.

The examiner did not consider the prior art "Yoon" patent, and the applicant did not submit the reference independently. As the district court noted, "with the exception of the interference proceeding, the Yoon patent is not mentioned anywhere in the file history of the[] patent, nor was it disclosed during prosecution of the [related] patents."

Naturally, Applied Medical alleged inequitable conduct, and moved for such a finding on summary judgment.

While the court found numerous disputed issues of material fact, the court had some interesting things to say under these circumstances on the "intent to deceive" prong of the inequitable conduct test:

Applied suggests that [prosecuting counsel] “gamed” the system by using the Yoon patent to his advantage before the BPAI during the interference proceeding, while simultaneously hiding the reference from the Examiner during prosecution of the ‘854 patent application – in effect, that [counsel's] strategy was to hope the PTO’s left hand – the Examiner – did not know what its right hand – the BPAI – was doing.

Applied is correct that because the Examiner and the BPAI are different units within the PTO, identifying the Yoon reference to the BPAI is not the same thing as identifying it to the Examiner. See, e.g., A.B. Dick Co. v. Burroughs Co., 798 F.2d 1392, 1399 n.7 (Fed. Cir. 1986) (noting that the district court pointed out that “the PTO cannot realistically be thought of as the equivalent (say) of a small law office, in which notice to one person may fairly be deemed notice to all. It is not necessarily true that the PTO Examining Division will have access to proofs filed in the course of an interference.”). However, the problem with Applied’s argument – and the distinction from A.B. Dick Co. – is that in this case, the APJ, in an order adopted by the BPAI, specifically directed the Examiner to consider a number of references referred to in the parties’ motion papers, including the Yoon patent.

Applied argued that, at a minimum, the prosecuting counsel should have realized that something was wrong when the Examiner did not cite the Yoon patent as a reference that was considered and presupposes that the counsel believed the reference to be material. The district court found this to be weak:

Even assuming that a reasonable attorney in [counsel's] position would or should have thought something was wrong when the Yoon reference was not cited, Applied cites to no statute, regulation, or case that requires a patent attorney to do the PTO’s job for them . . . [counsel] has a duty of candor and good faith to the PTO, but Applied has not cited any rule that imposes on counsel an obligation to point out to the Examiner the ways in which he or she thinks the Examiner might be wrong . . . Applied is entitled to second-guess the Examiner’s allowance of the ‘854 patent’s claims under an invalidity theory, but the court is unaware of any authority that requires [counsel] to either analyze the examination process for flaws and inform the Examiner of his mistakes, or be charged with inequitable conduct.

There is little, if any, evidence before the court of intent to deceive with respect to the ‘854 patent. However, because the overall determination of inequitable conduct is a sliding scale, where more evidence of materiality means that less evidence of intent to deceive is permissible, the court finds that granting summary judgment in favor of Tyco is inappropriate at this time.

Read/download the opinion here (link)