CAFC: Inconsistent Characterization (and Partial Disclosure) of Disputed Prior Art May Lead to Inequitable Conduct

Golden Hour Data Systems, Inc. v. emsCharts, Inc., No. 2009-1306 (August 9, 2010)

Golden Hour filed a patent application directed to computerized systems and methods for information management services in connection with emergency medical transport.  When the application was filed, the specification acknowledged that certain technology ("the AeroMed system") was the closest art.  Specifically, the Background stated that

Although others have attempted to remedy this conflict, no fully integrated medical systems have been developed. For example, the [AeroMed system] provides computer software for dispatching emergency crews to accident scenes and managing flight information. However, it does not provide comprehensive integration of the flight information with a clinical diagnosis, billing system and administration system.

Shortly after the application was filed, Golden Hour filed an IDS containing a statement that

Applicants are aware of AeroMed Software, computer software for Air Medical Dispatch, Flight Program Management, Medical Charting, Continuing Education Tracking, Transfer Center, Physician’s Referral Lines, and Custom Applications. AeroMed Software is a product of Innovative Engineering of Lebanon, New Hampshire.

The language for this comment was apparently taken from the cover of an undated brochure describing the AeroMed system.  Importantly, the brochure contained a disclosure indicating that the system was capable of providing "comprehensive integration of the flight information with a clinical diagnosis, billing system and administration system."  However, this portion of the brochure was never submitted to the USPTO.

During litigation, the lower court found the non-disclosure to be inequitable conduct on motion for JMOL, and noted that the information inside of the brochure was inconsistent with the disclosure in the IDS, and inconsistent with how the inventor and prosecution counsel had described the AeroMed system in the original application. Therefore because the prosecution counsel "selected that part of the brochure to disclose that did not threaten patentability” and “excluded . . . the entire teaching that would have been a serious obstacle to patentability,” the district court found that “[t]here can be no question” that the withheld information is “highly material.”

Furthermore, the lower court found that “[s]uch selectivity is strong evidence of intent to mislead the patent office about the relevant prior art system as described by its competitor.”  The court therefore concluded that “the single most reasonable inference to be drawn is that Golden Hour intended to deceive the patent office.”

On appeal, Golden Hour argued that the brochure was undated.  As such, the MPEP would have precluded an examiner from considering the brochure.  The CAFC rejected this argument:

The MPEP itself contradicts this reading. The sections on which Golden Hour relies do not limit an IDS to the submission of prior art references, and the MPEP states that “[t]here is no requirement that the information [identified in an IDS] must be prior art references in order to be considered by the examiner.” MPEP § 609 (2008). Further, our prior cases make clear that information may be material even if it does not qualify as prior art.

[S]econd, the brochure and the information contained therein were material because they contradicted other representations to the PTO, even if the brochure was not itself prior art. In the specification, applicants described the AeroMed system in existence as of the time of the application . . . By not correcting the statement in the specification, applicants continued to maintain its truth in direct contradiction to what is disclosed in the AeroMed brochure. Given the importance of integrated billing to the patentability of the invention, information inconsistent with or contrary to the application’s representation of the capabilities of AeroMed’s billing system in the specification would have been important to a reasonable examiner . . . We therefore affirm the district court’s finding that the information in the brochure not produced to the PTO was highly material.

[SIDE NOTE]: In an interesting twist, the brochure was submitted as prior art during litigation, and was found not to be invalidating prior art.

However, on the issue of intent, the CAFC stated that the "key question" was whether the inventor and/or prosecuting attorney "in fact read the brochure."

If one or both read the brochure and deliberately did not disclose the damaging information on the inside, their actions would give rise to an inference of intent to deceive. However, if they did not read the brochure (and did not do so to avoid learning of damaging information), those actions regarding the failure to dis-close the information on the inside of the brochure would at most, amount to gross negligence. Gross negligence is not inequitable conduct.

[T]he district court did not actually find that either [the inventor and/or prosecution counsel] was aware of the inside contents of the brochure. As findings of intent so often turn on a district court’s credibility determinations . . . it is essential that the court provide detailed factual findings with respect to crucial facts - such as whether [either] read the entire brochure; whether, knowing the information to be mate-rial, they deliberately withheld it; or whether they deliberately refused to read the entire brochure in order to avoid learning damaging information.

[I]t might seem unlikely that a patent practitioner would make representations as to the brochure in an IDS without reading the entire brochure and would not be interested in reading the entire brochure to deter-mine whether there was anything in it that might disclose its prior art status.

But this also is not a situation in which a finding of deceptive intent is compelled. It is not our task to make factual findings. Therefore we must remand to the district court for it to make detailed factual findings in the first instance.

AFFIRMED-IN-PART, VACATED-IN-PART AND REMANDED

Newman's Dissent:

I do not share the conclusion that the undated AeroMed brochure, obtained at a trade show . . . a few weeks after this patent application was filed, and found not to be invalidating prior art, was so clearly and convincingly “material to patentability” that failure to provide a copy of the brochure while quoting its front page, invalidates the patent that was found valid over the entire content of the brochure. The record does not show that the brochure was published before the Golden Hour patent application was filed. The defendants provided no documentary evidence of any publication date, and the district court did not find the brochure to be prior art; their only evidence was the “uh-huh’s” of the brochure’s author.

[A]t the trial, the full brochure was in evidence, and stressed by the defendants, and the jury found that it was not invalidating. In view of the majority’s ruling that deceptive intent was not established in the district court, and the jury’s verdict of validity despite the brochure, the charge of inequitable conduct should be laid to rest. At most, this charge was deemed viable only because of inconsistencies in the law, inconsistencies that this court has presented for resolution in the pending en banc case of Therasense, Inc. v. Becton, Dickinson & Co. . . . It is sufficiently likely that the reasoning applied in this case could be affected, that this appeal should be held pending completion of the en banc proceedings.

 Prior 271 Blog coverage of the Golden Hour case may be found here (link)