Friday, June 20, 2008

CAFC: Misrepresentation Does NOT Have to Bear on Patentability For Inequitable Conduct

Scanner Tech. Corp. v. ICOS Vision Systems Corp. N.V. , (2008-1081), June 19, 2008

During prosecution, Scanner became convinced that a new product launched by ICOS was infringing on the claims of a patent application. Accordingly, Scanner filed a Petition To Make Special, pursuant to MPEP 708.02.

The petition contained all the PTO prerequisites, including a statement that a "rigid comparison" of the alleged infringing method with the claims of the application had been made, and that some of the claims are "unquestionably infringed." The petition was accompanied by a statement from the applicant and assignee describing the claimed invention, as well as certain interactions between Scanner and ICOS. The PTO granted the petition, and the application ultimately issued a short time later.

The district court took issue with Scanner's statement in the petition that a "rigid comparison" was made on the ICOS product, which appeared in a trade show. The court found that the ICOS product was not on "open display," but in a "black sealed box" that was not amenable to close inspection. Thus the district court held that the petition statements "were intended to mislead the PTO into believing" that ICOS copied the claimed device.

On appeal, Scanner argued that the district court abused its discretion because the court "misapplied the law relating to materiality by incorrectly concluding that any statement in a petition to make special is per se material if the petition is granted."

Relying on General Electro Music Corp. v. Samick Muic Corp., 19 F.3d 1405, 1411 (Fed. Cir. 1994), the CAFC stated:

It is true that many of our cases, before and after General Electro, examine materiality in the context of whether the alleged inequitable conduct bore directly on patentability of the claims in suit. That fact does not undercut the continuing force of the test for materiality in the setting of a petition to make special, or in other settings where an alleged misrepresentation to the Patent Office resulted in some action other than issuance of a patent . . . [W]e must reject Scanner's view that inequitable conduct cannot be shown absent a misrepresentation that bears on the patentability of the claims in the application. When the setting involves a petition to make special, as is the case here, we reaffirm that a false statement that succeeds in expediting the application is, as a matter of law, material for purposes of assessing the issue of inequitable conduct.
However, the CAFC reversed the district court's finding of inequitable conduct, noting that the district court erroneously failed to give due weight to inferences rebutting inequitable conduct.

Whenever evidence proffered to show either materiality or intent is susceptible of multiple reasonable inferences, a district court clearly errs in overlooking one inference in favor of another equally reasonable inference. All reasonable inferences must be drawn from the evidence, and a judgment then rendered on the evidence as informed by the range of reasonable inferences. Where the rule is breached, no inequitable conduct may be found. The rule is necessary, for without it findings of inequitable conduct, with the punishment of unenforceability of the entire patent, could wrongly stand.
NOTE: From footnote 3 in the opinion:

We note that not all false statements or misrepresentations contained in a petition to make special are necessarily material even if the applicant succeeded in receiving expedited treatment for his or her application. Rather, in evaluating whether a false statement or misrepresentation in a petition to make special is material, a court must determine whether the false statement was likely a but-for cause of the grant of the petition. If not, a threshold level of materiality has not been established.

- This has been an "inequitable-conduct-heavy" week for CAFC opinions:

Nilssen v. Osram Sylvania (07-1198), June 17, 2008 - attorney fees for inequitable conduct affirmed, based on a multitude of alleged misrepresentations and litigation conduct. Newman dissent: "The statutory authority to award attorney fees was intended to 'prevent gross injustice,' not to shift the economic balance against the unsuccessful plaintiff."

Synthon IP v. Pfizer (07-1344), June 17, 2008 (Nonprecedential) - affirming the findings of inequitable conduct and exceptional case, and the award of attorney fees.

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