Chicago IP Attorney & Lawyer : R. David Donoghue : Chicago IP Litigation Blog

Yesterday, the Federal Circuit handed down its anticipated en banc decision in Therasense, Inc. v. Becton, Dickinson & Co., increasing the standards for inequitable conduct.  The 6-5 majority held that: 

1. an omitted reference is material only if the claim or patent would not have issued, but for omission of the reference;
    
2. specific intent to deceive must be shown by clear and convincing evidence;
    
3. courts can no longer employ a "sliding scale" of intent and materiality, both must be showng by clear and convincing evidence; and
    
4. courts should apply equity to ensure that the remedy is not based upon conduct "immaterial to the issuance of the patent." 

Patent Docs has an excellent explanation of the opinion and the case background.  And there is plenty of commentary about the opinion (see links below).  My initial reaction was that the heightened standards will not actually reduce the number of inequitable conduct claims that are filed, although it may reduce the number of inequitable conduct findings. 

So, while the overall outcomes may change, the general cost and complexity of patent litigation will likely remain the same.  But when I said as much on Twitter (@rdd), I got an interesting reaction from what appears to be an anonymous patent lawyer.  This anonymous person suggested that the heightened standard would actually embolden inventors and patent prosecutors to omit references and hide information from the Patent Office because they are now less likely to be charged with inequitable conduct.  My inclination is to dismiss this theory based upon my operating presumption that most patent prosecutors, and most inventors, are, or at least intend to, zealously advocate for their clients, or themselves, within the Patent Office's rules and the relevant ethics standards.  Of course, I have seen exceptions, and they can be severe.  But my experience is that those are the exceptions, not the rule.  I am curious to hear what others think about this.  Am I wrong?

Here is a round up of some of the blog posts about the decision:

• Peter Zura's 271 Patent Blog "rejoices" that the heightened standards give prosecutors added protection;
   
• Life Sciences Law;
   
• Orange Book Blog;
   
• Patently-O ;
   
• PharmaPatents; and
   
• PLI Blog.

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Patent Compliance Group, Inc. v. Brunswick Corp., No. 10 C 4645, Slip Op. (N.D. Ill. Jan. 14, 2010) (Der-Yeghiayan, J.).

Judge Der-Yeghiyan denied defendant Brunswick's Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff Patent Compliance Group's ("PCG") false patent marking claims regarding Brunswick's exercise equipment. First, the Court held that Rule 9(b) heightened pleadings applied to the intent to deceive requirement of false patent marking, and anologized to the Federal Circuit's inequitable conduct pleading requirements. While PCG's first complaint alleging that Brunswick was a sophisticated company, PCG's amended complaint attaching Patent Office documents identifying the expiration dates of the allegedly expired patents and identifying Brunswick's in-house patent counsel was sufficient.
 

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Avery Dennison Corp. v. Continental Datalabel, Inc., No. 10 C 2744, Slip Op. (N.D. Ill. Nov. 30, 2010) (Kennelly, J.).

Judge Kennelly granted plaintiff Avery Dennision's ("ADC") Fed. R. Civ. P. 12(b)(6) motion to dismiss defendant Continental Datalabel's ("CDI") inequitable conduct, Walker Process fraud and sham litigation counterclaims in this patent dispute regarding labels with a tear off liner to expose a portion of a label column for easy removal.

Inequitable Conduct

CDI alleged two bases of inequitable conduct. First, ADC allegedly intentionally failed to tell the examiner that certain limitations outlined in a series of bullet points were from a particular prior art reference. That claim filed because ADC had previously disclosed the prior art reference at issue to the examiner - once a reference is before an examiner, it cannot be found to have been withheld from the examiner. Second, ADC allegedly intentionally failed to disclose to the examiner that curling up of labels is an inherent characteristic of adhesive labels. But ADC had disclosed the inherent curling up by disclosing various prior art references regarding adhesive labels that taught the inherent curling up, combined with the examiner's presumed experience in the art.

Walker Process Fraud Claim

Because CDI's Walker Process claim was premised upon the alleged inequitable conduct, CDI's Walker Process claim failed. The Court further noted that because inequitable conduct is a broader concept than Walker Process fraud, a party that fails to make its case for inequitable conduct, cannot make a Walker Process fraud claim.

Sham Litigation

CDI's sham litigation claim was based upon allegations that ADC knew the patent was invalid based upon the Brady prior art reference, which was before the examiner, and because had ADC tested CDI's accused labels, ADC would have realized its suit was baseless. Because the Brady reference was before the examiner, however, the Court could not find that the claim was "objectively baseless" as required for sham litigation. ADC could have reasonably believed that after the examiner considered Brady and granted ADC's patent, ADC's patent was in fact valid over Brady.

And ADC's alleged failure to test the accused CDI product was not sufficient for a sham litigation claim. Sham litigation requires more than an unsuccessful suit. While CDI may eventually prove that it did not infringe, ADC's failure to perform one test identified by CDI does "not permit the court to infer more than the mere possibility" that ADC's suit was in bad faith.

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Neutral Tandem, Inc. v. Peerless Network, LLC, No. 08 C 3402, Slip Op. (N.D. Ill. Dec. 2, 2010) (Darrah, J.).

Judge Darrah granted plaintiff Neutral Tandem summary judgment as to defendants' (collectively "Peerless Network") inequitable conduct claim. Peerless offered no clear and convincing evidence that the inventor knew of the allegedly withheld prior art, referred to as the "Phase II Order." The fact that the inventor was involved in the proceeding's from which the Phase II Order issued was not sufficient. Those proceedings lasted eleven years and resulted in thirteen orders. And the inventor testified that he did not remember the Phase II Order. Furthermore, similarities between a paragraph of the Order and a statement made during prosecution was not sufficient. Finally a petition filed with the FCC by the inventor referencing the Order was not sufficient because he testified it was written by his outside counsel and he had not reviewed the petition.

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Bone Care Int'l, LLC v. Pentech Pharms., Inc., No. 08 C 1083, Slip Op. (N.D. Ill. Apr. 23, 2010) (Dow, Jr.).

Judge Dow granted in part plaintiffs' motion to dismiss plaintiff's inequitable conduct affirmative defenses and corresponding counterclaim in this patent case related to a treatment for hyperthyroidism. The Court dismissed defendants' defenses and claims based upon infectious unenforceability. Defendants showed a relationship between the patents-in-suit and the earlier patents. But defendants did not meet the Fed.R.Civ.P. 9(b) pleading standards because they did not plead an "immediate and necessary" relationship between the patents-in-suit and the earlier patents in the family.

The Court denied the motion to dismiss as to prior art references that had been disclosed in earlier, related patent prosecutions, but not the prosecutions of the patents-in-suit. Defendants' allegations were sufficient to allow the Court to infer that the prior art references were intentionally withheld to avoid rejections similar to those from the earlier prosecutions based upon that prior art. It did not matter that defendants did not allege that the prior art references were not cumulative. Rule 9(b) pleading is designed to put the opposing part on notice, not to require the recitation of "certain magic words." The Court dismissed defendants' allegations regarding allegedly false statements to the PTO because other writings requested the applicant did not believe the statements to be false. 

Defendants' allegations regarding certain of plaintiffs' undisclosed articles were sufficiently plead. Defendants identified specific articles written by patentee, and plead that they were relevant and that patentee failed to disclose them. 

Finally, defendants sufficiently pled that plaintiff's submitted article made misleading statements about the state of the art. Among other reasons, the Court noted that the truth of the contested statements could not be decided upon a motion to dismiss. 

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SP Techs., LLC v. Garmin Int'l., Inc., No. 08 C 3248, Slip Op. (N.D. Ill. Sep. 30, 2009) (Pallmeyer, J.)

Judge Pallmeyer denied defendants' motion for summary judgment of inequitable conduct in this patent infringement case. Plaintiff SP Technologies ("SPT") asserted a patent for a touch screen keyboard that cannot be moved, resized or closed by a user. Defendants argued the patent should be held unenforceable based upon the inventor's alleged failure to disclose to the Patent Office twenty lines of code for disabling a close button allegedly copied from a website and used in the patent, as well as certain alleged prior art Palm Pilot devices.

Intent to Deceive

The Court held there were questions of fact as to the investor's alleged intent to deceive the Patent Office as to both alleged pieces of prior art. With respect to the code, there was evidence that the inventor believed there was no need to submit any evidence about a portion of the code because only the entirety of the code was relevant to patenting. Regarding the Palm devices, the inventor believed he had disclosed the Palm Pilots because they were mentioned in articles submitted to the Patent Office. 

Materiality

Regarding the allegedly copied code, the Court noted that few inventors could be considered the sole inventor of every aspect of their invention. Almost all inventions include some known components. And defendants did not prove that the single component of the invention represented by the allegedly copied code was central to patentability. The Court did, however, note that it appeared the code was likely copied as it was identical to that on the website and in other manuals, down to a misspelling. The Court accepted as evidence a printout of a copy of the website at issue from the relevant 1999 date. The copy of this website was maintained by the Internet Archive, or the Way Back Machine. The printout was authenticated by an Internet Archive employee that explained the Internet Archive’s process of maintaining historic copies of websites.

Similarly, defendants did not present sufficient evidence of the materiality of the Palm devices. Defendants offered only pictures without proof, such as a manual, that a user could not move, resize or close the keyboard.

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Another sign that patent reform is heating up again:  the ABA's IP Section has sent the Senate Judiciary Committee a position paper regarding inequitable conduct reform (click here to get to the Section's advocacy page which has a link to the letter).  The ABA argues that inequitable conduct materiality should be based upon the law and standards at the time of the alleged conduct, not based upon the present day standards.  The ABA also argues that inequitable conduct decisions should continue to be made by the federal courts, not the PTO.  And finally, the ABA argues that the standard for inequitable conduct should be:

(1) that a person having a duty of candor and good faith to the PTO in connection with the patent or an application therefor knowingly and willfully misrepresented a material fact or material information to the PTO or omitted a known material fact or known material information from the PTO;

(2) that, in the absence of such misrepresentation or omission, the PTO, acting reasonably, would not have granted or maintained in force at least one invalid patent claim; and

(3) that the misrepresentation or omission occurred with a specific intent to deceive the PTO, and that such intent cannot be established by the mere materiality of the misrepresentation or omission.

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Se-Kure Controls, Inc. v. Diam USA, Inc., No. 06 C 4857, Slip Op. (N.D. Ill. Jan. 9, 2009) (Cox, Mag. J.).*

Judge Cox denied plaintiff’s motion to exclude defendants’ patent law expert witness, but placed limits on the expert’s testimony following the reasoning of a previous opinion in a related case about the same expert -- click here to read about that opinion in the Blog's archives. The Court held that a patent expert’s testimony could aid the Court’s understanding of Patent Office procedures and of what would have been material to a reasonable patent examiner. But the patent law expert was not allowed to testify as to any legal conclusions. And the testimony would be given outside the jury’s presence to avoid any prejudice. Because the Court decides inequitable conduct, there was no need for the jury to hear the expert’s testimony.

* Click here for more on this case and related cases in the Blog’s archives. Also, note that the Court continues the progressive use of footnote citation.

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ACCO Brands USA LLC v. PC Guardian Anti-Theft Prods., Inc., No 06 C 7102, Slip Op. (N.D. Ill. Dec. 10, 2008) (Zagel, J.).*

Judge Zagel denied defendant PC Guardian's ("PCG") renewed motion to transfer plaintiff's patent suit against PCG, but not necessarily the other defendants, to the Northern District of California, where plaintiff and PCG were litigating a related patent.  The Court previously denied this motion, reasoning that all issues related to the patents in suit should be tried in one court, as opposed to the Northern District of California resolving the case as to PCG and the Northern District of Illinois to resolve the issues as to the other defendants in this suit. 

PCG renewed its motion because its new Northern District of California inequitable conduct motion implicated both the patents in suit in the Northern District of California and those at issue in the Northern District of Illinois.  But the Court held that transfer of the case would still leave this Court to resolve the identical issues as to the remaining defendants.  Additionally, because the Northern District of California court would likely rule on the issues before this Court, this Court would have the opportunity to consider the California rulings before deciding the issues.  And this Court had already construed the claims in this case (click here), resulting in only two minor differences between the courts.

*  Click here for more on this case in the Blog's archives.

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UTStarcom, Inc. v. Starent Networks, Corp., No. 07 C 2582 Slip Op. (N.D. Ill. Dec. 5, 2008) (Lindberg, Sen. J.).

Judge Lindberg granted in part plaintiff's motion to dismiss certain of defendant Starent's counterclaims.  Starent's allegations that specific patentee withheld specific references from the Patent Office were sufficient to meet the Rule 9(b) heightened pleading standards for inequitable conduct.  But the Court dismissed Starent's tortious interference counterclaim to the extent that it was based upon the filing of a law suit because Illinois prohibits tortious interference with prospective economic advantage claims based upon filing law suits.  The Court also dismissed Starent's malicious prosecution counterclaim because Starent did not allege a special injury, such as arrest, seizure of property, taking or interference with property.

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 New Medium LLC v. Barco N.V., No. 05 C 5620, 2008 WL 4615682 (N.D. Ill. Oct. 16, 2008) (Posner, J. sitting by designation).

In my previous entry about this case, I linked to a copy of this decision and briefly explained the result, but did not provide any analysis of the opinion because I was previously involved in the case -- click here to read that entry in the Blog's archives.  Since that post, Dennis Crouch has provided some excellent analysis of the opinion -- click here to read it at Patently-O.  Thanks Dennis.

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New Medium LLC v. Barco N.V., No. 05 C 5620, 2008 WL 4615682 (N.D. Ill. Oct. 16, 2008) (Posner, J. sitting by designation).

I was previously involved in this case and, therefore, I have not posted about prior opinions in detail.  But because I posted that Judge Posner (who is sitting by designation) was holding an inequitable conduct bench trial/evidentiary hearing in the case, I am posting the opinion Judge Posner issued based upon that hearing -- click here to read the opinion and here for the Blog's prior post.  The Court dismissed one of defendant's inequitable conduct arguments, but based upon the other, held two of the patents in suit unenforceable because of inequitable conduct.

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Miyano Machinery USA, Inc. v. MiyanoHitec Machinery, Inc., No. 08 C 526, 2008 WL 236610 (N.D. Ill. Jun. 6, 2008) (Nolan, Mag. J.).

Judge Nolan granted plaintiff’s motion to quash defendants’ subpoenas of plaintiff’s counsel – who represented: 1) plaintiffs and perhaps individual defendants in plaintiffs’ earlier trademark prosecution; and 2) plaintiffs in this case. The Court denied defendants’ motions to compel production of communications between plaintiffs and plaintiffs’ counsel and to pierce the privilege.

Defendants argued that plaintiffs committed fraud on the PTO, and therefore inequitable conduct, when plaintiffs’ counsel allegedly knowingly submitted false declarations during prosecution of plaintiffs’ trademarks. Defendants based their claims on an allegedly privileged communication between plaintiff and its counsel (Exhibit L) that plaintiffs claimed was inadvertently produced.

The Court held that Exhibit L was inadvertently produced – it was just one document among 22,000 pages and plaintiffs requested its return immediately after discovering its production. Furthermore, Exhibit L was essentially a list of questions from counsel to plaintiffs, by which counsel was making sure he had sufficient information to file the declarations in question – evidence supporting plaintiffs’ defense of defendants’ inequitable conduct claims.

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Nilssen v. Osram Sylvania, Inc., No. 2007-1998, -1348 Slip. Op. (Fed. Cir. June 17, 2008).

The Federal Circuit affirmed Judge Darrah's award of defendant's/appellee's attorney's fees – click here to read the Blog's post about the inequitable conduct opinion. Judge Darrah previously held and the Federal Circuit previously affirmed that plaintiffs committed inequitable conduct by, among other things: (1) falsely claiming small entity status; (2) failing to disclose material prior art to the PTO; and (3) failing to disclose related litigation to the PTO. Judge Darrah then held that the case was exceptional based upon plaintiff's inequitable conduct, filing of a frivolous suit, and litigation misconduct. Because the case was exceptional, Judge Darrah awarded defendants their attorney's fees.

The Federal Circuit agreed with plaintiffs, holding that an inequitable conduct finding did not require a case be deemed exceptional. But the Court held that Judge Darrah's findings were supported by evidence and, therefore, were within his discretion.

Judge Newman dissented, stating:

The court today promotes unexceptional trial procedures and non-culpable prosecution errors into an "exceptional case" of such severity as to warrant the award of attorney fees. That is not what the status, or precedent, or policy contemplates. I respectfully dissent.

Check the following blogs for more on this opinion:

• Filewrapper
  
• Patently-O

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Slip Op. (N.D. Ill. May 6, 2008) (Moran, Sen. J.).*

After a two-day hearing and two rounds of briefing, Judge Moran held that defendants (collectively “eSpeed”) had not met their burden of proving that plaintiff Trading Technologies (“TT”) engaged in inequitable conduct before the Patent & Trademark Office (“PTO”). The Court held that one of the TT patent's inventors engaged in commercial use between the priority dates for the patent's provisional and parent applications. But the Court held that TT was not required to disclose the commercial use to the PTO because it was not material to patentability. First, TT sought priority from its provisional application in good faith and had a reasonable belief that priority from the provisional was warranted. The reasonableness of the belief was born out when both the jury and the Court determined that the patent could claim priority from the provisional application. Because the commercial use happened after the patent's critical date (based upon the provisional application), it was not material.**

Additionally, TT did not commit inequitable conduct when it responded to the Examiner's request for, among other things, “any use of the claimed invention” with a series of brochures and presentations that described the software's features, but without identifying the inventor's commercial use. TT argued that the Examiner was seeking an explanation of all of the features of TT's software because it had identified anticipatory prior art from TT's website in a prior Office Action. The Court held that this was a reasonable reading of the Examiner's request because the Examiner accepted TT's response which did not address whether the software had been in use. Had the Examiner wanted an answer to that question, he could have asked again, instead of allowing the patent to issue.

Many readers will be wondering what is next. The Court has a few more pending motions, and a motion for reconsideration would not be surprising in this case. But for the most part, I suspect that this case is now on a fast track to the Federal Circuit, where the Court predicted it was going months ago. As always, I will keep you updated as the case develops, both in the Northern District and at the Federal Circuit.

* Click here to read much more about this case in the Blog’s archives and click here for this opinion.

** Click here and here for more on the determination of the appropriate priority date in the Blog's archives.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Min. Order (N.D. Ill. Feb. 20, 2008) (Moran, Sen. J.).*

I have received several emails asking about the status of this case and, specifically, when the inequitable conduct portion of the case will be decided.  The post-trial inequitable conduct briefing appears to be complete -- if you want to read the briefs, they are largely available on Pacer.  So, unless the Court asks for further briefing or an additional hearing either of which seem unlikely, the Court will consider the evidence and the parties' post-trial papers, and then write an opinion deciding the inequitable conduct issues.  There is not any way to accurately predict when the opinion will issue.  The timing is governed by numerous factors, including the complexity of the case and the size of the Court's current docket. 

Additionally, the parties have filed other motions which the Court will also have to decide.  For example, Trading Technologies ("TT") filed a motion for a protective order sealing certain evidence that was produced as "Highly Confidential," but which was put into evidence and used without immediate restriction or objection, as to confidentiality, during the public trial.  I will keep you updated as the Court issues any decisions regarding inequitable conduct or any other issues in the case.

* Click here to read much more about this case in the Blog’s archives.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Min. Order (N.D. Ill. Feb. 20, 2008) (Moran, Sen. J.).*

Judge Moran is scheduled to begin a two-day inequitable conduct bench trial this morning, and everything appears to be ready.  The deposition designations, exhibit lists and motions in limine have all been filed.  The eSpeed defendants have also filed motions to preclude Trading Technologies' counsel from testifying and to enforce eSpeed's understanding  of a stipulation (not surprisingly, the parties disagree as to what was stipulated) regarding the critical date.

Trial is scheduled to begin this morning at 10:30 am CDT.  Unfortunately, client obligations will prevent me from attending.  But I will continue to keep you updated based upon the Court's rulings.

* Click here to read much more about this case in the Blog’s archives.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Min. Order (N.D. Ill. Feb. 20, 2008) (Moran, Sen. J.).*

Judge Moran scheduled a two-day inequitable conduct hearing Wednesday and Thursday, April 2 and 3, thereby granting by implication defendant eSpeed's motion for such a hearing.  The Court also set a March 21 status hearing to discuss witness and privilege issues, presumably related to the inequitable conduct hearing.  So, there is at least one more round of argument and possibly briefing before the Court's judgment is complete and final.  I hope to attend the inequitable conduct hearing and will blog about it if I do.

* Click here to read much more about this case in the Blog’s archives.

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Se-Kure Controls, Inc. v. Vanguard Prods. Group Inc., No. 02 C 3767, 2008 WL 169054 (N.D. Ill. Jan. 17, 2008) (Cox, Mag. J.).*

Judge Cox denied plaintiff’s motion to exclude defendants’ patent law expert witness, but placed limits on the expert’s testimony. The Court held that a patent expert’s testimony could aid the Court’s understanding of Patent Office procedures and of what would have been material to a reasonable patent examiner. But the patent law expert was not allowed to testify as to any legal conclusions. And the testimony would be given outside the jury’s presence to avoid any prejudice. Because the Court decides inequitable conduct, there was no need for the jury to hear the expert’s testimony.

* Click here for more on this case and related cases in the Blog’s archives. Also, note that this opinion also uses footnote citation.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Min. Orders (N.D. Ill. Jan. 3, 2007) (Moran, Sen. J.).*

In addition to the willfulness decision discussed earlier today (click here for the post) and the invalidity decision that I will blog about early next week, Judge Moran also issued two minute orders deciding several of the outstanding post-trial motions.  The Court denied defendant eSpeed's motion for a new trial and its combined motion for judgment as a matter of law that: 1) the claims are invalid because of anticipation, obviousness, prior sale; and 2) because the claims have a June 9, 2000 priority date they were not infringed.

There are still several pending motions, including various motions regarding damages and interest on the jury's award and eSpeed's motion for an evidentiary hearing regarding inequitable conduct.  I will keep you posted as those are decided.

*  Click here to read much more about this case in the Blog’s archives.

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Abbott Labs. v. Sandoz, Inc., No. 05 C 5373, 2007 WL 4287501 (N.D. Ill. Dec. 4, 2007) (Coar, J.).*

Judge Coar construed the claims of plaintiff Abbott’s patent related to an extended release antibiotic (clarithromycin, an erythromycin derivative which Abbott markets as Biaxin XL), denied defendant Sandoz’s motion for summary judgment of noninfringement and granted Abbott summary judgment regarding anticipation, obviousness and inequitable conduct.  Of particular interest, the Court held that the use of Markush group language – “selected from the group consisting of” – in the specification did not necessarily limit the construction of claim terms. The Court also noted that materiality of a reference in an inequitable conduct analysis was determined from the perspective of a reasonable examiner, not the patentee.

* Click here for more on this case and related cases.

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I have not been able to fulfill my promised additional coverage of the inequitable conduct portion of the Trading Technologies v. eSpeed case, but it is not my fault.*  The Court decided to consider eSpeed's inequitable conduct and patent misuse defenses on the papers.  The Court ordered a briefing schedule that will complete briefing by early December for eSpeed's inequitable conduct and patent misuse defenses , as well as eSpeed's post-trial motions regarding willfulness and damages remittitur and TT's motions for its attorneys' fees and costs.  The Court has scheduled a status conference for December 20th.  Perhaps the parties will have rulings by the end of the year.

Practice tip:  In my experience, one of the dangers of doing inequitable conduct after the conclusion of the jury trial is that both the Court and the parties are exhausted and emotionally drained at the end of the jury trial (particularly after a multi-week trial like this one).  So, when it is time to try inequitable conduct, either the Court no longer wants the trial or the parties and the Court are so exhausted that they have trouble keeping their focus and energy level where it was for the jury trial despite the importance of the issues.  I do not know why the parties or the Court decided that inequitable conduct should be decided on the papers in this case.  But any time that inequitable conduct is to be tried after a jury trial, you run the risk that no live evidence will come in on inequitable conduct.

*  Click here to read much more about this case and Trading Technologies' ("TT") related cases in the Blog's archives

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Trading Techs. Int'l., Inc. v. eSpeed, Inc., No 04 C 5312, Slip Op. (N.D. Ill. Aug. 20, 2007) (Moran, Sen. J.).*

Judge Moran granted in part plaintiff Trading Technologies’ (“TT”) motion to bifurcate inequitable conduct from the rest of the trial – in another opinion issued on the same day, the Court denied defendant eSpeed’s motion to bifurcate willfulness and damages from the liability phase of the trial. The Court noted that bifurcation is the exception not the rule, but that Fed. R. Civ. P. 42(b) allows the Court to bifurcate trials for convenience, to avoid prejudice or when bifurcation benefits expediency and economy. The Court also explained that bifurcating inequitable conduct does not violate the Seventh Amendment, citing Gardco Mfg., Inc. v. Herst Lighting Co., 820 F.2d 1209 (Fed. Cir. 1987). 

TT sought an inequitable conduct bench trial after the conclusion of the jury trial. eSpeed asked the Court to try inequitable conduct before the jury and have the jury issue an advisory verdict pursuant to Fed. R. Civ. P. 39(c). The Court observed that there was substantial case law supporting both TT’s and eSpeed’s positions, showing the discretion the Court has on the issue. But the Court followed the reasoning of Judge Norgle in THK Am., Inc. v. NSK, Ltd., 1996 WL 33398071 (N.D. Ill. 1996). Judge Norgle bifurcated inequitable conduct, but heard the evidence of inequitable conduct each day after the jury was dismissed as the inequitable conduct evidence came up. The Court reasoned that this form of bifurcation prevented the jury from hearing potentially prejudicial evidence, while allowing witnesses not to have to return for additional days of testimony.

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Abbott Labs. v. Sandoz, Inc., No. 05 C 5373, 2006 WL 1141635 (N.D. Ill. Apr. 16, 2007) (Coar, J.).

Judge Coar granted plaintiff Abbott's motion for a preliminary injunction, after having previously denied it a TRO.*  The PI enjoined defendant Sandoz from selling a generic version of Abbott's patented extended release antibiotic (clarithromycin, an erythromycin derivative which Abbott markets as Biaxin XL).  The Court held that Sandoz had shown a substantial likelihood of materiality and Abbott's intent to deceive the PTO  based upon Abbott's failure to disclose certain taste perversion data during prosecution.  But because Abbott abandoned the claims to which the taste perversion data was relevant of its own accord, the Court did not find the patent preliminarily unenforceable.  The Court explained its reasoning as follows:

Redemption is one of the core principles of the American ethos.  Thus in addition to being contrary to the spirit of Scribbs, Kimberly-Clark and the Code of Federal Regulation, it seems wholly inequitable to hold a patent to be invalid for fraudulent conduct in the prosecution of a claim that was withdrawn before actual prosecution had even begun.

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Murata Mfg. , Ltd. v. Bel Fuse, Inc., No. 03 C 2934, 2007 WL 781252 (N.D. Ill. Mar. 8, 2007) (Cole, Mag. J.).

Judge Cole held that plaintiff's inequitable conduct defense did not waive its privilege and, therefore, denied defendant's motion to compel privileged documents.  Defendant asserted that plaintiff engaged in inequitable conduct by failing to disclose an allegedly material piece of prior art during prosecution of the patent-in-suit.  Defendant's defense was essentially that their counsel and inventors fully understood their disclosure obligations and chose not to disclose the alleged prior art because  it was not material or even similar to the patent-in-suit.  Defendant argued that plaintiff waived its privilege when its 30(b)(6) deponent testified that:  1) he had been told that plaintiff's in-house counsel instructed its prosecuting attorneys to disclose all relevant prior art to the PTO; and 2) that he was confident that the inventors understood their duties of disclosure based upon their past experience as patentees and the fact that they had each had several conversations with plaintiff's prosecution counsel.  But the Court held that disclosure of the occurrence of these conversations, without disclosing any of the contents did not act as waiver.   The Court noted that if disclosure of the existence of these conversations without elaboration constituted wavier, then the exchange of privilege logs would also constitute waiver.

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Shen Wei (USA) Inc. v. Sempermed, Inc., No. 05 C 6004, 2007 WL 328846 (N.D. Ill. Jan. 30, 2007) (Guzman, J.).

Judge Guzman granted defendant leave to amend its answer adding inequitable conduct affirmative defenses and counterclaims alleging that plaintiffs failed to disclose their prior art sale of a medical glove embodying their invention, but not regarding the existence and sale of a third party's glove of which plaintiffs were allegedly aware.  The Court held that defendant's affirmative defense and counterclaim met the Fed. R. Civ. P. 9(b) standard with respect to plaintiffs' alleged sale of their own product more than one year before their priority date because, although defendant did identify the person who intended to deceive the USPTO, it was reasonable to conclude that the inventor was charged with the intent.  With regards to the sale of the third party, Ostar, glove defendant only alleged that plaintiffs generally knew of the glove and its materiality, but failed to disclose it.  Defendant did not plead with sufficient specificity:  who knew about the Ostar glove, what they knew, when they knew it, whether the failure to disclose was intentional or why the Ostar glove was material. 

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Judge Darrah, after finding each of the eleven patents-in-suit unenforceable for inequitable conduct, held that the suit was exceptional based upon the inequitable conduct, the filing of several frivolous claims which were previously dismissed and misconduct at trial, providing the Court the discretion to award attorney's fees.  The court also did a detailed analysis of defendants' Bill of Costs and awarded defendants some or all of their requested costs for service of process, court reporters, witnesses and experts, among others.  Of note, the Court held that expert fees, including the expert's hourly rates, were recoverable for time spent on expert reports, deposition and related preparation, and other time spent in responding to discovery, but not for time spent attending other expert depositions in the case.

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Black & Decker Inc. v. Robert Bosch Tool Corp., No. 04 C 7955, 2006 WL 3069544 (N.D. Ill. Oct. 24, 2006) (St. Eve, J.).

After a jury found that defendant willfully infringed certain claims of the patents-in-suit, Judge St. Eve conducted a bench trial to determine whether the patents were unenforceable based upon prosecution counsel’s alleged inequitable conduct in failing to disclose known prior art to the PTO during examination.* A finding of inequitable conduct based upon failure to disclose material information requires that the information was material to patentability and that the failure to disclose was done with intent to mislead the PTO. The Court denied the inequitable conduct claim focusing on the second prong of the inequitable conduct test – intent.  In short, prosecution counsel’s failure to disclose the alleged prior art (the “Smith patents”) to the PTO was not inequitable conduct because prosecution counsel believed the invention under examination (the “Dome patents”) was prior art to the Smith patents. Whether or not the Dome patents were in fact prior art to the Smith patents was not relevant to the question of prosecution counsel’s intent.

* Judge St. Eve previously denied plaintiff’s motion for summary judgment on inequitable conduct discussed in this post, along with a longer description of the facts of the case.

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Nilssen v. Osram Sylvania, Inc., __ F. Supp.2d __, 2006 WL 1891807, (N.D. Ill. July 5, 2006) (Darrah, J.).

After a six-day inequitable conduct bench trial, Judge Darrah held each of the eleven patents-in-suit unenforceable based upon the pro se plaintiff/inventor’s inequitable conduct before the Patent & Trademark Office (“PTO”). Plaintiff’s inequitable conduct included: submitting misleading affidavits to the PTO; improperly claiming small entity status; falsely claiming priority dates to avoid prior art; failing to disclose related litigation during prosecution; and failing to disclose material prior art to the PTO during prosecution. The Court, however, refused to hold that all patents related to the patents-in-suit were unenforceable under the unclean hands doctrine.

This opinion provides a detailed primer on the many types of misconduct that an applicant may commit before the PTO.  It also serves as a cautionary tale for inventors considering prosecuting patent applications pro se.

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