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

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 before 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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Black & Decker Inc. v. Robert Bosch Tool Corp., No. 04 C 7955, 2006 WL 2088437 (N.D. Ill. July 24, 2006) (St. Eve, J.).

Judge St. Eve denied plaintiff, Black & Decker’s (“B&D”) summary judgment motion on defendant Bosch’s inequitable conduct defense. While prosecuting various applications related to a rugged jobsite radio and charger (the “Smith patents”), B&D became aware of inventor Joseph Domes’s similar applications, which later matured into the patents-in-suit. To avoid a possible interference, B&D licensed Domes’s applications (the “Domes patents”) and ultimately became the exclusive licensee of the two Domes patents.

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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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