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No evidence of intent to deceive, no inequitable conduct
September 10, 2008

In a recent decision, the Federal Circuit reversed a district court's grant of summary judgment of inequitable conduct against the patentee. At issue was whether the patentee's failure to disclose a letter describing an aspect of the prior art constituted inequitable conduct. The court reversed finding that the alleged infringer had failed to provide sufficient facts to support an inference of intent to deceive.The defendant's theory involved a plan by the patentee to switch law firms once it appeared the first firm intended to disclose the letter, and preventing the second firm from discovering the existence of the letter. The opinion provided a clear look of how the Federal Circuit will analyze inequitable conduct. The court teed up its analysis by stating:

To successfully prove inequitable conduct, the accused infringer must present "evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the [PTO]." Further, at least a threshold level of each element -- i.e., both materiality and intent to deceive -- must be proven by clear and convincing evidence. And even if this elevated evidentiary burden is met as to both elements, the district court must still balance the equities to determine whether the applicant's conduct before the PTO was egregious enough to warrant holding the entire patent unenforceable. Thus, even if a threshold level of both materiality and intent to deceive are proven by clear and convincing evidence, the court may still decline to render the patent unenforceable.

Most important to the court was that an accused infringer proves threshold levels of intent to deceive the PTO and materiality with clear and convincing evidence. The clear and convincing standard requires that the evidence be strong enough to show that an inference of intent to deceive is the "single most reasonable inference able to be drawn from the evidence." In this case, there was simply "no evidence, direct or indirect," to support the inference the defendant sought to draw. As a result, the finding of inequitable conduct was reversed.More on Star Scientific, Inc. v. R.J. Reynolds Tobacco Co. after the jump.

The plaintiff, Star Scientific, owns two patents (6,202,649 and 6,425,401) relating to a curing process for tobacco used in cigarettes and other tobacco-containing products. The benefit of claimed curing processes are that they reduce the formation of a carcinogen, tobacco-specific nitrosamines (TSNAs), in the tobacco leaves. Specifically, the processes prevent the anaerobic conditions prevalent in direct-fired curing and which are thought to aid in the formation of TSNAs. As described by the court:

Fresh tobacco ("green tobacco") must be dried in a process called "curing" before it is suitable for consumption as cigarettes or other such products. Curing is done in curing "barns," and commercial tobacco companies like RJR cure their tobacco in bulk-curing barns in which substantial quantities of harvested tobacco are cured together in large stacks. Smaller operations may use the older and long-used technology of "stick barns" in which much smaller quantities of tobacco are cured.Four major mechanisms of curing have been used in the United States:
(1) air curing, where the tobacco is air-dried without the application of heat;
(2) radiant heat indirect-fired curing ("radiant heat curing"), where fuel (typically oil) is burned and the hot exhaust gases are passed through pipes running through the barn such that the hot pipes radiate heat into the barn to dry the tobacco, but the exhaust gases are then expelled outside the barn;
(3) direct-fired curing, where fuel (typically propane) is burned and the hot exhaust gases themselves are blown directly into the barn to dry the tobacco; and
(4) forced air indirect-fired curing, where fuel is burned to heat clean air that is then blown into the barn to dry the tobacco, while the exhaust gases from the fuel burning are expelled outside the barn.

In 1998, before the filing of the application that became the '649 patent, a letter was sent from a Star consultant, Dr. Harold Burton, to the prosecuting attorneys at Sughrue, Mion, Zin, Macpeak & Seas. In the letter, Dr. Burton wrote about his observation that a radiant heat flue-curing method used in China resulted in low levels of TSNAs. The prosecuting attorney concluded that letter was not material to the contemplated patent application after speaking with Dr. Burton. Shortly after the filing of the application, Star received tobacco samples from two Virginia farms that still used radiant heat curing. Star forwarded the samples to Dr. Burton so that he could generate data representing the TSNA levels of the samples. Star then provided the resultant data to the Sughrue attorney. After conferring with Williams, the Sughrue attorney declined to disclose the data to the PTO because while the data was relevant it was "not a significant concern because Star's method produced significantly greater reduction in TSNAs."A little over one year after the application was filed and converted to a utility patent application, Star transferred responsibility from the Sughrue attorneys to another set of attorneys at Banner & Witcoff. The Banner attorneys filed a petition to make special and an information disclosure statement, but did not disclose Burton letter or data. The petition was granted and the application was allowed on September 14, 2000 and issued in March 2001. On September 25, 2000, the Banner attorneys filed a continuation that would eventually become the '401 patent. The Banner attorneys again filed a Petition to Make Special and an IDS which made no reference to the Burton letter or data. On May 23, 2001, after the '649 patent issued but while the continuation was pending, Star filed suit against R.J. Reynolds Tobacco Company for infringement of the '649 patent. During the litigation, the Banner attorneys periodically filed supplemental IDSs in the continuation, including additional prior art and RJR's interrogatory responses to invalidity along with the cited references. It was during this litigation (but after the issue fee was paid) that the Banner attorneys first became aware of the Burton letter and data. Litigation counsel for Star opined that it may be best to "err on the side of disclosure" and provide the letter and data to the U.S. Patent and Trademark Office. The Banner attorneys considered the Burton letter and data and declined to disclose either as they were not material to patentability. The continuation proceeded to issue as the '401 patent. After issuance, Star immediately moved to amend its complaint to add allegations of infringement of the '401 patent.The district court held a bench trial on the issue of inequitable conduct in 2005. On June 25, 2007, the district court held Star's patents unenforceable. The district court also granted a motion for summary judgment that the asserted claims of both patents were invalid for indefiniteness. Star appealed.At the outset, the Federal Circuit dealt with inequitable conduct in the '649 patent. RJR argued that intent to deceive could be inferred based on Star's decision to change law firms. According to RJR, the transfer was to prevent the Banner attorneys from noticing the Burton letter and data so that it could be concealed from the PTO during prosecution of the '401 patent. The Federal Circuit was not convinced. According to the court, RJR failed to present any evidence, direct or indirect, supporting its theory according to the court. Specifically, as stated by the court: "RJR failed to elicit any testimony or submit any other evidence indicating that Star knew what the Burton letter said prior to replacing the Sughrue firm, or that the letter was a reason for changing firms." In fact, RJR never even asked the inventor or Star's other executive about any of these facts, and other testimony showed that at least the inventor was not aware of the letter until after the '649 patent issued. Given this lack of evidence, the court held there was no basis for even an inference of intent to deceive. Thus, the district court's finding of deceptive intent as to the '649 patent was clearly erroneous, and the court reversed the finding of inequitable conduct with respect to that patent.Finally, the court also disagreed that the Burton letter and data was material to the patentability of the '401 patent's claims. The court held the Burton letter and experimental data cumulative, in light of additional evidence provided by Star, specifically RJR's response to one of Star's interrogatories in the litigation stating that changing curing methods to reduce TSNA levels in cured tobacco was known in the prior art. As a result, the court reversed the finding of inequitable conduct with respect to the '401 patent as well.Turning to indefiniteness, the court held the claims were not "insolubly ambiguous." The relevant limitation was "anaerobic condition." The court held that one of ordinary skill in the art would understand, based on the specification, that this term referred to a low enough level of oxygen that causes increased TSNA formation. Thus, while the limitation was a "term of degree," the specification provided sufficient guidance to determine when an "anaerobic condition," as claimed in the patent, was reached, by measuring the levels of TSNAs. The fact that this determination could not be made before practicing the claimed process did not compel a different result, as the indefiniteness determination "does not depend on a potential infringer's ability to ascertain the nature of its own accused product to determine infringement, but instead on whether the claim delineates to a skilled artisan the bounds of the invention." Accordingly, the court reversed the district court's indefiniteness finding as well.To read the full decision in Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., click here.

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