Filewrapper®

Finding of inequitable conduct without considering materiality vacated

August 06, 2008
Post by Blog Staff

In a decision on Friday, the Federal Circuit reversed a district court's summary judgment of invalidity and noninfringement and subsequent finding of inequitable conduct. The court also vacated the district court's exceptional case finding and the associated award of attorney's fees.The plaintiff was initially awarded partial summary judgment of infringement of six patents. The district judge then assigned a special master to examine the remaining issues in the case, including invalidity and inequitable conduct. The case was then transferred to a new judge who, without written opinion, overturned the plaintiff's ruling of summary judgment and awarded partial summary judgment of noninfringment and invalidity. The judge then held a brief bench trial on the issue of inequitable conduct, where the plaintiff was only allowed to present inventor testimony regarding candor and good faith; all evidence of materiality was precluded. After this trail, the court, from the bench, made a ruling of inequitable conduct against the plaintiff, ruled the case was exceptional under § 285, and awarded attorney's fees.The Federal Circuit reversed, vacated, or remanded every ruling made by the trial court. Specifically, the court held that in order to support a finding of inequitable conduct, there must be threshold findings of both materiality and intent to deceive. Here, the district court only examined intent, rendering the record insufficient to support a holding of inequitable conduct. The court also held the district court's findings regarding intent to deceive were clearly erroneous. On top of that, the court held the summary judgment rulings "lack[ed] findings for judicial review," and that "the record show[ed] many potential issues of fact that would prevent entry of summary judgment." Given the district judge's handling of the case, the court further ordered the case reassigned to a new trial judge on remand.More on Research Corp. Tech., Inc. v. Microsoft Corp. after the jump.Research Corporation Technologies ("RCT") owns six patents involving digital halftoning. Halftoning is "an image which simulates a continuous tone image, but is actually an arrangement of individual dots. The particular spacing between the dots gives the viewer the illusion of a continuous picture consisting of varying shades of gray in a halftone image." RCT filed suit against Microsoft claiming infringement of these six patents in 2001. After a Markman hearing, RCT moved for partial summary judgment of infringement, and Microsoft filed a cross-motion for noninfringment. The district court granted RCT's motion, stating that certain Microsoft products were infringing. At this point, the case was transferred to a new trial judge.The new judge vacated the decision granting RCT's summary judgment motion and granted Microsoft's motion for summary judgment of noninfringement, without an opinion explaining either decision. The judge also granted Microsoft's motion for summary judgment to invalidate the patents based on anticipation under § 102(b) and lack of written description under § 112, first paragraph. Microsoft then requested a trial to determine the issue of inequitable conduct. At that trial, the judge precluded RCT from entering any evidence or testimony on the issue of materiality, limiting RCT's evidence "to testimony from the inventors about candor and good faith." After the trial, the judge, ruling from the bench, held there was inequitable conduct. Finally, the judge held the case was exceptional under § 285, and awarded Microsoft its attorneys' fees. RCT appealed.The Federal Circuit dismantled the district court's orders. It began by examining inequitable conduct. In order to show inequitable conduct, there must be (1) a misrepresentation of a material fact, failure to disclose material information, or submission of false material information, with (2) intent to deceive. At the inequitable conduct trial, however, the only issue considered by the district court was the issue of intent; no evidence was presented and no findings were made on the issue or materiality. Because there were no findings regarding materiality, the holding of inequitable conduct was not properly supported.Had the court considered the issue, the Federal Circuit held the only reasonable conclusion was that the allegedly withheld information was not material. The basis of the inequitable conduct claim was the lack of disclosing post-filing tests made by the inventors. The Federal Circuit stated that because these tests were done post-filing, the inventors had no duty to disclose the information because they were not material. Further, the research and testing was done on a factor that, while relevant to the issue of halftoning, was not described or claimed in the patent.

Even had the information been material, the Federal Circuit held that the district court's findings on intent were clearly erroneous. The inventors published their allegedly withheld findings, which the court noted was "an act inconsistent with an intent to conceal data." The Federal Circuit said the trial court also improperly analyzed the intent to deceive aspect of inequitable conduct. First, the trial court had focused on comments made by the inventor regarding the entire patented system. The Federal Circuit responded to this analysis by stating: "An inventor's motives in applying for a patent or his views on the purposes of the patent system are generally irrelevant to a proper determination of inequitable conduct. [An inventor] is not required to know or recite the purposes of the patent system." The trial court also incorrectly focused on an email between the inventor and another scientist, where the inventor did not fully disclose the invention to him. The court held this should not be interpreted as an intent to deceive, instead he was merely withholding confidential information from a research competitor. Based on the lack of intent and the absence of any analysis of materiality, the Federal Circuit reversed the finding of inequitable conduct. With the inequitable conduct finding removed, the court also vacated the § 285 exceptional case finding and award of attorney fees.The court then vacated and remanded on the issues of invalidity and noninfringement because there were "many potential issues of fact that would prevent entry of summary judgment."Finally, the court looked to have the case remanded and be reassigned to a new trial court. Under Ninth Circuit law, the court considers three factors exist to determine if reassignment is proper:

  1. Whether the original judge would reasonably be expected upon remand to have substantial difficulty in putting out of his or her mind previously-expressed views or findings determined to be erroneous or based on evidence that must be rejected.
  2. Whether reassignment is advisable to preserve the appearance of justice.
  3. Whether reassignment would entail waste and duplication out of proportion to any gain in preserving the appearance of fairness.
While reassignment on remand should only be done in rare cases because of the burden placed upon a new judge in learning the facts, the court held it was necessary in this instance. The court ultimately said "after a thorough review of all the evidence, testimony, and facts of this case, this court concludes the strongly expressed convictions of the trial court in this case may not be easily and objectively reconsidered." The case was remanded with instructions to be reassigned.For the full decision of Research Corp. Tech., Inc. v. Microsoft Corp., click here.


Post Categories

Comments (0)
Post a Comment



Captcha Image
Return to the Filewrapper Blog

Search Posts

Purpose

The attorneys of McKee, Voorhees & Sease, P.L.C. designed this blog as an informational and educational resource about intellectual property law for our clients, other attorneys, and the public as a whole. Our goal is to provide cutting-edge information about recent developments in intellectual property law, including relevant case law updates, proposed legislation, and intellectual property law in the news.

Disclaimer

McKee, Voorhees & Sease, P.L.C. provides this blog for general informational purposes only. By using this blog, you agree that the information on this blog does not constitute legal or other professional advice and no attorney-client or other relationship is created between you and McKee, Voorhees & Sease, P.L.C. Do not consider this blog to be a substitute for obtaining legal advice from a qualified, licensed attorney. While we try to revise this blog on a regular basis, it may not reflect the most current legal developments. We consciously refrain from expressing opinions on this blog and instead, offer it as a form of information and education, however if there appears an expression of opinion, realize that those views are indicative of the individual and not of the firm as a whole.

Connect with MVS

Enter your name and email address to recieve the latest news and updates from us and our attorneys.

Subscribe to: MVS Newsletter

Subscribe to: Filewrapper® Blog Updates

  I have read and agree to the terms and conditions of McKee, Voorhees & Sease, P.L.C.

Captcha Image