[CAFC: Because the district court's judgment as to inequitable conduct was based on factual findings that we deem clearly erroneous, we reverse the judgment of unenforceability of the '649 and '401 patents. ] Careful readers of IPBiz might recall that Carter G. Phillips was co-author of the eBay brief to the Supreme Court which had the "fib" about patent grant rate [
Gross error in the eBay brief to Supreme Court in MercExchange case]
The inequitable conduct charge against Star Scientific centered around a failure to disclose to the USPTO the "Burton letter." The CAFC wrote:
As part of the preparation of Williams' patent application, Delmendo was sent a
letter on August 28, 1998, by scientist and Star consultant Dr. Harold Burton ("the
Burton letter"). Burton wrote to relate his recent observation that Chinese tobacco
products contain very low TSNA levels. The Burton letter further stated:
Since China is a developing country, they are still use [sic] the old curing
technology that was abandoned in the US during the sixties. It seemed to
me that the probable cause for the absence of TSNA was their use of the
old [radiant heat] flue-curing techniques. [Romulo Delmendo of
Sughrue, Mion, Zinn, Macpeak & Seas had been engaged to prosecute the patent
Delmendo testified that although he was initially concerned about the
information, he then spoke with Burton, analyzed the letter, and ultimately concluded
that neither it nor its content was material to the contemplated patent application.
The '018 application's draft specification adopted most of the Provisional's disclosure
but deleted the statement that radiant heat curing of U.S.-grown tobacco produced "high
levels of TSNA." Instead, it stated:
In flue curing processes that utilize a heat exchanger capable of providing
relatively low airflow through the curing barn, I have discovered that it is
possible to somewhat reduce the TSNA levels by not venting combustive
exhaust gases into the curing apparatus or barn. The preferred aspects of
the present invention are premised on the discovery that other
parameters, as identified above (e.g., airflow), can be adjusted to ensure
the prevention or reduction of at least one TSNA regardless of the ambient
'649 patent col.6 ll.22-30 (emphasis added). Delmendo testified that this new disclosure
was based on his discussion of the Jennings data with Williams.
***Of legal analysis-->
We review the district court's inequitable conduct determination under a two-tier
standard; we review the underlying factual determinations for clear error, but we review
the ultimate decision as to inequitable conduct for an abuse of discretion. Cargill, Inc. v.
Canbra Foods, Ltd., 476 F.3d 1359, 1364-65 (Fed. Cir. 2007).
The burden of proving inequitable conduct lies with the accused infringer. Ulead
Sys., Inc. v. Lex Computer & Mgmt. Corp., 351 F.3d 1139, 1146 (Fed. Cir. 2003). 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]." Cargill, 476 F.3d at 1363 (citing Impax Labs., 468 F.3d at 1374).
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. Id.; Digital Control Inc. v.
Charles Mach. Works, 437 F.3d 1309, 1313 (Fed. Cir. 2006).
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.
Thus, the fact that information
later found material was not disclosed cannot, by itself, satisfy the deceptive intent
element of inequitable conduct. M. Eagles Tool Warehouse, Inc. v. Fisher Tooling Co.,
439 F.3d 1335, 1340 (Fed. Cir. 2006). Rather, to prevail on the defense, the accused
infringer must prove by clear and convincing evidence that the material information was
withheld with the specific intent to deceive the PTO. Id.; see also Kingsdown Med.
Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (en banc) (holding
even gross negligence insufficient to prove intent to deceive).
An important part of the analysis-->
But even if Star's explanations are not to be believed, it remained RJR's burden to
prove its allegation regarding the reason for the Sughrue firm's dismissal. RJR cannot
carry its burden simply because Star failed to prove a credible alternative explanation.
See M. Eagles Tool Warehouse, 439 F.3d at 1341 ("When the absence of a good faith
explanation is the only evidence of intent, however, that evidence alone does not
constitute clear and convincing evidence warranting an inference of intent.").
The evidentiary gap-->
In reviewing the affirmative evidence, it becomes clear that RJR's evidence had a
major gap—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. RJR admitted at oral argument that it failed to
even ask Williams or Star's other executives about these critical facts, and RJR failed to
identify any testimony or other evidence when specifically asked by us to do so in
As noted earlier, the district court may infer facts supporting
an intent to deceive from indirect evidence. Cargill, 476 F.3d at 1364. But no inference
can be drawn if there is no evidence, direct or indirect, that can support the inference.
RJR's lack of any evidence at all on the crux of its theory, let alone clear and convincing
evidence, demonstrates that it failed to carry its burden.