Inequitable conduct found by DNJ renders U.S. Patents 6,397,458 and 6,808,551 unenforceable
The District Court of New Jersey made a finding of inequitable conduct against 3M Innovative Properties in the case Transweb v. 3M Innovative Properties, 2014 U.S. Dist. LEXIS 54919.
From the decision:
The Court has reviewed the record in exhaustive detail. Inequitable conduct turns on the actions of individuals who owe a duty of candor to the PTO: whether those individuals knew of the prior art reference, knew it was material, knew that it should be disclosed, and intentionally failed to disclose it or misled the PTO about the reference. Therasense, 649 F.3d at 1290. The Court finds that the evidence of the inequitable conduct by Hanson and Jones is clear and convincing. See Avid Identification Sys., Inc. v. Crystal Import Corp., 603 F.3d 967, 974 n.1 (Fed. Cir. 2010) ("[O]nly individuals, rather than corporations, owe a duty of candor to the PTO," so "only individuals can breach that duty and give rise to a finding of inequitable conduct."). In this case, the actions of other 3M employees--Rousseau,28 Legare, Nagel, Lyons, and others--provide strong corroborating evidence of the inequitable conduct of Jones and Hanson. The Court, after receiving full post-trial briefing; conducting its own de novo review of all the facts in the case; after having observed the demeanor of the witnesses; and conducting its own credibility determinations based on those observations, finds that the '458 and '551 patents were the result of inequitable conduct by individuals who owed a duty of candor to the PTO. U.S. Patents 6,397,458 and 6,808,551 are unenforceable. The advisory jury unanimously reached the same conclusion.
Of questionable actions, the court noted
John Reed, a 3M employee, circulated an email to numerous 3M employees including Rousseau and Legare, in which he wrote, "As a follow-up note to the meeting on April 20 with Transweb . . . Minimize direct contact with TransWeb. . . . Minimize written exchanges. Maximize verbal exchange of info . . . ." (PTX-1335.) The clear intent was to grill Ogale about the prior art, under the pretext of 3M becoming a big customer of TransWeb. In July 2000, 3M invited Ogale to return to Minneapolis with Richard Granville, his angel investor, and expressed its interest in purchasing the entire TransWeb company. (11/14/2012 P.M. Tr. at 61:16-62:19.) Those discussions fell apart.
As to patent attorney Hanson:
At trial, Hanson struggled to explain his conduct. He testified that the reason for his delay in disclosing the reference, until November 2000, was to allow the Confidentiality Agreement between TransWeb and Racal--which he had terminated on April 28, 1999--to expire. But the very MPEP provision that Hanson cited to the PTO (when requesting expungement of his supplemental disclosure from the public record) states that a patentee must submit material information to the PTO even if it is confidential. Manual of Patent Examining Procedure ยง 724 (7th ed. July 1998). Hanson knew that the expungement provisions provide a method to protect truly confidential information, so this was not a credible explanation of the delay strategy. Hanson wilted on the witness stand, head down, and, finally, hostile. In the disclosure he finally gave to the Examiner, Hanson stated that "[a]pplicants do believe . . . that the product may have been subsequently commercialized by Transweb" after 3M's patent was filed.
The disclosure also said that "neither the Transweb Tmelt 30P product, nor the product sheet, was shown or otherwise known to the inventors named in this patent application, or the undersigned, before the July 2, 1998 filing date of this [3M] patent application." (Id.)
Based on the evidence in this case, these statements were untrue. The only reasonable inference is that Hanson and Jones knew they were not true. When they rushed their own patent through the process, fudging the "witnessing" of the notebooks, they knew that 3M had been focused on TransWeb in advance of the Expo; they knew that TransWeb was at the Expo, distributing its prior art product; they knew that Sundet and Christensen had collected samples; Jones had tested the Racal samples cut from the same roll distributed at the Expo; Legare had PTX-1338 in his files, which was identical to the samples distributed by Ogale at the Expo; and when they were concerned that TransWeb's samples were in fact prior art, they ordered--and Jones tested--examples of the prior art as advertised in Nonwovens Industry, confirming that the samples were prior art. They did not disclose any of this information to the Examiner. No mention was made of the T-Melt 50P product, nor of the Willson P-95 filter material, nor of the PTX-1338 sample pack from the Expo that was in Legare's files. Regrettably, the only reasonable inference that explains the actions of Hanson and Jones is that they delayed in saying anything to the Examiner, and then finally made a materially misleading disclosure.
From the decision:
The Court has reviewed the record in exhaustive detail. Inequitable conduct turns on the actions of individuals who owe a duty of candor to the PTO: whether those individuals knew of the prior art reference, knew it was material, knew that it should be disclosed, and intentionally failed to disclose it or misled the PTO about the reference. Therasense, 649 F.3d at 1290. The Court finds that the evidence of the inequitable conduct by Hanson and Jones is clear and convincing. See Avid Identification Sys., Inc. v. Crystal Import Corp., 603 F.3d 967, 974 n.1 (Fed. Cir. 2010) ("[O]nly individuals, rather than corporations, owe a duty of candor to the PTO," so "only individuals can breach that duty and give rise to a finding of inequitable conduct."). In this case, the actions of other 3M employees--Rousseau,28 Legare, Nagel, Lyons, and others--provide strong corroborating evidence of the inequitable conduct of Jones and Hanson. The Court, after receiving full post-trial briefing; conducting its own de novo review of all the facts in the case; after having observed the demeanor of the witnesses; and conducting its own credibility determinations based on those observations, finds that the '458 and '551 patents were the result of inequitable conduct by individuals who owed a duty of candor to the PTO. U.S. Patents 6,397,458 and 6,808,551 are unenforceable. The advisory jury unanimously reached the same conclusion.
Of questionable actions, the court noted
John Reed, a 3M employee, circulated an email to numerous 3M employees including Rousseau and Legare, in which he wrote, "As a follow-up note to the meeting on April 20 with Transweb . . . Minimize direct contact with TransWeb. . . . Minimize written exchanges. Maximize verbal exchange of info . . . ." (PTX-1335.) The clear intent was to grill Ogale about the prior art, under the pretext of 3M becoming a big customer of TransWeb. In July 2000, 3M invited Ogale to return to Minneapolis with Richard Granville, his angel investor, and expressed its interest in purchasing the entire TransWeb company. (11/14/2012 P.M. Tr. at 61:16-62:19.) Those discussions fell apart.
As to patent attorney Hanson:
At trial, Hanson struggled to explain his conduct. He testified that the reason for his delay in disclosing the reference, until November 2000, was to allow the Confidentiality Agreement between TransWeb and Racal--which he had terminated on April 28, 1999--to expire. But the very MPEP provision that Hanson cited to the PTO (when requesting expungement of his supplemental disclosure from the public record) states that a patentee must submit material information to the PTO even if it is confidential. Manual of Patent Examining Procedure ยง 724 (7th ed. July 1998). Hanson knew that the expungement provisions provide a method to protect truly confidential information, so this was not a credible explanation of the delay strategy. Hanson wilted on the witness stand, head down, and, finally, hostile. In the disclosure he finally gave to the Examiner, Hanson stated that "[a]pplicants do believe . . . that the product may have been subsequently commercialized by Transweb" after 3M's patent was filed.
The disclosure also said that "neither the Transweb Tmelt 30P product, nor the product sheet, was shown or otherwise known to the inventors named in this patent application, or the undersigned, before the July 2, 1998 filing date of this [3M] patent application." (Id.)
Based on the evidence in this case, these statements were untrue. The only reasonable inference is that Hanson and Jones knew they were not true. When they rushed their own patent through the process, fudging the "witnessing" of the notebooks, they knew that 3M had been focused on TransWeb in advance of the Expo; they knew that TransWeb was at the Expo, distributing its prior art product; they knew that Sundet and Christensen had collected samples; Jones had tested the Racal samples cut from the same roll distributed at the Expo; Legare had PTX-1338 in his files, which was identical to the samples distributed by Ogale at the Expo; and when they were concerned that TransWeb's samples were in fact prior art, they ordered--and Jones tested--examples of the prior art as advertised in Nonwovens Industry, confirming that the samples were prior art. They did not disclose any of this information to the Examiner. No mention was made of the T-Melt 50P product, nor of the Willson P-95 filter material, nor of the PTX-1338 sample pack from the Expo that was in Legare's files. Regrettably, the only reasonable inference that explains the actions of Hanson and Jones is that they delayed in saying anything to the Examiner, and then finally made a materially misleading disclosure.
posted by Lawrence B. Ebert at 8:25 PM
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