Friday, September 26, 2014

Strong dissent by Judge Newman in AMERICAN CALCAR, INC. over finding of inequitable conduct


Partial disclosure of material information about the prior art to the PTO cannot absolve a patentee of intent if the disclosure is intentionally selective. Aventis Pharma S.A. v. Hospira, Inc., 675 F.3d 1324, 1335-36 (Fed. Cir. 2012); see also Semiconductor Energy Lab. Co. v. Sam- sung Elecs. Co., 204 F.3d 1368, 1376 (Fed. Cir. 2000) (finding intent where the patentee disclosed a complete reference in Japanese but did not provide translations of that part which was material to patentability); Apotex Inc. v. UCB, Inc., No. 13-1674, 2014 WL 3973498, at *8 (Fed. Cir. Aug. 15, 2014) (finding intent on the basis of an inventor misrepresenting material information about disclosed prior art).

As to advisory verdicts:

As we have held, inequitable conduct is “inequitable in nature,” and thus the “district court was in no way bound by the jury’s finding of no inequitable conduct in this case.” Calcar II, 651 F.3d at 1334. In any event, after the jury submitted its adviso- ry verdict, the district court requested thousands of pages of testimony from Calcar’s previous litigation. Order Requesting Supplemental Briefing, Am. Calcar, Inc. v. Am. Honda Motor Co., No. 06-cv-2433 (S.D. Cal. Sept. 24, 2008), ECF No. 566. This testimony included assertions by Mr. Obradovich that contradicted those made in these proceedings, which led the district court to its determina- tion that Mr. Obradovich lacked credibility. This was evidence that the jury did not see. Therefore, we see no reason why the jury’s advisory verdict suggests a reason- able alternative to the district court’s inference.

By a 2 to 1 vote:

For the aforementioned reasons, we affirm the district court’s judgment that the ’497, ’465, and ’795 patents were obtained through inequitable conduct and are thus unenforceable.

In dissent, Judge Newman observed

The only issue is whether Mr. Obradovich committed inequitable conduct by not providing the PTO, when the parent patent application was filed, with the Acura Owner’s Manual and the photographs that the Calcar employees took of the Acura display. These materials were provided to the PTO on reexamination of the ’497 patent, and patentability was confirmed by the PTO in light of that additional information.

The factual premises of “inequitable conduct” were not established, for there was not “but-for” materiality and no evidence of intent to deceive. The panel majority distorts the Therasense standards, ignores the PTO reexamination, casts the jury aside, and generally disre- gards the safeguards that this court adopted en banc. I respectfully dissent, for the criteria of inequitable conduct are plainly not met.


Nonetheless, my colleagues rule that the patents are unenforceable based on the initial failure to send the Owner’s Manual and photographs to the PTO. The ineq- uitable conduct with which Mr. Obradovich is charged is that he “did not tell Mr. Yip [his patent attorney] about his experience with the 96RL, nor did he provide Mr. Yip with the Owner’s Manual or the photos of the navigation system display screens.” Dist. Ct. Op. at 11. However, the PTO established, on reexamination of the ’497 patent, that the purportedly withheld information was not material to patentability. In accordance with Therasense this ended the inequitable conduct inquiry, for the PTO sus- tained patentability in view of this information.

As to inferences:

My colleagues “infer” clear and convincing evidence of deceptive intent from Mr. Obradovich’s initial failure to send his patent attorney the Owner’s Manual and the photographs of the Acura display. They postulate that a savvy inventor and businessman such as Mr. Obradovich would have known the information was material to pa- tentability and would therefore withhold it in order to deceive the PTO. However, a more likely inference is that a savvy inventor and businessman would know that a patent obtained through concealment of a material refer- ence is not a reliable commercial asset.


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