Monday, August 09, 2010

Inequitable conduct overturned by CAFC in Ring Plus

The outcome of Ring Plus v. Cingular Wireless at the CAFC was

For the following reasons, we reverse
the judgment of unenforceability, affirm the grant of
summary judgment of noninfringement, and affirm the
denial of Ring Plus’s motion to disqualify counsel.

Of background on inequitable conduct:

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].” Star Scientific, Inc. v. R.J. Reynolds
Tobacco Co., 537 F.3d 1357, 1365 (Fed. Cir. 2008) (citation
omitted). The accused infringer must prove “at least a
threshold level of each element--i.e., both materiality and
intent to deceive . . . by clear and convincing evidence.”
Id. If the accused infringer meets this evidentiary burden
with respect to both materiality and intent, “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 unenforce-
able.” Id.
Where a district court has made fact findings as to
materiality and deceptive intent after a bench trial, we
review those findings for clear error and the ultimate
decision on inequitable conduct for abuse of discretion.
Larson Mfg. Co. of S.D. v. 1317, 1327 (Fed. Cir. 2009).

Note for patent attorneys:

Ring Plus argues that because Strietzel and Sleevi
were before the examiner during prosecution, the Back-
ground statement was merely attorney argument and
cannot be a material misrepresentation. Although an
attorney is free to argue vigorously in favor of patentabil-
ity without being subject to allegations of inequitable
conduct, “the law prohibits genuine misrepresentations of
material fact.” Rothman v. Target Corp., 556 F.3d 1310,
1328 (Fed. Cir. 2009). Because we uphold the district
court’s finding that applicants’ Background statement
was a misrepresentation, this statement was outside the
bounds of permissible attorney argument. Ring Plus also
argues that the examiner did not consider Strietzel and
Sleevi to be important because he did not cite them dur-
ing prosecution. However, the materiality standard is an
objective one: the issue is what a reasonable examiner
would have found important, not whether the reference
in question was specifically considered during prosecution.

The matter of intent-->

Cingular, as the party seeking to establish inequitable
conduct, bore the burden of establishing by clear and
convincing evidence that applicants specifically intended
to deceive the PTO in making the misrepresentation in
the Background. Star Scientific, 537 F.3d at 1365; Larson
Mfg., 559 F.3d at 1340. Although intent to deceive can be
inferred from circumstantial evidence, the evidence must
still be clear and convincing; “a showing of materiality
alone does not give rise to a presumption of intent to
deceive.” Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306, 1313
(Fed. Cir. 2008); see also Kingsdown Med. Consultants v.
Hollister, Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (en banc
in relevant part) (holding that even “‘gross negligence’
does not of itself justify an inference of intent to deceive”).
Any inference of deceptive intent must be “the single most
reasonable inference able to be drawn from the evidence
to meet the clear and contific, 537 F.3d at 1366.


The [district] court found Mr. Schaap’s
belief “not credible” because he was a highly experienced
patent prosecutor and because “even a cursory review” of
Strietzel shows that the reference discloses software
based algorithms. Id. at 440. Based on its view that the
references clearly disclose software, the court found that
applicants’ purported belief in the truth of their represen-
tation was not plausible. From this evidence, the court
concluded that “[t]he single most reasonable inference . . .
is that the applicants intended to deceive.” Id. at 440.

Ring Plus skates on inequitable conduct-->

Ring Plus argues that the court clearly erred in find-
ing that Cingular presented clear and convincing evidence
of applicants’ specific intent to deceive the PTO. We
The court premised its finding of intent almost
entirely on its view that the references unambiguously
disclose software. We disagree that the disclosure of
software is so plain. Neither Strietzel nor Sleevi men-
tions software, and neither identifies any code or software
mechanism for operating the disclosed systems. More-
over, there is no record evidence that one of skill in the
art would consider the references to unambiguously
disclose software. Although the references disclose iso-
lated components that tend to be associated with com-
puter operation, the references do not unambiguously
disclose software for operating a telephone system.


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