Tuesday, November 09, 2010

CAFC lays out new ground in prosecution laches

Concerning prosecution laches:

Prosecution laches is an equitable defense to a charge
of patent infringement. Symbol Techs., Inc. v. Lemelson
Med., 277 F.3d 1361, 1366 (Fed. Cir. 2002) (“Symbol
Techs. I”). The doctrine “may render a patent unenforce-
able when it has issued only after an unreasonable and
unexplained delay in prosecution” that constitutes an
egregious misuse of the statutory patent system under the
totality of the circumstances. Symbol Techs. II, 422 F.3d
at 1385-86. We review a district court’s determination of
prosecution laches for abuse of discretion, id. at 1384, but
we review the legal standard applied by the district court
de novo, IPXL Holdings, L.L.C. v. Amazon.com, Inc., 430 F.3d 1377,
1380 (Fed. Cir. 2005).

What the CAFC said in this case:

We agree with Cancer Research that prosecution la-
ches’ requirement of an unreasonable and unexplained
delay includes a finding of prejudice, as does any laches
defense. See A.C. Aukerman Co. v. R.L. Chaides Const.
Co., 960 F.2d 1020, 1028 (Fed. Cir. 1992) (“Two elements
underlie the defense of laches: (a) the patentee’s delay in
bringing suit was unreasonable and inexcusable, and (b)
the alleged infringer suffered material prejudice attribut-
able to the delay.”). We also agree and now hold that to
establish prejudice an accused infringer must show evi-
dence of intervening rights, i.e., that either the accused
infringer or others invested in, worked on, or used the
claimed technology during the period of delay.


This court’s precedent also recognizes intervening ad-
verse rights as a requirement to holding a patent unen-
forceable for prosecution laches. In first recognizing the
doctrine, we relied on the above-cited Supreme Court
cases and noted their reliance on intervening rights.
Symbol Techs. I, 277 F.3d at 1364-65. For example, we
stated that in Crown Cork, “the [Supreme C]ourt ratified
the existence of the prosecution laches defense; it did not
apply the defense there in the absence of intervening
rights,” and we noted that “in General Talking Pictures,
the Court rejected the defense of prosecution laches
because there was no evidence of intervening public rights.” Id. at 1365.

As to omissions by the inventor:

The district court next found that inventor Stevens
withheld the data with intent to deceive because (1) the
withheld information was highly material, (2) Stevens
knew about the information and should have appreciated
its materiality as it directly contradicted the application’s
disclosure, and (3) Stevens did not provide a credible
explanation for withholding the information. Id. With
regard to the latter, the district court found not credible
Stevens’s testimony that he considered the withheld data
to be confidential to clinicians and inconclusive in view of
Stevens’s widespread publication both of the data and of
his conclusions that the data showed the compounds to be
inactive and toxic. Id. The district court also found
Stevens’s publication of the withheld data a sufficient basis
upon which to infer intent to deceive. Id. at 582.

But, the CAFC stated:

We agree with Cancer Research that the district court
clearly erred in finding that Stevens intended to deceive
the PTO by not disclosing data on the claimed compounds,
and specifically we agree that the district court erred
because it relied solely on its finding of materiality to
infer intent. The district court found that “Stevens should
have appreciated the materiality of the data . . . as they
expressly contradicted the disclosure of the pending
applications” and that under the circumstances “Stevens’
publications to the scientific community [provided] a
sufficient basis upon which to infer an intent to deceive.”
Cancer Research, 679 F. Supp. 2d at 581-82. The district
court, however, relied on the same evidence in finding the
withheld data to be “highly material”; the court found
that “the withheld information directly contradicts state-
ments made in the ’291 patent’s specification,” making it
highly material, and rejected Cancer Research’s argu-
ments regarding materiality as “belied by the fact that
Stevens . . . thought the data [were] significant enough to
describe in publications to the scientific community.” Id.
at 580-81. Because the district court did not rely on any
other evidence to support its finding of deceptive intent
beyond that used to find the withheld data material, the
court in effect relied solely on its materiality finding to
infer intent to deceive.

But materiality and intent are separate requirements,
and intent to deceive cannot be found based on material-
ity alone. Larson Mfg. Co. of S.D., Inc. v. Aluminart
Prods. Ltd., 559 F.3d 1317, 1340 (Fed. Cir. 2009). A court
cannot simply infer that an applicant “should have
known” the materiality of withheld information and thus
intended to deceive the PTO because the applicant knew
of the information and the information is material.
A district court must find some other evidence that indi-
cates that the applicant appreciated the information’s
materiality. See, e.g., Critikon, Inc. v. Becton Dickinson
Vascular Access, Inc., 120 F.3d 1253, 1256 (Fed. Cir. 1997)
(finding intent to deceive based in part on handwritten
notes of prosecution counsel corroborating that counsel
subjectively believed the undisclosed patent was mate-
rial). In this case, evidence that Stevens co-authored
articles that contradict the disclosure of the ’291 patent
specification does not alone establish that Stevens with-
held those studies intending to deceive the PTO.

While publication to the scientific community is not the
same as disclosure to the PTO and does not foreclose a
finding of deceptive intent, see Bristol-Myers Squibb Co. v.
Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1241 (Fed. Cir.
2003), the prompt publication of data in multiple articles
over the entire course of prosecution is inconsistent with
finding that intent to deceive is the single most reason-
able inference to draw from the evidence in this case, see
Research Corp. Techs., Inc. v. Microsoft Corp., 536 F.3d
1247, 1252 (Fed. Cir. 2008) (stating that “[p]ublication [to
the scientific community] is an act inconsistent with an
intent to conceal data from the USPTO.”

There was a dissent, which included the word "baffling."

Further, the majority’s treatment of the district
court’s credibility determinations—which are virtually
unreviewable by this court—is baffling. See LNP Eng’g
Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347,
1361 (Fed. Cir. 2001). The majority concludes that the
district court did not draw the most reasonable inference
regarding Stevens’s withholding of the published data.
Maj. Op. at 17-18. Instead, the majority believes that
there is another “an equally reasonable inference”—
Stevens did not appreciate the potential importance of the
data to the patentability of the claims. We should not
draw inferences that the district court has already ex-
cluded based on its own credibility findings with respect
to Stevens’s explanations for the withholding.


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