Alston & Bird LLP's weekly Federal Circuit Patent Case Summaries are published by Wolters Kluwer Law & Business as part of its Aspen Publishers product line. The following is a summary of the precedential patent-related opinions issued by the Court of Appeals for the Federal Circuit for the week ending on the date below.
Defenses: Fraud and Inequitable Conduct: Intent to Deceive
1st Media, LLC v. Electronic Arts, Inc., et al., No. 10-1435 (Fed. Cir. (D. Nev.) Sept. 13, 2012). Opinion by Linn, joined by Rader and Wallach.
The Federal Circuit reversed the district court’s determination that U.S. Patent No. 5,464,946 (“the’946 patent”) is unenforceable because of inequitable conduct. The Federal Circuit determined that the record contained no evidence of a “deliberate decision” to withhold three references from the U.S. Patent and Trademark Office (“PTO”) during prosecution of the ’946 patent, as required under Therasense.
The ’946 patent is directed to an entertainment system for use in purchasing and storing songs, videos, and multimedia karaoke information. While the application for the ’946 patent was pending, the prosecuting attorney (“Sawyer”) prosecuted three other patent applications for related inventions by the same named inventor (“Lewis”), namely: (1) International Patent Application No. PCT/US93/10930 (“PCT Application”); (2) U.S. Patent Application No. 07/975,824, which became U.S. Patent No. 5,325,423 (“the ’423 patent”); and (3) U.S. Patent Application No. 08/265,391, which became U.S. Patent No. 5,564,001 (“the ’001 patent”).
Before the ’946 patent issued, Sawyer received a supplemental European report related to the PCT Application citing as prior art International Publication WO 90/01243 (“Bush”). In this same time frame, an examiner rejected the application that led to the ’423 patent as anticipated by U.S. Patent No. 5,027,400 (“Baji”). Also, during prosecution of the ’001 patent, an examiner rejected claims as disclosed by U.S. Patent No. 5,220,420 (“Hoarty”). Neither Lewis nor Sawyer ever disclosed Bush, Baji, or Hoarty to the PTO during the course of examination of the ’946 patent.
At trial, the district court found that Lewis and Sawyer knew of the Bush, Baji, and Hoarty references, knew that they were material, and did not inform the PTO of them. The district court also concluded that because Sawyer and Lewis failed to provide a credible good faith explanation for non-disclosure of the references, it was appropriate to infer that Sawyer and Lewis intended to deceive the PTO during prosecution of the ’946 patent. The district court thus concluded that Lewis and Sawyer committed inequitable conduct.
Applying the law from the intervening decision in Therasense, the Federal Circuit reversed. Under Therasense, “in order to show that the patentee acted with the specific intent to deceive the PTO, a defendant must prove ‘that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.’” (Emphasis in original.) The Federal Circuit explained that, after Therasense, “[a] court can no longer infer intent to deceive from non-disclosure of a reference solely because that reference was known and material. Moreover, a patentee need not offer any good faith explanation for his conduct unless and until an accused infringer has met his burden to prove an intent to deceive by clear and convincing evidence.” Here, the Federal Circuit determined that the evidence supports only that Lewis and Sawyer (1) knew of the references, (2) may have known they were material, and (3) did not inform the PTO of them. Because the record contained no evidence of a “deliberate decision” to withhold the references, there was no inequitable conduct.
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