Day 11 Self Study Course:
summarized by Tatsuo Yabe
Pages 597 to 638 (Skip pgs 606 to 615)
Unenforceability is different from a holding of invalidity
although the result may be the same (the patentee cannot enforce his patent).
However, whether permanently unenforceable or for a period of time, or
unenforceable against all infringers or against only the defendant depends upon
the patentee’s action.
37 CFR 1.56(a) -- Rule 56--
A patent by its very nature is affected with a public
interest. The public interest is
best served, and the most effective patent examination occurs when, at the time
an application is being examiner, the Office is aware of and evaluates the
teachings of all information material to patentability.
Each individual associated with the filing and prosecution
of a patent application has a duty of candor and good faith in dealing with the
Office, which includes a duty to disclose to the Office all information known to
that individual to be material to patentability as defined in this section.
The duty to disclose information exists with respect to each pending
claim until the claim is cancelled or withdrawn from consideration, or the
application becomes abandoned.
Information material to the patentability of a claim that
is cancelled or withdrawn from consideration need not be submitted if the
information is not material to the patentability of any claim remaining under
consideration in the application.
There is no duty to submit information which is not
material to the patentability of any existing claim. The duty to disclose all
information known to be material to patentability is deemed to be satisfied if
all information known to be material to patentability of any claim issued in a
patent was cited by the Office or submitted to the Office in the manner
prescribed by the sections 1.97(b) to (d) and 1.98.
However, no patent will be granted on an application in
connection with which fraud on the Office was practiced or attempted or the duty
of disclosure was violated through bad faith or intentional misconduct.
Inequitable conduct was
originally called “fraud on the Office”.
Inequitable conduct is a defense to an infringement
charge. To succeed, the accused
infringer must prove that the patentee withheld (i) material information from
the PTO during prosecution of the patent (ii) with an intent to deceive by clear
and convincing evidence.
If the accused infringer is successful in proving
inequitable conduct, then the patent will be held unenforceable against all
infringers permanently (it is not curable).
If the accused infringer has made a very strong showing of
materiality, then less evidence of intent need to be established and vice versa.
Under Rule 56, the inventor, the patent agent or the
patent attorney, and any other person who participates in the preparation of the
application are all bound by the duty of candor to the PTO.
Molins PLC v. Textron,
Inc. (Fed Cir 1995)
Molins PLC –
Textron – Accused
Williamson (Molins’ Research Director) ;
24” – a fully automated machining system (1966)
Patents in questions:
Whitson (British Patent
Agent for Molins from 1967 to 1981)
Ivan Hirsh (Manager of
Molins’ patent department since 1981)
Smith (U.S. Patent
Counsel to Molins since 1966) – 1/2 rights owner
Nondisclosure of Wagensei Reference during original prosecution:
Wagensei Reference was
discovered during the pendency of the U.S. Patent Applications, Whitson
abandoned all the foreign patent applications to the batch process, but decided
not to abandon the pending
Molins asserts that
Wagensei was reviewed by the examiner during the reexam of the 563 patent and
during the examination of the 410 patent.
‘material’ when there is a substantial likelihood that a reasonable examiner
would have considered the information important in deciding whether to allow the
application. If that information is
not as pertinent as that considered by the examiner or is merely cumulative to
that considered by the examiner, then such information is not ‘material’.
Whether the reference
is ‘material’ is not whether the particular examiner of the application at
issue considered the reference to be important.
Instead, it is that of a “reasonable examiner”.
Thus, the fact that the
examiner did not rely on Wagenseil to reject the claims under reexam or the
‘410 method claims is not conclusive as to whether the reference was material.
Although there is some
risk in reliance on foreign patent prosecution, Whitson indicated during the
foreign patent prosecution that Wagensei was the most relevant prior art and the
evidence shows that patent examiners in several foreign countries considered
Wagenseil material to the system 24 related claims.
Smith’s Nondisclosure of the Lemelson Patents:
Whitson and Smith were
aware of the Lemelson Patents that were highly material but did not disclose
those patents of Lemelson during the pendency of the 563 patent prosecution.
However, those references were eventually searched and found by the
examiner, thus it cannot be deemed to have been withheld from the examiner.
Orthopedic Equipment v. All
Orthopedic Appliances (Fed Cir 1983).
Thus, Hirsh and Smith’s failure to cite these references to the PTO did
not constitute inequitable conduct.
of the Lemelson Application
During the time that
the 563 patent was being prosecuted, Smith was also prosecuting an application
that named Lemelson as inventor. It
was found out that the Lemelson’s application was highly relevant to the
Williamson’s claim 160 (563 patent).
Here, Smith breached
his duty as an attorney to his client by serving a party whose interest directly
conflict with Molins. Thus, Smith is subject to discipline under Code of
Professional Responsibility of the state he is a member of Bar.
However, as to
Smith’s obligation to the PTO (which is an issue here), Textron failed to
establish by clear and convincing evidence that inequitable conduct occurred in
the nondisclosure of claim 11 of the Lemelson Application because it was
cumulative to art already made of record during prosecution of the 563 patent.
The judgment of the
district court holding USP563 and USP410 unenforceable due to inequitable
conduct is affirmed on the basis that Molins’ attorney Whitson intentionally
withheld a material reference from the PTO.
pgs 605 to 606
Affidavits are always
v. Lotus Dev (Fed Cir 1996), the Court held that affidavits are
inherently material even if they are cumulative.
Affiant Jones tried to prove that the disclosure was sufficient by
submitting the Affidavit in order to overcome the 112(1) rejection.
Thus, no submission of the affidavits may render the patent unenforceable
for inequitable conduct.
was material even though it would not have rendered the claimed invention
Fed Cir’s and PTO’s
The Fed Cir applies the
“reasonable examiner standard” for assessing whether a reference is
v. Universal Avionics Sys. (Fed Cir 2007). The PTO had used this
standard until 1992, when the PTO adopted the present 37 CFR 1.56 (“a prima
facie case of unpatentability”).
Evidence: Reference is cumulative. Scripps
Clinic & Research Found v. Genentech (Fed Cir 1991).
Consultants v. Hollister Inc. (Fed Cir. 1998)
What is inequitable
Failure to cite a
reference to the PTO in an IDS is the most common example of inequitable
conduct. Others include: failing to
disclose a possible public use or on-sale bar activity.
How about a submission of a 29 page untranslated Japanese patent
application along with 1 page partial English translation that missed the most
relevant portion of the disclosure? See
Semiconductor Energy Lab v. Samsung
Elec (Fed Cir 2000)
How do you prove
No “smoking gun”
proof of intent to deceive is necessary. Circumstantial
evidence can satisfy the intent requirement.
Not enough that the patentee simply did not disclose a prior art
It is not inequitable
argument regarding how to interpret a reference (even if it is incorrect) is
usually not inequitable conduct. Akzo
applicant does not disclose a reference as long as the examiner discovers it
herself. Molins PLC v. Textron (Fed Cir 1995)
Burying a reference
a particular reference was buried in a disclosure statement that was 11 pages
long with 23
Doctrine of Unclean
Aluminium Corp v. Foseco Int’l (Fed Cir 1990), the Fed Cir held that a
holding one of patents-in-suit will render a holding of other related
patents-in-suit (continuations) were unenforceable.
Intentionally withholding the best mode in an earlier application
rendered subsequent continuation applications unenforceable.
Good Faith Defense:
Evidence of the
patentee having acted in good faith in prosecution must be weighted in
determination whether her conduct amounted to an inequitable conduct, however,
it is not dispositive of the issue.
One example of
sufficient evidence of good faith is that the employees had a good faith belief
that a “public use (a field testing)” occurred under a confidentiality
agreement and thus was not material prior art.
The court found that non-disclosure of “ a public use” was not
inequitable conduct. In
Norberg Inc. v. Telsmith (Fed Cir 1996)
35 USC 271(d):
No patent owner otherwise entitled to relief for
infringement or contributory infringement of a patent shall be denied relief or
deemed guilty of misuse or illegal extension of the patent right by reason of
his having done one or more of the following:
derived revenue from
acts which if performed by another without his consent would constitute
contributory infringement of the patent;
licensed or authorized
another to perform acts which if performed without his consent would constitute
contributory infringement of the patent;
sought to enforce his
patent rights against infringement or contributory infringement;
refused to license or
use any rights to the patent; or
conditioned the license
of any rights to the patent or the sale of the patented product on the
acquisition of a license to rights in another patent or purchase of a separated
unless, in view of the circumstances, the patent owner has
market power in the relevant market for the patent or patented product on which
the license or sale is conditioned.
This provision was drafted to address the type of conduct
that is not considered patent misuse.
Patent misuse is an affirmative defense to a patent
infringement charge. The accused infringer must prove by clear and convincing
evidence that the patentee has impermissively broadened the physical or temporal
scope of the patent grant with anticompetitive effects.
Windsurfing Int’l v. AMF Inc
(Fed Cir 1986).
Patent misuse relates primarily to a patentee’s actions
that affect competition in unpatented goods or that otherwise extend the
economic effect beyond the scope of the patent grant.
Mallinckrodt, Inc. v. Medipart
Inc. (Fed Cir 1992)
Patent misuse is a broader wrong than antitrust violation
thus misuse may arise when the conditions of antitrust violation are not met.
In Bard Inc. v. M3
Sys. (Fed Cir 1998),
the jury instruction on patent misuse focused primarily on the charge that Bard
was attempting to enforce the patents against goods known not to be infringing.
patent is unenforceable for misuse if the patentee attempts to exclude products
from the marketplace which do not infringe the patent and the patentee has
actual knowledge of non-infringement by the products.
patent is also unenforceable for misuse when a patentee attempts to use the
patent to exclude competitors from their marketplace with the knowledge that
patent was invalid or unenforceable.
patent will not be rendered unenforceable for misuse if the patentee has
enforced the patent in the good faith belief that the accused products infringed
Braun Med. Inc. v. Abbott Labs (Fed Cir 1997)
Patentee – Braun
Patent in question: USP4,683,916, directed to a reflux
valve that attaches to an intravenous (IV) line and allows a fluid injection
with a needless syringe.
Accused Infringers – Abbott (also NP Medical who
supplied an accused product to Abbott)
Abbott entered ‘K’ with Braun for purchasing 536,000
valves with the restrictions that the purchased valve must not be used in
certain listed products of Abbott. Abbott
was not happy with the restrictions and thus requested NP Medical to develop a
substitute valve. Abbott found out
the Abbott’s deal with NP Medical and sued both Abbott and NP Medical for
District court found that the patent was not invalid and
not infringed by the accused NP Medical. The
jury also found that the patent was misused by Braun based on the wrong jury
instruction (patentee is not allowed to place any post-sale restrictions on
customer and if found by a preponderance of the evidence, then the patentee is
guilty of patent misuse).
Fed Cir found that the jury instruction was clearly
erroneous because it essentially creates per se liability for any conditions
that the patentee placed on its sales.
The restrictions placed upon the post-sale use of patented
goods were well-summarized in the precedent in Mallinckrodt Inc. v. Medipart Inc. (Fed Cir 1992) where
the express conditions that violate some law or equitable consideration are
unenforceable, however, violation of valid conditions entitles the patentee to a
remedy for either patent infringement or breach of ‘K’.
This is the general framework.
The key inquiry is whether the patentee, by imposing the
restrictions, has “impermissibly broadened the physical or temporal scope”
of the patent grant with anticompetitive effect” Windsurfing Int’l v. AMF Inc. (Fed Cir 1986).
On remand, the district court must first determine whether Braun’s
restriction exceeds the scope of the patent grant.
On the basis of the patent misuse finding by the district
court on remand, Abbott sought attorney fees and damages for Braun’s patent
misuse. When the patent misuse is used successfully, this defense results in
rendering the patent unenforceable until the misuse is purged.
It does not result in an award of damages to the accused infringer.
In this case, contrary to the district court’s opinion,
monetary damages may not be awarded “under a declaratory judgment counterclaim
based on patent misuse,” because patent misuse simply renders the patent
unenforceable. In other words, the
defense of patent misuse may not be converted to an affirmative claim for
damages simply by restyling it as a declaratory judgment counterclaim.
Although the district court has the power to entertain a
hearing for damages (in reliance on 28 U.S.C. 2202), Fed Cir disagrees with
Abbott’s argument that it is entitled to a new trial on the facts of the
present case because Abbott failed to meet its burden of proof for the damages
resulting from the Braun’s patent misuse.
Examples of patent
- Tying condition of
sale under the patent on the purchase of a separate, non-patented, staple good.
The patentee must also have a market power.
- post-patent term
- Mandatory package
if determining patent misuse:
if that practice is “reasonable within the patent grant (within the scope of
the patent claims)?
the practice has the effect of extending the patentee’s statutory rights and
does so with an anti-competitive effect, then that practice must then be
analyzed according to the “rule of reason”;
the rule of reason, the fact finder must decide whether the questionable
practice imposes an unreasonable restraint on competition.
Curing patent misuse:
A holding of patent
misuse renders the patent unenforceable for the period of time during which the
patent was misused. The patentee can cure the misuse by terminating the
See pages 627.
Doctrine of patent
misuse v. Doctrine of Inequitable Conduct
While misconduct before
the PTO renders the patent unenforceable by any party, the unclean hands
doctrine (patent misuse) bars only the offending party.
In general, the patent misuse does not preclude the offending party from
enforcement of the patent in a subsequent lawsuit, but only provides a bar to
relief in the case at hand. In Aptix
Corp. v. Quickturn Design Systems (Fed Cir 2001)
3I -- Implant Innovations, Inc.
Patent in Question:
USP’891 Patent claiming priority from a Swedish patent application
was filed in 1979. The patent claims
“an element intended for implantation into bone tissue, said element is placed
directly into the jawbone where it acts as a tooth root substitute.
The implants described and claimed in the patent are preferably made of
titanium and have a particularly sized & spaced “micropits”.
Dr. Branemark and Dr. Ekenstam
Swedish Patent Agent:
Branemark is one of the authors of the 1977 Book
(‘Osseointegrated Implants in the Treatment of Edentulous Jaw Experienced from
a 10-Year Period’), including a single page containing 4 scanning electron
micrographs (SEMs) of titanium implants that exhibits micropits.
The micropits shown in the 1977 book have diameters within the range
claimed in the ‘891 patent.
In the Swedish patent application, prepared by the
inventor, Ekenstam, the 1977 Book was mentioned and briefed therein.
However, a Swedish Patent Agent, Barnieske, deleted all reference to the
1977 Book and filed a Swedish patent application and based on the Swedish patent
application, U.S. Patent application was filed.
In 1991, NP brought the law suit against 3I for
infringement of the USP’891 patent. 3I
defended on the grounds of invalidity, unenforceability, and non-infringement,
3I also brought an antitrust counterclaim, alleging that when NP brought suit,
NP was aware of the inventors’ intentional failure to disclose the 1977 Book
to the PTO, which renders the ‘891 patent unenforceable.
After trial limited to the antitrust issue, the jury found
in special verdicts, inter alia, that
3I had proven (i) the inventors or their agents or attorneys obtained the ‘891
patent through fraud; (ii) NP had knowledge that the ‘891 patent was obtained
by fraud at the time this action was commenced against 3I; and (iii) NP brought
this lawsuit against 3I knowing that the ‘891 patent was either invalid or
unenforceable and with the intent of interfering directly with 3I’s ability to
compete in the market. Thus, the
jury found that NP violated the antitrust laws by bringing lawsuit against 3I,
the court denied NP’s motion for JMOL. The jury awarded 3I about 3.3M in
Applicable Laws: pg 632
antitrust claim, CAFC is in the best position to create a uniform body of
federal law, the antitrust laws is to be decided as a question of Federal
other issues involving other elements of antitrust laws, such as relevant
market, market power, damages, that are not unique to patent law, CFAC will
continue to apply the law of the appropriate regional circuit.
Antitrust Liability: pg
A patentee who brings an infringement suit may be subject to antitrust
liability for the anti-competitive effects of that suit if the alleged infringer
(the antitrust plaintiff) proves:
(i) that the asserted patent was obtained through knowing and willful
fraud within the meaning of Walker
Process Equipment (Sup Ct: 1965), or
(ii) that the infringement suit was “ a mere sham to cover what is
actually nothing more than an attempt to interfere directly with the business
relationships of a competitors, Eastern
R. R. Presidents Conference v. Noerr Motor Freight Inc. (Sup Ct: 1961).
Inequitable Conduct v. Walker Process Fraud: pgs 633 to 634
“Inequitable conduct” is distinguishable from Walker
Process fraud. Inequitable
conduct is a lesser offense than common law fraud and includes types of conduct
less serious than “knowing and willful fraud”.
For finding a
common law fraud, all of the following elements must be met:
representation of a material fact,
falsity of that representation;
the intent to deceive or at least a state of
mind so reckless as to the consequences (equivalent to “scienter”);
party’s reliance on the
injury to the party deceived because of his reliance on the
Failure of one (or another) element above may still find
the inequitable conduct.
In sum, a finding of Walker
Process fraud requires higher threshold showings of both intent and
materiality than does a finding of inequitable conduct.
Moreover, the Walker Process fraud
may not be based on an equitable balancing of lesser degrees of materiality and
intent. Furthermore, the Walker
Process fraud must be based on independent and clear evidence of deceptive
intent together with a clear showing
of reliance (i.e., the patent would not have been issued but for the
misrepresentation or omission).
Inequitable conduct is an equitable defense in a patent
infringement action and serves as a shield, whereas finding of fraud may expose
a patentee to antitrust liability and thus serves as a sword.
Antitrust liability can include treble damages whereas the
remedies for inequitable conduct only include unenforceability of the affected
patent (or possible attorney’s fee at most).
Another cause for
Antitrust Liability under E.R.R.
President v. Noerr:
An antitrust claim can also be based on that a suit is
baseless. An antitrust plaintiff must prove that the suit was both objectively
baseless and subjectively motivated by a desire to impose collateral,
anti-competitive injury rather than to obtain a justifiable legal remedy.
APPLICATION OF LAWS TO
THE SPECIFIC FACTS OF THE CASE:
As for the present case, CAFC concludes that there exists
substantial evidence upon which a reasonable fact finder finds an antitrust
liability in the acts of NP because (i) the 1977 Book was sufficiently material in the meaning of Walker Process as the examiner would not have granted if
he had been aware of the 1977 Book (the
examiner’s reliance); (ii) Branemark, one of the authors of the 1977
Book, through his Swedish patent agent, Barnieske, withheld the 1977 Book with the required intent
to deceive the PTO; and (iii) the record indicates that NP brought suit
against 3I with knowledge of the applicants’ fraud.
CAFC concludes that the finding of Walker Process fraud was supported by substantial evidence
and was based on a jury instruction that was not legally erroneous or
prejudicial, thus NP’s motion for JMOL was denied and NP was properly deprived
of its immunity from the antitrust laws under Walker Process.
Common Law Fraud
Walker Process Fraud
Elements for I.C. for IDS Related
Intent to deceive PTO;
Materiality of the information deceived or concealed.
Defense by accused Infringer;
Proof needed by Clear and Convincing Evidence;
Balancing Intent and Materiality Okay;
If found I.C., Patent is unenforceable; But no damages recovery.
Elements for Fraud for IDS related
Intent to deceive;
Materiality of the information deceived or concealed;
Defense by accused infringer;
Proof by C & C;
No Balancing between Intent and Materiality; Threshold
found Fraud, Patent is unenforceable, Possible recovery of damages;
Elements for CL Fraud:
Misrepresentation of Material Fact(s);
Intent to Deceive;
Reliance by Deceived Party;
Injury resulting from the reliance;
Proof by C & C evidence;
Elements of W-P Fraud:
Misrepresentation of Material Fact(s);
Intent to Deceive PTO
PTO’s reliance on the misrepresentation;
Enforcement of the patent by “P” with the knowledge of
the fraud committed against PTO and
Enforcement of said patent by “P” with the knowledge of
unenforceability of the patent
Proof by C & C evidence;
recovery of damages and attorney’s fee;
Invoked if W-P Fraud was found;
recovery of damages and attorney’s fee;
state of NY
the above elements;
physical scope, or
Packaging sales or tying sales
enforcement of patent w/knowledge (invalidity) or
Broader Wrong then antitrust violation;
is unenforceable but can be cured.
Impact of Final Judgment - Pgs 844 to 855
Issue Preclusion - Collateral Estoppel
Claim Preclusion - Res
Claim preclusion prevents a party from relitigating the
same claim against other parties where an issue preclusion prevents the
relitigation of a particular issue although the case as a whole may be allowed
The following case illustrates an example of ‘res
Blonder-Tongue Lab. Inc. v.
Patent owner – Foundation
Patent in Question – USP3,210,767 (Isbell Patent)
relates to a frequency independent unidirectional antennas, designed for
transmission and reception of electromagnetic radio frequency signals used in
many types of communications, such as broadcasting of radio and TV signals.
First infringement suit was brought by Foundation against Winegard Co in
SD Iowa Court. Chief Judge
Stephenson held patent invalid because the patent was found obvious,
In 1966, before Judge Stephenson had ruled in Winegard
case, the Foundation also filed suit in ND of Illinois against customers of
B-T for the infringements. Judge
Hoffman held that the Foundation’s patents were valid.
B-T appealed and the Court of Appeal for the 7th Circuit
affirmed, inter alia, that the Isbell patent was valid and infringed by
B-T’s products. B-T sought certiorari (review by the
Should the holding of Triplett v.
If not, does the
determination of invalidity in the Winegard
litigation bind the respondents in this case?
In Triplett v.
While the earlier decision may be comity be given great weight in a later
litigation and thus persuade the court to render a like decree, it is not res
adjudicate and may not be pleased as a defense.
The holding in Triplett
has been gently criticized by some judges.
v. Lowell exemplified the
judge-made doctrine of mutuality of estoppel (‘mutuality
rule’), ordaining that unless both parties in a second action are
bound by a judgment in a previous case, neither party in the second action may
use the prior judgment as determinative of an issue in the second action.
The broader question is whether it is any longer
sustainable to afford a litigant more than one full and fair opportunity for
judicial resolution if the same issue.
Although neither judges, the parties, nor the adversary
system performs perfectly in all cases, the requirement of determining whether
the party against whom an estoppel is asserted had a full and fair opportunity
to litigate is a most significant safeguard.
There are several components of the problem, first, we
analyze the proposed termination or modification of the Triplett rule in terms of those considerations relevant to
the patent system; second, we deal broadly with the economic costs of continued
adherence to Triplett, and
finally, we explore the nature of the burden, if any, that permitting patentees
to relitigate patents once held invalid imposes on the federal courts.
The patentee-plaintiff must be permitted to demonstrate,
if he can, that he did not have a fair opportunity procedurally, substantively,
and evidentially to pursue is claim the first time. (Eisel v. Columbia Packing Mass. 1960)
We are not persuaded, therefore, that the Triplett
rule, as it was formulated, is essential to effectuate the purpose of the patent
system or is an indispensable or even an effective safeguard against faulty
trials and judgments.
The expense of patent litigation has two principal
consequences if the Triplett
rule is maintained. The patentee is
expending funds on litigation to protect a patent which was already found
invalid, these moneys could be more wisely spent such as further research and
development. The second major
economic consideration is far more significant because the alleged infringer in
the subsequent lawsuit must bear a huge financial burden to prove invalidity of
the patent as each subsequent lawsuit, the patentee enjoys the statutory
presumption of validity.
Inc. v. Adkins Sup Ct 1969) obviates to some extent the concern that Triplett
prompts alleged infringers to pay royalties on patents previously declared
invalid rather than to engage in costly litigation when infringement suites are
permits an accused infringer to accept a license, pay loyalties for a time, and
cease paying when financially able to litigate validity, secure in the knowledge
that invalidity may be urged when the patentee-licensor sues for unpaid
This has several economic consequences.
First, the alleged infringer who cannot afford to defend may absorb the
royalty costs in order to compete with other manufacturers who won the
litigation (holding of invalidity) and may need to cut the profitability of his
business and maybe that he will never be in a financial position to challenge
the validity of the patent that was invalidated previously.
Second, on the other hand, the manufacturer who secured a judicial
holding (invalidity of patent) may be able to increase his market share without
coming close to the price levels that would prevail in a competitive market
because he is free from royalty payments. Third,
consumers will pay higher prices for goods covered by the invalid patent.
Beyond all of this, the rule of Triplett may permit invalid patent to serve almost as
effectively as would valid patent as barriers to the entry of new firms
(particularly small firms).
The availability of estoppel to one who charged with
infringement of a patent previously held invalid will merely shift the focus of
litigation from the merits of the dispute to the question whether the party to
be estopped had a full and fair opportunity to litigate his claim in the first
action. Moore & Currier.
It is apparent that the uncritical acceptance of the
principle of mutuality rule expressed in Triplett
v. Lowell is today out of place. Thus, we (the