Since raising the standard for inequitable conduct in Therasense, Inc. v. Becton, Dickinson & Co.1, the US Court of Appeals for the Federal Circuit has affirmed findings of inequitable conduct in only a handful of cases2. In Ohio Willow Wood Co. v. Alps South, LLC, the Federal Circuit reversed a summary judgment ruling by the district court and concluded that a genuine issue of material fact concerning inequitable conduct existed. The decision gives practitioners further insight as to how to apply the heightened Therasense standard to find inequitable conduct. The opinion, authored by Judge Reyna, also affirmed the district court’s grant of summary judgment regarding collateral estoppel and obviousness.
The Ohio Willow Wood Company (OWW) sued ALPS South, LLC (Alps) in the US District Court for the Southern District of Ohio for infringement of US Patent No. 5,830,237 (the ’237 patent). The ‘237 patent, entitled “Gel and Cushioning Devices,” describes a cushioning sleeve designed to slip over the residual stump of a patient’s amputated limb, providing cushion for attached prosthetics.
After the district court issued its claim construction opinion, Alps filed an ex parte reexamination of the ‘237 patent, and the district court stayed the litigation pending the outcome of the reexamination. During the reexamination, the examiner allowed the claims over the prior art Silosheath product based on OWW’s argument that the gel in the Silosheath bled through the sleeve material.
Alps then filed a second ex parte reexamination and presented a prior art product that was an improvement on the Silosheath called the Single Socket Gel Liner (SSGL). The SSGL did not exhibit bleed through like the Silosheath did. Alps submitted an advertisement for the SSGL as well as sworn testimony from a third-party witness who was involved in developing the SSGL. On appeal to the Board of Patent Appeals and Interferences (BPAI or Board), OWW argued that the witness was “interested” and his testimony was uncorroborated. The Board agreed that the testimony was uncorroborated and, therefore, reversed the Examiner’s rejection and allowed the reexamination certificate to issue.
While the Alps litigation was stayed, OWW had filed a suit against another company, Thermo-Ply, for infringement of US Patent No. 7,291,182 (the ‘182 patent), a continuation of the ‘237 patent. The court in Thermo-Ply found the claims in the ‘182 patent invalid for obviousness, and the Federal Circuit affirmed that decision3.
After OWW was issued its second reexamination certificate, the district court resumed the stayed litigation. The parties then filed cross motions for summary judgment: Alps moved for summary judgment that (1) OWW was collaterally stopped from contending that the claims of the ‘237 patent were not invalid and (2) that other claims of the ‘237 patent were invalid for obviousness. OWW moved for summary judgment of no inequitable conduct. The district court granted all three motions, effectively finding all of the asserted claims invalid and not finding any issue of material fact regarding inequitable conduct. On appeal, the Federal Circuit affirmed on the issues of collateral estoppel and obviousness but reversed and remanded on the issue of inequitable conduct.
1. Collateral Estoppel
Collateral estoppel protects a party from having to litigate an issue that has been fully and fairly litigated in a previous action and adversely resolved against its opponent. In this case, Alps argued that OWW was precluded from arguing that the ‘237 patent claims were not invalid because the claims of the ‘182 patent, a continuation of the ‘237 patent, were found invalid in the Thermo-Ply litigation. OWW argued that the validity of the claims of the ‘182 patent was a different issue from the validity of the claims of the ‘237 patent, but the Federal Circuit disagreed. The court cited Bourns, Inc. v. U.S.4 and Westwood Chem., Inc. v. U.S.5 for the proposition that its “precedent does not limit collateral estoppel to patent claims that are identical. Rather, it is the identity of the issues that were litigated that determines whether collateral estoppel should apply. If the differences between the unadjudicated patent claims and adjudicated patent claims do not materially alter the question of invalidity, collateral estoppels applies.” Although the court did not mention it, in both Bourns and Westwood, the Court of Claims found collateral estoppel applied involving invalidity of claims of the same patent.
In this case, the Federal Circuit held that the issues underlying the validity determination of the ‘182 patent claims were identical to the validity issues of the ‘237 patent claims. In the case where the language of the two patents’ claims is “substantially similar” and thus “describe[s] substantially the same invention,” the “mere use of different words in . . . the claims does not create a new issue of invalidity.” In response to OWW’s argument that the “polymeric” gel required by the ‘182 patent is of a different scope than the “block copolymer” gel of the ‘237 patent, the court responded that such a contention needed to be supported by evidence that the different wording changed the invalidity analysis. Since OWW failed to provide such evidence, the Federal Circuit affirmed the district court’s grant of summary judgment that OWW was collaterally estopped from arguing validity of the ‘237 patent claims that were similar to those in the ‘182 patent. This holding is important, because it suggests that a patentee can be precluded from arguing validity of its claims simply because a related patent’s claims have been invalidated.
Next, the Federal Circuit turned its attention to the district court’s grant of summary judgment that five other dependent claims, which placed numerical limits on certain characteristics found in independent claim 1 of the ‘237 patent, were obvious. OWW argued that the district court failed to justify its combination of prior art references to arrive at the claimed invention. The Federal Circuit held that confining the claims based on numerical limits was nothing more “than the exercise of routine skill” and would have been predictable to one of ordinary skill in the art. Similarly, OWW then argued that secondary indicia of non-obviousness rendered its claims valid, but the court rejected this argument, holding that OWW failed to show “the requisite nexus between the secondary indicia and the patented inventions.”
3. Inequitable Conduct
The majority of the court’s opinion was devoted to the discussion of inequitable conduct. The Federal Circuit’s 2011 opinion in Therasense held that to succeed in rendering a patent unenforceable for inequitable conduct, a challenger must demonstrate with clear and convincing evidence that the patentee (1) withheld or misrepresented material information (2) with a specific intent to deceive the US Patent and Trademark Office (PTO). Alps argued that there were genuine issues of material fact regarding whether OWW withheld evidence during the second reexamination that would have corroborated the third-party witness’s testimony and that OWW falsely exaggerated the third-party witness’s interest in the dispute.
In Therasense, the court elevated the standard for the materiality prong to an objective but-for patentability standard. Under this prong, a challenger must show with clear and convincing evidence that the PTO would not have allowed a claim had it been aware of the undisclosed prior art. Additionally, Therasense carved out an exception to the materiality requirement in the case that the patentee engages in “affirmative acts of egregious misconduct, such as the filing of an unmistakably false affidavit.”
During the second reexamination proceeding, the PTO had issued a final rejection to OWW based on asserted prior art and the testimony of a third-party witness. The testimony was designed to cure the deficiencies of the asserted prior art. However, on appeal to the BPAI, OWW was able to discount the testimony by arguing that the witness was “highly interested” and his testimony was uncorroborated. In fact, the BPAI characterized the PTO appeal “as involving a single dispositive issue: whether the examiner erred in crediting the uncorroborated testimony” of the third-party witness. Alps contended that OWW was able to obtain the issuance only by withholding and misrepresenting evidence that tended to show corroboration with the testimony and the witness’s lack of interest in the outcome.
Whether testimony is credible is determined under a “rule of reason” standard based on the totality of the evidence. Here, the conclusion that the witness’s testimony was corroborated was supported by three witness declarations, an abandoned patent application, and physical samples. It was undisputed that these documents were in OWW’s possession at the time of appeal, but none was submitted as evidence. After extensive review, the court agreed with Alps, ruling that the cumulative weight of the evidence give credence to the testimony and held that a genuine issue of material fact existed regarding materiality.
Moreover, the court held that OWW misrepresented material information before the PTO. In its brief to the BPAI and during the subsequent hearing, OWW represented the witness as the highly interested, sole inventor of the prior art. By selectively highlighting ambiguous language in the witness’s testimony, OWW convinced the BPAI that the witness was receiving royalty payments and had a stake in the outcome of the reexamination. However, on closer inspection by the Federal Circuit, the witness’s deposition actually provided stronger evidence to the contrary. Likewise, the court found unpersuasive OWW’s unsupported assertion that the witness was the sole inventor of the prior art. Taking the facts in a light most favorable to Alps, the court remarked that because OWW’s counsel knew that the misrepresentations regarding the witness’s interest and inventorship would “affect issuance of the patent,” proffering these misrepresentations was “tantamount to the filing of an unmistakably false affidavit.” Such “egregious misconduct” formed an alternative basis for a finding of materiality under Therasense.
b. Deceptive Intent
In addition to materiality, a challenger must show that the party charged with inequitable conduct had the specific intent to knowingly and deliberately deceive the PTO. The specific intent to deceive must be “the single most reasonable inference drawn from the evidence.”
Here, the court simply cited to its foregoing discussion concerning OWW’s omissions and misrepresentation as evidence of deceptive intent. Although OWW responded with its own good faith assertions, the court did not believe such assertions were sufficient, to outweigh the evidence of deceptive intent on a summary judgment ruling; rather, the court remanded the issue for trial.
The Federal Circuit further noted that had OWW withheld or misrepresented only a single piece of evidence, the court might have reached a different conclusion. However, the court continued, when withholding or misrepresenting multiple pieces of evidence without a reasonable explanation, the single most reasonable inference would support a finding of deceptive intent.
The court thus reversed the district court’s grant of summary judgment of no inequitable conduct and remanded the issues of materiality and intent to the district court.
1. 649 F.3d 1276 (Fed. Cir. 2011).
2. See, e.g., Intellect Wireless, Inc. v. HTC Corp., 732 F.3d 1339 (Fed. Cir. 2013); Aventis Pharma S.A. v. Hospira, Inc., 675 F.3d 1324 (Fed. Cir. 2012).
3. Ohio Willow Wood Co. v. Thermo-Ply, Inc., No. CIV. A. 9:07-CV-274, 2009 WL 6499349 (E.D. Tex. Nov. 20, 2009), aff’d, Ohio Willow Wood Co. v. Thermo-Ply, Inc., 440 F. App’x 926 (Fed. Cir. 2011) (per curiam).
4. 537 F.2d 486, 491, 493 (Ct. Cl. 1976).
5. 525 F.2d 1367, 1372 (Ct. Cl. 1975).