DEFENDANT'S CONVERSION FROM SEEKER OF LICENSE TO PATENT-EVISCERATING PRIOR ART HOLDER INDICATED ASSERTED PRIOR ART WAS NOT MATERIAL

Line Rothman v. Target Corp., [2008-1375] (February 13, 2009) [RADER, Friedman, Bryson] The Federal Circuit affirmed the holding that claims of U.S. Patent No. 6,855,029 were invalid, but reversed a finding of inequitable conduct by the patentee.
DISCUSSION: The Federal Circuit characterized appellant’s argument on appeal as a highlight reel of testimonial sound bites from Appellees’ witnesses in an effort to make the jury’s verdict seem unreasonable. The Federal Circuit added that in a final attempt to avoid invalidation of the patent, appellant relied upon secondary considerations, which the Federal Circuit reminded is not just a cumulative or confirmatory part of the obviousness calculus but constitutes independent evidence of nonobviousness. The Federal Circuit said that a strong prima facie obviousness showing may stand even in the face of considerable evidence of secondary considerations.
The Federal Circuit noted that leaving the question of inequitable conduct for the jury, while not ideal, was permissible. The Federal Circuit stated that to prevail on an inequitable conduct charge, a defendant 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]. Both of these factual elements require proof by clear and convincing evidence. Commenting on the allegedly withheld art, the Federal Circuit said that receipt of threatening letters containing vague descriptions of unsubstantiated prior art at the tail end of a souring business relationship does not create an automatic duty of disclosure. Otherwise, every potential patent licensee (and prospective infringer) could subject a patent applicant to the possibility of inequitable conduct sanctions on a whim. The Federal Circuit noted the dramatic transformation that defendant morphed from interested suitor offering favorable royalty terms and expressing assurance of “strong initial business” with a major retailer to a patent-eviscerating prior art holder. The Federal Circuit found that the withheld prior art was merely cumulative, and did not support a finding of inequitable conduct. The Federal Circuit also found inadequate assertions that attorney argument about the references could support a finding of inequitable conduct.