Findings on Intent Lacking in first Post-Thersense Inequitable Conduct Case

American Calcar, Inc. v. American Honda Motor Co., Inc., 2009-1503, -1567 (June 27, 2011) [LOURIE, Bryson Gajarsa] the Federal Circuit affirmed summary judgment decisions of non infringement, reversed the denial of JMOL on the validity of the ’759 patent, and vacated and remanded the finding of inequitable conduct.

DISCUSSION: Although the question of inequitable conduct was presented to the jury for an advisory determination, the Federal Circuit said that inequitable conduct is equitable in nature, with no right to a jury, and the trial court has the obligation to resolve the underlying facts of materiality and intent. The Federal Circuit said that its en banc decision in Therasense that to prove inequitable conduct, the accused infringer must provide evidence that the applicant (1) misrepresented or omitted material information, and (2) did so with specific intent to deceive the PTO.

Under Therasense, the materiality required to establish inequitable conduct is, in general, but-for materiality. When an applicant fails to disclose prior art to the PTO, that prior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art. Further, while deceptive intent can be inferred from indirect and circumstantial evidence, that “inference must not only be based on sufficient evidence and be reasonable in light of that evidence, but it must also be the single most reasonable inference able to be drawn from the evidence to meet the clear and convincing standard.” The Federal Circuit reiterated that in a case involving nondisclosure of information, clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference.

The Federal Circuit noted that the withheld information may be material if it would have blocked patent issuance under the PTO’s preponderance of the evidence standard, giving those patents’ claims their broadest reasonable construction. However it could not infer that finding from the district court’s opinion, so it vacated and remanded the case.

Under Therasense, “the accused infringer must prove by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.” The Federal Circuit noted that although the court performed a detailed analysis of the facts withheld, it made no holding that any of the inventors knew that the withheld information was in fact material and made a deliberate decision to withhold it. The Federal Circuit said that instead, the district court relied on the sliding scale standard that was rejected in Therasense, basing its finding of intent significantly on the materiality of the 96RL system to the claimed invention. The Federal Circuit said that it was not its task to make factual findings, and vacated the district court’s finding of intent and remand the issue to the district court.

Regarding the summary judgment of non-infringement, the Federal Circuit agreed with the district court that the language of the summary and the detailed description limited the meaning of the claims, despite the fact that at least the summary used the language “for example” as well as an argument based upon claim differentiation, noting that if a claim will bear only one interpretation, similarity will have to be tolerated.

The Federal Circuit also held the patentee to a narrower construction of the term “source”, noting that it may reach a narrower construction, limited to the embodiments disclosed in the specification, when the claims themselves, the specification, or the prosecution history clearly indicate that the invention encompasses no more than that confined structure or method. On the issue of equivalents, the Federal Circuit found that ACI failed to provide particularized testimony and linking argument as to the ‘insubstantiality of the differences’ between the claimed invention and the accused device or process, and in any event finding a signal from one source to be equivalent to “signals from a plurality of sources” would vitiate that claim limitation by rendering it meaningless.

The Federal Circuit agreed with the district court’s claim construction and that “in response to” connotes that the second event occur in reaction to the first event. This was supported by the language of the claim itself. The Federal Circuit further observed that the specification did not disclose any embodiment that requires intervening action.