If You Try to Hide Prosecution Conduct, Then the Court will Presume You Had Something to Hide

In Regeneron Pharmaceuticals v, Merus N.V., [16-1346] the Federal Circuit denied rehearing and rehearing en banc of the July panel decision previously discussed here, that litigation misconduct warranted a finding of inequitable conduct in patent prosecution.

Judge Newman, who is usually spot-on in her analysis, again dissented, voicing her concern that inequitable conduct in patent prosecution can be retrospectively imposed by “adverse inference” arising from later misconduct in litigation, without a showing of deceptive intent, which she called “a disservice to the patent practitioner, the patentee, and the public.”

 

While it would be disturbing if the subsequent unrelated conduct of a litigator could retroactively change the nature of the conduct of the patent prosecutors, this is not the case in Regeneron.  The litigation conduct complained of related to resisting disclosures about the alleged inequitable conduct.  If a party is not forthcoming about accused conduct, it seems reasonable to assume that there was something wrong with that conduct.

If Regeneron is used to transmute litigation misconduct into prosecution misconduct, then Judge Newman is right this is a disservice to patentee and their prosecutors.  However, if Regeneron simply means that if you try to hide prosecution conduct, then the courts will presume you had something to hide, the rule should not be a threat to patent owners and their counsel.

Objective Indicia Were Properly Considered and Did Not Save Cookie Package Patent from Summary Judgment of Obviousness

In Intercontinental Great Brands LLC v. Kellogg North American Co., [2015-2082, 2015-2084] (September 7, 2017), the Federal Circuit affirmed summary judgment that Kraft’s U.S. Patent No. 6,918,532 was invalid for obviousness, but was not unenforceable for inequitable conduct.

The district court found that the absence of a “convenient opening and reclosing arrangement” was a “known problem” for cookie packaging and that the prior art resealable, tray-included packaging for foods offered a skilled artisan a solution to the problem simply by replacing the existing “tray” with a “frame” i.e., a tray with higher sides.  The court considered the simple and clear teachings of the art, the importance of common
sense and ordinary creativity, and the conclusory character of Kraft’s expert’s assertions of nonobviousness.  the court concluded that Kraft’s evidence of objective indicia, though substantial, was not entitled to much weight in the ultimate legal assessment of obviousness.  On the issue of inequitable conduct, the court found that Kellogg had not presented evidence that could meet the standard for intent to deceive established in Therasense,

The Federal Circuit said that Kraft’s arguments that the district court treated the objective indicia as an “afterthought,” “writing off the patent before turning to objective indicia,” and “repeatedly not[ing] its finding of obviousness before considering the objective indicia,” mischaracterized the district court’s reasoning, finding that the district court drew its conclusion of obviousness only after, not before, considering the objective indicia.

The Federal Circuit held that the district court did not draw an ultimate conclusion of obviousness before considering the objective indicia, the . The contrary is not shown by the court’s “not uncommon” choice of words when conducting the ultimate weighing, namely, that the objective indicia “do not overcome Kellogg’s extremely strong prima facie showing.”

The Federal Circuit rejected Kraft’s argument that objective indicia must be considered before drawing a conclusion about whether a person of ordinary skill had motivation to combine the prior art, finding that the staged consideration undertaken by the district court, and reflected in its cases, makes sense within the motivation-to-combine framework.

The Federal Circuit also rejected Kraft’s argument that the district court failed to provide “explicit and clear reasoning providing some rational
underpinning” for its invocation of common sense in its motivation-to-combine analysis.  The Federal Circuit said that the court relied on the record demonstrating the “known problem” of an insufficiently “convenient opening and reclosing arrangement” for cookie packaging and the suggestion in the prior art that it was useful for a variety of items.

The Federal Circuit also found that that the “enhanced burden” when the prior art relied upon for invalidation was previously considered by the USPTO “provides no basis for a different result.”  First the Federal Circuit noted that there is no specific PTO determination of nonobviousness based on the particular prior art now at issue. Second, the Federal Circuit found the showing of obviousness to be sufficiently strong that no PTO contrary determination could alter the conclusion about summary
judgment.

On the cross-appeal of the finding of no inequitable conduct, the Federal Circuit no reversible error in the district court’s conclusion that Kellogg’s evidence was insufficient to permit a finding of the intent required for inequitable conduct based on Kraft’s reexamination arguments.  Kellogg alleged that an item in the prior art considered by the Board during reexamination contained a misprint, and that Kraft committed inequitable conduct by not so informing the Board. This sentence containing the misprint was material, because it resulted in the Board’s reversing the reexamination Examiner.  However, the Federal Circuit said that Kellogg also had to prove that  Kraft, in what it did not say about the sentence
that was the focus of the Board’s attention, had a “specific intent to mislead or deceive the PTO.”

The Federal Circuit said that the intent requirement is demanding, and citing Therasense said that the evidence must be “sufficient to require a finding of deceitful intent in the light of all the circumstances”; deceptive intent “must be the single most reasonable inference able to be drawn from the evidence”; and “when there are multiple reasonable inferences that may be drawn, intent to deceive cannot be found.”

The Board noted that there was no evidence of whether or not Kraft actually believed it was a misprint, just Kellogg’s argument of what Kraft had to have believed.  The Federal Circuit said that without more evidence of Kraft’s belief, one reasonable inference on the record—especially given Kellogg’s burden of persuasion—is that Kraft did not
believe that there was a misprint.

The district court’s obviousness analysis, approved by the Federal Circuit, relied upon the identification of the problem to be solved in the Background.  Prosecutors need to be careful in drafting the background section, so that it does not make the invention seem like the logical (and thus obvious) solution to the problem that perhaps only the inventor had the insight to identify in advance.

 

Karma’s a ^$#*! – Sanction for Litigation Misconduct Results in Finding of Intent to Deceive the USPTO

In Regeneron Pharmaceuticals, Inc. v. Merus N.V., [2016-1346] (July 27, 2017), the Federal Circuit affirmed final judgment that  U.S. Patent No. 8,502,018 (which related to using large DNA vectors to target and modify endogenous genes and chromosomal loci in eukaryotic cells) unenforceable because of Regeneron’s inequitable conduct during prosecution.

Merus argued that Regeneron’s patent prosecutors withheld four references from the USPTO during prosecution.  The references were cited in a third-party submission in related U.S. patent prosecution and in
European opposition briefs, were but-for material, and were withheld by Regeneron with the specific intent to deceive the PTO.  Regeneron argues, however, that the references were not but-for material, that they were cumulative of references the PTO actually relied on during prosecution, and that Regeneron did not have any specific intent to deceive the PTO.

During prosecution, Regeneron asserted that it had developed a commercial embodiment of the claimed mouse with surprising
results.  However, it was undisputed that that assertion was false; Regeneron had not developed any such mouse at the time.  Regeneron’s application was allowed.  However, just before allowance, a third party made a submission of prior art in the parent case. This prior art was not disclosed in the ‘018 patent, but once the ’018 patent had been allowed, the art was disclosed in every related application having the same specification and similar claims.

The Federal Circuit acknowledged that the materiality required to establish inequitable conduct is but-for materiality, and said that In determining the materiality of a reference, the court applies the preponderance of the evidence standard and gives claims their broadest reasonable construction.  The Federal Circuit added that a reference is not but-for material, however, if it is merely cumulative, i.e., when it “teaches no more than what a reasonable examiner would consider to be taught by the prior art already before the PTO.”

In addition to proving the materiality of the withheld references, a challenger must prove that the patentee acted with the specific intent to deceive the PTO.  Evidence of intent to deceive should be weighed independently of the materiality analysis. Proving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive, rather clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference.

Direct evidence of intent is not required, and an inference of intent to deceive can be made where the applicant engages in “a pattern of lack of candor,” such as repeatedly makes factual representations “contrary to the true information he had in his possession.”

Applying the broadest reasonable interpretation to the claims, the Federal Circuit concluded that the district court properly found that the withheld references were but-for material separately and in combination.  As to specific intent to withhold, the Federal Circuit approved the district court’s drawing an adverse inference of specific intent from Regeneron’s litigation conduct, which the Federal Circuit described as “beset with troubling misconduct.”  This misconduct included:

  • Failure to provide adequate infringement contentions
  • Failure to product conception and reduction to practice documents in discovery
  • Taking the position that no claim terms required construction
  • Arguing that a disclosure of a memo from outside counsel did not work a waiver of attorney-client privilege and failure to identify relevant documents for the Court’s in camera review
  • Failure to recall in a deposition communications with the patent examiner
  • Maintaining claims of privilege regarding the knowledge and thoughts about the withheld references.

The Federal Circuit was careful to point out that this was not a case of punishing a party’s post prosecution misconduct by declaring the patent unenforceable, because Regeneron was accused of misconduct during prosecution as well.  Regeneron’s litigation misconduct, however, obfuscated its prosecution misconduct.

The Federal Circuit concluded that In light of Regeneron’s widespread litigation misconduct, including the use of sword and shield tactics
to protect its deliberations over the disclosure of the withheld references to the PTO, that the district court did not abuse its discretion by drawing an adverse inference of specific intent to deceive the PTO.

 

 

 

Invention Must Inevitably Result to be Anticipated by Inherency

In U.S. Water Services, Inc., v. Novozymes A/S, [2015-1950, 2015-1967] (December 15, 2016), the Federal Circuit vacated summary judgment of anticipation, and affirmed the denial of summary judgment of no inequitable conduct.

The patents relate to methods of reducing fouling in fermentation equipment through the use of phytase.  The district court found the claims inherently anticipated.  The Federal Circuit cautioned that inherency may not be established by probabilities or possibilities, and said that the mere fact that a certain thing may result from a given set of circumstances is not sufficient.  The inherent result must inevitably result from the disclosed steps.

While the prior art disclosed the use of phytase in fermentation, the Federal Circuit found that the district court erred in finding no genuine dispute of material fact as to whether the patents-in-suit were inherently anticipated because the prior art discloses the conditions that will necessarily result in phytase reducing deposits.  In particular the district court erred in deeming irrelevant evidence that practicing the prior art will not always result in deposit reduction.  The Federal Circuit found a genuine dispute as to a material fact remained and that, consequently, the district court improperly granted summary judgment on inherent anticipation.

Regarding the denial of Summary Judgment of no inequitable conduct. A party seeking to prove inequitable conduct must
show that the patent applicant made misrepresentations
or omissions material to patentability, that he did sowith the specific intent to mislead or deceive the USPTO, and that deceptive intent was the single most reasonable inference to be drawn from the evidence.  The Federal Circuit found no genuine dispute about this material fact.  The Federal Circuit found that the record contains no suggestion that, but-for the disclosures the examiner would not have issued the patents-in-suit.

Art That Did Not Invalidate Can Still Be Material

In American Calcar, Inc. v. American Honda Motor Co., Inc., 2013-1061 (Fed. Cir. 2014), the Federal Circuit affirmed a finding of inequitable conduct for failing a disclose a reference, even though the patent was found valid over that reference.  The Federal Circuit explained that district courts and the PTO employ different evidentiary standards and rules for claim construction. Therefore, “even if a district court does not invalidate a claim based on a deliberately withheld reference, the reference may be material if it would have blocked patent issuance under the PTO’s different evidentiary standards.” citing Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc).  Thus the Federal Circuit concluded that the jury’s verdict finding the patents at issue non-obvious thus does not weigh on the determination of materiality for inequitable conduct.”

Fraud is Alive and Well after Therasense

Although the stringent “but for” test of materiality of Therasense has made it difficult to show inequitable conduct, in Apotex, Inc. v. UCB, Inc., 2013-1674 (Fed. Cir. 2014) the Federal Circuit affirmed a finding of inequitable conduct.  After finding materilaity, i.e., that thepatent would not have been allowed but for misconduct, the Federal Circuit went out of its way to point out that there is no duty to disclose suspicions or beliefs regarding the prior art.  The Federal Circuit said that there is nothing wrong with advocating, in good faith, a reasonable interpretation of the teachings of the prior art.  However the Federal Circuit found that the misconduct at issue, however, goes beyond failing to disclose a personal belief or alternative interpretations of the prior art; but consisted of affirmatively and knowingly misrepresenting material facts regarding the prior art.  In fact, the Federal Circuit found that the case comes close to the type of affirmative misconduct that in Therasense we held could justify finding inequitable conduct without showing but-for materiality.  The Federal Circuit found the conduct conduct evidences a pattern of lack of candor, and agreed with the district court that deceptive intent was the single most reasonable inference that can be drawn from the evidence.