After Therasense, Knowledge of a Reference’s Materiality Does Not Prove an Intent to Deceive the PTO
|Judges: Rader, Linn (author), Wallach|
|[Appealed from D. Nev., Judge Mahan]|
In 1st Media, LLC v. Electronic Arts, Inc., No. 10-1435 (Fed. Cir. Sept. 13, 2012), the Federal Circuit reversed the district court’s grant of DJ of inequitable conduct and the district court’s finding that U.S. Patent No. 5,464,946 (“the ’946 patent”) is unenforceable.
1st Media, LLC (“1st Media”) owns the ’946 patent, which is directed to an entertainment system used in purchasing and storing multimedia karaoke information. The ’946 patent names Dr. Scott Lewis as the inventor. Lewis’s lawyer, Joseph Sawyer, filed and prosecuted the application that led to the ’946 patent. While the ’946 patent was pending, Sawyer prosecuted the following three patent applications for related inventions made by Lewis: International Patent Application No. PCT/US93/10930 (“the PCT application”); the application that became U.S. Patent No. 5,325,423 (“the ’423 patent”); and the application that became U.S. Patent No. 5,564,001 (“the ’001 patent”). During examination of the PCT application, a European patent examiner rejected it, citing as the closest prior art International Publication WO 90/01243 (“Bush”). While examining the application that led to the ’423 patent, a U.S. examiner rejected several claims as anticipated by U.S. Patent No. 5,027,400 (“Baji”). During examination of the application that led to the ’001 patent, a U.S. examiner rejected claim 1 as obvious in view of U.S. Patent No. 5,220,420 (“Hoarty”). During prosecution of the ’946 patent, neither Lewis nor Sawyer ever disclosed the Bush, Baji, or Hoarty references (collectively “the three references”) to the PTO, and the PTO did not consider the three references.
1st Media sued Electronic Arts, Inc. (“Electronic Arts”) for infringement of the ’946 patent. Electronic Arts asserted an inequitable conduct defense, based in part on 1st Media’s failure to cite the three references, and counterclaimed for DJ of inequitable conduct.
At trial, Lewis and Sawyer both testified that they did not appreciate the materiality of the three references. Specifically, Lewis testified that “nondisclosure of the Bush reference was ‘an oversight that got lost in the cracks at that time and wasn’t a conscious decision not to report [it].’” Slip op. at 6 (alteration in original) (citation omitted). Sawyer testified that while he was prosecuting the ’946 patent, he had newly set up a solo office out of his home, and his practice at that time was very active. Both Lewis and Sawyer further testified that the technology in the applications that led to the ’423 and ’001 patents was so distinct from the ’946 patent that it did not occur to them to disclose Baji or Hoarty during prosecution of the ’946 patent. The district court concluded that these explanations were not credible and that Lewis and Sawyer knew that the references were material. The district court then inferred intent to deceive the PTO during prosecution of the ’946 patent and held the ’946 patent unenforceable for inequitable conduct.
“Knowledge of the reference and knowledge of materiality alone are insufficient after Therasense to show an intent to deceive.” Slip op. at 12.
On appeal, the Federal Circuit reversed the district court based on the standard set forth in Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc). The Court noted that under Therasense, to find inequitable conduct “absent affirmative egregious misconduct, a defendant must prove by clear and convincing evidence both of the ‘separate requirements’ that: (1) ‘the patentee acted with the specific intent to deceive the PTO’; and (2) the non-disclosed reference was but-for material.” Slip op. at 8 (citing Therasense, 649 F.3d at 1290-91). For requirement (1), a defendant must prove the following three elements: that the applicant knew of the reference, knew that it was material, and “made a deliberate decision to withhold it.” Id. (quoting Therasense, 649 F.3d at 1290). The Court noted that post-Therasense, a court can no longer infer intent to deceive from nondisclosure of a reference solely because that reference was known and material. Moreover, a patentee does not need to provide any good-faith explanation for his or her conduct unless and until an accused infringer has met his or her burden to prove an intent to deceive by clear and convincing evidence.
Because the district court issued its opinion before the Federal Circuit’s Therasense opinion, the Federal Circuit applied the Therasense standard in reversing the district court’s finding that Lewis and Sawyer committed inequitable conduct. Although Electronic Arts admitted that it had no direct evidence that Lewis or Sawyer intended to deceive the PTO, it argued that the way in which Lewis and Sawyer became aware of the references, coupled with statements they made during prosecution of the ’946 patent, demonstrated the necessary mens rea to infer a deliberate decision to withhold the references. Rejecting Electronic Arts’ arguments, the Court reiterated that knowledge of the reference and knowledge of materiality alone are insufficient after Therasense to show an intent to deceive. Nor is it enough to argue carelessness, lack of attention, poor docketing, or anything else that might be considered negligent or even grossly negligent. The Court distinguished Aventis Pharma S.A. v. Hospira, Inc., 675 F.3d 1324 (Fed. Cir. 2012), in which there was affirmative conduct by the applicants showing not only specific awareness of materiality, but “careful and selective manipulation of where, when, and how much of the most material information to disclose.” Slip op. at 13-14. Evidence of such selective disclosure was not present in the instant case.
Regarding the Bush reference, although Lewis testified that he now thinks that Bush is relevant, the record did not support the inference that Lewis and Sawyer deliberately chose to withhold Bush. Similarly, the Court explained that there was “simply no evidence” in the record that either Lewis or Sawyer deliberately withheld the Baji or Hoarty references from the PTO during the prosecution of the application that led to the ’946 patent, and there can be no inference that Lewis or Sawyer intended to deceive the PTO. Id. at 15-16.
Accordingly, the Court reversed both the district court’s grant of DJ of inequitable conduct and the district court’s finding that the ’946 patent was unenforceable.