November 2013
Failure to Expressly Negate a False Declaration Establishes Materiality and Raises a Strong Inference of Intent for Inequitable Conduct
| Judges: Prost, Moore (author), O’Malley |
| [Appealed from N.D. Ill., Senior Judge Hart] |
In Intellect Wireless, Inc. v. HTC Corp., No. 12-1658 (Fed. Cir. Oct. 9, 2013), the Federal Circuit affirmed the district court’s judgment that U.S. Patent Nos. 7,266,186 (“the ’186 patent”) and 7,310,416 (“the ’416 patent”) asserted by Intellect Wireless, Inc. (“Intellect Wireless”) were unenforceable due to inequitable conduct.
The ’186 and ’416 patents are directed to the wireless transmission of caller identification information. During prosecution, the sole inventor, Daniel Henderson, submitted a declaration under 37 C.F.R. § 1.131 (“Rule 131 declaration”) to overcome a prior art reference, averring that the claimed invention was actually reduced to practice and demonstrated at a meeting in July 1993. The claimed invention was, however, never actually reduced to practice.
Henderson later filed a revised Rule 131 declaration. In this declaration, Henderson mentioned diligence from conception to the effective filing date, implying reliance upon constructive reduction to practice. Henderson’s prosecuting attorney also informed the examiner that the revised declaration contained none of the actual reduction to practice elements. Yet, the revised declaration also described a “prototype now in the Smithsonian that was in development for a . . . demonstration” in July 1993 and a “product brochure and packing receipt,” and expressly mentioned “actual reduction to practice” and “bringing the claimed subject matter to commercialization.” Slip op. at 6 (citations omitted). Furthermore, to obtain claims in several related patents, Henderson submitted a declaration and a press release, both of which also indicated that he had built a device that could actually receive wireless transmissions.
Following a bench trial, the district court found the ’186 and ’416 patents unenforceable due to inequitable conduct. The district court concluded that HTC Corporation (“HTC”) had proven the materiality prong because the Rule 131 declaration contained a false statement that was neither withdrawn, specifically called to the attention of the PTO, nor fully corrected. The district court also concluded that Henderson had acted with specific intent to deceive the PTO, finding that his explanations for the misrepresentations during prosecution of the asserted patents were not credible given the pattern of false and misleading statements regarding actual reduction to practice made during prosecution of related patents. Intellect Wireless appealed.
“Therasense in no way modified Rohm & Haas’s holding that the materiality prong of inequitable conduct is met when an applicant files a false affidavit and fails to cure the misconduct.” Slip op. at 7.
On appeal, the Federal Circuit affirmed the judgment of inequitable conduct. Addressing materiality, the Court found that it was undisputed that Henderson had not actually reduced the claimed invention to practice or demonstrated a prototype in July 1993, and thus the original declaration contained multiple unmistakably false statements. The Court then held, applying the standard of Rohm & Haas Co. v. Crystal Chemical Co., 722 F.2d 1556, 1572 (Fed. Cir. 1983), that Henderson’s revised declaration had failed to correct these falsehoods, and thus cure the misconduct, because the revised declaration “never expressly negated the false references to actual reduction to practice in the original declaration”; “nowhere expressly stated the actual facts” (i.e., that neither Henderson nor Intellect Wireless had actually reduced the invention to practice); and nowhere “openly advise[d] the PTO of Mr. Henderson’s misrepresentations.” Slip op. at 6. The Court also noted that its decision in Therasense had in no way modified Rohm & Haas’s holding but rather “made clear that filing a false affidavit is exactly the sort of ‘affirmative act[] of egregious misconduct’ that renders the misconduct ‘material.’” Id. at 7 (alteration in original) (quoting Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1292 (Fed. Cir. 2011) (en banc)). The Court thus held that not only had the district court not clearly erred in concluding that Henderson had engaged in affirmative egregious misconduct when he filed a false declaration, but given the false statements and the clear failure to cure the misconduct, “the argument that materiality has not been established is entirely without merit.” Id. at 8.
The Federal Circuit also saw no error in the district court’s finding on intent. The Court reasoned that
“[s]ubmission of an affidavit containing fabricated examples of actual reduction to practice in order to overcome a prior art reference raises a strong inference of intent to deceive.” Id. at 9-10. And the Court found the inference stronger in this case since Henderson had engaged in a pattern of deceit by making false statements regarding reduction to practice to obtain claims in several related patents. Moreover, according to the Court, the district court’s finding of intent could be affirmed based on the content of the two declarations, with completely false statements in the first declaration followed by a replacement declaration that failed to expressly admit the earlier falsity. Finally, the Court held that the district court did not err in deciding not to credit Henderson’s explanation, noting that “‘[c]redibility determinations are an aspect of fact-finding that appellate courts should rarely reverse.” Id. at 11 (quoting Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1368 (Fed. Cir. 2008)). Accordingly, the Court affirmed that the asserted patents were unenforceable due to inequitable conduct.
*Daniel S. Perry is a Law Clerk at Finnegan.
