Intent to Deceive Inferred from High Degree of Materiality, Knowledge of Withheld Reference, and Lack of Credible Explanation for Nondisclosure
September 29, 2008
Last Month at the Federal Circuit - October 2008
Judges: Lourie (concurring-in-part and dissenting-in-part), Bryson, Dyk (author)
[Appealed from: D. Del., Judge Robinson]
In Praxair, Inc. v. ATMI, Inc., Nos. 07-1483, -1509 (Fed. Cir. Sept. 29, 2008), the Federal Circuit affirmed the district court’s conclusion that Praxair, Inc. and Praxair Technology, Inc.’s (collectively “Praxair”) U.S. Patent No. 6,045,115 (“the ’115 patent”) was unenforceable due to inequitable conduct. It reversed the district court’s conclusion of unenforceability with regard to Praxair’s U.S. Patent No. 6,007,609 (“the ’609 patent”) and affirmed that the ’609 patent was not invalid. The Court also altered the construction of one term in the ’609 patent and, therefore, vacated the finding of infringement. Finally, the Court reversed the judgment of invalidity of U.S. Patent No. 5,937,895 (“the ’895 patent”) based on indefiniteness. Accordingly, the Federal Circuit remanded for determination of infringement of the ’609 and ’895 patents.
Praxair owns three patents, the ’609 patent, the ’115 patent, and the ’895 patent, which are directed to pressurized storage containers designed to hold hazardous gases and limit accidental discharges. The ’609 and ’115 patents use a capillary flow restrictor to prevent discharge of stored fluids and the ’895 patent uses a pressure-controlled valve.
Praxair sued ATMI, Inc. and Advanced Technology Materials, Inc. (collectively “ATMI”) for infringement of the three patents. The district court granted partial SJ to ATMI, holding the asserted claims of the ’895 patent invalid for indefiniteness because the court concluded that the term “port body” could not be understood from the specification. The jury found that ATMI infringed the asserted claims of the ’609 and ’115 patents, and also found no asserted claims invalid. The district court denied a permanent injunction, holding that money damages would adequately compensate Praxair. The district court also held the ’115 and ’609 patents unenforceable for inequitable conduct based on a failure to disclose restricted flow orifice (“RFO”) prior art to the PTO.
On appeal, the Federal Circuit first discussed inequitable conduct with respect to the ’115 patent. Praxair challenged the materiality of the RFO art, arguing that the flow restrictors described were not similar to the capillaries described in Praxair’s patents. The Court rejected that challenge, holding that the use of a narrow passage in both the RFO art and the Praxair patents sufficiently supported the district court’s finding of materiality. It also rejected Praxair’s contention that the RFO art was cumulative, noting that Praxair failed to raise that argument before the district court.
Turning to intent, the Federal Circuit reviewed the three bases for inferring intent: that the RFO art was highly material, that the applicants knew or should have known of the RFO art, and that Praxair failed to present a credible good-faith explanation for the failure to disclose. The Court found no error as to the finding of high materiality in light of four statements made during prosecution distinguishing the application from flow restriction in the prior art. It similarly affirmed the district court’s finding that the prosecuting attorney and one of the inventors knew of the undisclosed RFO art. The Court, however, rejected the prosecuting attorney’s conclusory testimony that, during prosecution of the ’609 and ’115 patents, he did not knowingly withhold any information from the PTO. The Court rejected the testimony as failing to prove that, at the time of the application, the prosecuting attorney believed the RFO art was cumulative, or that such alleged cumulativeness was the cause of his failure to disclose, or that he could identify any specific reference rendering the RFO art cumulative. In so holding, the Court reiterated that “[h]indsight construction of reasons why a reference might have been withheld cannot suffice as a credible explanation of why, at the time, the reference was not submitted to the PTO.” Slip op. at 17-18.
The Federal Circuit then turned to the unenforceability of the ’609 patent. Because the finding of materiality as to the ’115 patent depended on statements made during prosecution of that patent, and because those statements were made after a Notice of Allowability in the application for the ’609 patent, the Court concluded that the ’609 patent should not fall with the ’115 patent. It therefore reversed the district court’s finding of inequitable conduct with respect to the ’609 patent.
The Court next turned to indefiniteness of the ’895 patent. Although the district court held the term “port body” indefinite because the specification did not adequately describe or label a port body in the figures, the Federal Circuit disagreed. It looked to discussion of two embodiments in the Summary of the Invention, which described a port body that appeared (albeit unlabeled) in the figures. The Court concluded that,“[a]lthough the discussion of the port body in the ’895 patent’s specification may not be a model of clarity, the specification adequately explains that the port body is a housing that sealingly engages the outlet of the cylinder and defines the fluid discharge path.” Id. at 23.
Finally, the Court turned to ATMI’s cross-appeal, which challenged the infringement and no invalidity conclusions of the jury as to the ’115 and ’895 patents. Because a result of unenforceability bars a finding of infringement and moots any issue of invalidity, the Federal Circuit rejected ATMI’s purported cross-appeal as improper in light of the district court’s inequitable conduct holding on the two patents. The Court, however, accepted ATMI’s arguments as alternative grounds upon which it could affirm the district court and addressed the merits of those arguments. Having affirmed the unenforceability of the ’115 patent, the Court considered only the ’609 patent.
ATMI challenged the construction of “flow restrictor” and “capillary.” Specifically, it asserted that “flow restrictor” required severe flow restriction, a position the district court had rejected as to the ’115 patent as addressing a preferred embodiment. The Federal Circuit agreed that isolated statements in the Background and Summary of the Invention sections of the specification addressed preferred embodiments, not the invention as a whole. In particular, the specification used the word “typically” in conjunction with discussion of “severe” flow restriction. While rejecting ATMI’s proposal of “severe” restriction, the Court agreed that the district court failed to sufficiently require a meaningful flow restriction. Because the specification consistently emphasized flow restriction as critical to the safety features of the invention, the Court concluded that “flow restrictor” requires “a restriction of flow sufficient to prevent a hazardous situation.” Without sufficient indication in the record whether the accused device would or would not infringe under the correct construction, the Court remanded for a determination under the correct construction.
ATMI also challenged the district court’s construction of “capillary,” which is used in the claim to limit the type of flow restrictor covered by the claim. The district court had construed “capillary” to mean “pertaining to or resembling a hair; fine and slender.” The Court rejected ATMI’s argument that the district court’s construction did not serve a purpose of the invention, stating that the patent need not claim every purpose disclosed. It also rejected ATMI’s proposed construction, which required uniformly shaped capillaries, as directed at a preferred embodiment. Although the specification contained multiple statements broadly addressing the invention as including uniformly shaped capillaries, the Federal Circuit held that other statements contradicted that understanding by referring to specific embodiments as including uniform capillaries. Finally, the Court looked to dependent claim 4, which expressly included the uniformity requirement, as supporting the district court’s exclusion of uniformity from independent claim 1. It accordingly affirmed the district court’s construction of “capillary.”
Addressing the final point raised by ATMI, the Court reviewed the district court’s denial of JMOL of invalidity based on anticipation by the Zheng patent. ATMI’s expert had testified that the sintered metal filters described in the Zheng patent were so similar to those used in the ’609 patent that if one contained capillaries, then so did the other. The Federal Circuit, reviewing the jury’s finding, concluded that the jury was not required to accept the expert’s opinion and could instead rely on the presumption of validity asserted by Praxair. The Court therefore rejected ATMI’s claim that it deserved JMOL of invalidity or a new trial on invalidity. Lastly, because the parties had reached a settlement agreement that precluded an injunction, the Court refused to address the district court’s denial of a permanent injunction.
Judge Lourie wrote separately, joining the majority in all aspects except in affirming the inequitable conduct regarding the ’115 patent. He did not believe that the district court sufficiently justified its conclusion of intent to deceive the PTO. Judge Lourie stated, “[W]hile a smoking gun may not be needed to show an intent to deceive, more is needed than materiality of a reference.” Lourie op. at 2. He found no basis for inferring deceptive intent because he viewed the record as lacking evidence that the prosecuting attorney and inventor knew of the materiality of the art, rather than merely of the art itself.
Finally, Judge Lourie agreed with the majority’s decision not to reach the issue of the district court’s denial of a permanent injunction, but reminded that patents provide a right to exclude infringing competitors, regardless of the proportion that the infringing goods bear to a patentee’s total business.