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One Bad Apple Spoils the Whole Barrel

June 04, 2002

Decision icon Decision

Last Month at the Federal Circuit - July 2002

Judges: Dyk (author), Archer, and Clevenger

In Frank’s Casing Crew & Rental Tools, Inc. v. PMR Technologies, Ltd., No. 00-1518 (Fed. Cir. June 4, 2002), the Federal Circuit affirmed the district court’s assertion of personal jurisdiction over the Defendants, affirmed the district court’s holding that the patent at issue was unenforceable due to inequitable conduct, and affirmed the district court’s denial of attorney fees.

PMR Technologies, Ltd. and PMR Services, Inc. (collectively “PMR”) are the assignees of U.S. Reissue Patent No. 34,063 (“the ’063 patent”), a reissue of U.S. Patent No. 4,738,145 (“the ’145 patent”). The patents relate to a method and apparatus for monitoring torque while screwing together pipes, such as those used in oil and gas drilling.

In 1980, brothers Darrell and Larry Vincent founded Tubular Makeup Specialists (“TMS”) to develop torque monitoring devices. Since they did not have any technical experience, Peter Weiner was hired as a consultant. John Shaunfield was then hired to develop a program for a computer used in a torque mounting device being developed. In 1981, TMS retained a law firm in Dallas, Texas, to work on a patent application related to the device. Weiner met with the Dallas law firm to explain the technical details of the device. Before filing the application, the Vincents discharged the Dallas law firm and retained a law firm in Houston, Texas.

In 1982, the Houston law firm finalized and filed the patent application. The patent application named Darrell and Larry Vincent and John Shaunfield as inventors, but did not name Peter Weiner as an inventor. The Vincents did not tell Weiner or Shaunfield about the patent application. Instead, they filed the application under 37 C.F.R. § 1.47(a), together with declarations attesting that Shaunfield refused to execute an oath or declaration. Just before the application was due to issue, Shaunfield learned about it and filed a petition to suspend the issuance. His petition caused an inquiry by the PTO to investigate whether the Vincents had violated their duty of candor under 37 C.F.R. § 1.56, but the PTO ultimately found no inequitable conduct.

In 1990, the Vincents and Shaunfield applied for a broadening reissue of the ’145 patent, which was allowed and resulted in the issuance of the ’063 patent on September 15, 1992. PMR obtained a license to the ‘063 patent and attempted to sell rights to oil and gas companies by sending “cease and desist” letters, several of which contained proposed licenses.

After receiving one of the cease and desist letters, Frank’s Casing Crew & Rental Tools, Inc. (“Frank’s”) filed an action in the United States District Court for the Western District of Louisiana seeking a DJ that the ’063 patent was invalid, unenforceable, and not infringed.

PMR moved under Rule 12(b)(2) of the Fed. R. Civ. P. to dismiss for lack of personal jurisdiction, which was denied. PMR then filed an amended Answer, Class-Action Counter-Claim, and First Amended Complaint asserting a new patent-infringement classaction claim, joining six additional defendants as named defendants and seeking to have them certified as representatives of a class of unnamed defendants.

At trial, the district court found that Weiner was an innocent coinventor that should be added to the ’145 and ’063 patents, but denied a request by Frank’s on behalf of Weiner to correct the inventorship to name Weiner as the sole inventor or as a coinventor. The district court also held that the ’063 patent was unenforceable because the Vincents had engaged in inequitable conduct.

On appeal, the Federal Circuit agreed that PMR waived its personal jurisdiction defense when PMR filed its Answer, Class-Action Counter-Claim, and First Amended Complaint, asserting infringement claims against new defendants that had not previously been involved in any infringement suit related to the ’063 patent. The Federal Circuit reasoned that voluntary invocation of federal jurisdiction waives a personal jurisdiction objection, citing Lapides v. Board of Regents of University System of Georgia, No. 01-298, 535 U.S. ____, (U.S. May 13, 2002).

Concerning inventorship, the Federal Circuit noted that the critical question was who conceived the subject matter of the claims at issue. Although the district court never construed any of the ’063 patent’s claims, the Federal Circuit found that they covered at least the torque monitoring device conceived by Weiner, and, thus, he should have been named on the patent.

In regard to the finding of inequitable conduct, the Federal Circuit agreed that the ’063 patent was unenforceable because the Vincents deliberately omitted Weiner. On behalf of Weiner, Frank’s argued that because the Vincents were not true inventors of the ’063 patent, their conduct could not render the patent unenforceable. Frank’s also argued that Weiner should be allowed to enforce the ‘063 patent as an innocent coinventor.

However, the Federal Circuit noted that it was the Vincents who sought a patent on the invention, regardless of whose invention it was, so their conduct was at issue. The Federal Circuit noted that misdeeds of coinventors, or even a patent attorney, can affect the property rights of an otherwise innocent individual. Therefore, one bad apple can spoil the entire barrel.