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Failure to Disclose Material Information Was Not Inequitable Conduct Where Most Omitted Material Was Disclosed Later During Prosecution

March 21, 2006

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Last Month at the Federal Circuit - April 2006

Judges: Newman, Mayer, Gajarsa (author)

In Kao Corp. v. Unilever United States, Inc., Nos. 05-1038, -1049 (Fed. Cir. Mar. 21, 2006), the Federal Circuit affirmed the district court’s ruling that U.S. Patent No. 6,306,382 (“the ’382 patent”) was valid and enforceable but not infringed.

Kao Corporation (“Kao”) owns the ’382 patent, which claims a cosmetic skin care product used to remove keratotic plugs commonly known as blackheads from facial skin. Unilever United States, Inc. (“Unilever”) produces the allegedly infringing product under the trade name Pond’s Clear Pore Strips. Kao sued Unilever, alleging that Pond’s Clear Pore Strips infringed the ’382 patent. Following a three-day bench trial, the district court held that the ’382 patent was valid and enforceable, but not infringed by the Pond’s product.

On appeal, Unilever first argued that the district court erred in finding that the ’382 patent satisfied the written description requirement of 35 U.S.C. § 112. Unilever’s argument focused on a limitation added by amendment to claim 1 that recited “wetting the skin or said cosmetic article” prior to applying the cosmetic article to the skin. Unilever asserted that the specification did not describe a wetting step but only embodiments in which the cosmetic article was already wet. Though the Federal Circuit noted that Unilever’s arguments were “not without force,” it concluded that it was “poorly positioned, relative to the finder of fact” to contradict the district court’s determination, which was not clearly erroneous.

Next, Unilever argued that the district court erred in finding Kao’s evidence of unexpected results sufficient to rebut its prima facie case of obviousness on three grounds. First, Unilever contended that it had suffered both “surprise and substantial prejudice” because Kao never notified Unilever of its intent to rely on evidence of unexpected results to rebut Unilever’s claim of obviousness. Second, Unilever argued that the district court failed to use the closest prior art in assessing Kao’s showing of unexpected results. Third, Unilever argued that the district court failed properly to assess “the totality of the evidence” in finding the ’382 patent was not obvious, contending that “the overwhelming weight of the evidence demonstrate[d] that the ’382 patent is obvious,” notwithstanding Kao’s successful showing of unexpected results.

The Federal Circuit dismissed Unilever’s first contention, noting that the evidence of unexpected results Kao relied on was in the prosecution history, which Unilever introduced into evidence. Next, the Federal Circuit asserted that, even if the district court had evaluated Kao’s evidence of unexpected results in light of the nonclosest prior art, such error would be harmless because Unilever did not allege that Kao’s results were any lessunexpected in view of what it considered to be the closest prior art. Finally, the Federal Circuit concluded that the “overwhelming evidence” cited by Unilever was “little more than the very evidence used to establish the prima facie case.” Slip op. at 12.

Unilever further argued that the district court erred in failing to find the ’382 patent unenforceable for inequitable conduct. The allegations were based on a declaration filed by one of the inventors during prosecution. The declaration reported unexpectedly effective results for one copolymer variant, but failed to disclose both negative test results for a related variant and the margins of error for the tests. The district court found that the withheld information was material, but concluded that Kao did not act with intent to deceive, because the omitted test results but not the margins of error were ultimately disclosed to the examiner, albeit more than one year after the declaration was filed. In affirming the district court’s decision, the Federal Circuit noted that, “although there certainly was evidence from which the trial court could have concluded that Kao acted with intent to deceive,” it was “very reluctant to question the judgment of the finder of fact, who appears to have considered the relevant evidence including the rather glaring failure of the inventors to offer any rationale for the omission in rendering the decision.” Id. at 14-15.

Finally, Kao cross-appealed the district court’s finding that Unilever’s product did not infringe the ’382 patent. The district court had construed claim 1 to require a particular acid or anhydride, but to exclude the salt form. Because Unilever’s product used the salt form, the district court found that Kao had failed to prove literal infringement. Kao argued on appeal that (i) Unilever’s product in fact uses the acid, and not the salt; and (ii) even if Unilever’s product does use the salt, a salt can infringe an acid claim if the salt provides the same “beneficial effect” as the acid. The Court dismissed Kao’s first argument, finding it to be unsupported by any reference to the record or any other authority. As to the second argument, the Court found that Kao never challenged the district court’s construction of claim 1 that excluded the salt form of the acid. Thus, the Court concluded that a salt could not infringe claim 1 under the unchallenged claim construction even if the salt provided the same function as the acid. Moreover, Kao did not raise a DOE argument.

Judge Newman, concurring in part and dissenting in part, agreed with the panel’s decision to affirm the lower court’s findings that the ’382 patent was valid, and that Kao did not commit inequitable conduct, but dissented from its decision to affirm the lower court’s finding of noninfringement, arguing that the panel misunderstood the chemistry involved. Judge Newman agreed with Kao that 85.5% of the accused product is acid, with only 14.5% salt.

Judge Mayer, concurring in part and dissenting in part, agreed with the panel’s decision to affirm the trial court’s findings regarding the written description requirement, inequitable conduct, and noninfringement, but dissented from its decision to affirm the lower court’s determination of nonobviousness, arguing that Kao’s showing of unexpected results was insufficient as a matter of law to overcome the prima facie case of obviousness because Kao introduced no evidence that its invention removed plugs unexpectedly better than the closest prior art reference.