Tubing Explosion: Inequitable Conduct Renders a Patent Family Unenforceable

Holding

In a declaratory judgment action brought by Global Tubing, the district court granted the Plaintiff’s motion for summary judgment of unenforceability for inequitable conduct. Glob. Tubing LLC v. Tenaris Coiled Tubes LLC, 2023 U.S. Dist. LEXIS 46067 (S.D. Tex. Mar. 17, 2023).[1]

Background

The Tenaris patents at issue are U.S. Patent Nos. 9,803,256 (“the ’256 patent”), 10,378,074 (“the ’074 patent”), and 10,378,075 (“the ’075 patent”), relating to high performance material for coiled tubing in the oil and gas industry and methods of producing the same.

Southwestern, a former competitor, created and distributed to its customers a “sales brochure” describing its CYMAX tubing product. Glob. Tubing, 2023 U.S. Dist. LEXIS 46067 at *4. Page 30 of the brochure disclosed the carbon content of CYMAX, which overlaps with the carbon content in Defendant’s ‘256 patent. Id. at *4-5. Soon after Tenaris filed for the ‘256 patent, it obtained a copy of the CYMAX brochure, which was distributed to those at Tenaris working on the ‘256 patent. Id. at *5. One member of the Tenaris team wrote to the lead inventor, Martin Valdez, “look at the chemistries (Page 30 for instance for CYMAX 100). This is essentially our chemistry for H5590 (A606HS).” Id. Valdez sent the brochure to Tenaris’s in-house counsel, who forwarded it to outside patent prosecution counsel, but no one provided the CYMAX brochure to the USPTO Id.

Later in prosecution of the ’256 patent, in preparing an inventor declaration to overcome an obvious rejection, Valdez wrote to the prosecuting counsel about the CYMAX brochure stating, “In page 30 of the CYMAX.pdf doc you can see the spec of the CYMAX 100 which was 0.13 - 0.17 Carbon. I am not sure it is a good idea to disclose this document.” Id. at *11-12. The CYMAX brochure was still not provided to the USPTO. Id. at *12.

In prosecuting the two children patents (the ’074 and the ’075 patents), Tenaris decided to provide the CYMAX brochure to the USPTO, however, in a way where the brochure was dissected into five parts with multiple pages removed, including page 30 showing the carbon content of CYMAX. Id. at *14. Tenaris also changed inventorship of the child patents so that available prior art was no longer considered, as the prior art had previously rendered the patents obvious. Id.

District Court

Inequitable Conduct of the ‘256 Patent

A breach of duty of candor and good faith, coupled with intent to deceive, constitutes inequitable conduct. Id. at *7. To establish inequitable conduct, clear and convincing evidence are required to show that the applicant (1) misrepresented or omitted information material to patentability, and (2) did so with specific intent to mislead or deceive the PTO. Id. Specific intent to deceive must be the single most reasonable inference able to draw from the evidence. Id. at *9.

For materiality of the omitted CYMAX brochure, the Court found that “there can be little doubt that the CYMAX brochure satisfies even the strictest criteria,” as one of the inventors recognized that the brochure contains “essentially our chemistry.” Id. at *10. A finding of materiality is further supported by Tenaris’s act of removing page 30 when it later submitted the brochure. Id. at *10-11.

For intent to mislead or deceive, after reviewing the statement made by Valdez, the lead inventor, to the prosecuting counsel about the CYMAX brochure, the Court wrote that “[r]arely do courts come across such stark evidence of the intent fork of inequitable conduct.” Id. at *12. The Court found that an intent to deceive is the most reasonable inference from the evidence. Id.

In response to Tenaris’ argument that Global should not make arguments inconsistent with its invalidity contention, the Court ruled that invalidity contentions should not estop a party from later taking a different position, especially in such a case in which so much has been revealed in discovery. Id. at *12-13.

‘074 and ‘075 Child Patents Unenforceable

For inequitable conduct related to a parent patent to render a child patent unenforceable, the inequitable conduct at issue needs to have an “immediate and necessary relation” to the children patents. Id. at 6.

The Court found that the “immediate and necessary relation” between the ‘256 patent and its children was established not only by patentee’s terminal disclaimer in the children patents, but also in actions taken during the prosecution of the children. Id. at *13-14. Tenaris’ failure to submit the full original CYMAX brochure and its change of the inventors to disable relevant prior art that would have rendered the patents obvious “clearly show the relation between the ’256 patent and the ’074 and ’75 children patents.” Id. at *14.

Take-aways

As the Court noted, “the remedy for inequitable conduct is the ‘atomic bomb’ of patent law,” because “inequitable conduct regarding any single claim renders the entire patent unenforceable.” Id. at *8. And as also shown in this case, the “fruit of the poisonous tree” doctrine may mean the atomic bomb blows up related patents as well.

Although the court tightened the standards for finding both intent and materiality in Therasense to avoid overuse of this doctrine of inequitable conduct, patent practitioners should remain vigilant and watch out for themselves and their clients. The duty of candor and good faith is on every individual associated with the filing and prosecution of the patent. 37 C.F.R. §1.56. Patent practitioners may need to educate their clients about this duty when necessary. As advised by the Federal Circuit, “when a question of materiality is close, a patent applicant should err on the side of disclosure.” LNP Eng’g Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347, 1361 (Fed. Cir. 2001).

Endnotes

[1] Significant detail regarding the facts may be found in an earlier discovery motion decision regarding inequitable conduct and attorney-client privilege, Glob. Tubing, LLC v. Tenaris Coiled Tubes, LLC, No. 4:17-CV-3299, 2021 U.S. Dist. LEXIS 58700 (S.D. Tex. Mar. 26, 2021).