In October, I spoke at AIPLA with James Carmichael, who used to head up the “Fraud Squad” at the PTO. He noted that there had only been three Fed. Cir. decisions upholding findings of inequitable conduct (IC) since Therasense, two of which involved attorney misconduct. Now there is a fourth. The Fed. Cir. panel of Judges Dyk, Bryson and Reyna vacated and remanded a district court’s finding of no IC, but they wrote at a level of factual detail which virtually instructed the district court to change its mind. (Ohio Willow Wood Co. v. Alps South, LLC, Appeal no. 2012-1642, 2013-1024 (Fed. Cir. November 15, 2013) a copy is available at the end of this post).
The facts of the case are rather complicated and involve litigation and two reexaminations. Ohio Willow Wood co. (OWW) had sued Alps South (Alps) for infringement of U.S. Pat. No. 5830237 (a copy is available at the end of this post), which is directed to cushioning devices, somewhat like large sox, that go over the residual stumps of amputated limbs to make the use of prosthetics more comfortable. In the litigation, Alps had obtained the testimony of three experts in the construction of such devices to support its position that the distinguishing feature relied upon by OWW – the ability of the devices to prevent migration of polymer gel from the interior to the exterior of the “sock”—was present in a prior art device called a “Single Socket Gel Liner (SSGL”).
As part of the reexamination requested by Alps, Alps submitted an advertisement for the SSGL and testimony of an expert, Mr. Jean-Paul Comtesse, who had been involved in the development and production of the SSGL, that it did not exhibit this gel leakage. The testimony was provided to the Examiner in the form of a declaration and a deposition transcript that had been obtained during the litigation. The Examiner agreed with Alps and rejected the claims as obvious.
OWW appealed to the Board and argued that the testimony by Comtesse should be disregarded because he was an interested party, and because the evidence was uncorroborated. An attorney for OWW, Mr. Gayan, argued to the Board that there was no other evidence “of record” except the ad, which did not describe the components of the SSGL. The Board characterized this issue as the “single dispositive issue,” and reversed the Examiner.
In a subsequent litigation involving another defendant, the E.D. Texas court found a continuation of the ‘237 patent invalid as obvious and the Fed. Cir. affirmed. When the stay of the original litigation was lifted, following the reexamination, the district court found the claims of the ‘237 patent invalid on the basis of collateral estoppel or as obvious. However, the district court also granted OWW’s motion for S.J. of no IC. Both parties appealed.
The Fed. Cir. found that collateral estoppel was appropriate in this case, and affirmed the obviousness ruling. The Fed. Cir. then turned its attention to the S.J. of no inequitable conduct. Alps argued that information was made known to OWW during the course of the litigation that OWW either withheld or misrepresented to obtain issuance of the ‘237 patent during the reexamination proceedings. Viewing the Therasense requirement for “but-for” materiality from the perspective of the PTO, the Fed. Cir. stated:
“The crux of our materiality determination therefore hinges on whether OWW withheld or misrepresented information that, in the absence of the withholding or misrepresentation, would have led the BPAI to credit Mr. Comtesse’s testimony asserted to invalidate a patent to be corroborated.”
Applying a rule of reason analysis, the panel found the “reliable evidence from individuals other than the alleged inventor or an interested party,” may corroborate. The panel concluded that a reasonable finder of fact could conclude that OWW withheld corroborating evidence from the PTO about the construction of the SSGL that “includes witness testimony, documents, and physical samples.”
There was, in fact, a lot of such evidence. Alps had given OWW three declarations from three “prosthetists” that the prior art SSGL did not exhibit gel leakage to the exterior of the device. Another company, Silipos, had even filed a patent application on such a device that OWW was made aware of. In fact, SSGL samples were reviewed by Comtesse during his deposition but they were not provided to the PTO or to the Board, although they would further corroborate his testimony. The panel stated that OWW’s “subjective assertions” that the prior art SSGL and the “Silosheath” device cited by the Examiner were the same product “do not appear to be meritorious.”
The panel went on to find that OWW further misrepresented the level of “interest” of Comtesse to the Board in the second reexamination proceeding, and stated:
“[T]he ambiguous testimony OWW identified does not plausibly support a conclusion that Mr. Comtesse made admissions that he was receiving royalty payments and had a stake in the outcome of the dispute….OWW’s counsel was aware that Mr. Comtesse’s level of interest was critical to convincing the [Board] to reverse the examiner’s final rejection in the second reexamination… Accordingly…we find OWW’s misrepresentations to the [Board] are tantamount to the filing of an unmistakably false affidavit….[and] may be sufficient to satisfy the materiality prong of [IC].”
If possible, things only go downhill from here. The panel found a lot of evidence of deceptive intent:
“OWW’s counsel…sought to discredit Mr. Comtesse’s testimony and …did so by making misrepresentations and misleading statements that were directly refuted by credible evidence that OWW did not otherwise disclose…. If OWW had simply withheld a single piece of information or made a single misrepresentation, this would be a different case. However, OWW withheld various pieces of information and had no reasonable explanation for the several misrepresentations it made to the PTO.… We leave it to the district court to determine if the inference of deceptive intent that we hold could be drawn when viewing that evidence in a light most favorable to Alps remains after assessing the credibility of OWW’s witnesses [citing Aventis Pharma v. Hospira].”
There is little doubt how the district court is going to rule after this monograph on IC. Despite Therasense, it should be clear that there is still a duty of candor and good faith in dealing with the PTO. The Therasense court discarded Rule 1.56(b), not Rule 1.56(a). The PTO has not finalized a revised 1.56(b), but you can pretty much guess how it will read.