The Software IP Report

No Intent to Deceive, No Inequitable Conduct

By Charles Bieneman

Categories: Inequitable Conduct, The Software IP Report

The Federal Circuit has reversed a finding of inequitable conduct where “the record contains no evidence of a deliberate decision to withhold those references from the PTO as required under Therasense, Inc. v. Becton, Dickinson & Co.”  1st Media, LLC v. Electronic Arts, Inc., No. 2010-1435 (Fed. Cir. Dec; 13, 2012).  The opinion was authored by Judge Linn, and joined by Chief Judge Rader and Judge Wallach.

The patent-in-suit, U.S. Patent No. 5,464,946, was directed to “an entertainment system for use in purchasing and storing songs, videos, and multimedia karaoke information.”  Attorney Joseph Sawyer prosecuted the application for the ‘946 patent and certain related applications, including a PCT application and two U.S. applications that later issued as U.S. Patent No. 5,325,423 and U.S. Patent No. 5,564,001.  The ‘423 patent application was filed the same day as the ‘946 patent application.  The ‘001 patent application was a continuation-in-part of the ‘423 patent application.

The ‘946 applicant failed to cite three references cited in the related applications.  The trial court, ruling prior to the Federal Circuit’s decision in Therasense, held that the failure to cite these references was inequitable conduct rendering ‘946 patent unenforceable.  At trial, the inventor and the prosecuting attorney each testified that they did not appreciate the materiality of the references, but the trial court did not find this testimony credible.

Under Therasense, “[a] court can no longer infer intent to deceive from non-disclosure of a reference solely because that reference was known and material.”  On appeal, the defendants admitted that they lacked “direct evidence” that the inventor or the attorney “intended to deceive the PTO.”  Instead, they argued that circumstances demonstrated the requisite mens rea for a finding of inequitable conduct.

Concerning the first reference, which had been cited as having relevance in the PCT application, the district court had accepted defendants’ argument that the applicant knew of the reference’s relevance and failed to disclose it to the PTO.  However, under Therasense, such knowledge is insufficient to show an intent to deceive.

The second reference had been cited in the application for the ‘423 patent.  The Federal Circuit agreed with the patent owner that even if this reference had been selectively withheld from the examiner of the ‘946 application, and even if the district court did not credit testimony that the applicants did not appreciate the materiality of the reference, it was not proper to use that lack of credibility as affirmative evidence of an intent to deceive.

The third reference, cited in the ‘001 application, was not brought to the attention of the applicants until after they had received a Notice of Allowance for the ‘946 patent, and after they had made the argument to which the reference allegedly would have been relevant.  Further, the claim limitations to which the reference allegedly was relevant “were not determinative of patentability of the ’001 Patent, meaning that there was nothing to single out [the reference] for special attention.”  Accordingly, there was no evidence supporting an intent to deceive.

The Court concluded that:

Ultimately, for all of the references, the evidence supports only that [the inventor] and Sawyer (1) knew of the references, (2) may have known they were material (which this court does not reach), and (3) did not inform the PTO of them. But that is not enough. As Therasense made clear, a defendant must prove that an applicant (1) “knew of the reference,” (2) “knew it was material,” and (3) “made a deliberate decision to withhold it.” [Citation omitted.] It is the last requirement that is missing from the record developed in this case.

Because the defendants admitted that the record on inequitable conduct was complete, there could be no proof of an intent to deceive.  Therefore, the court did not need to address the question of but-for materiality.