Federal Circuit No. 2013-1061

Calcar sued Honda alleging the infringement of several patents related to vehicle navigation systems and Honda responded with several defenses, including inequitable conduct. The inequitable conduct stems from Calcar's founder, Mr. Obradovich, withholding certain information from the United States Patent and Trademark Office (USPTO) during examination.

When determining whether patents should be unenforceable for inequitable conduct, it is a question of both materiality and intent. In Therasense (Fed. Cir. 2011), the Federal Circuit clarified the standards that should be used for materiality and intent. To prove inequitable conduct under the Therasense standard, the accused infringer must provide evidence that the applicant (1) misrepresented or omitted material information, and (2) did so with specific intent to deceive the USPTO. 

The test for materiality is whether the patents would have been granted "but for" the information that the appellant did not disclose. When assessing materiality, the court should apply the preponderance of the evidence standard and give claims their broadest reasonable construction. This is significant because this is the evidentiary standard used by the USPTO in granting patents, and the district courts employ different evidentiary standards than the USPTO.

Under this but-for test, the district court determined that the USPTO would not have granted the patents "but for" the information withheld by Mr. Obradovich. The Federal Circuit reviewed that determination for clear error and found that the district court did not commit clear error on the issue of materiality. Therefore the Federal Circuit affirmed the district court's determination on the issue of materiality.

With respect to intent, the district court determined that Mr. Obradovich had specific intent on deceiving the USPTO, and that Mr. Obradovich knew that the prior art was material to his invention even though he had disclosed limited information about the prior art system at issue in the patent specification and in the form of a newspaper article describing that system. The district court had found that the single reasonable inference based on the evidence was that the inventors possessed undisclosed information about the prior art system, knew it was material, and deliberately decided to withhold it.  The Federal Circuit did not find clear error with this determination and therefore affirmed the district court's determination on the issue of intent.

Accordingly, the Federal Circuit affirmed the district court in its determination that the patents were unenforceable due to inequitable conduct.