Am. Calcar, Inc. v. Am. Honda Motor Co., Inc.

In a post-Therasense decision, addressing the issue of inequitable conduct the U.S. Court of Appeals for the Federal Circuit upheld a district court’s finding that the asserted patents were unenforceable due to inequitable conduct based on a co-inventor’s actions, finding that defendant had shown “but for materiality” and specific intent to deceive.  Am. Calcar, Inc. v. Am. Honda Motor Co., Inc., Case No. 13-1061 (Fed. Cir., Sept. 26, 2014) (Prost, J.) (Newman, J., dissenting).

Calcar brought suit against Honda, asserting infringement of 15 patents, three of which remained at issue on appeal.  The patents relate to aspects of a multimedia system for use in a car to access vehicle information and control vehicle functions.  Honda responded to the complaint asserting various defenses, including inequitable conduct.  Honda urged inequitable conduct based on the actions of a co-inventor who allegedly deliberately withheld prior art that was material to patentability from the U.S. Patent and Trademark Office.  After the district court granted Honda’s inequitable conduct motion, Calcar appealed.

While the appeal was pending, the Federal Circuit established a narrower test for inequitable conduct in Therasense (IP Update, Vol. 14, No. 6), requiring “by clear and convincing evidence that the patent applicant (1) misrepresented or omitted information material to patentability, and (2) did so with specific intent to mislead or deceive the PTO.”  The Federal Circuit remanded the case for the district court to determine materiality and intent as to two of the patents at issue in light of Therasense.  On remand, the district court again concluded that the patents at issue were unenforceable due to inequitable conduct based on the two-prong Therasense standard, and Calcar appealed.

The Federal Court affirmed the district court’s judgment that the patents were unenforceable due to inequitable conduct.  Applying the “but-for materiality” standard set forth in Therasense, the Court agreed with the district court that undisclosed details of the prior art were material to patentability because “it would have been obvious to a person of ordinary skill in the art to include different information in the [prior art] system.”  Moving to intent, the Court found no clear error in the district court’s finding of intent to deceive.  Citing Therasense, the Federal Circuit explained that “‘[b]ecause direct evidence of deceptive intent is rare, a district court may infer intent from indirect and circumstantial evidence,’ provided that such intent is the single reasonable inference.”  The Court further noted that a district court is not bound by a jury’s finding of no equitable conduct.

In dissent, Judge Newman argued that the Therasense standard was not met.  First, Judge Newman argued there was no “but-for materiality” because the withheld prior art was provided to the PTO on reexamination and patentability was sustained by the PTO in light of that additional information.  Second, Judge Newman argued there was no evidence of intent to deceive, and the majority improperly devised an inference of deceptive intent based largely on the co-inventor’s credibility when inconsistency of recollection was also a reasonable inference.  Judge Newman noted that jury decision should be of particular relevance when the issue to be decided relates to questions of credibility.