The U.S. Court of Appeals for the Federal Circuit reversed a finding of inequitable conduct that was based on alleged intent to deceive the U.S. Patent and Trademark Office (USPTO) regarding the content of two prior art references that were disclosed in the patent and prosecution history. Ring Plus, Inc. v. Cingular Wireless Corp., Case No. 09-1537 (Fed. Cir., Aug. 6, 2010) (Moore, J.). The panel also unanimously affirmed summary judgment of non-infringement.

The claims-in-suit were for a software-based algorithm and method for generating and delivering messages over a phone line while the phone is “ringing.” This technology is generally used for delivering advertising or other sound content to a caller who is waiting on the line for a call to be answered.

The district court found inequitable conduct after a bench trial and declared the patent-in-suit unenforceable. The inequitable conduct allegations revolved around two prior art references, known as Sleevi and Strietzel. These references were disclosed in the “background” section of the patent application and also described in an amendment submitted during prosecution. The issue was whether statements made by the applicants to the effect that neither Sleevi nor Strietzel disclosed software (as opposed to hardware) to operate a telephone system were intentional misrepresentations. After the district court answered “yes” and found the patent unenforceable for inequitable conduct, Ring Plus appealed.

The Federal Circuit reversed. The Court agreed that the district court did not clearly err in finding that a person of ordinary skill in the art would have understood the references to disclose software-based algorithms and that the statement in the background of the application to the contrary was a misrepresentation. Because of the finding of a misrepresentation was upheld, the Court also concluded that a similar statement made in prosecution was outside the bounds of permissible attorney argument. Moreover, given the record evidence that these references were particularly relevant, the Federal Circuit also determined that the district court did not clearly err in finding that the misstatement was material.

However, the Federal Circuit rejected the district court’s findings regarding intent. The district court relied heavily on its conclusion that the disclosures of software were unambiguous. The Federal Circuit disagreed and found no record evidence that the disclosures were unambiguous to a person of skill in the art. The prosecuting attorney testified that he believed during prosecution that Sleevi and Strietzel disclosed hardware, not software. He further testified to his belief that neither reference proposed software to operate the telephone systems. The defendant did not present any testimony in rebuttal. The Court concluded that the attorney’s testimony supported the reasonable inference that the applicants believed that the ambiguous disclosures in the prior art references did not disclose software. Moreover, the Court concluded that other evidence, such as the applicants’ statement that they examined the references “very carefully,” did not establish intent. Therefore, the Federal Circuit held that the district court clearly erred in finding clear and convincing evidence of deceptive intent.