The U.S. Court of Appeals for the Federal Circuit reversed a district court finding of inequitable conduct as lacking appreciation of the “materiality prong” and instructed the chief judge of the district court to reassign the case away from Judge M. Real, the second time in 10 days an appellate court had taken this unusual action in a matter pending before Judge Real. Research Corporation Technologies, Inc. v. Microsoft Corporation, Case No. 06-1275 (Fed. Cir., Aug. 1, 2008) (Rader, J.).

The case came before Judge Real after an illness resulted in a transfer from the originally assigned judge, who had conducted a Markman hearing and had granted a motion for partial summary judgment of infringement against Microsoft. Judge Real, without an opinion, reversed the prior summary judgment grant and granted Microsoft’s motions for summary judgment of non-infringement and invalidity. Then, at Microsoft’s request, the district court cancelled a jury trial and instead ordered a bench trial limited to the issue of unenforceability of the patents in suit. At that bench trial, Microsoft, which did not call any witnesses, argued for one hour. Research Corporation Technologies (RCT) called its inventors to testify on candor and good faith. However, the court barred expert testimony on the materiality prong of the inequitable conduct defense. Ruling from the bench, Judge Real held that the patents were unenforceable due to inequitable conduct and issued a cursory final order. RCT appealed.

While the appeal was pending, Microsoft moved for attorneys’ fees and amplification of the court’s findings. Judge Real granted the fee request, but did not amplify any of his findings of fact or conclusions of law.

The Federal Circuit reversed or vacated all of the district court’s holdings, i.e., on invalidity, non-infringement and unenforceability. As to the holding that RCT’s patents were unenforceable, the Federal Circuit found clear error. The court found that Judge Real misapplied the two-prong inequitable conduct test, completely ignoring the essential materiality element of that test in finding a non-prior-art document describing experiments performed by one of the inventors post application filing to be potentially material to inequitable conduct. As for the district court’s findings on the intent prong, Federal Circuit found clear error as the district court relied on an inventor’s testimony as to his hope for remuneration as the basis for a finding of intent to deceive the U.S. Patent and Trademark Office (USPTO). The Court reversed the holding on inequitable conduct, vacated the grant of attorneys’ fees and remanded the matter along with the earlier-decided motions for summary judgment on infringement.

On remand, however, the case will not go back to Judge Real. Applying Ninth Circuit law, the Federal Circuit instructed reassignment on the basis that there had been a pattern of error and finding that Judge Real may not easily and objectively reconsider his strongly expressed convictions in the case.

Practice Note: Ten days earlier, the U.S. Court of Appeals for the Ninth Circuit removed Judge Real from a class action based on abuse of discretion in certifying a class “without making any findings regarding Rule 23’s requirements for class certification.” Scott Bonlender et al. v. American Honda Motor Co. Inc., Case No. 07-55258 9th Cir., (July 22, 2008).