KFx Medical Corp. ("KFx") alleged that Arthrex, Inc. ("Arthrex") infringed three of its patents: United States Patent Number 7,585,311 ("311 Patent"), United States Patent Number 8,100,942 ("942 Patent") and United States Patent Number 8,109,969 ("969 Patent"). All three patents share the same name: "System and Method for Attaching Soft Tissue to Bone." KFx's moved for summary judgment of no inequitable conduct in connection with the '942 Patent and"the '969 Patent.

As explained by the district court, Arthrex's claim of inequitable conduct was directed to the conduct of Ryan Melnick, the attorney who prosecuted the patents. Arthrex alleged that Mr. Melnick intentionally diverted the Examiner of the '942 and '969 Patents away from a statement by KFx's President and CEO, Tate Scott ("the Scott Statement"), and instead directed the Examiner to less relevant prior art references. Arthrex contended the Scott Statement explained that the work performed in a 2004 article by Peter J. Millett, M.D., et al., entitled "Mattress Double Anchor Footprint Repair: A Novel, Arthroscopic Rotator Cuff Repair Technique" ("the Millett article") was prior art to all of the patents. Arthrex claimed that Mr. Melnick's diversionary tactic caused the Examiner not to apply the Millett article, and that if the Examiner had applied that article, he would have rejected the claims. Arthrex also asserted that "Mr. Melnick failed to disclose to the Examiner the correct priority date for the '969 patent and, in fact, took steps to mislead the Examiner into believing the '969 patent was entitled to the same priority date as the '942 patent, when he knew it was not."

After the district court reviewed the Federal Circuit's recent reassessment of the doctrine of inequitable conduct in Therasense, Inc. v. Becton Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc), the district court addressed defendant's claim of inequitable conduct, which was two-fold: "First, Defendant argues Plaintiff committed inequitable conduct when it misled the Examiner of the '942 and '969 Patents to believe the Scott Statement was being considered in the reexamination of the '311 Patent. Second, Defendant argues Plaintiff failed to disclose the priority date of the '969 Patent was June 1, 2005."

Turning to the defendants' first argument, KFx asserted that the evidence surrounding Mr. Melnick's submission of the Scott Statement was not sufficient to allow the inequitable claim to proceed. KFx argued that there was no evidence to support a finding of materiality or a finding of deceptive intent.

In response, the defendant asserted that there was sufficient evidence to allow the jury to draw a reasonable inference of both deceptive intent and materiality--that evidence included Mr. Melnick's failure to inform the Examiner of the '942 and '969 Patents that the PTO refused to consider the Scott Statement during the reexamination proceeding . The district court disagreed. "However, Plaintiff points out that Mr. Melnick submitted to the Examiner Defendant's Answers to the Complaints in this case, which allege that the PTO refused to consider the Scott Statement during the reexamination despite Mr. Melnick's petition that the PTO consider that document. Defendant's assertion that Mr. Melnick failed to inform the Examiner that the PTO refused to consider the Scott Statement is, therefore, not supported by the evidence."

The district court also disagreed with the defendant's other evidence. "Defendant's other evidence is, likewise, insufficient to require a finding of deceptive intent. That evidence includes a telephone interview between the Examiner and Mr. Melnick, the contents of which the parties dispute and from which the parties draw different inferences. The other evidence is similarly innocuous, and does not require a finding of deceptive intent. Therefore, the Court grants Plaintiff's motion as to this allegation of inequitable conduct."

Turning to the priority date issue, the district court noted that "Defendant alleges Mr. Melnick committed inequitable conduct by claiming priority to a provisional application with a priority date of June 2, 2004, rather than claiming June 1, 2005, as the priority date. Defendant claims that by doing so, Mr. Melnick was able to avoid the Millett article as prior art and prevent the Examiner from searching for prior art during the one year period between June 2, 2004, and June 1, 2005."

The district court again disagreed with the defendant. "Plaintiff argues it is entitled to summary judgment on this allegation for several reasons. First, it argues Mr. Melnick's claim to priority to the provisional application was proper. Plaintiff states it is the Examiner who determines the priority date applicable to the individual claims, and there is no evidence the Examiner chose June 1, 2005, as the priority date for the claims of the '969 Patent rather than June 2, 2004. Defendant argues Mr. Melnick knew the priority date for the '969 Patent was June 1, 2005, but that he failed to so inform the Examiner to avoid the Millett article and other prior art. The problem with Defendant's argument, however, is it relies on supposition, not evidence. In the absence of any evidence to support this argument, the Court grants Plaintiff's motion as to this allegation of inequitable conduct, as well."

Accordingly, the district court granted the motion to dismiss the inequitable conduct claim.

KFX MEDICAL CORP. v. ARTHREX, INC., Case No. 11cv1698 DMS (BLM) (S.D. Cal. July 10, 2013)