On September 13, 2012, the U.S. Court of Appeals for the Federal Circuit, in 1st Media, LLC v. Electronic Arts, Inc., No. 2010-1435 (“1st Media”), reversed a Nevada district court’s ruling holding a patent owned by 1st Media unenforceable due to inequitable conduct.  1st Media, LLC v. do Pi Karaoke, Inc., No. 07-cv-1589 (Apr. 23, 2010).  The opinion is another in the recent string of cases elucidating the evolving scope of the inequitable conduct defense, and is interesting primarily for the guidance it provides concerning the “specific intent to deceive” prong of the defense under Therasense.  Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc).  

In 1st Media, the plaintiff asserted that Electronic Arts infringed claim 16 of U.S. Patent No. 5,464,946 (“’946”).  Claim 16 recites: 

16. An multimedia Karaoke information entertainment system comprising:

interactive multimedia mastering system (IMM) for receiving program source material from a network;

an interactive multimedia device (IMD) for storing program source material received from the IMM and that can select certain program source material from the IMM; and

multimedia call processing system (MCPS) that can receive credit or purchase information and can retrieve program source material to be sent to the IMD.

The PTO granted the ‘946 Patent to inventor Dr. Scott Lewis on November 7, 1995.  Attorney Joseph Sawyer represented Lewis in prosecuting the patent, which was assigned to 1st Media.

Electronic Arts asserted inequitable conduct as both a defense to infringement and a declaratory judgment counterclaim.  The district court bifurcated the case and held a bench trial on the allegations of inequitable conduct.  Electronic Arts relied on the applicant’s failure to disclose three references to the PTO during the prosecution of the ‘946 Patent: International Publication WO 90/01243 (“Bush”), U.S. Patent No. 5,027,400 (“Baji”), and U.S. Patent No. 5,220,420 (“Hoarty”).  The evidence before the district court showed that Lewis and Sawyer learned of each of the three prior art references after the Notice of Allowance for the ‘946 Application on May 2, 1992, but prior to payment of the issue fee on August 1, 1995.  Sawyer prosecuted all three of the related applications, which were each examined by a different examiner.

The European Patent Office (“EPO”) cited Bush on July 24, 1995, eight days prior to the issue fee payment for the ‘946 Patent, in a supplemental search report for a PCT Application.  Lewis had filed the PCT Application at the same time as the identical ‘946 Application.  Bush was the closest prior art document that supported the ultimate rejection of the PCT Application in 1998 and was cited by the EPO as “particularly relevant if combined with another document in the same category.” Id. at 3.

The PTO cited Baji during the prosecution of U.S. Patent No. 5,325,423 to Lewis (“’423”).  The ‘423 Application recited claim elements directed to structural limitations IMM, IMD, and MCPS, which were recited in claim 16 of ‘946, as shown above.  The examiner cited Baji on July 16, 1993, as disclosing the IMM, IMD, and MCPS limitations.  As a result, Sawyer cancelled the rejected claim.  Baji was cited over two years before the ‘946 issue fees were paid.

Finally, the PTO cited Hoarty during the prosecution of U.S. Patent No. 5,564,001 (“’001”) to Lewis, a continuation-in-part of the ‘423 Application.  Here, the examiner rejected claim 1 on June 12, 1995, as obvious in view of Hoarty because Hoarty disclosed the IMM, MCPS, and IMD structures as claimed.  Claim 1 was replaced with a new claim that retained the IMM, MCPS, and IMD limitations but distinguished Hoarty through multiple additional limitations (not present in the claims of the ‘946 Patent).  The new claim was eventually allowed and the ‘001 Patent issued in October, 1996.  Hoarty was cited over seven weeks prior to the ‘946 issue fee payment.

It was clear on the district court record that both Lewis and Sawyer knew of these three references prior to payment of the issue fee for the ‘946 Patent and that at least Sawyer knew facts suggesting their materiality to the claims of the ‘946 Patent.  At trial, both Lewis and Sawyer attempted to excuse the nondisclosure as an innocent mistake.  Lewis testified that the nondisclosure of Bush was “an oversight that got lost in the cracks at that time and [not a] conscious decision not to report [the reference].”  Id. at 6.  Sawyer declared, “[T]he Bush publication itself never sparked an awareness or belief in my mind that Bush should be disclosed.”  Id.  Sawyer also testified he only considered patentability issues during the time between the first office action and the notice of allowance; thus, he generally would not have considered the references in the ‘946 case because they came up after receipt of the ‘946 notice of allowance.

Both Bush and Lewis also offered testimony suggesting that they did not appreciate the materiality of the references.  Sawyer testified that his standard practice was to cite prior art in related foreign applications “if he knew that prior art was material.”  Id. at 13.  In addition, Lewis “did not testify that he thought that Bush was relevant to the ‘946 Patent’s prosecution in 1995.”  Id.  Regarding Baji and Hoarty, Lewis and Sawyer testified they “did not appreciate the materiality of the Baji reference” because Baji related to a “distinct technology” and Hoarty was “not analogous” to the invention claimed in the ‘946 Patent.  Id. at 16.

The district court was not convinced by these explanations, finding that “Lewis and Sawyer knew the references were material” and that “because they failed to provide a credible good faith explanation for nondisclosure of the references, it was appropriate to infer that they intended to deceive the PTO during prosecution of the ‘946 patent.”  Id. at 7.  Accordingly, the district court held the ‘946 Patent unenforceable due to inequitable conduct and dismissed the complaint.  Id.

On this record, the Federal Circuit found the district court’s finding of deceitful intent clearly erroneous.  First, the court noted that the district court had rendered its decision prior to Therasense and had accordingly failed to consider whether there was any deliberate decision by Lewis or Sawyer to withhold the references at issue.  The court then offered a gloss on Therasense, clarifying that the accused infringer must clear a high hurdle in order to demonstrate the requisite deceptive intent:

Knowledge of the reference and knowledge of materiality alone are insufficient after Therasense to show an intent to deceive.  Moreover, it is not enough to argue carelessness, lack of attention, poor docketing or cross-referencing, or anything else that might be considered negligent or even grossly negligent.  To sustain a charge of inequitable conduct, “clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference.” 

Id. at 12-13 (quoting Molins PLC v. Textron, Inc., 48 F.3d 1172, 1181 (1995)).  The court pointed to the district court’s failure to “discuss or consider whether there was a deliberate decision” not to disclose.  Electronic Arts conceded there was no direct evidence on that specific issue, and the court found the circumstantial evidence of intent insufficient to support an inference of deliberate nondisclosure in light of the heavy burden faced by the accused infringer following Therasense.  At bottom, the court found the evidence of inadvertence rather than malfeasance sufficient as a matter of law to preclude a finding of deceptive intent; to do otherwise would, the court feared, “effectively eviscerate Therasense’s test for mens rea and reinflict the plague of patent unenforceability based on the thinnest of speculation regarding the applicant’s putative mental state.”  Id. at 14.   

This raises the question of how an accused infringer might prove the requisite “deliberate decision to withhold” in the absence of direct evidence, which will rarely, if ever, be available.  Fortunately, the court did not leave us entirely without guidance, as it specifically distinguished a recent opinion upholding a finding of inequitable conduct under the standard announced in Therasense based on circumstantial evidence.

In Aventis Pharma S.A. v. Hospira Inc., 675 F.3d 1324 (Fed. Cir. 2012), Aventis sued Apotex for infringement of patents directed to compositions and methods of using a chemotherapy cancer drug, docetaxel.  The patents at issue related to surfactants used with docetaxel that help keep the drug in solution so it can be administered intravenously.  Polysorbate is one such surfactant claimed in the asserted patents.  This was significant because known, disclosed prior art taught using Cremophor, which had the problem of causing allergic reactions.  The French version of the Physician’s Desk Reference, Dictionnaire Vidal (“Vidal”) was known prior art not disclosed to the PTO.  Vidal taught using polysorbate instead of Cremophor.  Additionally, a known prior art article by Guéritte-Voegelein (“GV”) explicitly taught that docetaxel was more soluble in an excipient that included polysorbate.

Apotex, pointing to conflicting testimony from the inventor, successfully argued that the patents were unenforceable due to Aventis’s inequitable conduct for failure to disclose the key Vidal and GV references.  The inventor stated that he had performed experiments using polysorbate with another cancer drug, as taught by Vidal, but that, because “he believed that these experiments were failures,” he felt it was unnecessary to disclose the reference.  Id.  However, he also testified that what Vidal taught about replacing Cremophor with polysorbate was one of the “main factors that shaped [his] thinking.”  Id.  Furthermore, an internal memo was found acknowledging side effects of Cremophor and that Vidal showed using polysorbate to increase solubility.  Additionally, submissions to the USPTO indicated that the side effects of Cremophor were part of the “problem” the inventors were solving.  Since the solution was found in Vidal, the district court found that there was “no justification for telling the [PTO] about the prior art disclosing the problem [the inventor] examined while concealing key prior art disclosing the solution he chose.”  Id.

There was also conflicting evidence on the GV reference.  While the inventor testified he had only read an early draft of the GV article “which did not include [the] sentence disclosing the polysorbate 80/docetaxel ,” he also testified that, as the docetaxel project leader, he reviewed the GV article “with some care to make sure that it was a proper article for the company to be publishing.”

On this evidence, the district court found the necessary intent to deceive, and the Federal Circuit affirmed.  The court reasoned that the materiality and intent findings pointed to specific intent to deceive as the “single most reasonable inference.”  Specifically, in light of the selective disclosure of known prior art and the inventor’s strongly contradicted testimony regarding both the Vidal and GV references, “coupled with the deference [the court] must afford to the district court’s credibility determinations,” the court found no clear error.  Id.

Judge Linn, who authored the 1st Media opinion, joined the Aventis opinion upholding a finding of inequitable conduct on the facts of that case.  In the 1st Media opinion, he distinguished Aventis by stating that in the prior case “there was affirmative conduct by the applicants showing not only specific awareness of materiality, but careful and selective manipulation of where, when, and how much of the most material information to disclose.”  1st Media at 13-14.  It was the lack of such “manipulation” on the part of the applicant and his counsel that distinguished the record in 1st Media from that presented to the earlier panel in Aventis

Thus, while 1st Media establishes that the failure to disclose a clearly material reference due to oversight or inadvertence does not alone suffice to support a finding that the applicant deliberately decided to withhold the reference, it does not establish a “direct evidence” requirement for deceptive intent.  To the contrary, by distinguishing Aventis as it did, the court reaffirmed the proposition that evidence of some additional “affirmative conduct” demonstrating deceptive intent – such as the evidence in Aventis that the applicant in fact used the teaching of an undisclosed reference in reducing the invention to practice – may establish the required predicate, even if that evidence is circumstantial rather than direct.