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Federal Circuit Affirms Inequitable Conduct Determination Under Therasense ’’But For’’ Exception and Reaffirms Significance of Rohm & Haas

Thursday, October 10, 2013

Today, the Federal Circuit upheld a District Court’s inequitable conduct verdict based on the submission of false affidavits to the United States Patent & Trademark Office (“PTO”). Intellect Wireless, Inc. v. HTC Corp., 2012-1658. This case stemmed from the Northern District of Illinois, where Intellect Wireless sued HTC and numerous other defendants for allegedly infringing patents for sending images and caller ID information over a wireless network. After summary judgment briefing, the District Court bifurcated the case ordering a bench trial on the limited issue of inequitable conduct.

During prosecution of the patents-in-suit and other patents in the family, the inventor and founder of Intellect Wireless, Daniel Henderson, submitted a Rule 131 declaration claiming that he had actual reduction to practice of his invention (i.e., that he built a working prototype of a mobile device that could send or receive messages and provide caller ID). A short time later, Henderson submitted additional modified declarations in the same and other related applications that continued to swear that he built a working prototype of his invention. Henderson

claimed that the statements in these later declarations were a mistake and that they cured any false statements made in the initial declaration. Regardless, all of the declarations were necessary to overcome prior art that was cited by the PTO. During trial, it was revealed that Henderson never actually built a prototype that could wirelessly send or receive images or caller ID as he swore in his declarations to the PTO.

In its precedential opinion, the Federal Circuit (Moore*, Prost, & O’Malley) handed down its first decision that affirmed a finding of materiality under the exception to the “but for” standard created in its pioneering opinion in Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc). Given that Henderson never actually reduced his invention to practice, the Federal Circuit determined that “[i]t is undisputed that Mr. Henderson’s original declaration was unmistakably false.” Intellect, slip op. at 5. The Federal Circuit went on to hold that an unmistakably false declaration “alone establishes materiality.” Id.

The Federal Circuit also stated that the submission of a false declaration to the PTO alone can, in some instances, be enough to show intent to deceive under the “single most reasonable inference” standard. However, in this case, the Federal Circuit found that intent to deceive was further supported by Henderson’s actions. Namely, he submitted false declarations in nearly a dozen applications within the same patent family. Further, he manipulated the Smithsonian Institution and submitted a Smithsonian press release to the PTO that contained false information. According to the Federal Circuit, these actions amounted to a pattern of deceit that bolstered the District Court’s finding of intent to deceive the PTO.

Further, thirty years after it decided Rohm & Haas Co. v. Crystal Chem. Co., 722 F.2d 1556 (Fed. Cir. 1983), the Federal Circuit affirmed that it remains the framework for curing inequitable conduct before the PTO. Intellect, slip op. at 5-7. Under Rohm & Haas, in order to cure his false statements, Henderson had to expressly advise the PTO of the misrepresentations and their location, and provide the PTO the true facts. Significantly, Henderson could not merely supply a new set of facts without calling to the PTO’s attention the previous false statements. Thus, Henderson’s submission of the additional modified declarations was insufficient to cure his misconduct. The Federal Circuit reiterated that full and open disclosure of the misrepresentation to the PTO identifying the false information is needed to cure inequitable conduct, because the PTO and public need to know the actual facts. Finally, the Federal Circuit reiterated that Rohm & Haas was not modified or marginalized by Therasense and remains the standard for curing inequitable conduct. Id. at 7-8.

HTC was represented by Sheppard Mullin attorneys Steve Korniczky, Martin Bader, Matthew Mueller, and Gray Buccigross.

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