Ole K. Nilssen v. Osram Sylvania (CAFC 2006-1550)

Reasons for finding Nilssen having committed inequitable conduct:

1) Nilssen submitted affidavits from Dale Fiene to overcome rejection, but failed to disclose their personal and professional relationship, and Fiene's financial interest in Nilssen's patents.

2) Nilssen paid small entity maintenance fees; but, having licensed his patents to Phillips, he was obliged to fork out large maintenance fees.

3) Nilssen misclaimed an effective priority date on patents to potentially avoid anticipatory prior art.

4) Nilssen failed to inform the examiner of ongoing litigation of related patents for applications still pending.

5) Nilssen committed the classic mistake of not identifying "relevant prior art of which he had knowledge."

Not all of the patents guillotined where on the chopping block of litigation; a few had been withdrawn at the 11th hour. But the CAFC affirmed the district court's “doctrine of infectious unenforceability.”

[I]nequitable conduct with respect to one or more patents in a family can infect related applications, see, e.g., Consolidated Aluminum Corp. v. Foseco Int’l Ltd., 910 F.2d 804 (Fed. Cir. 1990)

Small entity maintenance fees is a limited circumstantial privilege.

The clear import of the PTO regulation benefiting small entities is to ensure that inventors currently receiving a revenue stream from or reasonably expected to receive a revenue stream from an entity that is not itself entitled to pay small entity fees should not be able to claim that right.

While a misrepresentation of small entity status is not strictly speaking inequitable conduct in the prosecution of a patent, as the patent has already issued if maintenance fees are payable (excepting an issue fee), it is not beyond the authority of a district court to hold a patent unenforceable for inequitable conduct in misrepresenting one’s status as justifying small entity maintenance payments. Ulead Sys., Inc. v. Lex Computer & Mgmt. Corp., 351 F.3d 1139, 1146 (Fed. Cir. 2003).

The district court had found Nilssen having "obvious intent to mislead," and his exculpable statements "not credible."

Priority date does not have to be a prosecution rejection issue for its misstatement to be inequitable conduct.

It is not necessary for a holding of inequitable conduct that an examiner rely on a claim for priority or that entitlement to an earlier priority be expressly argued in order to overcome prior art.

A claim for priority is inherently material to patentability because a priority date may determine validity, whether an issue arises in prosecution or later in court challenges to validity. While an active misrepresentation made during prosecution in order to avoid prior art is no doubt “highly material,” see Li Second Family Ltd. P’shp v. Toshiba Corp., 231 F.3d 1373, 1380 (Fed. Cir. 2000), a misrepresentation that would not have immediately affected patentability is still material, see Digital Control, Inc. v. Charles Mach. Works, 437 F.3d 1309, 1318 (Fed. Cir. 2006).

Litigation is necessarily material to related applications still in prosecution.

It is clear from the language of § 2001.06(c) that the existence of the litigation itself is material information that an examiner needs to have. It is important because it signals the examiner that other material information relevant to patentability may become available through the litigation proceedings. The PTO obviously considers such information material and there is no basis for us to conclude otherwise.

Failure to cite prior art as a basis for inequitable is a two-pronged skewer: materiality and intent.

“Information is material if there is a substantial likelihood that a reasonable examiner would have considered the information important in deciding whether to allow the application to issue as a patent.” Honeywell, 488 F.3d at 1000 (internal quotations omitted). The fact that Nilssen had repeatedly cited or had cited to him the prior art references in question makes it highly likely that a reasonable examiner would have wanted to consider the information in the withheld patents in determining patentability. Given that these material references were repeatedly before Nilssen, and his failure to offer any good faith explanation for withholding them other than mere oversight, we find an inference that Nilssen intended to deceive the PTO not unreasonable.

Mistakes do happen, but inadvertence can carry an applicant only so far.