January 26, 2008
Monsanto brought a declaratory judgment action against Bayer Bioscience to preclude infringement for its transgenic corn products. It worked: the patents were found both non-infringed and invalid by inequitable conduct. Bayer's appeals were futile.
Monsanto v. Bayer Bioscience (CAFC 2007-1109)
This was the second round before the CAFC. Round one: after initially granting "summary judgment to Monsanto, holding that all four patents were unenforceable due to inequitable conduct, that certain patent claims were invalid, and that the ’565 patent was not infringed;" Bayer appealed. The CAFC reversed claim construction on a term, vacated, and remanded for trial. Bayer dropped all but the '565 patent.
Subsequently, the district court held a four-day bench trial on inequitable conduct. In a 99-page opinion, the district court found materiality and intent for two separate acts relating to the ’565 patent and concluded that inequitable conduct made the ’565 patent unenforceable. Monsanto v. Bayer Bioscience N.V., No. 400cv01915, slip. op. (E.D. Mo. Aug. 28, 2006) (Monsanto II). The court also found inequitable conduct in the prosecution of the ’799, ’372, and ’546 patents and accordingly held these patents unenforceable. Id. at 95. Bayer appealed.
Bayer argued this and that, but the CAFC expeditiously only needed to affirm the inequitable conduct finding to toss the mess out.
To hold a patent unenforceable for inequitable conduct, a district court must find by clear and convincing evidence that a patent applicant breached its duty of candor and good faith to the United States Patent and Trademark Office (“PTO”) by failing to disclose material information, or submitting false material information, with an intent to deceive the PTO. Bruno Indep. Living Aids, Inc. v. Acorn Mobility Servs. Ltd., 394 F.3d 1348, 1351 (Fed. Cir. 2005); Kingsdown Med. Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867, 872 (Fed. Cir. 1988) (internal citations omitted); see also Monsanto I, 363 F.3d at 1239 (explaining that inequitable conduct can be found when the “applicant omitted or misrepresented material facts with the intention of misleading or deceiving the patent examiner”). Once the requisite levels of materiality and intent have been proven, a district court “must balance the equities to determine whether the patentee has committed inequitable conduct that warrants holding the patent unenforceable.” Monsanto I, 363 F.3d at 1239.
Information is material for the purposes of an inequitable conduct determination if “‘a reasonable examiner would have considered such [information] important in deciding whether to allow the parent application.’” Digital Control Inc. v. Charles Mach. Works, 437 F.3d 1309, 1314 (Fed. Cir. 2006) (quoting Dayco Prods., Inc. v. Total Containment, Inc., 329 F.3d 1358, 1363 (Fed. Cir. 2003)). “In evaluating materiality, this court has consistently referred to the standard set forth in PTO Rule 56.” Purdue Pharma L.P. v. Endo Pharms., Inc., 438 F.3d 1123, 1129 (Fed. Cir. 2006). Rule 56 defines material information as:
information that is not cumulative to information already of record or being made of record in the application, and that
(1) establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim; or
(2) . . . refutes, or is inconsistent with, a position the applicant takes in:
(i) Opposing an argument of unpatentability relied on by the Office, or
(ii) Asserting an argument of patentability.
37 C.F.R. § 1.56. A misstatement or omission that is material under the Rule 56 standard is considered material for the purposes of the inequitable conduct inquiry. Digital Control Inc., 437 F.3d at 1316.
During prosecution of '565, Bayer disclosed an abstract of a prior art paper by Dr. Wayne Barnes that was presented at a conference. At the conference, Barnes displayed a poster that went with the presentation. One of Bayer's employees, Dr. Celestina Mariani, took notes from the poster. The poster had a lot more information than the abstract, as did Mariani's notes. The notes, though "widely circulated" to the relevant workers at Bayer, including the patent prosecutor, Dr. Wouter Meulemanns, were never disclosed to the patent office.
Dr. Mariani was a little weasel. As the appeals court noted:
At trial Mariani was much less forthcoming about the content of her notes than she had been in the deposition.
Dr. Meulemanns was a big weasel:
Meulemanns was not credible in claiming not to have known nor understood the content of the notes despite having discussed them with Mariani.
The district court found, and the appeals court agreed:
Bayer made “a deliberate decision to withhold the known highly material reference with the specific intent to deceive or mislead the PTO examiner.”
The district court also found by clear and convincing evidence that Bayer’s representation to the PTO that unpredictability of gene expression had been solved was false and misleading and was submitted to the PTO examiner with the specific intent to deceive the PTO.
See First Interstate Bank of Billings v. United States, 61 F.3d 876, 882 (Fed. Cir. 1995) (“[C]redibility determinations by the trial judge ‘can virtually never be clear error.’” (quoting Anderson v. City of Bessemer, 470 U.S. 564, 575 (1985)));
Hammering all the nails in the coffin:
Bayer’s failure to disclose the highly material Mariani notes to the PTO during the prosecution of the ’565 patent is not sufficient to prove inequitable conduct. Rather, clear and convincing evidence must also establish an intent to deceive the PTO. To prove intent, “the involved conduct, viewed in light of all the evidence, including evidence of good faith, must indicate sufficient culpability to require a finding of intent to deceive.” Digital Control Inc., 437 F.3d at 1319 (quoting Paragon Podiatry Lab., Inc. v. KLM Labs., Inc., 984 F.2d 1182, 1189 (Fed. Cir. 1993)). Direct evidence of intent to deceive is not necessary, but may be inferred from the surrounding circumstances. Critikon, Inc. v. Becton Dickinson Vascular Access, 120 F.3d 1253, 1256 (Fed. Cir. 1997). We have held that absent a credible reason for withholding the information, “[i]ntent may be inferred where a patent applicant knew, or should have known, that withheld information would be material to the PTO’s consideration of the patent application.” Id.; see also Bruno Indep. Living Aids, 394 F.3d at 1354 (holding that an “inference of deceptive intent may fairly be drawn in the absence” of a “credible explanation for the non-disclosure”); cf. Dayco Prods., 329 F.3d at 1367 (“Intent to deceive cannot be inferred simply from the decision to withhold the reference where the reasons given for the withholding are plausible.”).
Intent is easily inferred when, as here, an applicant makes arguments to the PTO that it knows, or obviously should have known, are false in light of information not before the examiner, and the applicant knowingly withholds that additional information.
The district court judge trashed all four patents; not just '565, the only one left in dispute.
The question facing this court is, thus, whether a district court’s jurisdiction under § 285 to determine whether there was inequitable conduct in the prosecution of patents that are otherwise no longer in suit confers on that court the jurisdiction to hold such patents unenforceable for inequitable conduct. We hold that it does.
In an opinion issued after the briefs were filed in the instant case but prior to oral argument, this court explicitly held that a district court has the power to declare patents that are no longer in suit unenforceable for inequitable conduct. Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223 (Fed. Cir. 2007).
35 U.S.C. § 285 goes to awarding attorneys fees to the prevailing party. As Monsanto incurred the cost of defense for all the rancid patents, awarding fees to Monsanto, which the courts did, necessarily relied upon finding the whole lot bad.
Posted by Patent Hawk at January 26, 2008 2:24 PM | Inequitable Conduct
For me the interesting thing is Bayer in house patent attorney ("big weasel" you say) Dr Meulemanns. Was it all his fault, or not? How much did his boss know? How well did Dr Meulemanns survive the stress of deposition? How well has he been sleeping, these last several years? Did he take early retirement? How many thousand in house patent attorneys have Dr Meulemanns-type judgements to make, most every day of their careers?
Posted by: MaxDrei at January 28, 2008 8:56 AM
The human interest part of the story with regard to Dr. Meulemanns may be interesting, but most indecent people don't seemed consumed by their indecencies; otherwise, it wouldn't be a pattern of existence. Most likely, Meulemanns' biggest regret is being caught out.
Patent attorneys are no different than any other profession with regard to competence or integrity. As Aristotle observed, "We are what we repeatedly do."
Statistically, inequitable conduct, though often accused, remains relatively rare. It's newsworthiness only raises its prominence, not its frequency.
Posted by: Patent Hawk at January 28, 2008 2:02 PM