August 25, 2008
In a touchstone ruling, Star Scientific v. R.J. Reynolds, the CAFC resets the high bar for inequitable conduct:
The burden of proving inequitable conduct lies with the accused infringer. The patentee need not offer any good faith explanation unless the accused infringer first carried his burden to prove a threshold level of intent to deceive by clear and convincing evidence. If a threshold level of intent to deceive or materiality is not established by clear and convincing evidence, the district court does not have any discretion to exercise and cannot hold the patent unenforceable regardless of the relative equities or how it might balance them. Even if a threshold level of both materiality and intent to deceive are proven by clear and convincing evidence, the court may still decline to render the patent unenforceable.
Star Scientific v. R.J. Reynolds (CAFC 2007-1448)
The district court found 6,202,649 and 6,425,401 unenforceable due to inequitable conduct and the asserted claims invalid for indefiniteness. The appeals court reversed the indefiniteness finding, which had been based upon claim construction for "anaerobic condition" at which the district court puffed smoke.
The finer points of curing fine tobacco, for those interested in one of the dumber ways to self-medicate.
Fresh tobacco ("green tobacco") must be dried in a process called "curing" before it is suitable for consumption as cigarettes or other such products. Curing is done in curing "barns," and commercial tobacco companies like RJR cure their tobacco in bulk-curing barns in which substantial quantities of harvested tobacco are cured together in large stacks. Smaller operations may use the older and long-used technology of "stick barns" in which much smaller quantities of tobacco are cured.
Four major mechanisms of curing have been used in the United States:
(1) air curing, where the tobacco is air-dried without the application of heat;
(2) radiant heat indirect-fired curing ("radiant heat curing"), where fuel (typically oil) is burned and the hot exhaust gases are passed through pipes running through the barn such that the hot pipes radiate heat into the barn to dry the tobacco, but the exhaust gases are then expelled outside the barn;
(3) direct-fired curing, where fuel (typically propane) is burned and the hot exhaust gases themselves are blown directly into the barn to dry the tobacco; and
(4) forced air indirect-fired curing, where fuel is burned to heat clean air that is then blown into the barn to dry the tobacco, while the exhaust gases from the fuel burning are expelled outside the barn.
In the 1960s, the primary method used by American tobacco companies was radiant heat curing. By the 1970s, most companies switched to direct-fired curing, which was the predominant method used until at least the late 1990s.
Cured tobacco contains a number of hazardous chemicals, including carcinogens known as tobacco specific nitrosamines ("TSNAs"), which are not present in green tobacco. In the 1990s, researchers began to explore TSNA formation in tobacco and discovered links between TSNAs and direct-fired curing. As a result, some researchers began to investigate how curing methods could be altered to minimize TSNA formation.
Hence the invention, which involved minimizing untoward microbial activity.
[Jonnie Williams of Star] Williams, the inventor, believed that TSNAs were formed due to the presence of microbes on the tobacco leaves. According to this theory, ambient oxygen in the vicinity of the drying leaves is reduced during cure by the production of carbon dioxide as the green tobacco leaves degrade and by the oxygen-poor combustion gases blown in during direct-fired curing. The microbes thus must operate anaerobically and obtain oxygen through reduction-oxidation reactions involving nitrates also produced from leaf degradation. Those reactions produce nitrites, which in turn form TSNAs through further chemical reactions. Williams' method sought to prevent TSNA formation by lessening the drop in oxygen levels through control of airflow, humidity and temperature inside the curing barn, thereby reducing the microbes' need to resort to anaerobic processes.
Star consultant Dr. Harold Burton wrote a letter to Williams, observing "that Chinese tobacco products contain very low TSNA levels."
Delmendo testified that although he was initially concerned about the information, he then spoke with Burton, analyzed the letter, and ultimately concluded that neither it nor its content was material to the contemplated patent application.
So Williams didn't disclose the Burton letter during prosecution. From that came the inequitable conduct charge and district court finding.
Today's CAFC bible on inequitable conduct, starting with a history lesson -
The burden of proving inequitable conduct lies with the accused infringer. Ulead Sys., Inc. v. Lex Computer & Mgmt. Corp., 351 F.3d 1139, 1146 (Fed. Cir. 2003). To successfully prove inequitable conduct, the accused infringer must present "evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the [PTO]." Cargill, 476 F.3d at 1363 (citing Impax Labs., 468 F.3d at 1374). Further, at least a threshold level of each element--i.e., both materiality and intent to deceive--must be proven by clear and convincing evidence. Id.; Digital Control Inc. v. Charles Mach. Works, 437 F.3d 1309, 1313 (Fed. Cir. 2006). And even if this elevated evidentiary burden is met as to both elements, the district court must still balance the equities to determine whether the applicant's conduct before the PTO was egregious enough to warrant holding the entire patent unenforceable. Monsanto Co. v. Bayer Bioscience B.V., 363 F.3d 1235, 1239 (Fed. Cir. 2004). Thus, even if a threshold level of both materiality and intent to deceive are proven by clear and convincing evidence, the court may still decline to render the patent unenforceable.
The need to strictly enforce the burden of proof and elevated standard of proof in the inequitable conduct context is paramount because the penalty for inequitable conduct is so severe, the loss of the entire patent even where every claim clearly meets every requirement of patentability. This penalty was originally applied only in cases of "fraud on the Patent Office." See Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 250-51 (1944); see also Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 816 (1945) ("The far-reaching social and economic consequences of a patent, therefore, give the public a paramount interest in seeing that patent [grants] spring from backgrounds free from fraud or other inequitable conduct and that such [grants] are kept within their legitimate scope."); Digital Control, 437 F.3d at 1315 (discussing the roots of inequitable conduct in common law fraud). Subsequent case law has broadened the doctrine to encompass misconduct less egregious than fraud, see for example Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1069-70 (Fed. Cir. 1998), but the severity of the penalty has not changed, and thus courts must be vigilant in not permitting the defense to be applied too lightly. Just as it is inequitable to permit a patentee who obtained his patent through deliberate misrepresentations or omissions of material information to enforce the patent against others, it is also inequitable to strike down an entire patent where the patentee only committed minor missteps or acted with minimal culpability or in good faith. As a result, courts must ensure that an accused infringer asserting inequitable conduct has met his burden on materiality and deceptive intent with clear and convincing evidence before exercising its discretion on whether to render a patent unenforceable.
Materiality and intent are two different, albeit related, prongs. Both must be proved by "clear and convincing evidence."
With regard to the deceptive intent prong, we have emphasized that "materiality does not presume intent, which is a separate and essential component of inequitable conduct." GFI, Inc. v. Franklin Corp., 265 F.3d 1268, 1274 (Fed. Cir. 2001). Moreover, as we explained in Molins PLC v. Textron, Inc.:
[T]he alleged conduct must not amount merely to the improper performance of, or omission of, an act one ought to have performed. Rather, clear and convincing evidence must prove that an applicant had the specific intent to . . . mislead or deceiv[e] the PTO. In a case involving nondisclosure of information, clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference.
48 F.3d 1172, 1181 (Fed. Cir. 1995) (emphases added). Thus, the fact that information later found material was not disclosed cannot, by itself, satisfy the deceptive intent element of inequitable conduct. M. Eagles Tool Warehouse, Inc. v. Fisher Tooling Co., 439 F.3d 1335, 1340 (Fed. Cir. 2006). Rather, to prevail on the defense, the accused infringer must prove by clear and convincing evidence that the material information was withheld with the specific intent to deceive the PTO. Id.; see also Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (en banc) (holding even gross negligence insufficient to prove intent to deceive).
Because inequitable conduct smoking guns are seldom left lying around, for inference, there is a direct relationship between materiality and intent. But while you might not have the gun, you better have the smoke.
We have also held that because direct evidence of deceptive intent is rarely available, such intent can be inferred from indirect and circumstantial evidence. Cargill, 476 F.3d at 1364. But such evidence must still be clear and convincing, and inferences drawn from lesser evidence cannot satisfy the deceptive intent requirement. See Ferring, 437 F.3d at 1186 ("The predicate facts must be proven by clear and convincing evidence."). Further, the inference must not only be based on sufficient evidence and be reasonable in light of that evidence, but it must also be the single most reasonable inference able to be drawn from the evidence to meet the clear and convincing standard. Scanner Techs. Corp. v. ICOS Vision Sys. Corp., 528 F.3d 1365, 1376 (Fed. Cir. 2008) ("Whenever evidence proffered to show either materiality or intent is susceptible of multiple reasonable inferences, a district court clearly errs in overlooking one inference in favor of another equally reasonable inference.").
Redundant information is not material.
With respect to the materiality prong, we have held that "information is material when a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent." Symantec Corp. v. Computer Assocs. Int'l, Inc., 522 F.3d 1279, 1297 (Fed. Cir. 2008); see also Digital Control, Inc. v. Charles Mach. Works, 437 F.3d 1309, 1314 (Fed. Cir. 2006). It is well-established, however, that information is not material if it is cumulative of other information already disclosed to the PTO. Honeywell Int'l Inc. v. Universal Avionics Sys. Corp., 488 F.3d 982, 1000 (Fed. Cir. 2007) ("Information cumulative of other information already before the Patent Office is not material."); 37 C.F.R. § 1.56(b) ("[I]nformation is material to patentability when it is not cumulative to information already of record or being made of record in the application . . . .").
Inequitable conduct is not a matter of court discretion, but of proof. The only discretion is whether to invalidate a patent once inequitable conduct is shown.
If a threshold level of intent to deceive or materiality is not established by clear and convincing evidence, the district court does not have any discretion to exercise and cannot hold the patent unenforceable regardless of the relative equities or how it might balance them. See Nordberg, Inc. v. Telsmith, Inc., 82 F.3d 394, 398 (Fed. Cir. 1996) (holding that the district court properly refrained from balancing materiality and intent when a threshold showing of intent to deceive was not clearly and convincingly made). Only after adequate showings are made as to both materiality and deceptive intent may the district court look to the equities by weighing the facts underlying those showings. "The more material the omission or the misrepresentation, the lower [the] level of intent [is] required to establish inequitable conduct, and vice versa." Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 1256 (Fed. Cir. 1997). At this second stage, however, the question is no longer whether materiality and/or intent to deceive were proven with evidence that is sufficiently clear and convincing. While the facts of materiality and intent to deceive must be proven by clear and convincing evidence, the district court must balance the substance of those now-proven facts and all the equities of the case to determine whether the severe penalty of unenforceability should be imposed. It is this balancing that is committed to the district court's discretion. Molins, 48 F.3d at 1178.
RJR had a conspiracy theory that Star changed prosecutors to hide the Burton letter. The district court didn't believe that Star changed prosecutor because "a key partner passed away and that Williams observed a Sughrue attorney perform unsatisfactorily in an unrelated prosecution."
But even if Star's explanations are not to be believed, it remained RJR's burden to prove its allegation regarding the reason for the Sughrue firm's dismissal. RJR cannot carry its burden simply because Star failed to prove a credible alternative explanation. See M. Eagles Tool Warehouse, 439 F.3d at 1341 ("When the absence of a good faith explanation is the only evidence of intent, however, that evidence alone does not constitute clear and convincing evidence warranting an inference of intent."). The patentee need not offer any good faith explanation unless the accused infringer first carried his burden to prove a threshold level of intent to deceive by clear and convincing evidence. Nordberg, 82 F.3d at 398. Only when the accused infringer has met this burden is it incumbent upon the patentee to rebut the evidence of deceptive intent with a good faith explanation for the alleged misconduct. See id.
In reviewing the affirmative evidence, it becomes clear that RJR's evidence had a major gap--RJR failed to elicit any testimony or submit any other evidence indicating that Star knew what the Burton letter said prior to replacing the Sughrue firm, or that the letter was a reason for changing firms.
There were other gaps in the RJR's conspiracy theory. But the bottom line was that Star disclosed to the PTO "that the prior art had achieved low to insignificant levels of TSNA." The Burton letter was "cumulative."
Because cumulative information is not material, we hold that the district court clearly erred in finding that the information contained in the Burton letter and in the Curran data was material to the prosecution of the '401 patent.
In a nutshell: "'When a word of degree is used . . . the patent's specification [must] provide some standard for measuring that degree' to be definite." As it was in this case.
The parties do not dispute the claim constructions reached by the district court, and the district court did construe all terms relevant to this appeal. In and of itself, a reduction of the meaning of a claim term into words is not dispositive of whether the term is definite. Halliburton Energy Serv., Inc. v. M-I LLC, 514 F.3d 1244, 1251 (Fed. Cir. 2008). And if reasonable efforts at claim construction result in a definition that does not provide sufficient particularity and clarity to inform skilled artisans of the bounds of the claim, the claim is insolubly ambiguous and invalid for indefiniteness. See id. at 1249-51.
The district court construed the term "anaerobic condition" to mean "an oxygen deficient condition (such as is created by an atmosphere of combustion gases or from the release of carbon dioxide by the plant during cure) which promotes microbial nitrate reductase activity." Markman Order, slip op. at 1-2. Thus, a skilled artisan would know that the claim term contemplates only conditions where the dearth of oxygen promotes the activity of the nitrate reductase enzyme. It is undisputed that those of ordinary skill would understand from the patents' specifications that the significance of nitrate reductase activity to the claimed invention is that it produces nitrites, which then form TSNAs. See '649 patent col.7 ll.39-55; '401 patent col.7 ll.43-59. Therefore, from the claim term "anaerobic condition" and the intrinsic record, a skilled artisan would discern that the term delineates those conditions where the shortage of oxygen results in increased TSNA formation. This is further supported by statements to that effect in the patents' specifications. See, e.g., '649 patent col.4 ll.36-39 ("For example, it is postulated that if the conditions [contemplated for the present invention] are made aerobic, the microbes will consume oxygen in the atmosphere for their energy source, and therefore no nitrites will form.").
We have stated that "[w]hen a word of degree is used . . . the patent's specification [must] provide some standard for measuring that degree" to be definite. Datamize, 417 F.3d at 1351 (quoting Seattle Box Co. v. Indus. Crating & Packing, Inc., 731 F.2d 818, 826 (Fed. Cir. 1984)). Here, the term "anaerobic condition" is in effect a term of degree because its bounds depend on the degree of oxygen deficiency. And as the district court determined in its claim construction, the intrinsic record provides a standard for measuring that degree and assessing the bounds of "anaerobic condition" as required by Datamize, namely the level of TSNA formation. In fact, the claims explicitly refer to the standard, requiring that the tobacco be cured in a "controlled environment" that prevents an "anaerobic condition" in order to "substantially prevent the formation of at least one nitrosamine." See '649 patent cl.4.
In other words, the district court was able to discern from the intrinsic record that TSNA formation, as contemplated by the asserted patents, is tied to highly specific measurements of four very specific chemical compounds. Far from being insolubly ambiguous, a skilled artisan could determine whether an "anaerobic condition" was present--or, rather, was prevented--simply by measuring the levels of NNN, NAT, NAG, and NNK.
The district court had a backwards approach to indefiniteness, by first determining infringement. "The test for indefiniteness does not depend on a potential infringer's ability to ascertain the nature of its own accused product to determine infringement, but instead on whether the claim delineates to a skilled artisan the bounds of the invention."
The district court's contrary conclusion was based on its misunderstanding that claim definiteness requires that a potential infringer be able to determine if a process infringes before practicing the claimed process.12 But we disclaimed any such approach in Invitrogen Corp. v. Biocrest Manufacturing, L.P., 424 F.3d 1374, 1384 (Fed. Cir. 2005). We explained that Stratagene, in making a similar argument, was "really talking about the difficulty of avoiding infringement, not indefiniteness of the claim." Id. "The test for indefiniteness does not depend on a potential infringer's ability to ascertain the nature of its own accused product to determine infringement, but instead on whether the claim delineates to a skilled artisan the bounds of the invention." Id. (citing SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1341 (Fed. Cir. 2005)); see also Datamize, 417 F.2d at 1354 (holding that "indefiniteness does not depend on the difficulty experienced by a particular person in comparing the claims with the prior art or the claims with allegedly infringing products or acts"). As construed by the district court, the term "anaerobic condition" clearly delineates the bounds of claim scope and thus is not indefinite.
12 The district court misunderstood our decision in Geneva Pharmaceuticals, Inc. v. GlaxoSmithKline PLC, 349 F.3d 1373, 1383-84 (Fed. Cir. 2003). There, we rejected a proposed construction that, if adopted, would have rendered the term indefinite because a given composition could both infringe and not infringe simultaneously. We did not hold the claim term at issue to be indefinite; in fact, after rejecting that proposed construction, we arrived at the correct construction which did not render the term indefinite. Id. at 1384. And while we emphasized that a claim is indefinite if a skilled artisan cannot determine if an accused product infringes or not, we did not hold that the infringement determination must be able to be made at any particular time.
Reversed and remanded.
Posted by Patent Hawk at August 25, 2008 2:15 PM | Inequitable Conduct
Given that Chief Judge Michel authored this opinion, one may wonder if this signals a trend by the Federal Circuit to reign in dubious or weakly supported allegations of inequitable conduct. If true, that would be "good news" for patentees and those of us in the prosecution world who have to worry that every action we take during prosecution will be misconstrued, mischaracterized, or distorted. Only time will tell.
Posted by: EG at August 26, 2008 9:27 AM
"RJR failed to elicit any testimony or submit any other evidence indicating that Star knew what the Burton letter said prior to replacing the Sughrue firm, or that the letter was a reason for changing firms."
This failure was a result of the fact that when defendant RJR had the relevant Star Scientific witnesses, in particular inventor Williams, on the stand and was given the opportunity to controvert their testimony that gave reasonable explanations for what had transpired, RJR PASSED on the opportunity ... just said "no thanks" to "your witness".
The judge, Garbis, was clearly a bit incredulous at this, as is shown in the court record, and as was observed "in person" in court.
Yet, after a mysterious and inexplicable delay of 2 1/2 years, Garbis sat down and wrote an abysmally formulated "decision" (including factual mistakes) that completely ignored the fact that the testimony of Star's witnesses was uncontroverted in the matter of inequitable conduct. Garbis ignored the court record and simply cut and pasted RJR's "conspiracy theory" novelette into his "decision".
The sudden bifurcation of the IC matter (based on a completely immaterial piece of speculation by a self proclaimed non-expert in the matter ... "Burton") from the trial on all other matters (originally scheduled for January of 2005), plus an inexplicable 2 1/2 year delay, plus a decision worthy of a fiction prize (but not a big one) has, conveniently for RJR and "big tobacco", nearly cost Star its viability, and has given RJR the benefit of the KSR revision of standards in the request for reexamination they recently filed.
Hopefully the CAFC decision means at least curtailment of this kind of shoddy (at BEST) court conduct and the forced restoration of some degree of integrity therein.
To my ear, listening to the tape of the oral presentations, the CAFC was nothing less than incredulous at what took place in that decision. Some have said that Garbis was handed his head. I'd say that is a pretty fair assessment ... and very well deserved.
CAFC rescued my nearly completely shattered faith in the U.S. judicial system. They shown like lasers on the inequities (speaking of them) in the lower court, and had an amazing grasp of the science and "story" involved. I was frankly astounded. Hats off to and three cheers for them and their research staff!
Posted by: justhinkin at May 15, 2009 9:28 AM