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December 21, 2008

Sour Grapes

6,673,064 claims a laser catheter. Dr. Peter Rentrop sicked '064 on Spectranetics, and copped a cool half million. Spectranetics, after sloppily stirring as much trouble for Rentrop as it could, appealed losing on obviousness, among other profundities. The appeals court reminded Spectranetics that they could have floated that boat, but didn't, and it's water under the bridge now.

Dr. Peter Rentrop v. Spectranetics (CAFC 2007-1560)

Rentrop had previously worked with Spectranetics, but split when the relationship strained, and then filed for his patent.

Spectranetics asserted defenses including obviousness and inequitable conduct and counterclaimed to, among other things, correct inventorship of the '064 patent.

None of that flew.

While the Rentrop jury verdict was pre-KSR, post-trial motions weren't sorted out until four months after Obzilla thundered in. Spectranetics sat on its thumbs about new obviousness standard. Until appeal. Too late. And, oh yeah, sour grapes too.

We turn first to Spectranetics's argument regarding obviousness. Spectranetics cannot, of course, attack the basis for the jury's obviousness verdict directly as it did not move for judgment as a matter of law on obviousness. Rather, Spectranetics argues that claim 1 of the '064 patent was so clearly obvious based on the prior art presented to the jury that the only possible explanation for the jury not finding the claim to be obvious was that the district court gave a rigid "teaching, suggestion or motivation" jury instruction in violation of the Supreme Court's recent decision in KSR Int'l Co v Teleflex Inc, 550 US 398 (2007).

Rentrop argues that Spectranetics waived its argument based on KSR because Spectranetics did not bring this argument to the district court's attention before entry of judgment. We agree. KSR was decided on April 30, 2007. The jury returned its verdict on December 8, 2006, and briefing on post-trial motions was completed by February 20, 2007 -- over two months before KSR was decided. The district court, however, did not decide the post-trial motions until August 23, 2007, and judgment was not entered until August 24, 2007, almost four months after the decision in KSR.

In Sage Products, Inc v Devon Industries, Inc, 126 F3d 1420 (Fed Cir 1997), we had occasion to discuss why we do not allow new arguments to be presented for the first time on appeal:

This is an appellate court. By and large, it is our place to review judicial decisions--including claim interpretations and grants of summary judgment--reached by trial courts. No matter how independent an appellate court's review of an issue may be, it is still no more than that--a review. With a few notable exceptions, such as some jurisdictional matters, appellate courts do not consider a party's new theories, lodged first on appeal. If a litigant seeks to show error in a trial court's overlooking an argument, it must first present that argument to the trial court. In short, this court does not "review" that which was not presented to the district court.

Id, 126 F3d at 1426. Although Sage Products involved new arguments presented on appeal of summary judgment of non-infringement that were not based on an intervening change in the law, its reasoning applies here. Where possible, every legal argument should be presented first to the trial court. KSR was decided almost four months before the trial court entered judgment, giving Spectranetics ample time to bring that decision to the trial court's attention. Had Spectranetics done so, the trial court -- if it agreed that the jury instructions on obviousness were incorrect under KSR -- could have taken appropriate action and possibly obviated the need for this appeal. Spectranetics points out that we have taken up the KSR jury instruction issue several times where it had not been brought before the district court first, but in the cases Spectranetics cites, judgment was entered by the district court before KSR was decided. See Cordis Corp v Medtronic AVE, Inc, 511 F3d 1157 (Fed Cir 2008); Black & Decker, Inc v Robert Bosch Tool Corp, 260 Fed App'x 284 (Fed Cir 2008).

We hold that when there is a relevant change in the law before entry of final judgment, a party generally must notify the district court; if the party fails to do so, it waives arguments on appeal that are based on that change in the law. Spectranetics did not bring KSR to the attention of the district court and therefore has waived its arguments based on KSR. The jury's determination that the '064 patent is not invalid will not be disturbed.

Although we hold that Spectranetics waived its arguments based on KSR, we note that the jury instructions on obviousness in this case appear to be consistent with KSR.

Even if Spectranetics had not waived its KSR argument, it appears that it would not have been entitled to relief from the jury's finding of nonobviousness.

Spectranetics reargued claim construction, which the CAFC panel termed "overreaching."

The inequitable conduct dog didn't hunt either. The district court found "Rentrop's testimony..."credible in all material respects,"" and the CAFC figured Spectranetics was all hat and no cattle.

Chief District Court Judge for Northern California Vaughn R. Walker, panel opinion author, penned a tidy case law synopsis on inequitable conduct:

"To prove that a patent is unenforceable due to inequitable conduct, the alleged infringer must provide clear and convincing evidence of (1) affirmative misrepresentations of a material fact, failure to disclose material information, or submission of false material information and (2) an intent to deceive." Impax Labs, Inc v Aventis Pharm Inc, 468 F3d 1366, 1374 (Fed Cir 2006). A fact is material if it is material under either PTO Rule 56 or the "reasonable examiner" standard. Digital Control Inc v Charles Machine Works, 437 F3d 1309, 1316 (Fed Cir 2006).

PTO Rule 56 states that:

[I]nformation is material to patentability when it is not cumulative to information already of record or being made of record in the application, and
(1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim, or
(2) It 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 CFR § 1.56(b) (2008).

"Under the earlier 'reasonable examiner' standard, 'information is material where there is a substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent.'" Cargill, Inc v Canbra Foods, Ltd, 476 F3d 1359, 1364 (Fed Cir 2007) (quoting 37 CFR § 1.56(a) (1991)).

The intent element requires that "the involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive." Impax Labs, 468 F3d at 1374-75. Intent need not be proven by direct evidence; it is usually inferred from the facts and circumstances surrounding the conduct at issue. Id at 1375.

If a district court finds materiality and intent by clear and convincing evidence, it must "balance the equities to determine whether the patentee has committed inequitable conduct that warrants holding the patent unenforceable." Id. "The more material the omission or the misrepresentation, the lower the level of intent required to establish inequitable conduct, and vice versa." Critikon, Inc v Becton Dickinson Vascular Access, Inc, 120 F3d 1253, 1256 (Fed Cir 1997).


Posted by Patent Hawk at December 21, 2008 2:28 PM | Prior Art


The inequitable conduct dog didn't hunt either. The district court found "Rentrop's testimony..."credible in all material respects," and the CAFC figured Spectranetics was all hat and no cattle.

Posted by: Suzie Orman at December 21, 2008 3:28 PM