Affirming a finding of unenforceability due to inequitable conduct, the Federal Circuit recently confirmed that its Therasense decision "in no way modified" its previous ruling that "the materiality prong of inequitable conduct is met when an applicant files a false affidavit and fails to cure the misconduct." Slip Op. at 7. The Federal Circuit also found that a "pattern of deceit" makes "the inference stronger" for the intent prong of inequitable conduct. Id. at 10.
Intellect Wireless Inc. ("Intellect") sued HTC Corporation and HTC America, Inc. (collectively, HTC), for patent infringement (Intellect Wireless v. HTC, No. 2012-1658 (Fed. Cir. Oct. 9, 2013)). Each asserted patent had the same specification, which disclosed providing caller identification (ID) information from a message center to a personal communication device (e.g., a cell phone) via a wireless network, and displaying the caller ID information on the cell phone's screen. Id. at 2. After a bench trial, the district court held the asserted patents unenforceable due to inequitable conduct by the sole inventor, Daniel Henderson. Id. at 3.
In its decision, the Federal Circuit stated that, "[t]o prove inequitable conduct, the challenger must show by clear and convincing evidence that the patent applicant (1) misrepresented or omitted information material to patentability, and (2) did so with specific intent to mislead or deceive" the PTO. Id. (citing In re Rosuvastatin Calcium Patent Litig., 703 F.3d 511, 519 (Fed. Cir. 2012)). Moreover, "[w]hen the patentee has engaged in affirmative acts of egregious misconduct, such as the filing of an unmistakably false affidavit, the misconduct is material." Slip Op. at 3 (citing Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1292 (Fed. Cir. 2011) (en banc)).
The unanimous decision noted, "It is undisputed that Mr. Henderson's original declaration was unmistakably false." Id. at 5. Contrary to the declaration, Mr. Henderson did not actually reduce the claimed invention to practice and he did not demonstrate a prototype in July 1993. Thus, "[a]bsent curing, this alone establishes materiality." Id. at 5. The court went on to reiterate the requirements for curing—which it found Intellect did not meet.
To "cure" after filing a false declaration, the Federal Circuit explained that the applicant must "expressly advise the PTO of [the misrepresentation's] existence, stating specifically wherein it resides." Id. (citing Rohm & Haas Co. v. Crystal Chem. Co., 722 F.2d 1556, 1572 (Fed. Cir. 1983)). Further, "if the misrepresentation is of one or more facts, the PTO [must] be advised what the actual facts are." Slip Op. at 5. Finally, the applicant must "take the necessary action . . . openly. It does not suffice that one knowing of misrepresentations in an application or in its prosecution merely supplies the examiner with accurate facts without calling his attention to the untrue or misleading assertions sought to be overcome, leaving him to formulate his own conclusions." Id.
Applying this standard to Mr. Henderson's conduct, the Federal Circuit held that the misrepresentations made to the PTO were not cured. While Mr. Henderson filed a second declaration that was slightly different from the first, the Federal Circuit found that "[n]owhere did the declaration openly advise the PTO of Mr. Henderson's misrepresentations" as required under Rohm. Id. Thus, the Federal Circuit held that, "[g]iven the false statements and the clear failure to do what is necessary according to our precedent to cure the misconduct, the argument that materiality has not been established is entirely without merit." Id. at 8 (emphasis added).
Next, the Federal Circuit looked to the second prong for a finding of inequitable conduct—intent. The Federal Circuit made clear that the "finding of intent could be affirmed based on the content of the two declarations." Id. at 10. Specifically, completely false statements in a first declaration were followed by a replacement declaration that, "rather than expressly admitting the earlier falsity, dances around the truth." Id.
This case clarifies that Therasense did not change the standard for curing a misrepresentation to the PTO. Thus, it is important to realize that any revised declaration must, at a minimum: (1) expressly identify prior misrepresentations, and (2) advise the PTO of the actual facts.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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