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By Tony Dutra
Sept. 6 --The U.S. government advised the Supreme Court on Sept. 5 to deny a petition for writ of certiorari challenging the U.S. Court of Appeals for the Federal Circuit's standards on inequitable conduct as a defense in a patent infringement case (Sony Computer Entm't Am. LLC v. 1st Media LLC, U.S., No. 12-1086, gov't views filed 9/5/13).
The petition asks the high court to determine whether the appeals court's test is too rigid, preventing consideration of the circumstances, and precluding equitable remedies. It essentially challenges the 6-5 en banc decision by the court in Therasense Inc. v. Becton Dickinson & Co., 649 F.3d 1276, 2011 BL 137835, 99 U.S.P.Q.2d 1065 (Fed. Cir. 2011) (104 PTD, 5/31/11).
The instant case only questions the intent side of the test, the government said in a brief filed by Solicitor General Donald B. Verrilli Jr., and the court should wait for a case that challenges materiality as well.
And in any event, the brief said, “it is too soon to assess the practical impact of the two-year old Therasense standards.”
Attorney Joseph Sawyer filed an application for a patent titled “System and Apparatus for Interactive Multimedia Entertainment,” directed to the receipt of information and storage of songs and videos on karaoke entertainment systems, on behalf of inventor Scott Lewis. The patent (U.S. Patent No. 5,464,946) was issued in November 1995 and assigned to 1st Media LLC.
1st Media filed a patent infringement lawsuit in November 1997 in the U.S. District Court for the District of Nevada, naming as defendants Electronic Arts Inc., Harmonix Music Systems Inc., Viacom Inc. and Sony Computer Entertainment America Inc. The defendants asserted an inequitable conduct defense based on the failure to disclose to the Patent and Trademark Office certain prior art references, each of which disclosed some components of a karaoke device. The district court agreed in a 2010 opinion, prior to the Therasense ruling.
The Federal Circuit reversed in September 2012, after the Therasense ruling. 1st Media LLC v. Electronic Arts Inc., 2012 BL 234052, 694 F.3d 1367, 104 U.S.P.Q.2d 1315 (Fed. Cir. 2012) (179 PTD, 9/17/12).
Under the Therasense standard, absent affirmative egregious misconduct, a defendant must prove by clear and convincing evidence both of the “separate requirements” that: (1) “the patentee acted with the specific intent to deceive the PTO”; and (2) the non-disclosed reference was but-for material. Therasense explained that in order to show that the patentee acted with the specific intent to deceive the PTO, a defendant must prove “that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.” (emphasis added).
The defendants failed to convince the court that Lewis and Sawyer made a deliberate decision to withhold the relevant references. They admitted they had no direct evidence. They argued instead that “the necessary mens rea from which the district court permissibly could have inferred a deliberate decision” was evident in the patentee and attorney's awareness of the references and their subsequent statements to the PTO during prosecution of the '946 patent. The appeals court was unconvinced.
“A court can no longer infer intent to deceive from non-disclosure of a reference solely because that reference was known and material,” the appeals court said.
Since the appellees admitted that the lower court's record on the issue was complete, even though that judgment was pre-Therasense, the appeals court reversed the inequitable conduct ruling rather than remanding for further consideration.
All four defendants, with Sony the lead name, filed the petition for writ of certioriari March 4 (53 PTD, 3/19/13). The high court asked for the views of the Solicitor General on May 13 (93 PTD, 5/14/13).
The Solicitor General said that the government agreed with the Federal Circuit's requirement for a showing of specific intent, and disagreed with the petitioner's argument that the standard left no room for a district court's discretion to infer intent.
In making its case for the latter, the government said that the Therasense standard allows a district court to make an adverse inference from discredited testimony and does not require “separate” and “independent” evidence for intent without reference to materiality. The Federal Circuit instead only said, according to the brief, that “even if a patentee is aware of prior art, and aware that the prior art is material, his failure to disclose it does not invariably mean that he has made a deliberate decision to withhold the information.”
The government faulted the Federal Circuit for not remanding to allow the district court to apply the Therasense standards, but said that was no reason to grant cert.
In any event, this is neither the time nor the case to address the inequitable-conduct doctrine more generally. Any review would be incomplete without considering materiality (in addition to intent), but that issue is not presented here, and ongoing rulemaking by the PTO could be relevant to the analysis. And it is too soon to assess the practical impact of the two-year-old Therasense standards--standards that were not applied by the district court in this case--on the operation of the patent system.
The brief was referring to the PTO's July 2011 notice of proposed rulemaking to adopt the same materiality standard for the agency's Rule 56, 37 C.F.R. §1.56, duty to disclose (141 PTD, 7/22/11).
The brief noted that the comment period ended awhile ago and that no final rule was issued, but it still contended that an eventual rulemaking “may also impact the materiality component of the inequitable-conduct doctrine.” As this journal reported in December 2011, though, only 23 percent of respondents supported the proposed rule as it was articulated and the PTO reported that it would table rulemaking until after the America Invents Act's requirements of the agency were fully implemented (238 PTD, 12/12/11).
Finally, the Solicitor General recounted appeals handled by the Federal Circuit since Therasense, essentially to rebut the petitioners' argument that Therasense would make a significant difference in inequitable conduct judgments. Only one district court finding of intent to deceive was reversed by the appeals court, according to the government, “and it did so after concluding that the nondisclosure was neither deliberate nor material.” Outside the Box Innovations, LLC v. Travel Caddy, Inc., 695 F.3d 1285, 1291-1292, 2012 BL 242323, 104 U.S.P.Q.2d 1890 (Fed. Cir. 2012) (185 PTD, 9/25/12).
Abran J. Kean of Erise IP, Leawood, Kan., filed the cert petition on behalf of the defendants. Robert P. Greenspoon of Flachsbart & Greenspoon, Chicago, represents 1st Media.
To contact the reporter on this story: Tony Dutra in Washington at email@example.com
To contact the editor responsible for this story: Naresh Sritharan at firstname.lastname@example.org
The SG's brief is available at http://pub.bna.com/ptcj/121086SGviews.pdf.
Sony's petition is available at http://pub.bna.com/ptcj/121086petition.pdf.
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