Saved by Therasense: Deliberate decision to withhold references not found where art was cited in foreign counterpart and domestic co-pending applications
Ryan Chirnomas | October 10, 2012
1st Media v. Electronic Arts et al.
Decided September 13, 2012
Panel: Rader, Linn and Wallach. Opinion by Rader.
This case demonstrates how Therasense has changed the inequitable conduct analysis. Although the individual inventor and sole practitioner knew of references which were probably material, and did not submit the references, this is now insufficient to demonstrate inequitable conduct. It must additionally be shown that there was a specific decision to withhold the documents from the USPTO, in order to show an intent to deceive. This can be demonstrated, for example, by selective disclosure. However, no such evidence was presented, and thus an intent to deceive, the first part of the inequitable conduct analysis, was not found.
In 1992, inventor Dr. Scott Lewis hired a sole practitioner, Joseph Sawyer, to file a patent application directed to a system for purchasing and storing songs, videos and multimedia karaoke information. After an amendment to limit one claim to karaoke applications, the application issued as U.S. Patent No. 5,464,946 in 1995, and was later assigned to 1st Media. Sawyer was also handling Lewis’s PCT application, corresponding to the ‘946 patent except that the karaoke limitation was never added.
On the same day that the ‘946 patent was filed, Sawyer also filed another application for Lewis, which ultimately issued as U.S. Patent No. 5,325,423. Additionally, Sawyer also handled a continuation-in-part of the ‘423 patent application, which eventually issued as U.S. Patent No. 5,564,001. Each of the PCT application, the ‘423 patent application and the ‘001 patent application were at some point co-pending with the ‘946 patent application. It does not appear that a double-patenting rejection was made in any of these applications.
Before the first Office Action was issued in the prosecution of the ‘946 patent application, Sawyer received an Office Action in the co-pending application that became ‘423 patent, citing U.S. Patent No. 5,027,400 (“Baji”). The ‘423 patent application was similar to the ‘946 patent application, and used many similar phrases. The examiner in the ‘423 patent application alleged that Baji disclosed certain elements which were also recited in the claims of the ‘946 patent. Baji was never filed at the USPTO.
About a month before paying the issue fee in the ‘946 patent application, Sawyer received an Office Action in the co-pending application that became the ‘001 patent, citing U.S. Patent No. 5,220,420 (“Hoarty”). The examiner in the ‘001 patent application contended that Hoarty disclosed certain elements which were also recited in the claims of the ‘946 patent. Hoarty was never filed at the USPTO.
Finally, eight days before paying the issue fee in the ‘946 patent, Sawyer received from his foreign associate a Supplemental European Search Report, citing WO 90/01243 (“Bush”) as a “Y” reference, meaning that Bush is particularly relevant if combined with another reference. Bush was never filed at the USPTO. Several year later, the EPO rejected the PCT application, with Bush being the closest prior art.
In 2007, 1st Media sued Electronic Arts, Harmonix Music Systems, Viacom and Sony Computer Entertainment (collectively, “EA”) for infringement of at least one of the claims of the ‘946 patent. It appears that 1st Media is a non-practicing entity. EA moved for declaratory judgment of inequitable conduct, based on the non-submission Bush, Baji and Hoarty, as well as non-submission of the rejections from the ‘423 and ‘001 patent applications. This trial occurred before the CAFC’s Therasense decision.
At trial, Lewis and Sawyer testified that at the time, they did not appreciate the materiality of these references. Additionally, Lewis explained that the non-submission of Bush was “an oversight that got lost in the cracks at that time and wasn’t a conscious decision not to report [it].” Sawyer explained that “the Bush publication itself never sparked an awareness or belief in my mind that Bush should be disclosed.” Sawyer also stated that he generally only considered questions of patentability from the time between the first office action and the notice of allowance, which he calls “active prosecution.” Sawyer also explained the non-submission of the references as a consequence of him starting his own “very active” solo practice out of his home. As to Baji and Hoarty, Lewis and Sawyer also explained that they thought that the subject matter of the ‘423 and ‘001 patent applications was so distinct from the subject matter of the ‘946 patent application that it did not occur to them to subject these references.
The district court did not find Lewis and Sawyer credible. In particular, the district court stated that their explanation “defied common sense in light of the extensive overlap in the applications and claims.” The district court concluded that the Lewis and Sawyer knew of the references, knew that the references were material, and further concluded that that due to their lack of a good-faith explanation for non-submission of these references, an inference of intent to deceive was appropriate. Thus, the court granted the declaratory judgment motion and dismissed 1st Media’s complaint.
The CAFC took up this case for review after issuing their Therasense opinion. On appeal, EA only challenged 1st Media’s arguments regarding Bush, Baji and Hoarty, and thus the CAFC did not consider the non-disclosure of the rejections from the co-pending applications. Under Therasense, inequitable conduct can be reached by two paths: (1) affirmative egregious misconduct or (2) intent to deceive coupled with “but-for materiality.” Intent to deceive requires (a) knowledge of the reference, (b) knowledge of the materiality of the reference, and (c) a deliberate decision not to submit the reference. Courts can no longer infer intent to deceive only based on the reference being known and known to be material. No affirmative egregious misconduct was alleged here.
EA admitted that there was no direct evidence of Lewis or Sawyer’s intent to deceive the USPTO, and further admitted that the record was complete. Instead, EA argued that the manner in which Lewis and Sawyer became aware of the reference “demonstrate[s] the necessary mens rea from which the district court permissibly could have inferred a deliberate decision to withhold the references.” On the other hand, 1st Media argued that Bush was only discovered after the notice of allowance was issued, and that Bush was only relevant in conjunction with another reference. Additionally, 1st Media argued that the foreign associate indicated that Bush was of limited relevance.
The CAFC reversed the district court decision, by explaining, “it is not enough to argue carelessness, lack of attention, poor docketing or cross-referencing or anything else that might be considered negligent or even grossly negligent.” Instead, it must be shown that there was “a deliberate decision to withhold a known material reference.” The CAFC did not find such a deliberate decision here.
Although EA argued that a decision to withhold the documents was demonstrated by the manner in which Lewis and Sawyer learned of the references, the CAFC disagreed, relying on Therasense and Aventis Pharma v. Hospira. In Aventis Pharma, the applicants not only were aware of the materiality of the references, but there was evidence of “careful and selective manipulation of where, when and how much of the most material information to disclose.” Although the CAFC acknowledged that Lewis and Sawyer may have known that Bush was material, they found no evidence of a deliberate decision to withhold Bush, such as evidence of selective disclosure, like in Aventis Pharma. Additionally, the CAFC noted that the inability of Lewis and Sawyer to give a credible explanation for non-submission is not evidence of a deliberate decision to withhold the references, and that the patent owner does not have to provide any credible explanation until the accuser meets their burden of showing intent to deceive by clear and convincing evidence.
With respect to Baji, cited in a co-pending application, the CAFC again held that no inequitable conduct could be found, since there was no evidence of a deliberate decision to withhold Baji, such as evidence of selective disclosure. According to the court, the point that Baji was not mentioned in the response to the Office Action in the ‘946 patent is not, on its own, evidence of a deliberate decision to withhold Baji from the USPTO.
Finally, with respect to Hoarty, cited in another co-pending application, the CAFC again refused to find inequitable conduct, because there was no evidence of a deliberate decision to withhold Hoarty. The court held that even if there is some common technology between the ‘946 patent and the ‘001 patent, this does not prove that the subsequent non-submission of Hoarty was indicative of a deliberate decision not to submit it. In particular, the features of the invention disclosed by Hoarty were not key to the patentability of the ‘001 patent, thus there may not have been a reason to think Hoarty was material.
In conclusion, the court held that even though Lewis and Sawyer knew of all three references, might have known they were material, and did not submit them to the USPTO, there can be no finding of inequitable conduct under the Therasense standard. This is because there was no evidence of a deliberate decision to withhold information from the USPTO. The CAFC did not need to comment on whether the references were “but-for” material, since EA did not satisfy the first part of the inequitable conduct analysis.
If CAFC had heard this case before the Therasense decision, the result would likely have been that inequitable conduct was found. Although parties in a similar position as 1st Media should feel safer now, rather than rely on the courts to apply the post-Therasense inequitable conduct standard, they may now consider curing possible inequitable conduct allegations before initiating litigation by filing for Supplemental Examination, a new AIA post-grant proceeding. Of course, it is still best practice to promptly submit any potentially material documents to the USPTO, particularly those cited in foreign counterpart applications. Additionally, although inequitable conduct is now very difficult to prove in the absence of actual fraud, an applicant should be consistent in their decisions about what information to submit and when, in order to avoid an allegation of selective disclosure.