A patent applicant has a duty to prosecute an application before the U.S. Patent & Trademark Office with candor, good faith, and honesty. See Paragon Podiatry Lab., Inc. v. KLM Labs., Inc., 984 F.2d 1182, 1192 (Fed. Cir. 1993). Affirmative misrepresentations of material fact, failure to disclose material information or a submission of false material information during the prosecution of a patent application when coupled with an intent to deceive constitutes inequitable conduct. Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed. Cir. 1995). Inequitable conduct is a defense to a claim for patent infringement and is a basis for rendering a patent unenforceable.
The Federal Circuit recently found that the failure to disclose to the Patent & Trademark Office two prior art patents constituted inequitable conduct that rendered the patent unenforceable. Elk Corp. of Dallas v. GAF Building Materials Corp., 168 Fed. Cir. 28 (Fed. Cir. 1999). In Elk Corporation, four inventors, some of whom were Elk employees, began developing a two-ply, composite roofing shingle based on an existing patent. In anticipation of applying for a design patent on the new shingle, one of the inventors arranged for a patentability search on the newly-developed roofing shingle. That same inventor, when requesting the search, acknowledged the similarity of this design to a shingle disclosed in that other patent. The patent search produced yet a second patent, which the inventor identified as being "of special interest." During the prosecution of the Elk design patent, neither of the two patents were disclosed to the Patent & Trademark Office. The patent did issue.
Elk Corp. subsequently sued GAF Building Materials for infringement of the design patent. GAF Building counterclaimed alleging that the patent was unenforceable due to inequitable conduct based on the failure to disclose these patents and proffering arguments to the examiner which could not have been made had the two patents been disclosed. The District Court found the patents were material, that the applicants had knowledge of the materiality of the patents and that they withheld the patents with an intent to deceive. The District Court also found that in order to overcome an initial rejection, the applicants made an argument concerning prior art cited by the examiner which could not have made had they disclosed the far more material patents. In light of all the circumstances, the District Court concluded that the patent should not be enforced.
The Second Circuit affirmed the District Court's finding of materiality and knowledge of the materiality. On the issue of the intent to deceive, the Federal Circuit noted that intent need not and rarely can be proven by direct evidence. Id. at 32. The court noted that this element of inequitable conduct must generally be inferred from the facts and circumstances surrounding the applicant's overall conduct. Id. The Federal Circuit further recognized that the more material the omission, the less the degree of intent that must be shown to reach a conclusion of inequitable conduct.
If you would like more information concerning this case or other intellectual property issues, please contact JaneC. Schlicht at (414) 227-1291 or schlicht@cf-law.com.