Inequitable Conduct Not Found in Patent Application

In this patent infringement case, the court had found Plaintiff's patent to be unenforceable on an earlier motion for summary judgment, based on commercial sales more than one year prior to the filing of the patent application. Defendants then moved for summary judgment declaring that the patent was unenforceable for "inequitable conduct," and that Plaintiff was required to pay their attorney fees. Defendants argued that Plaintiff committed fraud before the United States Patent Office by concealing that prior art had been sold more than one year before the application was filed. Plaintiff conceded that prior art was sold more than one year prior to the application, and that this information should have been provided to the patent examiner. However, the Plaintiff argued that its failure was a good faith mistake, not fraud or inequitable conduct.

In denying Defendants' motion for attorney fees, the court noted that a patent applicant has a duty of candor and good faith to disclose all information known to be material to patentability. To prove inequitable conduct, however, it must be shown by clear and convincing evidence that there was an intent to deceive the Patent Office. Intent to deceive may be proven by showing acts, the natural consequences of which are presumably intended by the actor. Gross negligence is sufficient to prove intent to deceive, and is present when the applicant should have known of the materiality of the withheld information. Once such intent is established, the court conducts a balancing test to determine whether the conduct rises to the level of "inequitable conduct."

After reviewing the record, the court determined that there were disputed questions of fact as to whether Plaintiff's patent attorney knew of the prior sales and whether Plaintiff knew that this information was required by the Patent Office. Accordingly, the court could not decide the issue on a motion for summary judgment. However, because Defendants had not raised the issue of inequitable conduct in their answer or counterclaim, there was no remaining issue in the case to be decided.

Sash Controls, Inc. v. Talon, Allen-Stevens Corp., et al, Civil Action No. 96-CV-72517 (November 24, 1997)( Friedman, Bernard A.)(Docket No. 166, 7 pp.). This article was written by Ronald S. Longhofer, a partner in our Litigation Department, and previously appeared in the March 1998 edition of the Michigan Bar Journal.