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Patent Law Commentary
McKesson v. Bridge Medical: Inequitable Conduct Due to Lack of Full Disclosure in Patent Prosecutions
McKesson Information Solutions, Inc. v. Bridge Medical, Inc.
Posted: 01/18/2008
By: John R. Carr, Esq.
Companies Mentioned: Bridge Medical, Inc., McKesson Information Solutions, Inc.
Introduction
The decision in McKesson Information Solutions Inc. v. Bridge Medical Inc., 487 F.3d 897 (Fed. Cir. 2007), has been referred to by many as “frightening,” “burdensome,” and “a whopper.” Indeed, the decision places a high burden on patent prosecutors to disclose essentially every action in any related co-pending application. The failure to do so may result in a declaration that the patent is unenforceable due to inequitable conduct.
Detailed Commentary
BACKGROUND
McKesson Information Solutions filed suit against Bridge Medical Inc., claiming infringement of McKesson’s U.S. Patent No. 4,857,716 (“the ‘716 patent”). In defense, Bridge Medical asserted that the ‘716 patent was unenforceable due to inequitable conduct, equitable estoppel, and unclean hands. More specifically, Bridge Medical argued that failure to disclose activity and prior art references in related cases constituted inequitable conduct. The district court agreed and found the patent unenforceable due to inequitable conduct. McKesson Information Solutions Inc. v. Bridge Medical Inc., 2006 WL 1652518, No. CIVS022669FCDKJM (E.D. Cal. June 13, 2006). McKesson appealed to the Federal Circuit, which affirmed the lower court’s decision in McKesson Information Solutions Inc. v. Bridge Medical Inc., 487 F.3d 897 (Fed. Cir. 2007).
The ‘716 Patent
The ‘716 patent concerns a patient identification system for relating specific items with specific patients (such as medication) and ensuring that an identified item corresponds to an identified patient. The system is based on a bar code system that uses a portable bar code reader, a base station unit in the patient’s room, and a central computer (collectively, “three-node communication”). To prevent patient data from mingling with other data, the terminal and the base station can be programmed to identify each other and exclude other signals (the “programmable unique identifier”).
The ‘716 patent has one independent claim and claims priority to a parent application (“the ‘278 application”) which was twice rejected by the Examiner. The second rejection was based upon a combination of prior art references. In this rejection, the Examiner made suggestions on how to rewrite the one independent claim to make it allowable. Thereafter, McKesson filed a continuation application, in which it redrafted the one independent claim as per the Examiner’s suggestion. The continuation application was allowed and the ‘716 patent issued on August 15, 1989.
At the time McKesson filed the ‘716 patent application, a prior related application (“the ‘149 application”) was pending before a different Examiner. The ‘149 application involved a similar invention and McKesson did disclose the pending ‘149 application at the time he filed the ‘278 application.
Before the ‘716 patent issued, the Examiner in the ’149 application rejected the claims as obvious in light of a combination of several prior art references – including a new prior art reference—U.S. Patent No. XXXX issue to Baker (“the Baker patent”) – which had not been previously cited in any of the other related applications. McKesson acknowledged this reference and amended the claims to overcome this prior art reference; but, he did not disclose the rejection or the Baker patent to the Examiner in the ‘716 patent before it issued.
The ‘372 patent
Additionally, prior to issuance of the ‘716 patent, McKesson received a Notice of Allowance on another related application which also concerned a three-node communication. The Examiner in this related co-pending application was the same as that in ‘278 application (the application that eventually resulted in the ‘716 patent). A resulting patent in this related application issued (“the ‘372 patent”) on December 16, 1988. McKesson did not notify the Examiner in the ‘278 application of this allowance because it was the same Examiner in both applications.
THE COURTS FOUND THE ‘716 PATENT UNENFORCEABLE
A party asserting the defense of unenforceability bears the burden of proving that an applicant, with intent to mislead or deceive the examiner, failed to disclose material information or submitted materially false information to the PTO during prosecution. 487 F.3d at 913; Digital Control Inc. v. Charles Mach. Works, 437 F.3d 1309, 1313 (Fed. Cir. 2006). The party asserting the defense must prove both “materiality” and “intent to deceive” by clear and convincing evidence. 487 F.3d at 913.“Materiality” is judged by a “reasonable examiner” standard and “embraces any information that a reasonable examiner would substantially likely consider important in deciding whether to allow an application to issue as a patent.” 487 F.3d at 913; Akron Polymer Container Corp. v. Exxel Container Inc., 148 F.3d 1380, 1382 (Fed. Cir. 1998) (citations omitted). “Information concealed from the PTO may be material even though it would not invalidate the patent.” Li Second Family LP v. Toshiba Corp., 231 F.3d 1373, 1380 (Fed. Cir. 2000). “However, a withheld otherwise material [piece of information] is not material for the purposes of inequitable conduct if it is merely cumulative to that information considered by the examiner.” Digital Control Inc. v. Charles Mach. Works, 437 F.3d 1309, 1319 (Fed. Cir. 2006).
The rare decision to declare the ‘716 patent unenforceable due to inequitable conduct during prosecution was based on three different acts, each of which alone was deemed by the court as inequitable conduct:
1) Failure to disclose the Baker patent during prosecution of the ‘716 patent
During prosecution of the ‘716 patent, the Baker patent was cited in a related co-pending application; but, McKesson did not notify the Examiner of the Baker patent. The appellate court concurred with the district court’s finding that nondisclosure of the Baker patent was intentional and material. Although McKesson argued that disclosure of Baker would have been cumulative of other prior art references, the district and appellate courts disagreed, finding that Baker was “unique” and “highly material.” 487 F.3d at 908-09.
Regarding intent, the district court inferred intent to deceive, finding that McKesson knew or should have known of Baker’s materiality when he chose not to fight the rejections based on Baker and instead cancelled the claims of the ‘149 application that were rejected due to Baker. Id.
2) Failure to disclose rejection of the ‘149 application in the ‘716 patent
Though McKesson did disclose the existence of the pending ‘149 application to the Examiner in the ‘716 patent, he did not disclose the actual rejection of the ‘149 application to the Examiner in the ‘716 patent. Relying on Li Second Family v. Toshiba, 231 F.3d 1373 (Fed. Cir. 2000), the appellate court stated:
Here, as in Li Second Family, we are presented with a situation in which (1) the examiner of one application (Trafton) was not apprised of the adverse decisions by another examiner (Lev) in a closely-related application; (2) the applicant disclosed the closely-related application only in the context of prior art cited in that application, but failed to mentioned the adverse decisions; and (3) the applicant made statements to the examiner inconsistent with the other examiner’s decisions, i.e., that nothing in the prior art disclosed three-node communications. Given such a tight correlation between the facts at hand and those in Li Second Family, we must reject McKesson’s attempt to distinguish that case. Accordingly, we hold that the district court did not clearly err in finding that [Schumann] intended to deceive the PTO by not disclosing the two rejections in the ‘149 application to Examiner Trafton.” 487 F.3d at 924-925.
The Court applied and clarified its previous decision in Dayco Products Inc. v. Total Containment Inc., 329 F.3d 1358 (Fed. Cir. 2003). In Dayco, the Court had held that a “contrary decision of another examiner reviewing a substantially similar claim” was material and must be disclosed to the PTO. 329 F.3d at 1368. The McKesson court stated that, in cases of co-pending claims, “a showing of substantial similarity is sufficient to prove materiality,” but those claims need not be substantially similar in order to be material. 487 F.3d at 919-920. The court also pointed to the Manual of Patent Examination and Procedure (“MPEP”), which makes it clear that “material rejections in co-pending applications fall squarely within the duty of candor.” Id. at 923. Therefore, merely revealing the existence of the ‘149 application without revealing the rejections was clearly insufficient.
3) Failure to disclose allowance of the CIP to Trafton
In the part of McKesson that unsettles the patent bar most, the court found that McKesson exhibited inequitable conduct when it failed to disclose to the Examiner in the ‘716 patent his own allowance of the claims of the ‘372 patent while the ‘716 patent was also still pending. The district court found that this nondisclosure could have “conceivably” triggered a “double patenting rejection.” 487 F.3d at 912.
McKesson tried to argue that the claims of the ‘716 and ‘372 patents were not sufficiently similar to qualify the allowance of the ‘372 patent as material, since the ‘372 patent lacked the programmable unique identifier limitation. McKesson also argued that the district court erred when it failed to assess whether a reasonable examiner really would have issued a double patenting rejection.
The court rejected both of these arguments, stating that “the test for materiality is whether a reasonable examiner would have considered the information important, not whether the information would conclusively decide the issue of patentability.” Id. at 925 (citing Li Second Family, 231 F.3d at 1380). The court held that the Examiner should have “been given the opportunity to consider whether the added limitations in the ‘716 patent were non-obvious,” in light of the ‘372 patent. 487 F.3d at 912.
Finally, McKesson argued that the district court failed to consider that Trafton was the examiner who reviewed and ultimately allowed both the ‘372 and ‘716 patents, therefore he likely remembered allowing the ‘372 claims and already appreciated their materiality. But the court disagreed and pointed to the MPEP, which warns prosecuting attorneys not to assume that a PTO examiner remembers details of other pending files while reviewing one particular application. MPEP §2001.06(b)(5th ed. Rev. 3, 1986).
CONCLUSION
McKesson increases the burden on patent prosecutors who file multiple related applications. The ruling requires full disclosure of not only the existence of related applications but also full disclosure of the course of prosecution of these related applications, as well as full disclosure of all references cited in an of these co-pending applications. This full disclosure of must occur even if the co-pending applications are before the same examiner.
Interestingly, the appellate court seems to have ignored the requirement of proving actual deceptive intent by clear and convincing evidence, automatically inferring deceptive intent where the references or actions in questions are deemed “highly material.” Accordingly, McKesson gives patent infringement defendants a wieldy new weapon, one that is certain to make future appearances and further increase and encourage litigation. As Judge Pauline Newman cautioned in her dissenting opinion:
This court returns to the ‘plague’ of encouraging unwarranted charges of inequitable conduct, spawning the opportunistic litigation that here succeeded despite consistently contrary precedent.
487 F.3d at 926-927.
Patent Law Summary
Read the related Patent Law summary: Federal Circuit Affirms Inequitable Conduct Ruling in McKesson Information Solutions Suit
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