Patent Law Updates | New Judicial Opinions
December 21, 2007
Federal Circuit Affirms Inequitable Conduct Ruling in McKesson Information Solutions Suit
McKesson Information Solutions, Inc. v. Bridge Medical, Inc.
No. 2006-1517, U.S. Court of Appeals for the Federal Circuit, 5/18/2007
In this appeal, the U.S. Court of Appeals for the Federal Circuit held that a patent directed toward a patient identification system was unenforceable for inequitable conduct. According to the court, plaintiff patentee’s failure to disclose three items of information pertaining to its co-pending applications was “individually and collectively material to prosecution of the application that led to the patent” in issue. In so stating, the Federal Circuit found that such material non-disclosures were committed under circumstances that give rise to an inference of an intent to deceive. Disclosure of material prior art made of record before one examiner of the U.S. Patent and Trademark Office (USPTO) while withholding it from another (within the same office) could serve as circumstantial evidence of such deceptive intent. The Federal Circuit thus affirmed the trial court’s dismissal of patentee’s infringement suit.
The patent in issue (“’716 patent”) provides “a patient identification system for relating items with patients and ensuring that an identified item corresponds to an identified patient.” This system is accomplished first by providing a set of bar codes associated with a given patient such that one bar code from the set is physically attached to the patient and the other bar codes from the set are physically attached to, for example, the patient’s medications; and second by providing a portable handheld bar code reader (or patient terminal) wirelessly connected to a base station unit (typically located in the patient’s room) that communicates via modem with a system computer capable of “processing and storing patient data.”
Plaintiff McKesson filed this infringement case against defendant Bridge Medical Inc. before the United States District Court for the Eastern District of California. Bridge answered McKesson’s complaint by pleading the affirmative defenses of unenforceability due to inequitable conduct, equitable estoppel, and unclean hands. Bridge also brought counterclaims against McKesson for declaratory judgment. The district court bifurcated the trial into two phases, with the first phase being a bench trial on the inequitable conduct affirmative defense and the second phase being a jury trial on the remainder of the claims, counterclaims, and affirmative defenses. A four-day bench trial of the first phase resulted in an unenforceability judgment in favor of Bridge, thereby rendering the second phase unnecessary.
Given that this case involved the concurrent prosecution of a series of co-pending applications - where the prosecuting attorney testified in the district court that he would make all the same non-disclosure decisions again if prosecuting the same applications today – the issue of whether sufficient evidence existed to affirm the lower court’s finding of inequitable conduct was posed before the Federal Circuit.
The applicable rule is that “a patent may be rendered unenforceable for inequitable conduct if an applicant, with intent to mislead or deceive the examiner, fails to disclose material information or submits materially false information to the PTO during prosecution.” Digital Control Inc. v. Charles Mach. Works, 437 F.3d 1309, 1313 (Fed.Cir.2006); see also 37 C.F.R. § 1.56(a). The materiality of information withheld during prosecution may be judged by the “reasonable examiner” standard. See id. at 1316. That is, “[m]ateriality ... embraces any information that a reasonable examiner would substantially likely consider important in deciding whether to allow an application to issue as a patent.” Akron Polymer Container Corp. v. Exxel Container, Inc., 148 F.3d 1380, 1382 (Fed.Cir.1998). Moreover, “(i)nformation 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, 437 F.3d at 1319.
In sustaining the ruling of the lower court, the Federal Circuit held that that there was clear and convincing evidence that plaintiff’s patent prosecutor had withheld these three categories of information under circumstances that give rise to an inference of intent to deceive. These items of information pertain to: (1) a prior art made of record in the related co-pending applications from the examiner who handled the ‘716 patent; (2) two rejections made by another examiner in a co-pending case; and (3) an allowance made by the ‘716 examiner in another co-pending application under review by the same examiner.
According to the court, the three non-disclosures were individually and collectively material to prosecution of the application that led to the ′716 patent. After assessing all the facts, the court held that McKesson failed to provide a credible explanation for the material non-disclosures. As the district court noted, what happened before the USPTO was not a case of mistake or negligence since the prosecuting patent attorney claimed that it was not the practice of his or any other law firm to cite office actions in the 1980s (when he filed the applications).
In making a finding of deception before the USPTO, the Federal Circuit cited the case of Bruno Independent Living Aids, Inc. v. Acorn Mobility Services, Ltd.(394 F.3d 1348 (Fed. Cir. 2005) (where it was held that selectively withholding prior art from the USPTO, while disclosing it to another federal agency (in that case, the Food and Drug Administration), supports an inference of intent to deceive). The Bruno ruling could likewise apply to material information selectively withheld within the USPTO: disclosing material prior art made of record before one patent examiner while withholding it from another can serve as circumstantial evidence of deceptive intent.
Going further, the court added that merely disclosing the existence of a co-pending patent application, without revealing that such application was rejected by another examiner, was not enough. Agreeing with the holding of the district court, the Federal Circuit explained that section 2001.06(b) of the Manual of Patent Examination and Procedure (“MPEP”), “plainly impose[s] a duty of disclosure beyond citation of the co-pending application.” Thus, the court concluded that while the patent attorney’s “disclosure of the co-pendency of the [′149 application] to the (‘716 patent examiner) is some evidence of a lack of intent to deceive under Akron Polymer, weighing all the evidence here, as the court must, said disclosure does not overcome the inference of an intent to deceive established [on these facts].”
On the basis of this reasoning, the Federal Circuit affirmed the district court’s dismissal of the patent infringement suit.
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