Federal Circuit Reverses Microsoft's $8M Award and Patent Invalidity Judgment

Holding:

In this dispute over patents relating to image halftoning technology, the U.S. Court of Appeals for the Federal Circuit reversed the district court's finding of inequitable conduct against patentee Research Corporation Technologies ("RCT"), and reversed the award of $8 million in attorney's fees in favor of Microsoft Corp. ("Microsoft"). The district court found inequitable conduct because the inventors did not disclose their post-filing K factor tests to the U.S. Patent and Trademark Office ("USPTO"). On appeal, the Federal Circuit held otherwise, stating that because the inventor’s work occurred after the filing of the patent application, these K factor experiments were not material to their inventive activity. In the circumstances of this case, therefore, the inventors had no obligation to report their later tests to the USPTO. Importantly, the inventor and her coauthors published the K factor tests to the scientific community. Publication is an act inconsistent with an intent to conceal data from the USPTO. In addition to the district court's error in its analysis of the materiality prong, the Federal Circuit also found the district court erred in its intent analysis. Because the Federal Circuit vacated the district court's determination of unenforceability due to inequitable conduct, it also vacated the exceptionality finding and the grant of attorney fees in favor of Microsoft.

Detailed Summary:

In this case, the United States District Court for the District of Arizona held plaintiff-appellant RCT’s patents unenforceable due to inequitable conduct. The district court also granted defendant-appellee Microsoft Corp. summary judgment of invalidity and noninfringement.

All the patents at issue relate to image halftoning technology used in computers and printers. A halftone is an image which simulates a continuous tone image, but is actually an arrangement of individual dots. The particular spacing between the dots gives the viewer the illusion of a continuous picture consisting of varying shades of gray in a halftone image. Opinion, p. 3.

RCT filed…

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