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Federal Circuit Reverses Microsoft's $8M Award and Patent Invalidity Judgment
Research Corp. Technologies Inc. v. Microsoft Corp.
No. 2006-1275, U.S. Court of Appeals for the Federal Circuit , 08/01/2008
Companies Mentioned: Microsoft Corp., Research Corp. Technologies Inc.
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 suit against Microsoft for infringement of six patents at issue. Dr. Kevin J. Parker, from the University of Rochester, and his graduate student at the time, Dr. Theophano Mista, made these inventions.
Without opinion, the new district judge reversed the prior judge’s grant of RCT’s summary judgment motion for infringement and also granted, without opinion, Microsoft’s summary judgment motion for noninfringement. Again without opinion, the new trial judge also granted Microsoft summary judgment on invalidity. Id. p. 2. The trial judge found inequitable conduct because the inventors did not disclose Dr. Mista’s post-filing K factor tests to the USPTO.
The “K factor” is a scaling factor and constitutes the number by which the Principal Frequency equation can be multiplied to change the size of the filter. The K factor is not required in the patented invention and not mentioned in the patent. After the filing of the patent application, and as a part of her continuing doctoral thesis, Dr. Mista set out to test the strictness of Dr. Ulichney’s Principal Frequency equation by testing it with three different scaling factors. Id. pp. 5-7.
Because Dr. Mista’s work occurred after she and Dr. Parker had filed 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. Id. pp. 6-7.
Additionally, the patents did not even mention the K factor. The K factor research was not necessary to practice the patented invention. In fact, most of Dr. Mista’s mask-generating programs included no K factor at all, including her final program called makemask. Importantly, Dr. Mista 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. Id., pp. 7-8
According to the Federal Circuit, because the district court focused exclusively on candor, its findings and conclusions improperly excluded and ignored proferred testimony on the immateriality of the K-factor experiments. Similarly, the district court also did not allow any testimony from qualified experts regarding whether the K factor experiments had any bearing on any statutory ground for patentability. In sum, the district court completely ignored the materiality prong.
In addition to district court’s error in its analysis of the materiality prong, the Federal Circuit also found the district court erred in its intent analysis. The trial court, for instance, focused improperly on comments that Dr. Parker made at trial regarding the purposes of the patent system. “An inventor’s motives in applying for a patent or his views on the purposes of the patent system are generally irrelevant to a proper determination of inequitable conduct. Dr. Parker is not required to know or recite the purposes of the patent system. Moreover, although Dr. Parker may likely not profit directly from the patent himself, even if he did hope for remuneration, any financial reward does not alone show an intent to deceive the USPTO.” Id., p. 9.
The district court also erred in relying on an email exchange a few days after filing as evidence that Dr. Parker was not in possession of the invention at the time of filing. In an email to Dr. Ulichney, another researcher, Dr. Parker indicated that he was thinking about starting some experiments regarding blue noise masks. Indeed this was not an entirely truthful statement.
In sum, the trial court erred in ignoring the materiality prong and in misapplying the intent prong of the inequitable conduct.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.
View a PDF of the judicial opinion.Service
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