Intent to Deceive: A High Hurdle Post-Therasense
1st Media, LLC v. Electronic Arts, Inc., et al. (Fed. Cir., 2012)
I have a soft spot for karaoke. It’s not that I can sing; my voice is suitable for use only in the shower or on a riding lawn mower. However, I did meet my wife on a blind date at a local restaurant on a Thursday evening that turned out to be Karaoke Night. The good news is that we got married in spite of our exposure to off-key renderings of hits by Neil Diamond, Kool & the Gang, and Madonna.
1st Media, LLC owns U.S. Pat. No. 5,464,946, which relates to an entertainment system for use in purchasing and storing songs, videos, and multimedia karaoke information. 1st Media sued Electronic Arts, Inc. and others in Nevada District Court for patent infringement. However, the court agreed with the defendants that inventor Dr. Scott Lewis and his attorney Joseph Sawyer intentionally withheld material references from the USPTO, and this amounted to inequitable conduct that made the ‘946 patent invalid and unenforceable. The case was decided in 2010, i.e., before the Federal Circuit’s en banc decision in Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011). Upon review under the new Therasense standard, the Federal Circuit concluded that the record showed no evidence of a deliberate decision to withhold the references from the USPTO. Therefore, it reversed the district court.
The ‘946 patent was based on an application filed on November 13, 1992; the issue fee was paid on August 1, 1995. Electronic Arts identified other similar applications for which Lewis was the inventor and Sawyer was the attorney. In one instance, a corresponding PCT application received a search report citing a “Y” category document (WO 90/01243). Sawyer received the search report eight days before paying the issue fee for the ‘946 patent, but he did not cite the reference to the USPTO. Lewis filed another similar application on November 13, 1992, which was rejected on July 16, 1993 as anticipated by U.S. Pat. No. 5,027,400. However, neither Lewis nor Sawyer cited the ‘400 patent while prosecuting the application that led to the ‘946 patent.
At the trial, Lewis and Sawyer testified that they did not appreciate the materiality of the uncited references. Lewis called the failure to cite the Y-category publication an “oversight that got lost in the cracks”; there was no “conscious decision” to omit it. Other uncited references were considered to relate to “distinct” technologies. The district court dismissed these explanations. It concluded that because Lewis and Sawyer failed to provide a credible good faith explanation for non-disclosure of the references, the court could infer that they intended to deceive the USPTO.
The Federal Circuit disagreed. As Judge Linn wrote for the panel, “Therasense changed the standard for proving inequitable conduct based on nondisclosure of a reference to the PTO.” Absent “affirmative egregious misconduct, a defendant must prove by clear and convincing evidence both of the ‘separate requirements’ that: (1) the patentee acted with the specific intent to deceive the PTO; and (2) the non-disclosed reference was but-for material.” A defendant must prove that the applicant “knew of the reference, knew it was material, and made a deliberate decision to withhold it.” To meet the “clear and convincing” standard, the “specific intent to deceive must be the single most reasonable inference able to be drawn from the evidence.”
The district court had accepted the argument that an intent to deceive could be inferred from Sawyer and Lewis’s failure to cite references and their failure to offer a good faith explanation for nondisclosure. However, after Therasense, knowledge of the reference and its materiality alone are “insufficient . . . to show an intent to deceive.” Applying the higher post-Therasense standard to each of the uncited references, the Federal Circuit concluded that Sawyer and Lewis made no deliberate decision to withhold material information from the PTO, so there could be no inequitable conduct.
The decision in 1st Media v. Electronic Arts underscores the message of Therasense: charges of inequitable conduct based on nondisclosure of references now face a high hurdle. Although the challenges of prosecuting complex portfolios consisting of many similar or related patent applications makes it possible—and even likely—for any wily opposing counsel to identify an uncited yet material reference, the defendant is now hard-pressed to prove the requisite deliberate decision to withhold information. Overall, 1st Media confirms the bad news for those who would raise inequitable conduct as a defense and the good news for merely negligent inventors and their attorneys. In the background, I can almost hear someone doing her best Kool on karaoke: Cel-e-brate good times, come on!
– Jon Schuchardt br>
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