CAFC find Inequitable Conduct on argument plus withholding contradictory evidence

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84-4. Inequitable Conduct Arose From Arguing that Challenger’s Testimony Lacks Corroboration, While Withholding Knowledge of Contradictory Evidence

Ohio Willow Wood Co. v. Alps South, LLC, No. 2015-1132, 2015-1133, 2016 U.S. App. LEXIS 3022 (Fed. Cir. Feb. 19, 2016) (Before Dyk, Bryson, and Wallach, J.) (Opinion for the court, Bryson, J.). Click Here for a copy of the opinion.

The Ohio Willow Wood Company (OWW) sued Alps for infringement of a patent related to liners used in prosthetic limbs.  The claimed liners consisted of a synthetic fabric coated with a gel on only the side touching the body, designed to reduce skin irritation.  Alps filed two reexamination proceedings against the asserted patent, during which time the district court case was stayed.

The first reexamination was in view of advertisements for a product called “Silosheath,” manufactured by Silipos.  OWW overcame the advertisement by showing the examiner an example of the Silosheath liner, and demonstrating that the gel would bleed through the fabric, such that the gel would be on both sides of the liner.  The examiner required OWW to make a clarifying amendment to the claim, and issued a reexamination certificate.

The second reexamination was based on an advertisement for a the “Single Socket Gel Liner” (SSGL) that was part of the Silosheath product line.  The central issue was whether this SSGL product, like the product, would allow the gel to bleed through the fabric.  Alps presented a declaration on behalf of Jean-Paul Comtesse, who worked at Silipos when the SSGL and Silosheath products were developed, stating that the SSGL product used a fabric called “Coolmax” which was thicker and denser than the fabric used in the other Silosheath products, and that this fabric would not allow the gel to bleed through the fabric.  The examiner rejected the claims in view of the SSGL product. OWW appealed to the Patent Trial and Appeal Board (PTAB).

On appeal to the PTAB, OWW argued that Comtesse’s testimony was unreliable because he was a highly interested witness, and his testimony was uncorroborated. Comtesse was the inventor of the SSGL product, and was still receiving royalties on the product.  Further, the advertisement cited by Alps did not specify that the fabric was Coolmax, and thus provided no corroboration.  The PTAB agreed with OWW and reversed the examiner’s rejection.

Following the two reexaminations, the district court lifted the stay, and granted a motion for summary judgment of invalidity to Alps.  The same order rejected Alps’ claim of inequitable conduct by OWW during the reexaminations. Both sides appealed. The Federal Circuit affirmed the finding of invalidity, and remanded to the district court for a trial on the inequitable conduct claim.

Following a bench trial, the district court found inequitable conduct during the second reexamination.  In the second reexamination, OWW’s representations about a lack of corroborating evidence constituted inequitable conduct, because OWW was aware that such corroborating evidence existed.  Specifically, James Colvin, OWW’s director of R&D, was in possession of two letters from Michael Scalise (Scalise Letters), an attorney for Silipos, which clearly stated that the Silosheath product line included gel only on one side.  Further, Mr. Colvin was also aware of three declarations filed with Alps’s summary judgment motion which likewise corroborated Comtesse’s testimony. Nevertheless, Mr. Colvin took no action to correct the representations of OWW’s counsel to PTAB. The district court thus found that OWW had committed inequitable conduct because of the inaction of Mr. Colvin, and it declared the patents to be unenforceable. OWW again appealed to the Federal Circuit.

To show inequitable conduct, a party must demonstrate that the applicant for a patent made misrepresentations that were material, with the specific intent to mislead or deceive the Patent Office, and that deceptive intent is the single most reasonable inference to be drawn from the evidence.  Here, the PTAB’s decision identified that the single dispositive issue in the case was the reliability of Comtesse’s testimony, and thus any omission of corroborating evidence was material.

As to the Scalise Letters, OWW argued that deceptive intent was not the single most reasonable inference because Mr. Colvin did not believe that the letters were prior art to OWW’s patent.  The Federal Circuit rejected this argument because the record shows that Mr. Colvin was well aware that the issue was corroboration of testimony – not whether there was additional prior art. Thus, the district court’s decision that deceptive intent was the single most reasonable inference from the withholding of the Scalise letters was affirmed.

As to the declarations filed as part of Alps’ motion for summary judgment, OWW argued that Mr. Colvin thought that the declarations had been filed under seal, and thus he was not allowed to view them.  The district court rejected the argument, because the documents were available to OWW employees – only those marked “attorneys eyes only” could not be read by Mr. Colvin. The court further found it inconceivable that OWW’s representative in the litigation would not  read the declarations filed as part of a case defending their best selling product.  The Federal Circuit disagreed. No witnesses had been presented showing that Mr. Colvin had, in fact, read the declarations, and OWW’s attorneys testified that they understood the declarations to be confidential, and not available to Mr. Colvin. Thus, the court concluded that Alps had failed to show that Mr. Colvin acted with deceptive intent with respect to the declarations.