Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_02-cv-02669/USCOURTS-caed-2_02-cv-02669-7/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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1 Bridge also moved for summary adjudication of its

counter-claim for declaratory relief on the same grounds. (Amd.

Counter-Compl., filed July 16, 2003.) 

2 U.S. Patent No. 4,857,716 (“the ‘716 patent”)

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

McKESSON INFORMATION

SOLUTIONS, INC.,

NO. CIV. S-02-2669 FCD KJM

Plaintiff,

v. MEMORANDUM AND ORDER

BRIDGE MEDICAL, INC.,

Defendant.

----oo0oo----

This matter is before the court on the parties’ crossmotions for summary adjudication of defendant Bridge’s Medical

Inc.’s (“Bridge”) affirmative defense of inequitable conduct.1

By that defense, Bridge seeks a finding that the subject patent2

held by plaintiff McKesson Information Solutions, Inc.

(“McKesson”) is unenforceable for inequitable conduct in

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3 Because oral argument will not be of material

assistance, the court orders this matter submitted on the briefs. 

E.D. Cal. L.R. 78-230(h).

2

prosecuting the patent before the Untied States Patent and

Trademark Office (“PTO”).

For the reasons set forth below, both parties’ motions are

DENIED.3 Triable issues of fact remain regarding the materiality

of the non-disclosures and the apparent intent to deceive the

PTO. As such, Bridge’s defense/counter-claim for inequitable

conduct may not be resolved on summary adjudication.

BACKGROUND

The ‘716 patent inventors were represented before the PTO by

attorney Michael D. Schumann (“Schumann”) in their effort to

secure the ‘716 patent, covering a Patient Identification and

Verification System and Method. (Bridge’s Resp. to McKesson’s

Stmt. of Undisp. Facts (“RUF”), filed July 15, 2005, ¶ 1.) While

the ‘716 application was pending, Schumann also filed and

prosecuted a series of related (“co-pending applications”),

including the applications that ultimately became U.S. Patent No.

4,835,372 to Gombrich et al. (“the ‘372 patent”), U.S. Patent No.

4,850,009 to Zook et al. (“the ‘009 patent”), and U.S. Patent No.

4,916,441 to Gombrich (“the ‘441 patent”). (Bridge’s Stmt. of

Disputed Facts (“DF”), filed July 15, 2005, ¶ 45.)

According to Bridge, the ‘372 and the ‘716 patent

applications covered nearly identical subject matter and involved

very similar claims, yet Schumann did not refer the ‘716 patent

examiner to the notice of allowance of the ‘372 patent. (DF ¶

46.) However, Schumann did, in response to a rejection of the

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3

pending claims in the ‘716 application, twice inform the examiner

of the ‘372 application. (RUF ¶ 9, 14.) Ultimately, the ‘372

patent issued before the ‘716 patent. (DF ¶ 47.)

Bridge also maintains that the ‘009 and ‘716 patent

applications prosecuted by Schumann were substantially similar,

each describing and claiming a “portable handheld terminal” with

a “display means,” “keyboard means,” and “electromagnetic

transceiver means” used with a “base station.” Specifically, the

‘009 patent–-from column 5, line 63 through column 15, line 57--

has the identical disclosure, word for word, as the disclosure of

the ‘716 patent–-from column 22, line 37 to column 30, line 11. 

(DF ¶ 49.) On February 26, 1987, the ‘009 examiner rejected all

claims of the ‘009 patent application and notified Schumann of

the rejection. Among others, claims 15, 16, and 18, of the ‘009

application were, Bridge asserts, substantially similar to claim

1 of the ‘716 patent, and the rejection for obviousness of those

claims was based on references the ‘716 examiner was considering. 

(DF ¶ 51.) Yet, Schumann did not notify the ‘716 examiner of

this rejection. (DF ¶ 52.) Thereafter, a second rejection was

entered December 1, 1987 for ‘009 claims 1-24; again, Bridge

asserts that ‘009 claims 20 and 22-24, also rejected for

obviousness, bore a substantial similarity to claim 1 of the ‘716

patent, although Schumann did not inform the ‘716 examiner of

this rejection either. (DF ¶s 53, 54.)

While Schumann did not disclose these rejections of the ‘009

application, he did disclose on two occasions to the ‘716

examiner, the existence of the ‘009 application. (RUF ¶s 6, 7,

8.)

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4 The court denies McKesson’s request to preclude Bridge 

from relying on this theory for its inequitable conduct defense

on the basis of untimely disclosure. As aptly demonstrated in

Bridge’s opposition to McKesson’s motion, Bridge disclosed this

theory as early as its first amended answer and counterclaim

filed July 16, 2003 (para. 24), if not at the latest, in its

interrogatory responses in May 2004. Moreover, there has been no

prejudice to McKesson in responding to this theory even if it was

disclosed at the latest in May 2004; Bridge’s expert discussed

the theory extensively in his expert report filed December 6,

2004; McKesson subsequently filed rebuttal expert reports

thereto, and Bridge’s expert was deposed on March 2, 2005. There

is no basis to preclude Bridge from asserting this theory.

5 Also, he has not submitted a declaration on the

motions.

4

Next, Schumann disclosed U.S. Patent No. 4,456,793 to Baker

et al. (“the ‘793 patent”) to the ‘009 and ‘441 examiners but

failed to disclose it to the ‘716 examiner. Bridge asserts the

‘793 patent involved a three node wireless communication system

involving the features of the ‘716 patent. However, in

prosecuting the ‘716 application, Schumann argued to the

examiner, in order to overcome a rejection, that the prior art

did not disclose such a system. (DF ¶s 55, 56.)4

Finally, Schumann submitted to the ‘441 examiner at least

six references that could have served as prior art to the ‘716

patent, but Schumann did not disclose them to the ‘716 examiner.

(Sheridan Opp’n Decl., filed July 15, 2005, authenticating Expert

Rpt. [Docket Item 353] at 15.)

Schumann has no explanation for these failures to disclose;

at deposition, he declared a foggy memory.5 (DF ¶ 59.)

STANDARD

Summary judgment is appropriate when, based on the record,

no genuine issue exists as to any material fact, and the moving

party is entitled to judgment as a matter of law. Fed. R. Civ.

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5

P. 56(c). A genuine issue of material fact exists if the

evidence is such that a reasonable jury could find in favor of

the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 248 (1986). 

When evaluating a motion for summary judgment, the court

views the evidence through the prism of the evidentiary standard

of proof that would pertain at trial on the merits. Id. at 255. 

Under the patent statutes, a patent enjoys a presumption of

validity (35 U.S.C. § 282) which can be overcome only through

clear and convincing evidence. Eli Lilly & Co. v. Barr

Laboratories, Inc., 251 F.3d 955, 962 (Fed. Cir. 2001). “Thus, a

moving party seeking to invalidate a patent at summary judgment

must submit such clear and convincing evidence of invalidity so

that no reasonable jury could find otherwise.” Id.

Alternatively, a moving party seeking a finding of no invalidity

must show that the nonmoving party, who bears the burden of proof

at trial, failed to produce clear and convincing evidence on an

essential element of a defense upon which a reasonable jury could

invalidate the patent. Id. “In determining whether a genuine

issue of material fact exists, the court views the evidence in

the light most favorable to the nonmoving party and resolves all

doubts in its favor.” Id.

ANALYSIS

To establish that the ‘716 patent was obtained through an

act of inequitable conduct, Bridge bears the burden to prove by

clear and convincing evidence two elements: First, it must show

an affirmative misrepresentation of a material fact, the failure

to disclose material information, or the submission of false

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material information. Life Techs., Inc. v. Clontech Labs., Inc.,

224 F.3d 1320, 1324 (Fed. Cir. 2000). Under the pre-1992

standard in place at the time, information was considered

material “if there [was a] ‘substantial likelihood that a

reasonable examiner would consider it important in deciding

whether to allow the application to issue as a patent.’”

Halliburton Co. v. Schlumberger Tech. Corp., 925 F.2d 1435, 1440

(Fed. Cir. 1991) (quoting 37 C.F.R. § 1.56 (1989)). But

information or prior art is not material if it is cumulative to

other information or art that is already before the examiner. 

Regents of the University of California v. Eli Lilly & Co., 119

F.3d 1559, 1574-75 (Fed. Cir. 1997).

Second, Bridge must prove that Schumann acted with intent to

deceive the PTO. Life Techs., 224 F.3d at 1324. Thus, a good

faith mistake or error does not constitute inequitable conduct,

nor is it sufficient to merely show that Schumann was grossly

negligent. Kingsdown Med. Consultants, Ltd. v. Hollister, Inc.,

863 F.2d 867, 877 (Fed. Cir. 1988). Indeed, Bridge must show

that Schumann actually intended to mislead the PTO. Speedplay,

Inc. v. Bebop, Inc., 211 F.3d 1245, 1259 (Fed. Cir. 2000)

(finding that “[t]he omission must be made with the specific

intent to mislead, not merely from carelessness in the

performance of a duty”).

However, the Federal Circuit has recognized that direct

evidence of intent to deceive the PTO is difficult to obtain, and

therefore it has found that intent to deceive can be inferred

based upon the totality of the circumstances. See e.g., BristolMyers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226,

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1239 (Fed. Cir. 2003) (an intent to deceive is properly inferred

when a “patent applicant knew, or should have known, that

withheld information could be material to the PTO’s consideration

of the patent application”); Molins PLC v. Textron, 48 F.3d 1172,

1180 (Fed. Cir. 1995) (“Intent is . . . most often proven by a

showing of acts, the natural consequences of which are presumably

intended by the actor.”); Paragon Podiatry Lab., Inc. v. KLM

Lab., 984 F.2d 1182, 1192 (Fed. Cir. 1993) (“A party charging

inequitable conduct may make a prima facie case by showing an

unexplained violation of the duty of candor.”)

Once threshold levels of both materiality and intent have

been established, they are weighed to determine if the patent

should be held unenforceable for inequitable conduct. “In making

this determination, the court must conduct a balancing test

between the levels of materiality and intent, with a greater

showing of one factor allowing a lesser showing of the other.” 

Life Techs., 224 F.3d at 1324.

1. Materiality

Through the declaration of its expert, James A. Sheridan

(“Sheridan”), Bridge argues the materiality of Schumann’s nondisclosures, namely: (1) the notice of allowance of the ‘372

patent; (2) the rejections in the ‘009 patent application; (3)

the ‘793 patent; and (4) prior art references from the ‘441

patent application. With respect to each non-disclosure,

McKesson offers a contrary opinion, of “no materiality,” through

its expert, Thomas Smegal (“Smegal”). Materiality is a

“questio[n] of fact that must be proven by clear and convincing

evidence.” Dayco Prods., Inc. v. Total Containment, Inc., 329

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6 The court notes that it is mystified as to why the

parties filed the instant motions. The parties, and certainly

their lawyers, must have been well aware of the conflicting

expert opinions on this issue as these experts were previously

disclosed, filed expert reports, and were deposed. Yet, in the

face of the experts’ opinions, cross-motions for summary judgment

were filed with little, if not no, attempt to discredit the

opposing expert’s opinion. Indeed, no formal objections, seeking

the exclusion of the expert’s opinions, were filed by either

party. How either side believed it could prevail on its motion

absent such a successful effort is unclear to the court. 

Instead, it appears from the utterly voluminous papers filed on

the motions that the parties believed they could “hide” the

triable issues in the heaps of paper. However, as this order

makes clear, the volume of paper cannot disguise the “battle of

experts” present in this case which clearly prevents an award of

summary adjudication. 

8

F.3d 1358, 1362 (Fed. Cir. 2003). At the summary judgment stage,

the court must decide whether the evidence relating to

materiality makes the “fact reasonably inferable either way, or

whether the evidence is so one-sided that the factual issue of

[materiality] may be decided as a matter of law.” Paragon

Podiatry Laboratory, Inc. v. KLM Laboratories, Inc., 984 F.2d

1182, 1190 (Fed. Cir. 1993). As the competing declarations of

Sheridan and Smegal make abundantly clear,6 the question of

materiality could be decided in favor of either party, and

therefore summary adjudication of the issue is inappropriate. 

Id. (“‘If the facts of materiality [or intent] are reasonably

disputed, the issue [of inequitable conduct] is not amenable to

summary judgment.’”) (emphasis in original) (citation omitted). 

A brief summary of some of their relevant opinions demonstrates

this point.

First, with regard to the failure to disclose the notice of

allowance of the ‘372 patent, Sheridan asserts that the

information was highly material because it implicated

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7 Additionally, McKesson’s discussion of Dayco Prods. on

this point, concerning failure to notify an examiner of the

existence of co-pending applications, is inapposite. Bridge does

not argue here that Schumann failed to disclose the mere

existence of the ‘372 application; rather, its claim is based on

Schumann’s failure to disclose the issuance of substantiallysimilar claims that could have given rise to a rejection based on

double-patenting. Thus, Dayco’s holding that disclosure of a copending application is direct evidence pointing away from an

intent to deceive the PTO is not controlling of the issue here.

9

patentability in that it could have generated a double-patenting

rejection for the claims of the ‘716 patent. (Sheridan Decl.,

filed July 1, 2005, ¶ 34.) In rebuttal, Smegal challenges

Sheridan’s conclusion on the basis that he has failed to

adequately demonstrate the similarity between the ‘372 and ‘716

patent claims; according to Smegal, while the two patent

applications may have involved similar subject matter, the claims

themselves were not similar. (Smegal Decl., filed July 15, 2005,

¶s 59, 61) Therefore, Smegal does not agree that revelation of

the ‘372 notice of allowance could have served as a basis for a

double-patenting rejection.7

Second, regarding the rejections of claims in the ‘009

application, Sheridan finds them material because some of the

rejected claims were substantially similar to at least claim 1 of

the ‘716 patent, and the rejections were based on references the

‘716 examiner was considering. Accordingly, Sheridan concludes

“[h]ad [the ‘716 examiner] been informed of [the] rejections he

could have considered the particular combination relating to

patentability found conclusive by [the ‘009 examiner].” 

(Sheridan Decl., ¶ 37.) Again in rebuttal, Smegal challenges

Sheridan’s conclusion that the rejected claims in the ‘009

application were similar to claim 1 of the ‘716 patent, finding

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8 The parties and their respective experts also dispute

whether at the time (1989), Schumann had a duty to disclose such

information. Bridge maintains that he did, and McKesson asserts

that such a duty did not exist until the Federal Circuit issued

its opinion in Dayco Prods. in 2003. The court disagrees with

McKesson’s reading of Dayco Prods. In Dayco Prods., the court

simply stated that it “had never addressed whether the prior

rejection of a substantially similar claim in a copending United

States application is material;” it did not make that finding in

the first instance. Rather, it applied the duty to disclose such

information, as embodied in 37 C.F.R. § 1.56(b)(2), to conduct

that had occurred more than a decade earlier. As such, Dayco

Prods. is not dispositive of the materiality of this nondisclosure.

10

instead a dissimilarity among the claims, and thus a lack of

materiality. (Smegal Decl., ¶ 64-65.)8 

Third, Sheridan finds the ‘793 patent “highly pertinent

prior art to the ‘716 patent” because it discloses a “three node

wireless communication system employing ‘a radio transmission

link between a portable hand-held unit and a fixed base station

unit.’” (Sheridan Decl., ¶ 40.) It was thus prior art

inconsistent with Schumann’s arguments regarding patentability of

the ‘716 application, and accordingly, it was material

information. (Id. at ¶ 40.) Smegal responds that even assuming

the ‘793 patent was inconsistent with Schumann’s arguments in

favor of patentability, Schumann was not required to disclose it

because it was cumulative of other art he disclosed. (Smegal

Decl., ¶ 54 [“[I]t is my understanding, based on the analysis by

McKesson’s technical expert Dr. Harry Bims, that the [‘793

patent] is less relevant than other art cited to the Examiner and

merely cumulative to art already of record in the ‘716

patent.”].) In contradiction, Bridge’s technical expert, Dr.

Lawrence Fagan, finds the ‘793 patent non-cumulative, concluding

that the ‘793 patent discloses elements of the ‘716 patent that

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are not found in the disclosed references. (Fagan Opp’n Decl.,

filed July 15, 2005, ¶ 35; see also Sheridan Decl., ¶ 43.)

Finally, Sheridan finds, in particular, that two of the six

references disclosed to the ‘441 examiner were material to the

‘716 application, namely, the ‘470 patent and the related ‘120

patent. Specifically, Sheridan states that the ‘470 patent was

material because it disclosed that many industries had begun to

use bar codes and that there was a need for lightweight portable

bar code scanners. This information would have important to the

‘716 examiner, according to Sheridan, because portability was

alleged to be a point of distinction for the ‘716 patent.

(Sheridan Opp’n Decl., Exp. Rpt. at 15-16.) For example, the

‘470 patent notes that “[m]any industries . . . have begun to

designate their products with a unique bar code symbol consisting

of a series of lines and spaces of varying widths;” it then

proceeds to claim a bar code scanner “which is so light-in-weight

and small-in-volumne, that it can be easily held in a user’s hand

without causing arm-and wrist-fatigue, while being easy to

manipulate . . .” and “supportable entirely by a user during

symbol reading.” (Id.)

Smegal responds that this reference was cumulative of others

provided by Schumann to the ‘716 examiner. Indeed, Schumann

disclosed numerous patents and articles regarding the expanding

usage of bar codes in various industries, including the health

care industry. (Dickerson Decl., filed July 1, 2005, Exs. HH,

II, JJ, BB; Smegal Decl., ¶ 57, 58.)

Clearly, this discussion makes evident that triable issues

of fact remain regarding the materiality of the subject nonCase 2:02-cv-02669-FCD-KJM Document 533 Filed 08/11/05 Page 11 of 15
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9 On this issue, the parties agree the trier of fact, on

this issue, is the court. Ulead Systems, Inc. v. Lex Computer &

Management Corp., 351 F.3d 1139, 1146 (Fed. Cir. 2003) (“Although

inequitable conduct is a matter for the court, rather than the

jury to resolve, summary judgment is inappropriate if there are

genuine issues of material fact.”)

12

disclosures, thereby preventing an award of summary judgment in

either parties’ favor. See e.g., Aventis Pharma Deutschland GMBH

v. Cobalt Pharmaceuticals, Inc., 355 F. Supp. 2d 586, 594-96 (D.

Mass. 2005) (competing expert testimony raised reasonable dispute

as to materiality and intent making inequitable conduct defense

not amenable to summary judgment). While Bridge has not

demonstrated materiality by clear and convincing evidence

sufficient to prevail on its motion, the court cannot find that

no reasonable trier of fact would believe its evidence and find

in its favor. Ultimately, after an opportunity to weigh the

credibility of the witnesses, the trier of fact9 may conclude

that Bridge has proved the requisite materiality of the nondisclosures. Therefore, McKesson’s motion likewise cannot

succeed.

2. Intent to Deceive

For the same reasons as above, triable issues of fact remain

regarding whether Schumann intended to deceive the PTO, thus

further preventing an award of summary judgment in either

parties’ favor. As with materiality, the parties’ experts,

Sheridan and Smegal, have differing opinions on whether Schumann

can be found to have intended to deceive the PTO by his nondisclosures. 

Before summarizing those opinions, the court notes that

Schumann’s failure to explain the non-disclosures via his

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deposition or by declaration does not affect resolution of the

motions. Bridge incorrectly argues that Schumann’s lack of “a

credible, good faith explanation” for his conduct mandates a

finding of intent to deceive. Bruno Indep. Living Aids, Inc.,

349 F.3d 1348, 1350 (Fed. Cir. 2005). While the Federal Circuit

has found such a fact supportive of a finding of intent to

deceive, it has not found the fact determinative of the issue,

nor has it, as McKesson points out, required the prosecuting

attorney to provide such an explanation in order to withstand a

finding of intent to deceive. Id. at 1354-55. Indeed, it is not

McKesson’s burden to prove a lack of intent to deceive. It is

Bridge’s burden to establish intent to deceive. Here, unlike

Bruno, where the court found no credible evidence of the

prosecuting attorney’s apparent explanation for the nondisclosure, there is evidence of Schumann’s purported intent

through the declarations of Sheridan and Smegal. However, as set

forth below, because that evidence is conflicting and makes the

issue of intent to deceive “reasonably inferable either way,” an

award of summary judgment is not permissible.

For example, Sheridan supports his opinion that an intent to

deceive can be inferred from the following facts: (1) Schumann

served as counsel for all four co-pending applications; (2) the

‘372 and ‘716 patents shared the same parent and grandparent

applications; (3) the ‘372 and the ‘716 patent applications

covered nearly identical subject matter and involved very similar

claims; (4) the ‘009 and ‘441 applications contained

substantially similar specifications to the ‘716 application; (5)

the rejections in the ‘009 application were based on references

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the ‘716 examiner was considering; (6) the ‘793 patent involved a

three node wireless communication system involving the features

of the ‘716 patent. (Sheridan Decl., ¶ 44.) According to

Sheridan, under these facts, Schumann’s failure to disclose the

subject information “could not have been unintentional,” or at

minimum, supports a finding that Schumann “should have known”

that the information was material. Either way, the facts

“warrant an inference that the failure to disclose was

intentional.” (Id. at ¶s 44, 46.)

Precisely to the contrary, Smegal “disagree[s] with

[Sheridan]” that an intent to deceive can be inferred because,

according to Smegal, the facts do not support such a finding. 

(Smegal, ¶ 67.) Instead, Smegal finds that because the subject

information was not “material” to the inquiry, as set forth

above, an intent to deceive cannot be inferred. (Id. at 67-69.) 

For example, Smegal believes Schumann’s disclosure of the

existence of the co-pending ‘372 application to the ‘716 examiner

demonstrates a lack of intent to deceive, despite the admitted

failure to disclose the notice of allowance of the ‘372

application. (Id. at ¶ 68.) He further maintains that the

failure to disclose certain action in the ‘009 application to the

‘716 examiner does not reveal an intent to deceive because like

the ‘372 application, Schumann did disclose the ‘009 application

itself to the ‘716 examiner. 

Again, as with materiality, the parties’ experts dispute

whether an intent to deceive can be properly inferred from the

facts. That dispute cannot be resolved herein where the court is

confined by the mandates of Rule 56 of the Federal Rules of Civil

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Procedure. This issue is simply not amenable to resolution on

summary judgment. Rather, the trier of fact must determine the

weight to be given the respective experts’ opinions and to

adjudge the ultimate persuasiveness of their opinions.

CONCLUSION

For the foregoing reasons, the parties’ cross-motions for

summary adjudication of Bridge’s affirmative defense/counterclaim for unenforceability of the subject patent on the basis of

inequitable conduct are DENIED.

IT IS SO ORDERED.

DATED: August 10, 2005.

/s/ Frank C. Damrell Jr. 

FRANK C. DAMRELL, Jr.

UNITED STATES DISTRICT JUDGE

Case 2:02-cv-02669-FCD-KJM Document 533 Filed 08/11/05 Page 15 of 15