Opinion ID: 209986
Heading Depth: 3
Heading Rank: 4

Heading: Objective baselessness standard and prima facie case of intent

Text: HT also argues the district court committed error in not using the objective baselessness standard for bad faith. We are not persuaded that the court applied the wrong legal standard to the evidence. The district court's discussion expressly invoked the proper standard and cited to this court's leading case linking bad faith to objective baselessness. Judkins, 514 F.Supp.2d at 762 (citing Globetrotter Software v. Elan Computer Group, Inc., 362 F.3d 1367, 1375, 1377 (Fed.Cir.2004)). Moreover, the district court at several points in its opinion indicated that Judkins's claims were not objectively baseless, albeit without using that exact phrase. For example, the district court made clear its unwillingness to hold that [Judkins's] belief that the '120 patent was, or would be, valid and enforceable was objectively unreasonable. Id. at 765. In rejecting HT's arguments that the Board's initial finding of abandonment and the finding in the Springs litigation to the same effect necessarily meant the '120 patent should not have issued, the court determined that [t]he status of the '120 Patent is open to reasonable debate at this point. As such, we cannot conclude on this record that [Judkins] was objectively unreasonable in notifying the market of the alleged infringement of the '120 Patent. Id. at 766. In short, the district court unquestionably evaluated Judkins's assertion of his patent rights from an objective standpoint and determined that Judkins had not acted in an objectively baseless way. HT seizes on the district court's statement that HT has provided no evidence regarding [Judkins's] subjective belief as to the validity or unenforceability of the '120 Patent. Id. This observation does not mean, however, that the district court required HT to provide such evidence to establish bad faith. This court held in Mikohn Gaming Corp. v. Acres Gaming, Inc . that bad faith may have both subjective and objective elements. 165 F.3d 891, 897 (Fed.Cir.1998). Indeed, once the court concludes that the claims of infringement are objectively baseless, the court must then consider whether the claims were made in subjective bad faith. Cf. Prof'l Real Estate Investors, 508 U.S. at 60, 113 S.Ct. 1920. In sum, the district court applied the correct legal standard. Finally, HT argues that the district court erred when it failed to require Judkins to explain his conduct during the prosecution of the '120 patent. HT asserts that it has established a prima facie case of intent which shifts the burden to Judkins to provide evidence showing Judkins lacks intent to deceive  one of the two elements of inequitable conduct. Cargill Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1363 (Fed.Cir.2007). HT's argument on this point draws on two of our cases upholding grants of summary judgment on the question of inequitable conduct by patent applicants, Paragon Podiatry Laboratory, Inc. v. KLM Laboratories, Inc., 984 F.2d 1182 (Fed.Cir. 1993), and Ferring B.V. v. Barr Laboratories, Inc., 437 F.3d 1181 (Fed.Cir.2006). In Paragon, we upheld the district court's grant of summary judgment in favor of an alleged infringer, holding that the patent-in-suit was invalid under 35 U.S.C. § 102(b) and unenforceable because of inequitable conduct. Paragon, the assignee of the patent, challenged the district court's finding on summary judgment of intent to deceive. Paragon, 984 F.2d at 1188-89. We acknowledged that our precedent urges caution in the grant of summary judgment respecting a defense of inequitable conduct and that this outcome ought to be, and can properly be, rare indeed. Id. at 1190 (citing Burlington Indus., Inc. v. Dayco Corp., 849 F.2d 1418, 1422 (Fed.Cir.1988)). Nonetheless, we concluded that the district court could properly conclude that there was no genuine issue as to intent. Id. at 1190-91. Crucially, we concluded that the alleged infringer, KLM, had made out a prima facie case of intent, based not only on the patentee's failure to submit known, highly material information, but also based on its affirmative act of submitting deceptive and possibly false affidavits to the patent examiner, the affidavits' misleading character, and the inability of the examiner to investigate the facts to which they attested. Id. at 1191. We also upheld the inference of an intent to deceive based on the failure to disclose commercial, as opposed to experimental, sales outside section 102(b)'s grace period, noting that unlike the applicant's failure to disclose, for example, a material patent reference, the examiner has no way of securing the information on his own. Id. at 1193. In Paragon, we concluded that because the defendant made out a prima facie case of inequitable conduct, the burden shifted to the plaintiff to come forward with evidence that would require reassessment of the validity of the defense. Id. The possibility of a shifting burden of production (as distinguished from a shifting burden of proof) does not assist HT in this case, because the district court did not abuse its discretion in declining to conclude that HT had established a prima facie case of inequitable conduct. The evidence of inequitable conduct in Paragon was far stronger than in this case, both with respect to the materiality of the information not disclosed (which, unlike in this case, was not contested in Paragon ) and intent to deceive. Indeed, in our discussion of this point in Paragon, we acknowledged that intent to mislead may not be inferred, without more, from the failure to disclose to the patent examiner known, highly material information. Id. at 1191 (citing Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 552 (Fed.Cir.1990)). To the contrary, we emphasized that the applicant's conduct went well beyond mere failure to disclose. Similarly, in Ferring, we upheld the district court's grant of summary judgment on the question of inequitable conduct, which rested on an inference of intent to deceive; as in Paragon, the applicant had failed to disclose significant past relationships with scientists who submitted supporting declarations to the patent examiner. Ferring, 437 F.3d at 1191-92; cf. Pfizer Inc. v. Teva Pharms. USA, Inc., 518 F.3d 1353, 1366-67 (Fed.Cir.2008) (materiality alone of references not disclosed to patent examiner was insufficient to establish intent to deceive where patentee offered credible explanation for failure to disclose). These affiliations of ostensibly disinterested scientists were not otherwise known to the examiner  unlike the finding of the Northern District of Illinois in the Springs litigation, which appears to have been part of the record of the interference and subsequent litigation that ultimately went to the patent examiner who approved the '120 patent. We also note that because the decisions below were grants of summary judgment, our decisions in Paragon and Ferring involved a less deferential standard of review than the abuse-of-discretion standard we must use here. See Paragon, 984 F.2d at 1185 (citing Vas-Cath, Inc. v. Mahurkar, 935 F.2d 1555, 1560 (Fed.Cir.1991)); Ferring, 437 F.3d at 1187 (citing Dayco Prods., Inc. v. Total Containment, Inc., 329 F.3d 1358, 1362-63 (Fed.Cir.2003)). But even if these cases have some bearing on this point of HT's appeal, the district court did not err when it failed to require Judkins to offer evidence to rebut HT's evidence of intent to deceive.