Opinion ID: 4542383
Heading Depth: 4
Heading Rank: 2

Heading: Prior Sales

Text: Inline further contends that “Graphic also defrauded the USPTO by concealing highly-material prior sleeve sales to Nestl[é]. There is no dispute that prior sales of the 50019D/F designs (. . . [used by] Fitzwater . . .) took place.” Appellant’s Br. at 34. Graphic does not dispute that these prior sales occurred,6 but it argues that no genuine 6 Invalidating a patent on the basis of prior sales, also known as the on-sale bar, “is triggered when a claimed invention is: (1) ready for patenting; and (2) the subject of a commercial offer for sale prior to the critical date.” Merck & Cie v. Watson Labs., -11- dispute exists as to the material facts: (1) Graphic’s employees who owed a duty of candor to the USPTO did not know that the prior sales were material, and (2) such sales were indeed immaterial. “Congress has imposed several conditions on the limited opportunity to obtain a property right in an idea. One such condition is the on-sale bar, which reflects Congress’[s] reluctance to allow an inventor to remove existing knowledge from public use by obtaining a patent covering that knowledge.” Helsinn Healthcare S.A. v. Teva Pharm. USA, Inc., 139 S. Ct. 628, 632 (2019) (cleaned up). “Every patent statute since 1836 has included an on-sale bar.” Id. at 633. The applicable statute here, 35 U.S.C. § 102, prohibits patentability if “the claimed invention was . . . on sale, or otherwise available to the public” more than one year before the filing of a patent application. 35 U.S.C. § 102(a)(1), (b)(1) (emphasis added). “Applicants for patents are required to prosecute patent applications in the [US]PTO with candor, good faith, and honesty.” Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed. Cir. 1995) (internal footnote omitted). “A breach of this duty constitutes inequitable conduct.” Id. Inequitable conduct can certainly arise out of one’s failure to disclose information that is material—such as prior sales—with the intent to deceive the USPTO. Id.; see also Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1290 (Fed. Cir. 2011) (en banc). Moreover, various individuals may be subject to this duty. [T]he duty to disclose information material to patentability rests on the inventor, on each attorney or agent who prepares or prosecutes an application and on every other individual who is substantively involved in the preparation or prosecution of the application and who is Inc., 822 F.3d 1347, 1351 (Fed. Cir. 2016). -12- associated with the inventor, with the assignee, or with anyone to whom there is an obligation to assign the application. Molins, 48 F.3d at 1178 n.6 (citing 37 C.F.R. § 1.56). Here, Inline contends that certain Graphic employees owed a duty to disclose to the USPTO that the 50019D/F design samples were sold to Chef America in 2001, more than a year before Graphic filed applications for the asserted patents in 2005 and 2006. According to Inline, the following employees owed this duty: Fitzwater, the CAD drawer; Biddle, the intellectual property counsel; and Voyzey, the business development director. We agree with the district court that there is no “need [to] resolve the issue of whether the prior sales were material” to the patentability of the asserted patents “because even if they were [material],[7] Inline has offered no . . . clear and convincing evidence . . . that anyone at Graphic owing a duty of candor to the [US]PTO knew that the prior sales were material [and] deliberately chose not to disclose them.” Inline Packaging, 351 F. Supp. 3d at 1204 (emphasis added). Inline makes two arguments. First, Inline avers that “despite knowing Graphic’s long-term relationship with Nestl[é] and the origins of the patented sleeve designs, neither Fitzwater [n]or Biddle conducted any due diligence in connection with the submissions to the USPTO related to similar designs created and sold in the past.” Appellant’s Br. at 35. It insists that the district court improperly assessed the credibility of Fitzwater’s and Biddle’s testimonies, decided factual disputes, and, in turn, “invad[ed] the province of the jury.” Id. at 36. Second, Inline infers that because 7 “[I]n assessing the materiality of a withheld reference, the court must determine whether the [US]PTO would have allowed the claim if it had been aware of the undisclosed reference.” Therasense, 649 F.3d at 1291. A court making this patentability determination “should apply the preponderance of the evidence standard and give claims their broadest reasonable construction.” Id. at 1291–92. -13- Voyzey “made the prior sales to Nestl[é],” he somehow knew that those sales were material to the claimed design in the asserted patents. Id. at 38. We begin with the latter argument. Simply put, the record lacks evidence that Voyzey, Graphics’s business development director, knew that the sales were material to the patentability of the asserted patents. Further, as the district court concluded, the record does not show that Fitzwater knew of the 50019F design or that she knew Graphic had sold samples of both designs to Chef America in 2001. She became involved with Project Roxanne in 2005 and used the 50019D design as a starting point to begin the redesign of the susceptor sleeve for Nestlé’s products. She testified that, after months of drawings and revisions, the original design of 50019D was transformed into a different and new sleeve. Likewise, Biddle testified that his employment at Graphic began in 2004 and that he simply did not know anything about Project Quantum or the sales to Chef America, which had occurred three years before the start of his employment. Despite Inline’s contention that Fitzwater and Biddle should have exercised due diligence before filing the asserted patent applications, it is well-established “that a duty to investigate does not arise where there is no notice of the existence of material information.” Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 267 F.3d 1370, 1382 (Fed. Cir. 2001). This case differs from Brasseler. There, the patentee’s attorneys had been notified of an event with the potential of creating an on-sale bar. Id. at 1376. They, nevertheless, chose not to further investigate before filing the patent application claiming priority to a newly-invented surgical blade. Id. at 1374–76. Here, neither Fitzwater nor Biddle had been notified about the existence of material information, and accordingly, they did not need to “pursue a fishing expedition to obtain [it].” Id. at 1382. -14- Significantly, “a finding of deceptive intent may not be based solely on gross negligence, including instances in which . . . [Fitzwater or Biddle] [was] completely unaware of the existence of specific information later discovered and found to be material.” Id. And “when there are multiple reasonable inferences that may be drawn, intent to deceive cannot be found.” Therasense, 649 F.3d at 1290–91. Instead, to meet the clear and convincing standard, the evidence must establish that “the single most reasonable inference” to be drawn is that Fitzwater, Biddle, and Voyzey acted with a specific intent to deceive the USPTO. Id. at 1290 (internal quotation omitted). The evidence here does not establish such. Hence, we affirm this claim’s dismissal and hold that the record lacks direct or circumstantial evidence that Graphic’s employees acted with the requisite intent to deceive the USPTO. See id. Because we hold that Inline cannot establish the first condition of its Walker Process claims—knowing and willful fraud—we need not analyze the other elements of a monopolization claim under 15 U.S.C. § 2.