Opinion ID: 211192
Heading Depth: 2
Heading Rank: 1

Heading: jury trial issue

Text: Procedurally, this case is almost indistinguishable from Gardco Manufacturing, Inc. v. Herst Lighting Co., 820 F.2d 1209 (Fed. Cir. 1987). In Gardco, the plaintiff sought a declaratory judgment on the asserted invalidity, unenforceability, and noninfringement of a patent. Id. at 1210. In the unenforceability and invalidity accusations, the prior art was the defendant-patentee’s own prior products, which were not disclosed to the PTO during examination. See id. at 1211, 1213. The defendant counterclaimed for infringement and demanded a jury trial. Id. The trial court in Gardco then separated the inequitable conduct issue for trial without a jury. At the same time, the district court postponed for later, if necessary, a jury trial on infringement and invalidity. Id. at 1210. The bench trial on inequitable conduct determined that the asserted patent was not enforceable. Id. For that reason, the trial court did not impanel a jury. Gardco differs from this case in only two ways. Due to the declaratory judgment posture, the Gardco parties were arranged differently, i.e., with the accused infringer as plaintiff rather than defendant. Gardco also featured inequitable conduct as a separate claim rather than as a defense to infringement. Neither of those differences has any bearing on the question of the right to a jury trial. See In re Tech. Licensing Corp., 423 F.3d 1286, 1288, 1291 (Fed. Cir. 2005) (right to jury trial is examined without regard to the alignment of the parties or the posture of the issue, i.e. a defense or separate claim). Thus, this court confronts the same situation that Gardco presented nearly twenty years ago. At that time, this court sustained the trial court’s approach. Gardco, 820 F.2d at 1213. This court, as it must, sustains the Gardco reasoning in this case. 05-1079 6 Nevertheless, Agfa presents two distinct reasons for this court to depart from Gardco. This court declines that invitation. In the first place, contrary to Agfa’s assertion, Gardco is consistent with Supreme Court precedent. In Beacon Theatres, Inc. v. Westover, 359 U.S. 500 (1959), the Supreme Court explained that a trial judge could not conduct a bench trial (and preclude a jury trial) on equitable declaratory relief claims where that trial would resolve “common” issues with a claim subject to jury resolution. 359 U.S. at 503-04. In Beacon Theatres, the declaratory judgment plaintiff sought to raise essentially the same antitrust issues for which the declaratory judgment defendant sought a jury trial. Id. The Supreme Court declined to limit the declaratory judgment defendant’s jury trial rights solely “because Fox took advantage of the availability of declaratory relief to sue Beacon first.” Id. at 504. Beacon Theatres specifically noted that both the petitioner’s claim and the declaratory relief claim involved “a common issue.” Id. This case involves issues of inequitable conduct (including the materiality of the undisclosed prior art) and validity. Although these issues overlap to some degree, they are not “common” issues as in Beacon Theatres. Because this case does not involve “common” issues, this court need not apply the Beacon Theatres rule to honor Agfa’s jury trial request. Beacon Theatres did not use the term “overlapping.” While the inequitable conduct and validity questions in this case overlap in the consideration of some aspects of the same relevant evidence, they do not involve a common issue. As Gardco explained: The simple fact is that a patent may be valid and yet be rendered unenforceable for misuse or inequitable conduct. Similarly, a valid patent may be (in the abstract) infringed, that is, the accused device may fall within the 05-1079 7 scope of the claim, but there will be no liability to the patentee when the patent is unenforceable. Thus the conduct-of-the-applicant-in-the-PTO issue raised in the nonjury trial and the separated infringement/validity issues are distinct and without commonality either as claims or in relation to the underlying fact issues. 820 F.2d at 1213 (footnote and emphasis omitted). This Gardco reasoning governs even in the face of 37 C.F.R. § 1.56(b). In that regulation, the PTO defines materiality as including information that establishes “a prima facie case of unpatentability.” 37 C.F.R. § 1.56(b)(1). Even though the definition of materiality, i.e., “a prima facie case of unpatentability,” may implicate some aspects of a validity analysis, the issues of invalidity and materiality are still not common within the legal construct of Beacon Theatres. As Gardco explained, a patent may be valid but not enforceable. Thus inequitable conduct and validity are not “common” issues as Beacon Theatres applied that concept. Moreover this court’s recent decision in Digital Control, Inc. v. Charles Machine Works, 437 F.3d 1309, 1316 (Fed. Cir. 2006), explained that the PTO’s Rule 56 did not supplant the earlier, and arguably broader, “reasonable examiner” standard for materiality. Digital Control suggests as well that material prior art need not even be invalidating prior art. Thus, under the reasonable examiner standard, material prior art need not necessarily present a prima facie case of unpatentability. See id. at 1315 (Information is material “where there is a substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent.”) (quoting an older version of Rule 56). Because the materiality of prior art is distinct from validity issues (without even considering the additional intent requirement for inequitable conduct), this court’s earlier reasoning in Gardco remains 05-1079 8 sound. Materiality, therefore, does not present common issues with validity. Because the issues are not “common,” the Beacon Theatres rule does not apply to protect Afga’s jury trial request. Finally, Gardco explicitly considered and commented on the Supreme Court’s decisions, including Beacon Theatres and the later decisions relating to inequitable conduct factors and validity factors. This panel could not depart from Gardco’s reasoning even if it accepted the suggestion that materiality and validity present a common issue, which it does not. In sum, although this case involves both issues of inequitable conduct and validity, the decision to hold a bench trial on inequitable conduct does not preclude the trial court’s later grant of a jury trial. The Beacon Theatres case does not mandate that these are “common issues” that must be tried to a jury. Scire Facias Next, contrary to Agfa’s contentions, Gardco is consistent with some dicta in a footnote in In re Lockwood, 50 F.3d 966 (Fed. Cir. 1995), vacated, 515 U.S. 1182 (1995). In Lockwood, this court confronted a request for a jury trial in an action involving the validity of two patents. Id. at 968. Lockwood explained that “[t]he thrust of the [Seventh] Amendment was to preserve the right to jury trial as it existed in 1791.” Id. at 971. After citing Tull v. United States, 481 U.S. 412, 417 (1987), for the proposition that the “Seventh Amendment ‘require[s] a jury trial on the merits in those actions that are analogous to ‘Suits at common law,’’” Lockwood discusses the writ of scire facias. 50 F.3d at 972, 974 n.9. In that discussion, the court remarks that “[t]he contemporary analog of the writ is . . . an action for a declaration of unenforceability due 05-1079 9 to inequitable conduct not due to invalidity.” Id. at 974 n.9. This court in Lockwood next states that actions corresponding to a writ of scire facias would give rise today to the right to a jury trial. Id. Thus, in its footnote 9, Lockwood seemed to suggest that inequitable conduct is analogous to a writ of scire facias, and because that writ would have ultimately been decided by a jury in 1791, it was wrong for the trial court to decide the inequitable conduct issue without a jury. On close inspection, however, this commentary in Lockwood does not disturb the Gardco reasoning. Admittedly, Lockwood’s analysis is easy to misread for the proposition that a writ of scire facias is the historic analog of inequitable conduct. Lockwood, however, did not speak in terms of historic analogs to inequitable conduct, it instead spoke of inequitable conduct as a potential “contemporary analog” to scire facias. Id. Lockwood was not examining inequitable conduct with an eye toward the right to a jury trial in 1791, rather this court explained that a writ of scire facias was not so analogous to invalidity as to require a jury trial. The footnote in Lockwood noted the language in older opinions suggesting that the writ “was used to attack fraudulently obtained patents,” id., and, then suggested in passing that inequitable conduct may serve as a better modern analog for the ancient writ. This court’s use of the word “analog” in the footnote was unfortunate. In re Technology Licensing made the same point, but with language less steeped in Seventh Amendment jurisprudence. See 423 F.3d at 1290 (“The court in Lockwood specifically stated that a proceeding on a writ of scire facias was not analogous to a suit for a declaration of invalidity, but was more akin to an action for inequitable conduct.”) (emphasis added, citation omitted). A closer analysis than was needed in Lockwood 05-1079 10 reveals that a writ of scire facias was not, in fact, a suit at common law analogous to modern inequitable conduct. In eighteenth-century England, patents did not undergo an examination, at least as “examination” proceeds in modern patent systems. See Edward C. Walterscheid, The Early Evolution of the United States Patent Law: Antecedents (Part 4), 78 J. Pat. Trademark Off. Soc’y 77, 83 (1996). Instead, the Sovereign granted patents based solely on a petition and sworn affidavit from the inventor. In modern terms, the early English patent system was a registration system. See id. at 83-84. Without examination, nearly every defect in a patent resulted from some false representation made by the patentee. See W. M. Hindmarch, A Treatise on the Law Relative to Patent Privileges for the Sole Use of Inventions: And the Practice of Obtaining Letters Patents for Inventions 230 (I.G. M’Kinley & J. M. G. Lescure 1847) (“[I]t is the duty of every one obtaining a grant from the Queen, to see that she is correctly informed respecting the grant. [If] the Queen has been deceived in any material particular, by a false representation or suggestions of the grantee, the patent will be wholly void.”) (citations omitted).2 For example, the early English system would require a patentee to attest that the invention was a genuinely new improvement, not already in the public domain. If the evidence later showed the contrary, the court would characterize this defect as a misrepresentation rather than as anticipation, the modern label for the same defect. See id. at 164 (“Patentees . . . must have represented to the Crown that their inventions 2 Hindmarch is an American reprinting of the original British version. While the date of the publication is 1847, its discussion and analysis, particularly with respect to scire facias, includes citations to opinions issued during the mid-to-late eighteenth century, i.e., at a time relevant to a Seventh Amendment analysis. 05-1079 11 were such improvements . . . and if their inventions were not such improvements as represented . . . their patents are void by reason of the false representation or suggestion made to the Crown.”) (footnote omitted). Thus, while “fraud” reasonably describes the various bases for voiding eighteenth century patents, the actual history discloses that the conduct of the patentee was not the focus of a decision to void a patent.3 Finally, a litigant in England in the eighteenth century could also defend against patent infringement by raising the grounds for voiding a patent through a writ of scire facias without seeking the writ at all. Compare id. at 162 (“In an action brought upon a patent[,] objections may be taken to it [including] that the Queen has been deceived in some material particular.”) with id. at 231 (“The various objections which can be taken to a patent for an invention, by a person against whom the patentee may institute legal proceedings, have already been considered; and the law provides a remedy for the public by action of scire facias, in which similar objections may be taken . . . .”) (citation omitted). In sum, while a writ of scire facias might be more akin to inequitable conduct than to invalidity, it certainly is not an historic analog that would trigger a Seventh 3 Even if “fraud” was perfectly synonymous with the grounds for voiding an eighteenth century patent, it is not the equivalent of today’s inequitable conduct defense. Common law fraud is not synonymous with the broader concept of inequitable conduct. See Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1069 (Fed. Cir. 1998). Fraud has a number of indispensable elements: (1) a representation of a material fact, (2) the falsity of that representation, (3) the intent to deceive (or an equivalent recklessness), (4) justifiable reliance by the deceived party, and (5) injury to the deceived party. Norton v. Curtiss, 433 F.2d 779, 792-93 (CCPA 1970). As noted above, intent was not relevant to the decision to void a patent in eighteenth century England, but rather the more standard doctrines of patentability applied. By the same token, reliance and injury are not elements of today’s inequitable conduct defense. Thus, while the label “fraud” may loosely cover both scenarios, they are nevertheless distinct. 05-1079 12 Amendment right to a jury trial. This court has consistently treated inequitable conduct as an equitable defense that may be adjudicated by the trial court without a jury. Gardco remains the law of this circuit and governs this case. Contrary to the dissent’s analysis, this court today does not decide that the factual issues underlying a charge of inequitable conduct must be adjudicated by a