Opinion ID: 152449
Heading Depth: 3
Heading Rank: 1

Heading: Misrepresentation of Material Fact

Text: At trial, Cingular claimed that applicants misrepresented the substance of two references, U.S. Pub. No.2001/0051517 (Strietzel) and U.S. Patent No. 4,811,382 (Sleevi). [1] Cingular alleged that applicants misrepresented these references at two points: first, in the Background of the Invention of the '608 patent; and second, in an amendment submitted during prosecution (Amendment B). In the Background, applicants identified Strietzel and Sleevi as related art and stated that [i]n each of the aforesaid [Strietzel and Sleevi references], there is no algorithm or software proposed for operating the telephone system. Thus, Streitzel [sic] and Sleevi both propose hardware based systems, but no software to operate those systems.  '608 patent col.3 ll.25-29 (emphasis added). In Amendment B, applicants asserted that they had very carefully examined Strietzel and Sleevi and noted that one of the distinctions between the applicant's system and ... any other reference known to the applicant is the fact that the applicant's system only generates [a] message when the phone line between the caller and the recipient is not busy. J.A. 10363. The court found that Strietzel and Sleevi disclose software-based algorithms and playing a sound presentation only when the recipient line is not busy. Therefore, the court found that applicants' statements in the Background and Amendment B were material misrepresentations. Ring Plus argues that the statements in the Background and Amendment B are not misrepresentations because they are not false. With respect to the Background statement, the district court observed that Figure 1 of Strietzel depicts a telecommunications advertising system that includes various computer-related components, such as a message database, a processing means, a router, and the Internet. Ring Plus, Inc. v. Cingular Wireless LLC, 637 F.Supp.2d 423, 436 (E.D.Tex.2009). The court noted that Strietzel also discloses that its system can be integrated into a wireless system or the Internet. Strietzel para. [0028]. Further, the court found that Figures 7-9 of Strietzel, which depict process flow diagrams used in conjunction with Strietzel's telecommunications advertising means, illustrate algorithms. The court acknowledged that Sleevi's implicit disclosure of software was less clear than Strietzel's. Ring Plus, 637 F.Supp.2d at 436. However, the court noted that Sleevi discloses that stored program controlled digital switching is more often used in modern switching systems. Sleevi col.5 ll.51-54. The court also observed that Sleevi discloses a switching network and a control complex that can be programmed to perform certain functions. Id. col.6 ll.23-40, 50-59. Additionally, the court relied on testimony from Cingular's invalidity expert, who testified at trial that the references disclose software-based algorithms, and Robert Schaap (the attorney who prosecuted the '608 patent), who testified at deposition that the Strietzel and Sleevi systems would be operated at least in part by software. Ring Plus, 637 F.Supp.2d at 437. From this evidence, the court found that a person of skill in the art would have understood both Strietzel and Sleevi to disclose software-based algorithms and that applicants' statement to the contrary in the Background was a misrepresentation. Id. at 436, 437. Neither Strietzel nor Sleevi explicitly discloses software for operating a telephone system. However, as the district court observed, both references describe components that are generally understood by persons of skill in the art to be associated with computers and software. The references also disclose methods for operating a telephone system. Although the disclosure of software is certainly not express in either Strietzel or Sleevi, we cannot say that the court clearly erred in finding that a person of skill in the art would have understood the references to disclose software-based algorithms. Therefore, the court did not clearly err in finding that applicants' Background statement was a misrepresentation. However, we agree with Ring Plus that the district court clearly erred in finding that applicants' statement in Amendment B was a misrepresentation. The court found that both Striezel and Sleevi disclose playing a sound presentation only when a called line is not busy. Contrary to the court's finding, however, Strietzel states unambiguously that the busy tone can be replaced by one or more advertisements. Para. [0064]. Sleevi is altogether silent as to whether the status of the recipient's line affects system operation. The court did not cite to any portion of Sleevi to support its finding, relying instead on conclusory testimony from witnesses who also failed to identify any support for their positions in Sleevi. Ring Plus, 637 F.Supp.2d at 438. Cingular points to Sleevi's disclosure that [i]f the called address is busy, the calling customer line is connected to a busy tone generator as supporting the court's finding. Sleevi col.5 ll.7-9. However, this portion of Sleevi describes the general operation of a prior art telephone system; it does not disclose generating a message only if the line is not busy. See id. fig.1, col.10 ll.38-41, col.12 ll.42-44. Sleevi does not disclose a telephone system that only presents messages when the line is not busy. The court clearly erred in finding that Striezel and Sleevi disclose playing a sound presentation only when a called line is not busy and, therefore, clearly erred in finding that applicants' statement in Amendment B was a misrepresentation. Ring Plus also argues that the district court clearly erred in finding that applicants' statements were material. Because we find that applicants' statement in Amendment B was not a misrepresentation, we need only address the materiality of the Background statement. Information is material when a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent. Symantec Corp. v. Computer Assocs. Int'l, Inc., 522 F.3d 1279, 1297 (Fed.Cir.2008). The district court found that the misrepresentation in the Background was not only material, but highly so. The court credited deposition testimony from Mr. Schaap that Strietzel and Sleevi were among the most relevant prior art references. The court also pointed to a patentability opinion in which Mr. Schaap informed applicants that he had found no prior art references more pertinent than Strietzel and Sleevi and that Sleevi, in particular, fairly well precludes broad patent protection. J.A. 10423. In view of the evidence showing the particular relevance of Strietzel and Sleevi to the '608 patent, the court did not clearly err in finding that applicants' Background statement regarding the substance of those references was highly material. Ring Plus argues that because Strietzel and Sleevi were before the examiner during prosecution, the Background statement was merely attorney argument and cannot be a material misrepresentation. Although an attorney is free to argue vigorously in favor of patentability without being subject to allegations of inequitable conduct, the law prohibits genuine misrepresentations of material fact. Rothman v. Target Corp., 556 F.3d 1310, 1328 (Fed.Cir.2009). Because we uphold the district court's finding that applicants' Background statement was a misrepresentation, this statement was outside the bounds of permissible attorney argument. Ring Plus also argues that the examiner did not consider Strietzel and Sleevi to be important because he did not cite them during prosecution. However, the materiality standard is an objective one: the issue is what a reasonable examiner would have found important, not whether the reference in question was specifically considered during prosecution. Therefore, we conclude that the court did not clearly err in determining that applicants' statement in the Background that Sleevi and Strietzel propose no algorithm or software ... for operating the telephone system was a material misrepresentation.