Opinion ID: 756409
Heading Depth: 2
Heading Rank: 1

Heading: Inequitable Conduct in the Prosecution of the '234 and

Text: '648 Patents Baxter first challenges the district court's finding that the '234 and '648 patents are unenforceable due to inequitable conduct. Although Baxter does not specifically appeal the district court's March 17, 1997, Opinion and Order extending this finding to the '554 patent as well, we presume that the arguments made regarding the '234 and '648 patents are intended to be equally applicable to the '554 patent. Inequitable conduct includes affirmative misrepresentations of a material fact, failure to disclose material information, or submission of false material information, coupled with an intent to deceive. See Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1068-71, 46 U.S.P.Q.2d 1097, 1105-06 (Fed.Cir.1998) (citing Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178, 33 USPQ2d 1823, 1826 (Fed.Cir.1995)). Determination of inequitable conduct requires a two step analysis. First, the trial court must determine whether the withheld reference meets a threshold level of materiality. The trial court must then also determine whether the evidence shows a threshold level of intent to mislead the PTO. See Halliburton Co. v. Schlumberger Tech. Corp., 925 F.2d 1435, 1439, 17 USPQ2d 1834, 1838 (Fed.Cir.1991). These threshold determinations are reviewed by this court under the clearly erroneous standard of Federal Rule of Civil Procedure 52(a). See Kingsdown Med. Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867, 872, 9 USPQ2d 1384, 1389 (Fed.Cir.1988) (in banc). Once the threshold levels of materiality and intent have been established, the trial court is required to weigh materiality and intent. See Molins, 48 F.3d at 1178. The more material the omission, the less evidence of intent will be required in order to find that inequitable conduct has occurred. See N.V. Akzo v. E.I. Dupont de Nemours, 810 F.2d 1148, 1153, 1 USPQ2d 1704, 1708 (Fed.Cir.1987). In light of all the circumstances, the court must then determine whether the applicant's conduct is so culpable that the patent should be held unenforceable. See LaBounty Mfg., Inc. v. United States Int'l Trade Comm'n, 958 F.2d 1066, 1070, 22 USPQ2d 1025, 1028 (Fed.Cir.1992). We review the district court's ultimate determination of inequitable conduct under an abuse of discretion standard. See Kolmes v. World Fibers Corp., 107 F.3d 1534, 1541, 41 USPQ2d 1829, 1834 (Fed.Cir.1997); Halliburton, 925 F.2d at 1440; Kingsdown, 863 F.2d at 876. A reference is deemed material if 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.'  Halliburton, 925 F.2d at 1440 (quoting 37 C.F.R. § 1.56 (1989)); see also J.P. Stevens & Co. v. Lex Tex Ltd., 747 F.2d 1553, 1559, 223 USPQ 1089, 1092 (Fed.Cir.1984). Thus, the initial question before this court is whether the district court was clearly erroneous in finding that the Borla Device would have been important to a reasonable examiner in deciding whether to allow the applications to issue. 3 However, we also note that a patentee need not cite an otherwise material reference to the PTO if that reference is merely cumulative or is less material than other references already before the examiner. See Scripps Clinic & Research Found. v. Genentech, Inc., 927 F.2d 1565, 1582, 18 USPQ2d 1001, 1014-15 (Fed.Cir.1991); Specialty Composites v. Cabot Corp., 845 F.2d 981, 992, 6 USPQ2d 1601, 1609 (Fed.Cir.1988). Baxter makes two arguments with respect to the materiality of the Borla Device. First, Baxter argues that the Borla Device is not material to the claimed inventions because it does not contain all of the claimed limitations and therefore it is less material than other prior art cited to the examiner. In particular, Baxter argues that because the Borla Device does not use a pre-slit septum in conjunction with a blunt cannula, it cannot be more material than other cited references. Second, Baxter argues that the Borla Device is merely cumulative of other prior art already cited to the examiner. We address each of these arguments in turn. In its analysis of the materiality of the Borla Device, the district court concluded that the Borla Device has all of the features of the InterLink injection site, in the exact same form, except for the slit in the septum. Baxter, 1996 WL 145778 at  7. Baxter's main argument on appeal is that, given the importance of the pre-slit septum to the claimed invention, this difference alone is sufficient to make the Borla Device non-material. We disagree. A difference in a single element, however important to the patented invention, is not automatically dispositive of the issue of materiality. The patent claims require more than merely a pre-slit septum and a blunt cannula, they also require an annular channel, an annular lip, a deformation of the first end of the housing, and axial and radial forces. See Baxter, 1996 WL 145778 at  6. References lacking different elements are often combined to reject an application under 35 U.S.C. § 103. Simply because the Borla Device lacked a pre-slit septum does not make it likely that a reasonable examiner would consider the reference unimportant in deciding whether to allow the patent. In other words, materiality is not analyzed in a vacuum. It is not dependent on a single element viewed in isolation. Rather, it is judged based upon the overall degree of similarity between the omitted reference and the claimed invention in light of the other prior art before the examiner. See Halliburton, 925 F.2d at 1441-42. The district court therefore properly considered the totality of the claimed features in determining whether the Borla Device was material to the patentee's application. Baxter's argument that the Borla Device teaches away from the claimed invention is similarly without merit. While the trial court must consider portions of prior art references which teach away from the claimed invention, id. at 1441, Baxter apparently misapprehends what it means to teach away from a patented invention. [I]n general, a reference will teach away if it suggests that the line of development flowing from the reference's disclosure is unlikely to be productive of the result sought by the applicant. In re Gurley, 27 F.3d 551, 553, 31 USPQ2d 1130, 1131 (Fed.Cir.1994). There is nothing in the Borla Device to suggest to one of skill in the art that a similar device under radial compression with a pre-slit septum was unlikely to work. While the Borla Device does not teach that a pre-slit septum is likely to succeed in overcoming the coring and leakage problems of the prior art, it certainly does nothing to teach away from the use of a pre-slit septum. To the extent that Baxter challenges the district court's factual findings relating to the construction and operation of the Borla Device, we detect no clear error in the district court's findings. The trial court found that the Borla Device included a rubber septum that was under radial compression based upon statements by the inventors. This finding is not contradicted by the other evidence at trial to such an extent that we may say that the district court's judgment is clearly erroneous. Baxter points to a crude representational drawing and a cutaway photograph of the Borla Device purportedly showing small gaps between the rubber septum and the side wall of the housing to buttress its argument that the Borla Device did not apply radial forces to the rubber septum. Contrary to Baxter's assertion, the cut away photograph does not clearly disclose gaps between the rubber septum and the housing. Similarly, the small gaps shown by the representational drawing cannot overcome the clear statements of the inventors to the contrary. The judgment of the district court that the Borla Device contained some amount of radial compression is neither contrary to the factual record as a whole nor clearly erroneous. Baxter's argument that the Herlitze EPO reference is more material than the Borla Device also fails. The district court found that while the Herlitze EPO reference does have a septum contained by a swaged housing, it does not have a large annular channel for receiving displaced septum or an annular lip for supporting the septum. Nor has any evidence been presented that it has radial forces. Baxter, 1996 WL 145778 at  7. The Herlitze EPO reference does not disclose the annular channel or radial forces. Lacking two of the claimed limitations, the Herlitze EPO reference cannot be more material than the Borla Device. The Borla Device was the only item in the prior art that combined every claimed element of the '234 and '648 patents save the pre-slit rubber septum and blunt cannula. Likewise, while various other references separately disclosed a pre-slit rubber septum and a blunt cannula, this does not render the Borla Device immaterial as cumulative of the references already before the examiner. The fact that the Borla Device contained all of these features in a single device would likely have been important to an examiner in determining whether to allow Baxter's applications. Therefore we cannot say that the district court's finding that the Borla Device was highly material was clearly erroneous. Baxter also challenges the district court's finding that the inventors intended to deceive the PTO in failing to disclose the Borla Device. Intent need not be proven by direct evidence. Indeed, [d]irect proof of wrongful intent is rarely available but may be inferred from clear and convincing evidence of the surrounding circumstances. LaBounty, 958 F.2d at 1076; see Paragon Podiatry Lab., Inc. v. KLM Lab., Inc., 984 F.2d 1182, 1189-90, 25 USPQ2d 1561, 1567 (Fed.Cir.1993) (explaining that intent must be generally inferred from the facts and circumstances surrounding the applicant's conduct). Our prior decisions are also clear that although intent may be inferred from circumstantial evidence, mere gross negligence is insufficient to justify an inference of an intent to deceive the PTO. See Kingsdown, 863 F.2d at 876; FMC Corp. v. Manitowoc Co., 835 F.2d 1411, 1415 n. 9, 5 USPQ2d 1112, 1116 n. 9 (Fed.Cir.1987). In a case involving an omission of a material reference to the PTO, there must be clear and convincing evidence that the applicant made a deliberate decision to withhold a known material reference. See Molins, 48 F.3d at 1181. In its opinion, the district court expressly recognized the above principles and found that based on the high materiality of the Borla Device and the absence of any evidence of mitigating good faith on the part of the inventors, Jepson and Dudar did intend to mislead the PTO in failing to disclose the Borla Device. See Baxter, 1996 WL 145778 at  7. Although Baxter asserts that there is no proof that the inventors knew of the materiality of the Borla Device, the district court pointed out that documentary evidence was clear that the Borla Device formed the basis of the claimed inventions and that the inventors were clearly acquainted with the critical features of the Borla Device. In support, the district court pointed to Jepson's statement in his November 17, 1986 memorandum that the original Volts access site cap was similar to the Borla Device except for increased compression and a change in the dimensions of the swaged parts. Jepson even visited the Borla location in Italy to evaluate the company as a potential manufacturer of the InterLink device. See id. at  8. Baxter is stuck with the statements and actions of its own witnesses. The district court further found unconvincing Baxter's argument that the disclosure of over fifty prior art references demonstrated its good faith in prosecuting the patent. Plaintiffs may have disclosed to the patent office multitudes of prior art, but they did not disclose the single most relevant piece of prior art that was used extensively in the development of the invention. Id. at  9. The district court pointedly concluded that the inventors' conduct, in its entirety, manifested a culpable state of mind sufficient to warrant a finding of an intent to deceive the PTO. See id. This court finds no clear error in that decision. Baxter argues that the inventors' testimony, memoranda and lab notebook entries do no more than establish knowledge of the Borla Device and that this knowledge alone is insufficient to show knowledge of materiality. Baxter cites the case of FMC Corp. v. Hennessy Industries, 836 F.2d 521, 524-25, 5 USPQ2d 1272, 1274-75 (Fed.Cir.1987), for this proposition. FMC creates no such bright line test for determining whether intent to deceive the PTO may be inferred. In FMC, this court merely held that the district court was not clearly erroneous in failing to infer knowledge of materiality from the evidence before it. See id. As we have stated above, intent is generally inferred from the sum total of the applicant's conduct. It is the totality of the applicant's conduct that creates the inference upon which the applicant's intent can be ascertained. Baxter's argument that the inventors were unaware of the materiality of the Borla Device relies heavily on the inventors' testimony. However, the district court expressly found the inventors' testimony to be self-serving and inconsistent with the documentary evidence. The trial court's assessment of credibility is typically given great weight. Since the fact-finder has personally heard the testimony and observed the demeanor of the witnesses, we accord deference to the fact-finder's assessment of a witness's credibility and character. Molins, 48 F.3d at 1181. Accordingly, [t]he drawing of inferences, particularly in respect of an intent-implicating question ... is peculiarly within the province of the fact finder that observed the witnesses. Rolls-Royce Ltd. v. GTE Valeron Corp., 800 F.2d 1101, 1110, 231 USPQ 185, 192 (Fed.Cir.1986). Having considered Baxter's arguments to the contrary, we see no reason to disturb the trial court's findings on appeal. Finally, Baxter argues that the district court clearly erred in finding an absence of good faith on the part of the inventors. It is true that evidence of good faith must be considered in determining whether inequitable conduct has been shown by clear and convincing evidence. See Kingsdown, 863 F.2d at 876 ([T]he involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive.). However, good faith is only one factor to be considered along with the totality of the evidence. The district court considered Baxter's proffered evidence of good faith and found it lacking. Baxter argues on appeal that its efforts to point out relevant prior art to the PTO demonstrates its good faith in prosecuting the '234 and '648 patents. However, as we have stated above, the Borla Device was clearly relevant and the inventors were clearly aware of its existence. Moreover, given the degree to which the patented inventions were based upon the Borla Device, an inference that the inventors were aware of its importance is justified. On balance we cannot say that the district court abused its discretion in determining that the inventors' conduct, in its entirety, warrants a determination that the '234 and '648 patents are unenforceable due to inequitable conduct.