Court Opinion

ID: 7006864
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:52:51.243454+00
Date Added: 2024-06-11T16:10:06.207534
License: Public Domain

MAYER, Chief Judge,
dissenting-in-part.
Because a fraud upon the court is no less grave than a fraud on the Patent and Trademark Office, I would affirm the district court’s holding that the '069 patent is unenforceable.
The maxim of unclean hands is applied broadly, giving substantial discretion to the officer of the court in its application. See Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 815, *137965 S.Ct. 993, 89 L.Ed. 1381, 65 USPQ 133, 138 (1945) (“This maxim necessarily gives wide range to the equity court’s use of discretion in refusing to aid the unclean litigant.”). It is “not bound by formula or restrained by any limitation that tends to trammel the free and just exercise of discretion.” Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240, 245-46, 54 S.Ct. 146, 78 L.Ed. 293, 19 USPQ 228, 230 (1933) (“Keystone I”). The maxim itself is predicated upon the need to protect the integrity of the judicial system. “[The] doctrine is rooted in the historical concept of court of equity as a vehicle for affirmatively enforcing the requirements of conscience and good faith. This presupposes a refusal on its part to be ‘the abettor of iniquity.’ ” Precision Instrument, 324 U.S. at 814, 65 S.Ct. 993, 89 L.Ed. 1381, 65 USPQ at 138 (citing Bein v. Heath, 47 U.S. (6 How.) 228, 247, 12 L.Ed. 416 (1848)).
Had Mohsen’s deception occurred in the Patent and Trademark Office (“PTO”) rather than before the court, everyone agrees that the '069 patent would be unenforceable. There is no reason to reach a different result here. The duty of candor to the court is entitled to at least as much honor as that to the PTO. The courts have no greater resources to uncover fraud than the PTO. Although patent prosecutions are ex parte and judicial proceedings are adversarial, the PTO has the benefit of hundreds of experts in the relevant arts to make independent inquiries. The rationale of Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 246, 64 S.Ct. 997, 88 L.Ed. 1250, 61 USPQ 241, 245 (1944), applies: “[Tampering with the administration of justice in the manner indisputably shown here involves far more than an injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public, institutions in which fraud cannot complacently be tolerated ... The public welfare demands that the agencies of public justice be not so impotent that they must always be mute and helpless victims of deception and fraud.”
There is no limit inherent in the doctrine of unclean hands that prevents declaring a patent unenforceable based on the post-issuance conduct of the party seeking relief. The governing principle of the doctrine is that “ ‘whenever a party who, as actor, seeks to set the judicial machinery in motion and obtain some remedy, has violated conscience, or good faith, or other equitable principle, in his prior conduct, then the doors of the court will be shut against him in limine; the court will refuse to interfere on his behalf, to acknowledge his right, or to award him any remedy.’ ” Keystone I, 290 U.S. at 244-45, 54 S.Ct. 146, 78 L.Ed. 293, 19 USPQ at 230 (quoting Pomeroy, Equity Jurisprudence § 397 (4th ed.)). Rendering the patent unenforceable for Mohsen’s forgery of engineering notebooks purporting to establish the conception and reduction to practice of his invention is entirely consistent with this language. The district court properly refused to “ ‘acknowledge [the patentee’s] right’ ” in that patent. Id.
Indeed, the unclean hands doctrine is the source of our ability to declare a patent unenforceable, for the well-recognized defense of inequitable conduct in the PTO. See Hazel-Atlas, 322 U.S. at 250-51, 64 S.Ct. 997, 88 L.Ed. 1250, 61 USPQ at 247; see also Consolidated Aluminum Corp. v. Foseco Int’l Ltd., 910 F.2d 804, 812, 15 USPQ2d 1481, 1487 (Fed.Cir.1990) (“[W]e reject ... [the] invitation to limit a flexible doctrine of equity to conduct occurring before a court.... [W]hat we have termed ‘inequitable conduct’ is no more than the unclean hands doctrine applied to particular conduct before the PTO.” (citations omitted)); see also J.P. Stevens & Co. v. Lex Tex Ltd., 747 F.2d 1553, 1561, 223 USPQ 1089, 1093 (Fed.Cir.1984) (“[A]t the *1380time the Patent Act was enacted Supreme Court cases had treated inequitable conduct as an ‘unclean hands’ type defense.”) (superceded, but adopted in relevant part, by Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 877, 9 USPQ2d 1384, 1392 (Fed.Cir.1988) (en banc)).
The Supreme Court’s development of the doctrine makes this flexibility clear. Keystone I first permitted an accused in-fringer to assert unclean hands as a defense to infringement. 290 U.S. at 243-44, 54 S.Ct. 146, 19 -USPQ at 230-31. The patentee’s post-issuance conduct of obtaining the agreement of a third party not to disclose a possible prior use of the invention, and the patentee’s reliance on this deception to obtain a favorable judgment in an infringement action and to commence a second infringement suit, constituted unclean hands requiring the dismissal of the claims in the subsequent infringement case. Id.
At the time Keystone I was decided, the Court was limited by the rule that only the government had the ability to move to vacate a patent for fraud in its inception; private parties could not. See Hazel-Atlas, 322 U.S. at 251, 64 S.Ct. 997, 88 L.Ed. 1250, 61 USPQ at 247 (“It has previously been decided that such a remedy is not available in infringement proceedings, but can only be accomplished in a direct proceeding brought by the government.” (citing United States v. Am. Bell Tel. Co., 128 U.S. 315, 9 S.Ct. 90, 32 L.Ed. 450 (1888))). Private parties were permitted to assert only invalidity defenses in infringement actions. See Am. Bell Tel. Co., 128 U.S. at 370-72, 9 S.Ct. 90. As Keystone Driller Co. v. Northwest Engineering Corp., 294 U.S. 42, 43 n. 2, 55 S.Ct. 262, 79 L.Ed. 747, 24 USPQ 35, 35-36 n. 2 (1935) (“Keystone II ”), shows, the Court had not yet recognized its ability in an action between private parties to hold a patent unenforceable for a patentee’s deceptive conduct falling outside the scope of the enumerated invalidity defenses, regardless of whether the inequitable behavior was committed in the prosecution of the patent or in court. See Hazel-Atlas, 322 U.S. at 251, 64 S.Ct. 997, 88 L.Ed. 1250, 61 USPQ at 247; Am. Bell Tel. Co., 128 U.S. at 370-72, 9 S.Ct. 90; Mowry v. Whitney, 81 U.S. (14 Wall) 434, 439, 20 L.Ed. 858 (1871) (dismissing action equivalent to a declaratory judgment of invalidity on the grounds that only the government “can institute judicial proceedings for ... vacating or rescinding the patent ... ”); see also Donald S. Chisum, Chisum on Patents, § 19.03[1][a] at 19-150 (2000).
However, Hazel-Atlas, 322 U.S. at 250-51, 64 S.Ct. 997, 88 L.Ed. 1250, 61 USPQ at 247, subsequently confirmed that a court may declare a patent unenforceable in a private action under the unclean hands doctrine. The Court relied on Keystone I to hold that when deceptive conduct was practiced before both the PTO and then before the court, “nothing less than a complete denial of relief’ to the patentee would suffice. Id. at 250, 64 S.Ct. 997, 61 USPQ at 247. Hazel-Atlas thus derived its conclusion that a patent may be held unenforceable for deception in the PTO from Keystone I’s refusal to enforce a patent for deception before the court. Unenforceability may be a remedy for either in the appropriate circumstances. See Fraige v. Am.-Nat’l Watermattress Corp., 996 F.2d 295, 298 n. 3, 27 USPQ2d 1149, 1151 n. 3 (Fed.Cir.1993) (“Although Hazel-Atlas was not based on fraud arising during the course of an infringement action, the principles laid down by the Supreme Court are equally applicable here [to fraud committed in an infringement action].”); cf. Precision Instrument, 324 U.S. at 819, 65 S.Ct. 993, 89 L.Ed. 1381, 65 USPQ at 139 (dismissing the action for deception before the PTO *1381and the court based on the “public policy against the assertion and enforcement of patent claims infected with fraud and perjury.”).
Here, the district court held that the only way to protect the judicial proceedings from Mohsen’s deceptions was to declare the '069 patent unenforceable. His forgery was pervasive, long-standing, and wanton. It was committed in the context of a series of inter-related patent litiga-tions among the parties concerning related technology in courts in many jurisdictions, as well as an antitrust action and a takeover attempt. Closing the door to one courtroom would merely lead to prompt refiling in another, and would be of little deterrence to subsequent attempts to undermine the integrity of the judicial process.
That Mohsen’s forged documents infected the evidence of the conception and reduction to practice of the invention bolsters the conclusion that the patent should not be enforced. Although the record does not fully develop the issue, it appears that he was seeking to avoid potentially invalidating prior art with his forgery, intending to swear behind the date of his patent application. Thus, the fraud concerns the validity of an issued patent, a matter of public concern. See Fraige, 996 F.2d at 298, 27 USPQ2d at 1162; Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661, 666, 64 S.Ct. 268, 88 L.Ed. 376, 60 USPQ 21, 24 (1944); Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488, 492, 62 S.Ct. 402, 86 L.Ed. 363 (1942); Precision Instrument, 324 U.S. at 816, 65 S.Ct. 993, 89 L.Ed. 1381, 65 USPQ at 138 (“The farreaching social and economic consequences of a patent, therefore, give the public a paramount interest in seeing that patent monopolies ... are kept within their legitimate scope.”).
Had Mohsen succeeded, he might unjustly have retained or enlarged the scope of his property right, avoided a finding of obviousness or anticipation, and thus remained the owner of valid patent claims where he should have none. As the district court observed, the patent would be strengthened through its testing in litigation and in reliance upon the fraudulent documentation and testimony. Aptix would likely be able to command a higher price for it (in license or assignment), and would more readily be able to obtain settlements from potential infringers than if it had not survived a challenge to its validity. This strengthened patent could be helpful in obtaining infringement verdicts in subsequent litigation, resulting in a chain of judgments based on the same fraud. See Donald S. Chisum, Chisum on Patents, § 19.02[2][a] at 19-51 (2000) (“A prior judgment of validity cannot bind non-parties to a suit. Nevertheless, under the doctrine of comity, a court will give some weight to prior adjudications ... based on the same evidence.”). Permitting the possibility of such a chain of judgments tainted with deception is precisely what the Supreme Court sought to avoid in Keystone I, Hazel-Atlas, and Precision Instrument.
This type of deception taints the patent itself. The documentary record of the invention has been permanently blotched. The forgery is sufficiently pervasive that it is difficult to tell if any of the purported engineering notebooks and supporting documents are authentic. Thus, the effects of Mohsen’s conduct before the court would not necessarily be eradicated in an action brought by another party. If the patent is not held unenforceable, a subsequent owner may attempt in litigation to establish a date of conception and reasonable diligence in reduction to practice before the date óf the patent’s application. To permit this possibility is to countenance the continued involvement of the courts in sorting through the muddy morass of Mohsen’s forgeries and dishonest testimony. The unclean hands doctrine does not permit *1382this boon to the forger and stain on the courts. See Precision Instrument, 324 U.S. at 814, 65 S.Ct. 993, 89 L.Ed. 1381, 65 USPQ at 138. Therefore, we do not exceed the limits of equity in refusing to enforce the patent. Mercoid, 320 U.S. at 666, 64 S.Ct. 268, 88 L,Ed. 376, 60 USPQ at 24 (“The patent is a privilege.”).
In other contexts, we have not been so quick to confine the consequences of a patentee’s fraud. For example, even if inequitable conduct in a patent’s prosecution only directly concerns one of the claims, we hold that it is fatal to the entire patent. See Kingsdown Med. Consultants, 863 F.2d at 877, 9 USPQ2d at 1392 (en banc) (“When a court has finally determined that inequitable conduct occurred in relation to one or more claims during prosecution of the patent application, the entire patent is rendered unenforceable.”). There is no reason to become parsimonious with equity here.
With respect to Meta, as the patent’s licensee, it derives its rights in the '069 patent entirely through Aptix and has no standing to sue in its own right. See 35 U.S.C. § 281 (1994). To the extent that Meta would be harmed by our refusal to recognize Aptix’s right to the patent, its action is against Aptix. Had Aptix’s deception initially been before the PTO, the patent would be unenforceable, and Meta would lose all its rights in the patent even if it had no knowledge of the misconduct. Besides, as the driving force behind the Aptix patent litigation, Meta had ample notice of the alleged fraud and ample opportunity to require the testing of the veracity of the documents that it and Aptix continued to rely on. The district court made no findings about whether Meta itself had clean hands. However, willful blindness to another’s wrongful acts and continued reliance upon them could rise to the level of intentional or unconscionable conduct.