Court Opinion

ID: 9491075
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:03:08.116334+00
Date Added: 2024-06-11T17:54:29.759480
License: Public Domain

LOURIE, Circuit Judge,
dissenting in part.
I respectfully dissent from Part I of the court’s decision reversing the district court’s dismissal of the state law claim. However, I do join Parts II and III which affirm, respectively, the district court’s denial of Dow’s request for attorney fees and the court’s dismissal of Exxon Chemical Patents, Inc. from the case.
I dissent because the district court correctly decided that the state law claim was preempted by federal law; it was essentially an inequitable conduct claim. The majority, citing Sears, Roebuck & Co. v. Stiffel, 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661, 140 USPQ 524 (1964), Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. .234, 84 S.Ct. 779, 11 L.Ed.2d 669, 140 USPQ 528 (1964), Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 94 S.Ct. 1879, 40 L.Ed.2d 315, 181 USPQ *1480673 (1974), Aronson v. Quick Point Pencil Co., 440 U.S. 257, 99 S.Ct. 1096, 59 L.Ed.2d 296, 201 USPQ 1 (1979), and Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 109 S.Ct. 971, 103 L.Ed.2d 118, 9 USPQ2d 1847 (1989), concludes that the state law claim for intentional interference with actual and prospective contractual relations does not stand as an impermissible obstacle to the accomplishment and execution of the patent laws and that it is therefore not preempted.
However, none of these Supreme Court cases deals with the issue before us, which is whether such a state law claim may be entertained when it is essentially bottomed on the assertion that the patentee engaged in inequitable conduct in the Patent and Trademark Office (“PTO”). The cases cited by the majority involved either an alternative form of intellectual property protection or enforcement of a contract, rather than an attack on the enforceability (or validity) of a patent which is basically at issue here.
Kewanee concerned trade secret protection, and the Supreme Court concluded that the patent law does not preclude inventors from employing state trade secret laws for their protection rather than seeking to patent their inventions. See 416 U.S. at 479, 94 S.Ct. at 1885. In Sears, Roebuck and Camp-eo, the question was whether state unfair competition law can provide patent-like protection against copying, when federal patent law did not protect the subject matter in question. The court held in the negative. The issue was quite different from ours.
Aronson involved enforcement of a contract that provided for a right to royalties, whether or not a patent had issued. No preemption was found because enforcement of the contract did not conflict with the goals and policies of federal patent law. See Aronson, 440 U.S. at 265-66, 99 S.Ct. at 1100-01. That case had little to do with this one. In Bonito Boats, the Court found preemption because the Florida statute creating patent-like protection for boat hull designs directly conflicted with federal law. The Court held that state laws which restrict public access to subject matter specifically left unprotected by the federal patent law are preempted. Thus, none of those cases provides precedent for the majority’s decision. I believe this court’s holding of preemption in Abbott Laboratories v. Brennan is the closest precedent and that it should lead to a similar result here. See 952 F.2d 1346, 1355-57, 21 USPQ2d 1192, 1199-1201 (Fed.Cir.1991) (holding that a state law claim for abuse of process, bottomed on the allegation that the patentee engaged in inequitable conduct, was preempted by the federal patent law). The state law claim here is premised on an assertion of inequitable conduct in the procurement of Exxon’s patent.
Inequitable conduct is a defense to a claim of patent infringement when the patent was obtained by a failure of the patent applicant to comply with the duty of disclosure to the PTO. See 37 C.F.R. § 1.56 (1997). There already are remedies for such misconduct, including unenforceability of the patent, see 35 U.S.C. § 282 (1994), and attorney fees when the case is found to be exceptional, see id. at § 285. Likewise, in cases of egregious misconduct or subsequent baseless attempts to enforce the patent, the patentee may be exposed to liability under the federal antitrust laws. See Walker Process Equipment, Inc. v. Food Machinery & Chem. Corp., 382 U.S. 172, 86 S.Ct. 347, 15 L.Ed.2d 247, 147 USPQ 404 (1965) (fraudulent misrepresentation); Professional Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 113 S.Ct. 1920, 123 L.Ed.2d 611, 26 USPQ2d 1641 (1993) (objectively and subjectively baseless suit). Dow attempts to bypass these federal remedies by asserting a state law cause of action. I believe that such a cause of action is preempted because it frustrates federal patent policy by providing damages for inequitable conduct distinct from the remedies established under federal law. Permitting a state law claim to be based essentially on an assertion of inequitable conduct is essentially a duplication of federal remedies. It leads to the potential of conflicting results, an eventuality that preemption is intended to avoid. Just as in Sears, Roebuck and Compeo, and in Bonito Boats, a state cause of action that conflicts with federal remedies is preempted.
The majority emphasizes that the tort of intentional interference with actual and pro*1481spective contractual relations involves elements in addition to a finding of inequitable conduct. That assertion is of course correct, but it merely masks the real issue. It is well-established that a patent owner is entitled to assert its patent against those it believes are infringers. See Virginia Panel Corp. v. MAC Panel Co., 133 F.3d 860, 869, 45 USPQ2d 1225, 1232 (Fed.Cir.1997) (“[A] patentee must be allowed to make its rights known to a potential infringer so that the latter can determine whether to cease its allegedly infringing activities, negotiate a license if one is offered, or decide to run the risk if liability and/or the imposition of an injunction.”). Whenever a patentee suspects that its patent is being infringed, it should, as a matter of civilized business practice, warn the suspected infringer to cease and desist, on pain of facing a lawsuit. If the accused infringer has a contractual relationship with another party, such as a customer, as is the usual case, that other party may be warned as well, as it is usually also an accused in-fringer. Warning infringers to stop infringing one’s patent is a protected activity. The fact that the patent owner may lose its case, or even be found to be guilty of inequitable conduct does not mean that it had no right to demand that those it considered to be in-fringers stop their allegedly infringing conduct. Thus, the fact that this tort involves post-grant activities does not practically-speaking distinguish it from inequitable conduct per se.
Moreover, this case is not truly distinguishable from Concrete Unlimited because of any distinction between a patentee’s good or bad faith. An accused infringer can always assert bad faith to get into state court; after this case, this will surely happen more often. Whether or not enforcement of a patent allegedly procured by inequitable conduct has been undertaken in good faith or in bad faith ultimately depends on whether the patent was in fact procured through inequitable conduct. Either way, the case is grounded on an assertion of inequitable conduct, a defense arising only in the context of a federal cause of action. The state law claim in this case is simply a proxy for the defense of inequitable conduct that was eliminated when the patentee, Exxon, mooted the infringement claim by granting an immunity from suit. Dow is ultimately attempting to try in state court the issue of inequitable conduct that Exxon’s grant of immunity in the federal case took away.
Just as inequitable conduct has become a staple defense in an infringement suit, the result of this decision may well be the generation of a staple state tort of interference with contract essentially based on conduct in the patent office involving the procurement of the patent. Every federal patent infringement suit in which a patentee has warned an accused infringer having a contract or business relationship with another party regarding the accused subject matter may now be fair game for a state tort action. I hope not, because I do not agree that the law provides for such an action, that it is necessary as a matter of policy, or that we should be creating new causes of action when federal law already provides remedies for the alleged offense. Maintenance of a bright line rule that state tort law does not provide a damages remedy for inequitable conduct best serves the law’s goal of providing clarity concerning the distinction between federal and state causes of action. Accordingly, because the issue of inequitable conduct is part of a patent infringement law suit, it should not be raised separately in the guise of.a state law claim. I therefore respectfully dissent from the reversal of the district court’s dismissal of Dow’s claim for intentional interference with actual and prospective contractual relations.