Court Opinion

ID: 9603898
Source: CourtListenerOpinion
Date Created: 2023-08-22 02:10:55.989217+00
Date Added: 2024-06-11T18:02:15.053252
License: Public Domain

LINN, Circuit Judge,
eoncurring-in-part and dissenting-in-part.
I am pleased to join Parts I and IIA of the majority opinion concluding that there remains a live controversy between the parties on the issue of unenforceability of U.S. Patent No. 5,235,326 (“the '326 patent”) and affirming the district court’s materiality ruling. I respectfully dissent, however, from Part IIB affirming the district court’s ruling that the duty of candor required by 37 C.F.R. § 1.56(c)(3) applies to Dr. Stoddard.
This case involves the application of 37 C.F.R. § 1.56 (“Rule 56”), a rule adopted by the United. States Patent and Trademark Office (“PTO”) that places on defined individuals a duty of candor and good faith, including a duty of disclosure, in dealing with the PTO during the period of examination of a patent application. 37 C.F.R. § 1.56(a). These individuals include: (1) each named inventor; (2) each attorney or agent who prepares or prosecutes the application; and (3) “[ejvery other person who is substantively involved in the preparation or prosecution of the application and who is associated with the inventor, with the assignee or with anyone to whom there is an obligation to assign the application.” 37 C.F.R. § 1.56(c). Since Dr. Stoddard is not a named inventor or an attorney or agent associated with the filing of the '326 patent, the question presented in this case turns on the application of Rule 56(c)(3), which, as the majority recognizes, has never been explicitly addressed by this Court.
Rule 56(c)(3) lists two criteria that must be met before imposing a duty of disclosure on an individual. First, the individual must be “substantively involved in the preparation or prosecution of the application.” 37 C.F.R. § 1.56(c)(3). Second, the individual must be “associated with the inventor, with the assignee or with anyone to whom there is an obligation to assign the application.” Id. I agree with the majority that Dr. Stoddard was associated with the inventors of the '326 patent and that the second prong of Rule 56(c)(3) is met in this case. Where I part company with the majority is the conclusion that Dr. Stoddard was “substantively involved in *978the preparation or prosecution of the [’326 patent] application” as required by the first prong of Rule 56(c)(3).
We review a district court’s determination of inequitable conduct under an abuse of discretion standard. Kingsdown Med. Consultants Ltd. v. Hollister Inc., 863 F.2d 867, 876 (Fed.Cir.1988) (en banc). “We will not substitute our judgment for that of the trial court in relation to the discretionary ruling of inequitable conduct unless the appellant establishes that the ruling is based upon clearly erroneous findings of fact or a misapplication or misinterpretation of applicable law or that the ruling evidences a clear error of judgment on the part of the district court.” Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 267 F.3d 1370, 1379 (Fed.Cir.2001). In my view, the district court both misapplied Rule 56(c)(3) and clearly erred in finding that Dr. Stoddard was “substantively involved in the preparation or prosecution of the application.” Accordingly, I would reverse the determination that the '326 patent is unenforceable due to inequitable conduct.
I. Who Owes the Duty of Candor
The majority correctly recognizes that the duty of candor is codified at 37 C.F.R. § 1.56 and includes the duty to disclose to the PTO all information that is material to the issue of patentability known to certain individuals. 37 C.F.R. § 1.56(a). As the majority further notes, the question in this case is to whom does the duty of candor extend under the language “every other person who is substantively involved” in Rule 56(c)(3)?
The majority holds that a district court may consider an “individual’s position within the company, role in developing or marketing the patented idea, contact with the inventors or prosecutors, and representations to the PTO” when deciding whether an individual is “substantively involved,” regardless of whether those factors relate to the person’s awareness of the merits of the application in question or engagement in any specific activity relating to that application. Majority Op. at 974-75, 975-76, 977 n. 4. The majority goes even further to extend the duty generally to “those on the commercial side of patented product development,” because they are “the types of people most likely to have knowledge of § 102(b) prior art.” Majority Op. at 976. With all due respect, I find no basis in the rule or in any policy for such an expansive reading of Rule 56(c)(3).
The obligation imposed by the duty of candor is to disclose to the PTO information “material to patentability.” 37 C.F.R. § 1.56(a). Because one cannot assess whether information is “material to patent-ability” without knowledge of the technical details or legal merits of an application, it should be self-evident that when Rule 56(c)(3) talks about persons who are “substantively involved” it is referring to those persons who are both (1) engaged in the preparation or prosecution of an application and (2) sufficiently apprised of the technical details or legal merits of the application as to be able to assess the materiality of any information they may know or discover as the application is prepared or prosecuted. This naturally excludes not only the “typists, clerks, and similar personnel who assist with the application” in a non-substantive way as described in the Manual of Patent Examining Procedure (“MPEP”) § 2001.01, but also corporate officers, managers, employees, and all other individuals who are neither aware of the technical details or legal merits of the application nor engaged in the preparation or prosecution thereof. Simply having a general interest or even a financial interest in the invention or a gen*979eral awareness of the application is not enough.
This interpretation does not improperly import into Rule 56(c)(3) the knowledge component from materiality, as suggested by the majority. Majority Op. at 976. Instead, it recognizes that Rule 56(c)(3) uses the phrase “substantively involved.” The use of the word “substantive[ ]” limits the set of individuals who have a duty to disclose to those who possess a specific understanding of the substance of the application. This has nothing to do with the question of whether any particular piece of information is material, but relates to the separate question of whether a person is substantively involved; i.e., sufficiently apprised of the details of the application as to be in a position to make that assessment. Reading the separate parts of Rule 56 in harmony is not improperly conflating them, as the majority suggests.
The majority reads “substantive[ ]” to mean that the involvement “relates to the content of the application or decision related thereto, and that the involvement is not wholly administrative or secretarial in nature.” Majority Op. at 974 (citing MPEP § 2001.01 (8th ed., rev.2, May 2004)). Such an expansive interpretation is nowhere suggested in the cited section of the MPEP or anywhere in Rule 56. The PTO could easily have written a rule as broad as that set forth by the majority. However, the PTO purposefully limited the duty of disclosure to material information in order to limit the submission of irrelevant and cumulative information that could overwhelm the PTO and obscure potentially important disclosures. See Duty of Disclosure, 42 Fed.Reg. 5589 (Jan. 28, 1977) (“ ‘Relevant’ is replaced by ‘material’ because the latter term connotes something more than a trivial relationship.”); MPEP § 2001 (8th ed., rev.2, May 2004) (“There is no duty to submit information which is not material to the patentability of any existing claim.”). By extension, the PTO also limited the duty to those individuals in a position to determine what disclosures are material-those substantively involved in the preparation or prosecution of the application.
While I do not quibble about the majority’s characterization of this as a threshold inquiry, calling it such does not justify writing “substantively” out of the rule and lowering the threshold to extend the duty to disclose to everyone having some relationship to the invention or application no matter how peripheral or tangential it may be to the substance of the application. The majority’s interpretation places on persons who are not in a position to assess materiality an obligation to disclose information the relevance of which they have no way of determining. The effect is either to encourage the filing of information regardless of its materiality, just to be on the safe side, or to widen the net of inequitable conduct that may be cast by accused infringers after the fact in litigation. Neither result is desired or warranted and cannot be justified on the rationalization that Rule 56(c)(3) is simply an innocuous threshold inquiry. Indeed, this court has held that the identity of the individual accused of inequitable conduct is essential to the determination of whether the patent can be found unenforceable. See Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1330 (Fed.Cir.2009) (“The pleading, however, provides no factual basis to infer that any specific individual, who owed a duty of disclosure in prosecuting the '685 patent, knew of the specific information in the [prior art] patents that is alleged to be material to the claims of the '685 patent.”).
Finally, the majority suggests that intent should solve the concern I have expressed. Majority Op. at 976-77. With all due respect, that suggestion is premised *980on circular reasoning that ignores Rule 56(c)(3) entirely. If intent was all that mattered, there would be no need to be concerned at all about who had the duty to disclose.
II. Dr. Stoddard’s Involvement
In this case, there is no evidence that Dr. Stoddard was substantively involved in the preparation or prosecution of the application for the '326 patent. Specifically, there is no evidence to even suggest that Dr. Stoddard had any knowledge of the technical details or legal merits of the application for the '326 patent while it was being prepared or prosecuted. I find it significant that no document or testimony shows that Dr. Stoddard participated in any inventor meeting with patent counsel, received a draft of the application prior to filing, or received any draft response of an office action to the PTO during prosecution or was otherwise apprised of the technical details or legal merit of the application. In fact, Robert Malm, the prosecuting attorney of the '326 patent, testified that Dr. Stoddard was not substantively involved in the preparation or prosecution of the patent. J.A. 14100, 14104 (Malm’s testimony stating that he did not have any conversations with Dr. Stoddard about patent prosecution matters and that no individual at Avid reviewed responses before they were filed with the PTO).
The majority cites two communications as evidence sufficient to support the district court’s inference that Dr. Stoddard was substantively involved in the '326 application. Majority Op. at 974-75. Neither of these documents actually related to the '326 application. The first memo, addressed to Dr. Stoddard from a named inventor of the '326 patent, mentioned only the possible effect of Avid sales on a European patent application. The second memo, which indicated that Dr. Stoddard was provided a copy, was addressed to a patent attorney who was never involved in the '326 patent application and included new material for an unspecified patent application. This memo did not give any indication that it was in any way related to the '326 patent application. These documents do not support the conclusion that Dr. Stoddard had any awareness of the details or merits of the '326 application.
The majority incorrectly points to Dr. Stoddard’s involvement in Avid’s research and development as a factor indicating that he was substantively involved in the preparation of the patent application relating to that research. Majority Op. at 974-75. Dr. Stoddard’s research activities are simply evidence that Dr. Stoddard was “associated with the inventor, with the assignee or with anyone to whom there is an obligation to assign the application.” 37 C.F.R. § 1.56(c)(3). Because it is the actual substance of the application that defines what constitutes “material” information that the individual must disclose to the PTO, Rule 56 requires more than just this association. See 37 C.F.R. § 1.56(b)(1), (c)(3).
The majority also ascribes significance to the fact that Dr. Stoddard was personally responsible for certain prior art demonstrations. Majority Op. at 975-76. However, this fact does not contribute to a finding that Dr. Stoddard was substantively involved in the patent application. While employees who perform product demonstrations may well be the individuals most likely to have knowledge of prior art, that knowledge, in itself, does not give rise to a duty of disclosure to the PTO. See Kemin Foods, L.C. v. Pigmentos Vegetales Del Centro S.A. de C.V., 464 F.3d 1339, 1346 (Fed.Cir.2006) (affirming district court’s refusal to find inequitable conduct based on the failure of an employee scien*981tist — not a named inventor — to disclose a prior art reference noting that he was “only tangentially involved in prosecution” of the patent). Unless such an individual also has knowledge of the technical details or legal merits of the patent application and is engaged in the preparation or prosecution thereof, he is not bound by Rule 56. Moreover, while the district court found Dr. Stoddard’s testimony on the issue of prior art demonstrations was less than candid, that neither shows that he was involved in the '326 patent application nor demonstrates that whatever involvement he may have had was substantive in any way.
Finally, Dr. Stoddard’s signature on the small entity status affidavit, declaring that Avid is a small business concern eligible for reduced patent application fees, provides no evidence that he had any knowledge of the substantive details contained in the patent application. The small entity status document relates only to information about the corporation and not to anything material to patentability.
The majority states that Dr. Stoddard is substantively involved in the application for the '326 patent based on the entirety of the evidence in the record. However, as noted above, none of the individual pieces of evidence the majority cites as the basis for this finding — Dr. Stoddard’s role in the company, the two memos regarding patent prosecution, the small entity status affidavit, Dr. Stoddard’s involvement in the product demonstrations, or Dr. Stoddard’s lack of credibility at trial — show that Dr. Stoddard was even peripherally involved with the actual application at issue. Simply combining the evidence does not change the fact that there is nothing in the record showing that Dr. Stoddard had anything at all to do with the application for the '326 patent.
For the foregoing reasons, it is my view that the evidence does not support a finding that Dr. Stoddard was substantively involved in the preparation or prosecution of the '326 patent. He was neither engaged in the preparation or prosecution of the '326 patent application nor sufficiently apprised of its technical details or legal merits to allow him to assess what information would be considered material to its patentability. Because the district court misapplied Rule 56(c)(3) and clearly erred in extending the duty of disclosure to Dr. Stoddard, I would reverse the finding that the '326 patent is unenforceable due to inequitable conduct.