Federal Circuit Finds Information Discovered After the Filing of an Application Must Be Material to Form Grounds of Inequitable Conduct

In Research Corporation Technologies, Inc. v. Microsoft Corporation, 536 F.3d 1247, 87 USPQ2d 1519 (Fed. Cir. 2008), Research Corporation Technologies, Inc. (“RCT”) appealed the Federal Circuit for the District Court for the District of Arizona’s holding of RCT’s patents unenforceable due to inequitable conduct and its grant of summary judgment of invalidity and noninfringement in favor of Microsoft Corporation (“Microsoft”). The Federal Circuit reversed, vacated, and remanded the case to the District Court with instructions to reassign the case.


Halftoning technology is used in computers and printers. A halftone is an image that simulates a continuous tone image, but is actually an arrangement of individual dots. The particular spacing between the dots gives the viewer the illusion of a continuous picture consisting of varying shades of gray in the image. One method of halftoning is thresholding, which uses a grid-like array, or mask, to carry the threshold to initiate pixels for a particular pattern. Due to the difficulty and poor quality of the thresholding method of halftoning, two of RCT’s scientists, Dr. Kevin J. Parker and Dr. Theophano Mista, invented and applied for patents for a Blue Noise Mask that was quick, used very little computer memory, and produced high quality halftone images. These resulted in U.S. Patent Nos. 5,111,310 (‘310); 5,341,228 (‘228); 5,477,305 (‘305); 5,543,941 (‘941); 5,708,518 (‘518); and 5,726,772 (‘772).

Specifically, in 1987, Dr. Robert Ulichney published a book about digital halftoning techniques, but he had only the capability to generate blue noise halftone using the complex mathematical process of error diffusion. Recognizing the drawbacks of Dr. Ulichney’s method, Dr. Parker and Dr. Mista filed patent applications which resulted in the ‘310, ‘228, ‘305, ‘941, ‘518, and ‘772 patents.  However, after filing the patent applications and as part of her continuing thesis work, Dr. Mista tested the strictness of Dr. Ulichney’s equation by testing it with different scaling factors (“K factors”).  She concluded that the equation could indeed be broadened. Drs. Mista, Parker, and Ulichney then jointly published an article summarizing the test results.

On December 21, 2001, RCT filed suit against Microsoft for infringement of six patents related to digital halftoning. After a Markman hearing, RCT moved for partial summary judgment that certain Microsoft products contained infringing halftoning masks. Microsoft filed a motion for partial summary judgment that RCT’s claims were invalid for anticipation under 35 U.S.C. § 102(b) and lack of written description under 35 U.S.C. § 112 ¶1. The trial court granted RCT’s infringement motion, appointed a special master to consider the additional summary judgment motions, then transferred the case to a different trial judge. At this time, the parties filed additional summary judgment motions. The new district judge reversed the prior judge’s grant of RCT’s summary judgment motion for infringement and also granted Microsoft’s summary judgment motions for noninfringement and on invalidity. This judge additionally granted all of Microsoft’s motions in limine and set a jury trial to commence August 8, 2005. However, upon Microsoft’s request, the new judge cancelled the scheduled jury trial and ordered a trial on inequitable conduct instead. During trial, RCT was barred from presenting expert testimony on materiality, and its case was limited to testimony from the inventors about candor and good faith. On November 23, 2005, the trial court ruled from the bench that the RCT patents were unenforceable due to inequitable conduct. After RCT appealed, Microsoft filed motions with the District Court seeking attorney fees, amplification of the court’s finding, and an extension of the effective date for appeal pending a decision on the first two motions. The trial judge granted the motions on the deadline and attorney fees but did not amplify its findings of fact or conclusions of law on any topic.

On appeal, the Federal Circuit found that, to find a patent unenforceable for inequitable conduct, there must be clear and convincing evidence both that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the patent office. Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1363 (Fed. Cir. 2007). The trial court found inequitable conduct because the inventors did not disclose the scientist’s post-filing K factor tests to the USPTO.

Post-Filing Publication Not Evidence of Materiality since No Obligation to Report

However, the Federal Circuit found that, even assuming arguendo that there was an intent to deceive, because the work occurred after the scientists had filed the patent application, these K factor experiments were not material to their inventive activity. The Federal Circuit determined that under the circumstances of this case, the inventors had no obligation to report their later tests to the USPTO. For one, these post-filing K factor experiments were basic scientific research, not a verification of the patented technology. Also, the patents did not even mention the K factor, so the K factor research was not necessary to practice the patented invention. Lastly, the inventors published the K factor tests to the scientific community, and publication is an act inconsistent with intent to conceal data from the USPTO.

In support of its argument that the experimental results were material, Microsoft argued that the patents discussed production of pleasing images (or at least not annoying), and the joint publication related explicitly to “visually pleasing” images.  Further, Microsoft argued that the joint publication and the fact that Dr. Mista’s K factor experiments disclosed some limitations of the patented technology. However, the Federal Circuit found that Microsoft’s contention, with which the trial court agreed, that the inventors had an obligation to submit the post-filing tests to the USPTO was incorrect. The K factor experiments were not material to the patented technology, which did not refer to or rely upon K factors at all. The Federal Circuit found that the trial court completely ignored the materiality prong and, thus, clearly erred in finding that the inequitable conduct test was satisfied.

Post-Filing Publication Conflicts with Intent Requirement Since Not Hidden

In addition to missing the materiality prong, the District Court’s intent analysis was clearly erroneous. The trial court, for example, focused improperly on comments that Dr. Parker made at trial regarding the purposes of the patent system since the inventor’s motives in applying for a patent are “generally irrelevant to a proper determination of inequitable conduct.”  Moreover, the Federal Circuit found that the inclusion of the experimental results in the joint publication was “an act inconsistent with an intent to conceal data from the USPTO.”  As such, the Federal Circuit also reversed the District Court’s finding of an intent to deceive for purposes of inequitable conduct.

Email Exchange Deliberately Not Discussing Details of Yet to be Filed Invention Not Evidence of Lack of Possession under 35 U.S.C. § 112

The District Court also erred in relying on an email exchange a few days after filing as evidence that Dr. Parker was not in possession of the invention at the time of filing for purposes of 35 U.S.C. § 112. The Federal Circuit found that an email from one scientist to another in a competitive field that does not disclose the actual status of research and is hardly dispositive proof that the inventor was not in possession of the invention at the time of filing. Moreover, the Federal Circuit noted that Dr. Parker explicitly stated he did not send the emails earlier since the research was confidential and was not to be revealed to a third party until after the patent applications were filed.  Thus, the emails did not establish that the inventors did not have the invention for purposes of 35 U.S.C. § 112.

Because the trial court erred in ignoring the materiality prong and in misapplying the intent prong of the inequitable conduct test, the Federal Circuit reversed those findings and conclusions. Further, since the Federal Circuit vacated the trial court’s determination of unenforceability due to inequitable conduct for multiple errors, it also vacated the exceptionality finding and the grant of attorney fees. As the record showed many potential issues of fact that would prevent entry of summary judgment, the Federal Circuit also remanded both matters for a proper determination on the merits.

Trial Court Ordered Not To Reconsider Case since Statements Evidence Bias

Finally, the Federal Circuit decided that the expressed convictions of the trial court may not be easily and objectively reconsidered on remand.  As such, the Federal Circuit found that the case met the “unusual circumstances” required by the Ninth Circuit’s test for request to transfer to a different judge. Accordingly, the Federal Circuit remanded to the Chief Judge of the District Court for the District of Arizona to determine the reassignment of the case for a proper determination of validity and infringement on the merits.

Significance to Patent Applicants

RCT represents a divergence from the Federal Circuit’s recent trend to ignore, for purposes of inequitable conduct, any need for intent in determining fraud on the patent office.  Instead, as noted by the dissent in Aventis Pharma S.A.v. Amphastar Pharmaceuticals, Inc., 525 F3d 1334, 87 USPQ2d 1110 (Fed. Cir. 2008) discussed previously in the Stein McEwen, LLP Newsletter (Vol. 4, Iss. 2)(June 2008), ignoring the requirement for intent and focusing on non-duplicative art for purposes of finding inequitable conduct encourages frivolous inequitable conduct charges.  Instead, the Federal Circuit in RCT reminds that there must be evidence of intent and materiality, and not mere speculation.  Moreover, given the importance of publication to many researchers in the academic community, the Federal Circuit’s finding, that post filing publication activity does not, without more, evidence an intent to deceive and does not show materiality, should encourage researchers to continue publication of their ongoing work on inventions for which patent protection is sought.   A contrary ruling would have had a significant chilling activity on post-filing research publications since all such publications would inevitably be used for purposes of rending the prior-filed patent unenforceable.  By requiring additional evidence beyond evidence of post filing research, the Federal Circuit helped to reduce the number of frivolous inequitable conduct defenses that would otherwise affect the academic community.


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