Categories: Inequitable Conduct Date: Nov 30, 2014 Title: Calcar v. Honda: Federal Circuit Upholds District Court Ruling that Calcar Defrauded the PTO
|TItle:||American Calcar v. American Honda Motor Co., Inc. (Fed. Circ. Sept. 26, 2014).|
|Issue:||[Whether] the judgment of the [lower court] finding that U.S. Patent Nos. 6,330,497 ("497 patent"), 6,438,465 ("465 patent"), and 6,542,795 ("795 patent") were unenforceable due to inequitable conduct [was an abuse of discretion]. |
American Calcar, at *2, 6 (Text Added).
|Holding:||The defendant proves inequitable conduct "by clear and convincing evidence that the patent applicant (1) misrepresented or omitted information material to patentability, and (2) did so with specific intent to mislead or deceive the PTO." [...] This court held in Therasense that the standard for "the inequitable conduct is but-for materiality." In particular, undisclosed prior art is "but-for material if the PTO would not have allowed a claim had it been aware of" it. [... In regard to the intent prong,] "because direct evidence of deceptive intent is rare a district court may infer intent from indirect and circumstantial evidence," provided that such intent is the single reasonable inference. |
Id. at *5-6, 9 (Text Added, Internal Citations Omitted).
|Procedural History:||This appeal arises from Calcar's suit against defendant-appellees American Honda Motor Co., Inc. and Honda of America Manufacturing , Inc. (collectively "Honda"), asserting the infringement of fifteen patents - of which three remain at issue. [...] The patents describe and claim aspects of a multimedia system for use in a car to access vehicle information and control vehicle functions. [...] The case was transferred to the district court [of the Southern District of California] from the Eastern District of Texas [....] Before trial, Honda moved for a finding of inequitable conduct. Honda's motion was based on the actions of Calcar's founder, Mr. Obradovich. Among the three co-inventors, Mr. Obradovich was the one primarily responsible for preparing the patent application. Honda alleged that he deliberately withheld prior art that was material to patentability from the [PTO]. Specifically, Honda argued that while Mr. Obradovich disclosed the existence of the 1996 Acura RL ("96RL") navigation system, he intentionally did not disclose additional information that would have led the PTO to deny the patent as anticipated or rendered obvious by the system. In 1996, Honda added the navigation system as an option for the Acura RL. At the time, Calcar was publishing "Quick Tips" guides: booklets with condensed information from a car's owner's manual. During the course of developing a QuickTips guide for the 96RL, Mr. Obradovich drove the car and operated the navigation system, and Calcar personnel took photographs of the navigation system and owner's manual. Subsequently, Mr. Obradovich began working on the parent application that ultimately issued as the '355 patent. The application explicitly referred to the 96RL system as prior art, and Mr. Obradovich acknowledged that the system was used as the basis of Calcar's inventions. Honda alleged that Mr. Obradovich knew that the owner's manual and photographs were in Calcar's possession and deliberately withheld them during prosecution. Honda argues that the operational details that he did not disclose were precisely those that were claimed in the patents at issue - the use of the system to display the status of vehicle functions (claimed by the '497 patent) and to search for information about the vehicle (claimed by the '465 and '795 patents). The jury ultimately found the '497 patent invalid, and it found the '465 and '795 patents valid. After the trial ended and the jury rendered its verdict, the district court granted Honda's inequitable conduct motion and therefore, held the patents at issue unenforceable. Calcar then appealed to this court. While the appeal was pending, this court established a revised and narrower test for inequitable conduct in Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc). In light of Therasense we affirmed the district court's finding of the materiality of the prior art with respect to the '497 patent, and vacated the district court's other determinations of materiality and intent. On the question of the materiality of the prior art as to the '465 and ''795 patents, we remanded for the district court to determine whether the patents would have been granted "but for" the information that the applicant did not disclose, following the test for materiality set forth in Therasense. With respect to the applicant's specific intent to deceive the PTO, we vacated as to all three patents and remanded to the district court to "make a specific finding on whether any of the three inventors knew that the withheld information was material and whether they made a deliberate decision to withhold it. [...] The district court again found that the three patents at issue were obtained through inequitable conduct [....] Calcar appealed. |
American Calcar, at *2-5 (Text added, Internal Citations Omitted).
|Analysis (PROST, Wallach)|
|Representative Claim||Claim 1 of the '465 patent is representative of the patents for which materiality is at issue on appeal [...]: |
1. A system for use in a vehicle comprising:
a memory for storing a plurality of displays having predetermined contents, the plurality of displays being associated with a plurality of aspects of the vehicle;
an interface for entering a query to conduct a search concerning an aspect of the vehicle;
an input device for selecting a result of the search;
a processor responsive to the selected result for identifying at least one of the plurality of displays which is associated with the aspect of the vehicle; and
a display element for showing thereon the at least one display.
American Calcar, at *6-7 (Emphasis Added).
|Standard of Review||We review the district court's ultimate finding of inequitable conduct based on those underlying facts for abuse of discretion. |
Id. at *5-6.
|Materiality||This court held in Therasense that the standard for "the materiality required to establish inequitable conduct is but-for materiality." In particular, undisclosed prior art is "but-for material if the PTO would not have allowed a claim had it been aware of" it. [...] the only limitation that Calcar claims as novel is that the object of the user's search has to be "an aspect of the vehicle." [...] Calcar's principal argument that the district court improperly failed to account for the inventive differences between the prior art 96RL navigation system and the claims of the '465 and '795 patents. Calcar points to examples listed in the patent's specification, such as the ability to retrieve such features as climate control functions, "the radio, the engine, and other aspects of the vehicle." Calcar argues that the search for information regarding such aspects of the vehicle is a non-obvious invention that was merely based on the 96RL system. The district court did address the differences between the 96RL system and what Calcar actually claimed. It found that the only difference was "the nature of the information contained in the systems" [....] As the district court stated, the 96RL and Calcar's patented system "perform the same function, i.e., delivery of information, the same way, i.e., through an interactive display screen, to achieve the same result, namely providing information to the vehicle user." [...] the mere substitution of one kind of information as the object of the search - which, under a broadest reasonable interpretation of the claim, could be anything about the car - would be an obvious, and thus unpatentable, invention. Because the district court did not commit clear error in its finding of materiality, we affirm the district court's determination that the undisclosed operational details of the 96RL navigation system are material to the patentability of the '465 and '795 patents. |
American Calcar, *6-8 (Text Added, Internal Citations Omitted).
|Intent||Calcar provided a limited disclosure of the 96RL navigation system in the patents' specification, and it also submitted a New York Times article describing the system during prosecution. As the district court found, however, these disclosures exclude material information about the 96RL system, such as the manner in which the prior art system provided notifications to the user and displayed search results. Partial disclosure of material information about the prior art to the PTO cannot absolve a patentee of intent if the disclosure is intentionally selective. We recognize instead that "because direct evidence of deceptive intent is rare, a district court may infer intent from indirect and circumstantial evidence, provided that such intent is the single reasonable inference. [...] On remand [from the prior appeal,] the district court reviewed the record and made the findings of fact required under Therasense. The district court found that Mr. Obradovich possessed material information based on his own testimony about his personal knowledge of the 96RL system, test drives of the 96RL with the system, and use of figures from the 96RL owner's manual in the patent application he drafted. It further found that Mr. Obradovich knew the information was material because he himself acknowledged the importance of the information he possessed about how the 96RL system was used to access information and present it to the user. [...] It found that the evidence showed that Mr. Obradovich had "ample time and opportunity" for a comprehensive disclosure, and yet he only disclosed the mere existence of the 96RL system without providing its operational details. It concluded, therefore, that his failure to disclose other information that would have prevented his patent application from succeeding "demonstrates a deliberative process, not an accident or mistake." The district court noted in particular that Calcar's positions and Mr. Obradovich's testimony regarding his knowledge and possession of documents lacked credibility. Overall, we do not find any clear error in the district court's inference - based on its careful and comprehensive review of the record and eight years of experience with the case - of Mr. Obradovich's specific intent to deceive the PTO. |
Id. at *9-11.
|In sum, on remand, the district court did not clearly err in its underlying factual findings of materiality and intent. Its thorough analysis was fully consistent with the standards and tests set forth in Therasense. The district court, therefore, did not abuse its discretion in determining that the patents were unenforceable due to inequitable conduct. |
American Calcar, *11-12.
|NEWMAN, Circuit Judge, dissenting. American Calcar, Newman Op., at *1.|
|The factual premises of "inequitable conduct" were not established [by the majority], for there was not "but - for" materiality and no evidence of intent to deceive. The panel majority distorts the Therasense standards, ignores the PTO reexamination, casts the jury aside, and generally disregards the safeguards that this court adopted en banc. I respectfully dissent, for the criteria of inequitable conduct are plainly not met. |
American Calcar, Newman Op., at *2.
Image Attribution Statement: TTTNIS, “NISSAN CARWINGS Navigation System for FUGA,” available under a Creative Commons CC0 1.0 Universal Public Domain Dedication, http://commons.wikimedia.org/wiki/File:NISSAN_CARWINGS_Navigation_System_for_FUGA.jpg (image edited) (last visited Nov. 23, 2014).