Finding of No Inequitable Conduct Reversed on Appeal -- Ohio Willow Wood Co. v. Alps South LLC

by McDermott Will & Emery

Addressing statements and representations made to the Board of Patent Appeals and Interferences (Board) in the context of reexaminations, the U.S. Court of Appeals for the Federal Circuit reversed a district court’s grant of summary judgment of no inequitable conduct, finding that the duty of candor requires more than just identifying allegedly invalidating prior art and related product and includes facts regarding those products. Ohio Willow Wood Co. v. Alps South LLC, Case Nos. 12-1642, 13-1024 (Fed. Cir., Nov. 15, 2013) (Reyna, J.).

This suit involved a patent owned by Ohio Willow Wood (OWW) directed to gel liners for the residual stumps of amputated limbs to make the use of prosthetics more comfortable. OWW and Alps South (Alps) directly compete in the industry. After issuing its initial Markman ruling, the district court stayed the case pending the resolution of consecutive ex parte reexamination actions initiated by Alps.

In the first reexamination, the examiner initially rejected the challenged claims based on a prior art device called the Silosheath. However, after the patentee modified the claim language to limit the invention to devices which do not permit gel seepage, the Patent and Trademark Office (PTO) issued the first reexamination certificate.

Alps then initiated a subsequent reexamination based on a product called the Single Socket Gel Liner (SSGL). Both the SSGL and Silosheath were products made by Silipos. Alps based its invalidity allegation on a single-page advertisement of the SSGL and the testimony of an expert, who had previously worked for Silipos and testified that, unlike the Silosheath, the SSGL was made from a DuPont fabric called Coolmax. The use of Coolmax, he testified, made the SSGL impermeable and prevented any gel seepage. The examiner issued a final rejection based on Silosheath.

OWW appealed to the Board, contending that expert testimony was uncorroborated and biased based on a personal interest in the outcome of the litigation. During oral argument, OWW also denied the existence of any other evidence that would corroborate the SSGL’s use of Coolmax. The Board reversed, finding insufficient evidence to support the examiner’s conclusion. After the PTO issued the second reexamination certificate, the district court lifted its stay.

After issuing its second Markman ruling based on the amended claim language, the district court granted summary judgment of invalidity of the asserted claims. Alps’ counterclaim for inequitable conduct remained. The basis of Alps’ inequitable conduct contention was that OWW improperly overcame the examiner’s rejections in the second reexamination by withholding material information made known to OWW during the litigation that could corroborate the expert testimony and falsely exaggerating any interest of the expert in the dispute.

The district court granted summary judgment of no inequitable conduct by OWW. The district court noted that the examiner’s initial rejection of the claims based on the expert testimony in the second reexamination was “fatal” to Alps’ argument. In other words, OWW could not have withheld or misrepresented information that was “squarely before” the examiner and the Board.

Both sides appealed. The Federal Circuit reversed on the issue of inequitable conduct, making clear that OWW’s attorneys were not absolved of their duty of candor simply because the PTO and Board were aware of the SSGL product. Rather, that duty requires more. The Court noted that OWW intentionally sought to discredit the expert “by making misrepresentations and misleading statements that were directly refuted by credible evidence that OWW did not otherwise disclose.”

The Federal Circuit focused on potentially corroborating information made available to OWW before the reexamination proceedings. First, the Court described three declarations from other experts and a photograph of the SSGL product bearing a Coolmax tag. Second, the Court described OWW’s knowledge of an abandoned patent application filed by Silipos that may have covered the SSGL. OWW did not disclose this information to the examiner or the PTO. The Federal Circuit also noted that the expert had reviewed SSGL samples during his deposition in the district court. Yet, OWW’s counsel argued at the Board hearing that no known examples of the SSGL product from the relevant time period were in existence. Finally, the Court noted that the record contradicted OWW’s arguments that the expert had an interest in the outcome of the litigation. The Court found these misrepresentations to be “self-serving” and “tantamount to the filing of an unmistakably false affidavit.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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