Last week, in Tinnus Enterprises, LLC v. Telebrands Corp., U.S. Magistrate Judge John D. Love of the U.S. District Court for the Eastern District of Texas issued a report and recommendation ("Recommendation") on a Motion For Summary Judgment of No Inequitable Conduct and No Unclean Hands filed by Plaintiffs Tinnus Enterprises, LLC and Zuru Ltd. ("Tinnus").  In particular, Magistrate Judge Love recommended that Tinnus' motion for summary judgment be granted.

Magistrate Judge Love's recommendation is related to a patent dispute initiated by Tinnus, which filed suit against Defendants Telebrands Corp. and Bulbhead.com, LLC ("Telebrands"), alleging that Telebrands infringed Tinnus' U.S. Patent Nos. 9,242,749.  Tinnus subsequently amended their complaint to allege infringement of U.S. Patent No. 9,315,282.  Following the issuance of an injunction against Telebrands, the District Court's claim construction opinion, and the denial by the Court of summary judgment as to indefiniteness, Tinnus moved for summary judgment on no inequitable conduct.  In their motion, Tinnus asserted that Telebrands could not meet the clear and convincing evidence standard with respect to Telebrands' allegations that (1) Tinnus, the inventor, and patent counsel intentionally withheld the Patent Trial and Appeal Board's decision to institute post-grant review of U.S. Patent No. 9,051,066, from which both the '749 and '282 patents claim the benefit, and (2) the applications that issued as the '749 and '282 patents improperly claimed priority to the application that issued as the '066 patent.

With respect to the second allegation, the Recommendation notes that Telebrands did not address this issue in their opposition to Tinnus' motion, and therefore concludes that "[g]iven that there is no opposition to summary judgment on this argument, the Court finds that summary judgment is appropriate."  The Court therefore recommended that Tinnus' motion be granted as to no inequitable conduct based upon improperly claimed priority.

As for the first allegation, Tinnus' argued that Telebrands failed to show that the decision to institute post-grant review of the '066 patent was withheld from the Examiner because the evidence showed that the Examiner was aware of the decision.  Tinnus also argued that Telebrands failed to produce evidence that the decision was material or that Tinnus, the inventor, or patent counsel had any intent to deceive.  Telebrands countered that the institution of post-grant review of the '749 and '282 patents on the same grounds as the decision instituting post-grant review of the '066 patent established "but for materiality," and that an intent to deceive the Patent Office for failing to provide the Examiner with a copy of the decision on the '066 patent was "the single most reasonable inference that can be drawn from the facts surrounding prosecution of the patents-in-suit."

Regarding Telebrands' argument of intent to deceive, the Recommendation notes that "Defendants do not dispute that the Examiner was aware of the '066 PGR Institution Decision by the PTAB," adding that "[i]ndeed, the evidence shows that the applicant's interview summary with the Examiner indicated that the Examiner was aware of the PTAB's PGR Institution Decision."  Telebrands, however, had argued that Tinnus' interview summary was a self-serving document that may not accurately reflect the substance of the interview.  The Court addressed this argument by pointing out that Telebrands had deposed the patent counsel who had submitted the interview summary and "presumably did not question him about the details of the interview or the veracity of his statements because Defendants do not cite any testimony in support of their contention."  In addition, the Court noted that "knowing that the Examiner was indeed aware of the decision, Defendants' position assumes that Examiner is somehow incapable of finding the PTAB's PGR Institution Decision on his own," adding that "[i]t would be difficult to understand how the USPTO could not obtain the necessary publicly available documents from its own administrative agency when needed."  Contrary to Telebrands' argument that an intent to deceive was the single most likely inference to be drawn from the evidence, the Court determined that "the more likely inference that can be drawn is that prosecution counsel believed he had satisfied his duty of candor when he informed the Examiner of the PGR Institution Decision during an interview with the Examiner."

Turning to Telebrands' materiality argument, the Recommendation determined that Telebrands' argument of but for materiality "holds little weight" since "an institution decision is simply a finding that it is 'more likely than not' that at least one challenged claim is unpatentable, or raises a novel or unsettled legal question."  Significantly, the Court pointed out that in its final written decision regarding the '066 patent, "the PTAB did not invalidate the '066 Patent based on the prior art that Defendants contend establishes 'but for' materiality."

Finding that Telebrands could not show a "specific intent to deceive," the Court recommended that Tinnus' motion with respect to the first allegation be granted as well.  The Court therefore recommended that Tinnus' Motion For Summary Judgment of No Inequitable Conduct and No Unclean Hands be granted.

Tinnus Enterprises, LLC v. Telebrands Corp. (E.D. Tex. 2017)
Report and Recommendation of United States Magistrate Judge by Magistrate Judge Love