United States: From The Highchair To The Courtroom: Federal Circuit Serves Up Helpful Guidance On Equitable Defenses In Childproof Placemat Patent Dispute

What You Need to Know

• Key takeaway #1
  Mischaracterizing the prior art before the PTO when obtaining a patent may establish but-for materiality per se for purposes of inequitable conduct.
• Key takeaway #2
  Even if misrepresentation about the prior art before the PTO is not sufficiently egregious for per se materiality, but-for materiality may be found where the patentee discloses the prior art, but misrepresents the prior art's characteristics, and the PTO's patentability determination may have been different had the prior art been characterized accurately.
• Key takeaway #3
  Litigation misconduct can lead to a finding of unclean hands that bars the requested relief in patent litigation.

The Federal Circuit's recent decision in Luv n' Care v. Laurain provides a cautionary tale for patentees. Disclosing prior art to the Patent and Trademark Office (PTO) is not enough to insulate against a finding of inequitable conduct, particularly where a patentee mischaracterizes that prior art and the PTO's patentability determination may have differed had the patentee accurately described the prior art. Misconduct by the patentee during litigation can also lead to a finding of unclean hands that bars the patentee from relief for alleged infringement against the opposing party in that litigation.

Inequitable Conduct

An underlying issue in Luv n' Care concerned whether the patentee's misstatements about the prior art during prosecution of U.S. Patent No. 9,462,903 (the '903 Patent), rendered it unenforceable. Inequitable conduct is an affirmative defense that renders a patent unenforceable when the patentee (1) withholds but-for material information from the PTO and (2) does so with specific intent to deceive the PTO. The '903 Patent is directed to a self-sealing dining mat integrated with tableware that creates a partial vacuum with the underlying table in order to help prevent parents' long-standing frustration of cleaning up after their children "dislodg[e] and upturn[] their plates and bowls to spill foodstuffs and beverages everywhere." '903 Patent at 1:54-2:5.

Following a bench trial, the district court found that Luv n' Care failed to establish that the '903 Patent was unenforceable due to inequitable conduct. The district court held that although the patentee misrepresented that a prior art product called the Platinum Pets mat lacked self-sealing functionality, because the patentee had at least disclosed the Platinum Pets mat to the PTO, the patentee's misrepresentations to the PTO were not but-for material. The Federal Circuit vacated and remanded.

First, regarding materiality, the Federal Circuit noted that a patentee's statements to the PTO characterizing the prior art's disclosures may rise to the level of "affirmative egregious misconduct," establishing materiality per se, in which case there is no need for the court to assess the "impact on the PTO's patentability determination." More specifically, the Federal Circuit held that, on remand, the district court must determine whether the patentee misrepresented the self-sealing functionality of the Platinum Pets mat such that it amounted to affirmative egregious misconduct.

The Federal Circuit clarified that even if the PTO is aware of a reference, a patentee's misrepresentation about the characteristics of the prior art may be but-for material. To assess materiality, the district court must evaluate whether the PTO's patentability determination would have differed had the patentee accurately characterized the prior art.

Second, regarding specific intent to deceive, the Federal Circuit held that a "purposeful omission or misrepresentation of key teachings of prior art references may . . . be indicative of a specific intent to deceive the PTO." In addition, a district court cannot simply consider a patentee's individual acts of misconduct in insolation, but instead must consider them as part of "the collective whole" and acts of misconduct "in the aggregate." Thus, on remand, the district court must consider whether the patentee's misrepresentations regarding the Platinum Pets mat, when considered in aggregate with other acts of misconduct, demonstrate an intent to deceive the PTO.

Unclean Hands

The patentee's misconduct extended beyond prosecution and into litigation, giving rise to an unclean hands defense. During the litigation, the patentee failed to disclose related, pending patent applications until late in the case, blocked discovery of prior art searches by falsely claiming that none had been performed, and had two witnesses who "repeatedly provided false testimony that was directly contradicted by other contemporaneous evidence." The district court found that the patentee's misconduct undermined the defendant's ability to press its unenforceability challenge. As a result, the Federal Circuit affirmed the district court's finding that the patentee "by deceit and reprehensible conduct attempted to gain an unfair advantage" in the litigation and was barred from obtaining relief from Luv n' Care in the future.

Take-Aways

The patentee successfully reversed the district court's finding of obviousness, but it was a pyrrhic victory as a result of its misconduct before the PTO and the court. The Federal Circuit's decision reminds patentees to be mindful of their characterizations of the prior art when prosecuting a patent to avoid later unenforceability. Mischaracterizing the prior art to the PTO may constitute affirmative egregious misconduct such that but-for materiality is established per se. And, even if a patentee discloses prior art to the patent office, but-for materiality may be established if the PTO's patentability decision would have differed had the patentee given the PTO an accurate characterization of the prior art. Finally, a patentee should never resort to "deceit and reprehensible conduct" in pursuing its claims in court.