Welcome to Winston & Strawn’s Federal Circuit Patent Decision Summaries. This bulletin provides a short summary of, and links to, the precedential patent cases decided by the Federal Circuit last week. We hope that these summaries are useful in keeping you updated on the Federal Circuit’s patent decisions.

A licensee seeking a declaratory judgment of noninfringement bears the burden of proof in the limited circumstance where the license prevents the patentee from asserting a counterclaim for infringement.

Medtronic Inc. v. Boston Scientific Corp., No. 2011-1313, -1372 (Fed. Cir. Sept. 18, 2012).

The patentee entered an agreement with the accused infringer which allowed the accused infringer to have a license while seeking a declaratory judgment of noninfringement. Because the accused infringer had a license, the patentee could not assert a counterclaim for infringement. At trial, the district court held that the patentee had the burden to prove infringement, that it failed to meet that burden, and that the accused infringer was entitled to its judgment. The patentee appealed, and the Federal Circuit vacated and remanded. 

The court reiterated that in the usual case a patentee who files a complaint or counterclaim alleging patent infringement bears the burden of proving that infringement. In this case, however, only the accused infringer could seek relief. The patentee could not assert a counterclaim for infringement due to the continued license agreement. Following MedImmune, Inc. v. Genetech, Inc. 549 U.S. 118 (2007), the court found that because the license shielded the accused infringer from liability for infringement, the patentee should not be dragged into litigation and forced to prove what it already resolved by license. Therefore, the court held that where the accused infringer has a license and seeks a declaratory judgment of noninfringement, and the license prevents the patentee from asserting a counterclaim for infringement, the accused will have the burden of proof on noninfringement. 

A copy of the opinion can be found here.  

Litigation involving a parent patent, which does not raise issues of invalidity or unpatentability, is not material for inequitable conduct of an application; and an unmistakably false affidavit, filed without deceptive intent, cannot support an inequitable conduct claim.

Outside The Box Innovations, LLC, et al. v. Travel Caddy, Inc., et al., No. 2009-1171 (Fed. Cir. Sept. 21, 2012).

A district court held a patent unenforceable for inequitable conduct for two reasons. First, the prosecuting attorney failed to disclose to the Patent and Trademark Office (“PTO”) that the parent patent was in litigation. Second, the prosecuting attorney had falsely claimed small entity status and failed to pay the appropriate fees. The Federal Circuit reversed on appeal.

Applying the Therasense standard, “[t]o establish unenforceability based on inequitable conduct in the PTO, it must be shown that information material to patentability was withheld from the PTO . . . with the intent to deceive or mislead the patent examiner into granting a patent.” Materiality and deceptive intent are separate requirements, and each must be independently established by clear and convincing evidence.

The court held the failure to disclose litigation involving the parent patent was not material because only noninfringement, and not invalidity or unpatentability, had been alleged in the litigation. The district court had found materiality because the prosecuting attorney’s significant involvement in the litigation and the prospect “that validity could arise as an issue” in the litigation made the litigation not “irrelevant.” The Federal Circuit rejected this reasoning explaining that materiality, not “relevance” was the standard.

The Federal Circuit also disagreed with the district court’s finding of intent based on the failure to disclose. Absolutely no evidence existed to support deceptive intent given that validity had not yet been raised in the undisclosed litigation.

Although the Federal Circuit declined to hold that an erroneous assertion of small entity status was per se material, inequitable conduct was not established because there was no deceptive intent behind the assertion of small entity status. Despite noting that filing a false declaration of small entity status “appears” to fall within the definition of an “unmistakably false affidavit,” which is per se material under Therasense, the court did not decide whether the erroneous small entity status was material. Instead, the court found no deceptive intent. As an initial matter, the patentee was indeed a small entity under the patent laws. The patentee’s entitlement to pay small entity fees, however, was vitiated by its license to a large entity. The record showed “no evidence that anyone involved in the patent prosecution knew that a patent license had been granted to a large entity and deliberately withheld that information in order to pay small entity fees.” Thus, no deceptive intent existed. 

A copy of the opinion can be found here.