United States: Mischaracterizing Record Of Ex Parte Reexamination May Constitute Inequitable Conduct

In Ohio Willow Wood Co. v. Alps South, LLC, No. 2012-1642 (Nov. 15, 2013) the Federal Circuit reversed a district court's summary judgment ruling of no inequitable conduct and suggested in its decision that the patentee committed inequitable conduct before the USPTO. In Ohio Willow, the patentee allegedly withheld evidence and misrepresented testimony when appealing an examiner's finding of invalidity to the Board of Patent Appeals and Interferences ("BPAI"). This case demonstrates the importance of accurately representing the factual record before the USPTO. It also reflects how effective the tools of discovery can be in uncovering any inaccuracies or inconsistencies in statements made to the USPTO. Ohio Willow Wood Co. ("OWW") sued Alps South, LLC ("Alps") for infringement of U.S. Patent No. 5,830,237 ("the '237 patent"), which is directed to a cushioning device to go over an amputated limb to make prosthetics more comfortable. Alps then initiated an ex parte reexamination with the USPTO, which led to a stay in the litigation. Alps' primary prior art reference was a product manufactured by Silipos, Inc. ("Silipos") called the Silosheath. After the Examiner rejected all challenged claims based on this reference, OWW argued that, unlike the Silosheath, the '237 patent claimed gel liners that excluded any gel on the exterior surface of the fabric. The Examiner allowed OWW to overcome the rejection by amending the claims to clarify that the gel coating of their invention was only on the interior of the fabric. After this amendment, a reexamination certificate issued.

Alps then instituted a second ex parte reexamination challenging the validity of the amended claims based on a different Silipos product called the Single Socket Gel Liner ("SSGL"). Alps argued that the SSGL was an invalidating prior art reference that did not have any gel on its exterior surface. In support, Alps produced an advertisement for the SSGL and testimony from Jean-Paul Comtesse, who had been affiliated with Silipos and involved in the development of the SSGL. Mr. Comtesse testified that, unlike the Silosheath, the SSGL was made with a fabric called "Coolmax" that was impermeable to gel and would not allow gel to bleed through to the outer surface. Based on this new reference, the Examiner issued a final rejection of all claims of the '237 patent.

OWW appealed to the BPAI. OWW argued that the Examiner's rejection was improper because it relied on the uncorroborated testimony of Mr. Comtesse, whom OWW characterized as a highly interested party. OWW also expressly denied the existence of any other evidence that would corroborate Mr. Comtesse's testimony that the SSGL was made out of Coolmax fabric. Influenced by OWW's arguments, the BPAI found that the evidence was insufficient to sustain the rejection and concluded that Mr. Comtesse's testimony was largely conclusory and unaccompanied by sufficient corroborating evidence. A second reexamination certificate issued.

In the litigation that followed, Alps accused OWW of committing inequitable conduct in the reexamination proceedings, particularly in connection with OWW's response to the Comtesse Declaration. Though the district court granted OWW's motion for summary judgment of no inequitable conduct, the Federal Circuit reversed.It held that, when viewed in the light most favorable to Alps, there were genuine issues of material fact regarding whether OWW committed inequitable conduct during the reexamination proceedings.

To prove inequitable conduct, a party must show that the applicant: 1) misrepresented or omitted information material to patentability; and 2) did so with specific intent to mislead or deceive the PTO. OWW was only able to overcome the final rejection by convincing the BPAI that Mr. Comtesse was highly interested and there was no evidence to corroborate his testimony. Thus, the Federal Circuit determined that the proper inquiry was whether OWW withheld or misrepresented information that would have led the BPAI to accept Mr. Comtesse's testimony. The Federal Circuit held that a reasonable finder of fact could conclude that OWW both withheld and misrepresented such information.

There were three types of corroborating evidence that OWW withheld, in the Federal Circuit's view. OWW was aware of several declarations from disinterested third parties stating that there was no gel on the exterior of the SSGL, but did not make the USPTO aware of them. OWW was also aware that Silipos had filed a patent application, since abandoned, covering its commercial embodiments that described an outer layer and an inner gel layer, which further supported Mr. Comtesse's testimony. There was no evidence that either the Examiner or the BPAI were aware of this abandoned application and OWW did not make them aware of it. Finally, OWW's attorneys argued before the BPAI that there were no physical samples of the SSGL from the relevant time period. In fact, a sample did exist and was used in Mr. Comtesse's deposition. The Court thus held that because the declarations, abandoned patent application and physical sample corroborated Mr. Comtesse's testimony, there was a genuine issue of fact regarding whether OWW withheld material evidence.

The Federal Circuit also agreed with Alps that OWW misrepresented Mr. Comtesse's testimony by stating to the BPAI that he had admitted that he was an interested party and continued to receive royalties on the products he developed for Silipos. Mr. Comtesse's deposition testimony indicated that his relationship with Silipos ended in 1999, five years before the filing of the lawsuit, and that he had no financial interest in the outcome of the lawsuit. He also testified that he no longer received royalties from Silipos, in direct contradiction to what OWW said before the BPAI. OWW claimed its statements were supported by other portions of Mr. Comtesse's testimony, but the Court did not accept this argument and held that "the ambiguous testimony OWW identifies does not plausibly support" its conclusion. OWW also represented to the BPAI that Mr. Comtesse was the sole inventor of the SSGL, a statement which was not supported by his admission that he was involved in the development of the SSGL. Even if he had testified that he was an inventor of the SSGL, OWW's statement about sole inventorship would still have been improper because OWW was aware that someone else was the named inventor on Silipos' patent application. The Federal Circuit found OWW's misrepresentations to the BPAI to be "tantamount to the filing of an unmistakably false affidavit."

The Court also found the requirement of intent to mislead or deceive the USPTO satisfied. There was no dispute that OWW's counsel knew that if the BPAI accepted Mr. Comtesse's description of the SSGL, the '237 patent would not have emerged from reexamination. Thus, OWW's counsel sought to discredit Mr. Comtesse's testimony and did so by making misrepresentations that were refuted by evidence that OWW withheld. OWW's assertions that it had acted in good faith could not overcome these misrepresentations and omissions. The Court noted that if OWW had withheld a single piece of evidence or made a single misrepresentation, the case would be different, but the collective weight of the evidence withheld supported a finding of intent.

The Federal Circuit's opinion strongly suggests that the record in Ohio Willow would support a finding of inequitable conduct, and provides valuable insight to determining what constitutes inequitable conduct. In particular, this case emphasizes the need to be careful not to overstate facts while arguing before the USPTO. It also provides an excellent example of the way in which discovery can be used as a check against statements made in re-examination. When litigation is pending the resolution of a re-examination, the parties should be prepared for discovery designed to confirm or deny the accuracy of the facts underlying any successful arguments made before the USPTO when the litigation resumes. If those arguments will not survive the scrutiny of discovery, they shouldn't be made to the USPTO in the first place.

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