Update: Petersburg, Virginia-based Star Scientific, Inc., sued R.J. Reynolds Tobacco Co. for patent infringement in the U.S. District Court for the District of Maryland in 2001. A bench trial on the issue of the enforceability of the asserted patents was held in 2005. On June 25, 2007, the District Court found Star’s patents to be unenforceable on the basis of inequitable conduct by Star’s attorneys during prosecution of Star’s patents before the U.S. Patent & Trademark Office. Thereafter, Star characterized the decision as “stunning and totally without support in the record,” and concluded that “the opinion ignores significant portions of the record, distorts others, and spins a tale that is unrecognizable to those who attended the trial.”
On appeal, the Federal Circuit (Michel, Dyk, Schall) heard lengthy arguments on March 7, 2008, concerning the District Court’s judgment, which centered on the actions of five lawyers in four different law firms and how they acted in view of their knowledge of a key prior art memorandum—the Burton letter—which discusses features of the invention claimed in Star’s patents, and which was communicated to the inventor prior to his filing his first patent application.
During the oral argument, the Federal Circuit Judges framed the inequitable conduct issue as follows:
“The issue here we’ve been discussing is intent. Is it possible to find the requisite level of intent without implicating the attorneys? In other words, assume for the moment that one were to come to the conclusion that the attorneys in this case, starting with the Sughrue firm through the Banner firm through the Crowell firm, acted in good faith, does that take away necessarily the determination of intent that is needed to support inequitable conduct?”
Inequitable conduct--also referred to as fraud on the Patent Office--is often plead as a defense in patent infringement lawsuits. Typically, the defense involves allegations that individuals involved in prosecuting a patent application intentionally misrepresented information provided to the PTO by making false or misleading statements, or withheld material prior art from the PTO by not disclosing closely-related, or "material" publications or test data. Allegations of inequitable conduct by prosecuting attorneys, who are usually not parties to the case in which the allegations are raised, are viewed with interest, not only because allegations of inequitable conduct in court papers are often publicized in the media, but also because a finding of inequitable conduct by members of the patent bar can result in suspension. 35 U.S.C. § 32.
Perhaps that is why Carter Phillips, lead counsel for Star Scientific, argued the issues on appeal as involving lawyer reputations:
“The District Court analyzed this case as if there was a rather substantial conspiracy among four quite reputable law firms [Sughrue, Mion, Banner & Witcoff, Paul Hastings, and Crowell]. And in making that determination, it was very critical to [the Judge’s] analysis that he says, and this is the quarantine portion of the analysis, and this is the linchpin of the District Court’s analysis: it is the isolation of the Banner firm—that’s the recipient [of the prosecution files]—the isolation of the Banner firm from predecessor counsel was part of an intentional effort to avoid tainting the Banner firm with Delmendo’s [Sughrue's] knowledge, with whatever concerns he may have had about this particular letter, the Burton letter. And then subsequently, the District Judge also says, the Court finds that if Star had not prevented contact between Delmendo and Rivard, Delmendo would have communicated his knowledge and information [to the Banner firm]. So that this entire analysis, predicated on the assumption that there is somehow a nefarious conspiracy going on here, is complete fabrication. There is no evidence that supports it. And yet it is the critical element for the District Court to finding intent.”
At the conclusion of the argument, Judge Michel, in a somewhat unusual move but one underscoring the importance of this case, ordered the parties to submit additional briefs to clear up exactly what each of the lawyers who knew about the Burton letter said and did, and where that evidence is found in the record:
“Requesting from both counsel letter briefs not exceeding 10 pages on the factual guts of particularly with regarding to the position and activities of Delmendo and the others who’ve been mentioned here so we can trace the chain of what did each of these people say and where do we find it in the record. Because obviously great interest on our our part in understanding exactly what the evidence was so we can compare the evidence, the actual words of testimony, with the findings that the District Judge made, which explicitly or implicitly have to rest on those bits of testimony.”
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Pennzoil-Quaker State, a Delaware company based in Houston, TX, contends that it is owner of the PENNZOIL logo and related marks (used in commerce for the sale and promotion of lubricants and other petroleum-based products). Defendant Schmidt allegedly does business as and is the owner of Auto Lube, Inc., in Laurel, MD. According to the complaint, Pennzoil and Schmidt entered into a purchase and licenses agreement which provided for the display of the PENNZOIL mark and signs in Defendant’s Auto Lube facility. Pennzoil contends that Schmidt breached the agreement, and is now infringing the mark and logo. 
The USOC is a federally chartered corporation based in Colorado Springs, CO. Under the Olympic Sports Act, the USOC was granted the exclusive right to use the OLYMPIC marks in the United States (including OLYMPIC, OLYMPIAD, the five interlocking rings symbol, and others), and is the owner of the federally-registerd OLYMPIC mark.
