Conspiracy Theory Fails to Convince Federal Circuit
- Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., No. 2007-1448 (Fed. Cir., argued March 7, 2008; opinion August 25, 2008)
Petersburg, Virginia-based Star Scientific, Inc., sued R.J. Reynolds Tobacco Co. for infringement of U.S. Patent Nos. 6,202,649 and 6,425,401 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.” The Federal Circuit reversed.
Background
In August 1998, Star's Jonnie Williams, the named inventor, engaged Delmendo of Sughrue to prosecute a patent application on a tobacco curing process aimed at lowering TSNA levels. Delmendo was sent a letter on August 28, 1998, by Star consultant Dr. Harold Burton in which Burton wrote that Chinese tobacco products contain very low TSNA levels, probably due to radiant heating. Delmendo testified that he spoke with Burton, analyzed the letter, and ultimately concluded that neither it nor its content was material to the contemplated patent application.
Delmendo later filed a provisional patent application for Williams disclosing that some nations, including China, still utilize radiant heat curing, and stating "It has been determined that [the radiant heat] process as applied to tobacco grown in the United States yields tobacco products with high levels of TSNA." Exactly one year later, Delmendo filed a non-provisional application that deleted the statement that radiant heat curing of U.S.-grown tobacco produced "high levels of TSNA." Instead, the application disclosed: "I have discovered that it is possible to somewhat reduce the TSNA levels by not venting combustive exhaust gases into the curing apparatus or barn."
Shortly thereafter, Williams and Star terminate Sughrue's engagement and hired Banner & Witcoff. Rivard and Hoscheit from Banner met with Delmendo to discuss the transfer of files and the status of pending applications. Paul Perito, a partner of the law firm Paul, Hastings, who became the chairman of Star, tapped Scott Flicker from Paul Hastings to facilitate the transfer of files from Sughrue to Banner. Upon receiving the files, Rivard searched them for prior art but did not notice the Burton letter. Rivard filed an Information Disclosure Statement ("IDS") discussing and distinguishing certain prior art, but did not include the Burton letter. Rivard filed a continuation with an IDS listing many of the same references as his earlier IDS, but also did not include the Burton letter.
In June 2002, while waiting for the continuation application to issue as a patent, Rivard became aware of the Burton letter and other data when Star's trial counsel, Crowell & Moring ("Crowell"), informed him that RJR had raised those documents in litigation. Rivard's initial reaction was that they should be disclosed out of an abundance of caution. Several Crowell attorneys exchanged e-mails amongst themselves discussing whether they thought the Burton letter was required to be disclosed to the PTO; however, the letter was never disclosed to the PTO.
Analysis
In reaching its decision, the Federal Circuit said,
The need to strictly enforce the burden of proof and elevated standard of proof in the inequitable conduct context is paramount because the penalty for inequitable conduct is so severe, the loss of the entire patent even where every claim clearly meets every requirement of patentability. Just as it is inequitable to permit a patentee who obtained his patent through deliberate misrepresentations or omissions of material information to enforce the patent against others, it is also inequitable to strike down an entire patent where the patentee only committed minor missteps or acted with minimal culpability or in good faith. As a result, courts must ensure that an accused infringer asserting inequitable conduct has met his burden on materiality and deceptive intent with clear and convincing evidence before exercising its discretion on whether to render a patent unenforceable.
Deceptive Intent Prong
The Federal Circuit found that the District Court's finding of deceptive intent as to both patents-in-suit was based primarily on its acceptance of RJR's theory that Williams and Star conspired to deliberately prevent Delmendo and his colleagues at the Sughrue firm from disclosing the Burton letter to the PTO by replacing them with the Banner firm and purposely keeping the Banner firm ignorant of the Burton letter. The Federal Circuit held that this "quarantine" theory was not supported by clear and convincing evidence, in that RJR's evidence had a major gap—RJR failed to elicit any testimony or submit any other evidence indicating that Star knew what the Burton letter said prior to replacing the Sughrue firm.
Materiality Prong
The Federal Circuit found that an interrogatory response, which Star disclosed to the PTO, contained the critical information that the prior art had achieved low to insignificant levels of TSNA, and that the information contained in the Burton letter would therefore have been cumulative during prosecution by the time the Banner lawyers were made aware of the letter in June 2002.
Read Part 1 of this post.
