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Federal Circuit Affirms Inequitable Conduct Based on False Declaration

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Intellect Wireless, Inc. v. HTC Corp. By Mary Schnoor – Edited by Kathleen McGuinness Intellect Wireless, Inc. v. HTC Corp., No. 12-1658 (Fed. Cir. October 9, 2013) Slip opinion [caption id="attachment_3766" align="alignleft" width="150"] Photo By: Jarrett Campbell - CC BY 2.0[/caption] On October 9th, the U.S. Court of Appeals for the Federal Circuit affirmed the district court’s judgment that two patents owned by Intellect Wireless, Inc. (“Intellect”) are unenforceable due to inequitable conduct. Intellect Wireless, Inc. v. HTC Corp., No. 12-1658, 1 (Fed. Cir. October 9, 2013). Intellect had claimed that HTC Corp., the Taiwanese smartphone maker, infringed patents covering technology allowing a wireless device to receive and display caller identification information. Id. The Federal Circuit unanimously upheld the lower court’s decision, which found that Daniel Henderson, the founder of Intellect and inventor of the patents in question, intentionally submitted false statements as part of his Rule 131 declaration to the U.S. Patent and Trademark Office (“USPTO”) and that his actions satisfied the Therasense standard for inequitable conduct. Id. at 3. During the prosecution of the patents, Henderson made false statements to the USPTO, claiming that he had actually reduced his invention to practice and that he had demonstrated it at a meeting in 1993. Id. at 4. Although Henderson’s attorney attempted to cure this misconduct by submitting revised declarations, the court’s opinion emphasized that such efforts to cure misconduct will be unsuccessful unless they explicitly acknowledge the false declaration’s existence to the USPTO and clearly state what was false and what the actual facts are. Id. at 5-6. IPFrontline explains the court’s ruling and the lessons it provides for patent attorneys seeking to correct false declarations.  PharmaPatents also reviews the ruling, and PatentlyO provides a brief summary. In holding as it did, the court applied the standard for inequitable conduct as set forth in Therasense: inequitable conduct requires clear and convincing evidence both (1) that the applicant misrepresented or omitted material information or committed an affirmative act of egregious misconduct, such as filing an unmistakably false affidavit, and (2) that the applicant did so with the specific intent to mislead or deceive the USPTO. Therasense, Inc. v. Becton, Dickinson, and Co., 649 F.3d 1276, 1290-92 (2011). Henderson’s statement to the USPTO that he had actually reduced his invention to practice and had demonstrated it at a meeting in 1993 was determined to be unmistakably false, thereby satisfying the materiality prong. Intellect, at 5. Therasense established a heightened “but-for” standard for materiality, with the exception of affirmative acts of egregious misconduct.  Because the misconduct in this case fell under the exception, the court did not need to consider the “but-for” test. See id. at 7. Additionally, the court found no error with the District Court’s finding that Henderson’s false affidavit and pattern of deceit were sufficient evidence of his intent to deceive. Id. at 11. Since Therasense was decided in 2011, inequitable conduct has been significantly more difficult to establish. See, e.g., 1st Media, LLC v. Electronic Arts, Inc., 694 F.3d 1367 (2012). Accordingly, PatentlyO reports that the percentage of cases attempting to plead inequitable conduct has dropped sharply in the years since Therasense. This case represents an exception to that trend and demonstrates that inequitable conduct remains a viable way to invalidate a patent, particularly when, as here, affirmative misconduct was committed. As noted on IPFrontline, the repeated falsehoods provided by Henderson to the USPTO and his attorney’s evasions in the revised declaration made this a remarkably clear-cut case of inequitable conduct.