Federal Circuit affirms collaboration is insufficient basis for joint infringement; partial disclosure can form basis for inequitable conduct
By Leocadie Welling – Edited by Anthony Kammer
Golden Hour Data System, Inc. v. emsCharts, Inc., No. 2009-1306, 1396 (Fed. Cir. Aug. 9, 2010)
On August 9, 2010, the Federal Circuit affirmed the decision of the United States District Court for the Eastern District of Texas, holding that emsCharts and Softtech had not jointly infringed Golden Hour’s patent for managing emergency medical transport services. The Federal Circuit also vacated and remanded the invalidation of Golden Hour’s patent for inequitable conduct due to an alleged failure to disclose material information. The court agreed that the alleged material information was material even if it was not prior art; however, it held that there was insufficient evidence of deceptive intent.
PatentlyO features an overview of the case. The Patent Prospector has a detailed summary of the case and criticizes the court’s remand on the deceptive intent question and its reliance on “puppeteering” as necessary for a finding of joint infringement. 271 Patent Blog summarizes the court’s analysis of the inequitable conduct issue.
Golden Hour filed an application in 1998 that led to Patent No. 6,117,073 (the ‘073 patent). The ‘073 patent was for a system that would computerize and integrate services for emergency medical transport, including dispatch, clinical services to treat patients, and – importantly – billing. After filing its application, Golden Hour filed an Information Disclosure Statement (IDS) describing what it believed to be the most similar existing system, the AeroMed system. Quoting from the front page of an undated AeroMed brochure, Golden Hour indicated that the AeroMed system did not include an integrated billing system. However, Golden Hour’s IDS failed to disclose that inside the same brochure, AeroMed did in fact claim to provide integrated billing.
In September 2006, Golden Hour sued emsCharts and Softtech for infringement of the ‘073 patent based on their cooperation in packaging their products into a single unit that provided services related to emergency medical transport. A jury held in favor of Golden Hour, finding that emsCharts and Softtech infringed on the ‘073 patent and that the AeroMed system did not anticipate the patent. The district court then held a bench trial on the issue of inequitable conduct and held the ‘073 patent unenforceable based on Golden Hour’s inequitable conduct in failing to disclose the AeroMed brochure. The court also granted emsChart’s motion for judgment as a matter of law on the issue of joint infringement.
The Federal Circuit affirmed the district court’s holding on the issue of joint infringement because it found that neither defendant exercised control over the entire process, which is a necessary element when coordinated actions are claimed to infringe a patent.
On the issue of inequitable conduct, two matters are essential: materiality and deceptive intent. The Federal Circuit agreed with the district court that the AeroMed brochure was highly material because it contradicted Golden Hour’s submissions. The court held that even if the brochure’s status as prior art was unclear, it was still material. In assessing whether Golden Hour had the requisite intent to deceive, the court found that the key question was whether Golden Hour’s CEO or patent agent had read the brochure. Because there was insufficient evidence on the record to rule on that issue, the court remanded.
Judge Newman dissented from both holdings, arguing that the court should not overturn the jury verdict on either issue. On joint infringement, Judge Newman argued that collaborative activity can infringe on a patent. With regard to inequitable conduct, Judge Newman wrote that “there is no basis for a second-bite ruling” when the jury reviewed the AeroMed brochure and found it did not invalidate the patent. The dissent also pointed out that the proceedings should at least wait for the outcome of the relevant Therasense case, in which the en banc Federal Circuit is expected to clarify the legal standard for intent to deceive.
This decision is significant both because it indicates that potentially infringing activity is not infringement if it is done collaboratively and because it suggests that undisclosed information need not be prior art to be relevant for a finding of inequitable conduct.
Leocadie Welling is a 3L at the Harvard Law School.