Court Denies Motion to Dismiss Inequitable Conduct Counterclaim and to Strike Affirmative Defenses

In a March 6, 2014 ruling, Judge Denise Cote denied plaintiff Keystone Global LLC’s motion to dismiss defendants’ counterclaim of inequitable conduct and certain patent-related affirmative defenses. The inequitable conduct counterclaim was based on the defendant’s assertion that it had invented the claimed invention more than a year before the plaintiff applied for the patents-in-suit, that the plaintiff bought one of the defendant’s devices using a pseudonym, and that the plaintiff failed to disclose the defendant’s device or its purchase of the plaintiff’s product during prosecution of the patents-in-suit. In considering the motion to dismiss the counterclaim, Judge Cote applied the Iqbal/Twombly plausibility standard, and further noted that the “Federal Circuit has . . . required a party alleging inequitable conduct on the basis that an applicant failed to disclose prior art to ‘identify the specific prior art that was allegedly know to the applicant and not disclosed.’” Since the counterclaim identified “the piece of prior art the applicants are alleged to have failed to disclose to the PTO and, in alleging that one of the applicants purchased the prior art using a pseudonym, suggests that the failure to disclose was willful,” the Court found the allegations sufficient, and denied the motion to dismiss.

As to the motion to strike, Judge Cote wrote that such motions are “‘not favored and will not be granted unless it appears to a certainty that plaintiffs would succeed despite any state of the facts which could be proved in support of the defense.’” The Court ruled that the defendant’s “affirmative defenses, while not artfully pled, raise core issues in the patent litigation,’” and denied the motion.

Court Invalidates Patent Based on Patent Counsel's Inequitable Conduct

In a September 30, 2013 ruling, Judge Laura Taylor Swain invalidated plaintiff Worldwide Home Products, Inc.'s patent on the ground of inequitable conduct, and dismissed plaintiff's infringement action against Bed, Bath and Beyond, Inc. and Cohesion Products Inc.  The patent-in-suit relates to a clothing hanger having two configurations.  During the prosecution of the application that matured into the patent-in-suit, the plaintiff's patent lawyer submitted to the PTO pages from a website of another product that it deemed relevant to the claimed invention.  The website pages, however, only had low resolution images of the product, which made it difficult to distinguish particular product features.  The plaintiff's patent counsel made representations to the patent examiner about what the web pages showed about the product, and on the basis of those representations, the examiner allowed the application.  Unbeknownst to the PTO, however, the plaintiff's attorney had an actual sample of the product and high resolution photographs of the product that had been supplied by the defendants' counsel.  The actual product and the high resolution photographs showed that plaitniff's patent counsel's representations to the PTO were untrue.  Patent counsel claimed that he did  not supply the product or high resolution photographs to the PTO because they were undated, so he could not tell whether or not they were prior art.

A threshold issue for Judge Swain in determining the defendants' motion for summary judgment of invalidity based on inequitable conduct was the admissibility of the report and testimony of defendants' expert witness, William Poms, n former patent examiner, that that plaintiff's patent counsel had committed inequitable conduct.  The plaintiff argued that Poms' testimony was "not properly admissible under Federal Rule of Evidence 702 in that it inaccurately informs the Court of the law and usurps the court's and jury's roles in determining the law and facts of" the case.  The Court rejected the challenge, ruling that "Mr. Poms is qualified as an expert in the patent prosecution process, having served as both a PTO examiner and a prosecuting attorney.  He has based his opinions on the factual record before the Court, and has reliably applied his knowledge of the facts and the law."