IP UPDATE
Exploring the Latest in Intellectual Property Law
IP UPDATE
Exploring the Latest in Intellectual Property Law
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Getting to the Core of It: Assignment Clause Is Ambiguous

by | May 30, 2024 |

The US Court of Appeals for the Federal Circuit vacated and remanded a district court’s grant of summary judgment, finding that the language used in an invention assignment clause was subject to more than one reasonable interpretation (i.e., ambiguous) and thus remand was necessary for further fact finding. Core Optical Tech., LLC v. Nokia Corp., Case Nos. 23-1001; -1002; -1003 (Fed. Cir. May 21, 2024) (Dyk, Taranto, JJ.) (Meyer, J., dissenting).

Core Optical filed complaints against three groups of defendants alleging patent infringement. The lead defendant, Nokia, moved for summary judgment, arguing that Core Optical did not have standing to bring the patent infringement suit. Nokia argued that by virtue of an invention assignment clause in an employment-related agreement signed in 1990, the inventor, Dr. Core, had assigned the patent rights to TRW, his employer at the time of the invention. In the agreement, Dr. Core “agreed to disclose to TRW and automatically assign to TRW all of his inventions that ‘relate to the business or activities of TRW’ and were ‘conceived, developed, or reduced to practice’ during his employment with TRW.” Nokia argued that by virtue of that earlier assignment, the subsequent assignment to Core Optical was ineffective. The agreement had a carveout from the assignment for inventions “developed entirely on [Dr. Core’s] own time” that was unrelated to his work for TRW. According to Nokia, based on the assignment, Core Optical did not have standing to assert the patent. The district court agreed and granted Nokia’s motion for summary judgment. Core Optical appealed.

The Federal Circuit reviewed the district court’s grant of summary judgment de novo, following Ninth Circuit and California law relating to the underlying contract dispute and related factual determinations. Under California law, the “fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties” (citing City of Atascadero v. MLPF&S (1998)). In granting summary judgment, the district court had held that the 1990 invention assignment agreement’s carveout did not encompass Dr. Core’s PhD research, which undisputedly led to the invention claimed in the patent. That finding was based in part on the TRW fellowship program that supported and enabled Dr. Core’s PhD work. However, Core Optical presented evidence that “Dr. Core was careful not to work on his PhD research while ‘on the clock’ at TRW and not to use TRW equipment, facilities, or supplies when working on his PhD research.”

The Federal Circuit disagreed with the district court that the matter was subject to resolution on summary judgment. The Court agreed with Core Optical that the “entirely-own-time” phrase did not unambiguously express a mutual intent to designate all the time Dr. Core spent performing his PhD research as his own time or, as Nokia argued, to indicate that some of the time Dr. Core spent performing his PhD research was partly TRW’s time (as the district court held). The Federal Circuit walked through the undisputed facts, including that Dr. Core sought funding from TRW for his PhD research and [...]

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Testing Negative: Collateral Order Doctrine Precludes Appellate Jurisdiction

by | May 23, 2024 |

Addressing appellate jurisdiction in view of the collateral order doctrine, the US Court of Appeals for the Federal Circuit dismissed an appeal of a district court’s ruling denying a motion to dismiss because the district court’s order did “not conclusively determine any issue.” Copan Italia S.p.A. v. Puritan Med. Prod. Co. LLC, Case No. 22-1943 (Fed. Cir. May 14, 2024) (Cunningham, Bryson, Stark, JJ.)

Copan and Puritan are competing medical supplies companies. Copan filed suit against Puritan alleging infringement of Copan’s patents for “flocked” swabs, which are used “for collecting biological specimens.” While the lawsuit was filed in 2018, the circumstances surrounding the case changed significantly in March 2020 when the COVID-19 pandemic caused the demand for flocked swabs to skyrocket. In May 2020, the parties agreed to stay the proceedings until the COVID-19 crisis passed.

During the stay, Puritan entered into a contract with the US Air Force, causing Puritan to expand its manufacturing facilities and capabilities. The Air Force stated in a document associated with the contract that, under the Public Readiness and Emergency Preparedness Act (PREP Act), (1) the contract was being entered into for the purpose of covered countermeasures for responding to a public health emergency, (2) Puritan’s performance under the agreement was for recommended activities in responding to the public health emergency and (3) Puritan was a covered person under the PREP Act. Further, the Air Force “expressly acknowledge[d]” that Puritan “shall be immune from suit and liability to the extent and as long as [Puritan’s] activities fall withing the terms and conditions of the PREP Act and the PREP Act declaration.”

Puritan asserted it had immunity under the PREP Act from certain claims in Copan’s infringement suit. Puritan sought leave to amend its answer to include this affirmative defense and filed a partial motion to dismiss the claims directed to Puritan’s performance under the Air Force contract. Copan opposed the motion, arguing the PREP Act does not apply to claims for patent infringement and immunity only applies to claims for losses relating to physical harm, like products liability.

The district court denied Puritan’s motion, finding “that Puritan had not shown, as a factual matter, that its flocked swabs were ‘covered countermeasures’ under the PREP Act.” The district court pointed to “evidentiary gaps,” which prevented Puritan – at the current stage of litigation – from proving the PREP Act affirmative defense. Puritan appealed.

The Federal Circuit determined it lacked jurisdiction and dismissed the appeal. Because the denial of Puritan’s partial motion to dismiss was not a final order, appellate jurisdiction would only arise in limited circumstances under the collateral order doctrine. The collateral order doctrine allows appellate jurisdiction on rulings that (1) conclusively determine a disputed question, (2) resolve an issue completely separate (collateral) to the merits of the action and (3) are effectively unreviewable on appeal from a final judgment.

The Federal Circuit found that the district court order did not conclusively determine any issue and therefore the Federal Circuit lacked jurisdiction under the [...]

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Prime Delivery: Amazon Program Now Offers Personal Jurisdiction to Patent Holders

by | May 16, 2024 |

Addressing the issue of personal jurisdiction in the context of a declaratory judgment case involving a program for resolving patent infringement claims, the US Court of Appeals for the Federal Circuit concluded that a patent owner has personal jurisdiction in the forum of an alleged infringer when it files a program claim against the alleged infringer. SnapRays, dba SnapPower v. Lighting Defense Group, Case No. 23-1184 (Fed. Cir. May 2, 2024) (Moore, CJ. Lourie, Dyk, JJ.)

The Amazon Patent Evaluation Express (APEX) program helps resolve patent infringement claims against sellers on Amazon. Under APEX, a patent owner submits an APEX Agreement to Amazon that identifies the allegedly infringed patent claim and the Amazon listings with the alleged infringing products. Amazon then sends this APEX Agreement to the seller, who can do one of the following to avoid removal of their accused listings:

  • Opt into APEX and let a third party determine whether their product likely infringes
  • Resolve the claim directly with the patent owner
  • File a lawsuit for declaratory judgment of noninfringement. If the seller does nothing, its listings are automatically removed from Amazon within three weeks of receipt of the APEX Agreement.

Lighting Defense Group (LDG), a Delaware company whose principal place of business is in Arizona, submitted an APEX Agreement alleging that SnapPower’s Amazon products (electrical outlet covers with integrated technology) infringed one of its patents. SnapPower, a Utah company whose principal place of business is in Utah, then filed a declaratory judgment action against LDG in Utah. LDG then filed a motion to dismiss for lack of personal jurisdiction. The district court granted the motion, finding that SnapPower did not demonstrate that LDG purposefully directed activities at SnapPower in Utah and that there was no evidence that LDG reached out to Utah other than through responses to SnapPower’s communications. SnapPower appealed.

The Federal Circuit reversed, finding that LDG was subject to personal jurisdiction under the Court’s three-prong test because (1) LDG purposefully directed its activities at SnapPower in Utah, (2) LDG’s submission of the APEX Agreement was directed to SnapPower in Utah and aimed to affect activities in Utah and (3) it would not be unreasonable to find personal jurisdiction over LDG in Utah.

In assessing the first prong, the Federal Circuit found that LDG knew, via APEX’s terms, that Amazon would notify SnapPower of the APEX Agreement and that the options available to SnapPower included a claim for declaratory judgment. Further, the Court found that the APEX Agreement had more power than cease and desist letters because of the automatic removal of the listings after three weeks, which would affect sales and activities in Utah.

In assessing the second prong, the Federal Circuit found that personal jurisdiction comported with due process because LDG’s actions aimed to affect marketing, sales and other activities in Utah and because the suit arose out of LDG’s activities in the forum.

In assessing the final prong, the Federal Circuit rejected LDG’s argument that allowing personal jurisdiction would “open the [...]

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Stud-y Harder: Domestic Industry Must Be Established for Each Asserted Patent

by | May 16, 2024 |

Addressing a final determination by the US International Trade Commission of no violation of § 337, the US Court of Appeals for the Federal Circuit affirmed that the complainant had not satisfied the economic prong of the domestic industry requirement because it relied on aggregated evidence of investments across different products protected by different patents. Zircon Corp. v. ITC, Case No. 22-1649 (Fed. Cir. May 8, 2024) (Lourie, Bryson, Stark, JJ.)

In 2020, Zircon filed a complaint seeking a § 337 investigation based on alleged infringement of four patents covering electronic stud finders. The Commission instituted an investigation, naming Stanley Black & Decker as the respondent. Zircon withdrew one patent during the investigation and, in late 2021, the administrative law judge (ALJ) issued an initial determination finding no violation of § 337. The ALJ found some claims of one of the three patents to be valid and infringed but held that Zircon had failed to establish the economic prong of the domestic industry requirement because it had aggregated its investments across all 53 of its practicing products, of which only 14 practiced all three patents. On review, the Commission affirmed the finding of no violation, holding that all claims were either invalid or not infringed. The Commission also affirmed the domestic industry finding, holding that the aggregation prevented it from evaluating the significance of Zircon’s investments with respect to each of the three asserted patents. Zircon appealed.

The Federal Circuit affirmed on the basis that Zircon failed to meet the second prong of the domestic industry requirement. The Court explained that where different groups of products practice different patents, the complainant must separately establish a domestic industry for each group of products. The Court agreed with Zircon that such a showing might not necessarily require breaking out investments on a per-patent basis but concluded that the complainant must ultimately show that the domestic industry requirement is met for each asserted patent. Because the Federal Circuit upheld the finding of no domestic industry, it found it unnecessary to reach the infringement and invalidity rulings.



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Say What? Recitation Entitled to Patentable Weight When Not “Communicative Content”

by | May 16, 2024 |

Addressing when claimed printed matter is entitled to patentable weight, the US Court of Appeals for the Federal Circuit reversed the Patent Trial & Appeal Board’s ruling involving the printed matter doctrine, explaining that the claimed subject matter was not communicative content. IOEngine, LLC v. Ingenico Inc., Case No. 21-1227 (Fed. Cir. May 3, 2024) (Lourie, Chen, Stoll, JJ.)

Financial technology company Ingenico filed three petitions for inter partes review (IPR) of certain claims from three patents owned by IOEngine, all of which shared the same title and written description. The patents, titled “Apparatus, Method and System for a Tunneling Client Access Point,” claimed a “portable device” that was “configured to communicate with a terminal.” The challenged claims recited a memory that contained program code “configured in various ways to facilitate communication … with a communications network node.”

The Board issued final written decisions, which found the challenged claims to be unpatentable for obviousness or anticipation. The Board also found several claims to be anticipated after giving no patentable weight to certain claim recitations by application of the printed matter doctrine. The Board found that the terms “encrypted communications” and “program code” claim “only communicative content” (i.e., printed matter) and that these recitations were not entitled to patentable weight.

The Board concluded that the recitation of “encrypted communications” was subject to the printed matter doctrine because “nothing in the claim … requires anything beyond sending and receiving data, even if the data is in an encrypted form.” Similarly, the Board found that the recitation “program code” was subject to the printed matter doctrine because the “recital of ‘downloading’ of program code was limited to downloading (sending or transmitting) the code, which is a communication, and no other function is recited in the claim.”

IOEngine appealed, arguing that the Board erroneously construed the term “interactive user interface,” erred in its application of the printed matter doctrine, and erred in its anticipation and obviousness analysis.

The Federal Circuit affirmed the Board’s claim construction, finding IOEngine had forfeited its proposed construction because it did not present it to the Board during the IPR proceeding. Likewise, the Court affirmed the Board’s unpatentability determination of anticipation and obviousness for those claims where the Board did not invoke the printed matter doctrine.

However, the Federal Circuit reversed the Board’s determination that the recitations “encrypted communications” and “program code” were entitled to no weight under the printed matter doctrine.

The Federal Circuit explained that courts use a two-step test to determine whether a recitation should be accorded patentable weight under the printed matter doctrine. First, a court should determine “whether the limitation in question is directed toward printed matter.” Under step one, a limitation should be considered printed matter when the limitation “claims the content of information,” meaning that “the matter [is] claimed for what it communicates.” Only if the first step is met should the court proceed to step two. In the second step, the court considers “whether the printed matter nevertheless should be given patentable [...]

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When Is It Really Over? If Additional Proceedings Are Needed, Judgment Is Not Final

by | May 16, 2024 |

The US Court of Appeals for the Federal Circuit, factually distinguishing the concept of finality in this case from its earlier decision in Fresenius USA v. Baxter Int’l, vacated and remanded a district court’s amended final judgment with instructions to dismiss the case as moot in view of parallel proceedings that had found all patent claims invalid. Packet Intelligence LLC v. NetScout Systems, Inc., Case No. 22-2064 (Fed. Cir. May 2, 2024) (Lourie, Hughes, Stark, JJ.)

This dispute was originally before the Federal Circuit in 2020 when NetScout appealed a district court’s judgment that it willfully infringed multiple patents and that none of the patent claims were shown to be unpatentable or invalid. NetScout also appealed the district court’s damages award, which included enhancements. In the first appeal, the Federal Circuit reversed the damages award, vacated the enhanced damages and affirmed the remainder of the decision (Packet I). While the case was on remand to the district court, the Patent Trial & Appeal Board issued final written decisions in a series of inter partes reviews (IPRs) that had been initiated by third parties, finding all claims to be unpatentable as obvious. Packet appealed the Board’s decisions to the Federal Circuit. The district court issued an amended decision on May 4, 2022, after the Federal Circuit’s first decision remanding the case and after the Board’s final written decisions in the IPRs.

NetScout appealed again, arguing that if the Federal Circuit affirmed the Board’s findings invalidating the patents at issue, then the claims at issue in the litigation would all be unpatentable, which would trigger an immediate issue preclusion that would leave Packet unable to collect on any outstanding monetary damages awarded by the district court. Therefore, the question before the Federal Circuit was whether the decision in Packet I rendered the case sufficiently final such that it would be immune to the Board’s subsequent determination of unpatentability.

The Federal Circuit determined that Packet’s infringement judgment was not final before the Federal Circuit affirmed the Board’s unpatentability judgments. The Court discussed its prior decisions on finality, focusing on its 2013 decision in Fresenius in which the Court considered a different concept of finality. In Fresenius, the Court explained that the finality at issue was not the potential res judicata effect on another litigation. Rather, Fresenius was concerned with “whether the judgment in this infringement case is sufficiently final so that it is immune to the effect of the final judgment in the PTO proceedings, as affirmed by this court.” The Federal Circuit stated that in accordance with this concept of finality (also the one at issue in NetScout’s appeal), a litigation is sufficiently final when it is “entirely concluded” so that the cause of action is merged into a final judgment and the final judgment leaves nothing for the court to do but execute the judgment.

Applying this standard to the facts of the case at issue, the Federal Circuit found that Packet’s cause of action remained pending and [...]

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Standing Ovation…Denied!

by | May 9, 2024 |

The US Court of Appeals for the Federal Circuit reversed a district court’s decision in a patent dispute for a lack of subject matter jurisdiction because the plaintiff lacked constitutional and statutory standing. Intellectual Tech LLC v. Zebra Technologies Corporation, Case No. 22-2207 (Fed. Cir. May 1, 2024) (Prost, Taranto, Hughes, JJ.)

In 2011, OnAsset granted Main Street Capital a security interest in a patent owned by OnAsset. In 2013, Main Street notified OnAsset that it was in default and, in 2017, OnAsset and Main Street entered into a forbearance agreement. Around the same time, Intellectual Tech was formed as a subsidiary of OnAsset and was assigned the patent in which Main Street had security interest. Intellectual Tech entered into its own patent security interest agreement with Main Street. Later, like OnAssett, Intellectual Tech defaulted.

Intellectual Tech sued Zebra Technologies for patent infringement, asserting the patent that was the subject to the security interest. Zebra moved to dismiss for lack of standing since Intellectual Tech had defaulted with respect to the Main Street security interest agreement. The district court denied Zebra’s motion, affirming Intellectual Tech’s ownership over the patent and its right to enforce it against Zebra. Zebra argued that Main Street gained exclusive rights over the patent when OnAsset defaulted back in 2013. The district court disagreed but nevertheless granted Zebra’s motion regarding constitutional standing, concluding that Main Street still had a right to grant a license to the patent to Zebra. Despite Intellectual Tech’s efforts to cure the standing defect by joining Main Street to the lawsuit, the district court deemed it incurable and dismissed Intellectual Tech’s claims without prejudice. Intellectual Tech appealed.

The Federal Circuit reversed, determining that Intellectual Tech had an exclusionary right in the patent when it filed a complaint against Zebra. Zebra contended that Main Street’s authority to license the patent, as per the forbearance agreement, stripped Intellectual Tech of all exclusionary rights. Zebra presented two licensing-related arguments: Main Street’s exclusive licensing ability upon default nullified Intellectual Tech’s exclusionary rights, and even if both Main Street and Intellectual Tech could license upon default, Main Street’s nonexclusive capability still deprived Intellectual Tech of its rights.

The Federal Circuit disagreed, finding that the forbearance agreement did not suggest that, without further action from Main Street, the mere activation of Main Street’s options automatically divested Intellectual Tech of its rights. By rejecting this exclusive-rights contention, the Court did not evaluate whether Intellectual Tech would maintain constitutional standing under the interpretation.

The Federal Circuit distinguished exclusive and nonexclusive licensing contexts in explaining why the jurisprudence cited by Zebra (the Federal Circuit’s 2010 decision in WiAV Sols. LLC v. Motorola, Inc.) did not control. According to the Court, this differentiation underscored the importance of distinguishing between patent owners and licensees, as ownership typically entails baseline exclusionary rights, contrasting with a licensee’s limited freedom from suit.

Moreover, the Federal Circuit’s analysis also underscored the necessity to assess patent agreements thoroughly, particularly regarding assignment clauses. Zebra argued that Main Street’s option [...]

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It May Be a Hairy Situation, but Detailed Declaration Sufficient Evidence of Prior Use

by | May 9, 2024 |

The US Court of Appeals for the Federal Circuit affirmed the Patent Trial & Appeal Board’s refusal to register a mark, finding that an unchallenged, detailed declaration by the opposing company’s director sufficed as substantial evidence of prior use. Jalmar Araujo v. Framboise Holdings, Inc., Case No. 23-1142 (Fed. Cir. Apr. 30, 2024) (Lourie, Linn, Stoll, JJ.)

On December 3, 2019, Jalmar Araujo filed an application to register #TODECACHO as a standard character mark for hair combs. Framboise Holdings filed an opposition on the grounds that Araujo’s mark would likely cause confusion with its #TODECACHO design mark (below).

Framboise Holdings alleged that it owned the mark based on its prior use of it in connection with various hair products since March 24, 2017. Framboise also filed its own application for registration of its design mark on April 14, 2020, claiming the same date of first use.

On October 18, 2021, the final day on which Framboise could submit its case in chief to the Board, it moved for a seven-day extension. Four days after filing the motion, it served Araujo with the declaration of Framboise Director Adrian Extrakt. Although it was the testimony of a single interested party, the Board found Extrakt’s declaration alone to be convincing evidence of prior use. His declaration provided a list of products and dates of first use, as well as examples of the mark displayed on products in stores. After the Board sustained the opposition, Araujo appealed.

Araujo argued that the Board abused its discretion in granting Framboise an extension of the trial period, and that the Board’s finding that Framboise established prior use of the #TODECACHO design mark was not supported by substantial evidence. The Federal Circuit disagreed.

The Federal Circuit concluded that the Board had not abused its discretion in granting Framboise an extension because it identified and applied the correct good cause standard and “reasonably found good cause to grant the extension.” The Court also found that the Board was correct in finding that Extrakt’s declaration alone was sufficient evidence to support a priority date of March 24, 2017, based on evidence of the design mark’s use in connection with various hair products. The Court noted that the declaration did not simply consist of “naked general assertions of prior use,” but contained evidence. Araujo neither deposed Extrakt nor offered any evidence to dispute his claims. Hence, Extrakt’s declaration sufficed to meet the applicable preponderance of the evidence standard.

Practice Note: Oral or written testimony, even when offered by an interested party, can establish priority of use in a trademark proceeding if it is sufficiently detailed, is supported by exhibits and is convincing.



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Cross-Appeals Fail to Strike a Chord

by | May 2, 2024 |

In the latest development in the ongoing litigation saga between competitors Sonos and Google, the US Court of Appeals for the Federal Circuit affirmed the US International Trade Commission’s determination that the original accused audio players and controllers infringed the asserted patents while redesigned products did not. Sonos, Inc. v. Int’l Trade Comm’n, Case No. 22-1421 (Fed. Cir. Apr. 8, 2024) (Stark, Dyk, Reyna, JJ.) (nonprecedential).

Sonos filed a complaint against Google at the Commission, asserting that Google’s importation of certain audio players and controllers infringed Sonos’s patents generally directed to connecting and controlling wireless speakers. The chief administrative law judge made an initial determination that Google’s originally accused products infringed each of the asserted patents but also found that Google’s redesigned products were noninfringing alternatives. After declining the parties’ petitions for review, the Commission issued a final determination adopting the chief administrative law judge’s initial determination and entered a limited exclusion order. Sonos appealed the Commission’s determination concerning the redesigned products, and Google cross-appealed the Commission’s determination concerning the original products.

Sonos argued that the Commission misconstrued disputed claim terms and lacked substantial evidence for its noninfringement findings. First, Sonos argued that the Commission misconstrued claim language reciting “at least a second message containing network configuration parameters,” which “comprise an identifier of the secure WLAN . . . and a security key.” The Commission construed this language as requiring a single second message with both the claimed identifier and security key while Sonos contended that the claim language contemplated multiple second messages that collectively contain the identifier and security key. The Federal Circuit disagreed with Sonos, noting that the specification provided strong support for the Commission’s construction. Because Google’s redesigned product transmitted the identifier and the key in separate messages, the Federal Circuit affirmed the Commission’s conclusion that Google did not infringe.

Sonos next took issue with the Commission’s determination that Google’s redesigned product, which included an incrementing integer counter for synchronizing playback among devices, did not infringe a claim requiring synchronization through “time clock information.” While Sonos framed the issue as one of claim construction, the Federal Circuit reasoned that it was actually a factual issue (whether the accused redesign infringed), which is reviewed for substantial evidence. Because Google’s experts explained that an incrementing counter does not represent a time value, the Court concluded that the Commission’s determination was supported by substantial evidence.

Finally, Sonos contested the Commission’s construction of “equalization” as requiring “alteration of the relative strength of certain frequency ranges in the audio data” by adjusting certain properties of a speaker driver, adjusting amplifier gain in a playback device or using a filter. Finding this construction too narrow, Sonos argued that “equalization” should include any modification to output audio data, including the changing of a channel output without altering strengths of a frequency range. The Federal Circuit agreed with the Commission’s construction, which was based on expert testimony and dictionaries demonstrating that “equalization” is a well-known audio technique used to enhance or diminish specific frequency ranges. [...]

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Unclean Hands Aren’t Just for Toddlers

by | Apr 25, 2024 |

In an action involving manufacturers of a self-sealing dining mat for toddlers, the US Court of Appeals for the Federal Circuit affirmed a district court’s finding that the defendants were barred from obtaining relief on their counterclaims under the unclean hands doctrine, thereby vacating the district court’s other findings on inequitable conduct, obviousness, attorneys’ fees and costs. Luv N’ Care, Ltd. et al. v. Laurain et al., Case No. 22-1905 (Fed. Cir. Apr. 12, 2024) (Reyna, Hughes, Stark, JJ.)

Luv N’ Care and Nouri E. Hakim (collectively, LNC) filed suit against Lindsey Laurain and Eazy-PZ (EZPZ), asserting various claims for unfair competition under the Lanham Act and Louisiana law. LNC also sought declaratory judgment that EZPZ’s design patent was invalid, unenforceable and not infringed. After the suit was filed, the US Patent & Trademark Office (PTO) issued Laurain a utility patent directed toward self-sealing dining mats. Laurain subsequently assigned her rights to EZPZ, which then asserted counterclaims for utility patent, design patent and trademark infringement.

Following discovery, the district court granted LNC’s motion for summary judgment, finding all claims of EZPZ’s utility patent as obvious in view of three prior art references. EZPZ moved for reconsideration, which the district court denied, indicating that a “ruling providing further reasoning will follow in due course.” Before any such ruling issued, the PTO issued an ex parte reexamination certificate confirming the patentability of the utility patent claims two days before the district court’s bench trial began.

EZPZ did not provide this reexam certificate to the district court prior to the bench trial. During the bench trial, the district court found that EZPZ had not committed inequitable conduct but that EZPZ’s litigation conduct constituted unclean hands. After the district court entered judgment, EZPZ moved for reconsideration of summary judgment based on the ex parte reexamination certificate. The district court denied this motion and found that the evidence did not compel alteration of the prior ruling that the utility patent was invalid. It also denied LNC’s motion for attorneys’ fees and costs. EZPZ appealed.

The Federal Circuit affirmed the unclean hands determination but vacated the district court’s rulings on inequitable conduct, invalidity, attorneys’ fees and costs. As to unclean hands, the Court reasoned that EZPZ failed to disclose patent applications related to the utility patent until well after the close of discovery and dispositive motion practice. EZPZ also blocked LNC’s efforts to discover Laurain’s prior art searches by falsely claiming that she had conducted no such searches and that all responsive documents had been produced. It further found that EZPZ witnesses, including Laurain and EZPZ’s former outside counsel, repeatedly gave evasive testimony during depositions and at trial. The Court affirmed the district court’s determination that EZPZ’s misconduct bore an immediate and necessary connection to EZPZ’s claims for infringement because the undisclosed material was directly relevant to the development of LNC’s litigation strategy and undermined LNC’s ability to press its invalidity and unenforceability challenges. The Court found no clear error in the district court’s reasoning that [...]

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