Research Corp. Technologies, Inc. v. Microsoft

• Decision Date: 01 August 2008
• Docket Number: No. 2006-1275.,2006-1275.
• Citation: 536 F.3d 1247
• Parties: RESEARCH CORPORATION TECHNOLOGIES, INC., Plaintiff-Appellant, v. MICROSOFT CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

536 F.3d 1247

RESEARCH CORPORATION TECHNOLOGIES, INC., Plaintiff-Appellant, v. MICROSOFT CORPORATION, Defendant-Appellee.

No. 2006-1275.

United States Court of Appeals, Federal Circuit.

August 1, 2008.

Brian E. Ferguson, McDermott Will & Emery LLP, of Washington, DC, argued for plaintiff-appellant. With him on the brief were Mark G. Davis, John R. Fuisz, Paul E. Poirot, and Natalia V. Blinkova. Of counsel was Paul Devinsky. Of counsel on the brief was Michael J. Rusing, Rusing & Lopez, PLLC, of Tucson, Arizona.

John D. Vandenberg, Klarquist Sparkman, LLP, of Portland, Oregon, argued for defendant-appellee. With him on the brief were Stephen J. Joncus, Todd M. Siegel, and Garth A. Winn. Of counsel on the brief were Jeffrey Willis and Andrew Jacobs, Snell & Wilmer, L.L.P., of Tucson, Arizona, and Stephen McGrath, Microsoft Corporation, of Redmond, Washington.

Before NEWMAN, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and RADER, Circuit Judge.

RADER, Circuit Judge.

The United States District Court for the District of Arizona held Research Corporation Technologies' (RCT's) patents unenforceable due to inequitable conduct. The district court also granted the Microsoft Corporation summary judgment of invalidity and noninfringement. Because the trial court incorrectly held RCT's patents unenforceable due to inequitable conduct, this court reverses, and, accordingly, vacates the award of attorney fees based on the exceptional case finding. This court also vacates the trial court's summary grants of noninfringement and invalidity as well as the motions in limine orders. Pursuant to 28 U.S.C. § 2106, this court also remands with instructions to reassign the case.

I

On December 21, 2001, RCT filed suit against Microsoft for infringement of six patents claiming digital halftoning—U.S. Patent Nos. 5,111,310 ('310); 5,341,228 ('228); 5,477,305 ('305); 5,543,941 ('941); 5,708,518 ('518); and 5,726,772 ('772). Dr. Kevin J. Parker, from the University of Rochester, and his graduate student at the time, Dr. Theophano Mista, made these inventions. After a Markman hearing, RCT moved for partial summary judgment that certain Microsoft products contain infringing halftoning masks. Microsoft filed a motion for partial summary judgment that the same claims are invalid for anticipation under 35 U.S.C. § 102(b) and lack of written description under 35 U.S.C. § 112 ¶ 1.

The trial court granted RCT's infringement motion, and then appointed a special master, Mr. Bruce Brunda, to consider the additional summary judgment motions. At that point, the case was transferred to a different trial judge. After the transfer, the parties filed additional summary judgment motions.

Without opinion, the new district judge reversed the prior judge's grant of RCT's summary judgment motion for infringement and also granted, without opinion, Microsoft's summary judgment motion for noninfringement. Again without opinion, the new trial judge also granted Microsoft summary judgment on invalidity. Finally, the judge who received the transfer granted all of Microsoft's motions in limine and set a jury trial to commence August 8, 2005.

But then, at Microsoft's request, the new judge cancelled the scheduled jury trial and ordered a trial on inequitable conduct instead. Microsoft's argument at this inequitable conduct trial lasted an hour and featured no witnesses. The new judge barred RCT from presenting expert testimony on materiality. RCT's case was limited to testimony from the inventors about candor and good faith. On November 23, 2005, the trial court ruled from the bench that the RCT patents were unenforceable due to inequitable conduct. The court entered its cursory final order on January 27, 2006.

After RCT appealed, Microsoft filed motions with the district court seeking attorney fees, amplification of the court's findings, and an extension of the effective date for appeal pending a decision on the first two motions. The trial judge granted the motions on the deadline and attorney fees but did not amplify its findings of fact or conclusions of law on any topic.

II

All the patents at issue relate to image halftoning technology used in computers and printers. A halftone is an image which simulates a continuous tone image, but is actually an arrangement of individual dots. The particular spacing between the dots gives the viewer the illusion of a continuous picture consisting of varying shades of gray in a halftone image. Halftoning may feature one tone (single bit dots) or more than one tone (multi-bit dots). The prior art of halftoning images at the time of this invention produced grainy results and contained distracting artifacts.

A black and white image is broken down into 256 shades of gray. Common usage represents these 256 shades with numbers ranging from 1 to 256. The number 1 is black, the number 256 is white. As shades become lighter, their assigned number ascends.

One method of halftoning is thresholding, a point algorithm technique to generate digital halftoning images and prints. If a gray level number in the image exceeds a predetermined number (the threshold), the method initiates the pixel. A grid-like array, or mask, carries the threshold for any particular pattern. At the time of invention, the halftoning art used different kinds of masks, including constant threshold masks, varying threshold masks, random masks, and white noise masks. Due to difficulties with each of these masks, Dr. Parker and Dr. Mista invented a blue noise mask.

Scientist and author, Dr. Robert Ulichney, published a book in 1987 in which he analyzed digital halftoning techniques and defined various metrics to measure the quality of the halftone image. This book chronicled that low frequency dots caused the graininess and artifacts common in digital halftoning pictures. While studying these problems, Dr. Ulichney discovered blue noise in halftoning. Dr. Ulicheny discovered that dot profiles would be more visually pleasing if they contained blue noise properties (low frequency dots). But, Dr. Ulichney could only generate blue noise halftone using a complex mathematical process called error diffusion.

Drs. Parker and Mista recognized the drawbacks of Dr. Ulichney's method, namely slow speed, intensive computation demands, and missing blue noise results at the mid-gray level. Drs. Parker and Mista then invented a Blue Noise Mask that was quick, used very little computer memory, and produced high quality halftone images, and subsequently applied for patents on their inventions.

The Principal Frequency (Fg) represents the desired average spacing between the dots in a dot profile at each gray level. The Principal Frequency is represented as follows:√

                , where g ≤ 0.5
                                 , where g > 0.5
                

where "R" is the distance between dots and "g" is the gray level.

The "K factor" is a scaling factor and constitutes the number by which the Principal Frequency equation can be multiplied to change the size of the filter. For example, where g is > 0.5, K would factor into the Principal Frequency equation in the following manner:

For typical blue noise patterns, K=1.

The K factor is not required in the patented invention and not mentioned in the patent. After the filing of the patent application, and as a part of her continuing doctoral thesis, Dr. Mista set out to test the strictness of Dr. Ulichney's Principal Frequency equation by testing it with three different scaling factors. The power spectrum is a two-dimensional plot that expresses the frequency with which dots appear in any given direction of the dot profile. Dr. Mista was attempting to manipulate the shape of the power spectrum and assess the impact on the dot profiles. Dr. Mista concluded that Dr. Ulichney's equation could indeed be broadened. After this work, Drs. Mista, Parker, and Ulichney together published an article summarizing these results. T. Mitsa, R. Ulichney, and K. Parker, The Construction and Evaluation of Halftone Patterns with Manipulated Power Spectra, RIDT, The 2nd Int'l Workshop on Raster Imaging and Digital Typography, Boston, MA, pp. 90-97, Oct. 15-16, 1991.

III

Because inequitable conduct ultimately falls within the discretion of the district court, this court reviews that determination for an abuse of discretion. Kingsdown Med. Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867, 876 (Fed.Cir. 1988) (en banc). The trial court's factual findings on the issues of materiality and intent, however, receive review for clear error. Id.

Where a court premises its inequitable conduct determination upon clearly erroneous findings of fact or a misapplication of law, this court must reverse. Id. To find a patent unenforceable for inequitable conduct, there must be clear and convincing evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the PTO. Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1363 (Fed.Cir.2007). A determination based solely on one part of the test is legally erroneous. Id. Here, the trial court erroneously found the patent unenforceable based on only one prong of the two-pronged test for inequitable conduct, intent to deceive the USPTO. The first prong, materiality, is a required element of the inequitable conduct analysis.

The trial judge found inequitable conduct because the inventors did not disclose Dr. Mista's post-filing K factor tests to the USPTO. Because Dr. Mista's work occurred after she and Dr. Parker had filed the patent application, these K factor experiments were not material to their inventive activity. In the circumstances of this case, therefore, the inventors had no obligation to report their later tests to the USPTO.

After the patents at issue were filed, Dr. Mista decided to expand on her research by testing the strictness of Ulichney's Principal Frequency Equation as the cutoff frequency....