Intellect Wireless, Inc. v. HTC Corp.

• Citation: 732 F.3d 1339
• Decision Date: 09 October 2013
• Docket Number: No. 2012–1658.,2012–1658.
• Parties: INTELLECT WIRELESS, INC., Plaintiff–Appellant, v. HTC CORPORATION and HTC America, Inc., Defendants–Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

732 F.3d 1339

INTELLECT WIRELESS, INC., Plaintiff–Appellant,

v.HTC CORPORATION and HTC America, Inc., Defendants–Appellees.

No. 2012–1658.

United States Court of Appeals,Federal Circuit.

Oct. 9, 2013.

Meredith Martin Addy, Steptoe & Johnson LLP, of Chicago, IL, argued for plaintiff-appellant. With her on the brief was Amanda K. Streff. Of counsel on the brief were Raymond P. Niro and Paul K. Vickrey, Niro, Haller & Niro, of Chicago, IL.

Stephen S. Korniczky, Sheppard Mullin Richter & Hampton, LLP, of San Diego, CA, argued for defendants-appellees. With him on the brief were Martin R. Bader and Matthew M. Mueller. Of counsel on the brief were Nagendra Setty and George Kanabe, of San Francisco, CA. Of counsel was Graham Marc Buccigross, of San Diego, CA.

Before PROST, MOORE, and O'MALLEY, Circuit Judges.

MOORE, Circuit Judge.

Intellect Wireless, Inc. (Intellect) appeals from the district court's judgment that U.S. Patent Nos. 7,266,186 ('186 patent) and 7,310,416 ('416 patent) are unenforceable due to inequitable conduct. We affirm.

Background

The technology at issue in this case involves wireless transmission of caller identification (ID) information. The asserted patents share the same specification, which discloses providing caller ID information from a message center to a personal communication device, such as a cell phone, via a wireless network. '186 patent, at [57]; id. col. 4. l. 66–col. 5 l. 4. The specification also teaches displaying the caller ID information on the cell phone's screen. Id. col. 15 ll. 20–24. Claim 1 of the '186 patent is representative:

A wireless portable communication device for use by a message recipient for receiving a picture from a message originator having a telephone number, comprising:

a receiver operably coupled to receive a message from a message center over a wireless connection, the message including a non-facsimile picture supplied by the message originator and a caller ID automatically provided by a communications network that identifies the telephone number of the message originator, the message originator sending the caller ID with the picture to the message center;

a display; and

a controller operably coupled to display the picture and caller ID on the display.

'186 patent, claim 1 (emphasis added).

Intellect sued HTC Corporation and HTC America, Inc. (HTC) for patent infringement. After a bench trial, the district court held the asserted patents unenforceable due to inequitable conduct by the sole inventor, Mr. Daniel Henderson. Intellect Wireless, Inc. v. HTC Corp., 910 F.Supp.2d 1056 (N.D.Ill.2012).

Intellect appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

Discussion

“To prove inequitable conduct, the challenger must show by clear and convincing evidence that the patent applicant (1) misrepresented or omitted information material to patentability, and (2) did so with specific intent to mislead or deceive” the U.S. Patent and Trademark Office (PTO). In re Rosuvastatin Calcium Patent Litig., 703 F.3d 511, 519 (Fed.Cir.2012). “When the patentee has engaged in affirmative acts of egregious misconduct, such as the filing of an unmistakably false affidavit, the misconduct is material.” Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1292 (Fed.Cir.2011) (en banc). “We review the district court's ultimate finding of inequitable conduct for abuse of discretion, and review the underlying findings of materiality and intent for clear error.” Novo Nordisk A/S v. Caraco Pharm. Labs., Ltd., 719 F.3d 1346, 1357 (Fed.Cir.2013).

I. Materiality

The district court held that HTC proved the materiality prong of inequitable conduct. The court found that Mr. Henderson submitted to the PTO a declaration under 37 C.F.R. § 1.131 (Rule 131) containing false statements. To overcome a prior art reference during prosecution, Mr. Henderson averred that “the claimed invention was actually reduced to practice and was demonstrated at a meeting ... in July of 1993.” J.A. 7731 ¶ 9. However, the district court found that the claimed subject matter was never actually reduced to practice. Intellect, 910 F.Supp.2d at 1071–72;see J.A. 2169; J.A. 5389; J.A. 5470. The court also found “no evidence that any of the false statements in any of the declarations were actually withdrawn, specifically called to the attention of the PTO or fully corrected.” Intellect, 910 F.Supp.2d at 1072.

Intellect argues that the district court clearly erred in its materiality finding. Intellect contends that Mr. Henderson's prosecuting attorney quickly corrected the false declaration by filing a revised Rule 131 declaration, which did not include facts supporting actual reduction to practice. See J.A. 7742–846. It argues that the attorney explained to the Examiner that the applicant was relying on constructive reduction to practice. Intellect contends that, after the asserted patents issued, the Examiner confirmed that he relied on constructive, as opposed to actual, reduction to practice. Intellect lastly argues that the district court discounted evidence that the remaining reference to “actual reduction to practice” in the revised declaration was an inadvertent mistake.

HTC counters that the district court did not clearly err when it found materiality because Mr. Henderson filed multiple unmistakably false declarations during prosecution. Specifically, it argues that Mr. Henderson falsely claimed actual reduction to practice in the original Rule 131 declaration in order to overcome a prior art reference. HTC points out that the revised declaration still referred to “actual reduction to practice.” HTC argues that Mr. Henderson made this false assertion during prosecution of other family patents, which suggests that this language was not mere drafting error. HTC contends that neither Mr. Henderson nor his attorney expressly advised the PTO about the misrepresentations during prosecution, as required to cure the misconduct. It further argues that Mr. Henderson's post-issuance efforts to clarify the record do not cure the misconduct because they are self-serving statements made during litigation.

We agree with HTC. It is undisputed that Mr. Henderson's original declaration was unmistakably false. Absent curing, this alone establishes materiality. There is no dispute in this case that Mr. Henderson did not actually reduce the claimed invention to practice—nor did he demonstrate a prototype in July of 1993. Thus, the original declaration contains multiple unmistakably false statements. See J.A. 7731 ¶¶ 9, 10, 11 (“the claimed invention was actually reduced to practice and was demonstrated at a meeting”; “the working prototype demonstration included communicating information from a calling party connected to a communications network that provided caller identifying information to a called party”; referring to a device that “displayed the caller identification and associated image information transmitted via a wireless network”). Intellect argues that Mr. Henderson's revised declaration and subsequent statements to the PTO corrected these misrepresentations. We do not agree.

When an applicant files a false declaration, we require that the applicant “expressly advise the PTO of [the misrepresentation's] existence, stating specifically wherein it resides.” Rohm & Haas Co. v. Crystal Chem. Co., 722 F.2d 1556, 1572 (Fed.Cir.1983). Further, “if the misrepresentation is of one or more facts, the PTO [must] be advised what the actual facts are.” Id. Finally, the applicant must “take the necessary action ... openly. It does not suffice that one knowing of misrepresentations in an application or in its prosecution merely supplies the examiner with accurate facts without calling his attention to the untrue or misleading assertions sought to be overcome, leaving him to formulate his own conclusions.” Id.

The district court did not err in concluding that Mr. Henderson's revised declaration failed to correct the falsehoods in the original declaration under the Rohm & Haas standard. See Intellect, 910 F.Supp.2d at 1071–73. At best, the revised declaration obfuscated the truth. It mentioned “diligence from the date of conception to the effective filing date,” implying that Mr. Henderson was now relying upon constructive reduction to practice. J.A. 7745. But the revised declaration did not cure the misconduct because it never expressly negated the false references to actual reduction to practice in the original declaration. In the original declaration, Mr. Henderson told the PTO that he actually reduced the invention to practice and demonstrated it at a meeting in July of 1993. See J.A. 7731 ¶ 9. In the revised declaration, he described a “prototype now in the Smithsonian that was in development for a ... demonstration” in July of 1993, a statement that could be read to mean that a device embodying the claimed invention was actually built during that month. J.A. 7746 ¶ U. The revised declaration also described a “product brochure and packing receipt,” which further implied the existence of an actual working device. J.A. 7747 ¶ GG; J.A. 7852–57. Finally, the revised declaration expressly mentioned “actual reduction to practice” and “bringing the claimed subject matter to commercialization,” further obscuring the truth. J.A. 7747 ¶ 11; J.A. 7748 ¶ 12. Most importantly, the declaration nowhere expressly stated the actual facts, which are that “neither [Mr. Henderson] nor Intellect Wireless actually reduced to practice” the inventions claimed in the asserted patents. J.A. 2169. Nowhere did the declaration openly advise the PTO of Mr. Henderson's misrepresentations, as our precedent clearly requires. See Rohm & Haas, 722 F.2d at 1572.

Intellect asserts that Mr. Henderson's attorney “specifically advised the Examiner on multiple occasions of the mistaken claim of actual reduction to practice.” Intellect Br. 35. But the record contradicts Intellect's position. The prosecution history of the asserted patents is...