KangaROOS U.S.A., Inc. v. Caldor, Inc.

• Decision Date: 03 December 1985
• Docket Number: No. 84-1688,84-1688
• Citation: 778 F.2d 1571,228 USPQ 32
• Parties: , 228 U.S.P.Q. 32 KANGAROOS U.S.A., INC., Plaintiff-Appellant, v. CALDOR, INC., Defendant-Appellee. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1571

778 F.2d 1571

54 USLW 2355, 228 U.S.P.Q. 32

KANGAROOS U.S.A., INC., Plaintiff-Appellant, v. CALDOR, INC., Defendant-Appellee.

Appeal No. 84-1688.

United States Court of Appeals Federal Circuit.

Dec. 3, 1985.

Donald R. Dunner, of Finnegan, Henderson, Farabow, Garrett & Dunner, Washington, D.C., argued, for plaintiff-appellant. With him on brief, of counsel, were Charles E. Lipsey and Karen G. Bender, of Finnegan, Henderson, Farabow, Garrett & Dunner, Washington, D.C., and Jeffrey L. Michelman, of Popkin, Stern, Heifetz, Lurie, Sheehan, Reby & Chervitz, St. Louis, Mo.

Barry L. Springel, of Jones, Day, Reavis & Pogue, Cleveland, Ohio, argued, for defendant-appellee. With him on brief, were Kenneth R. Adamo and Robert C. Kahrl, of Jones, Day, Reavis & Pogue. Of counsel was the law firm of Kenyon & Kenyon, New York City.

Before MARKEY, Chief Judge, BENNETT, and NEWMAN, Circuit Judges.

PAULINE NEWMAN, Circuit Judge.

KangaROOS U.S.A., Inc. appeals the partial summary judgment of the United States District Court for the Southern District of New York, holding U.S. Patent No. 4,384,414 (the '414 patent), invention of Robert J. Gamm entitled "Athletic Shoe Pocket", unenforceable on the ground of fraud or inequitable conduct in the prosecution. On the basis that a summary proceeding was inappropriate in the circumstances here presented, we vacate the judgment and remand for further proceedings.

The Issue

The facts and law are fully stated in the district court's Opinion and Order dated April 27, 1984 as amended ¹. The conduct on which the summary adjudication was based arose from the assertion on behalf of Gamm, in order to antedate the Gulbransen reference cited during prosecution of the application that led to the '414 patent, of entitlement under 35 U.S.C. Sec. 120 to the priority date of design patent application Serial No. 938,098. This priority claim was unchallenged by the Examiner. Thus there was removed as prior art an intervening reference on which the examiner had based rejections under 35 U.S.C. Secs. 102 and 103. The district court described the issue before it as:

whether the making of a clearly improper claim that a later application is entitled to the benefit of the filing date of an earlier application, in order to overcome the most pertinent prior art reference against the later application, which the PTO examiner could and should have checked but obviously did not, constitutes fraud or inequitable conduct which renders the patent issued on the later application invalid or unenforceable.

585 F.Supp. at 1521-22, 222 USPQ at 708. The district court, in granting summary judgment, refused KangaROOS' request to present evidence on the applicant's intent in making the priority claim, stating:

It is inconceivable that any evidence which might be adduced at a trial could alter this conclusion.

585 F.Supp. at 1529-30, 222 USPQ at 714.

The primary question raised by KangaROOS on appeal is whether there were genuine issues of material fact such that summary judgment as a matter of law was improperly granted. D.L. Auld Co. v. Chroma Graphics Corp., 714 F.2d 1144, 219 USPQ 13 (Fed.Cir.1983); Fed.R.Civ.Proc. 56(c). On motion for summary judgment the district court must view the evidence in the light most favorable to the party against whom the summary judgment is directed, and reasonable inferences of fact must be drawn in favor of the non-movant. See United States v. Diebold, 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962).

The district court observed that the facts of patent prosecution as contained in the record of proceedings before the Patent and Trademark Office (PTO) are undisputed. This record consists of prosecution histories of the several patent applications, and shows KangaROOS' claim to the priority date of the design disclosure and the examiner's withdrawal of the Gulbransen reference. The court determined that the claim to Sec. 120 priority was material to the allowance of the claims of the '414 patent in the form in which they were allowed, and concluded that the claim to priority was "so utterly devoid of merit that it could have resulted only from an intent to mislead or at least gross negligence". 585 F.Supp. at 1530, 222 USPQ at 714.

KangaROOS argues on appeal that the Sec. 120 priority claim was not specious but had support in the design disclosure, that the examiner should have checked it as required by the Manual of Patent Examining Procedure (MPEP), that there was no intent to deceive or mislead, and that the issue was not amenable to summary resolution in that the court improperly resolved the material issue of intent against the non-movant.

Intent to deceive is a necessary component of common law fraud, J.P. Stevens & Co., Inc. v. Lex Tex Ltd., Inc., 747 F.2d 1553, 1559, 223 USPQ 1089, 1092 (Fed.Cir.1984), cert. denied, --- U.S. ----, 106 S.Ct. 73, 88 L.Ed.2d 60 (1985). Good faith, intent to deceive, scienter, honest mistake are all questions of fact. See Seven Cases of Eckman's Alternative v. United States, 239 U.S. 510, 517, 36 S.Ct. 190, 193, 60 L.Ed. 411 (1916); Pfizer, Inc. v. International Rectifier Corp., 538 F.2d 180, 185, 190 USPQ 273, 277 (8th Cir.1976), cert. denied, 429 U.S. 1040, 97 S.Ct. 738, 50 L.Ed.2d 751, 192 USPQ 543 (1977); Norton v. Curtiss, 433 F.2d 779, 795-6, 167 USPQ 532, 545 (CCPA 1970).

Intent to deceive is also a material factor in the determination of "inequitable conduct" before the PTO, as this doctrine has evolved to enforce the high standards of conduct required of patent practitioners. As discussed in American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1363, 220 USPQ 763, 773 (Fed.Cir.), cert. denied, --- U.S. ----, 105 S.Ct. 95, 83 L.Ed.2d 41, 224 USPQ 520 (1984), the more material the misrepresentation before the PTO, the lower the burden of proving intent. However, intent remains a factor to be weighed in meeting the burden of proving inequitable conduct by clear and convincing evidence, and evidence on the factual question of intent can not be refused consideration.

A summary judgment of fraud or inequitable conduct, reached while denying to the person accused of the fraud or inequitable conduct the opportunity to be heard on the issue, is a draconian result. "Summary judgment is a lethal weapon, and courts must be mindful of its aims and targets and beware of overkill in its use". Brunswick Corp. v. Vineberg, 370 F.2d 605, 612 (5th Cir.1967). Thus we have reviewed the issues material to the asserted misconduct, and the applicable law, to determine whether the judgment of fraud or inequitable conduct was properly granted summarily.

Analysis

A.

There is no statutory prohibition against an applicant's reliance, in claiming priority under 35 U.S.C. Sec. 120, on a disclosure in a design application if the statutory conditions are met. Of particular pertinence is the condition that the disclosure of the design application meet the requirements of the first paragraph of section 112 as applied to one or more claims of the continuation-in-part utility application. Compare In re Berkman, 642 F.2d 427, 429, 209 USPQ 45, 46 (CCPA 1981); In re Bauman, 683 F.2d 405, 409, 214 USPQ 585, 589 (CCPA 1982). The determination of whether any claim of the utility application is adequately supported in the prior design application depends on the facts of each case. In the case before us the district judge found that the design disclosure did not support the claims of the utility application against which he tested the design disclosure.

The district court discussed in thorough detail the entitlement of the claims of Gamm's parent utility application, Serial No. 107,092, to the priority date of Gamm's design application. The court did not discuss the claims of the divisional application that led to the '414 patent in relation to the disclosure of the design application.

It was only in prosecution of Gamm's divisional application that the Sec. 120 priority was asserted, in order to overcome the intervening Gulbransen reference. We think the district court erred, not in its conclusion (which is apparently uncontested) that "the invention claimed in Gamm's parent utility application was not disclosed in his earlier design application in the manner required by 35 U.S.C. Sec. 112", but in its premise that this was "[t]he critical issue of law". 585 F.Supp. at 1519-20, 222 USPQ at 706.

In our view, the critical issue of law was whether the invention claimed in Gamm's divisional utility application had no reasonable or justifiable basis for asserting the priority of the design application, such that there was clear and convincing evidence of fraud or inequitable conduct within the constraints and inferences that guide summary procedures. The claims of the parent application are not pertinent to this issue.

The role of the parent application with respect to the divisional was solely to provide the continuity of disclosure required by Sec. 120, thereby connecting the divisional through a chain of co-pendency back to the design application. It is not material whether the parent could have relied on a Sec. 120 priority claim, because no intervening reference was cited against the claims of the parent. On motion for summary judgment of invalidity of the divisional because of fraud in its prosecution, the critical issue was decided based on analysis of the claims of the wrong patent.

The claims in the divisional were different from those in the parent. Appellant directs us to claim 20 of the divisional application:

20. In a pocket for an athletic shoe and designed to hold smaller size personal items such as keys, coins, or the like as during jogging, comprising, said shoe having a quarter portion stitched to the sole shank at its lower extent, a pocket stitched to the quarter portion of the shoe along its front and back edges and being secured at its lower part proximate the location of the sole shank, said pocket having an...