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SoCal IP Institute :: October 1, 2012 :: Inequitable Conduct and Judgment as a Matter of Law

We will be discussing two Federal Circuit cases during our weekly SoCal IP Institute meeting on Monday, October 1, 2012. Brief synopses are presented below.

Outside the Box Innovations, LLC. v. Travel Caddy, Inc., Case No. 2009-1171 (Fed. Cir. September 21, 2012) (attached).

Travel Caddy brought suit against Outside the Box Innovations claiming infringement of two of their patents, U.S. Pat. No. 6,823,992 and its continuation, U.S. Pat. No. 6,991,104 both directed to tool carrying cases.  The district court held that the patents were unenforceable based on inequitable conduct during the prosecution of the patents.  Travel Caddy had failed to inform the patent examiner of the existence of litigation in the parent patent prior to the issuance of the ‘104 patent.  Travel Caddy also incorrectly claimed small entity status.  Travel Caddy clearly met the small entity status requirements in having fewer than 500 employees, but Travel Caddy had a commercial arrangement with its distributor and seller, The Rooster Group, who was a large entity of over 500 employees.

On appeal, the Federal Circuit reversed the decision of unenforceability for incorrectly claiming small entity status.  The Court reversed not on the ground of materiality, but on the basis of a lack of intent.  The Court held that  the requirements of Therasense were not met because “there was no clear and convincing evidence of intent to deceive the PTO.”

Regarding the holding of unenforceability for not disclosing the litigation in the parent patent, the Federal Circuit reversed the district court’s pre-Therasense finding of both materiality and intent. On materiality, the Federal Circuit ruled that the failure to disclose the existence of a litigation when there was no citation of prior art, nor any pleading of invalidity or unpatentability in the complaint of the litigation as it existed during pendency of the continuation application, did not constitute clear and convincing evidence of materiality.  On intent, the Court held that there is no evidence that the withholding of the information concerning the litigation could have deceived the examiner and no suggestion of deliberate action to withhold it in order to deceive the examiner.

Mirror Worlds, LLC. v. Apple, Inc., Case No. 2011-1392 (Fed. Cir. September 4, 2012) (attached).

Mirror Worlds owns three patents at issue in this case: US Patents 6,006,227; US Patent 6,638,313; and US Patent 6,725,427.   Mirror Worlds brought a patent infringement action in the District Court for the Eastern District of Texas against Apple claiming that Apple’s Spotlight, Time Machine and Cover Flow features in their Mac operating system infringe the patents.  Cover Flow lets users scroll through album cover art when browsing for music in their iTunes libraries. The feature also works for documents, pictures and other material stored in a computer. Spotlight searches the computer’s hard drive while Time Machine automatically saves copies of files.  Mirror Worlds asserted claims of both direct infringement and induced infringement.

The district court granted Apple’s oral motion for judgment as a matter of law that Apple did not induce infringement of any of the patents.  The district court stated that Mirror Worlds failed to introduce substantial evidence to show that defendant itself induced its customers to infringe the disputed patent’s method claims. The issue of direct infringement by Apple was submitted to the jury, wherein the jury found Apple liable for willfully infringing all three asserted patents and awarded $208.5 million in damages. However, the district court granted Apple’s motion for judgment as a matter of law and vacated the jury verdict.

The Federal Circuit affirmed, concluding that Mirror Worlds failed to present substantial evidence of direct infringement and damages.  The district court had concluded that Mirror Worlds did not establish infringement under the doctrine of equivalents because Mirror Worlds did not provide substantial evidence to show that the accused products have an equivalent for the “cursor or pointer” limitation.  The Federal Circuit also agreed that the evidence presented at trial was not sufficient to support the damages awarded by the jury.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, October 1, 2012 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Attalla by 9 am Monday morning.

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