Patent Related Misconduct Issues in U S Litigation

Patent-Related Misconduct Issues in U.S.
Litigation
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Patent-Related Misconduct Issues in U.S. Litigation

Joel Davidow
1
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Contents
INTRODUCTION
xi
PART I: Patent Prosecution Misconduct CHAPTER 1: Improper Conduct as to Invention A. Obtaining a Patent on a Product or Process the Patentee Knows He Did Not Invent B. Inaccurate or Incomplete Disclosure of Inventorship C. Failure to Disclose Sales or Oers to Sell that Occurred More Than One Year Before Patent Application CHAPTER 2: Inadequate Disclosure (of the Invention, How to
1 3
4 4 7
Practice It, or How to Practice It Optimally)

A. Lack of Description B. Lack of Enablement C. Failure to Disclose (or Concealment of ) the Best Mode for Achieving the Invention 1. Burden of Proof 2. Inventors View of Best 3. Best Mode to Achieve the Claims, or the Claim Plus Necessary Adjuncts? a) Relation of Best Mode to What Was Claimed b) Best Mode for Less than All Uses 4. Adequacy of Disclosure 5. How May Adequate Disclosure Be Proved or Disproved? 6. Must Brand Names and Model Numbers of Inputs Be Disclosed? 7. Will Best-Mode Violations Justify Conduct Sanction? CHAPTER 3: Inequitable Conduct in Obtaining the Patent A. Failure to Meet Duty to Disclose to the PTO 1. Duty of Disclosure 2. Who Has the Duty 3. Scope of the Duty 4. Timing of Disclosure
9
10 11 12 13 14 15 15 16 16 16 17 18
19
21 21 23 24 24
vi Contents
5. Meaning of Noncumulative 6. Types of Nondisclosure a) Inventorship b) Prior Use or Sales c) Facts Suggesting Obviousness d) Prior Art Writings e) Relevant Case Histories f ) Important PTO History g) Patentees Own Inventive Eorts h) Defects in Fee Reduction Requests i) Best-Mode Violations as Inequitable Conduct j) Failure to Provide Translation of Foreign Language References k) Burying References Balancing Test re: Materiality and Intent False Statements 1. Intent 2. False Statements Distinguished from Omissions 3. Typical Cases a) Falsied Test Results Due to Manipulation of the Conditions, Data, etc. b) False Attribution of the Disinterestedness of Providers of Expert Declaration Supporting Patentability c) Petitions to Make Special d) Small-Entity Status e) Misclaiming Priority Infection of Related Patents Prosecution Laches False Statements to PTO by a Third Party 25 25 26 27 28 28 29 30 30 31 31 31 35 35 37 37 39 39 39 40 41 42 42 43 43 45
B. C.
D. E. F.
CHAPTER 4: Relevant Procedural Issues Attorney-Client Privilege Inventorship Is a Triable Issue of Fact but Correction Is Possible Summary Judgment Is Sometimes Feasible Inequitable Conduct Is an Issue for the Judge, Sitting as an Equity Court, but the Jury May Be Assigned an Advisory Role E. Jury Trial Is Required for Overlapping Equitable and Non-Equitable Issues CHAPTER 5: Strategies in Litigating PTO Conduct Defenses A. B. C. D. Strategies Regarding Inventor Evidence Best Mode Discovery Proving or Disproving Concealment of Best Mode Inequitable Conduct Discovery 1. Prior Art Search A. B. C. D.
47
48 48 48
49 50
51
52 52 53 54 54
Contents vii
2. Discovery of the Patent Prosecution Attorney, Including One Who Is Plaintis Trial Counsel E. Pleading Inequitable Conduct: Rule 9(b) F. Summary Judgment
54 56 57
PART II: Patent Litigation Misconduct CHAPTER 6: Types of Litigation Abuse A. Delay or Unconscionability in Suing: Laches and Estoppel 1. Statutory Laches 2. Equitable Laches 3. Equitable Estoppel/Implied License 4. Ambush and Unclean Hands B. Reckless Cases or Reckless Pleadings: Rule 11 and its Requirements C. Discovery Misconduct or Recalcitrance: Rule 37 Sanctions D. Egregious Litigation Conduct in a Losing Case: 35 U.S.C. 285 E. Assessment of Fees against Attorneys Who Cause Excess Costs and Fees to the Opposing Side: 28 U.S.C. 1927 F. Threats by Patent Holders: Appropriate Scope of Rights CHAPTER 7: Procedural Issues in Raising Litigation Misconduct Issues A. Laches or Estoppel Can Be Litigated at the Outset B. Section 285 Awards Burden of Proof C. The Relationship Between Rule 37 and Section 285 1. Sanctions for Frivolous Patent Appeals D. Compensable Items CHAPTER 8: Litigation Strategies A. Filing Rule 11 Motion Promptly B. Discovery of Plainti to Probe Basis for the Case
59 61
62 62 63 63 63 64 66 68 70 71
73
74 74 75 76 78
79
80 80
PART III: Patent Misuse and Antitrust Misconduct CHAPTER 9: Misuse DefensesSubstantive Standards A. History of the Misuse Defense B. Clauses Leading to Misuse Contentions 1. Tie-In Clauses 2. Tie-Out Clauses 3. Price Clauses 4. Post-Expiration Royalties 5. Grantback Clauses 6. No-Challenge Clauses 7. Settlements 8. Acquisition of Competing Technologies
83 85
86 88 88 91 92 93 95 97 99 100
viii
Contents
C. Clauses that Will Seldom Engender Misuse or Antitrust Conclusions 1. High Royalties 2. Discriminatory Royalties 3. Field of Use Restrictions 4. Geographic Restrictions 5. Export Restrictions 6. Quantity Restrictions 7. Non-Exclusive Grantback Clauses 8. Packages of Patents 9. Royalties on Unpatented or Unused Products D. Horizontal Antitrust Oenses and Misuse Defenses E. Relevance of the Antitrust Guidelines CHAPTER 10: Antitrust Counterclaims A. Patentees Cartel Conduct 1. Sham Cross-Licenses or Settlements a) Pharmaceutical Settlements 2. Anticompetitive Patent Pooling a) DOJ Clearances for MPEG-2 and DVD Pools 3. Boycotts B. Patentees Single Firm Abuses (Attempt to Monopolize or Monopoly Maintenance) 1. Elements of Monopoly Oenses 2. Walker Process Claims 3. Handgards Claims C. Abuse of the Standard-Making Process D. Antitrust Claims Against Accused or Potential Infringers E. RICO Claims or Counterclaims CHAPTER 11: Procedural Issues in Litigation of Patent Antitrust Issues A. B. C. D. Standing Compulsory Counterclaim Relevancy of Rule 9(b) Bifurcation/Role of Judge and Jury 1. Bifurcation of Trials 2. Advisory Jury 3. Dismissal of Counterclaims and Defenses 4. Jurisdiction E. Choice of Law F. Remedies CHAPTER 12: Litigation Strategy A. In Misuse Cases B. As to Walker Process
101 101 101 102 103 104 104 104 105 105 106 106
109
110 110 111 113 114 114 115 116 117 124 129 130 131
133
134 134 135 136
136 137 139 139

140 141
143
144 145
Contents ix
C. As to Handgards Cases D. As to Antitrust Rule of Reason Counterclaims E. Conclusion: General Advice 1. Avoid Contradictions 2. Avoid Being Injured by Friendly Fire 3. Use Deposition Redirect with Summary Judgment in Mind APPENDICES A. Excerpts from the Manual of Patent Examiner Practice B. U.S. Patent Law, Title 35 C. Antitrust Guidelines for the Licensing of Intellectual Property 149 167 173 145 146 146 146 147 147
BIBLIOGRAPHY TABLE OF CASES INDEX
203 209 229
Introduction
A. Basic Issues: Infringement; Novelty B. Bad Conduct Issues C. Oensive Use of Bad Conduct Contentions D. Degrees of Fault and Their Consequences
xii xii xiii xiv
xi
xii
Introduction
This book deals with conduct issues that can arise in U.S. patent-related litigation, including antitrust claims against the patent holder.1 Although the book deals primarily with defenses and counterclaims, it also covers declaratory judgment actions, stand-alone antitrust cases and sanctions (fee) motions by either side.
A. Basic Issues: Infringement; Novelty

The basic defense in patent infringement litigation is non-infringement, i.e., that the asserted patent claims, properly construed, do not read on the accused product or process. As to this issue, the plaintiff has the burden of proof, by a preponderance of the evidence. The most common affirmative defense in such cases is that the patent is not valid, either because the invention was not novel,2 was obvious,3 or was otherwise unpatentable.4 As to these issues, defendant has the burden of proof, which burden is set high (clear and convincing evidence) because granted patents benefit from a presumption that the United States Patent and Trademark Office (PTO) acted correctly.5
B. Bad Conduct Issues

The wild cards in patent litigation are bad conduct allegations. For a firm anticipating or facing infringement charges, establishing bad conduct by the patentee or patent holder or enforcer can accomplish two things. First, proof of laches or estoppel, inadequate disclosure, inequitable conduct, or misuse will allow the defendant to prevail even though the patent may be both valid and infringed. Second, as will be discussed, allegations that the plaintiff sued on an invalid or unenforceable patent, or possessed little or no proof of infringement, will not only allow the defendant to prevail but may well shift the risks or costs of the litigation. Normally, in U.S. litigation, each side bears its own fees and costs. On the other hand, if the defendant can show that the plaintiff should have known that the patent was invalid, unenforceable or not
1. Patent holder may refer not only to the patentee, but also to an assignee, or to an exclusive licensee authorized to enforce the patent. 2. 35 U.S.C 102. 3. 35 U.S.C 103. 4. See 35 U.S.C. 101 (nonstatutory subject matter, lacks utility), and 112 (claims not enabled, claims lack written description, claims indefinite). 5. 35 U.S.C 282; See Smithkline Diagnostics v. Helena Labs. Corp., 859 F.2d 878 (Fed. Cir. 1988).
Introduction
xiii
infringed, such defendant can go beyond the American rule and win an award of fees and costs that perhaps will even be multiplied if antitrust law is implicated. Conversely, if a clearly meritorious infringement suit is delayed and made extra costly by recalcitrance and the assertion of frivolous defenses, fees and costs may be awarded to the prevailing patent holder.
C. Oensive Use of Bad Conduct Contentions

A conduct defense can sometimes be asserted offensively, among other ways, by filing a declaratory judgment action against the patent holder alleging invalidity based on certain types of bad conduct. Doing this has been made easier by the U.S. Supreme Courts MedImmune6 decision, which holds that a firm may take a license on a patent and still have standing to attack the patents validity by means of a declaratory judgment action. Also, patentee misconduct can be asserted as a basis for counterclaims or separate damage actions. Such counterclaims or such separate suits usually involve allegations of antitrust law violation, but can include tort claims such as tortious interference or defamation, and on rare facts, Racketeer Influenced and Corruption Organizations Act (RICO) claims. In sum, successful assertion of a conduct defense, claim, or counterclaim can bring three levels of reward to an accused infringer. (1) Any such defense, if successful, brings the defendant legal peace and perhaps legal security. The alleged infringement is excused and/or need not be defended. (2) In cases in which the conduct is egregiously bad, the reward for prevailing may be not only defeat of the claim but also an award of the costs of defense, including attorneys fees. Such award is usually granted under the Patent Act, 35 U.S.C. 285. Requests for fee awards are only proper after the movant has prevailed on the merits, and thus are neither defenses nor counterclaims. (3) In cases in which the bad conduct is proved to have been aimed at the likely monopolization of the product or service market covered by the patent and its substitutes, the successful defendant is deemed to be a benefactor to the consuming public under the antitrust laws, and is awarded three times its damages, including its cost of defense, plus the fees and costs involved in asserting the antitrust claim.7 Successful RICO claims would also entitle defendant to treble damages, but court rulings have made this defense difficult to invoke in patent litigation.8
6. MedImmune v. Genentech, 127 S. Ct. 764, 777 (2007). 7. Clayton Act 4. 8. See Chapter 10, E. RICO Claims or Counterclaims, infra.
xiv
Introduction
D. Degrees of Fault and Their Consequences

As will be demonstrated in subsequent chapters, the various levels of sanctions force trial judges and appellate courts to seek to define subtle gradations of fault. For instance, an unexplained failure to cite a relevant reference may be deemed so lacking in fault that no sanction is appropriate. If the omission is slightly more suspicious, inequitable conduct may be found, leading to unenforceability and the loss of an infringement suit. Such inequitable conduct can justify a finding that the lawsuit based on that patent was recklessly brought, leading to a shifting of legal fees to the losing plaintiffs. The courts must weigh whether the inequitable conduct caused the bringing of the infringement suit to be egregiously unwarranted. Deciding factors might be whether the crucial facts about the conduct were frankly admitted during the litigation or were elicited only due to pressure from the defendant. Lastly, it must be determined whether (1) the omission or commission amounts to the fraudulent obtaining of a market-dominating patent and thus an undeserved monopoly; or (2) the patent was used as an instrument of illegal monopolization or cartelization. Either justifies an award to an injured rival of treble damages, including defense costs, under antitrust law standards, specifically, the Sherman and Clayton Acts. Conduct defenses comprise virtually all affirmative defenses that can be asserted by an accused infringer, except, as noted above, the defenses that the patent is invalid as anticipated or obvious. It is the thesis of this book that conduct defenses or counterclaims raise issues that, for ease of review, can be grouped into three broad categories of conduct: (1) in the patenting process, (2) during patent litigation, (3) in the licensing or exploiting of the invention. In regard to each category, this book will first set out the conduct standards and then examine procedural and evidentiary issues relating to when and how the issue can be raised and resolved. Final sections of each chapter will deal with tactics and strategy. At the trial level, patent cases are triable in any federal district court. The aberration is that plaintiffs favor rocket dockets and/or districts with trial judges known for patent law expertise.9 These have included the Eastern District of Virginia, the Eastern District of Texas, the District of Delaware, and the Western District of Wisconsin. However, attitudes, personnel, and practicalities change over time. Forum shopping remains important. Patent plaintiffs can utilize the prompt procedure and broad, in rem relief granted to the U.S. International Trade Commission (ITC) by Section 337 of the Tariff Act. However, to invoke ITC remedies, patent holders must show
9. Cono A. Carrano, Cecil E. Key & Brian Su, Rocket Dockets: Coming Soon to a Venue Near You?, Intell. Prop. Today, 10 (December 2006).
xv
that they or their licensees have significantly practiced one patent in the United States, that is, that a domestic industry exists to be harmed.10 Parallel ITC and district court proceedings are allowed, since the ITC cannot grant damages and the district court cannot issue injunctions against importation of classes of merchandise.11 Thus, this book will discuss ITC cases and strategies. All appeals of district court, ITC and PTO patent rulings since 1981 are channeled by law to the Court of Appeals for the Federal Circuit (CAFC). Cases deemed to have greater antitrust than patent content are not channeled to the CAFC. The CAFC will defer to the antitrust jurisprudence of the circuit in which a mixed patent-antitrust case originated, unless proper resolution of the issue is viewed as crucial to sound patent law and policy.12 We now examine the three types of conduct issues, in turn, in the following sections.
10. See 19 U.S.C. 1337(a). 11. See 19 U.S.C. 1337 (c), (f), (l). 12. See Chapter 11, D. Choice of Law, infra.
PAR T
I
Patent Prosecution Misconduct
Generally, any arguable failure to earn or draft a proper patent can be transformed into a defense by an accused infringer. Thus, as will be reviewed here, failure to name all inventors; prove earliest invention; describe early sales fully; or show how to enable the invention, and do so optimally, etc., can result in loss of patent rights. The unique features of a finding that bad patenting conduct was most likely intentional, however, are that it can lead to the unenforceability of an otherwise sound patent, as well as to litigation sanctions and attorney fee awards.
CHAP T ER
1
Improper Conduct as to Invention
A. Obtaining a Patent on a Product or Process the Patentee Knows He Did Not Invent B. Inaccurate or Incomplete Disclosure of Inventorship C. Failure to Disclose Sales or Oers to Sell that Occurred More Than One Year Before Patent Application
4 4 7
Chapter 1 Improper Conduct as to Invention
A. Obtaining a Patent on a Product or Process the Patentee Knows He Did Not Invent
This conduct includes obtaining a patent on a derivative invention or one in which there is known anticipation; that is, the patentee knew that his claimed invention was, or might have been, disclosed by another or already in existence, but did not reveal such to the United States Patent and Trademark Office (PTO). The classic case is Union Camp Corp. v. Lewis1 in which a lawyer for the undeserving patentee induced an earlier inventor to stay silent in exchange for a share of undeserved royalties.2 The Court of Appeals for the Federal Circuit (CAFC), in C.R. Bard,3 held that absent clear evidence of intentional fraud, a mere error in inventorship creates no misuse or counterclaim right.4 The Patent Act, 35 U.S.C. 256, 2nd para., provides that if an error is correctable, no invalidity should result. If inventorship is corrected, even on reissue, there is no invalidity.5
B. Inaccurate or Incomplete Disclosure of Inventorship

Inventorship is governed by Sections 101, 116, 117, and 118. Section 101 states that the inventor, and only the inventor, receives the patent rights:
Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title [35 U.S.C.S. Sections 1 et seq.].6(emphasis added)
Thus, including the proper inventor(s) on the application is a crucial aspect of the patent process, as those listed receive exclusive rights. Failing to disclose all inventors can be a harmless omission, for instance, if all inventors were part of team and were committed to assigning the patent to the firm.7 The omission of an independent co-inventor, on the other hand, usually has
1. 385 F.2d 143, 144 (4th Cir. 1967). 2. See Davidow, United States Antitrust Law and International Transfers of Technology, Proceedings 1974 Fordham Corporate Law Institute 177, 180 (M. Bender 1975). 3. C.R. Bard Inc. v. Mc Systems, Inc., 157 F.3d 1340 (Fed. Cir. 1998). 4. Id. at 135355. 5. Id. at 135254. 6. 35 U.S.C. 101. 7. See, e.g., Pro-Mold Tool Co. v. Great Lakes Plastics, Inc., 75 F.3d 1568, 1576 (Fed. Cir. 1996) (failure to name inventors son as co-inventor was harmless).
Inaccurate or Incomplete Disclosure of Inventorship 5
serious consequences. This is because each such inventor would have an independent right to license the invention.8 Correction of inventorship is quite possible, however. First, Section 116 provides for correction during prosecution:
Whenever through error a person is named in an application for patent as the inventor, or through error an inventor is not named in an application, and such error arose without any deceptive intention on his part, the Director may permit the application to be amended accordingly, under such terms as he prescribes.9
In a related matter, Section 117 governs when the inventor has died or become incapacitated:
Legal representatives of deceased inventors and of those under legal incapacity may make application for patent upon compliance with the requirements and on the same terms and conditions applicable to the inventor.10
Section 118 allows a similar mechanism of substituted application for cases when the inventor is not involved:
Whenever an inventor refuses to execute an application for patent, or cannot be found or reached after diligent effort, a person to whom the inventor has assigned or agreed in writing to assign the invention or who otherwise shows sufficient proprietary interest in the matter justifying such action, may make application for patent on behalf of and as agent for the inventor on proof of the pertinent facts and a showing that such action is necessary to preserve the rights of the parties or to prevent irreparable damage; and the Director may grant a patent to such inventor upon such notice to him as the Director deems sufficient, and on compliance with such regulations as he prescribes.11
If inventorship must be corrected after prosecution of the patent, Section 256 applies:
Whenever through error a person is named in an issued patent as the inventor, or through error an inventor is not named in an issued patent and such error arose without any deceptive intention on his part, the Director may, on application of all the parties and assignees, with proof of the facts and such other requirements as may be imposed, issue a certificate correcting such error.
8. 9. 10. 11.
Harrington Mfg. Co. v. Powell Mfg. Co., 815 F.2d 1478 (Fed. Cir. 1986). 35 U.S.C. 116. 35 U.S.C. 117. 35 U.S.C. 118.
Chapter 1 Improper Conduct as to Invention The error of omitting inventors or naming persons who are not inventors shall not invalidate the patent in which such error occurred if it can be corrected as provided in this section. The court before which such matter is called in question may order correction of the patent on notice and hearing of all parties concerned and the Director shall issue a certificate accordingly.12
Courts tend to favor correction over invalidation if no bad faith is involved.13 An interesting example is the Excimer laser case before the ITC, in which an eye surgeon from Columbia University affiliated with VISX told the PTO he was the only inventor, but in fact he had actually worked with a top laser scientist from IBM in developing the way to use surgical lasers for eyesight correction. The IBM scientist was deemed a co-inventor, and the invention could be licensed from IBM, as well as VISX, destroying the infringement suit and perhaps proving inequitable conduct in not accurately describing IBMs role to the PTO.14 Although issues about leaving out an inventor will more likely result in correction than invalidation, there are cases in which it has been disastrous. For instance, where a dominant firm sued a rival company run by a former employee, proof by the rivals president that he was an omitted co-inventor of the patent in suit led to an antitrust victory and an antitrust damage award of three times the cost of defense.15 Procedurally, a Section 256 action to correct inventorship is treated as an equitable action and thus does not require a jury trial.16 However, if the plaintiff sues the named inventor for fraud, claiming that he (plaintiff ) was a or the true inventor, and seeks Section 256 correction, the CAFC has held that it is error for the court to decide the Section 256 issue prior to the fraud jury trial that raised the same issues.17 In Franks Casing Crew & Rental Tools, Inc. v. PMR Technologies,18 the court affirmed a finding of unenforceability when the two inventors named in the application had deliberately concealed the true inventors involvement in the conception of the invention claimed. These inventors were deemed to have engaged in a pattern of intentional conduct designed to deceive the attorneys and the PTO as to who the true inventors were.19 It is not clear that this was an instance of derivation or that the finding of inequitable conduct was based upon such a circumstance. In affirming, the CAFC noted that the
12. 13. 14. 15. 16. 17. 18. 19.
35 U.S.C. 256. See, e.g. Pro-Mold, supra, n.7. In re Certain Excimer Lasers, Initial Decision, 9899, 337 TA (12/26/99). Conceptual Engineering Associates, Inc. v. Aelectronic Bonding, Inc., 714 F.Supp. 1262 (D.R.I. 1989). Discussed further in Part III, Patent Misuse and Antitrust Misconduct, infra. Ethicon v. U.S. Surgical Corp., 135 F.3d 1456 (Fed. Cir. 1998). Shun v. Intel Corp., No. 061249 (Fed. Cir. 8/24/07). 292 F.3d 1363 (Fed. Cir. 2002) infra at subsection 6, a). Inventorship. Id. at 1376.
Failure to Disclose Sales or Offers to Sell
district court had focused on evidence that the named inventors had omitted the true inventor as part of a deliberate schemeto claim the patent for themselves by omitting him from participation.20
C. Failure to Disclose Sales or Oers to Sell that Occurred More Than One Year Before Patent Application
Since a patent application is unacceptably late for a product or process that was on sale more than a year ago, there is a duty to disclose all relevant events, even if not thought fatal by the inventor or his lawyer.21 Sales, even of a product containing less than all features of the claimed invention, may still have to be disclosed to the PTO.22 As will be discussed, infra, an inequitable conduct finding or even an antitrust claim can be premised on concealment of evidence that the patent is subject to an on-sale bar.23 Not all failures to disclose, however, amount to inequitable conduct. There may be no clear evidence of intent to deceive.24 Some cases seem to suggest that proof of failure to disclose a known material reference places a burden on the patent owner to produce evidence of good faith. In Dayco Products,25 the court stated: intent to deceive cannot be inferred simply from the decision to withhold the reference where the reasons given for the withholding are plausible.26 This suggests that there may be some burden on the patentee to give reasons for withholding a known material reference. Such a rule could rest on the theory that if a party has unique access to a reference and fails to produce it, a factfinder may infer that the evidence is unfavorable to the party.27 In Dippin Dots, the CAFC affirmed a finding of inequitable conduct based on the withholding of information concerning a fifteen-month old sale of what became the patented product, even though it was changed somewhat by the time of the patent application. The opinion notes that disclosure of
20. Id. 21. See, e.g., Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965). 22. Dayco Prods.Inc. v. Total Containment, Inc., 329 F.3d 1358, 1363 (Fed. Cir. 2003); Dippin Dots, Inc. v. Mosey, 476 F.3d 1337 (Fed. Cir. 2007). 23. Publications Intl. v. Western Publg Co., 1994-1 Trade Cas. (CCH) 70, 540 at 71, 933 (N.D. Ill. 1994)(allegation of knowing failure to disclose early sales satisfies Rule 9(b)). 24. See, e.g., FMC Corp. v. Manitowoc Co., 835 F.2d 1411, 1415 (Fed. Cir. 1987). 25. Dayco Products, Inc. v. Total Containment, Inc., supra. 26. Id. at 1367. 27. See, e.g., Gillette Co. v. S.C. Johnson & Son Inc., 919 F.2d 720 (Fed. Cir. 1990).
Chapter 1 Improper Conduct as to Invention
early sale information is important because the examiner cannot know of it on his own. Therefore, the panel rejected the argument that the applicant honestly believed that the earlier version was not finalized. In Brasseler U.S.A. I, L.P. v. Stryker Sales Corp., the CAFC affirmed summary judgment of inequitable conduct for failing to disclose prior sales.28 The attorney responsible for preparing the application had been instructed to file quickly to beat the upcoming one-year bar.29 In reality, the application was barred before it was even filed. The CAFC not only affirmed the rulings that the claims were barred by Section 102(b) and that the patent was unenforceable, but further held that an attorney who was told to file the application in three days had a duty to inquire further into when exactly the sale had occurred.30 In Allen Engineering Corp. v. Bartell Industries,31 Allen sued Bartell for infringing a utility patent. Bartells defense was partially based on the patents invalidity due to an on-sale bar and also on inequitable conduct for a failure to disclose the activity that gave rise to the on-sale bar. The bar was allegedly created by the sale of one of Allens products. The CAFC reversed the district courts determination that the patent was not invalid because of the sales and remanded after clarifying the standards to apply.32 The court did, however, affirm the holding that there had been no inequitable conduct. Defendant had argued in essence, that the Red Rider [by Allen] was so material that its nondisclosure justifies an inference of an intent to deceive,33 but the court disagreed, repeating the standard rule that intent is a separate component of inequitable conduct that usually must be proved by more than the fact of nondisclosure. In short, even clear evidence of nondisclosure of an allegedly invalidating sale was insufficient in itself to establish intent to deceive.
28. 29. 30. 31. 32. 33.
267 F.3d 1370 (Fed. Cir. 2001). Id. at 1374. Id. at 138485. 299 F.3d 1336 (Fed. Cir. 2002). Id. at 1354. Id. at 135152.
CHAP T ER
2
Inadequate Disclosure (of the Invention, How to Practice It, or How to Practice It Optimally)
A. Lack of Description B. Lack of Enablement C. Failure to Disclose (or Concealment of ) the Best Mode for Achieving the Invention 1. Burden of Proof 2. Inventors View of Best 3. Best Mode to Achieve the Claims, or the Claim Plus Necessary Adjuncts? a) Relation of Best Mode to What Was Claimed b) Best Mode for Less than All Uses 4. Adequacy of Disclosure 5. How May Adequate Disclosure Be Proved or Disproved? 6. Must Brand Names and Model Numbers of Inputs Be Disclosed? 7. Will Best-Mode Violations Justify Conduct Sanction?
10 11 12 13 14 15 15 16 16 16 17 18
10
Chapter 2 Inadequate Disclosure
The Patent Act, 35 U.S.C. 112, imposes on the patentee three related duties: first, to describe the whole claimed invention; second, to disclose enough detail to enable readers to achieve the invention without undue experimentation; and third, to teach, rather than conceal, any best mode attainable for the invention. The relevant text states that:
A written description of the invention, and of the manner and process of making and using it . . . to enable any person skilled in the art to which it pertains . . . to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.1
Accused infringers are thus free to attack the patent on Section112 grounds, arguing that one or more of the above requirements has not been met.
A. Lack of Description
Failure to describe the invention sufficiently to distinguish it from prior art can be fatal to a patent if combined with other violations, but seldom is in and of itself. Generally, the specification and/or figure constitute the key description, especially as to a mechanical invention.2 If the PTO is satisfied with the description, the courts are likely to defer to that judgment. Lack of a broad but detailed description may cause the narrowing of the enforceable scope of a patent, or a reason to resist new claims, but a weak description cannot be said to injure either the United States Patent and Trademark Office (PTO) or the public and thus normally does not create grounds for a conduct defense.3 Moreover, if testimony indicates that the description is not sufficient to practice the invention, the case fails on lack of enablement grounds.4
1. 35 U.S.C. 112 (2000). See Appendix B. 2. See, e.g., Omark Industries, Inc. v. Textron, Inc., 688 F.2d 1242 (9th Cir. 1982)(omissions in the description can be remedied by referring to drawings, thus satisfying the written description requirement). 3. See, e.g., Ariad Pharms., Inc. v. Eli Lilly & Co., 560 F.3d 1366 (Fed. Cir. 2009)(patent invalid under 112 for lack of a written description when specification failed to disclose molecules capable of reducing transcription factor activity, but no inequitable conduct in patent prosecution because there was no showing that errors and nondisclosures were intentional); LiebelFlarsheim Co. v. Medrad, Inc., 481 F.3d 1371, 82 U.S.P.Q.2d (BNA) 1113 (Fed. Cir. 2007)(The trial courts holding that two patents were invalid under 112, and 102 was affirmed due to evidence that there was no compliance with written description and enablement requirements, the trial courts finding that inequitable conduct counterclaim was moot was not erroneous). 4. See, e.g., Univ. of Rochester v. G.D. Searle & Co., 358 F.3d 916 (Fed. Cir. 2004), rehearing, en banc, denied, 375 F.3d 1303 (Fed. Cir. 2004), cert. denied, 2004 U.S. LEXIS 7905 (2004).
Lack of Enablement
11
B. Lack of Enablement
The enablement requirements, as set out by the Court of Appeals for the Federal Circuit (CAFC), are that the inventor must describe at least one complete embodiment of the invention, must teach an objective way of making it, and must teach at least one way to use it.5 Details can be left to the skill of those in the art, as long as undue experimentation is not required to go from the patent to the usable invention.6 If the specification fails to enable persons of skill to practice the invention, the patent will be declared invalid, but few patents are that vague; lack of enablement is very hard to disguise, and seldom leads to fee awards.7 In Union Pac. Resources Co. v. Chesapeake Energy Corp., even findings that one of skill in the art would not understand how to determine an element necessary for the invention, and that the means to compare information were not defined were not sufficient to constitute inequitable conduct.8 If claims are invalid as not enabled due to the necessity of undue experimentation, it is possible that the court might not even reach additional issues, including obviousness, anticipation, and inequitable conduct.9 If the patent holder sues for infringement a firm that makes an embodiment of the invention not directly taught by the patent, the courts will deny such broad scope to the claims if it is shown that an untaught embodiment works unpredictably unless modified.10 The CAFC has stated that [t]he issue of whether a reference would be considered important by a reasonable examiner in determining whether a patent application is allowable, including whether the invention is enabled, is a separate issue from whether the invention is actually enabled.11 It is usually difficult to conceal a lack of enablement. Thus, bad-conduct allegations usually concern alleged concealment of the best mode, discussed next.
5. See, e.g., Crown Operations Intern. Ltd. v. Solutia, Inc., 289 F.3d 1367, 137879 (Fed. Cir. 2002). 6. Adarg v. Fishof, 286 F.3d 1346, 135558 (Fed. Cir. 2002). 7. See, e.g., Union Pac. Resources Co. v. Chesapeake Energy Corp., 236 F.3d 684 (Fed. Cir. 2001) (lack of enablement and indefiniteness found, but no inequitable conduct found or attorneys fees awarded). 8. Id. 9. See, e.g., Enzo Biochem, Inc. v. Calgene, Inc., 188 F.3d 1362, 1369 (Fed. Cir. 1999)(undue experimentation was necessary to practice the patented technology in cells other than E. coli). 10. See Amgen v. Chugai Pharm. Co., 927 F.2d 1200, 1212 (Fed. Cir. 1991), cert. denied, 112 S. Ct. 169 (1991). 11. Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 123839 (Fed. Cir. 2003)(concluding that district court finding of inequitable conduct was not contradictory to its denial of a motion for summary judgment based on lack of enablement).
12
C. Failure to Disclose (or Concealment of) the Best Mode for Achieving the Invention
A useful one-sentence statement of the best mode rule is provided by the CAFC in Hybritech:12 In order to find a best mode violation, it must be shown that the applicant knew of and concealed a better mode than it disclosed.13 In practice, best mode defenses are the easiest of the three lack-ofdisclosure defenses to credibly assert. Furthermore, confusion as to key questions regarding the best mode obligation leaves an open field for argument.14 Also, inventors, being prideful craftsmen, tend to testify that every input they chose was the best available, and no patent specification describes every input and procedure in full detail. Something is always left unsaid. Still, the defense is far easier to assert than to win. As of 2002, the CAFC noted that only seven patents had been voided on this ground over a forty year period.15 It is beginning to appear that the CAFC seeks to stem a potential plague of knee-jerk, hyper-technical best mode defenses, by insisting on real proof of public injury, as it did when inequitable conduct charges became ubiquitous.16 How to resolve ambiguities in best mode inquiries is colored by ones view of the purpose of the rule. Surely, a purpose of a best mode disclosure requirement is to prevent patentees from defrauding those who license their invention. If licensees pay the asked royalty to practice the invention, and then cannot do so very well, or not as well as the patentee, they have in a sense been cheated, because the inventor obtained exclusivity in exchange for supposed full disclosure, but did not meet his end of the bargain with the public. The existence of such a scheme becomes particularly evident if the inventor seeks a second royalty, or payment, for a trade secret license under which the best mode will finally be adequately disclosed. Best mode violations are fatal even if unintentional,17 but evidence of intent to conceal or mislead makes adverse rulings more likely and can lead to attorney fee awards to the successful defendant.18 As the court emphasized in Consolidated Aluminum, disclosure of the best mode is statutorily required, making failure to disclose the best mode inherently material, and therefore sufficient to reach the minimum
12. Hybritech, Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367 (Fed. Cir. 1986). 13. Id. at 1384. 14. See generally, Carlson, Dale L., Katarzyna Przychodzen, and Petra Scamborova Patent Linchpin for the 21st Century?Best Mode Revisited, 45 IDEA 267 (2005). 15. See Bayer AG v. Schein Pharmaceuticals, Inc., 301 F.3d 1306, 1316 (Fed. Cir. 2002). 16. Kimberly-Clark Corp. v. Johnson & Johnson, 745 F.2d 1437, 1454 (Fed. Cir. 1984). 17. See Graco, Inc. v. Binks Mfg. Co., 60 F.3d 785 (Fed. Cir. 1995). 18. See, e.g., Consolidated Aluminum Corp. v. Foseco Intl, Ltd., 910 F.2d 804 (Fed. Cir. 1990).
Failure to Disclose the Best Mode for Achieving the Invention 13
level of materiality necessary for a finding of inequitable conduct.19 However, the court continued to state that, though failure to disclose the best mode is not excused even if unintentional,20 inequitable conduct requires a threshold level of intent.21 Therefore, failure to disclose the best mode will not constitute inequitable conduct in every case.22 Commentators have bemoaned the lack of clarity and predictability in best mode rulings.23 The CAFC has noted that The words of the statute are not without ambiguity.24 The appeals court has stated, in reversing a district court ruling, that lower court judges have misunderstood the principles supposedly discernible from earlier CAFC decisions in this field.25 Two possible problems are that it is unclear how to prove what the inventor really thought or what evidence to use to show that the disclosure was not adequate. The CAFC cases state the two basic best mode issues fairly consistently. Once the issue has been raised in defense, the court must determine (1) whether the inventor subjectively had in mind a best mode for achieving the invention at the time of filing the application for patent; and (2) if the inventor(s) had a best mode in mind, whether the disclosure in the patent adequately disclosed that best mode to those of ordinary skill in the art (an objective issue). Both concepts have been somewhat clarified over time. A mode is understood to include a method, an input or even a crucial measurement, such as an ideal temperature, as opposed to a range of temperatures. The only mode that must be disclosed is one conceived of before filing for the patent. Later improvements need not be disclosed for free, even if a reissue is sought.26
1. Burden of Proof
Since success in a best mode defense would invalidate a patent that the PTO thought was deserved, the courts have regularly held that the burden of proof is on the accused infringer, and that each of the two elements must be proved
19. Id. at 808 (referencing J.P. Stevens & Co., Inc. v. Lex Tex Ltd., Inc., 747 F.2d 1553, 1559 (Fed. Cir. 1987)). 20. Spectra-Physics Inc. v. Coherent, Inc., 827 F.2d 1524, 1535 (Fed. Cir. 1987), cert. denied, 484 U.S. 954 (1987). 21. J.P. Stevens, 747 F.2d at 1560. 22. Id. at 1553. 23. Moys Walker on Patents, 7.41, 7140, 7143, (the proper extent of the best mode requirement is subject to considerable uncertainty and dispute.). 24. Wahl Instruments, Inc. v. Acvious, Inc., 950 F.2d 1575, 1579 (Fed. Cir. 1991). 25. Id. at 1580. 26. See Engel Indus. Inc. v. Lockformer Co., 96 F.3d 1398 (Fed. Cir. 1996); Transco Products Inc. v. Performance Contracting, Inc., 821 F.Supp. 537 (N.D. Ill. 1993), revd in part, vacated in part, & remanded in part, 38 F.3d 551, (Fed. Cir. 1994), cert. denied, 513 U.S. 1151 (1995).
14
by clear and convincing evidence, a standard higher than mere preponderance of the evidence.
2. Inventors View of Best

It is well accepted that if the inventor never knew of a best mode, or never subjectively determined that the mode being used was better than alternatives, the inquiry is over, even if his colleagues knew of it.27 Even here, all is not simple. The inventor may testify that he or she had no favorite, but documents may contradict this, or such testimony may be deemed to be incredible. Despite the word subjective, the court may attribute a view to the inventor based on circumstantial evidence other than testimony. In such circumstances, however, meeting the clear and convincing standard would often be difficult. Similarly, hard questions arise if the inventor says he selected the best of the inputs he tried, but that he had no certainty that he had found the very best mode, because he decided to go with what he had found rather than spend more time trying inputs from other sources. In such circumstances, it would seem that any use of the word best is not meaningful in terms of the intent of the statute. The CAFC, in Wahl Instruments, Inc.,28 stressed that any inventor, pressed hard, could hardly deny that input or method choices he made were best in some way:
A requirement for routine details to be disclosed because they were selected as the best for manufacturing or fabrication would lay a trap for patentees whenever a device has been made prior to filing for the patent. The inventor would merely have to be interrogated with increasing specificity as to steps or material selected as best to make the device. A fortiori, he could hardly say the choice is not what he thought was best in some way. Thus, at the point he would testify respecting material or source or detail which is not in the patent, a failure to disclose the best mode would, ipso facto, be established.29
An unsettled issue is whether the word subjective means that a best mode attack may be sustained when the facts indicate that although the inventor preferred and failed to disclose a particular mode, that mode was not any better than other modes. The imprecise way in which the word subjective is used in some opinions might suggest that inadequate disclosure, even of average modes, is bad enough to forfeit a patent. However, some CAFC opinions suggest a rejection of such formalism. In Young Dental,30 the CAFC
27. 28. 29. 30.
Glaxo Inc. v. Novopharm Ltd., 52 F.3d 1043 (Fed. Cir. 1995). Wahl Instruments, Inc. 950 F.2d at 1581. Id. at 1575. Young Dental Mfg. Co. v. Q3 Special Prods., 112 F.3d 1137 (Fed. Cir. 1997).
concluded that the undisclosed item was easily approximated by those skilled in the art. Faced with proof that the inventor had once called his mode a trade secret, the opinion stated that concealing secrets that are not commercially valuable does not rise to the level of a best mode violation.31 Furthermore, the formulation that there must be proof that the inventor concealed a better mode than she disclosed32 indicates that the proponent of the defense does need to convince the court that the undisclosed mode was in fact better that those stemming from the disclosure. It seems likely that this type of common sense will work its way down to the trial courts. If the invention is made by multiple inventors, the issue that arises is whether the subjective best mode requirement is met if fewer than all the inventors favor it. Two cases on the topic give opposite answers.33
3. Best Mode to Achieve the Claims, or the Claim Plus Necessary Adjuncts?
There remains continued uncertainty concerning (1) the extent to which an inventor is required to disclose a mode that is necessary to optimum success but is not claimed; and (2) whether there is a duty to disclose a best mode for some but not all uses. a) Relation of Best Mode to What Was Claimed In Teleflex,34 the panel stressed that the best mode requirement must begin and remain focused on the language of the claims.35 Nevertheless, in Dana Corp.,36 a best mode violation was found due to non-disclosure of a fluoride surface treatment that was crucial to optimum results of a valve-stem seal, even though no surface treatment was claimed. The emerging consensus appears to be that non-claimed elements must be disclosed if they are critical to achieving optimum results from the claimed
31. Id. at 1141. 32. See Hybridtech, supra, n.56. 33. See Melissa N. McDonough, Note: To Agree or Not to Agree: That is the Question When Evaluating Best Mode Preferences of Joint Inventors After Pannu v. Iolab Corp., 80 S.Cal. L. Rev. 151 (2006); Pannu v. Iolab Corp., 155 F.3d 1344 (Fed. Cir. 1998); Graco, Inc. v. Binks Manufacturing Co., 60 F.3d 785 (Fed. Cir. 1995); See also Union Carbide Corp. v. Dow Chem. Co., No. 75-G-79, 1981 U.S. Dist. LEXIS 17790 (S.D. Tex. July 8, 1981), aff d, 682 F.2d 1136 (5th Cir. 1982). 34. Teleflex Inc. v. Ficosa North American Corp., 299 F.3d 1313 (Fed. Cir. 2002). 35. Id. at 1330. 36. Dana Corp. v. IPC Ltd. Partnership, 860 F.2d 415 (Fed. Cir. 1988); accord, Chemcast Corp. v. Arco Ind. Corp., 913 F.2d 923 (Fed. Cir. 1990).
16
invention, but need not be disclosed if they improve the product or process in ways that are independent of the performance of the invention.37 For instance, a protective coating for a high-speed generator can be retained as a trade secret because the coating does not affect the speed. Also, failure to list a best mode does not infect claims that do not need such mode.38 b) Best Mode for Less than All Uses Usually, a best mode is one that always applies, so that the best mode for a single use of the invention, or to meet the needs of certain customers only, is not a best mode.39 Thus, the best mode for meeting a big customers needs does not have to be disclosed in the specifications.
4. Adequacy of Disclosure
As to the second test, disclosure need not be exact if those skilled in the art can arrive at the best mode, or its equivalent, without undue experimentation. This means that brand names and model numbers of inputs need not be set out if such information is well known, or easily obtained or approximated. Inadequate disclosure can take three forms. In the most extreme, the patent simply never mentions the needed input or procedure. Total lack of disclosure is usually going to be deemed inadequate if the input is needed and not obvious to those in the art. A second level of inadequate disclosure is one in which a needed input is mentioned, but it would be impossible or unduly difficult to isolate the necessary one, thus resulting in inability to produce a working version of the invention. Such lack of disclosure thus could result in findings of both lack of enablement and concealment of best mode. The third level of objectionable nondisclosure is one in which the specification enables production of a commercially useful product, but one not as good as the inventors best mode if the best mode had been revealed more clearly.
5. How May Adequate Disclosure Be Proved or Disproved?

If the invention has been licensed, the adequacy of disclosure would seem to be determinable by finding out what methods or inputs the licensees obtained
37. See Stephen B. Wolmsley, Best Mode: A Plea to Sacrifice or Reform this Broken Requirement of U.S. Patent Law, 9 Mich. Telecomm & Tech. L. Rev. 126 (2002). 38. See Amgen, supra. at n.10. 39. See Teleflex v. Ficosa, 299 F.3d at 1313.
after reading the patent disclosures and how well they worked compared to the products or processes of the inventor. The alternative is to have an expert, or one of skill in the art, opine or testify that it would probably be difficult to find the best mode based on the specification or other disclosures in the patent. Such testimony could, of course, be contradicted by a rival expert or by a second witness from the field. Of course, if the patent has never led to licensed products, or even unlicensed copies, expert testimony may be the only way to resolve the issue of whether the disclosure is adequate. But what if licensed products have been produced and the accused infringer relies only on an expert, having never taken discovery from licensees concerning their experience in reading the patent and using it? The authors view is that defendants avoidance, without excuse, of licensee or other real world evidence should provide grounds for rejection of proffered expert testimony and summary dismissal of the defense, especially if there is some evidence of successful utilization of the patent by others. For instance, in Young Dental,40 supra, the court lists as a ground for rejection of the defense the fact that the infringer was able to find the supposedly undisclosed input, by asking a seller of such products for advice.41 A troublesome holding in this area is that proof that rivals were able to duplicate the best mode by reverse engineering will not excuse a failure to disclose it.42 Perhaps the standard of avoiding the need for undue experimentation can resolve close cases. In any event, requiring the proponent of the defense to examine how licensees achieved their results is not inconsistent with the holding of the above case.
6. Must Brand Names and Model Numbers of Inputs Be Disclosed?

In general, it is not customary in patent specifications to list the brand names or model numbers of favored inputs. The CAFC has said that there is no per se requirement to provide names for sources of materials absent evidence that the name of the source would not be known or easily available.43 The PTO does not encourage such disclosure. Nevertheless, the lack of such information provides an immediate basis for a best mode concealment allegation. Application of the above guideline has not always produced consistent results. In Chemcast Corp. v. Arco Industries Corp.,44 the disclosures were deemed too
40. 41. 42. 43. 44.
112 F.3d at 1137, supra, at n.30. Id. at 1145. Randomex, Inc. v. Scopus Corp., 849 F.2d 585 (Fed. Cir. 1988). Wahl, supra, at 1584, n.24. 913 F.2d 923 (Fed. Cir. 1990).
18 Chapter 2 Inadequate Disclosure
limited to assist in finding an input supplier. Key factors appear to be whether the input is custom-made or off-the-shelf, and whether the input is one that the industry expects to use.45 Best mode rulings indicate that the adequacy of disclosure is tested not only in terms of what those of skill in the art understand, but also what their input suppliers can contribute. In other words, if the patent teaches a machine and the best mode involves fasteners, adequacy of disclosure is tested in terms of what fasteners would be supplied if a machine maker showed the patent specification to his fastener supplier.46
7. Will Best-Mode Violations Justify Conduct Sanction?

Although the best mode requirement is controversial, egregious violations of it have led to serious sanctions beyond unenforceability. In Foseco, the courts conclusion that the patent taught a purposely inferior mode led to a finding of inequitable conduct.47 In Nobelpharma,48 a best mode violation, combined with concealment of a too-early invention date, led to a finding of a Walker Process antitrust violation,49 resulting in a treble-damage award to the accused infringer. Failure to disclose the best mode will render the patent unenforceable, but does not in itself constitute inequitable conduct or an antitrust violation.50 However, if there is clear evidence that the nondisclosure or misdisclosure was for a bad purpose, inequitable conduct can even be found and fees awarded.51 In very rare cases, such as Nobelpharma,52 the totality of the facts may support a finding that suing with a knowingly concealed best mode may be characterized as an illegal attempt to monopolize in violation of Sherman Act, Section 2, mandating a fee award of three times the costs of defense.53
45. See also United States Gypsum Co. v. Natural Gypsum Co., 74 F.3d 1209 (Fed. Cir.1996) (industry witness knew of no source for the input). 46. See, e.g., Wahl, supra, at 1581 (anyone seeking to make the device would have to do no more than present the drawing in the patent to an experienced plastics fabricator.). 47. Consolidated Aluminum Co. v. Foseco Intl Ltd., 910 F.2d 804 (Fed. Cir. 1990)(attorneys fees were not awarded for reasons peculiar to the way the case was litigated.). 48. Nobelpharma Ab v. Implant Innovations, 141 F.3d 1059 (Fed. Cir. 1998). 49. Discussed infra, at Chapter 7, D. Compensable Items. 50. Gardco Mfg., Inc. v. Herst Lighting Co., 820 F.2d 1209, 1213 (Fed. Cir. 1987)(inequitable conduct and invalidity are distinct and without commonality either as claims or in a relation to the underlying fact issues.). 51. See, e.g., Ameritek, Inc. v. Carolina Lasercut Corp., 42 U.S.P.Q.2d 1411 (Fed. Cir. 1996). 52. Nobelpharma, discussed in Section III, infra. 53. Id.
CHAP T ER
3
Inequitable Conduct in Obtaining the Patent
A. Failure to Meet Duty to Disclose to the PTO 1. Duty of Disclosure 2. Who Has the Duty 3. Scope of the Duty 4. Timing of Disclosure 5. Meaning of Noncumulative 6. Types of Nondisclosure a) Inventorship b) Prior Use or Sales c) Facts Suggesting Obviousness d) Prior Art Writings e) Relevant Case Histories f ) Important PTO History g) Patentees Own Inventive Eorts h) Defects in Fee Reduction Requests i) Best-Mode Violations as Inequitable Conduct j ) Failure to Provide Translation of Foreign Language References k) Burying References B. Balancing Test re: Materiality and Intent C. False Statements 1. Intent 2. False Statements Distinguished from Omissions 3. Typical Cases a) Falsied Test Results Due to Manipulation of the Conditions, Data, etc.
21 21 23 24 24 25 25 26 27 28 28 29 30 30 31 31 31 35 35 37 37 39 39 39
19
20 Chapter 3 Inequitable Conduct in Obtaining the Patent b) False Attribution of the Disinterestedness of Providers of Expert Declaration Supporting Patentability c) Petitions to Make Special d) Small-Entity Status e) Misclaiming Priority D. Infection of Related Patents E. Prosecution Laches F. False Statements to PTO by a Third Party
40 41 42 42 43 43 45
Failure to Meet Duty to Disclose to the PTO
21
The inequitable conduct defense is named such because it is an application of the principle that a person seeking equitable relief (enjoining infringement) must come to the court with clean hands. The U.S. Supreme Court has, since 1945, held that a patentee who fails in the duties of disclosure or misleads the United States Patent and Trademark Office (PTO) lacks clean hands and thus should be denied enforcement of the affected patent.1 However, an unenforceable patent remains valid in various technical senses.
A. Failure to Meet Duty to Disclose to the PTO

Unclean hands charges may relate to conduct outside the PTO, such as presenting false evidence to a court, but the great bulk of the litigated issues relate to the patentees conduct as applicant.2 Conduct issues usually involve either (1) failure to disclose material prior art or key facts; or (2) submission of false or misleading statements in support of the application. The position of the Court of Appeals for the Federal Circuit (CAFC) is that:
[a] patent may be rendered unenforceable for inequitable conduct if an applicant, with intent to mislead or deceive the examiner, fails to disclose material information or submits materially false information to the PTO during prosecution.3 The party urging unenforceability must show by clear and convincing evidence that the applicant met thresholds of both materiality and intent.4
1. Duty of Disclosure
Because obtaining a patent is an ex parte process (no opponent), the law imposes a duty of candor on the applicant to disclose all material prior art of which he is aware. Such duty is codified at 37 C.F.R. 1.56. Failure to submit material information can be cured by submitting it later in a proceeding, or even in re-examination, so long as the examiner has the opportunity to consider it before closing the file and allowing the patent.5
1. Precision Instrument Mfg. Co. v. Auto Maintenance Mach. Co., 324 U.S. 806, 814 (1945). 2. Precision Instrument Mfg., 324 U.S. at 81011 (patentee falsely asserted during interference proceedings that he was the sole inventor of the product). 3. Digital Control Inc. v. The Charles Mach. Works, 437 F.3d 1309, 1313 (Fed. Cir. 2006). 4. Molins PLC v. Textron, 48 F.3d 1172, 1178 (Fed. Cir. 1995); Dippin Dots, Inc. v. Mosey, 476 F.3d 1337, 1345 (Fed. Cir. 2007). 5. Young v. Lumenis, Inc., 492 F.3d 1336, 1348 (Fed. Cir. 2007).
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Chapter 3 Inequitable Conduct in Obtaining the Patent
As set forth in Section 1.56, the duty includes a duty on the part of these individuals to disclose to the PTO all information known to that individual to be material to patentability of the invention being claimed. Rule 56 specifically sets forth a definition of materiality, so as to put applicants and their attorneys and agents on notice as to what information must be submitted. Effective March 16, 1992, and continuing until today, Rule 56 has defined materiality as follows: (b) Under this section, information is material to patentability when it is not
cumulative to information already of record or being made of record in the application, and: (1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim; or (2) It refutes, or is inconsistent with, a position the applicant takes in: (i) Opposing an argument of unpatentability relied on by the Office, or (ii) Asserting an argument of patentability.
For patents whose applications were filed after March 1992, the CAFC has indicated that it is proper to look to the current version of Rule 56.6 In applying this version of the rule, it gives deference to the PTOs formulation at the time an application is being prosecuted before an examiner in regard to the standard of conduct it expects to be followed in proceedings in the PTO. However, in some circumstances, courts continue to apply the so-called reasonable examiner standard which was the standard of Rule 56 before it was amended. They hold that the new standard was not intended to constitute a significant substantial break with the pre-1992 standard, but rather was intended to give more precise guidance to applicants and their attorneys. Under the reasonable examiners standard, information is deemed material if there is a substantial likelihood that a reasonable examiner would have considered the information important in deciding whether to allow the application to issue as a patent.7 This does not conflict with the opinion expressed by the court before the change in the rule: To be material, a misrepresentation need not be relied on by the examiner in deciding to allow the patent. The matter misrepresented need only be within a reasonable examiners realm of consideration.8
6. See Purdue Pharma L.P. v. Endo Pharmaceuticals, 77 U.S.P.Q.2d 1767 (Fed. Cir. 2006); Brano Indept. Living Aids, Inc. v. Acorn Mobility Sorus. LTD., 394 F.3d 1348 (Fed. Cir. 2005). 7. Ferring B. V. v. Barr Labs., Inc., 437 F.3d 1181 (Fed. Cir. 2006). 8. Merck & Co., Inc. v. Danbury Pharmacal, Inc., 873 F.2d 1418, 1421 (Fed Cir 1989).
23
There is no but for test for materiality.9 If withheld art is regarded as sufficient to invalidate the patent, or if a misstated or omitted fact would have done so, inequitable conduct is usually held to have been clearly shown. In fact, evidence of but for fraud will likely lead to attorney fee sanctions or, if market domination results, antitrust guilt including treble damages. The close issues of inequitable conduct occur when the finder of fact concludes that the withheld art or misstated fact would probably not have defeated patentability. 10 In such cases, the patent is declared unenforceable to maintain the duty of disclosure and protect the integrity of the ex parte patenting process. Intent must be found, but circumstantial evidence can be sufficient.11
2. Who Has the Duty

Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith toward the PTO.12 The duty of candor and good faith extends to the inventors, the attorneys who prepare and prosecute the application, and every other person who is substantively involved in the preparation or prosecution of the application or who is associated with the inventor or the entity to which the application has been assigned. Knowledge of prior art by the applicants colleagues is not imputed to those actually involved in the prosecution.13 Additionally, because the duty applies only to individuals and not to organizations, uninvolved employees of a corporation to which the inventor has an obligation to assign the patent are under no duty to submit information that may be material to patentability.14
9. Molins PLC v. Textron, Inc., 48 F.3d 1172 (Fed. Cir. 1995). 10. See, e.g., A.B. Dick Co. v. Burroughs Corp., 798 F.2d 1392, 1396 (Fed. Cir. 1986). Years ago, some litigants attempted to depose patent examiners in order to press issues about relevance and whether they were misled. Statutory changes largely block such stratagems at present. See discussion, infra, at I-5(C). 11. Kingsdown Medical Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988). 12. 37 C.F.R. 1.56(a). 13. See, e.g., Insultherm, Inc. v. Tank Insulation Intl, 54 F.3d 731 (Fed. Cir. 1995)(The party alleging inequitable conduct must show a patentees knowledge of the undisclosed art because a patentee cannot disclose what is unknown to him.); FMC Corp. v. Manitowoc Co., 835 F.2d 1411, 1415 fn. 8 (Fed. Cir. 1987)(Applicant refers to the patentee and the attorney who prosecuted). 14. 37 C.F.R. 1.56(c).
24
3. Scope of the Duty

There is no duty to seek out prior art, only to disclose relevant, material references known to the patent prosecution team.15 Relevant references are those which a diligent patent examiner would want to think about in considering anticipation or obviousness issues. Material references are ones that are closer to the claimed invention than the submitted references.16 One area of ambiguity, or confusion, in regard to the cumulativeness standard is how it relates to the relevance standard. Relevant prior art has been alternatively described as art a reasonable patent examiner would want to see, or as reasonably related to the invention.
4. Timing of Disclosure
PTO regulations set out when information must be disclosed, usually suggesting disclosure within ninety days of filing the application or, if discovered after filing, ninety days of its discovery.17 Specifically, the Manual of Patent Examiner Practice (MPEP) states:
Submit information promptly. An applicant, attorney, or agent who is aware of prior art or other information and its significance should submit same early in prosecution, e.g. before the first action by the examiner, and not wait until after allowance. Potentially material information discovered late in the prosecution should be immediately submitted. That the issue fee has been paid is no reason or excuse for failing to submit information.18
One commentator says that the earlier the disclosure of a known piece of information relative to the examination the better.19 If material information is disclosed to the PTO only after the examiner has allowed a patent to issue or otherwise adopted the position of the applicant, it is likely that an accused infringer will later argue that the examiner was sandbagged.20
15. Cordis Corp. v. Boston Sci. Corp., 188 Fed. Appx. 984, 987 (Fed. Cir. 2006)(citing FMC Corp. v. Hennessy Indus., Inc., 836 F.2d 521, 526 n.6 (Fed. Cir. 1987)(one should not be able to cultivate ignorance, or disregard numerous warnings that material information or prior art may exist, merely to avoid actual knowledge of that information or prior art.)). 16. See Molins, supra, at n.9. 17. 37 C.F.R. 1.97 (2003). 18. MPEP, note 50, 2004 (12)(citing Elmwood Liquid Prods., Inc. v. Singleton Packing Corp., 328 F.Supp. 974 (M.D. Fla. 1971)). 19. Boulware, Margaret A., and Tamsen Valoir, Inequitable Conduct, 619 PLI/Pat. 1245, 1252 (2000). 20. David Hricik, Aerial Boundaries: The Duty of Candor as a Limitation on the Duty of Patent Practioners to Advocate for Maximum Patent Coverage, 44 S. Tex. L. Rev. 205, 22829 (2002)
25
5. Meaning of Noncumulative
There is a temptation to reason that any relevant art is perforce noncumulative. The better reasoning seems to be the opposite, namely, that an accused infringer asserting the materiality of unsubmitted or sketchily described art must show, first, that it would have been of sufficient potential interest to meet some relevance test, and, second, that it was closer to the invention than art already submitted to, or known by, the examiner.21 The judges conclusion that the patent would have been granted even if a withheld reference had been submitted does not alter the rule that unexcused withholding results in unenforceability.22 Nor is it relevant that the bad conduct was only related to a claim that it is not sued upon. If any claim of the patent in suit was obtained inequitably, the whole patent is unenforceable.23 As noted above, the regulation states that it will usually be inequitable conduct to withhold facts that tend to refute an argument made for patentability. Thus, use of the argument that there were no prior innovations using a 12-volt battery could justify an inequitable conduct finding if applicant knew of any such reference and did not submit it, even if the argument was unimportant. On the other hand, advocates are allowed to make arguments based on opinions even if such are ultimately deemed unsound.24 One CAFC decision, Penn Yan,25 led to the assumption that submission of a key reference along with a myriad of irrelevant ones might be deemed a form of concealment. However, a later case refused to apply the new doctrine when the facts were less egregious.26
6. Types of Nondisclosure
Case law indicates that omissions regarding a wide variety of subjects may raise issues of inequitable conduct, as shown, for instance, in the following.
21. 22. 23.
24. 25. 26.
(indicating that examiners have a financial incentive not to re-open reexamination once they have allowed an application). Halliburton Co. v. Schlumbarger Tech. Corp., 925 F.2d 1435 (Fed. Cir. 1991). See In re Baxter Travenol Labs, 952 F.2d 388 (Fed. Cir. 1991). J.P. Stevens & Co., Inc. v. Lex Tex Ltd., Inc., 747 F.2d 1553, 1561 (Fed. Cir. 1984), cert. denied, 474 U.S. 822 (1985); Lummus Industries, Inc. v. D.M. & E. Corp., 862 F.2d 267, 274 (Fed. Cir. 1988). See, e.g., Young v. Lumenis, Inc., 492 F.3d at 1348. Penn Yan Boats, Inc. v. Sea Lark Boats, Inc., 479 F.2d 1328 (5th Cir. 1973). Molins Plc v. Textron, 48 F.3d 1172, 118283 (Fed. Cir. 1995).
26
a) Inventorship Courts have emphasized that patents and applications must identify the true inventor(s), including all inventors involved in the case of a collaborative effort.27 Omission of an inventor can be sufficient for a court to find inequitable conduct.28 A prime example is Franks Casing Crew & Rental Tools, Inc. v. PMR Techs., Ltd., in which the court stated: if unenforceable due to inequitable conduct, a patent may not be enforced even by innocent co-inventors. One bad apple spoils the entire barrel. The misdeeds of co-inventors, or even a patent attorney, can affect the property rights of an otherwise innocent individual.29 Similarly, in University of West Virginia v. Van Voorhies, the CAFC again cited Stark to support the notion that innocent inventors may not enforce patents tainted by inequitable conduct.30 The determination of the proper inventor was traditionally based on who contributed to the invention as claimed, which allowed applicants to omit potential inventors, who contributed to the inventive effort, but not what was actually claimed.31 However, in PerSeptive Biosystems, Inc. v. Pharmacia Biotech, Inc.,32 the CAFC appeared to abandon this rule in favor of allowing a court to find inequitable conduct when the inventive entity is misnamed, regardless of what was actually claimed in the issued patent. In PerSeptive Biosystems, the district court adopted the narrower view of the term error, finding that the deliberate act of leaving two collaborators off of the patentsin-suit prevented correction under the Patent Act, 35 U.S.C. 256, regardless of which scientists contributions were actually claimed in the patents, and holding all three patents unenforceable for inequitable conduct.33 On appeal, PerSeptive Biosystems argued that it narrowed its patent claims during prosecution, removing the inventorship problem, but the CAFC held that these removed claims were the genesis of the claimed invention and led the named inventors to understand the subject matter that remained34
27. 12 Fed. Cir. B.J. 285, 298 (citing Kennedy v. Hazelton, 128 U.S. 667, 672 (1888)); 35 U.S.C. 102(f ), 116 (2000). See discussion of statutory inventorship requirements, infra, Section I-1(B). 28. Franks Casing Crew and Rental Tools, Inc. v. PMR Techs., 292 F.3d 1363,1376 (Fed. Cir. 2002) (affirming holding of inequitable conduct based on omission of an inventor. Brother co-inventors deliberately omitted another co-inventor from the patent and acted to hide his involvement in the invention throughout the patent prosecution process). 29. Id. at 1377 (quoting Stark v. Advanced Magnetics, Inc., 119 F.3d 1551, 1556, 43 U.S.P.Q.2d (BNA) 1321, 1325 (Fed. Cir. 1997)). 30. 278 F.3d 1288, 61 U.S.P.Q.2d 1449 (Fed. Cir. 2002). 31. 12 Fed. Cir. B.J. 285, 286 (2002). 32. 225 F.3d 1315 (Fed. Cir. 2000). 33. 12 Fed. Cir. B.J. at 30607 (citing PerSeptive Biosystems, Inc. v. Pharmacia Biotech, Inc., 12 F.Supp.2d 69 (D. Mass. 1998), aff d 225 F.3d 1315 (Fed. Cir. 2000)). 34. 225 F.3d at 1319.
27
and thus rejected the argument. Interestingly, the court dealt with inventorship in an unprecedented manner, stating that the named inventors had intentionally misrepresented their relationship with the unnamed inventive entity during prosecution35 even though the collaborative relationship and the initial invention were in fact disclosed.36 The CAFC concluded that the disclosures involved half-truths and material omissions, and noted that under Section 102(f), the collaborative efforts of three unnamed inventors were important to the patentability inquiry, ignoring what was actually claimed.37 This decision represents the first change in the courts treatment of Rule 56 since its revision in 1992, essentially lowering the bar for materiality or perhaps removing the materiality inquiry when looking at representations related to inventorship.38 In its most recent case concerning inventorship, the CAFC concluded that a later-issued patent would not be invalidated for an error in inventorship if there was an overlap in inventors. In this case, the provisional application listed one inventor, while the later filed, and identical, non-provisional application listed five.39 b) Prior Use or Sales Information regarding prior use or sales activity may conceivably raise invalidity issues.40 In Ameritek, Inc. v. Carolina Lasercut Corp.,41 the CAFC affirmed a district court decision that failure to disclose during prosecution certain sales that would have cost the applicant their patent was inequitable conduct and created an exceptional case warranting attorney fees. The district court had based this finding on a jury determination that the inventor applicant had intended to deceive, and went on to conclude that this conduct was imputed to the company, which had continued to pursue the infringement litigation despite learning of the inequitable conduct during prosecution.42 A more complex form of this issue arose in the Kaiser litigation.43 In Geneva II,44 the CAFC affirmed a district court decision that whether parties
35. 36. 37. 38. 39. 40.
41. 42. 43. 44.
Id. at 1322. Id. at 132527. Id. at 1322. 12 Fed. B.J. at 317. E.I. DuPont de Nemours and Co. v. MacDermid Printing Solutions, LLC., 525 F.3d 1353 (Fed. Cir. 2008). Parson Podiatry Lab. v. KLM Lab., 984 F.2d 1182, 1189 (Fed. Cir. 1993); Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., supra, at n.28 (nondisclosure of on-sale activity found to constitute inequitable conduct, citing willful ignorance of possible on-sale bar). 42 U.S.P.Q.2d 1411 (Fed. Cir. 1996). Id. at 1413. Kaiser Found. Health Plan v. Abbott Labs., Inc., 552 F.3d 1033, 1048 (9th Cir. 2009). Abbott Labs. v. Geneva Pharms., Inc., 182 F.3d 1315, 131819 (Fed. Cir. 1999).
28 Chapter 3 Inequitable Conduct in Obtaining the Patent
to prior sales were aware that the product contained the compound at issue was immaterial for Section 102(b) purposes. Though neither the buyers nor sellers knew of this fact at the time of the sales, the patent was invalidated by the on-sale bar. The court cited J.A. LaPorte, Inc. v. Norfolk Dredging Co.,45 which Abbott failed to include in documents submitted to the PTO, despite citing it in a brief during the litigation of the prior sales. c) Facts Suggesting Obviousness Information must be disclosed regarding products or processes connected to, or known by, the inventor and his agents that could raise issues of obviousness or other grounds for invalidity.46 d) Prior Art Writings Prior art includes not only patents and applications, but also publications or catalogs that show prior art. In Golden Hour Data Systems, Inc. v. emsCharts Inc.,47 the patent was found unenforceable partially due to a law students failure to cite a brochure describing the prior art. Though the patentee cited the prior art in the original Information Disclosure Statement (IDS), it had been disclosed in a manner that obscured its true relevance. Most notably, the student used text from an irrelevant part of the brochure in a later filing with the PTO, but never corrected the original misstatements in the IDS, clarified the significance of the prior art, or submitted the brochure.48 The need to disclose prior art is limited, however, to material art.49 In Larson v. Aluminart, three items of prior art not disclosed were not material because they were cumulative of prior art already before the panel.50 If the
45. 787 F.2d 1577 (Fed. Cir. 1986)(activities of a third party created an on-sale bar which invalidated the asserted claims of the patent). 46. Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1234 (Fed. Cir. 2003) (affirming holding of unenforceability based on failure to disclose a non-prior art article, because the article would have been relevant to the examiners consideration of enablement). 47. 2009 U.S. Dist. LEXIS 30108 (E.D.Tex. 2009). 48. The jury trial found infringement of the patent, placing this case in the series of recent cases knocking out objectively valid patents for inequitable conduct. See discussion of Larson v. Aluminart Products, infra, Chapter 3, Section A, subsection 6,d.) Prior Art Writings. 49. See, e.g. GFI, Inc. v. Franklin Corp., 265 F.3d 1268 (Fed. Cir. 2001)(nondisclosure of prior art references considered inequitable conduct based on intent inferred from proof that applicant knew or should have known of materiality); Life Technologies, Inc. v. Clontech Labs., Inc., 224 F.3d 1320 (Fed. Cir. 2000)(intent analysis not reached when applicants non-disclosure of reliance on cited prior art reference was not material). 50. Larson Mfg. Co. of South Dakota, Inc. v. Aluminart Products, Ltd., 2008-1096, 1174, slip-op. at 3 (Fed. Cir. Mar. 18, 2009); See also, Environmental Designs Ltd. v. Union Oil Co., 713 F.2d 693, 698 (Fed. Cir. 1983), cert. denied, 464 U.S. 1043 (1984).
29
examiner knows of prior art that is not submitted by the applicant, such failure to submit is generally not material, because [w]hen a reference is before the examiner, whether through the examiners search or the applicants disclosure, it cannot be deemed to have been withheld from the examiner.51 Furthermore, the threshold level of intent is not met when the art is cited in another application pending before the examiner at the same time.52 A divisional application may save an application infected by the omission of material prior art. For example, in Baxter Intl, Inc. v. McGaw, Inc., the court stated that where the claims are subsequently separated from those tainted by inequitable conduct through a divisional application, and where the issued claims have no relation to the omitted prior art, the patent issued from the divisional application will not also be unenforceable due to inequitable conduct committed in the parent application.53Prior art is not limited geographically, and an applicant must submit even prior art that is cited in related foreign applications.54 Such prior art is especially material when it was used to reject the same or similar claims in the foreign application, or has been found to be relevant for some other reason. The rationale is expressed in Gemveto Jewelry Co. v. Lambert Bros., Inc.,55 in which the court stated that a double standard of accountability would allow foreign attorneys and their clients to escape responsibility for fraud or inequitable conduct merely by withholding from the local correspondent information unfavorable to patentability and claiming ignorance of United States disclosure requirements. e) Relevant Case Histories Litigation, or evidence or findings from litigation, relevant to the validity of the claimed invention must be disclosed.56
51. 52. 53. 54. 55.
Scripps Clinic & Research Found. v. Genentech, Inc., 927 F.2d 1565, 1582 (Fed. Cir. 1983). FMC Corp. v. Hennessy Industries, Inc., 836 F.2d 521 (Fed. Cir. 1987). Baxter Intl, Inc. v. McGaw, Inc., 149 F.3d 1321, 1332 (Fed. Cir. 1998). MPEP 2001.06(a). 542 F.Supp. 933, 943, 216 U.S.P.Q. 976, 985 (S.D.N.Y. 1982)(patent was held invalid or unenforceable because patentees foreign counsel did not disclose to patentees U.S. counsel or to the PTO prior art cited by the Dutch Patent Office in connection with the patentees corresponding Dutch application). 56. Golden Valley Microwave Food, Inc. v. Weaver Popcorn Co., Inc., 837 F.Supp. 1444, 146566 (N.D. Ind. 1992) (holding that evidence in a prior litigation regarding related subject matter was material and should have been disclosed); Newell Window Furnishings v. Spring Window Fashions Div., Inc., 53 U.S.P.Q.2d 1302, 1331 (N.D. Ill. 1999)(holding that a withheld district court judges order denying a preliminary injunction in a prior suit involving applicants design patent was material to the prosecution of applicants co-pending utility patent application) revd on other grounds, 15 Fed. Appx. 836, 839 (Fed. Cir. 2001) (unpublished); Critikon, Inc. v. Becton Dickinson Vascular Access, 120 F.3d 1253, 1259 (Fed. Cir. 1997)(As a minimum
30
The failure to disclose litigation related to the patent at issue,57 or testimony from a prior proceeding,58 has been held to be a type of inequitable conduct. f ) Important PTO History Related or similar PTO proceedings or results that may be of interest to the examiner must be disclosed.59 In Larson v. Aluminart, a patentee failed to disclose two office actions issued in the prosecution of a continuation application that originated from the application that resulted in the patent at issue, the district court found inequitable conduct.60 Because these office actions were material, the CAFC remanded for a reconsideration of deceptive intent. A nondisclosure of a Board finding may also constitute inequitable conduct. In Li Second Family Ltd. v. Toshiba Corp.,61 such nondisclosure concerned a Board finding of non-entitlement to the benefit of an earlier filing in a related co-pending application. This failure to disclose, coupled with an improper priority claim, led the court to find inequitable conduct. g) Patentees Own Inventive Efforts Because Section 102(d) denies patents to inventions already patented by the applicant in a foreign country more than twelve months before the filing of the U.S. application,62 the duty to disclose includes the patentees own prior inventions, patents, and applications, including such efforts conducted
57. 58.
59.
60. 61. 62.
the applicant should call the attention of the [Patent] Office to the litigation, the existence and the nature of the allegations relating to validity and/or fraud, or inequitable conduct relating to the original patent, and the nature of the litigation materials relating to these issues)(quoting, in part, from MPEP 2001.06(c) (1994)); Boehringer Ingelheim Vetmedica, Inc. v. Schering-Plough Corp., 68 F.Supp.2d 508, 549 (D.N.J. 1999)(In sum, although the opinions addressing inequitable conduct based upon information gathered in related litigation are few in number, the opinions teach clearly that Rule 56 and traditional inequitable conduct law apply to information gathered from related litigation). Nilssen v. Osram Sylvania, Inc., 528 F.3d 1352, 1356 (Fed. Cir. 2008). Winbond Elecs. Corp. v. Intl Trade Commn., 262 F.3d 1363 (Fed. Cir. 2001)(failure to disclose inventorship testimony from prior ITC investigation to the PTO after request for certificate of correction not inequitable conduct because no intent). Akron Polymer Container Corp. v. Exxel Container, Inc., 148 F.3d 1380 (Fed. Cir. 1998)(discussing; Monsanto Co. v. Mycogen Plant Science, Inc., 61 F.Supp.2d 133, 19697 (D. Del. 1999)(noting that applicants should discuss co-pending applications that are material to patentability)). Larson v. Aluminart, supra, n.50. 231 F.3d 1373 (Fed. Cir. 2000)(found inequitable conduct based on an intent to deceive standard). 35 U.S.C 102(d).
31
abroad. Still, failure to disclose ones own prior art is not always material. In Unidynamics Corp. v. Automatic Products International, Ltd., the accused infringer claimed unenforceability based on patentees failure to disclose his own prior art device and the related utility application.63 The court rejected this argument, agreeing with the patentee that the device was merely cumulative of an item of prior art asserted during prosecution,64 and that the application did not even describe the point of novelty of the patent at issue.65 h) Defects in Fee Reduction Requests Facts that would have cast doubt on an applicants right to lower fees or time extensions from the PTO must be disclosed.66 Even though such assertions are not material to patentability, willful use of false testimony in requesting such provisions can lead to a finding of inequitable conduct.67 i) Best-Mode Violations as Inequitable Conduct Omission or concealment of the best mode, discussed at section I-2(C), if deemed intentional, can constitute inequitable conduct.68 j) Failure to Provide Translation of Foreign Language References 37 C.F.R. 98 expressly provides: If a written English-language translation of a non-English language document, or portion thereof, is within the possession, custody, or control of, or is readily available to [the applicant], a copy of the translation shall accompany any IDS. If no translation into English is available to an applicant citing a foreign reference in an IDS, Rule 98 states that a concise explanation of the relevance of the reference, as understood by the most knowledgeable person in the applicants employ involved in the prosecution of the patent application, is to be submitted as part of the IDS. There is very little case law that provides information on an applicants duty to translate foreign references. In one case,69 a U.S. patent agent received a
63. 157 F.3d 1311 (Fed. Cir. 1998)(intent not even addressed as materiality failed). 64. Id. at 1324. 65. Id. (based on these findings, district court ruling that there was no inequitable conduct as a matter of law was affirmed). 66. Monolith Portland Midwest Co. v. Kaiser Aluminum & Chem. Corp., 407 F.2d 289, 296 (9th Cir. 1969). 67. Id; See also, General Electro Music Corp. v. Samick Music Corp., 19 F.3d 1405 (Fed. Cir. 1994). (inequitable conduct defense supported by a finding that attorneys statement in a petition to make special was material and intentionally false). 68. Consolidated Aluminum v. Foseco, 910 F.2d 804 (Fed. Cir. 1990)(inequitable conduct affirmed based on withholding of best mode). 69. Libby-Owens-Ford Co. v. BOC Group, Inc., 655 F.Supp. 897 (D. NJ. 1987).
32 Chapter 3 Inequitable Conduct in Obtaining the Patent
copy of an English language publication that cited a Japanese patent in a footnote. He ordered a copy of the Japanese patent, looked at its diagrams, and then ordered a partial translation. On the basis of the limited information he had, he decided that the patent was cumulative to other prior art and he submitted the publication alone to the PTO. The court found no inequitable conduct and also observed that the Japanese patent would be considered no better than other art in the case. In another case,70 the patent agent submitted a German patent application to the PTO but not an English translation of it that he had. The court did not agree that this was inequitable conduct, but gave no explanation. The most extensive discussion in any decision is that in Key Pharmaceuticals, Inc. v. Hereon Laboratories Corp.71 The charge was that the patentee withheld four Japanese Kokais and two English-language patents. The patentee received the Kokais in a Patent Co-operation Treaty (PCT) International Search Report, which characterized them as being of particular relevance such that the claimed invention cannot be considered novel. . . . The patentee then obtained full English-language translations but did not submit them to the PTO, allegedly because of preoccupation with a pending merger into another company. Several years later, a patent agent of the successor company submitted the English-language abstracts of the Kokais but not the full translations, even though he was aware of them and had discussed them with foreign patent agents handling foreign cases. The abstracts discussed some important features of the invention, but not the use of nitroglycerine, which was mentioned in the full translations. The court held that the Kokais did not render the U.S. patent invalid as obvious. It noted that the examiner could have ordered translations if he wanted to, and that there was no evidence that the untranslated data about nitroglycerine would have impressed the examiner. Accordingly, the withheld data was viewed as probably not material to patentability. In addition, the failure to submit the full translations was explainable due to the workload in the companys office and this tended to prevent a conclusion of specific intent to deceive the PTO. The court therefore rejected the inequitable conduct charge. The matter of translations is considered, from a patent examiners standpoint, in the MPEP. MPEP Section 609 addresses information disclosure statements. In explaining the requirements of PTO Rule 98 (quoted above), Section 609 makes these comments about the content of an IDS and its citation of foreign language references:
If a translation of the information into English is submitted with the foreign language information, no concise explanation is required. An English-language
70. Valmet Paper Machinery, Inc. v. Beloit Corp., 895 F.Supp. 1158 (W.D. Wis. 1995). 71. Key Pharmaceuticals, Inc., v. Hereon Laboratories Corp., 981 F.Supp. 299 (D. Del. 1997).
Failure to Meet Duty to Disclose to the PTO equivalent application may be submitted to fulfill this requirement if it is, in fact, a translation of a foreign language application being listed in an information disclosure statement . . . . Submission of an English language abstract of a reference which does not deal with its relevance to the invention will not fulfill the requirement for a concise explanation. Where the information listed is not in the English language, but was cited in a search report or other action by a foreign patent office in a counterpart foreign application, the requirement for a concise explanation of relevance can be satisfied by submitting an Englishlanguage version of the search report or action which indicates the degree of relevance found by the foreign office. This may be an explanation of which portion of the reference is particularly relevant, to which claims it applies, or merely an X, Y, or N indication on a search report . . . The concise explanation may indicate that a particular figure or paragraph of the patent or publication is relevant to the claimed invention. It might be a simple statement pointing to similarities between the item of information and the claimed invention. It is permissible but not necessary to discuss differences between the cited information and the claims.
33
This language suggests several possible ways to deal with a foreign-language patent or publication that is relevant to the patentability of the invention being claimed in a patent application. One approach is to prepare a full translation of the entire reference, which obviates the need for a concise explanation; of course, that can be a very expensive way to proceed. A second approach is to select the parts of the reference that the inventor or other most knowledgeable person considers relevant, and translate only them; this, of course, involves a risk that an infringer will later assert that the selective translation omitted the most relevant portions of the reference (as conceived by the infringer). A third approach, subject to the same problems as the second approach, is to provide a concise explanation. A fourth approach is available when the European Patent Office (EPO) or another foreign patent office considers the reference in a search report for a related patent application (such as a foreign counterpart application). In such cases, the EPO or other office may provide an X, Y, or A to indicate an anticipation, obviousness, etc. This avoids problems of making a statement that can later be challenged in litigation, but the option is available only when an EPO or other search report exists. In Gambro Lundia AB v. Baxter Healthcare Corp.,72 it was held that the district court abused its discretion in finding inequitable conduct on grounds that the patent attorney misrepresented the teachings of a German patent in distinguishing a reference allegedly anticipating the patent application. Some of Gambros arguments to the examiner about the German patents teachings were at least over-statements, but in context these exaggerations
72. Gambro Lundia AB v. Baxter Healthcare Corp., 110 F.3d 1573 (Fed. Cir. 1997).
34
do not rise to the level of gross falsification. Other evidence in the record ignored by the district courtshowed Gambros good faith. The examiner relied on Gambros translation of the German patent, but he could have requested translations for the PTOs use of his own volition, under MPEP Section 901.05(d). Although infringers charges of inequitable conduct are recognized by courts as a problem of the U.S. patent litigation system, the most recent decisions of the CAFC provide a basis for controlling the defense. Good faith remains a defense, and the infringer has the burden of proving inequitable conduct. Actual intent to deceive the PTO must be proved, and it cannot be inferred simply from the fact that the applicant was careless (indeed, grossly negligent) in how it handled the prosecution of the patent application. In practice, the CAFC has typically upheld district court rulings of no inequitable conduct and has often reversed district court rulings of inequitable conduct. The harshest ruling in regard to selective translations is Semiconductor Energy Lab v. Samsung.73 There, the trial court denied enforcement because the inventor cited a Japanese language reference as relevant, and submitted the first few pages in English, without translating a later passage that the court found even more relevant. The appeals panel rejected the inventors contention that submission of what was a pre-existing partial translation was required, and implied nothing about the relevance of non-translated portions. The inventor was also faulted for submitting a concise explanation of the references relevance that omitted an aspect of relevance. The MPEP indicates that the concise explanations need not be complete.74 Deference to the district courts assessment of character and credibility seems to have been determinative. Recently, in Kaiser Foundation Health Plarl v. Abbott Labs,75 Abbott failed to provide an English translation of a relevant Japanese patent application which disclosed a form of terazosin hydrochloride described in a key patentin-suit. Abbott did include a full translation in an earlier application, which the examiner saw, but the disclosed reference did not fully or specifically disclose the earlier applications closest compound.76 The court found that there was enough evidence for a jury to find that an English translation of the Japanese reference would have led to rejection of the application, and used this finding to support the decision to reverse summary judgment.77
73. Semiconductor Energy Lab. Co. v. Samsung Elecs. Co., 204 F.3d 1368, 1372 (Fed. Cir. 2000), cert. denied, 531 U.S. 1190 (2001). 74. See MPEP 609.04(a). 75. 552 F.3d 1033, supra, at n.43. 76. Id. at 1051. 77. Id. at 1052.
Balancing Test re: Materiality and Intent
35
k) Burying References There was a time when it appeared that inequitable conduct could be proved by showing that the applicant purposely submitted a dangerous reference in the midst of anodyne references in order to lessen the attention the examiner would give to the key one. The paradigm case is or was Pen Yan Boats, Inc. v. Sea Lark Boats, Inc.78 There, the applicant discovered a close reference, waited a while, and then submitted it with a dozen or so less close references, stating falsely that all had just been found. The trial court found inequitable conduct due to an attempt to bury the dangerous reference among irrelevant ones. The major CAFC precedent on the subject appears to be more resistant to the burying theory. In Molins PLC v. Textron, Inc.,79 the appeals panel reversed the inequitable conduct finding of the lower court. The opinion notes that the key reference was submitted in fifty others, but stresses that no false or misleading statements were made and that the examiner initialed every reference, indicating that he had read and considered them all. There was evidence that there was good reason to disclose multiple references at that time. Thus, it is possible to conclude that a burying theory of inequitable conduct might again prevail, but the Molins holding leaves little room for such if, as is usually the case, the examiner initials the buried reference.
B. Balancing Test re: Materiality and Intent

The CAFC has developed what it calls a balancing test relating to the two requirements of materiality and intent, namely, that if an unsubmitted reference is highly material and known, there is no need for incontrovertible evidence of intent to deceive. Contrarily, if the materiality of the reference is not very great, intent to deceive will not be found unless there is strong evidence of intent.80 If the materiality requirement is not met, the intent element may not even be reached by the court.81
78. 479 F.2d 1328 (5th Cir. 1973). 79. 33 U.S.P.Q.2d 1823, 183031 (Fed. Cir. 1995). 80. See, e.g., Under Seas Indus. Inc. v. Dacor Corp., 833 F.2d 1551 (Fed. Cir. 1987); Kimberly-Clark Corp. v. Johnson & Johnson, 745 F.2d 1437 (Fed. Cir. 1984). 81. Life Techs., Inc. v. Clontech Labs., Inc., supra. (two allegations of nondisclosure and one allegation of misrepresentation of prior art not material, intent consideration not reached); Ruiz v. A.B. Chance Co., 234 F.3d 654 (Fed. Cir. 2000)(nondisclosure of public use not material: intent consideration not reached); Upjohn Co. v. Mova Pharm. Corp., 225 F.3d 1306 (Fed. Cir. 2000)(nondisclosure of prior art not material).
36
If evidence both of materiality and intent exists, the trial judge is to decide as a matter of equity whether the facts justify rendering the patent unenforceable.82 The court emphasized in Star Scientific83 that the penalty of inequitable conduct is severe. Just as it is inequitable to permit a patentee who obtained his patent through deliberate misrepresentations or omissions to enforce the patent against others, it is also inequitable to strike down an entire patent where the patentee only committed minor missteps or acted with minimal culpability or in good faith.84 Based on this notion, the CAFC emphasized the courts role in ensuring that parties asserting an inequitable conduct defense have met the burdens of materiality and intent based on a clear and convincing evidence standard. Recently, the CAFC decided a case that may have great significance for inequitable conduct litigation.85 The court affirmed the district courts finding that two undisclosed office actions were material, but remanded for a determination of intent and a balancing of intent and materiality to make a final conclusion as to inequitable conduct. The opinion provides some comments for the district court to consider when assessing deceptive intent: (1) it will not be necessary to accept additional evidence; (2) materiality does not presume intent, and nondisclosure does not satisfy the deceptive intent element; (3) any evidence of good faith should be considered, and weighed against a finding of deceptive intent. Judge Linn, while concurring in the opinion to keep with precedent, wrote a separate opinion to convey his concern about the plague of inequitable conduct allegations in patent cases. He points out that the Supreme Courts three inequitable conduct cases involved overt fraud, not acts of omission during prosecution. Linn notes that a standard even lower than Kingsdowns gross negligence standard86 is used throughout modern case law. This standard, expressed in the CAFCs own Praxair, Inc. v. ATMI, Inc.,87 permits a court to infer deceptive intent when (1) highly material information is withheld; (2) the applicant knew of the information and should have known it was material; and (3) the applicant did not provide a credible explanation for withholding the information. Judge Linn argues that such a standard repeats the materiality intent, sets forth a simple negligence standard, and shifts the burden to the patentee to prove a negative. This third aspect is particularly troubling, as it should be the accused infringer who must prove that material evidence was withheld with
82. 83. 84. 85.
Brasseler USA I, LP v. Stryker Sales Corp., 267 F.3d 1370, 1381 (Fed. Cir. 2001). Star Sci., Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357 (Fed. Cir. 2008). Id. Larson Mfg. Co. of South Dakota, Inc. v. Aluminart Products, Ltd., 2008-1096, 1174, slip-op., supra, Chapter 3, Section A, subsection 6, d.) Prior Art Writings. 86. Discussed, infra, Chapter 3, C. False Statements. 87. 543 F.3d 1306 (Fed. Cir. 2008).
False Statements
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specific intent to deceive. Satisfying the first two prongs does not, however, establish the threshold level of deceptive intent needed to bring the third prong into consideration. Finding that the present test for inferring deceptive intent falls short of the standard outlined in Star Scientific,88 Linn called for an en banc review of the inequitable conduct issue.
C. False Statements
Virtually all cases finding false statements to be inequitable involve sworn statements, usually affidavits. Affidavits submitted to the PTO are held to a high standard, as PTO examiners are specifically informed that affidavits and declarations are to be scrutinized closely and the facts weighed with care, including the affiants or declarants interest in the outcome of the application.89 The strictness of the rule on false declarations is exemplified by cases holding that a misstatement of the affiants rsum, or as to his lack of connection to the applicant, will be enough to forfeit enforcement of the patent.90
1. Intent
Once the materiality of a non-submitted prior art is shown, intent to deceive must be established. Of course, proof that the accused person knew of the prior art is crucial.91 Once knowledge of the art is shown, intent may be proved based on circumstantial evidence. However, all evidence of good faith must also be considered.92 Submission of prior art as close as or closer than omitted art refutes bad intent.93 For some years, negligent failure to disclose, or gross negligence, might have been deemed inequitable conduct. In Kingsdown, the CAFC rejected such approach, insisting that intent must be proved.94 Many post-Kingsdown cases have applied this holding that intent to deceive cannot be inferred solely from a failure to disclose a material reference. In Braun Inc. v. Dynamics Corp. of America,95 Braun accused Waring, a division of Dynamics, of
88. 89. 90. 91. 92. 93. 94. 95.
Star Sci., Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1367 (Fed. Cir. 2008). MPEP 716.01(c). See also, Ferring, 437 F.3d at 1187. Paragon Podiatry Lab. v. KLM Lab., 984 F.2d 1182 (Fed. Cir. 1993). Tennant Co. v. Hako Minuteman Inc., 651 F.Supp. 945, 957 (N.D. Ill. 1986)(Failure to cite prior art does not breach that duty if [applicant] did not know of the prior art.). Molins Plc v. Textron, 48 F.3d 1172 (Fed. Cir. 1995). Haliburton v. Schlumberger Tech., 925 F.2d 1425 (Fed. Cir. 1991). Kingsdown Medical Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988). 975 F.2d 815 (Fed. Cir. 1992).
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infringing a design patent on a hand-held electric blender. Waring asserted a defense of inequitable conduct, alleging that Braun failed to present its own material prior art to the PTO.96 Waring claimed that Brauns prior art was material because it showed that Brauns blender design was merely an obvious evolutionary step, not a patentable advance97 and that Brauns intent to deceive could be inferred from the failure to present said art to the PTO. The CAFC affirmed a directed verdict for Braun on inequitable conduct, holding that materiality does not presume intent, which is a separate and essential component of inequitable conduct.98 In Therma-Tru Corp. v. Peachtree Doors Inc.,99 Therma-Tru sued Peachtree for infringing a utility patent on doors with a glass fiber-reinforced plastic skin. At trial, the jury found the patent not invalid and willfully infringed, however, the district court held it unenforceable for inequitable conduct. The district court found that the inventors had intentionally withheld an enabling disclosure from the examiner. On appeal, Peachtree attempted to preserve this decision by arguing that the intent to deceive or mislead should be inferred from the fact that certain information was not provided to the examiner.100 The CAFC disagreed, holding that the theory of inferential culpability was definitively laid to rest in Kingsdown, wherein this court en banc held that invalidity for inequitable conduct requires a showing, by clear and convincing evidence, of intent to deceive or mislead the patent examiner.101 False or misleading declarations are also inequitable conduct. Such declarations must be shown to be knowingly false, and may be fatal even if unrelated to patentability (e.g., declarations affecting fees or timing). More significantly, a false statement, as in an affidavit, will usually be found to be intentional.102 An unconvincing or fallacious argument about disclosed prior art is not treated as material deception. Such false or misleading statement in such a document is likely to be held to be material.103An honest mistake in an affidavit, however, is not inequitable conduct.104
96. 97. 98. 99. 100. 101. 102.
Id. at 822. Id. Id. (quoting Manville Sales Corp. v. Paramount Sys. Inc., 917 F.2d 544, 552 (Fed. Cir. 1990)). 44 F.3d 988 (Fed. Cir. 1995). Id. at 996. Id. Refac Intl v. Lotus Dev. Corp., 81 F.3d 1576 (Fed. Cir. 1996), rehearing denied 1996 U.S. App. LEXIS 18326 (Fed. Cir. 1996). 103. Refac, 81 F.3d at 1583. ([a]ffidavits are inherently material; and the affirmative act of submitting an affidavit must be construed as being intended to be relied upon.). 104. Allen Archery, Inc. v. Browning Mfg. Co., 819 F.2d 1087 (Fed. Cir. 1987).
False Statements
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2. False Statements Distinguished from Omissions

The initial thing that should be said about false statements is that they may not differ much from omissions, which have just been discussed. The reason is that a declaration may be attacked as false because it omits key facts, rather than stating untruths.105 Nevertheless, a bald statement, such as an assertion that no similar invention was available, may be viewed as more egregious than a failure to mention one such invention. In general, inequitable conduct cases dealing with falsity have dealt with affidavits, declarations, or other submissions going beyond the arguments of counsel to the PTO, the general rule being that arguments about available references are mere advocacy, and need not be correct in any absolute sense.106 There may be a middle ground, in which patent counsel makes statements to the examiner about a piece of prior art that has not actually been submitted. (The authors view is that if the examiner could ask for the object, or ask more questions about it, intent to deceive should be rejected as implausible.)
3. Typical Cases
Certain types of false statement issues tend to reoccur, and provide most of the grist for inequitable conduct cases in this category. a) Falsified Test Results Due to Manipulation of the Conditions, Data, etc. Clearly, if the patent applicant asserts that its compound or such yielded unexpectedly good results when used as directed, these test results have to be fairly presented. In Novo Nordisk v. Bio-Technology General, the courts determination of inequitable conduct focused on the fact that Novo presented expert testimony to the Board about a test that had never been performed successfully.107 Because the test was the sole issue of the interference, Novos conduct reflected the necessary intent for inequitable conduct.108
105. Monsanto Co. v. Rohm & Haas Co., 312 F.Supp. 778, 79192 (E.D. Pa. 1970), affirmed, 456 F.2d 592 (3d Cir. 1972). 106. H.B. Fuller Co. v. National Starch and Chemical Corp., 689 F.Supp. 923, 941, 7 U.S.P.Q.2d 1753, 1766 (D. Minn. 1988)(No intent found when applicants patent agent did not carelessly construe the available test data, but rather made her best argument in favor of the patentability; her nondisclosure of the data resulted from failure to adequately check her work with the inventors, and was at most simple negligence). 107. Novo Nordisk Pharmaceuticals, Inc. v. Bio-Technology General Corp., 424 F.3d 1347, 1360 (Fed. Cir. 2005)(inventor must reveal that enablement example was prophetic, not actual). 108. Id.
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This determination was bolstered by the fact that Novo failed to offer an explanation after the interference ended. A misstatement of test conditions may not be sufficient to find inequitable conduct. In Regents of University of California v. Eli Lilly & Co.,109 which concerned a patent on recombinant DNA reproduction of insulin, the court found that there was no material misrepresentation even though the specification examples misidentified the plasmid used. Because the accused infringer did not argue that the plasmid was inoperable in the stated examples, but rather only that these should not have been stated as actual examples, the accused infringer had a burden to demonstrate that this distinction would have been considered material by a reasonable patent examiner. The court found that the accused infringer failed to meet this burden by clear and convincing evidence.110 Failure to disclose tests may also be suspect, especially if only a small percentage are disclosed during the prosecution.111 b) False Attribution of the Disinterestedness of Providers of Expert Declaration Supporting Patentability112 If the PTO is unconvinced as to the utility or novelty of an invention, and expert affidavits are submitted, especially to overcome a rejection, the cases emphasize that any interest of the expert in the invention of the applicant firm must be fully revealed. Omission in an affidavit of facts relevant to the affiants neutrality is sufficient to be deemed inequitable.113 In Refac, the inventors suggested that they would submit affidavits from people other than the inventors to back up an affidavit by a co-inventor, but the supposedly disinterested persons included at least one who had worked for the inventors company.114 Such conduct led to an antitrust class action suit by consumers of a patented drug. The applicant submitted five declarations of scientists to overcome an obviousness finding, but did not disclose that four out of five had been employed
109. 119 F.3d 1559, 157071 (Fed. Cir. 1997), cert. denied, 523 U.S. 1089 (1998). 110. See also Atlas Powder Co. v. E.I. Du Pont De Nemours & Co., 750 F.2d 1569, 1578 (Fed. Cir. 1984) (Even if intent could be inferred, and if the examples were constructive but not disclosed to the examiner as such, [the alleged infringer] has not shown the nondisclosure to have been material, i.e., important to an examiner in allowing the patent to issue.). 111. Monsanto Co. v. Rohm & Haas Co., 456 F.2d 592, 59697 (3d Cir. 1972)(Significantly, although the Husted tests entailed tests on twenty species, at three separate rates of application per acre, the Patent Office was informed of tests on only eleven species and only at one rate of application, two pounds per acre. In all, the affidavit showed less than 25 per cent of Husteds results; of 899 tests, only 110 were submitted.). 112. Ferring, 437 F.3d at 1190. 113. Refac Intl, Ltd. v. Lotus Dev. Corp., 81 F.3d 1576, 158182 (Fed. Cir. 1996). 114. Id.
False Statements
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by the applicant company or had received research funds from it.115 This is grounded in the fact that the law of evidence generally recognizes that the testimony of a witness may be rendered suspect by a past relationship with a party.116 Even mere silence about the relationship is enough to be deemed misleading.117 c) Petitions to Make Special Statements made in a petition to make special must be truthful and candid. If the statements made under oath in such a petition result in advancement of the application out of turn, the applicant has gained a benefit. To be considered material, the statements need not relate to patentability per se. False statements that convey a benefit to the applicant by advancing its application also count. The CAFC has held:
We conclude as a matter of law that a false statement in a petition to make special is material if, as is the case here, it succeeds in prompting expedited consideration of the application. The courts instructions as a whole did not restrict materiality to the merits of the application but were correctly understood by the jury to include a PTO decision to examine the application sooner than otherwise. There was thus no error in the jurys finding of materiality.118
In General Electro, the applicant falsely represented that it had made a careful and thorough search of the prior art, and based on that representation, the application was advanced out of turn. In the decision, the panel relied decisively upon precedent from the Ninth Circuit rejecting a soft approach to the truth or falsity of declarations submitted to the PTO. The panel reasoned:
On this matter we find relevance in the Ninth Circuits ruling in Monolith Portland Midwest Co. v. Kaiser Aluminum & Chem. Corp.,119 which involved a district court finding that a patentee procured its patent through misrepresentations to the PTO by filing a petition to make special declaration containing deliberate lies. On appeal, the patentee argued that the misrepresentations
115. Ferring, 437 F.3d at 1190; In re DDAVP Direct Purchaser Antitrust Litigation, 2009 WL 3320504 at 3 (2d Cir. 2009). 116. See, e.g., United States v. Robinson, 530 F.2d 1076, 107980 (D.C.Cir. 1976) (witness past business transactions with a party are significant in assessing the witness credibility); Aetna Ins. Co. v. Paddock, 301 F.2d 807, 812 (5th Cir. 1962) (witness past financial affiliation with a party is significant in assessing his credibility). 117. See, e.g., Paragon, 984 F.2d at 11911192 (failure to mention stock ownership and previous employment was an omission sufficient to find inequitable conduct). 118. General Electro Music Corp. v. Samick Music Corp., 19 F.3d 1405, 1411 (Fed. Cir. 1994). 119. 407 F.2d 288, 296, 160 U.S.P.Q. (BNA) 577, 582 (9th Cir. 1969).
42 Chapter 3 Inequitable Conduct in Obtaining the Patent were not material because the sole purpose of the petition [to make special] was to accelerate a patent application. The Ninth Circuit rejected that argument, stating that it may be true that the misrepresentations did not relate to an ultimate fact, but the use of willfully false testimony cannot be fully rinsed away with a solution composed primarily of legal semantics.120
d) Small-Entity Status As for other misrepresentations to the PTO, the CAFC has shown that discretion applies. In Regents of the University of California v. Eli Lilly & Co.,121 it was held that misstatements to the National Institutes of Health (NIH) were not material to patentability. Further, the CAFC has stated that
[w]hile a misrepresentation of small entity status is not strictly speaking inequitable conduct in the prosecution of a patent, as the patent has already issued if maintenance fees are payable (excepting an issue fee), it is not beyond the authority of a district court to hold a patent unenforceable for inequitable conduct in misrepresenting ones status as justifying small entity maintenance payments.We therefore affirm the district courts decision finding that all of the patents in suit are unenforceable due to inequitable conduct in improperly claiming small entity status.[A] misrepresentation that would not have immediately affected patentability is still material.122
e) Misclaiming Priority Applicants facing rejection of a claim on the basis of a prior patent, publication, or other prior art may seek to carry back his date of invention prior to the effective date of such items. If this backdating is done through an affidavit or declaration under Rule 131 of the PTO,123 an affidavit that is sufficient on its face will be accepted. Because of this default rule, and the resulting importance of the duty of candor and full and fair disclosure, the misrepresentation of misclaiming the priority of earlier filing dates may constitute a false statement for inequitable conduct purposes.124
120. General Electro at 1411. Similarly, in Digital Control Ind. v. Charles Machine Works, 437 F.3d 1309, 1318 (Fed. Cir. 2006)(noting we have explicitly held that an affidavit, such as a petition to make special, is material as a matter of law if it succeeds in promoting expedited consideration of the application. ) 121. 119 F.3d 1559, 1571 (Fed. Cir. 1997). 122. Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223, 1230 (Fed. Cir. 2007). In a later proceeding on this case, the court noted that both the misclaiming of small entity status and the improper paying of small entity maintenance fees were factors supporting the finding of inequitable conduct. Nilssen, 528 F.3d at 1356. 123. 37 C.F.R. 1.131. 124. See, e.g., Nilssen, 528 F.3d at 1356; but see Greenwood v. Seiko Instruments & Electronics Ltd., 711 F.Supp. 30, 33, 13 U.S.P.Q.2d 1245, 1247 (D. D.C. 1989), vacated in part, revd in part,
Prosecution Laches 43
D. Infection of Related Patents

Analogously to the fruit of the poisonous tree doctrine in evidence law,125 patent law says that inequitable conduct in a parent patent application can fatally infect later variations of the original application, such as divisionals or continuations-in-part.126 On the other hand, it well settled that inequitable conduct in a later application will not infect a related or parent application that was prosecuted before the bad conduct.127 The CAFC has held that a finding of inequitable conduct in the acquisition of even a single claim of a patent renders the remaining claims of that patent unenforceable, even those without the taint of inequitable conduct,128 but this applies only to claims in one patent. In Pharmacia Corp. v. Par Pharm., the court held that in the case of related but separate patents, even those with the same expiration date, inequitable conduct in one patent does not extend to another patent that was not acquired through culpable conduct.129
E. Prosecution Laches
In 2002, the CAFC issued a landmark decision, holding that the Lemelson barcode patent could be held unenforceable due to his practice of delaying patent prosecution.130 Reaction to the substantive attacks of patent trolls such as Lemelson have led the courts to recognize a new equitable defense called prosecution laches. Such defense can arise if the patentee unnecessarily delays the progress of his patent application in the hope that large firms will commit substantial resources toward use of a technology
125. 126. 127. 128.
129.
130.
900 F.2d 238, 14 U.S.P.Q.2d 1474 (Fed. Cir. 1990), on remand, 19 U.S.P.Q.2d 1862 (D. D.C. 1991) (though misleading 131 was filed, court did not find intent, and reversed district court finding of inequitable conduct). Rohm & Haas Co. v. Crystal Chemical Co., 722 F.2d 1556 (Fed. Cir. 1983). See, e.g., Consolidated Aluminum Corp. v. Foseco, 910 F.2d 804 (Fed. Cir. 1990). SSIH Equip. S.A. v. United States ITC, 713 F.2d 746, 218 U.S.P.Q. 678 (Fed. Circ. 1983). See Kingsdown Med. Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867, 877 (Fed. Cir. 1988) (en banc in pertinent part); Hewlett-Packard Co. v. Bausch & Lomb Inc., 882 F.2d 1556, 1563 (Fed. Cir. 1989)(inequitable conduct that occurs during prosecution of a reissue application renders all the claims of the reissued patent, including the original claims, unenforceable). 417 F.3d 1369, 1375 (Fed. Cir. 2005)(rejecting argument that terminal disclaimer alone bound the patents together for purposes of unenforceability due to inequitable conduct) (citing 37 C.F.R. 1.178(a) (2004)(requiring an offer to surrender the original patent or statement that the original is lost or inaccessible to initiate reissue proceedings)). Symbol Techs., Inc. v. Lemelson Med., Educ. & Research Found., 277 F.3d 1361, 1363 (Fed. Cir. 2002); remanded, dist. ct. aff d, 422 F.3d 1378 (Fed. Cir. 2005).
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without knowing that it is being patented.131 The elements of the offense are (1) unreasonably and unexplainably delaying patent prosecution, and (2) such delay causing material prejudice to an accused infringer or the public.132 In a patent prosecution context, the PTO may refuse to issue a patent to an applicant under the doctrine of prosecution laches if: (1) the applicant unreasonably delayed the prosecution of an application before the PTO, and (2) the applicant was given sufficient notice of the consequences of continuing to delay prosecution with an opportunity to correct this error.133 There is no need to prove prejudice, injury, or intervening rights to another party in ex parte prosecution before the PTO.134 Another provision of the PTO Code that is potentially related to conduct deemed to be prosecution laches is 37 C.F.R. 10.39. This provision states in part that a practitioner shall not accept employment on behalf of a person if the [attorney or agent knows] or it is obvious that such person wishes to (a) Bring a legal action... merely for the purpose of harassing or maliciously injuring any other person.135 Following the CAFCs Lemelson ruling, the PTO issued regulations against purposeful delays in patent prosecution, such as in the filing of multiple continuations. However, the need for such rules, and the likelihood of proving prejudice to an accused infringer, have been substantially lessened by the 1999 amendment to the Patent Act to require that all patent applications be laid open 18 months after filing.136 Thus, Lemelsons submarine strategy is probably no longer possible. Diligent patent counsel can discern threats from patents not yet granted, as well as issued patents. Possibly, a pattern of continuations and addition of claims might serve to mislead some firms making production decisions, but that would depend on a battle of wits, which either side might win.
131. Symbol Techs., Inc. v. Lemelson Med., Educ. & Research Found., LP, 422 F.3d 1378 (Fed. Cir. 2005); Chiron Corp. v. Genentech, Inc., 268 F.Supp.2d 1139 (D. Cal. 2002); Lemelson v. Wang Lab., 874 F.Supp. 430 (D. Mass. 1994). 132. A.C. Aukerman Co. v. R. L. Chaides Construction Co., 960 F.2d 1020, 1032, 22 U.S.P.Q.2d 1321, 1328 (Fed. Cir. 1992), on remand, 29 U.S.P.Q.2d 1054 (N.D. Calif. 1993) (en banc) (A court must look at all of the particular facts and circumstances of each case and weigh the equities of the parties. . . . It is, however, well settled that, to invoke the laches defense, a defendant has the burden to prove two factors: 1. the plaintiff delayed filing suit for an unreasonable and inexcusable length of time from the time the plaintiff knew or reasonably should have known of its claim against the defendant, and 2. the delay operated to the prejudice or injury of the defendant.). 133. In re Bogese II, 303 F.3d 1362, 1367, 1369 (Fed. Cir. 2002). 134. Id. at 1372. 135. 37 C.F.R. 10.39(a) (1985)(Acceptance of employment). 136. 35 U.S.C. 122(b)(2007)(. . . each application for a patent shall be published, in accordance with procedures determined by the Director, promptly after the expiration of a period of 18 months from the earliest filing date for which a benefit is sought . . .).
False Statements to PTO by a Th ird Party 45
The 2002 amendment changing the term of U.S. patents is also hurtful to Lemelson-type tactics. By changing the term from 17 years after issue to 20 years after filing,137 the law takes prosecution delay off the term of the issued patent. Thus, an applicant who took 19 years to get a patent would only have a one-year term.
F. False Statements to PTO by a Third Party

There are at least a few cases holding that a damage action will lie for a would-be patentee who has to deal with false assertions made to the PTO by a third party opposing issuance of the patent, usually during a reexamination.138 Due to the sham exception, the Noerr-Pennington139 right to petition will not protect against intentional falsehoods.140
137. 35 U.S.C. 154 (2007)(. . . shall be for a term beginning on the date on which the patent issues and ending 20 years from the date on which the application for the patent was filed in the United States.). 138. T.N. Dickinson v. LL Corp., 227 U.S.P.Q. 145, 149 (D. Conn. 1985)(stops at but allows unfair competition). 139. Noerr-Pennington doctrine: genuine attempts to influence the government are protected from Sherman Act liability via the protections of the First Amendment. It is derived from Eastern Railroad Conference v. Noerr Motor Freight, 365 U.S. 127 (1961) and United Mine Workers v. Pennington, 381 U.S. 657 (1965). The case is discussed, infra, Chapter 7. 140. Proctor & Gamble Co. v. Nabisco, Inc., 3 U.S.P.Q.2d 1207, 1212 (D. Del. 1987)(First Amendment does not protect fraudulent representations to the PTO intended to injure a competitor); Ball Corp. v. Xidex Corp., 9 U.S.P.Q.2d 1491, 1493 (D. Col. 1988)(defendants intentional submissions of false information on which examiner relied fell within the sham exception.).
CHAP T ER
4
Relevant Procedural Issues
A. Attorney-Client Privilege B. Inventorship Is a Triable Issue of Fact but Correction Is Possible C. Summary Judgment Is Sometimes Feasible D. Inequitable Conduct Is an Issue for the Judge, Sitting as an Equity Court, but the Jury May Be Assigned an Advisory Role E. Jury Trial Is Required for Overlapping Equitable and Non-Equitable Issues
48 48 48
49 50
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Chapter 4 Relevant Procedural Issues
A. Attorney-Client Privilege
Privilege claims may be attacked on the basis of the crime-fraud exception, if in camera inspection justifies that.1
B. Inventorship Is a Triable Issue of Fact but Correction Is Possible2

Pretrial discovery is appropriate as to the roles of all who contributed to the invention. Particularly important is whether an omitted inventor was not bound to assign his rights to the plaintiff corporation.
C. Summary Judgment Is Sometimes Feasible

After key Supreme Court rulings in 1986,3 it has been clear that mere pleadings do not create an issue of fact justifying trial. If the record after discovery contains no tangible evidence of each factor needed for a defense, that defense may be dismissed.4 The older idea that something may turn up at trial no longer holds, nor does surprise as a tactic. If plaintiff seeks summary judgment, and defendant has a pet theory, they have to unveil it in the form of an affidavit or exhibit attached to their summary judgment opposition, or risk permanent dismissal of the defense. Mere conclusory affidavits will not suffice.5 Best mode is usually not a summary judgment issue; the cases generally state that since best mode involves factual issues about inventor intent and skill in the art, it is usually not a suitable subject for summary determination.6
1. See United States v. Zolin, 491 U.S. 554, 568570, 109 S.Ct. 2619, 26282630, 105 L.Ed.2d 469 (1989). 2. 35 U.S.C. 256 (Whenever through error a person is named in an issued patent as the inventor, or through error an inventor is not named in an issued patent and such error arose without any deceptive intention on his part, the Director may, on application of all the parties and assignees, with proof of the facts and such other requirements as may be imposed, issue a certificate correcting such error. The error of omitting inventors or naming persons who are not inventors shall not invalidate the patent in which such error occurred if it can be corrected as provided in this section.). 3. Celotex Corp. v. Catrett, 477 U.S. 317 (1986). 4. See Paragon Podiatry Lab. v. KLM Lab., 984 F.2d 1182 (Fed. Cir. 1993). 5. Johnston v. IVAC Corp., 885 F.2d 1574 (Fed. Cir. 1989). 6. See, e.g., High Concrete Structures, Inc. v. New Enter. Stone & Lime Co., 377 F.3d 1379, 1381 (Fed. Cir. 2004).
Inequitable Conduct Is an Issue for the Judge
49
The 1986 standards are now regularly applied in patent cases.7 Both Anderson v. Liberty Lobby and Matsushita Electric stress that if the discovery record contains insufficient evidence to allow a rational trier of fact or a reasonable jury to properly find for the proponent, the claim should be dismissed before trial. For instance, in Young Dental,8 the Court of Appeals for the Federal Circuit (CAFC) stated that summary dismissal of defendants best mode defense should have been granted because the record contained no proof that the best mode was hard to find, and actually indicated the opposite.
D. Inequitable Conduct Is an Issue for the Judge, Sitting as an Equity Court, but the Jury May Be Assigned an Advisory Role
Inequitable conduct, being a defense based on equity, is for the court, not the jury.9 But the reality is not that simple. The trial judge has discretion to hear the defense in a pretrial mini-hearing, or to combine it with the trial, possibly going last, after the jury leaves. Alternatively, the judge may decide to hear the issue at trial, and to permit the jury to issue advisory rulings on the factual issues such as intent to deceive. As the CAFC affirmed in Agfa Corp., a judge retains the discretion to conduct a bench trial on the equitable issue of unenforceability in the same case where invalidity is to be tried to a jury.10 If an inequitable conduct defense is combined with an antitrust counterclaim based in whole or in part on such conduct, the defendant/counterclaimants right to a jury trial of its antitrust claim trumps the equity issue and necessitates a jury trial if that is demanded.11 Materiality is generally proved by expert testimony. An expert may be used to explain Manual of Patent Examiner Practice (MPEP) procedures and requirements. Discovery from inventor or patent prosecution team is needed to test credibility in regard to assorted reasons for not submitting references. Misuse defenses and/or antitrust counterclaims can be and have been successfully challenged at the pleading stages, under Federal Rules of Civil
7. Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986). 8. Young Dental, supra, Chapter 2, Section C, 2. Inventors View of Best. 9. See, e.g., Kingsdown Med., infra, at 876. 10. Agfa Corp. v. Creo Prods., 451 F.3d 1366, 1375 (Fed. Cir. 2006)(citing Gardco Mfg., Inc. v. Herst Lighting Co., 820 F.2d 1209, 1213 (Fed. Cir. 1987)). 11. Beacon Theatres, Inc. v. Westover, 359 U.S. 500 (1959).
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Chapter 4 Relevant Procedural Issues
Procedure 9(b) and 12(b)(6). Similarly, if a non per se antitrust type offense is relied upon for a misuse defense, failure to plead a relevant market and market power can be fatal to the asserted claim.12 If a Walker Process defense/ counterclaim is asserted failure to plead dominance in a specific relevant market will be fatal.13
E. Jury Trial Is Required for Overlapping Equitable and Non-Equitable Issues

A Supreme Court rule holds that where a misuse defense or antitrust counterclaim requires jury fact-finding as to the presence of inequitable conduct, that issue must be presented to the jury if such is requested.14 However, the case concerned a petitioners claim and declaratory relief involving a common issue. When inequitable conduct and validity questions overlap, this may still be inadequate to constitute a common issue warranting application of the Beacon Theaters rule.15
12. B.U. Opstiche v. Hologic, Inc., 909 F.Supp. 162, 17192 (S.D.N.Y 1995). 13. Mitsubishi Elec. Corp. v. EMS Tech., 44 U.S.P.Q. 2d (BNA) 1904 (N.D. Ill. 1997). See discussion of Walker Process, supra, Section III-2. 14. Beacon Theatres v. Westover, 359 U.S. at 503504 (rule requiring a request for a jury in such situation need only be applied where there are common issues). 15. Agfa Corp. v. Creo Prods., 451 F.3d at 1372 (citing Gardco Mfg., Inc. v. Herst Lighting Co., 820 F.2d 1209, 1212 (Fed. Cir. 1987)).
CHAP T ER
5
Strategies in Litigating PTO Conduct Defenses
A. Strategies Regarding Inventor Evidence B. Best Mode Discovery C. Proving or Disproving Concealment of Best Mode D. Inequitable Conduct Discovery 1. Prior Art Search 2. Discovery of the Patent Prosecution Attorney, Including One Who Is Plaintis Trial Counsel E. Pleading Inequitable Conduct: Rule 9(b) F. Summary Judgment
52 52 53 54 54 54 56 57
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52 Chapter 5 Strategies in Litigating PTO Conduct Defenses
Given the Court of Appeals for the Federal Circuits (CAFCs) rulings that all tests of materiality are given weight, and the present provision that art which tends to refute contentions is material, there is almost always a nonfrivolous inequitable conduct defense to raise. For instance, almost any patent or publication in the field, or any previous product or process made by or known to the inventor or his team, unless clearly cumulative, will likely be material to the contention that the invention is not obvious under the Patent Act, 35 U.S.C. 103.
A. Strategies Regarding Inventor Evidence

The discovery phase is properly used to look into similar products or methods already in existence, as well as when and how near simultaneous inventors were revealed or marketed. Third party discovery may be appropriate to discover when rival inventors perfected their versions. Document demands and party depositions may be used to try to determine whether putative inventor(s) had access to anothers similar invention prior to the claimed date of perfecting the patented invention. Discovery as to inventorship issues usually begins with a demand for the inventors notes. Depositions can then establish how large the team was. Memoranda may indicate disputes, within the firm or out of it, about who gets credit for the invention. Document demands and party depositions should be used to develop proof that a co-inventor was not named and perhaps would have had independent rights (i.e., rights not assigned to the same firm to which disclosed inventors rights were assigned).
B. Best Mode Discovery

On the patent holder side, a key strategy would seem to be to determine whether the inventor is comfortable in testifying that his adopted mode was not best, at least not for all purposes. In regard to proving inadequate disclosure of the best mode, the home run is proof that the key input is not mentioned at all, or is outside the parameters set out in the specification. Other helpful proof would be that the input was proprietary or customized, that is, it was not an off-the-shelf product available to purchase from third parties. Lastly, it could help to prove that the input was only available from a source not commonly used by persons in the art in question.
Proving or Disproving Concealment of Best Mode
53
C. Proving or Disproving Concealment of Best Mode

A testifying inventor has more than one way to torpedo a potential best mode claim. He might say that there may have been a best mode, but he personally did not know of it. He may instead state that there was no best mode, because inputs should vary depending on differing use of the invention, or different characteristics of the resulting product.1 Inventor witness preparation is clearly key for plaintiffs. If the inventor is comfortable saying that his mode was good, but probably no better than others, that would be helpful. If she will say that the mode picked was best for some uses or customers, but not for all such, that could help. Last, the inventor should be prepared to explain how the specification explains enough for skilled readers to easily arrive at the best mode. This could be combined with testimony (if available) that the source or brand names of key inputs were unnecessary because such sources were well known and many brands would do. If a defendant hires an obviousness expert, who opines that going from the prior art to the invention would be easy for ones skilled in the art, may the defendant also hire a best mode expert to opine that finding the best inputs would be unduly difficult, even for one of skill in the art, unless the specification of the patent in suit was more detailed? Of course, a technical answer is that it is conceivably possible that those of skill in the art could go from the prior art to an average achievement of the invention in suit but could not achieve the best mode of such invention without more details being disclosed. Nevertheless, things said by the first expert would tend to cast doubt on the conclusions of the second one, or vice versa. At least one opinion suggests that the CAFC is not inclined to be charitable about contradictions. In Rolls-Royce2 the defendants expert contended that a submitted reference was anticipatory, that is, it taught all elements of the patent in suit. Defendants argued, perhaps in the alternative, that the patent was invalid on inequitable conduct grounds due to the inventors failure to submit another reference. The CAFC upheld the district courts finding that the submitted reference was not anticipatory, but also upheld the district courts conclusion that the defendants contention that the submitted reference was anticipatory rendered incredible the contention that an unsubmitted reference was not cumulative. Rolls Royce was not a best mode case, but it does indicate that a defendants invalidity contentions may be treated as
1. See, e.g., Liquid Dynamics Corp. v. Vaughan Co., Inc., 449 F.3d 1209, 1224 (Fed. Cir. 2006)(no ideal nozzle size exists because size needs to vary with tank size), cert denied, 127 S. Ct. 599 (2006). 2. Rolls-Royce Ltd. v. GTE Valeron Corp., 800 F.2d 1101 (Fed Cir 1986).
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Chapter 5 Strategies in Litigating PTO Conduct Defenses
refuting each other. Of course, the potential dilemma of obviousness contentions refuting the concealment of best mode contentions and the two contradicting each other, like all dilemmas, cuts both ways: the plaintiff, in arguing that his invention was not obvious, may introduce expert evidence that tends to indicate that it would take undue experimentation to find the best mode.3
D. Inequitable Conduct Discovery 1. Prior Art Search

Close examination of the file wrapper is a first necessity. Then, the defendant would usually conduct its own prior art search. If that uncovers any unsubmitted references, proof or admissions should be sought that the inventor or his team knew of such reference.
2. Discovery of the Patent Prosecution Attorney, Including One Who Is Plainti s Trial Counsel
A sometimes-attempted strategy, or consequence, in the litigation of inequitable conduct issues is the creation of a record indicating that a lead counsel for the patentee is a key witness, thus potentially disqualifying that person and perhaps that law firm. The courts, however, are well aware of the ulterior purposes of this strategy and therefore are rather hostile to it. The issue only arises if the trial firm was the one that prosecuted the patent in suit. Even then, the general rule is that the raising of inequitable conduct issues justifies deposition of the involved attorneys, but does not automatically puncture the privileged nature of their documents, justify their testifying at trial, or lead to their being disqualified as trial counsel.4 Disqualification is likely only if the attorneys deposition transcript includes potential smoking gun evidence of inequitable conduct. However, if the attorneys testimony is key to rebuttal of an inequitable conduct charge, the client would have to be offered the choice to use counsel as a witness and change lawyers. Some litigants attempt to depose patent examiners in order to press issues about relevance and whether they were misled. Obviously,
3. The dilemma discussed here is hinted at in an earlier article, Larry S. Nixon and Ralph A. Flacone, Obviousness and Best Mode: What Can Defendants Do to Win with Them Today? 493 PLI/Pat 481 (1997). 4. See, e.g., Environmental Prod. Inc. v. Total Containment, Inc., 43 U.S.P.Q.2d 1288 (E.D. Pa. 1997).
Inequitable Conduct Discovery 55
these examiners are skilled in the field of the invention and have spent time reviewing the claims. In addition, examiners have no interest in the outcome of the litigation. Forty years ago, the deposition or testimony of an examiner was virtually never solicited,5 though this has changed recently. There are two main reasons why examiners did not generally become involved in infringement litigation. First, the United States Patent and Trademark Office (PTO) itself used to attempt to prevent testifying. Second, examiners were not available for interview prior to deposition, meaning that litigants had no way of knowing how they would testify. Changes in PTO procedure and rulings by the courts have somewhat removed these bars to examiner participation. For one thing, the Manual of Patent Examiner Practice (MPEP) used to dismiss examiners for testifying voluntarily and require them to report all requests for testimony or subpoenas to the Solicitor of the PTO.6 This practice was challenged when a court ruled that testimony of an examiner may have the capability of settling issues in a misrepresentation case.7 The PTO distinguished this case and more or less retained their prior policy, but faced further challenges by the courts.8 In 1972, the PTO revised the MPEP to reflect changes in policy, most significantly, under what conditions an examiner could testify without the need for a subpoena. The revision focused on three new conditions: (1) the questions must be phrased to comply with the permissive scope of inquiry; (2) the party taking the deposition must comply with Federal Rules of Civil Procedure (F.R.C.P.) Rule 30 and give notice of the deposition to the Solicitor; and (3) the deposition must be taken at a venue convenient to the PTO.9 Thus, the PTO still maintained the policy that examiners could only be deposed as to factual matters, and debates on whether an issue was fact or opinion were resolved in favor of the PTO. Though cases involving allegations of fraud may be more likely to benefit from this limited testimony, few litigants have undertaken the costs and efforts of deposing an examiner.10 One recent case demonstrates the significance of examiner testimony in situations of potential misconduct.11 There, Kaiser used testimony the examiner offered at deposition to show that Abbott had failed to provide an English
5. See Legal Basis for Precluding a Patent Examiner From Testifying, 49 J. Pat. Off. Socy 841 (1967). 6. MPEP 1701. 7. American Cyanamid Co. v. Federal Trade Commission, 363 F.2d 757 (6th Cir. 1966)(denouncing the PTO practice of restricting examiner testimony because only the examiner knew the facts at issue). 8. In re Mayewsky, 162 U.S.P.Q. 86, 89 (E.D. Va. 1969)(holding that an examiner should testify via deposition, provided that such deposition be limited to relevant matters of fact and avoid conclusions). 9. MPEP Section 1701, April 1972. 10. Horowitz, at 6126. 11. Kaiser Found. Health Plan v. Abbott Labs., Inc., 552 F.3d 1033, 1048 (9th Cir. 2009).
56 Chapter 5 Strategies in Litigating PTO Conduct Defenses
translation of a relevant Japanese patent application. The examiner explained that he could read a few words of the reference, including a table referring to the compound at issue.12 He also testified that he saw the full translation supplied with the earlier application, but could not remember reading it in conjunction with the application at issue.13 Though this information was brief and merely factual, it was enough for Kaisers purposes, as the prior summary judgment was overturned.
E. Pleading Inequitable Conduct: Rule 9(b)

In 2009, the CAFC took a major step in cutting back the frequency of asserted inequitable conduct defenses. It held that the offense is similar to fraud as governed by the F.R.C.P. under Rule 9(b), but must be pleaded with a specificity that meets CAFC standards. The panel states:
We hold that in pleading inequitable conduct in patent cases, Rule 9(b) requires identification of the who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.14
That court stressed that although knowledge and intent to deceive may be averred generally, the pleading must point to sufficient facts to create a reasonable basis for inferring intent. In Exergen, the court rejected the pleading because it failed to connect the inventor to withheld material known by others in the corporation, thus failing the who aspect of the Rule 9(b) test.15 Though the proponents of the inequitable conduct defense argued that their allegations satisfied the time, place and content test as outlined by the First Circuit,16 the CAFC did not defer to this standard. Instead, the court emphasized that merely averring the elements of inequitable conduct does not satisfy Rule 9(b).17 After pointing to the fact that an applicant failing to disclose all the relevant prior art known to it was previously found to have pled insufficient facts,18 the court found
12. Id. at 1049. 13. Id. at 1052. 14. Exergen Corp. v. Wal-Mart Stores, Inc. 2006-1491, 2007-1180, slip-op at 22 (Fed. Cir. Aug. 4, 2009). See also, DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990). 15. Cent. Admixture Pharmacy Servs., Inc. v. Advanced Cardiac Solutions, P.C., 482 F.3d 1347, 1356 (Fed. Cir. 2007); Exergen Corp., supra. 16. McGinty v. Beranger Volkswagen, Inc., 623 F.2d 226, 228 (1st Cir. 1980). 17. Exergen Corp., supra, at 21(citing King Auto Inc. v. Speedy Muffler King Inc., 667 F.2d 1008, 1010 (C.C.P.A. 1981)). 18. Cent. Admixture, 482 F.3d at 135657. The court also found that allegations of intent to mislead the examiner and efforts to manipulate measurements and units were deficient for lack of specificity.
Summary Judgment
57
three factual deficiencies with the Exergen defendants pleading. First, the pleading failed to name specific individuals associated with the alleged inequitable conduct during the filing and prosecution of the patent, which failed the who element.19 Second, the pleading did not identify the claims and limitations to which the withheld references related, thus failing the what and where elements.20 Finally, the pleading failed the why element by not explaining why the withheld information was material and noncumulative, and the how element by not including how an examiner would have used such information to assess the claims.21 In addition to these factual shortcomings, the pleadings also failed to create a basis for reasonable inference of scienter: neither knowledge of withheld material nor a specific intent to deceive. The CAFC affirmed the district court ruling denying the defendants motion for leave to amend the pleadings.
F. Summary Judgment
The conventional wisdom has been that a finding of unenforceability on inequitable conduct grounds will require a hearing, because the intent element is factual and involves credibility determinations. Such is stated in some CAFC opinions.22 Nevertheless, in some circumstances, so far always involving misleading affidavits, trial courts have granted summary judgment of unenforceability based on inequitable conduct, and have been sustained on appeal. In Paragon Podiatry Lab,23 the patent attorney told the examiner in an interview that he would submit Rule 32 affidavits on nonobviousness from disinterested parties, but then submitted three affidavits, in each of which the declarant stated that he was not an employee of Paragon but omitted that he was a shareholder. In Ferring,24 the applicant submitted five affidavits on a point for which the examiner declined to accept the assertions of the inventor. Four of the affidavits were from persons who either had been employed by Ferring or had received research funding from it, connections that were not disclosed. The panel majority affirmed that the explanations for the omission were so implausible that they created no factual issue standing in the way of summary
19. 20. 21. 22. 23. 24.
Exergen Corp. at 25. Id. at 26. Id. See Kangaroos U.S.A. v. Caldor, Inc., 778 F.2d 1571, 1578 (Fed. Cir. 1985). Paragon Podiatry Lab., Inc. v. KLM Labs., Inc., 984 F.2d 1182 (Fed. Cir. 1993). Ferring B.V. v. Barr Labs., Inc., 437 F.3d 1181 (Fed. Cir. 2006).
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Chapter 5 Strategies in Litigating PTO Conduct Defenses
judgment. It has also been the case that lack of a credible explanation constituted proof of bad intent.25 A recent study covers court treatment of inequitable conduct claims from 1995 through 2004.26 The following trends are found: 1. Inequitable conduct charges are disposed of by means of summary judgment in 50 percent of all cases in which they are raised. In 42 percent of cases, summary judgment of no inequitable conduct was granted. In 8 percent of cases, inequitable conduct was found at the summary judgment stage. 2. When inequitable conduct charges went to trial, 70 percent of them were rejected. The combined result was that inequitable conduct charges were successful in only 25 percent of the cases in which they were raised. (The article does not deal with how the successful ones fared on appeal.) Interestingly, in 8 percent of the cases in which inequitable conduct was found and validity was ruled on, the patent was found invalid. In such cases, the inequitable conduct finding was not outcome determinative.
25. Bruno Indep. Living Aids v. Acorn Mobility Servs., 394 F.3d 1348, 1354 (Fed. Cir. 2005). 26. Nolan-Stevaux, Katherine. Inequitable Conduct Claims in the 21st Century: Combating the Plague, 20 Berkeley Tech. L.J. 147 (2005).
PAR T
II
Patent Litigation Misconduct
As is discussed above, a bad conduct analysis of the patentee or patent holders behavior begins with analyzing how the patent was obtained. The necessary second inquiry is how the patent has been enforced: How promptly did the patent holder sue? Who was accused, and with what warnings or assurances? On what degree of confidence were the allegations made? Of course, other conduct issues may stem from discovery disputes, or from frivolous appeals.
CHAP T ER
6
Types of Litigation Abuse
A. Delay or Unconscionability in Suing: Laches and Estoppel 1. Statutory Laches 2. Equitable Laches 3. Equitable Estoppel/ Implied License 4. Ambush and Unclean Hands B. Reckless Cases or Reckless Pleadings: Rule 11 and its Requirements C. Discovery Misconduct or Recalcitrance: Rule 37 Sanctions D. Egregious Litigation Conduct in a Losing Case: 35 U.S.C. 285 E. Assessment of Fees against Attorneys Who Cause Excess Costs and Fees to the Opposing Side: 28 U.S.C. 1927 F. Threats by Patent Holders: Appropriate Scope of Rights
62 62 63 63 63 64 66 68
70 71
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Chapter 6 Types of Litigation Abuse
A finding of litigation abuse may result from precomplaint delay or ambivalence, or from a frivolous or vexatious case, defense, motion, or strategy. This chapter will first review the variations of laches and estoppel motions, and then review standards, procedure, and strategy for the three kinds of abuse contentions; under Rules 11 and 37 of the Federal Rules of Civil Procedure (F.R.C.P.), and Section 285 of the Patent Act (35 U.S.C. 285).
A. Delay or Unconscionability in Suing: Laches and Estoppel

Early options in asserting litigation misconduct as a contention or a defense are laches or estoppel. The two allegations are similar but not identical, as is explained in the Court of Appeals for the Federal Circuits (CAFCs) en banc Auckerman decision.1 Pre-infringement suit behavior, or delay, can actually create bases for three defenses, each more valuable. The least valuable is statutory laches, which is established by showing that the plaintiff delayed more than six years before suing. The statute then protects the infringer from damages claims for infringing acts more than six years old. More valuable is equitable laches, which, if established, protects the infringer from all damages based on activities prior to suit. A recently developed variation is equitable laches, used to thwart patent trolls who use intentional delay in prosecuting the patents in suit so as to lure companies into costly changes in products or processes while the submarine patent is hard to detect. Laches is a rare defense, because the statutory infringement time limit for infringement suits, six years, is generous. Additionally, it is rarely possible to argue laches after a lesser period unless there is prejudice, which thus would usually invoke the estoppel defense. Statutory laches forecloses only certain money damages. Equitable laches, usually based on long delay after learning key facts, plus prejudice, can foreclose injunctive relief, even against continuing conduct.
1. Statutory Laches
Damages for patent infringement are not abated by statute until six years have passed.2 The CAFC has made clear that laches is not normally to be used to shorten statutory limitations periods.3 Delays of two years or less appear
1. A.C. Auckerman Co v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992). 2. 35 U.S.C. 286. 3. Cornetta v. United States, 851 F.2d 1372, 137778 (Fed. Cir. 1988) (en banc).
Delay or Unconscionability in Suing: Laches and Estoppel 63
never to have supported a successful laches defense.4 Delays of over two years have been held to be neither per se defensible nor indefensible for summary judgment purposes.5 Secrecy and denials of infringement by the defendant will tend to vitiate an equitable laches defense.6
2. Equitable Laches
Laches turns entirely on waiting too long before suing. Estoppel may be created by leading the ultimate defendant to believe reasonably, to his or her prejudice, that a suit will not be brought. Prejudice is the key. Bare allegations of prejudice from delay will not suffice. The record must contain evidence of lost evidence, unavailable witnesses, or other damage to the defense due to the delay.7
3. Equitable Estoppel/ Implied License

Estoppel turns on proof that the defendant understandably relied on indications that no suit would be filed. The building of a single purpose plant to make the product, for instance, would tend to prove prejudice.8 A variation of equitable estoppel is the doctrine of implied license. This can be established for instance, if the defendant was a purchaser from a licensee,9 or the plaintiff was a customer for the challenged products or a supplier of key inputs for them. Implied license can be based on theories of legal estoppel, equitable estoppel conduct, or acquiescence.10
4. Ambush and Unclean Hands

A relatively recent variation of the implied license defense is the so-called ambush theory, which usually arises out of standard setting. The accused
4. See. e.g., Five Star Mfg. Inc. v. Ramp Lite Mfg. Inc., 44 F.Supp.2d 1149, 1156 (D. Kan. 1999) (six months delay too little). 5. IXYS Corp. v. Advanced Power Tech., Inc., 321 F.Supp.2d 1156, 1165 (D. Cal. 2004). 6. 114 F.3d 1547(secrecy and denial by infringer negate laches); Meyers v. Brooks Shoes, 912 F.2d 1459 (Fed. Cir. 1990). 7. IXYS Corp. v. Advanced Power Tech., Inc., supra; Gasser Chair Co. v. Infanti Chair Mfg. Corp., 60 F.3d 770 (Fed. Cir. 1995)(good defense if changing manufacturing costs money and would not have happened if plaintiff had timely sued (dicta)). 8. See A.C. Aukerman, supra. 9. United States v. Univis Lens Co., 316 U.S. 241 (1942). 10. See Wang Lab. v. Mitsubishi Elecs. Am., 103 F.3d 1571 (Fed. Cir. 1997); Carborundum Co. v. Molten Metal Equip. Innovations, 72 F.3d 872 (Fed. Cir. 1995).
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infringer alleges that the plaintiff lured others to support or adopt an industry standard, the practice of which leads to infringement of an undisclosed patent application. When the semiconductor firm Rambus sued its rivals for patent infringement, those who were members of the Joint Electron Device Engineering Council (JEDEC), an industry standards-setting organization, asked the court to rule that the plaintiffs behavior in hiding its patenting intentions from its fellow members was inequitable conduct or an antitrust violation that should result in a bar to its enforcement against them.11 The district court submitted the antirust claim for factual determination by a jury. It asked them to determine whether (1) Rambus had made representations that it did not have intellectual property relevant to the work of the JEDEC; (2) Rambus had uttered half-truths about its actual or potential intellectual property relevant to the semiconductor standards the JEDEC was considering; and (3) the members of the JEDEC shared a clearly defined expectation about what each was expected to disclose about filed patent applications or intent to file patent applications. The jury answered each of the three questions in the negative. The judge then concluded that, in deference to the Seventh Amendment, he would accept the jury findings in carrying out his role as an equity judge. Thus, he held that Rambus was exonerated of all charges and entitled to keep that $100 million infringement damage award it had received. Because its outcome turned on specific facts that might come out differently in another case, it is difficult to derive a clear rule of law or safe harbor from the ruling. Courts have suggested that they would look to the rules of the standards groups, which might require either disclosure or Reasonable and Non Discriminatory Licensing (RAND).
B. Reckless Cases or Reckless Pleadings: Rule 11 and its Requirements

F.R.C.P. Rule 11(b)(1)(3), in pertinent part, reads as follows:
(b) Representations to Court. By presenting to the court (whether by signing, filing, submitting, or later advocating) a pleading, written motion, or other paper, an attorney or unrepresented party is certifying that to the best of the persons knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, (1) it is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation;
11. Rambus Inc. v. Infineon Techs. Ag, 318 F.3d 1081 (Fed. Cir. 2003).
Reckless Cases or Reckless Pleadings: Rule 11 and its Requirements (2) the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; (3) the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery...12
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Under Rule 11, an attorney signing a pleading certifies that the pleading or motion being filed is well grounded in fact and law and is not being presented to the court for any improper purpose. Rule 11 provides that the courts may impose sanctions on both clients and attorneys. The rule gives courts broad discretion in determining what sanctions should be imposed. In addition to monetary sanctions, the court may order a variety of other sanctions, such as the striking of an offending paper or even censure. The amount of monetary sanctions may include expenses and attorneys fees incurred in defending against an invalid claim. Rule 11(c)(1)(A) provides a safe harbor if the challenged case or pleading has been withdrawn or appropriately corrected within 21 days of the motion being served. Thus, a party served with a Rule 11 motion ordinarily may withdraw or correct the offending pleading within 21 days of service in order to avoid sanctions. The CAFC has developed fairly detailed standards governing the prerequisites for filing a non-sanctionable patent infringement complaint: 1. For each asserted patent, an attorney must construe the claims and set out why the accused device or method falls under one or more claims of such patent or patents;13 2. The analysis must be based on thorough examination of the accused product, if it reasonably can be obtained.14 In one case, the patent holder examined the device in which the patent was used, but did not take it apart to see whether it contained the key features of the claim. This cursory examination was treated as insufficient to avoid Rule 11 sanctions.15 Hard cases occur when the asserted patent is for a process. In two cases, the patent holder obtained the product and determined that it could have resulted from the process. In both, the CAFC concluded that since the
12. 13. 14. 15.
F.R.C.P. 11. View Engg, Inc. v. Robotic Vision Sys., 208 F.3d 981, 986 (Fed. Cir. 2000). See, e.g., Judin v. United States, 110 F.3d 780, 784 (Fed. Cir. 1997). S. Bravo Sys. v. Containment Techs. Corp., 96 F.3d 1372 (Fed. Cir. 1996); Judin v. United States, supra.
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plaintiff could not view the process absent industrial espionage, the amount of precomplaint investigation it undertook was reasonable.16 Another rule that has emerged is that guessing right defeats Rule 11 sanctions, that is, if an accused device does infringe, the small amount of precomplaint investigation is not a reason for sanctions.17 Also, the CAFC has held that a plaintiff may reasonably rely on defendants advertising documents to conclude that many of its products infringe even though plaintiff has tested only one of them.18
C. Discovery Misconduct or Recalcitrance: Rule 37 Sanctions

Of course, the conduct of patent-related litigation is subject to F.R.C.P. Rule 37 which allows imposition of monetary sanctions, or even default, for failure to comply with discovery obligations. Rule 37 states:
(b) Failure to Comply with a Court Order (2) (A) For Not Obeying a Discovery Order. If a party or a partys officer, director, or managing agentor a witness designated under Rule 30(b)(6) or 31(a)(4)fails to obey an order to provide or permit discovery, including an order under Rule 26(f ), 35, or 37(a), the court where the action is pending may issue further just orders. They may include the following: (i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims; (ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence; (iii) striking pleadings in whole or in part; (iv) staying further proceedings until the order is obeyed; (v) dismissing the action or proceeding in whole or in part; (vi) rendering a default judgment against the disobedient party; or (vii) treating as contempt of court the failure to obey any order except an order to submit to a physical or mental examination
16. Hoffmann La Roche, Inc. v. Invamed Inc., 213 F.3d 1359 (Fed. Cir. 2000). 17. Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295 (Fed. Cir. 2004)(sanctions and attorney fees in favor of patent infringement defendant were properly denied because patentees pre-filing infringement investigation did not rise to level of bad faith litigation). 18. Antonious v. Spalding & Evenflo Cos., 275 F.3d 1066, 1072 (Fed. Cir. 2002).
Discovery Misconduct or Recalcitrance: Rule 37 Sanctions 67
Common Rule 37 offenses include unjustified failure to answer interrogatories, to produce documents, or to appear for scheduled depositions. Tardiness as well as complete refusal may also result in sanctions. For instance, producing a deponents documents after rather than before such persons deposition may justify a retaking of that deposition at the negligent partys expense. The extent of prejudice is a factor in weighing sanctions. Parties often ask for voluminous, largely irrelevant documents. The late production of such creates little prejudice. Contrariwise, the sudden appearance or unexplained disappearance of crown jewel documents may well lead to severe sanctions. Rule 37 gives the court authority to impose sanctions for failure to make disclosures required by Rule 26(a).19 In patent cases, one example of such an issue is the withholding of test results reviewed by a testifying expert.20 In ClearValue Inc. v. Pearl River Polymers, Inc., the CAFC upheld a district courts imposition of Rule 37 sanctions jointly and severally against the inventor, his attorney, and their expert based on a chain of incriminating emails thought to reveal a plan to avoid or delay disclosure of unfavorable test results.21 The results were suppressed for over a year and a half, and the email chain proved intent. Because the information withheld was related to the key issue in the litigation, the court found that it was not a harmless failure to disclose.22 Unimpressed by the evidence, the CAFC reversed the district courts Rule 37 sanction striking ClearValue and the inventors pleadings and granting judgment in favor of Pearl River. The appeals court did, however, note that the district court could consider sanctions for any further misconduct that could occur on remand. Rule 37 and Section 285 serve different purposes, and a court will maintain this distinction. In Stillman v. Edmund Scientific Co., the court emphasized:
Unlike Section 285, the pertinent subsections of Rule 37 specifically state that the expenses and fees may be charged against either the offending party or his attorney, or both. The breadth of pecuniary sanctions under Rule 37, however, is not coextensive with such a sanction under Section 285. The Rule by its terms limits an assessment thereunder to fees and expenses flowing from an abuse of the discovery process.23
19. F.R.C.P. 26(a). 20. (Citing In re Pioneer Hi-Bred, 238 F.3d 1370 (Fed. Cir. 2001)(holding that litigants cannot argue that materials, even those not used, supplied to their experts are privileged when the experts are testifying or being deposed)). 21. 2009 U.S. App. LEXIS 6061 (Fed. Cir. Mar. 24, 2009). 22. The court found an abuse of discretion in the lower courts failure to consider that the attorney lacked the ability to pay, and reversed the award of joint and several liability against him. 23. 522 F.2d 798, 801 (4th Cir. 1975).
68 Chapter 6 Types of Litigation Abuse
D. Egregious Litigation Conduct in a Losing Case: 35 U.S.C. 285

Section 285 of the Patent Act provides: [t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.24 The main grounds for such awards are the assertion of reckless positions and irresponsible conduct during litigation, such as delaying tactics. The legislative history makes clear that either a prevailing plaintiff or defendant may be awarded fees and costs.25 Since Section 285 is in derogation of the common law rule that each side bears its own costs and fees, courts have said it should be strictly constructed and reserved for instances in which leaving the victor to bear his own expenses would be a great injustice.26 An award is viewed as compensatory, not punitive.27 Section 285 of the Patent Act authorizes trial judges to award fees and costs to a prevailing party whose opponents position on the merits or litigation conduct was egregiously bad by simply stating: The court in exceptional cases may award reasonable attorney fees to the prevailing party. Section 285 is thus not a defense, but rather, like Section 284,28 which allows enhanced damages for willful infringement, a mechanism for avoiding bad conduct.29 The brief language of Section 285, however, does not provide much guidance, and the courts have been left to interpret exceptional case and prevailing party. As for the logistical aspects of Section 285, it need not be claimed until the movant has prevailed, so it is a post-victory motion. A party prevails if it wins decisive issues, such as noninfringement, even if it loses another issue, such as invalidity.30 A party may prevail even though the case is dismissed before the merits are reached, if a decision by the court has affected the legal relationship of the parties.31 But courts have denied Section 285 recoveries,
24. 35 U.S.C. 285 (2006). 25. See S. Rep. 1503, Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661 (1944); Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680 (1944). 26. Brooks Furniture Mfg. v. Dutailier Intl, Inc., 393 F.3d 1378 (Fed. Cir. 2005). 27. Mueller Brass Co. v. Reading Industries, Inc., 352 F.Supp. 1357 (D. Pa. 1972). 28. 35 U.S.C. 284 (2006). 29. Mathis v. Spears, 857 F.2d 749, 754 (Fed. Cir. 1988)(285 is the only deterrent to the equally improper bringing of clearly unwarranted suits on invalid or unenforceable patents.). 30. Inland Steel Co. v. LTV Steel Co., 364 F.3d 1318, 1320 (Fed. Cir. 2004)(The prevailing party is one who achieved some relief on the merits of the litigation, thus altering the legal relationship of the parties.); Brooks Furniture v. Dutailier Intl, 393 F.3d at 1381 (Accused infringer prevailed, despite the finding of patent validity, when it was successful in achieving a judgment of non-infringement). 31. See, e.g., Samsung Elec. Co. Ltd. v. Rambus, Inc., 398 F.Supp.2d 470, 488 (E.D.Va. 2005)(The entry of a consent decree was a court-ordered change sufficient to identify one of the parties as having prevailed).
Egregious Litigation Conduct in a Losing Case: 35 U.S.C. 285 69
even after finding the patent holder guilty of inequitable conduct, in instances in which the patent holder prevailed on many issues.32 Only a small fraction of all Section 285 motions succeed. Because judges are individuals and because Section 285 standards such as bad faith can be subjective, it is difficult to set out factors which will always or never justify Section 285 awards. Nevertheless, case law does indicate some parameters. For one, a defendant does not deserve sanctions for merely raising an ultimately unsuccessful defense, absent a finding that the defense was vexatious or unjustified litigation, frivolous suit, or other type of bad faith.33 In determining attorneys fees under Section 285, inequitable conduct is one factor that must be taken into consideration.34 Courts have, however, been relatively uniform in holding that a variety of litigation setbacks are not in themselves bad enough to automatically result in a Section 285 award. In particular: 1. The loss of the case itself is not enough.35 2. An unsuccessful plaintiff s failure to obtain a legal opinion of infringement does not in itself justify a fee award to the successful defendant.36 3. The loss of the case or an issue by summary judgment is not enough in itself.37 4. The plaintiff s loss due to an on-sale bar is not in itself grounds for a fee award38 but the concealment of decisive on-sale bar facts usually justifies an award of fees to the successful defendant.39 5. A finding of willful infringement by the defendant does not necessarily justify a fee award, but it does shift the burden to the trial court to explain why fees were not awarded.40
32. Consolidated Aluminum Corp. v. Foseco Intl, Ltd., 910 F.2d 804 (Fed. Cir. 1990). 33. Takeda Chem. Indus., Ltd. v. Mylan Labs., Inc., 549 F.3d 1381, 1387 (Fed. Cir. 2008). 34. Pharmacia & Upjohn Co. v. Mylan Pharmaceuticals, Inc., 182 F.3d 1356, 13591360 (Fed. Cir. 1999). 35. Informatica Corp. v. Business Objects Data Integration, Inc., 489 F.Supp.2d 1075 (N.D. Cal. 2007)(despite finding of willful infringement by defendant, closeness of evidence combined with defendants assertion of substantial invalidity defenses negated conclusion that case warranted sanctions). 36. Mach. Corp. of Am. v. Gullfiber Ab, 774 F.2d 467 (Fed. Cir. 1985). 37. Phillips Petroleum Co. v. United States Steel Corp., 673 F.Supp. 1278 (D. Del. 1987). 38. Pennwalt Corp. v. Akzona, Inc., 570 F.Supp. 1097 (D. Del. 1983), aff d 740 F.2d 1573. 39. Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp, 93 F.Supp.2d 1255.(S.D. Ga. 1999). 40. Modine Mfg. Co. v. Allen Group, Inc., 917 F.2d 538 (Fed. Cir. 1990), cert. denied, 500 U.S. 918 (1991)(if the court denies fees after finding willful infringement, it must explain why the case is not exceptional).
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6. The plaintiff s loss due to inequitable conduct frequently leads to a fee award41 but does not necessitate such an award.42 7. The successful assertion of the misuse defense does not in itself invoke Section 285.43 The baselessness of a suit may be shown if no proof of probable infringement was obtained prior to the suit.44 Failure to test the accused product often leads to fee awards.45 Bad conduct during the suit may consist of various forms of discovery misconduct, and may include extreme discovery recalcitrance.46
E. Assessment of Fees against Attorneys Who Cause Excess Costs and Fees to the Opposing Side: 28 U.S.C. 1927
Recent cases indicate that 28 U.S.C. 1927 can be employed in patent cases to compel the trial counsel to pay certain costs and fees of the prevailing party. In one 2008 case, a trial judge concluded that new trial counsel secured a jury trial (over a summary judgment motion) and a favorable jury verdict by misstating the law and the judges Markman rulings. After the judges opinion overturning the jury verdict was sustained by the CAFC, he granted the motion of the accused infringer for fees and costs during the three years from the summary judgment ruling to the close of the case.47 Plaintiffs were told that their literal infringement case was untenable due to the courts Markman rulings. They sought trial on doctrine of equivalency grounds but relied on product-to-product comparisons rather than claim versus product analysis, which is the only relevant inquiry. Also, counsel led the jury to believe that statements to the Food and Drug Administration
41. One study found that 285 fees were awarded in 40 percent of cases in which the accused infringer prevailed by proving inequitable conduct. See Nolan-Stevaux, Katherine, Inequitable Conduct Claims in the 21st Century: Combating the Plague, 20 Berkeley Tech. L.J. 147 (2005). 42. Andis Clipper Co. v. Oster Corp., 481 F.Supp. 1360 (D. Wis. 1979). 43. Du Buit v. Harwell Enterprises, Inc., 540 F.2d 690 (4th Cir. 1976). 44. Loctite Corp. v. Fed Pro., Inc. 667 F.2d 577, 584 (7th Cir. 1981)(No data or tainted data, regarding infringement sanctions for appeal). 45. Id. 46. Pall Corp. v. Micron Separations, Inc., 792 F.Supp. 1298 (D. Mass. 1992), aff d, in part, modified in part, revd in part, all on other grounds 66 F.3d 1211 (Fed. Cir. 1995), cert. denied 520 US 1115 (1997)(bad faith conduct of the litigation). See also T.A. Pelsue Co. v. Grand Enterprises, Inc., 782 F.Supp. 1476 (D. Colo. 1991). 47. Medronic Navigation Inc. v. Brainlab Medizinische Computersystems GMBH, Civ. No. 98-CV0172 RPM (D. Colo. Feb. 12, 2008).
Threats by Patent Holders: Appropriate Scope of Rights 71
(FDA) about equivalence were relevant in patent litigation, which they are not. The court stressed that it chose to use Section 1297 because it blamed counsel more than the plaintiff for advocacy excesses.48
F. Threats by Patent Holders: Appropriate Scope of Rights

Section 287 authorizes the patentee to give notice to the public of a patent.49 One goal of this provision is to allow the patentee to make its rights known to potential infringers.50 Such a notification prompts the alleged infringer to decide whether to cease its allegedly infringing activities, negotiate a license if one is available, modify its product or process, or decide to run the risk of liability and/or the imposition of an injunction.51 The propriety of giving notice to potential infringers or distributors of the infringing product is governed by federal law, which states that the contacting of these parties is allowable if done in good faith.52 Thus, a potential infringers claim for tortious interference in business relationships based on letters sent to the potential infringers customers will normally fail, absent strong evidence of bad faith.53 Additionally, in Virginia Panel, the CAFC held that this right to notify extends even to warning an infringers supplier even though that firm could not be subjected to liability or enjoined from practicing the claimed invention.54 It is important to note that merely contacting a potential infringer is not sufficient to create a justiciable controversy. In Fresenius United States v. Transonic Systems, the patentee sent a single letter to the alleged infringer, seeking to open negotiations and avoid litigation.55 Even though the letter did not use the term license, and alleged infringement, the court found that it
48. Id. The court noted that there is some uncertainty concerning whether a law firm, as opposed to individual lawyers, may be sanctioned, but decided in the affirmative. 49. 35 U.S.C. 287. 50. A patentee that has a good-faith belief that its patents are being infringed violates no protected right when it so notifies infringers. Mallinckrodt Inc. v. Medipart Inc., 976 F.2d 700, 709 (Fed. Cir. 1992). 51. Virginia Panel Corp. v. MAC Panel Co., 887 F.Supp. 880, 869 (W.D. Va. 1995), aff d, 133 F.3d 860 (Fed. Cir. 1997)(citing Locite Corp. v. Ultraseal Ltd., 781 F.2d 861, 877 (Fed. Cir. 1992)). 52. GP Indus. v. Eran Indus., 500 F.3d 1369, 1374 (Fed. Cir. 2007); See also, Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1336 (Fed. Cir. 1998). 53. Mikohn Gaming Corp. v. Acres Gaming, 165 F.3d 891, 897 (Fed. Cir. 1998)(no injunction against patentee when record showed no more than a negligible likelihood of success in showing bad faith). 54. Id. 55. 207 F.Supp.2d 1009, 1011 (N.D. Cal. 2001).
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was objectively unreasonable to fear imminent suit and declined to exercise jurisdiction.56 State law unfair competition claims asserted against a patentee for tortious interference with actual and prospective contractual relations are not preempted by the patent laws.57 In Dow Chemical v. Exxon, the state tort claims at issue were premised on bad faith misconduct in the marketplace, which has different elements and remedies than bad faith patent enforcement.58 In the similar Hunter Douglas, Inc. v. Harmonic Design, Inc., the court held that there is no preemption of state law tort claims based on publicizing an allegedly invalid and unenforceable patent in the marketplace as long as the claimant can show that the patent holder acted in bad faith in publication of the patent.59 Under this analysis, to avoid patent law preemption of such state law tort claims, bad faith must be alleged and proven, even if bad faith is not otherwise an element of the tort claim.60
56. Id. The court also noted that even if there were an actual controversy, jurisdiction would not be exercised because such declaratory jurisdiction is discretionary. 57. Dow Chem. Co. v. Exxon Corp., 139 F.3d 1470, 1473 (Fed. Cir. 1998) Note: Here, the tortious interference claims involved inequitable conduct, but the court also noted that a holder of a valid and enforceable patent who knowingly makes baseless infringement assertions against a competitors customers may also be subject to such liability. 58. Id. at 146667. 59. 153 F.3d 1318, 133637 (Fed. Cir. 1998). 60. Zenith Elecs. Corp. v. Exzec, Inc., 182 F.3d 1340, 1355 (Fed. Cir. 1999)(state tort laws not preempted by antitrust laws). For further discussion, see Chapter 11, Procedural Issues in Litigation of Patent Antitrust Issues.
CHAP T ER
7
Procedural Issues in Raising Litigation Misconduct Issues
A. Laches or Estoppel Can Be Litigated at the Outset B. Section 285 Awards Burden of Proof C. The Relationship Between Rule 37 and Section 285 1. Sanctions for Frivolous Patent Appeals D. Compensable Items
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Chapter 7 Procedural Issues in Raising Litigation Misconduct Issues
Litigation conduct issues are not all raised at the same time. Some can be raised early on, others as issues develop, some only after the trial stage of the litigation ends.
A. Laches or Estoppel Can Be Litigated at the Outset

Laches or estoppel defenses are determined under a preponderance of the evidence standard. Litigation of such issues will usually commence almost immediately. The defendant normally knows the supporting facts it will assert. It probably knows when the plaintiff knew or should have known of the product it was producing. It knows what promises, if any, of no suit were made to it by plaintiff. It knows what activities it undertook in reliance or what evidence is gone.
B. Section 285 Awards Burden of Proof

The standard formulation for adjudicating Patent Act, 35 U.S.C. 285 motions is for the court to determine first whether the losing sides conduct was exceptionally bad, that is, went beyond failing to prevail on key points and involved recklessness, bad faith, and/or recalcitrance, resulting in excessive litigation expenses to the victor and a waste of the courts time.1 The court must find that there is clear and convincing evidence that the case is exceptional.2 If the case is found to be exceptional, the trial court is to consider the nature and amount of fees and costs to be awarded. Thus, the successful movant will present evidence that the losing side should be deemed to have evidenced irresponsible judgment and tactics. The remainder of the motion will present a documented bill of fees and costs, tying these particularly to the issues that should have been non-issues.
1. See Phillips Petroleum Co. v. Esso Standard Oil Co., 91 F.Supp. 215 (D. Md. 1950); CTS Corp. v. Electro Materials Corp., 476 F.Supp. 144 (S.D.N.Y. 1979); But see Fort James Corp. v. Solo Cup Co., 412 F.3d 1340, 1348 (Fed. Cir. 2005) (no procedural limitations on courts ability to award fees under 285). 2. Stephens v. Tech. Intern., Inc., 393 F.3d 1269,1273 (Fed. Cir. 2004); Forest Laboratories, Inc. v. Abbott Laboratories, 339 F.3d 1324, 1327 (Fed. Cir. 2003); Line Rothman and Glamourmom v. Target, Civ. Action No. 2008-1375 (Fed. Cir.)(citing Rothman v. Target Corp., Civ. No. 05-4829, 2008 WL 4559698, at *3 (D.N.J. Oct. 8, 2008)(no award of costs because defendant failed to prove inequitable conduct)).
The Relationship Between Rule 37 and Section 285 75
A Section 285 claim may be based solely on the record prior to one party prevailing. The courts normally will not allow the prevailing party to conduct post-victory discovery to buttress its fee claim. Litigation conduct issues arising prior to final disposition of the case are handled under Federal Rules of Civil Procedure (F.R.C.P.), Rule 37, governing sanctions. Digeo, Inc. v. Audible, Inc.3 illustrates the principle that a good-faith litigant is not generally encumbered with the lacks or frauds of the original patentee. In Digeo, a plaintiff brought a patent as is at an action and then sued a likely infringer. The discovery showed that the patent had a defective list of inventors and a forged assignment from one inventor to another. Digeo dropped the case and moved for fees under Section 285. The trial judge declined, and was sustained by the Court of Appeals for the Federal Circuit (CAFC). The panel emphasized that mere negligence is not enough to create an exceptional case. It also upheld the decision of the trial judge not to allow post-dismissal discovery to look for evidence of gross negligence.4
C. The Relationship Between Rule 37 and Section 285

There are clear differences between the primary functions of the two sanctions provisions. Bringing a baseless infringement case, or raising frivolous defenses, is fully cognizable under Section 285 but not at all under Rule 37. Still, overlap can occur. Failure to timely answer interrogatories, or provide documents or witnesses timely or at all, can justify Rule 37 sanctions, but can also be a factor in deciding after trial that the losing party unjustifiably prolonged its own defeat by engaging in discovery recalcitrance. The CAFC has indicated that the successful movant will not be entitled to duplicative fee awards under Rule 27 and Section 285.5 However, it appears that considering awards under Section 285 does not bar later motions under Rule 37 (the two are not entirely mutually exclusive).6 In another situation, in Refac, the court affirmed dismissal under Rule 37, and reversed and remanded for a determination of sanctions against appellant attorney.7
3. 4. 5. 6. 7.
505 F.3d 1362 (Fed. Cir. 2007). Id. at 1371. Hughes v. Novi American, Inc., 724 F 2d. 122, 126 (Fed. Cir. 1984). Chemical Engineering Corp. v. Essef Industries, Inc., 795 F.2d 1565 (Fed. Cir. 1986). 81 F.3d 1576, supra at n.113.
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1. Sanctions for Frivolous Patent Appeals

Appeals deemed to be frivolous may be sanctioned in various ways. Section 285 . . . provides an alternative mechanism for sanctioning frivolous appeals in patent cases where . . . bad faith is also shown, in addition to the more general sanctions provisions, which do not require a showing of bad faith, including Rule 38.8 Federal Rule of Appellate Procedure 38 provides that, if a court of appeals shall determine that an appeal is frivolous, it may award just damages and single or double costs to the appellee.9 An appeal may be frivolous as filed or as argued.10 To be frivolous as filed, the appeal must meet the standard that requires that no basis for reversal in law or fact can be or is even arguably shown.11 To determine whether an appeal is frivolous as argued, the court looks to the post-filing conduct of the litigant in arguing the appeal.12 The CAFC announced their intention to impose sanctions for frivolous patent appeals in Asberry v. United States Postal Service,13 and has also commented that an appeal is an entirely appropriate means of seeking to vindicate legal rights, but a frivolous appeal imposes substantial and gratuitous injury.14 Thus, claims of frivolous appeal are not to be taken lightly: such assertions of frivolity should be accompanied by citation to the opposing brief and the record below, and clear argument as to why those citations establish the allegedly frivolous nature of the appeal.15 A bare assertion that an appeal is frivolous will be dismissed, as even an appeal judged to be entirely without merit may still have presented an arguable basis for reversal.16 In addition, a claim for sanctions under Rule 38 must be raised early on: a suggestion that the district court should have awarded sanctions is foreclosed by a failure to raise this issue in the district court.17
8. J.G. Peta, Inc. v. Club Protector, Inc., 65 Fed. Appx. 724, 730 (Fed. Cir. 2003)(citing State Indus., Inc. v. Mor-Flo Indus., Inc., 948 F.2d 1573, 1578 n.1 (Fed. Cir. 1991)). 9. Fed. R. App. P. 38. 10. State Indus., Inc., 948 F.2d at 1578. 11. Connell v. Sears, Roebuck & Co., 722 F.2d 1542, 1553 (Fed. Cir. 1983). 12. State Indus. Inc., 948 F.2d at 1579. 13. 692 F.2d 1378, 1382 (Fed. Cir. 1982). 14. S. Bravo Sys. v. Containment Techs. Corp., 96 F.3d 1372, 1377 (Fed. Cir. 1996). 15. Biodex Corp. v. Loredan Biomedical, Inc., 946 F.2d 850, 863 (Fed. Cir. 1991)(citing Finch v. Hughes Aircraft Co., 926 F.2d 1574, 157880, (Fed. Cir. 1991)). Here, in its brief, Loredan contended, in conclusory fashion, that the appeal is sufficiently frivolous to support an award of sanctions without citing the opening brief or argument on the factual basis for their allegation of frivolity. 16. Id.(citing Romala Corp. v. United States, 927 F.2d 1219, 1222 (Fed. Cir. 1991)). 17. Novo Indus., L.P. v. Micro Molds Corp., 350 F.3d 1348, 1358 (Fed. Cir. 2003)(no basis for awarding sanctions when appellants position in difficult case was not frivolous).
The Relationship Between Rule 37 and Section 285 77
A prime example of how to earn sanctions is found in Refac Intl, Ltd. v. Hitachi, Ltd.,18 in which the appellant failed to show any finding to have been clearly erroneous, any basis for finding an abuse of discretion, any error of law, and nowhere argued for any change in the law. The appellant was sanctioned under Rule 38 and required to pay to defendants the sum of their attorney fees and double their costs on the appeal.19 Another combination of factors that would support sanctions arose in Strathayr Instant Lawn Pty., Ltd. v. Gunn, in which the court admonished an appeal of the denial of extraordinary relief as frivolous when there existed clear precedent against it, an undeveloped trial record, a substantial question of patent validity, and no allegation of an abuse of discretion. For this frivolous appeal, the court awarded sanctions in the amount of attorneys fees and costs of defending appeal.20 The court will also deem an appeal frivolous if the case loses its merit during the proceedings, e.g., via withdrawal of issues from the case.21 Even if the court finds an appeal not to be frivolous, there may be grounds for assessing sanctions under the same rationale. In Cambridge Products, Ltd. v. Penn Nutrients, Inc.,22 the Federal Circuit criticized the appellants conduct, declaring that their misrepresentations of the district courts determination raise a serious issue, one which regardless of any supposed lack of intent or understanding, merits a reprimand. We do not look with favor on satellite litigation of this sort, which simply increases the cost of litigation. Further, because this court and all federal courts possess the inherent power to assess attorney fees against counsel who wilfully abuse the judicial processes, we therefore order the award to Cambridge of its reasonable attorney fees incurred on this appeal, holding Penns counsel on this appeal personally liable therefor.23
18. 921 F.2d 1247, 1256 (Fed. Cir. 1990). See also, TIF Instruments, Inc. v. Colette, 713 F.2d 197, 201 (6th Cir. 1983)(appeal and previous appeal which raised the same arguments were frivolous; court awarded damages and costs). 19. 921 F.2d at 1256. 20. Strathayr Instant Lawn Pty., Ltd. v. Gunn, 1993 U.S. App. LEXIS 5579 (Fed. Cir. Mar. 18, 1993). 21. See, e.g., Ontario Die Co. v. Independent Die Assn, 1992 U.S. App. LEXIS 2627 at *7 (Fed. Cir. 1992)(decision to hold the appeal frivolous was reinforced by IDAs initially appealing on four points of literal infringement of two patents and infringement of both patents under the doctrine of equivalents, but later withdrawing three of the four issues, leaving only an issue without merit). 22. 962 F.2d 1048, 1052 (Fed. Cir. 1992). 23. Id.
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D. Compensable Items
The trial court has considerable discretion in selecting what fees or costs to award. For instance, where defendant prevailed on the merits but not on its counterclaims, fees were not awarded for litigation of the counterclaims. Costs for expert witnesses have been awarded, but not uniformly.24 Applications must be based on documented hours, with proof that rates charged were customary.25 Fees for reexamination proceedings have been awarded to successful plaintiffs where such proceeding was crucial.26 In extreme cases involving bad faith, costs and attorneys fees can be assessed against both the defendant and defendants counsel.27
24. Compare Beckman Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547, 1554 (Fed. Cir., 1989)(abuse of discretion for district court to not include expert witness fees in 285 award), and Howes v. Medical Components, Inc., 761 F.Supp. 1193, 1200 (D. Pa. 1990)(because use of expert witnesses and a jury consultant was necessary to make issues easier for the jury to understand, it was a proper case for the award of reasonable fees), with Amsted Indus. v. Buckeye Steel Castings Co., 23 F.3d 374, 377 (Fed. Cir. 1994)(court cannot rely solely on section 285 to award expert witness fees), and Stryker Corp. v. Intermedics Orthopedics, 898 F.Supp. 116, 122 (E.D.N.Y. 1995)(case did not qualify as the kind of very exceptional case which would warrant granting expert witness fees in excess of the statutory cap mandated by section 1851(b)). 25. Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056 (Fed. Cir. 1983). 26. See Howes v. Medical Components, Inc., 761 F.Supp. 1193 (D. Pa. 1990). 27. TIF Instruments, Inc. v. Colette, 713 F.2d at 201(grounds urged for reversal were patently frivolous, and were found to be asserted in bad faith). See Roadway Express v. Piper, 447 U.S. 752, 766 (1980). See also, Sys. Div., Inc. v. Teknek, LLC, 298 Fed. Appx. 950, 957 (Fed. Cir. 2008)(imposed sanctions ordering the Trustee and his attorneys, jointly and severally, to pay appellees attorney fees and costs).
CHAP T ER
8
Litigation Strategies
A. Filing Rule 11 Motion Promptly B. Discovery of Plainti to Probe Basis for the Case
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Chapter 8 Litigation Strategies
A. Filing Rule 11 Motion Promptly

If it seems clear that plaintiffs infringement claims will fail for reasons plaintiff should know, serving a Federal Rules of Civil Procedure (F.R.C.P.) Rule 11 motion might result in a dismissal or modification of plaintiffs case, and will establish strong grounds for a fee award whenever affected claims are dropped or defeated.
B. Discovery of Plainti to Probe Basis for the Case

Discovery about patent prosecutions decisions often raises issues of attorneyclient (IC) privilege. Three types of attorney-client privilege issues arise frequently in litigation. First, it must be determined whether a privilege claim will deny defendant access to communication between client and patent counsel during prosecution, or communications among counsel or with firms producing search reports. Although a few aberrant cases1 suggested that patent prosecution files are not protected by privilege, the majority view is that they are. However, there are reasons why privilege will end up being expressly or impliedly waived. The major reason for this is that such communications may support a defense against the finding of bad intent necessary to an inequitable conduct holding. A memorandum, for instance, might show that the patent prosecution team decided that there were legal grounds for not submitting certain information. Such conclusion would usually provide grounds to avoid an adverse inequitable conduct ruling. The second type of privilege issue relates to waiver questions based on partial disclosures to third parties. For instance, in a battle for the patronage of retailers, the patent holder or alleged infringers might be tempted to tell the customer that an opinion exists, finding infringement or no infringement. The law appears to be that disclosure of the conclusion of a legal opinion letter does not waive privilege as to the letter itself, but that discussion of any of the details of the opinion will waive privilege as to the omitted details.2
1. Info-Hold, Inc. v. Trusonic, Inc., 2008 U.S. Dist. LEXIS 91418 (S.D. Ohio 2008); McNeil-PPC, Inc. v. Procter & Gamble Co., 136 F.R.D. 666, 671 (D. Colo. 1991); Detection Sys., Inc. v. Pittway Corp., 96 F.R.D. 152, 155 (W.D.N.Y. 1982)(quoting Choat v. Rome Indus. Inc., 462 F.Supp. 728, 732 (N.D. Cal. 1978) and Hercules v. Exxon Corp., 434 F.Supp. 136, 152 (D. Del. 1977)). 2. For further discussion of waiver of attorney-client privilege, see In re Intel Corp. Microprocessor Antitrust Litig., 2008 WL 2310288 (D. Del. June 4, 2008).
Discovery of Plaintiff to Probe Basis for the Case 81
The privilege issue arises from the so-called crime/fraud exception to privilege, the doctrine that communication made pursuant to a plan to perpetuate a crime or fraud are not privileged. Thus, a message from inventor to lawyer, or otherwise within the patent prosecution team, stating, e.g., lets hide the evidence of a sale thirteen months ago so that we can get a patent anyway and dominate the market, would normally not be privileged.3 Of course, an infringement defendant normally would not know that such wording was in a document listed on a privilege log. The best tactic has usually been to gather deposition evidence that such a scheme might have existed, and then use that to ask the trial court to examine the key documents in camera to determine whether the crime/fraud exception applies.4
3. See Westavco Corp. v. International Paper Co., 23 U.S.P.Q. 2d 1401 (E.D. Va. 1991) aff d, 991 F.2d 735 (Fed. Cir. 1993)(concealment of on-sale bar is fraud that loses privilege). 4. United States v. Zolin, 491 U.S. 554, 572 (1989); United States v. Chen, 99 F.3d 1495, 1502 (9th Cir. 1996). This is based on the crime-fraud exception as established in Clark v. United States, 289 U.S. 1, 15 (1933).
PART
III
Patent Misuse and Antitrust Misconduct
To develop all possible conduct defenses, an accused infringer must examine not only how the patent holders obtained the patent and tried to enforce it, but also how they sold the product, and how they handled licensing, particularly in regard to rivals. (Such conduct defenses developed under the rubric of patent misuse.) However, misuses that threaten to create cartels or monopolies could rise to the level of antitrust violations, qualifying as counterclaims if they injured the accused infringer. There would have to be examination, usually by an economist, of how such conduct affected competition in the patented field or related fields.
CHAP T ER
9
Misuse DefensesSubstantive Standards
A. History of the Misuse Defense B. Clauses Leading to Misuse Contentions 1. Tie-In Clauses 2. Tie-Out Clauses 3. Price Clauses 4. Post-Expiration Royalties 5. Grantback Clauses 6. No-Challenge Clauses 7. Settlements 8. Acquisition of Competing Technologies C. Clauses that Will Seldom Engender Misuse or Antitrust Conclusions 1. High Royalties 2. Discriminatory Royalties 3. Field of Use Restrictions 4. Geographic Restrictions 5. Export Restrictions 6. Quantity Restrictions 7. Non-Exclusive Grantback Clauses 8. Packages of Patents 9. Royalties on Unpatented or Unused Products D. Horizontal Antitrust Oenses and Misuse Defenses E. Relevance of the Antitrust Guidelines
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Chapter 9 Misuse DefensesSubstantive Standards
Misuse as a doctrine has had a history of expansion, followed by contraction partially because it piggy-backed on per se-like antitrust doctrines that have been trimmed back by conservative judges and enforcers.
A. History of the Misuse Defense

It has been well settled since the Motion Picture Patents1 case in 1917 that, purely as a matter of patent law, an accused infringer can render the patent in suit unenforceable for unclean hands, by establishing that the patent holder engaged in patent misuse. As will be discussed in a later chapter, the defense will always be made out if the accused makes out a case that the patent holder used the patent in suit as an aid to conduct violative of the antitrust laws. The basic definition of misuse is conduct that improperly extends the scope or duration of the granted patent monopoly.2 Thus, conduct such as requiring a licensee to buy unpatented products, to not deal in rival products, or to obey conditions lasting beyond the patents life, could create a misuse defense for an accused infringer. An attractive feature of the misuse doctrine for an accused infringer is that a defendant company can raise the defense based on conduct that had no effect on it, so long as an earlier misuse had not been purged. Establishing purging has to include proof that the bad effects of the misuse have been fully dissipated. The patent holder can purge the misuse and restore enforceability by vacating the illegal restriction.3 A claim of purging, however, may be disputed factually or by an argument that the effect will linger. Mere lack of enforcement of an offending license clause will not serve to avoid a misuse finding.4 Adequate purging is illustrated by the Eximer Laser Section 337 case at the U.S. International Trade Commission (ITC).5 There, the patent holder, VISX, had been subjected to a U.S. Federal Trade Commission (FTC) complaint based on its cross-license arrangements with its main rivals, and had accepted a consent decree. VISX complied with the FTC order and dissolved the crosslicenses.6 Thus, the ITC respondent could not assert a misuse defense because the objectionable licensing restraints that had already been sufficiently relaxed to satisfy a government antitrust agency.
1. 2. 3. 4. 5. 6.
Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502 (1917). Morton Salt Co. v. G.S. Supplier Co., 314 U.S. 488 (1942). See, e.g., B.B. Chemical Co. v. Ellis, 314 U.S. 495 (1942). Berlenbach v. Anderson & Thompson Ski Co., 329 F.2d 782, 783 (9th Cir. 1964). Summit Tech, 63 Fed. Reg. 46,452, 46, 453 (FTC 1998) 127 FTC 208 (1999). VISX, Inc., 1999 FTC LEXIS 113 (FTC 1999).
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The traditional doctrine was that some misuses were assertable even if not serious enough to constitute antitrust violations, although any antitrust violation involving the patent would also constitute a misuse. For some time, the looseness of the misuse doctrine both handicapped imaginative licensing arrangements and somewhat tilted infringement cases in defendants favor. For many years, it appeared that a misuse defense was easier to establish than an antitrust counterclaim, for two reasons. First, there could be technical misuses that had been recognized in Supreme Court decisions, but which would not rise to the level of antitrust violations and thus did not require proof of markets, market power, or anti-competitive effect. Second, there was no injury requirement for standing. Misuse could be shown in licenses to third parties, or other conduct that did no damage to the firm accused in the infringement action. All this eventually led to reaction and retreat that took four forms. First, the narrowing of antitrust doctrine lessened the scope of misuse as well. For instance, the Supreme Court ruled that, although coercive package licensing is a misuse, convenient, mutually acceptable package licenses are not misuses7 and then later ruled that vertical price fixing was not illegal in itself.8 Other cases clarified that not all patents conferred market power that might render tying clauses illegal.9 Second, Congress legislated significant limitations on what conduct could be deemed misuse, protecting refusals to license and non-market power tying.10 Third, the Court of Appeals for the First Circuit (CAFC) narrowed the concept of per se misuse by holding that all alleged misuses except for a few classic ones condemned by the Supreme Court were not misuses unless they also constituted or approximated antitrust violations.11 In Windsurfing,12 the CAFC began to emphasize that it would not find misuse unless the challenged license restriction impermissibly broadened the physical or temporal scope of the patent grant with anticompetitive effect. The opinion requires an inquiry into whether the effect of the behavior tends to restrain competition in an appropriately defined market.13 This effectively overruled Supreme Court language from the 1940s indicating that patent misuse could result from mere overextension, without the need for antitrust analysis. But the modern Supreme Court appears to agree with the CAFCs approach and has never chastised the circuit for its ruling.
7. Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 136 (1969). 8. State Oil Co. v. Khan, 522 U.S. 3 (1997); Leegin Creative Leather Prods. v. PSKS, Inc., 127 S. Ct. 763 (2007). 9. See, e.g., Ill. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28 (2006). 10. 35 U.S.C. 271(d)(4) and (5). 11. Dawson Chem, v. Rohm & Haas Co., 448 U.S. 175, 235 (1980)(effectively overturning Mercoid v. Mid-Continent Investment, 320 U.S. 661 (1944). 12. Windsurfing Intl, Inc. v. AMF, Inc., 782 F.2d 995, 1001 (Fed. Cir. 1986). 13. Id. at 10011002.
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Fourth, the Supreme Court and lower courts gradually cut back the number of licensing clauses that could in and of themselves violate the antitrust laws, and constantly increased the number that could be shown to be illegal only if rule of reason analysis pointed that way, that is, only if the practice led to significant anticompetitive or monopolistic effects in a soundly determined relevant product or service market. Fifth, antitrust enforcers have loosened their position on licensing restrictions over time, in particular by issuing guidelines setting out low-market-share safe harbors that render many license restrictions acceptable.14 The first advantage of misuse charges, per se unacceptability, has largely been eliminated. Very few technical (i.e., per se) misuses are recognized today. As noted above, the CAFC has refused to recognize any per se misuses not already deemed such by the Supreme Court. In a 1992 case, the court said:
To sustain a misuse defense involving a licensing arrangement not held to have been per se anticompetitive by the Supreme Court, a factual determination must reveal that the overall effect of the license tends to restrain competition unlawfully in an appropriately defined relevant market.15
The second advantage stands as stated, except that, as noted above, some bad conduct can be purged, as by amending or abandoning an offensive clause. On the other hand, misuse is purely a defense, not a counterclaim. It provides no basis for a damage claim by the accused.16
B. Clauses Leading to Misuse Contentions

An impressionistic summary of the present state of misuse law, divided by type of conduct, would be as follows:
1. Tie-In Clauses
The first misuse cases were based on licenses that forced the licensee to buy an unpatented staple article of commerce from the patent holder in order to use
14. Compare, e.g., Wilson, Department of Justice Luncheon Speech Law on Licensing Practices: Myth or Reality, before the Amer. Patent Law Assn. (Jan 21, 1975), in AIPLA Bull. JanFeb. 1975, 54, 5859 (describing nine licensing practices that the Antitrust Division deemed to be presumptively illegal under Section 1 of the Sherman Act) with A. B. Lipsky, Current Antitrust Division Views on Patent Licensing Practices, 50 Antitrust L. J. 515 (1982)(stating that none of these nine practices was per se illegal, and that some should normally be tolerated). 15. Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700, 706 (Fed. Cir. 1992)(citing Windsurfing International, Inc. v. AMF, Inc., 782 F.2d 995, 10011002 (Fed. Cir. 1986)). 16. See, e.g., B.Braun Med. v. Abbott Labs., 124 F.3d 1419 (Fed. Cir 1997).
Clauses Leading to Misuse Contentions
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the patented product or service.17 Such clauses were treated as misuse per se, regardless of possible lack of market power or insubstantial effect on competition. Nor was any excuse such as quality control or relation to warranties, recognized. Then in 1988, Congress altered the playing field by enacting a new provision in the Patent Act, 35 U.S.C. 271(d), under which tying is not a misuse unless it is shown that the tying product bestowed market power on its owner. The new section also codified the unexceptionable rule that refusal to license does not provide a basis for a misuse finding. The relevant text is as follows:
(d) No patent owner otherwise entitled to relief for infringement or contributory infringement of a patent shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having done one or more of the following... (4) refused to license or use any rights to the patent; or (5) conditioned the license of any rights to the patent or the sale of the patented product on the acquisition of a license to rights in another patent or purchase of a separate product, unless, in view of the circumstances, the patent owner has market power in the relevant market for the patent or patented product on which the license or sale is conditioned.18
Antitrust cases also sometimes treated tying as illegal per se19 but this generalization was gradually whittled away by cases holding that the offense required proof that the tying product was uniquely necessary.20 For many years, the Supreme Court accepted that all patented goods were clothed with market power sufficient to condemn tying arrangements on a per se basis.21 In U.S. Phillips, the CAFC held that supplying evidence of market power at the time the defense is raised is adequate.22 Then, in Independent Ink,23 they chose to interpret antitrust consistently with the rule Congress had legislated in the misuse field, stating that no presumption exists as to patented goods endowing the seller with market power. The defendant was allowed a remand to add proof of the market power of the patent and of the infringement plaintiff.
17. 18. 19. 20. 21. 22.
Morton Salt, 314 U.S. at 491. 35 U.S.C. 271(d). Northern Pac. Ry Co. v. United States, 356 U.S. 1 (1958). Fortner Enterprises v. United States Steel Corp., 394 U.S. 495 (1969). See Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 465 U.S. 2 (1984). U.S. Phillips v. ITC, 424 F.3d 1179 (Fed. Cir. 2005), cert denied, Princo Corp. v. U.S. Philips Corp., 126 S.Ct. 2899 (2006). See also, Bayer AG v. Housey Pharm., 228 F.Supp.2d 467 (D.Del. 2002) Princo Corp. v. ITC, No. 07-1386 (Fed. Cir. Apr. 20, 2009). 23. Ill. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28 (2006).
90 Chapter 9 Misuse DefensesSubstantive Standards
It is now clear however, that tying-based misuse is a shrinking, not expanding, category. However, litigation results remain mixed. It once appeared that all tying of an unpatented product to a patented one was a misuse.24 Some early cases suggested that misuse based on tying could be found when a licensor bundled patents, that is, refused to license less than all.25 However, modern courts have been reluctant to so hold. In Texas Instruments, Inc. v. Hyundai Elecs. Indus.,26 for instance, bundling was held not to be a tying misuse when all the bundled patents are needed to practice the invention without infringing. In Monsanto Co. v. Scruggs,27 the CAFC rejected the argument that the use of a real monopoly to tie the purchase of patented seeds to the sale of a specific herbicide (Roundup) constituted patent misuse. Scruggs claimed that Monsanto had tied the purchase through license restrictions, thereby misusing the relevant patents by illegally broadening their scope with anticompetitive effect. The majority held that the restriction requiring Roundup Ready seed growers to apply only Roundup brand herbicide if using glyphosate merely reinforced the regulations of the Environmental Protection Administration (EPA). The CAFCs requirement of a second antitrust element to prove patent misuse thus subsumed the demarcation of illegal patent ties effectually within antitrust law. A number of older cases hold that obligating the licensee not to deal in rivals products is a per se misuse.28 One case holds that Patent Act, Section 271(d), which places a market power screen on tie-in cases, also applies to tie-out, i.e., exclusive dealing, cases.29 The current position of the antitrust agencies is that all forms of exclusivity are judged on a rule of reason basis.30
See Mercoid Corp. v. Mid-Continent Co., 320 U.S. 661 (1944). Zenith Radio Corp. v. Haseltine Research, 395 U.S. 100 (1969). 49 F.Supp.2d 893 (E.D. Tex. 1999). Monsanto Co. v. Scruggs, 459 F.3d 1328, 134041 (Fed. Cir. 2006). See Berlenbach v. Anderson & Thompson Ski Co., 329 F.2d 782 (9th Cir. 1964); McCullough v. Kammerer Corp., 166 F.2d 759 (9th Cir. 1948); National Lockwasher Co. v. George K. Garrett Co., 137 F.2d 255 (3d Cir. 1943); Krampe v. Ideal Indus., 347 F.Supp. 1384 (N.D.Ill. 1972). 29. See Texas Instruments, Inc. v. Hyundai Elecs. Indus., 49 F.Supp.2d 893 (E.D. Tex. 1999); Recombinant DNA Tech Patent & Contract Litig., 850 F.Supp. 769, 777 (S.D. Ind. 1994)(concluding that requirement of market power in 35 U.S.C. 271 (d)(5) applies equally to tie-ins and tie-outs); see also, Beal Corp. Liquidating Trust v. Valleylab, Inc., 927 F.Supp. 1350, 1367 (D. Colo. 1996)(genuine issues of fact exist as to whether patent license agreement prohibiting licensee from purchasing products from outside sources is part of a larger horizontal market allocation scheme). 30. IP Guidelines, 5.4.
24. 25. 26. 27. 28.
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2. Tie-Out Clauses
License clauses limiting the licensees use of rival products or technologies (sometimes called tie-out clauses) were once treated as per se misuses.31 However, courts have more recently held that the 1988 patent law amendment protecting tie-in clauses from per se condemnation also protects tie-out clauses.32 Such clauses now tend to be reviewed under the standard antitrust rules for exclusive dealing. The Intellectual Property Licensing Guidelines of 1995 (IP Guidelines) state that clauses prohibiting a licensee from selling, using or distributing competing technologies may be allowable under antitrust law.33 Recognizing that intellectual property may be misappropriated more easily than other forms of property, the IP Guidelines state that restrictions that may be deemed anticompetitive in other contexts may be allowed in the arena of intellectual property licensing.34 Pursuant to this rationale, courts evaluate tie-out clauses under a rule of reason analysis.35 In U.S. v. Microsoft, the court held that Microsofts exclusive agreements with internet providers were anticompetitive because they kept its competitors products from ever gaining enough of a market presence to pose a real threat to its market domination.36 The Microsoft court also announced that although usually a court could not find a Sherman Act, Section 2, violation unless the anticompetitive conduct had foreclosed at least 40 percent or 50 percent of the market, in certain circumstances, a violation of Section 2 could be found pursuant to a smaller degree of market foreclosure.37 The court recognized, however, that a clause in Microsofts contracts prohibiting the use of any interface aside from the Windows desktop was not anticompetitive because it served to protect Microsofts copyrighted work from being altered.38 In Roland Mach v. Dresser Industries, the court looked at the time period covered by a tie-out clause and held that a contract covering a period of less than a year was presumptively lawful.39
31. See Berlenbach, 329 F.2d at 782; McCullough, 166 F.2d at 759; National Lockwasher Co., 137 F.2d at 255; Krampe, 347 F.Supp. at 1384. 32. Texas Instruments, 49 F.Supp.2d at 914; Recombinant DNA, 850 F.Supp. at 777. 33. IP Guidelines note 24, 4.1.2, 5.4. 34. Id. 35. United States v. Microsoft Corp., 253 F.3d 34, 5971 (D.C. Cir. 2001); Cook Inc v. Boston Scientific Corp., 2002-1 Trade Cas. (CCH) 73,626, at 93,067 (N.D. Ill.2002). 36. Microsoft, 253 F.3d at 6871. 37. Id. at 70. 38. Id. 39. Roland Mach v. Dresser Indus., 749 F.2d 380, 395 (7th Cir. 1984); see also Federal Trade Commission v. Motion Picture Adver. Serv., 344 U.S. 392, 396 (1953). But see U.S. v. Dentsly International Inc., 399 F.3d 181 (3d Cir. 2005)(holding that a course of dealing between supplier and distributors where distributors knew that they would be terminated for selling competing products was a violation of Sherman Act Section 2 even though there was no long-term contract.).
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As evidenced by the litigated exclusivity cases, legality tends to turn on the market effect of the restraint, the barrier to entry and the length or severity of the restraint.40 Of course, good business purpose is of significance.
3. Price Clauses
Price fixing in patent licenses has sometimes been thought of as the most egregious misuse/antitrust violation.41 Nevertheless, the issues are not simple. In 1948, the Supreme Court found illegal a price clause in a cross-licensed patent.42 Later, the Third Circuit held that the grant of multiple licenses imposing identical price levels constituted illegal price fixing.43 Courts have emphasized that they will not allow the resale price setting when it amounts to an industry-wide standard.44 In UnivisLens, a 1942 case, the court held that a patentee who charged a royalty on the sale of his patented bifocals had no right to limit the resale prices to be charged by those who have purchased the patented goods, even though the sale was characterized as involving a license.45 The IP Guidelines cite the rule of Univis Lens without qualification.46 However, recent Supreme Court decisions cast grave doubt on any such formalistic test for legality. The Supreme Court created a narrow exception to the prohibition on resale price maintenance and held in 1926 that General Electrics (GEs) lightbulb license to Westinghouse could legally specify a minimum price per bulb when GE continued to sell the lightbulb itself in addition to licensing the
40. IP Guidelines note 1, 5.4. 41. See e.g., Mallinckrodt, 976 F.2d at 700 (citing Bauer & Cie. v. ODonnell, 229 U.S. 1, 33 S. Ct. 616, 57 L.Ed. 1041 (1913)); Straus v. Victor Talking Machine Co., 243 U.S. 490, 37 S.Ct. 412, 61 L.Ed. 866 (1917); Boston Store of Chicago v. American Graphophone Co., 246 U.S. 8, 38 S. Ct. 257, 62 L.Ed. 551 (1918), (the Bauer trilogy); Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 37 S.Ct. 416, 61 L.Ed. 871 (1917). 42. United States v. Line Material Co., 1333 U.S. 287 (1948). 43. Newburgh Moire Co. v Superior Moire Co., 237 F.2d 283 (3d. Cir. 1956). 44. U.S. v. New Wrinkle, 342 U.S. 371, 379 (1952); U.S. v. U.S. Gypsum Co., 333 U.S. 364 (1948). 45. See United States v. Univis Lens Co., 316 U.S. 241 (1942); See also Ethyl Gasoline Corp. v. U.S., 309 U.S. 436 (1940). Compare Gen. Cinema v. Buena Vista Distrib., 681 F.2d 594 (9th Cir. 1982)(determining that royalties based on ticket sales prices or a minimum price for calculating royalty were not per se illegal and that requiring a minimum royalty based on a resale price was not a violation of antitrust law). 46. Id. at 5.2(stating that resale price maintenance in a licensing agreement is per se illegal).
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patent to others.47 One more chink in the Univis per se rule appeared due to the Supreme Courts holding in State Oil 48 that vertical maximum price fixing in a distribution arrangement (to hold prices down) is not illegal unless it is anticompetitive on the facts. The Antitrust Division stated afterwards that the same rule of reason approach would apply to a maximum price restriction in a patent license. In 2007, the Supreme Court, in the Leegin case,49 reexamined and overturned the rule of Parke Davis that minimum price regulation of multiple-seller product distribution is illegal per se. It went on to state that unnecessary vertical price fixing by a high-market share firm, or at the instigation of a dealer cartel, would likely be illegal.50 Since no patent was involved in the Leegin case, it cannot be stated with certainty how the decision affects the above cases. Still, the probability is that there are no per se rules of illegality left in regard to price clauses in single or parallel vertical transactions, such as one-way licenses. Although it is not clear whether patent holders can set minimum prices, patent holders are certainly allowed to suggest minimum prices and terminate those who do not follow them.51 Licensors may not, however, use coercion, such as threats or late delivery, against discounting distributors to encourage them to raise prices.52 A review of the cases courts have looked at since the GE holding shows that important considerations in legality of resale price maintenance are whether the patent holder is selling the patented product himself 53 and the number of licensees that are being constrained by the set price.54
4. Post-Expiration Royalties
In light of the Courts ruling that vertical price-fixing is no longer illegal per se55 there are no easy misuse defenses left, except perhaps, as is discussed next, if the license provides for royalties still being paid after expiration. Thus, the accused infringer considering a misuse defense must almost always
47. United States v. General Electric Co., 272 US 476, 490 (1926)(holding that a restriction applied to the first sale of the patented item is not unlawful.) See also LucasArts Entertainment Co. v. Humongous Entertainment Co., 870 F.Supp. 285 (N.D.Cal. 1993)(holding that resale price maintenance on videogames was reasonably adapted to secure pecuniary reward for the copyright holders monopoly and therefore valid). 48. State Oil, 522 U.S. at 3. 49. Leegin Creative Leather Prods., 127 S.Ct. at 2705. 50. Id. 51. U.S. v. Colgate & Co., 250 U.S. 300, 307 (1919). 52. Monsanto v. Spray-Rite Serv. Co., 465 U.S. 752, 765 (1984). 53. General Electric Co., 272 U.S. at 490; LucasArts Entertainment Co., 870 F.Supp. at 289. 54. New Wrinkle, 342 U.S. at 379; U.S. Gypsum Co., 333 U.S. at 389. 55. Leegin Creative Leather Prods., 127 S.Ct. at 2705.
plan from the beginning a rule of reason attack on the plaintiffs licensing scheme. This would involve, in the price clause arena, preparing to define a market, prove dominance, and predict excessive prices and profits. In 1964, the Supreme Court held in Brulotte v. Thys56 that requiring royalties payable after expiration is a per se misuse. Courts following Brulotte have held that the attempted enforcement of a license whose effect is to extend the use of a patent beyond the patent term constitutes a misuse.57 Brulotte creates a somewhat arbitrary rule, making little economic sense. Because of this, it has been cut back through years of unsympathetic interpretation and will probably not survive when next addressed by the Supreme Court.58 Nonetheless, the CAFC recognized the Brulotte rule in its 1997 Mallinckrodt decision.59 Where two patents (or more) are licensed, two circuits have split on whether a clause requiring full royalties to continue after one patent expires constitutes a misuse.60 In his opinion in Scheiber v. Dolby Labs, Judge Posner stated that an agreement to provide for lower overall royalties for two patents, when the U.S. patent expired two years earlier than the Canadian patent, did not have an effect of extending patent exclusivity because the price of the license was just amortized over a longer period of time, and because the terms could not be enforced against third parties anyway.61 Despite his expressed disdain for the Brulotte rule, Judge Posner followed the Supreme Court precedent, noting that it was for the Supreme Court to overrule.62 On the other hand, in agreements in which there was no coercion or royalties were higher during the life of a patent and there were reduced post-expiration royalties based on the existence of unexpired patents or trade secrets, courts have not found post-expiration royalties to be a misuse.63
56. Brulotte v. Thys, 379 U.S. 29 (1964). 57. Meehan v. PPD Indus., 802 F.2d 881 (7th Cir.1986); Boggild v. Kenner Prods., 776 F.2d 1315 (6th Cir. 1985); Pitney Bowes, Inc. v. Mestre, 701 F.2d 1365 (11th Cir. 1983); Modrey v. Am Gage & Mach., 478 F.2d 470 (2nd Cir. 1973); Velt v. Norton Simon Inc., 425 F.Supp. 774 (S.D.N.Y. 1977); Rocform v. Acitelli-Standard Concrete Wall, 367 F.2d 678 (6th Cir. 1966) (existence of a license providing for post-expiration royalties is misuse regardless of whether or not the royalties were ever collected); Ar-Tik Sys v. Dairy Queen, 302 F.2d 496 (3d Cir. 1962); Shields Jetco v. Torti, 314 F.Supp. 1292 (D.R.I. 1970). 58. See Sanford Redmond, Inc. v. Mid-America Dairymen, Inc., 29 U.S.P.Q.2d 1222 (S.D.N.Y. 1992) (use of royalty provision extending past expiration of the patent is illegal per se). 59. Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d. 100 (Fed. Cir. 1992). Accord: B. Braun Medical v. Abbott Labs., 124 F.3d 1419 (Fed. Cir. 1997). 60. Compare Rocform v. Acitelli-Standard Concrete Wall, supra, with Hull v. Brunswick, 704 F.2d 1195 (10th Cir. 1983). 61. 293 F.3d 1014 (7th Cir. 2002). 62. Id. at 101819. 63. Well Surveys v. Perfo-log, 396 F.2d 15, 1718 (10th Cir. 1968); Sunrise Med. HHG v. AirSep Corp., 95 F.Supp.2d 348, 458 (W.D. Pa. 2000); A.C. Aukerman Co.v. R.L. Chaides Constr., 29 U.S.P.Q.2d (BNA) 1054, 1058 (N.D. Cal. 1993).
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The cases and treatises suggest that a license agreement imposing royalties only on sales during the life of the patent, but allowing the payment of the amount due during post-expiration years, is not a misuse.64 A Delaware district judge held that there was no misuse in a license that allowed use of the method patent during the patents life provided that royalties were be paid for ten years after expiration on all sales of products resulting from such use of the licensed technology during its life.65
5. Grantback Clauses
Understanding the nature and potential problems of grantback clauses provides a useful roadmap for attacking these clauses through litigation. A grantback clause may call for grant of either an exclusive or a non-exclusive license to the patent holder. Some of these clauses may present an issue in which the contract containing them forms the basis for litigation or the crafting of settlement agreements. In either case, a general understanding of the problems associated with this clause is helpful. The term grantback refers to clauses requiring a licensee to grant the rights to improvements he makes in the licensed patent and/or in related technologies to a licensor.66 Including a grantback provision in a license agreement does not constitute a per se violation of antitrust laws, but instead is evaluated under the rule of reason approach.67 Analysis of grantback arrangements primarily focuses on the resulting impact on the licensees incentive to innovate68 and the contribution of the grantback to a general campaign of monopolization or attempts at market control.69 A focus on innovation makes sense because of the nature and purpose of the grantback. Obtaining the most up-to-date technology remains essential to compete in any market. Technological innovation and the
64. Bayer AG v. Housey Pharm., 228 F.Supp.2d 467 (D.Del. 2002). 65. Id. at 46869. 66. As contrasted with grant forward clauses wherein the licensor agrees to transfer rights to improvements it makes to the licensee. 67. Intellectual Property Guidelines 5.6. Most practitioners are now well aware of the scope and duration portion of the reasoned analysis, and therefore place temporal limitations on the granting of rights to improvements in an effort to decrease the potential for agency involvement. See also Transparent-Warp Machine Corp. v. Stokes & Smith Co., 329 U.S. 637, 64548 (1947)(grantback provision in technology license may be anticompetitive but is not per se unlawful). 68. Port, et al., Licensing Intellectual Property in the Information Age, Second Ed. at p. 498. See also Hartford Empire Co. v. United States, 323 U.S. 386, 400 (1945). 69. Hartford Empire Co., 323 U.S. at 386; U.S. v. Aluminum Co. of Am., 91 F.Supp. 333, 410 (S.D.N.Y. 1950); United States v. Gen. Elec. Co., 82 F.Supp. 753, 81516 (D.N.J. 1949); United States v. Gen. Elec. Co., 80 F.Supp. 989, 10056 (S.D.N.Y. 1948).
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accompanying ability to compete in a given market thus depend on obtaining the rights to improvements to existing technology, and provide the motivation for implementing a grantback clause. For this reason, obtaining grantbacks can help a market participant in eliminating his competition. This simple observation of the underlying purpose of the grantback provision sheds light on exactly how, when and why these clauses garner the unwanted attention of antitrust enforcement agencies. In short, the greater the restrictions placed on rights to improvements, the greater the risk that an antitrust violation may be found. If an agency determines that the licensor has market power in the relevant market and the licensees incentive to innovate has been significantly reduced, the agencies will consider the extent of the grantback provisions offsetting procompetitive effects, including: (1) the extent to which the provision promotes dissemination of the licensees improvements to the licensed technology; (2) how greatly the provision increases the licensees incentive to disseminate the licensed technology; or (3) how significantly the provision enhances innovation, output, or competition in the subject technology.70 Because of the analytical emphasis on restriction of innovation, careful attention should be paid to the manner in which the rights to improvements are granted if parties wish to avoid running afoul of the antitrust guidelines. Likewise, a careful reading of contracts affiliated with litigation may yield additional grounds for plaintiffs and defendants alike. As noted above, just as with other license arrangements, the grantback transfer occurs most frequently in three forms, namely, as a non-exclusive license, an exclusive license, or an assignment.71 Because non-exclusive licenses place fewer restrictions on the transfer and ownership of rights to improvements, antitrust violations do not ordinarily arise in the context of non-exclusive grantback licenses.72 The same cannot be said of exclusive license-back provisions. Because such provisions place greater limits on the ownership of any rights to improvements, they would more likely be subject to antitrust issues than
70. Port, et al., Licensing Intellectual Property in the Information Age, Second Ed. at 498. 71. See Port, et al., Licensing Intellectual Property in the Information Age, Second Ed. at 498 (A non-exclusive grantback allows the licensee to practice its technology and license it to others. Such a grantback provision may be necessary to ensure that the licensor is not prevented from effectively competing because it is denied access to improvements developed with the aid of its own technology. Compared with an exclusive grantback, a non-exclusive grantback, which leaves the licensee free to license improvements in technology to others, is less likely to have anticompetitive effects.). 72. Id.; See also Barr Rubber Prods. v. Sun Rubber Co., 277 F.Supp. 484, 506 (S.D.N.Y. 1967) aff d in part and revd in part, 424 F.2d 1114 (2nd Cir. 1970); Well Surveys v. McCullough Tool, 199 F.Supp. 374, 395 (N.D. Okla. 1961), aff d, 343 F.2d 381 (10th Cir. 1965); Binks Mfg. Co. v. Ransburg Electro-Coating Corp., 281 F.2d 252, 259 (7th Cir. 1960); Lightwave Tech. v. Corning Glass Works, 1991 U.S. Dist. LEXIS 543, 19 U.S.P.Q.2d 1838 (S.D.N.Y. Jan. 18, 1991).
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non-exclusive arrangements.73 Grantback clauses requiring assignment would obviously place the most significant limitation on rights to improvements and, thus, place the most stringent restrictions on innovation and its dissemination. Logically, assign-back clauses should be expected to carry the greatest risk of a finding of misuse. Aside from the forms of grantback provisions involved in an agreement, courts look at a number of other factors to determine whether a grantback provision should be considered anti-competitive. A court will often look at whether licensee and licensor are competitors.74 Another consideration that frequently influences a courts findings of anticompetitive effects is the scope and duration of the grantback. In Santa Fe-Pomeroy, Inc. v. P&Z Co., the court found that the exclusive grantback clause did not violate antitrust laws because it was limited in scope and duration to a contract project on which the licensor and licensee were working.75 Courts also consider whether the grantback is royalty-free and whether the improvements are royalty-free when they are later sublicensed. In Intl Nickel Co. v. Ford Motor Co.,76 the court held that a grantback clause was not a misuse because it was sublicensed royalty free. Agency scrutiny of grantback clauses has occurred with some frequency in situations involving patent pools. However, this has not prevented the agencies from approving a number of grantback clauses involving patent pools for products such as M-PEG-2 and DVD.77
6. No-Challenge Clauses
Restrictions on the right of a licensee to challenge validity were declared unenforceable as against public policy in Lear v. Adkins.78 However, lower courts have been unwilling to treat such clauses as either a misuse or an
73. See Port, et al., Licensing Intellectual Property in the Information Age, Second Ed. at 498. 74. United States v. Besser Mfg. Co., 96 F.Supp. 304, 31011 (E.D. Mich. 1951). 75. Santa Fe-Pomeroy, Inc. v. P&Z Co., 569 F.2d 1084, 110102 (9th Cir. 1978). See also United States v. E.I. DuPont de Nemours & Co., 118 F.Supp. 41, 22425 (D.Del. 1953)(grantback clause which was limited to the field of the moisture-proof cellophane licensed patent did not have anticompetitive effects because it did not enhance DuPonts market power.) But see Duplan Corp. v. Deering Milliken, Inc., 444 F.Supp. 648, 700 (D.S.C. 1977) (an agreement requiring a licensee to assign rights broader than those of the licensor was found to be invalid because its effect was to extend the monopoly of the licensor). 76. 166 F.Supp. 551, 56566 (S.D.N.Y. 1958). 77. See M-PEG-2 (Business Review Letter (June 26, 1997); DVD Business Review Letter (Dec. 16, 1998); DVD Business Review Letter (June 10, 1999); 3G Patent Platform Business Review Letter (Nov. 12, 1992), discussed infra. 78. Lear, Inc. v. Adkins, 395 U.S. 653 (1969).
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antitrust violation.79 In Bayer v. Housey, the court stated that although a clause under which the licensor reserved the right to terminate a license if the licensee contested the patents validity was unenforceable, it did not constitute misuse.80 Lear and its progeny elevate the policy aims associated with eliminating invalid patents over those favoring the general freedom to contract.81 This rationale garners support from the simple observation that licensees are usually in the best position to challenge the licensed patents validity.82 Using alternative phraseology instead of the traditional no-challenge provisions may, however, guarantee the licensor protection without generating any misuse, antitrust, or public policy concerns. One potential option for a licensor is to require a licensee to file a reexamination proceeding in the United States Patent and Trademark Office (PTO) instead of seeking a declaratory judgment on the issue of invalidity.83 Clauses restricting venue for invalidity litigation are also generally enforceable. A licensor could also insist upon an escalation of royalty rates should the licensee seek a determination of invalidity and fail. The Georgia-Pacific84 holding suggests that such a clause is enforceable because a courts affirmation of the validity presumption arguably drives the value of the patent higher.85 Although a licensor can increase payments, he usually may not force a licensee to continue paying royalties on a patent that was proven to be invalid after the agreement was made.86 In regard to the procedural limitations of contesting the validity of a licensed patent, circuit courts have disagreed about whether a licensee must stop royalty payments before he can challenge the validity of the patent.87
79. Panther Pumps Equip Co. v. Hydrocraft, Inc., 468 F.2d 225, 232 (7th Cir. 1972);Wallace Clark & Co. v. Acheson Indus., 401 F.Supp. 637, 640 (S.D.N.Y. 1975) aff d, 532 F.2d 846 (2d Cir. 1976); Congoleum Indus. v. Armstrong Cork Co., 366 F.Supp. 220, 233 (E.D.Pa 1973) aff d, 510 F.2d 334 (3d Cir. 1975). 80. Bayer, 228 F.Supp.2d at 471. 81. See generally Lear, infra. 82. See generally MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764 (2007). 83. In so doing, the policy aims set forth in Lear and MedImmune remain satisfied through a less expensive proceeding before the United States Patent Office, the most qualified administrative body for determining issues of patent validity. With public policy aims fully encapsulated in such a clause, the likelihood of the clauses enforceability in court significantly increases. 84. Georgia-Pacific Corp. v. United States Plywood Corp., 318 F.Supp. 1116 (S.D.N.Y. 1970). 85. See Id. In determining the reasonable royalty, the court considered fifteen factors including but not limited to the existing value of the invention . . . [the] duration of the patent and the term of the license . . . [the] selling price that may be customary in the particular business . . . [and] the amount a licensee would have agreed upon. . . . 86. Lear, 395 U.S. at 667. 87. Compare Studiengesellschaft Kohle M.B.H. v. Shell Oil Co., 112 F.3d 1561, 156668 (Fed. Cir. 1997)(Holding that the licensee must stop payments and give notice to the licensor before he can challenge the validity of the patent) with Warner-Jenkinson Co. v. Allied Chemical Corp.,
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7. Settlements
Persons accused of infringement and in search of misuse/antitrust defenses would do well to scrutinize any settlements by the patent holder of actual or contemplated litigation, including interference proceedings. Sensitive issues would include: (1) mutual no-challenge clauses against weak patents; (2) reciprocal territorial or customer restrictions, specifically extending beyond the scope or duration of the intellectual property rights involved; (3) reverse payments in which an avowed infringer prepared to challenge a patent is paid to stay out of the market for some years;88 or (4) sham settlements.89 In addition, the IP Guidelines state that the agencies will consider the competitive effect of settlements that involve cross-licensing.90 For instance, in Standard Oil Co. v. United States, the court evaluated whether an agreement entered into as a result of a settlement involved patents that blocked one another.91 When dealing with settlements that require the licensee to pay royalties on a patent during the course of litigation over its validity or even if it is later held to be invalid, courts have been split as to whether or not to enforce.92 Despite these reasons for hesitation, courts have generally been fairly lenient towards settlement agreements.93 If a party believes that his settlement may present a problem, a good way to obtain protection from challenges to the settlement is by securing court approval of the settlement. Under the Noerr-Pennington doctrine, discussed infra, court-approved settlements may receive protection from antitrust liability.94
88. 89. 90. 91. 92.
93. 94.
567 F.2d 184, 187 (2d Cir. 1977)(holding that a licensee does not have to stop payments before he can challenge the validity of the license). Discussed infra in Chapter 10, Section A, subsection 1, a) Pharmaceutical Settlements. Id. IP Guidelines 5.5. Standard Oil v. United States, 283 U.S. 163, 18081 (1931). See Hemstreet v. Spiegel, Inc., 851 F.2d 348, 350 (Fed. Cir. 1988)(holding that agreement requiring one party to pay royalties regardless of whether the patent is later held to be invalid was enforceable.). See also Ransburg Elector-Coating Corp. v. Spiller & Spiller, Inc., 489 F.2d 974, 978 (7th Cir. 1973). But see Warner-Jenkinson Co. v. Allied Chem., 567 F.2d 184, 18788 (2d Cir. 1977)(holding that an agreement requiring licensee to pay royalties for two years regardless of validity did not prevent licensee from contesting validity); MassillonCleveland-Akron Sign Co. v. Golden State Adver., 444 F.2d 425, 427 (9th Cir. 1971)(holding a no-challenge clause in the settlement agreement was invalid under Lear). See e.g. Hutzler Bros. v. Sales Affiliates, 164 F.2d 260, 267 (4th Cir. 1947). See MedImmune Inc., v. Genentech, Inc., 2003 U.S. Dist. LEXIS 23443 at *15 (C.D. Cal. Dec. 24, 2003)(holding that a court approved settlement agreement could not be considered an illegal restraint of trade). See also MedImmune Inc., v. Genentech, Inc., 427 F.3d 958 (Fed. Cir. 2005)(stating that the agreement did not even need Noer-Pennington immunity to be safe from antitrust challenges and that being a court-approved settlement was enough to shield it from being questioned.) cert. granted, 126 S. Ct. 1329 (2006).
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8. Acquisition of Competing Technologies

It is clear that acquisition of intellectual property is subject to the merger control law, Clayton Act, Section 7.95 The IP Guidelines state that the antitrust agencies will examine the effect of mergers or acquisitions on technology and research markets, as well as on products and service markets to determine if they potentially increase prices or reduce innovation.96 Thus, it seems theoretically possible that an accused infringer could defend on the ground that the patent holder has unclean hands due to its amassing of patents. Nevertheless, there do not seem to have been any cases in which such a violation was found. One argument to the contrary would be that the infringement itself should not be excused due to a patent holder having acquired patents on rival technologies, since the act of infringement would not be excused if the patent were held by some other firm. This argument might scuttle an antitrust claim, but probably would not prevent a misusetype defense. In SCM v. Xerox,97 a rival who was denied a license contended that the Xerox monopoly rested not on invention but on acquisition of the Battelle patent. The court rejected this contention, stressing that Xerox had the foresight to see the commercial potential of a patent most firms would not buy, and the skill to turn the claimed invention into a desirable efficient copier. Although the Second Circuit stated in its decision that a patent holder has the right to refuse to license his patent as long as the patent is lawfully acquired, later prosecutions by the FTC were aimed at patent holders who had amassed numerous patents, which they refused to license. Both the Xerox98 prosecution and the Ciba-Geigy-Sandoz merger investigation99 were settled with consent decrees that required the patent holders to license their technologies for modest or reasonable rates. Thus, a party will likely not be successful in asserting a misuse defense based on a patent holders killer portfolio if that patent holder licenses his patents to others, but may have some success if that patent holder refuses to license. Thus, it remains unclear, at this time, whether acquisition of a competing technology could be attacked collaterally by an infringer and, if proved to have been legal, would be deemed a sufficient related act to allow an unclean hands defense.
95. 15 U.S.C. 18 prohibits acquisitions that result in the lessening of competition or creation of a monopoly. 96. IP Guidelines 5.7. The agencies apply a regular merger analysis to any transaction in which an intellectual property holder sells all of its rights to an intellectual property and the seller acquires an exclusive license. 97. SCM Corp. v. Xerox Corp., 645 F.2d 1195 (2nd Cir. 1981). 98. In re Xerox Corp., 86 F.T.C. 364 (1975). 99. Ciba-Geigy Ltd., 123 FTC 842 (1997)(Ciba/Sandoz).
Clauses that Will Seldom Engender Misuse or Antitrust Conclusions 101
C. Clauses that Will Seldom Engender Misuse or Antitrust Conclusions 1. High Royalties
It is not a misuse, or an antitrust violation, for the patentee to charge as high a royalty as the market will bear, or one that results in no licenses, as long as the royalty is based on the patent.100
2. Discriminatory Royalties
The only U.S. antitrust law that deals explicitly with price discrimination is the Robinson-Patman Act, 15 U.S.C. 13.101 By its terms, that statute only deals with discrimination in the sale or lease of commodities, and thus does not apply to differing prices for services or intangibles. When a disfavored patent licensee attempted to challenge his royalty disadvantage under the Act, a federal judge dismissed his case, stating that a patent license agreement involves the sale of an intangible right of use which is not covered by the term commodity in Section 13(a).102 Thus, the Robinson-Patman Act does not apply to sales of patents, unless a commodity, such as a pill,103 for instance, is sold with the license.104 In several older cases, the courts have held that discriminatory royalties violate Section 2 of the Sherman Act and Section 5 of the FTC Act if the discrimination has a negative impact on competition.105 In the Shrimp Peeler cases, the patent holder licensed its canning machines to Gulf Coast canners, in which it held an interest, at half the rate it charged Northwest canners.106 The Alaska and Washington District Courts held that this practice unfairly
100. See Steward v. Abend, 495 U.S. 207, 228 (1990); Brulotte, 379 U.S. at 33. (Harlan, J., dissenting) W.L. Gore & Assoc. v. Carlisle Corp. 529 F.2d 614, 623 (3d Cir. 1976). 101. 15 U.S.C. 13 (a). 102. La Salle St. Press, Inc. v. McCormick & Henderson, Inc., 293 F.Supp. 1004, 1006 (N.D.Ill. 1968). 103. Innomend Labs v. Alza Group, 368 F.3d 148, 156 (2d. Cir. 2004)(discriminatory royalties on pills were held to be invalid). 104. Lasalle St. Press, 293 F.Supp. at 1006 (Holding that a patent cannot be considered a commodity.). Accord KMG Kanal-Mulle-Gruppe Intl v. Inliner U.S.A., 1999-2 Trade Cas. (CCH) 72,628 at 85,641 (S.D.Tex 1999). 105. Peelers Co. v. Wendt, 260 F.Supp. 193 (W.D. Wash. 1966); Laitram Corp. v. King Crab, Inc., 244 F.Supp. 9 (D.Alaska 1965), modified, 245 F.Supp. 1019 (D.Alaska1965); Grand Caillou Packing Co., 65 F.T.C. 799 (1964), aff d in part & revd in part sub nom; LaPeyre v. Federal Trade Commission, 366 F.2d 117 (5th Cir. 1966). 106. Peelers Co. v. Wendt, 260 F.Supp. 193; Laitram Corp. v. King Crab, Inc., 245 F.Supp. 1019; Grand Caillou Packing Co., 65 F.T.C. 799; LaPeyre v. Federal Trade Commission, 366 F.2d 117.
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limited competition in the market for canned shrimp, and therefore constituted an antitrust violation.107 More recent efforts to invalidate royalty rate discrimination under the Sherman Act have regularly been rejected by U.S. appellate courts.108 In BelaSeating,109 the appeals panel unanimously affirmed the ruling of the district judge that a patent owner is not required to grant licenses to all comers at equal rates or terms.110 A decade or so later, a different litigant attempted to attack royalty discrimination as a misuse of the patent monopoly which should render the patent unenforceable. Again, the appeals court defended the patent owners right to set unequal terms. In USM Corp.111 noted jurist and antitrust scholar Richard Posner, speaking for a unanimous three-judge panel, ruled that there is no antitrust prohibition against a patent owners using price discrimination to maximize his income from the patent.112 Thus, a discriminatory royalty will likely not prove a good defense to an infringement claim, unless the royalty is associated with some commodity and the party asserting the defense is able to specifically allege the anticompetitive effects of the discriminatory royalty and thus stay within the narrow rule created by the Shrimp Peeler cases.
3. Field of Use Restrictions

The IP Guidelines state that field of use restrictions have procompetitive justifications, as they increase the licensors incentive to license and help him to do so in an efficient manner.113 Courts have regularly upheld the right of patentees to license an invention only for use in a certain field or market.114 Courts have upheld clauses preventing licensees from selling the licensed technology for use in a large-scale commercial application115 and clauses restricting the licensed product to a one-time use.116 In General Talking
107. Peelers Co. v. Wendt, 260 F.Supp. at 193; Laitram Corp. v. King Crab, Inc., 245 F.Supp. at 1019; Grand Caillou Packing Co., 65 F.T.C. at 799; LaPeyre v. Federal Trade Commission, 366 F.2d at 117. 108. Standard Oil, 283 U.S. at 179. 109. BelaSeating Co. v. Poloron Prods., Inc., 438 F.2d 733 (7th Cir. 1971), cert. denied 403 U.S. 922 (1971). 110. Bela Seating Co. v. Poloron Products, Inc., 297 F.Supp. 489, 509 (D. Ill.1968). 111. USM Corp. v. SPS Techs., 694 F.2d 505 (7th Cir.1982); accord In re Independent Serv. Orgs. Antitrust Litig., 964 F. Supp 1479, 1491(D.Kan. 1997), aff d, 203 F.3d 1322 (Fed. Cir. 2000); Carter-Wallace Inc. v. United States, 167 U.S.P.Q. 667, 673 n.10 (Ct. Cl. 1970). 112. Id. at 505. 113. IP Guidelines 1995, 2.3. 114. See, e.g., Automatic Radio Mfg. Co. v. Hazeltine Research, Inc., 176 F.2d 799, 80203 (1st Cir. 1949). 115. General Talking Pictures v. Western Electric, 304 U.S. 175, aff d on rehg, 305 U.S. 124 (1938). 116. Monsanto v. McFarling, 302 F.3d 1291 (Fed. Cir. 2002); 363 F.3d 1336 (Fed. Cir. 2004) cert denied, 125 S. Ct. 2956 (2005).
Pictures v. Western Electric, the court held that a license that was limited to selling and manufacturing amplifiers for radio amateur reception, radio experimental reception, and home broadcast reception was valid and that the licensee infringed the patent by selling amplifiers for use in movie theaters.117 In Monsanto v. McFarling, the court held that a restriction prohibiting a licensee from using the second generation of his genetically engineered soybean seeds for replanting was also enforceable.118 Courts apply a rule of reason analysis to field of use clauses that apply to unpatented products made using patented processes.119 In Mallinckrodt v. Medipart, Inc., the court held that vertical nonprice restraints such as a single use requirement should be evaluated based on whether the restriction is reasonably within the patent grant, explaining that a restriction would be illegal if it were being used to expand the licensors monopoly outside the patent.120
4. Geographic Restrictions
Protection of licensors rights to limit the use or sale of a patent to a certain geographic area is supported by the Patent Act, which states that patent holders may grant licenses to use their patents in the United States or any specified part of the United States.121 The Supreme Court has held that a licensor may limit a licensees ability to use or sell the patent within or outside the United States.122 The IP Guidelines also note that territorial restrictions may have procompetitive uses123 and that a territorial restriction would not be likely to harm competition between potential competitors if the patent had not been licensed.124 When considering the legality of a territorial restraint, courts apply the rule of reason.125 Territorial restrictions have been found to be invalid where the license was a sham instituted for the purpose of geographic allocation.126
117. 118. 119. 120.
121. 122. 123. 124. 125.
126.
General Talking Pictures, 304 U.S. at 181. Monsanto, 302 F.3d 1291. United States v. Studiengesellschaft Kohle M.B.H., 670 F.2d 1122 (D.C. Cir. 1981). Mallinckrodt 976 F.2d at 700; See also B. Braun Medical v. Abbot Laboratories, 124 F.3d 1419 (Fed. Cir. 1997)(Stating that field of use restriction are usually upheld); Monsanto Co. v. Trantham, 156 F.Supp.2d 855, 86465 (W.D.Tenn. 2001); Carter v. Variflex Inc., 101 F.Supp.2d 1261, 126668 (C.D.Cal. 2000). 35 U.S.C. 261. Ethyl Gasoline Corp. v. United States, 309 U.S. 436 (1940). IP Guidelines 1995, 2.3. Id at Ex. 1. Atari Games Corp. v. Ninetendo of N. Am. Inc., 879 F.2d 1572, 157879 (Fed. Cir. 1990); Studiengesellschaft Kohle M.B.H., 670 F.2d 1122; Robintech Inc. v. Chemidus Wavin, Ltd., 628 F.2d 142, 147 (D.D.C. 1980). Timken Roller Bearing Co. v. United States, 341 U.S. 593, 59899 (1951); United States v. Crown Zellerbach Corp., 141 F.Supp. 118, 126 (N.D.Ill 1956).
Courts have found that if the limitations were proposed by the licensees, the licensor is guilty of an antitrust violation.127
5. Export Restrictions
Licenses that prohibit the licensee from exporting the resultant product, generally or to particular countries, have been attacked as antitrust offenses or misuses.128 If the patent holder has patent(s) in the country or countries it protects, or has granted an exclusive license there, it has usually been held that protecting such rights by means of an export restriction is legal.
6. Quantity Restrictions
It is well settled that a licensee can be limited only to production of a certain quantity of the licensed product, whether the product itself is patented or is produced by a patented process.129 When evaluating quantity restrictions in licensing agreements, courts have applied the rule of reason.130 One district court invalidated a quantity restriction because it was part of a conspiracy between licensees.131 However, absent a conspiracy, it would prove difficult to mount a defense on this theory.
7. Non-Exclusive Grantback Clauses

There can be little doubt as to the antitrust legality of clauses requiring a licensee to grant back to the licensor a license to practice any improvements that the licensee develops and/or patents.132 The standard remains whether the clause tends unreasonably to discourage innovation. Although misuse victories on the same grounds have been very rare in the last two decades, one occurred at the ITC. When Gemster sued to block
127. International Wood Processors v. Power Dry, 792 F.2d 416, 429 (4th Cir. 1986); Mannington Mills v. Congoleum Indus., 610 F.2d 1059, 107173 (3d Cir. 1979). 128. Brown Well v. Ketham Wire & Mfg. Co., 211 F.2d. 121 (9th Cir. 1954); Atari Games Corp., 879 F.2d 1572. 129. Atari Games Corp., 879 F.2d at 1572; United States v. E.I. DuPont de Nemours & Co., 118 F.Supp. 41, 226 (D.Del. 1953); United States v. Parker Rust-Proof Co., 61 F.Supp. 805, 812 (E.D. Mich. 1945). 130. Atari Games Corp., 879 F.2d at 1572; E.I. DuPont de Nemours & Co., 118 F.Supp. at 226; Parker Rust-Proof Co., 61 F.Supp. 805, 812; Aspinall Mfg. v. Gill, 32 F. 697 (C.C.D.N.J. 1887); Ethyl Corp. v. Hercules Powder Co., 232 F.Supp. 453, 460 (D.Del. 1963). 131. United States v. GE, 82 F.Supp. 753, 814 (D.N.J. 1949). 132. IP & Antitrust Section 3.364 at 330 (Aspen, 2004).
importation of foreign-made set-top boxes (cable TV converters with allegedly infringing channel selection and guide features), the respondents defended on misuse grounds. The respondents convinced the administrative law judge that Gemster had illegally tied its patents to products, and had imposed improvement grantback clauses that were likely to discourage innovation.133 The commission declined to review this holding, denying Gemster relief on other patent law grounds.
8. Packages of Patents
If a holder of multiple patents refuses to license fewer than all of them, or requires that the licensee license more of them than the licensee needs, an issue of antitrust tying may be raised if the court finds that the licensor has engaged in coercion and has refused to license its patents separately.134 Although the arrangement is per se illegal if the licensee is able to prove the elements of tying,135 the court will apply a rule of reason analysis if the licensee can only show that the agreement has some anticompetitive effects.136 However, if more than one patent is needed to make one product, modern courts hold that there is no tying of separate or separable assets.137
9. Royalties on Unpatented or Unused Products

Cases from Zenith v. Hazeltine138 to U.S. v. Microsoft139 have held that it can be an antitrust violation (and thus a misuse) for a licensor to compel the licensee to pay royalties on products that do not contain the licensed part. In Hazeltine, the court held that basing a royalty on total sales of radio broadcast machines as opposed to just sales of the patented portion of the machines
133. In re Certain Set-Top Boxes, Inv. No. 337 TA 454, at 134 (2002). 134. Automatic Radio Mfg Corp. v. Hazeltine Research, 339 U.S. 827 (1950). 135. (1) The tying product and the tied product are separate, (2) the sale of the tying product is conditioned on the purchase of the tied product, (3) the seller has economic power in the market for the tied product and (4) the agreement affects a not insubstantial amount of interstate commerce. United States v. IBM, 163 F.3d 737, 741 (2d Cir. 1998). 136. U.S. Phillips Corp. v. International Trade Commission, 424 F.3d 1179 (Fed. Cir. 2005). 137. Intl. Mfg. v. Landon, Inc., 336 F.2d 723, 729 (9th Cir. 1964); North Am. Phillips Co. v. Stewart Engg Co., 319 F.Supp. 335, 350 (N.D.Cal. 1970); Binks Mfg. Co., 122 U.S.P.Q. (BNA) 74, 88 (S.D.Ind. 1959), aff d in part revd in part, 281 F.2d 252 (7th Cir. 1960) cert. dismissed, 366 U.S. 211 (1966). But see Phillips Corp., 424 F.3d at 1179 (holding that a package license involving both essential and non-essential patents was not an antitrust violation because of the procompetitive efficiencies of the licensing scheme). 138. 395 U.S. 100 (1969). 139. 253 F.3d 34 (D.C. Cir 2001).
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was not unreasonable.140 In Hazeltine, the practice was defended as a convenience, but the Supreme Court rejected the defense, stating that the patent holder had engaged in misuse because it used the leverage of the patent to control the licensees operations.141 A courts decision as to whether requiring a royalty on an unpatented product constitutes misuse depends on whether the practice is done for the convenience of the parties or simply to strengthen the market position of the patent holder.142
D. Horizontal Antitrust Oenses and Misuse Defenses

The trend of antitrust policy and antitrust economics thinking has increasingly been to treat deals among rivals (horizontals) more seriously than ones with customers or suppliers (verticals). Thus, cross-licensing or patent pooling have received more intense antitrust scrutiny than one-way (vertical) licenses. Major cartel prosecutions have often challenged cross-licensing arrangements among rivals. The National Lead143 and ICI/Dupont144 decisions condemned cross-license schemes that camouflaged territorial market divisions as to all products, patented or not. Similar, but not identical, were vertical/ horizontal cartel cases in which the industry leader with one dominant patent used royalty rates and pricing restrictions to organize its licensees into cartel behavior. The classic cases are Masonite145 and U.S. Gypsum.146 It follows that if an infringement plaintiff can be shown to have engaged in cartel behavior with licensees, a patent misuse defense has been made out.
E. Relevance of the Antitrust Guidelines

In 1995, the U.S. antitrust agencies published the IP Guidelines. Although these have no legal effect on federal judges or on private litigation, they can
140. Hazeltine, 395 U.S. at 100. 141. Hazeltine, 395 U.S. at 13536. 142. Compare United States v. Microsoft Corp., 56 F.3d 1448 (D.C. Cir. 1995) and Engel Industries v. Lockformer Co., 96 F.3d 1398 (Fed. Cir. 1996). 143. United States v. National Land Co., 332 U.S. 319 (1947). 144. Unites States v. Imperial Chem. Ind. Ltd., 100 F.Supp. 504 (S.D.N.Y. 1951). 145. United States v. Masonite Corp., 316 U.S. 265 (1942). 146. United States v. United States Gypsum Co., 333 U.S. 364 (1948).
Relevance of the Antitrust Guidelines
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be influential and are representative and predictive of trends in analyzing legality. The major novelty in these guidelines was their adoption of safe harbors. In analyzing a purely vertical licensing restraint (no cross-licensing and no licensing between rival firms) they opined that non-per se restraints imposed by firms with less than 30-percent market shares were unlikely to raise competitive concerns. The IP Guidelines also state that a licensees small market share (less than 20 percent) is predictive of lack of anticompetitive market effects.147 It appears that the IP Guidelines have seldom been cited in infringement litigation. There are at least two major reasons for this. First, since the accused infringer is seldom willing and capable of developing reliable market shares (or even market definitions) in such cases, the defense or counterclaim is considered unfounded as it fails to reference the potential market share. Second, the rule of reason is so capricious a defense that the restriction is deemed justified by quality or warranty or other arguments, without detailed evaluation of relevant market shares. The IP Guidelines have twice been cited by the CAFC as persuasive authority in favor of positions favorable to patent holders.148 The IP Guidelines acceptance of the per se illegality of an anti-discounting license clause was based on pre-Leegin law, and thus will be likely be changed unless the per se rule is restored by legislation. Practice Tip: The existence of the misuse defense militates in favor of full discovery into the past licensing and sales practices of the patentee or patent holder. Even licensing correspondence must be reviewed because evidence of coercion or forcing remains potentially relevant. Usually, the first step to enabling a misuse defense is to use discovery to obtain all of the plaintiffs licenses and licensing correspondence. Depositions may clarify details of licensing negotiations or reveal suspicious quid pro quos with rivals. If a clause amounting to a per se misuse is found, and has not been purged, motion practice may start. If there is tying or other non per se clauses, discovery must be used to gain information about market parameters (substitutes, price, uses, etc.). The CAFC has made clear that if defendant goes to trial on a misuse claim not involving a per se misuse, and no market power proof has been offered, the claim can be dismissed or disregarded.149
147. See IP Guidelines 4.3. 148. U.S. v. Phillips, supra, at n.137; Intergraph Corp. v. Intel Corp. 89 Fed. Appx. 218 (Fed. Cir. 2004). 149. Virginia Panel Corp. v. MAC Panel Co., 887 F.Supp. 880 (W.D. Va. 1995), aff d, 133 F.3d 860 (Fed. Cir. 1997).
CHAP T ER
10
Antitrust Counterclaims
A. Patentees Cartel Conduct 1. Sham Cross-Licenses or Settlements a) Pharmaceutical Settlements 2. Anticompetitive Patent Pooling a) DOJ Clearances for MPEG-2 and DVD Pools 3. Boycotts B. Patentees Single Firm Abuses (Attempt to Monopolize or Monopoly Maintenance) 1. Elements of Monopoly Oenses 2. Walker Process Claims 3. Handgards Claims C. Abuse of the Standard-Making Process D. Antitrust Claims Against Accused or Potential Infringers E. RICO Claims or Counterclaims
110 110 111 113 114 114 115 116 117 124 129 130 131
109
110 Chapter 10 Antitrust Counterclaims
The antitrust laws likely to be most relevant to defenses or counterclaims are Sherman Antitrust Act (Sherman Act), 15 U.S.C. 1 and 2. Section 1 creates criminal and civil liabilities for conspiracies or agreements that restrain trade (i.e., competition). Section 2 prohibits monopolization. Because patents are a limited form of monopoly and can be exploited by one owner, accused infringers invoke Sherman Act, Section 2 more frequently than Section 1. Nevertheless, we will discuss Section 1 issues first.
A. Patentees Cartel Conduct

Since Section 1 requires an agreement, and treats horizontal agreements (ones among rivals) more harshly than vertical ones, accused infringers frequently seek misuse defenses or antitrust counterclaims by dissecting all cross-licensing, patent-pooling, or standardization activities in which the patent holder has engaged. Such agreements tend to have at least some restrictive effects and thus can raise issues under Section 1, the section of the Sherman Act dealing with conspiracies. If the agreement is multiparty, market effect is easier to show than in regard to a single, one-way license. However, all or most such activities, unless they are shams, tend to have benefits that are appealing.
1. Sham Cross-Licenses or Settlements

Sustaining an antitrust challenge to a licensing or cross-licensing arrangement is easiest if it can be shown that the licenses were in some sense a sham. The Department of Justice (DOJ) and Federal Trade Commission (FTC) Licensing Guidelines state that rule-of-reason analysis will not be used if the underlying transfer of technology is a sham.1 A sham can be found if the licenses were not really needed and the real purpose of the arrangement was to restrict output or raise price in some market other than the market for the technology.2 Evidence of a sham might be that licensees respected the restrictions but did not use the licensed technology. For instance, in explaining the illegality of agreements condemned in the National Lead case, Judge Rifkind said that the cartel members agreed to cross-licenses:
applied to commerce beyond the scope of any patent . . . extended to a time beyond the duration of any then-existing patent . . . embraced acknowledgement
1. Licensing Guidelines, 3.62. 2. Id.
Patentees Cartel Conduct 111 of patent validity with respect to patents not yet issued, nor applied for, and concerning inventions not yet conceived . . . extended to countries, such as China, where no system of patent monopoly exists . . . and regulated the disposition of the products after sale by the licensees.3
Thus, he discerned an ulterior motive to divide world markets in ways that extended beyond the life and scope of the patents being licensed. In Masonite,4 the pool was also deemed illegal because each license set out a resale price. Another form of potentially illegal cross-licensing conduct is patent pooling that involves unjustifiable boycotts. The classic case is Zenith Radio Corp. v. Hazeltine Research, supra, in which the Supreme Court upheld an antitrust damage award based on its conclusion that a Canadian patent pool was operated to disadvantage U.S. rivals. One feature of illegality was that members of the pool agreed not to license independently. a) Pharmaceutical Settlements Pharmaceutical companies operating under the Hatch-Waxman Act sometimes open themselves to charges of sham settlements. The issue arises when the company holding the drug patent has its patent attacked by a company wishing to offer a generic substitute, and pays the generic company to stay out of the market for some period of time. This practice has been attacked on a number of occasions by the FTC, which has announced its view that weak patents should be invalidated. Pharmaceutical settlements have been found to be illegal (under some circumstances, in some circuits).5 On the other hand, one FTC finding was reversed on appeal,6 and a number of courts have found that any form of settlement may be justifiable if not a pure sham.7 Other courts have found certain settlements to be per se violations.8 Factors justifying such settlements have included cross-licensing or certain assistance to the generic in entering the market in the not-too distant future. Although some consumer class actions have resulted in money settlements in this area, there do not appear to be any decided cases concerning an accused infringer raising reverse payment as an antitrust/misuse defense.
3. 4. 5. 6.
United States v. National Lead Co., 63 F.Supp. 513, 524 n.8 (S.D.N.Y. 1945). United States v. Masonite Corp., 316 U.S. 265 (1942). See, e.g., In re Schering-Plough Corp., et. al., FTC Dkt. 9297 (Apr. 2, 2001). See Schering-Plough Corp. v. Federal Trade Commission, 402 F.3d 1056 (11th Cir. 2005), cert. denied, Federal Trade Commission v. Schering-Plough Corp., 2006 U.S. LEXIS 5128 (June 26, 2006). 7. See Joblove v. Barr Labs., Inc. (In re Tamoxifen Citrate Antitrust Litig.), 429 F.3d 370 (2d Cir. 2005); Schering-Plough Corp. v. Federal Trade Commission, 402 F.3d 1056 (11th Cir. 2005), MedImmune, Inc. v. Genentech, Inc., 427 F.3d 958 (Fed. Cir. 2005); Valley Drug Co. v. Geneva Pharm., 344 F.3d 1294 (11th Cir. 2003); In re Ciprofloxacin Hydrochloride Antitrust Litig., 363 F.Supp.2d 514 (E.D.N.Y. 2005); Asahi Glass Co. v. Pentech Pharm., Inc., 289 F.Supp.2d 986 (N.D.Ill. 2003). 8. See In re Cardizem CD Antitrust Litig., 332 F.3d 896 (6th Cir. 2003).
The recent In re Ciprofloxacin Hydrochloride Litigation demonstrates the Federal Circuits stance on reverse payments.9 Bayer offered reverse cash payments to Barr, a generic manufacturer, as part of an agreement in which Barr agreed to postpone market entry until expiration of the patent in question. The district court held that patent law immunizes a settlement agreement from antitrust consideration if any of the exclusionary terms fall within the patents scope. Reviewing this decision, the CAFC found that such a settlement could violate antitrust laws only if it affected entry beyond the scope of the patent.10 Not only was there no evidence that this occurred, but also the patent was later upheld as valid. The decision is significant for two reasons. First, this holding rejects the antitrust agencies position that a patents scope should be defined by its exclusionary power at the time of settlement. Instead, the court gives a broader definition to patent scope: the patent right is identical to its nominal scope unless fraud or sham litigation is present. Such a definition makes antitrust attacks on patent settlements more difficult. Second, the court addresses the burden of proof for settlement challenges, and holds that a patent is presumed to be valid unless the generic manufacturer rebuts such presumption. Thus, if a settlement is consistent with the presumed patent scope, antitrust law can do nothing, even in a case of reverse payments.11 Significantly, the 2009 head of the Antitrust Division, reversing the agencys prior position, announced agreement with the FTC position that reverse payment cases should be treated as presumptively anticompetitive in a brief submitted at the request of the Second Circuit Court of Appeals, in a separate appeal in the Ciprofloxacin litigation.12 The DOJs brief sets forth a test that a plaintiff must meet to show prove a prima facie case of reverse payment: (1) that the generic manufacturer withdrew its challenge to the patents validity; (2) that money (or other consideration serving the same purpose) flowed from the patent holder to the generic drug firm; and (3) that the payment accompanied the agreement to withdraw the validity challenge.13 In addition to recent litigation, several new bills banning reverse settlements have been introduced in the House of Representatives, and President Obama has stated that he will reign in reverse settlements.14
9. 2008-1097 (Fed. Cir., Oct. 15, 2008). 10. See also In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 209 (2d Cir. 2006); Valley Drug Co., 344 F.3d at 1294; Ark Carpenters Health & Welfare Fund v. Bayer A.G., 544 F.3d 1323, 1335 (Fed. Cir. 2008) cert. denied. 11. From Economists INK, Winter 2009. R.D. Stoner, Implications of the Recent Cipro Decision. 12. See Br. for the United States Arkansas Carpenters Health and Welfare Fund v. Bayer AG ( In Re Ciprofloxacin Hydrochloride Litigation), 22, Appeal No. 05-2851 (2nd Cir. July 6, 2009). 13. Id. at 23. 14. Michael R. Harlin, The End May Be Near for Reverse-Payment Settlements, Natl L.J. (October 12, 2009).
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2. Anticompetitive Patent Pooling

The Antitrust Division and the FTC set forth the 1995 IP Guidelines as a general resource for analyzing patent pools. The guidelines dictate that crosslicensing and pooling arrangements may provide procompetitive benefits by integrating complementary technologies, reducing transaction costs, clearing blocking positions, and avoiding costly infringement litigation.15 On the other hand, cross-licensing and pooling arrangements are likely to have anticompetitive effects if excluded firms cannot effectively compete in the relevant market for the good incorporating the licensed technologies, or the pool participants collectively possess market power in the relevant market and the arrangements limitations on participation are not reasonably related to the efficient development and exploitation of the pooled technologies.16 In the Cracking Patents case of 1931, the Supreme Court upheld the antitrust legality of patent pools designed to allow convenient cross-licensing and third-party licensing of a group of patents needed for an industrial purpose.17 In Kobe, Inc. v. Dempsey Pump Co.,18 the court found an antitrust violation involving a scheme in which the conspirators pooled the dominant patents, and collectively decided not to license them to outsiders. In Zenith v. Hazeltine, a Canadian patent pool was condemned for naturalistic refusal to license most U.S. firms.19 Courts will also view with suspicion those patent pools whose effect is to reduce or inhibit innovation as a result of the fact that the pool members have access to each others inventions and will not invent themselves or purchase competing inventions.20 For a brief time, it appeared that a patent pool might be adjudged a misuse or antitrust violation if it involved nonessential patents. Such was held by a U.S. International Trade Commission (ITC) judge, but his finding was reversed by the CAFC.21 Two other cases also reject the non-essential patents charge.22 The operators of the pools were aided by lack of evidence that new entrants were resisting the package license that was offered.
15. 16. 17. 18. 19. 20.
IP Guidelines 5.5. Id. Standard Oil Co., 283 U.S. at 163. 198 F.2d 416 (10th Cir. 1952). See Zenith Radio Corp. v. Hazeltine Research, supra, 395 U.S. at 131. See IP Guidelines 5.5 (citing United States v. Mfrs. Aircraft Assn Inc., 31 Op. Atty. Gen. 166 (1917)). 21. U.S. Phillips Corp. v. International Trade Commn., 424 F.3d 1179, 1190 (Fed. Cir. 2005), cert denied sub nom Princo Corp v. U.S. Phillips Corp., 126 S. Ct. 2899 (2006). 22. Id. at 119597; see also Minebea Co. v. Papst, 444 F.Supp.2d 68, 21314 (D.D.C. 2006) (package licensing of essential hard disk drive patents with nonessential patents was not per se misuse); Globespanvirata, Inc. v. Texas Instruments., 2006-1 Trade Cas. (CCH) 75, 229, at 104,724 (D.N.J. 2006) (rejecting tying claim based on package licensing of essential patents for practicing technology with nonessential patents).
a) DOJ Clearances for MPEG-2 and DVD Pools The Antitrust Division has granted business review clearances to patent pools which make it easier for new contracts to license all needed patents in one transaction.23 Two technologies for which the pools were created, DVD and MPEG-2, were both the subjects of numerous patents. The pools were structured to split the royalties based upon an agreed-upon formula.24 The licensors granted non-exclusive licenses to the pool, allowing patents to be licensed independent of other patents in the pool.25 Additionally, the pools contain grantback provisions only for essential patents.26 Both pools also provide for an assessment of essentiality of the patents by an independent expert and both offer licenses in a nondiscriminatory manner.27
3. Boycotts
Cross-license schemes that allow licensee voting on who else gets a license have been condemned as boycotts, and considered refusals to deal.28 Some courts have gone as far as to consider such concerted refusals to license as per se antitrust offenses, while others have indicated that the arrangements should be subjected to a rule-of-reason analysis.29 Although the court in Mason City stated that allowing licensee and patentee voting on future licensees was per se illegal, the Moraine Products court held that sound commercial grounds existed for the voting scheme in an agreement between licensee and patent holder. The Moraine Products court held that there was reason to believe that the motivation behind the agreement revolved around enforceability rather than just a desire to divide the market between the current licensee and patent holder. Courts view agreements among potential licensees with less scrutiny than agreements between licensors. Courts have held that agreements to
23. See DOJ Business Review Letter 98-C (June 26, 1997); DOJ Business Advisory Letter 99-2 (June 10, 1999). 24. See DOJ Business Review Letter 98-C; DOJ Business Advisory Letter 99-2. 25. DOJ Business Review Letter 98-C; DOJ Business Advisory Letter 99-2. 26. DOJ Business Review Letter 98-C; DOJ Business Advisory Letter 99-2. 27. DOJ Business Review Letter 98-C; DOJ Business Advisory Letter 99-2. 28. See, e.g., U.S. v. Krasnov, 143 F.Supp. 1998 (E.D.Pa. 1956), aff d per curiam, 355 U.S. 5 (1957); Summit Tech., 127 F.T.C. 208, 20910 (1999)(participants in a patent pool forfeited their right to license their patents without a vote by the pool). 29. See, e.g., Mason City Tent & Awning Co. v. Clapper, 144 F.Supp. 754, 767 (W.D. Mo. 1956) (Sherman Act 1 and 2 prohibit an agreement by a patentee which gives a non-exclusive licensee power to veto other prospective licensees); Moraine Prods. v. ICI Am., Inc., 538 F.2d 134, 14548 (7th Cir. 1976)(reversed and remanded, directed verdict on an antitrust claim).
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challenge a patent30 or to share the expenses of litigation31 do not run afoul of antitrust law. On the other hand, agreements to refuse to negotiate with a patent holder32 or agreements to remove a patented product from a technical standard33 have been found to constitute group boycotts.
B. Patentees Single Firm Abuses (Attempt to Monopolize or Monopoly Maintenance)

Sherman Act, Section 2, prohibits monopolization, attempts to monopolize, and conspiracies to monopolize.34 Monopoly has no exact definition but has usually involved a market share over 70 percent and the ability to control prices or supply.35 Having or gaining a monopoly due to skill, foresight, or industry is not illegal.36 Gaining a monopoly due to being granted a deserved patent, or acquiring one, is not prohibited, and the holder of such patent has no obligation to license it, or to charge reasonable royalties.37 Attempts to monopolize can be asserted against a firm that does not have or attain a monopoly, but there must be proof of a specific intent to monopolize a definable market by improper means, and a dangerous probability of success.38 In the context of an infringement suit, an unclean hands defense or trebledamage counterclaim based on single-firm conduct could have one of three bases. The first, most common basis is that the patent was undeserved and obtained by common law fraud (not mere beach of duty) and has been or is being used to exclude or hamper competition in a definable, significant market. The second basis is that the patent holder has engaged in baseless litigation or threats of litigation to exclude or hamper competition. The third basis is that the patent holder has otherwise committed a Sherman Act, Section 2, offense that involves the patent.39 Of course, a counterclaim also must involve a showing of injury to the party asserting it. In the remainder of this section, we will discuss each of these possibilities in detail.
30. Jones Knitting Corp. v. Morgan, 361 F.2d 451, 459 (3d Cir. 1966)(distinguishing between an innocent agreement to challenge validity and the defendants agreement to refuse to negotiate). 31. Gould v. Control Laser Corp., 462 F.Supp. 685 (M.D. Fla.) aff d in part and appeal dismissed in part, 650 F.2d 617(5th Cir. 1981). 32. Sony Elecs. v. Soundview Techs., 157 F.Supp.2d 180, 190 (D. Conn. 2001). 33. Golden Bridge Technology v. Nokia Inc., 416 F.Supp.2d 525 (E.D. Tex 2006). 34. 15 U.S.C. 2 (1890). 35. See. e.g., United States v. Aluminum Co. of Am., 148 F.2d 416 (2d Cir. 1945). 36. United States v. Grinnell Corp., 384 U.S. 563, 570 (1966). 37. SCM Corp. v. Xerox Corp., 645 F.2d 1195 (2d Cir. 1981). 38. Spectrum Sports v. McQuillan, 506 U.S. 447 (1993). 39. C.R. Bard Inc. v. M3 Sys, 157 F.3d 1340, 1382 (Fed. Cir. 1998).
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Chapter 10 Antitrust Counterclaims
1. Elements of Monopoly Oenses

The violation of Sherman Act, Section 2, is shown when two elements are proved: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.40 The attempt to monopolize offense requires a finding of specific intent and proof of dangerous probability of success. Patent-antitrust cases can involve either type of violation. Either charge must be based on a well-pleaded market and a sensibly calculated market share. In Golan v. Pingle Enter., Inc., the CAFC first rejected an antitrust claim for failure to provide evidence of monopoly power in a relevant market.41 The claimant offered only conclusory allegations about the scope of the market, and presented no expert testimony on monopolization by the patentee or the relevant market. The court also noted that even if the market was as suggested by the claimant, he did not present any of the commonly accepted evidence for showing monopoly power, for example, market share or barriers to entry.42 It is well settled that a patentee has the right to exploit the monopoly inherent in its patent, by refusing to license, charging high prices or high royalties, or limiting what licensees may do, or where they may do it.43 But if the patent is known to the patentee to be invalid, if the patentee seeks monopoly power outside the scope of the patent grant, or if the patentee threatens or brings baseless infringement claims, the ordinary rules of Sherman Act, Section 2, apply. If the patentee lacked monopoly power before the controversial conduct, the usual charge is attempt to monopolize. The Supreme Court has made clear that such offense requires specific intent to act illegitimately plus a dangerous probability of success.44 Plaintiff must establish: (1) that the defendant has engaged in predatory or anti-competitive conduct with (2) a specific intent to monopolize and (3) a dangerous probability of achieving monopoly power.
40. 41. 42. 43.
United States v. Grinnell Corp., 384 U.S. 563, 57071 (1966). 310 F.3d 1360, 1368 (Fed. Cir. 2002). Id. at 1369. SCM Corp. v. Xerox Corp., 645 F.2d 1195 (2d Cir. 1981). See also Morse v. Nintendo of America, Inc., 1990 WL 118100, at *7, 1990-2 Trade Cases P 69,116, 69116 (N.D.Cal 1990); Xerox Corp. v. Media Sciences Intern., Inc., 511 F.Supp.2d 372, 387 (S.D.N.Y. 2007). 44. Spectrum Sports v. McQuillan, 506 U.S. 447, 456 (1993).
2. Walker Process Claims

It has been clear since the Supreme Courts decision in Walker Process45 that use of an undeserved patent to attempt to monopolize a line of commerce is actionable under Sherman Act, Section 2.46 Such claims are in fact usually called Walker Process claims. Deciding Walker Process, the Court made several key points:
Walkers counterclaim alleged that Food Machinery obtained the patent by knowingly and willfully misrepresenting facts to the Patent Office. Proof of this assertion would be sufficient to strip Food Machinery of its exemption from the antitrust laws.... To establish monopolization or attempt to monopolize a part of trade or commerce under 2 of the Sherman Act, it would then be necessary to appraise the exclusionary power of the illegal patent claim in terms of the relevant market for the product involved. Without a definition of that market there is no way to measure Food Machinerys ability to lessen or destroy competition.47
The elements of a Walker Process suit or countersuit are now well established. First, plaintiff must prove that the patentee obtained an undeserved patent by intentionally telling a crucial lie to defraud the patent office.48 Thus, the misrepresentation must be determinative, and intent to lie must be shown.49 Because a Walker Process claim is a Sherman Act, Section 2 attempt to monopolize claim, it must involve a dangerous probability of success.50 The accused patent must be potentially capable of providing its owner with control of a significant product, process, or service market, a market defined in economic terms, not in terms of the patents own parameters. This allegation is rendered more difficult if the accused infringer denies infringement before advancing its Walker Process. It can be hard to square a contention that the patent in suit is easy to invent around with a later contention that the patent is market-dominating. One solution is to argue that if the patentee wins all its Markman contentions, its patent will be hard to avoid.
45. Walker Process Equipment v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965). 46. The allegation was that the patentee hid its use of the invention more than one year prior to filing of application for the patent. 47. Id. at 177. 48. See Walker Process, supra, at 174. 49. Nobelpharma AB v. Implant Innovation, Inc., at 1069 (the plaintiff in the patent infringement suit must also have been aware of the fraud when bringing suit.). 50. 382 U.S. at 178; see also Unitherm Food Sys. v. Swift-Eckrich, Inc., 375 F.3d 1341, 136365 (Fed. Cir. 2004)(rejecting Walker Process claims absent proof of a relevant market), revd on other grounds, 126 S. Ct. 980 (2006); Spectrum Sports v. McQuillan, 506 U.S. 447 (1993).
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Further, a Walker Process plaintiff will have to show that the patent holder engaged in enforcement of, or made harmful threats to enforce, the infected patent, rather than just to hold it.51 The patent holder will have to be shown to have done things to cause rivals to leave the market, or at least lose significant market share. There might be a pattern of lawsuits, settlements, or threats against alleged infringers, or their customers, which were producing some success for the would-be monopolist. Toleration of infringement would clearly tend to disprove intent to monopolize. A gray area is created if the plaintiff patent holder has offered, or granted licenses to some firms. At least one court ruled that the grant of two or more licenses at royalty rates that are not prohibitive refutes intent to monopolize.52 The Court went on to hold that the patentees suit against and refusal to license a particularly hated rival, though dramatic, was viewed by it as irrelevant to a monopolization charge. (In any event, the antitrust laws have been rather permissive toward inconsistent patterns of licensing or royalty rates.53) Some commentators have suggested that earning undeserved royalties is a form of illegal use of undeserved monopoly power. But the FTC deals with unfair methods of competition, not strictly with market domination. The authors view is that licensing at nonprohibitive rates is a refutation of illegal intent to monopolize. The next gray area of Walker Process analysis is whether the plaintiff must prove two actual or intended fraudsfraud on the United States Patent and Trademark Office (PTO) plus intended fraud on the court where an infringement case is filed. Of course, the analysis is somewhat different where the patent holder relies on threats rather than the filing of complaints. Successful Walker Process claims or counterclaims have been extremely rare. Only Nobelpharma, Arcade and Conceptual Engineering provide clear examples. The only reported CAFC decision upholding Walker Process damages is the Nobelpharma case.54 There, Nobelpharma, the dominant supplier of dental implants, sued a smaller rival for patent infringement. Defense counsel convinced the jury that the patent was invalid because the product had been perfected in Sweden too long ago to allow U.S. patentability, and because Nobelpharma intentionally failed to make U.S. disclosure of a grooving method that was the best mode for ensuring the stability of the implants. The CAFC was impressed by evidence that Nobelpharmas counsel had warned
51. See, e.g., Brunswick Corp. v. Riegel Textile Corp., 752 F.2d 261, 265 (7th Cir. 1984); Handgards Inc. v. Ethicon, Inc., 601 F.2d 986, 993 (9th Cir. 1979)(No Walker Process claim was established where plaintiff did not contend that defendant sought to enforce a fraudulently obtained patent). 52. Semiconductor Energy Lab. Co. v. Samsung Elecs, Co., 4 F.Supp.2d 473 (E.D.Va. 1998). 53. See, e.g., BelaSeating cases, supra, Chapter 9, Section C, subsection 2. Discriminatory Royalties. 54. Nobelpharma AB, 141 F.3d at 1059.
them not to assert their patent because it was clearly invalid under U.S. law. The panel concluded that Nobelpharmas litigation was instituted in bad faith, stating:
The record indicates that a reasonable jury could have found that Nobelpharma brought suit against 3I with knowledge of the applicants fraud. A reasonable jury could have found that two of NPs then-officers Dr. Ralph Green, Jr. and Mr. Mats Nilsson, were aware of the fraud based on Greens testimony that Nilsson told him: If the Patent Office did not receive a copy of [the 1977 book] and if that were true, then we would have a larger problem and that was fraud. Greens testimony also indicates that NP was aware that the 1977 Book was highly material and, in fact, likely rendered the patent invalid. Green testified that he, Nilsson, and . . . Vande Sande obtained a legal opinion from NPs attorney . . . who indicated that if we were to sue anyone on the patent we would lose in first round. . . . There was prior art, not the least of which was this textbook [the 1977 Book] that would invalidate the patent.55
The jury awarded three times the cost of defense, plus the cost of putting on the antitrust counterclaim. Still, Nobelpharma is not an easily useable precedent because smoking gun evidence of the patentees guilty mind is seldom present and obtainable. Another of the rare cases demonstrating successful Walker Process claim was Conceptual Engineering Associates v. Aelectric Bonding, Inc.56 Here, the plaintiff obtained a patent, but failed to disclose the co-inventor, his former partner. The plaintiff then brought an action for patent infringement by the company owned by his ex-partner. The district court held the patent invalid for failure to disclose the co-inventor, and also found clear and convincing evidence that the infringement action was brought in bad faith, as the plaintiff knew that there was an undisclosed co-inventor and thus the patent was invalid or the suit was untenable due to the right of the co-inventor to practice the invention. The court went on to find that the plaintiff intended to monopolize the relevant market, and had a dangerous probability of success in this attempt. Thus, the court found the plaintiff had violated the Sherman Act, and awarded three times the cost of defense plus fees and costs for maintenance of the Walker Process counterclaim. Similarly, in Arcade v. Minnesota Mining & Manufacturing Co., the plaintiff managed to prevail on a Sherman Act, Section 2 Walker Process.57 Here, the district court upheld the jurys verdict that a reissued patent in suit was invalid for anticipation, obviousness and indefiniteness, and that the original
55. Id. at 107273. 56. 714 F.Supp. 1262 (D.R.I. 1989). 57. Arcade, Inc. v. Minnesota Mining & Mfg. Co., 1991 U.S. Dist. LEXIS 19768 (E.D. Tenn. 1991).
and reissued patents were unenforceable due to defendants inequitable conduct in obtaining the patent. There was evidence to support the jurys findings on the antitrust claims. In addition, the Walker Process plaintiff established that it always had an intervening rights defense. Due to the patentees conduct over a considerable period of time, the accused infringer was awarded attorneys fees. In Kaiser Foundation Health Plan v. Abbott Labs, a Walker Process claim was dismissed and then reinstated. There, the court found that there was enough evidence to preclude summary judgment on the Walker Process claim, namely, that Abbott failed to (1) provide an English translation of a relevant Japanese patent application which disclosed the exact form of the claimed product; and (2) tell the PTO about a decision of the Federal Circuit which had been resolved adversely to Abbott. The CAFC case at issue, J.A. LaPorte, Inc. v. Norfolk Dredging Co.,58 was not cited in Abbotts application. Because the court found that the omission of LaPorte was unlikely to be inadvertent, and that there was enough evidence for a jury to find that a full English translation of the Japanese reference would have led to rejection of the application, the lower courts grant of summary judgment was reversed.59 In the recent DDAVP litigation, the Second Circuit also found that the plaintiffs, consumers of a brandname drug, had pled a Walker Process claim along with other antitrust violations sufficiently to avoid summary judgment. The plaintiffs pled that the defendant committed a violation of Sherman Act Section 2, by engaging in sham infringement litigation to defend a patent that was invalid (due to inequitable conduct), listing the invalid patent in the FDA Orange Book, which lists drug patents, and delaying entry of the generic drug by filing a citizen petition with the FDA requesting that more testing be done on the generic companys version of the drug before it could enter the market.60 If the patent holder sues for infringement and at that time does not conceal the prior art that casts doubt on his patent or his PTO behavior, the analysis becomes more problematic: certainly, the plaintiff may lose his case, but his dangerous probability of wrongfully monopolizing turns on faith that his arguments to distinguish the omitted from the prior art, or defense of the critical PTO behavior, will be accepted. The Supreme Courts Professional Real Estate Investors (PRE) ruling grants litigants a wide range of arguments.61
58. 59. 60. 61.
787 F.2d 1577 (Fed. Cir. 1986). 552 F.3d at 1045. In re DDAVP Litig. at 5, 6. Discussed infra. Chapter 10, Section B, subsection 3. Handgards Claims.
In Filmtec, The Federal Circuit opined that an antitrust counterclaim may be bottomed on either a Walker Process or a reckless litigation theory.62
PRE and Walker Process provide alternative legal grounds on which a patentee may be stripped of its immunity from the antitrust laws; both legal theories may be applied to the same conduct. Moreover, we need not find a way to merge these decisions. Each provides its own basis for depriving a patent owner of immunity from the antitrust laws. The Supreme Court saw no need to merge these separate lines of cases and neither do we.63
With all due deference, such dichotomy does not really give the Walker Process claimant two independent ways to succeed, unless the infringement claim is knowingly baseless. If the patent holder/infringement plaintiff is candid with the defendant and the court in discussing the weaknesses of the patent and its prosecution, it seems highly unlikely that a subsequent finding of invalidity or unenforceability will lead to a treble-damage award. A clear example of the dubious approach is the recent Dippin Dots case.64 There, the plaintiff revealed in court its early sales of a rudimentary version of the invention. The panel ultimately concluded that the revealed facts did show that the patent was invalid under the on-sale bar. But the panel further concluded that the patentees behavior, viewed as a whole, did not rise to the level of attempted fraud to justify a treble damage, attempted-monopolization award to the accused infringer. Firms have standing to advance Walker Process claims or counterclaims if enforcement of the undeserved patent, or threats to enforce it, have damaged them as actual or potential competitors in the line of commerce that the patent potentially dominates.65 In addition to having this standing, the party asserting the claim must have suffered damages.66 The majority of courts have held that the cost of defending an infringement case is cognizable damages, even if no loss of customers has yet occurred.67 A recent Second Circuit case accorded Walker Process standing to a class of direct purchasers of a drug obtained by inequitable conduct.68 The purchasers claimed that the misconduct of the defendants prevented generic
62. 63. 64. 65.
Filmtec v. Hydranautics, 67 F.3d 931, 939 (Fed. Cir. 1995). Nobelpharma, 141 F.3d at 147172. Dippin Dots, Inc. v. Mosey, 476 F.3d 1337 (Fed. Cir. 2007). See, e.g., Indium Corp. v. Semi-Alloys, Inc., 781 F.2d 879 (Fed. Cir. 1985)(plaintiff lacked standing because their company was not ready to manufacture the product covered by the patent at issue). 66. Brunswick Corp. v. Riegel Textile Corp., 752 F.2d 261, 26668 (7th Cir. 1984)(consumer interest was not harmed: plaintiff lacked standing). 67. See CVD, Inc. v. Raytheon Co., 769 F.2d 842 (1st Cir. 1985). 68. In re Antitrust Litig. DDAVP, supra, at 4.
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versions of the drug from competing with the brandname drug in the marketplace. As stated earlier, Walker Process claims are usually not successful.69 Many clear rules have emerged as to what facts or failings refute a Walker Process case. First, it is well settled that a firm does not engage in an actionable Walker Process attempt to monopolize merely by obtaining a patent by fraud and holding it.70 The CAFC applies a declaratory judgment standard (imminent injury) to define whether a plaintiff may advance such claim, under which some type of enforcement conduct must be shown.71 Second, the withholding of relevant but not invalidating information from the PTO, may constitute inequitable conduct but is not enough for a Walker Process case.72 The fraud must be so significant, in fact, that the patent would not have been granted to the defendant absent the fraud.73 Third, the party asserting the patent must have been aware of this fraud on the PTO when it initiated the lawsuit.74 Fourth, injury to plaintiff is not a sufficient basis if the patent holder is not in the victims market75 or is not in a position to dominate it. Fifth, if no market is defined, or if there are admitted substitutes for the patented device or method, the asserted Walker Process claim will fail.76 The concern must be based on a dangerous probability of harm: If the plaintiff does not have a legitimate basis for fearing monopoly by the patentee, the claim fails.77 Failure to correctly define what market will be monopolized is
69. Steinman, David R., and Danielle S. Fitzpatrick, Antitrust Counterclaims in Patent Infringement Cases: A Guide to Walker Process and Sham-Litigation Claims, 10 Tex. Intell. Prop. L.J. 95, 99 n.22 (2001). 70. See, e.g. Unitherm Food Sys., Inc. v. Swift-Eckrich Inc., 375 F.3d 1341 (Fed. Cir. 2004) revd on other grounds, 1265 St. 980 (2006). 71. See, e.g., K-Lath, Div. of Tree Island Wire v. Davis Wire Corp., 15 F.Supp.2d 952, 964 (C.D.Cal. 1998)(claim dismissed due to lack of threat or reasonable apprehension of suit); Northlake Mktg. & Supply v. Glaverbel S.A., 861 F.Supp. 653, 658 (N.D.Ill. 1994)(claim dismissed when plaintiff did not present sufficient evidence that exclusive licensee defendant had threatened to enforce the patent). 72. See, e.g., E.I. DuPont de Nemours & Co. v. Berkeley & Co., 620 F.2d 1247, 1274 (8th Cir.1980). 73. EI DuPont, 620 F.2d at 1274; Brunswick, 752 F.2d at 265. 74. Nobelpharma, 141 F.3d at 1069 (the plaintiff in the patent infringement suit must also have been aware of the fraud when brining the suit.). See also, T&T Geotech. v. Union Pac. Res. Co., 944 F.Supp. 1317, 1324 (N.D. Tex. 1996)(summary judgment granted, for lack of evidence that defendant knew the patent was fraudulently obtained). 75. Silva v. Mamula, 1994-1 Trade Cas. (CCH) 70,555 at 71,98788 (E.D.Pa. 1994)(antitrust claim failed when parties against whom unlawful infringement suit was brought were not competitors of the patent holder). 76. Walker Process, 382 U.S. at 178. 77. Bourns, Inc. v. Raychem Corp., 331 F.3d 704, 70910 (9th Cir. 2003)(plaintiff had no product and no contracts or arrangements to produce the product until after the accused firm
clearly related, as lack of a defined market causes fears of monopolization to be too speculative.78 Sixth, the patent holder has the right not to sell its patented product to its rivals. The Federal Circuit has ruled that, In the absence of illegal tying, fraud on the Patent and Trademark Office, or sham litigation, the patent holder may enforce the statutory right to exclude others free from liability under the antitrust laws.79 The Ninth Circuit has held otherwise, in regard to refusal to sell spare partssome patentedto a rival repair firm.80 Recent cases indicate that a cause of action can arise absent any use of the patent against the plaintiff. It is sufficient that the fraudulently obtained patent is used to pressure plaintiffs customers to decline to deal with plaintiff. In Hydril Co.,81 the appeals panel reversed a district courts dismissal of a Walker Process complaint. The panel ruled that a sufficient allegation was that letters were sent by defendant to plaintiffs customers informing them of the patent and causing them to buy less from plaintiff. A closer question is whether the holder of a fraudulently obtained market dominant patent commits Walker Process monopolization if it uses such patent to obtain undeserved royalties. In SEL v. Samsung (SEL),82 discussed supra, a Walker Process counterclaim was dismissed due to the counterclaimants admission that the patentee had already licensed several firms in the same market. In SEL, the patentee was a research lab, and thus did not participate in any line of commerce. It thus could also have prevailed on even simpler grounds, namely, that it was incapable of monopolizing any market. It appears that a Walker Process case must be bottomed on injury to rival firms, not just to any firm. Thus, for instance, a firm that practiced its chip patent in the cell phone market would not violate Walker Process by using its invalid patent to weaken, exclude, or exploit firms using that chip in the toaster market (assuming that cross-entry was unlikely either way).
78.
79. 80.
81. 82.
threatened to enforce its suspect patent). See also, Technicon Instruments Corp. v. Alpkem Corp., 866 F.2d 417, 421 (Fed. Cir. 1989); Hennessy Indus. v. FMC Corp., 779 F.2d 402, 405 (7th Cir. 1985). See, e.g., B.V. Optische v. Hologic., Inc., 909 F.Supp. 162, 17172 (S.D.N.Y. 1995); ReAlco Indus. v. National Ctr. for Health Educ., 812 F.Supp. 387, 39192 (S.D.N.Y. 1993)(plaintiff did not allege a relevant product market in attempted monopolization claim based on enforcement of invalid copyright). CSU, L.L.C. v. Xerox Corp. (In re Independent Serv. Orgs. Antitrust Litig.), 203 F.3d 1322, 132728(Fed. Cir. 2000). Image Technical Services v. Eastman Kodak Co., 125 F.3d 1195, 121516 (9th Cir. 1997) (refusal to sell patented products was not immune from antitrust scrutiny because it had the effect of leveraging monopoly power in a market for parts into a separate service market). Hydril Co. LP and Hydril UK, Ltd. v. Grant Prideco. LP and Grant Prideco. Inc., 474 F.3d 1344 (Fed. Cir. 2007). Semiconductor Energy Lab. Co. v. Samsung Elecs. Co., 204 F.3d 1368 (Fed. Cir. 2000), cert. denied 531 U.S. 1190 (2001).
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It can be quite important for a patent holder/infringement plaintiff faced with a Walker Process counterclaim to arrange to have inequitable conduct defenses tried first in a mini-trial before the judge, and exercise damage control if the issues are serious. Generally, if inequitable conduct charges are defeated, Walker Process charges are defeated a fortiori. Even where inequitable conduct is found, findings that the missing or misdescribed material would not have defeated the patent, as in Baxter Labs and Molins, would also seem to preclude or doom Walker Process charges. Similarly, a finding that the evidence of bad intent is purely circumstantial, e.g., lack of explanation for omitting a reference, probably would be enough to obviate a Walker Process claim. If the court allows inequitable conduct and Walker Process claims to be tried in front of a judge and jury, there is somewhat greater danger that the judge will give the jury latitude to find that the patent would have been invalidated and that the fraudulent intent was present. The court can be asked to negate the jurys findings, but the Federal Circuit, like many courts, has been loath to overrule on fact questions such as intent, though it did indicate in Nobelpharma that smoking gun evidence of fraudulent intent may be the sine qua non of Walker Process success.
3. Handgards Claims
The second most common antitrust (attempted monopolization) claim or counterclaim in patent litigation was for years called a Handgards claim, after a case of that name.83 Actually, the viability of defenses or counterclaims or stand-alone claims based on the litigation activities of a patent holder is shaped by three key decisions: Handgards,84 Profesional Real Estate Investors, 85 and California Trucking.86 Handgards, the earliest of the three, ruled that a patent holder, or perhaps, coholders, could violate the Sherman Act by using a pattern of weak and ill-motivated infringement suits and threats of suit to drive potential rivals out of the market or deter them from entering it. California Trucking held that the normal Noerr-Pennington right to petition the courts, i.e., litigate, can be lost if the plan is to pool funds, sue all rivals indiscriminately, and threaten beforehand, in order to deter entry. Professional Real Estate Investors cut back on these doctrines severely. The difference between Walker Process and Handgards claims is that in the latter, the claimant does not allege that the patent is invalid, but only that
83. Handgards, Inc. v. Ethicon, Inc., 743 F.2d 1282, 128889 (9th Cir. 1984). 84. Id. 85. Professional Real Estate Investors, Inc. v. Columbia Picture Industry, 508 U.S. 49, 113 S.Ct. 1920 (1993). 86. California Motor Transport v. Trucking Unlimited, 404 U.S. 508 (1972).
the accusation of infringement is knowingly false, or, more generally, that the infringement case is a bad faith attempt to harass and injure a rival. A claim may also be based on bad faith threats of infringement that cause the alleged infringers customers to curtail their purchases.87 Handgards antitrust claims were never easy to win, but they became extremely difficult to sustain after the Supreme Courts decision in Professional Real Estate Investors,88 usually called the PRE case. There, it was held that because of the constitutional right of access to the courts an antitrust claim based on dismissal of an allegedly predatory lawsuit (alleging copyright infringement) would not lie unless it was shown that the lawsuit was objectively baseless (not merely unlikely to succeed) and was brought to injure the accused in ways different from the results of a victory for plaintiffs.89 The court noted:
We now outline a two-part definition of sham litigation. First the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits. If an objective litigant could conclude that the suit is reasonably calculated to elicit a favorable outcome, the suit is immunized under Noerr, and an antitrust claim premised on the sham exception must fail. Only if challenged litigation is objectively meritless may a court examine litigants subjective motivation. Under this second part of our definition of sham, the court should focus on whether the baseless suit conceals an attempt to interfere directly with the business relationships of a competitor, Noerr, at 144(emphasis added), through the use [of] the governmental processas opposed to the outcome of that processas an anticompetitive weapon, Omni, 499 U.S. at 380 (emphasis in original).90
The court went on to say:

Of course, even a plaintiff who defeats the defendants claim to Noerr immunity by demonstrating both the objective and the subjective components of a sham must still prove a substantive antitrust violation. Proof of a sham merely deprives the defendant of immunity; it does not relieve the plaintiff of the obligation to establish all other elements of his claim.91
A Handgards/PRE case differs from a Walker Process case in two ways: One, if a patent holder learned after it acquired the patent that it was invalid, perhaps due to newly discovered art or early sales, but sued anyway, no Walker Process counterclaim would lie because no fraud on the PTO
87. See Grant Pride Co. LP and Grant Prideco. Inc., 474 F.3d 1344, discussed supra at p.156. 88. Professional Real Estate Investors, Inc. v. Columbia Picture Industry, 508 U.S. 49, 113 S.Ct. 1920 (1993). 89. Cf. CVD v. Raytheon, 769 F.2d 842, supra. 90. PRE, supra, at 6061. 91. Id. at 61.
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could be proved. But a Handgards case might be feasible. Second, if a plaintiff knew that its infringement contention was specious, but sued anyway, in the hope that the litigation would bankrupt its rival due to high expenses or loss of frightened customers a Handgards case could be made out while there would be no PTO fraud theory on which to bottom a Walker Process contention. In Hydranautics v. FilmTec Corp., a case alleging sham litigation based on a fraudulently obtained patent, the Ninth Circuit considered whether dicta in Liberty Lake concerning fraudulently obtained patents was good law, and concluded that it [was], at least where fraud is intentional.92 The court said the holdings in PRE and Liberty Lake [left] open the question of whether an infringement action based on a fraudulently obtained patent is objectively baseless93 and held that where the plaintiff obtained the patent by intentional fraud or was an assignee who knew of the patents infirmity such plaintiff would not demonstrate probable cause for a patent infringement suit, i.e., would not show an objective basis for the suit. The FTC recently ruled that deliberate misrepresentations that substantially affect the outcome of a proceeding or so infest its core [as] to deprive the proceeding of legitimacy may not, in appropriate circumstances, qualify for NoerrPennington protection.94 A recent Federal Circuit opinion demonstrates how difficult it is to sustain an antitrust suit based on attempted enforcement of a patent known to be invalid or not infringed. In Golan v. Pingel Enterprise, Inc.,95 the patentee sent a cease and desist letter to the alleged infringer, threatening suit. The patentee was apparently unaware the patent had expired. The appeals court ruled that a patentee, acting in good faith on its belief as to the nature and scope of its rights, is fully permitted to press those rights even though he may misconceive what his rights are.96 Because the alleged infringer did not offer clear and convincing evidence that the infringement allegations were made without reasonable basis or that the patentee knew the patent was unenforceable, bad faith was not proved.97 It is important to note that in both Handgards and PRE, the party alleging the bad faith or infringement eventually lost. In fact, it is difficult to find more
92. 70 F.3d 533, 538 (9th Cir. 1995). 93. Id. 94. In re Union Oil Co., 138 F.T.C. 1 (2004). There are at least a few cases holding that a damage action will lie for a would-be patentee who has to deal with false assertions made to the PTO by a third party opposing issuance of the patent, usually during a reexamination. Due to the sham exception, the Noerr-Pennington right to petition will not protect against intentional falsehoods. 95. 310 F.3d 1360 (2002). 96. Mikohn Gaming Corp. v. Acres Gaming, Inc., 165 F.3d 891, 897 (Fed. Cir. 1998). 97. Golan v. Pingel, 310 F.3d at 1372.
than one or two successful Handgards cases. A Handgards-type theory was successful in 1952 in the Tenth Circuit, in a case in which the patent holder was found to have engaged in illegal monopolization through reckless infringement suits and threats of suit.98 The closest modern case is CVD, Inc. v. Raytheon Co.99 There, the defendant sued its ex-employees for trade secret theft despite their rejoinder that Raytheon, as a U.S. Government contractor, had revealed its secrets. The accused ex-employees prevailed and were awarded antitrust damages, and the award was sustained on appeal. Apparently, the David-versus-Goliath nature of the dispute appealed to the jury and judges, and Raytheons inability to formulate any legal theory supporting its threats was quite harmful to it. Interestingly, in the Virginia Panel case,100 a similar argument failed. Counterclaimant argued that the patents were dedicated due to government contractors but plaintiff argued that the infringers export sales were not protected. The CAFC concluded that if the patentee had any plausible theory of infringement, it was immune from antitrust liability. The CAFC continues to enforce a distinction between the degree of bad intent necessary to render the patent unenforceable due to inequitable conduct and the higher standard of intent (fraudulent intent) necessary to meet one of the standards for treble damage liability under the antitrust laws. In Dippin Dots, supra, the appeal panel reversed a Walker process finding below while affirming an inequitable conduct finding. Applying the standards it had set out in Nobelpharma, the opinion emphasized that the withheld material might not have invalidated the patent, that there was an omission, rather than falsehood, and that there was some argument for considering the material not pertinent, even though PTO standards point toward disclosure anyway.101 In a recent Section 2 sham litigation case, Kaiser Foundation Health Plan v. Abbott Labs, Kaiser claimed that Abbott obtained the key patent-in-suit via Walker Process fraud and attempted to extend its monopoly by filing sham suits on the patent.102 The court clarified the law somewhat in regard to the interplay between the Supreme Courts antitrust rulings in California Motor Transport v. Trucking Unlimited,103 and in PRE, Inc. v. Columbia Pictures Industries.104 In the former case, the Court concluded that deterring entry by threatening a campaign to sue all new entrants indiscriminately constituted a form of
98. Kobe, Inc. v. Dempsey Pump Co., 198 F.2d 416 (10th Cir. 1952). 99. CVD, Inc. v. Raytheon Co., 769 F.2d 842 (1st Cir. 1985). 100. Virginia Panel Corp. v. MAC Panel Co., supra. Chapter 9, Section E. Relevance of the Antitrust Guidelines. 101. See 476 F.3d at 134648. 102. Kaiser, at 1045. 103. 404 U.S. 508 (1972). 104. 508 U.S. 49, 113 S.Ct. 1920 (1993).
sham litigation not protected by the normal Noerr-Pennington right to use the courts. In PRE, the Court set out a near-absolute principle that all cases (infringement cases in that instance) that were not objectively baseless were fully protected regardless of anti-competitive intent. PRE led the Kaiser court to hold that filing numerous infringement suits, even unsuccessful ones, was not sufficient adverse proof that the suits were knowingly unwinnable or utterly reckless in that regard. Kaiser Permanente sought to preserve a Sherman Act count based on Abbotts having filed seventeen infringement cases.105 The appeals court nevertheless upheld dismissal of the charge. It said that the large number of cases simply reflected the large number of generics who chose to start selling the apparently patented product. It then emphasized that, after PRE, evidence that Abbotts infringement and validity theories were not totally baseless was enough to protect their vigorous anti-infringement program. In Braintree Laboratories, Inc. v. Schwarz Pharma, Inc.,106 the generic manufacturer sought antitrust damages after Braintree purchased a patent that resulted in blocking generic entry into the relevant market. On appeal, the Federal Circuit is to address whether the district court erred in concluding that the patent infringement action against Schwarz was not objectively baseless. The District court stated The court agrees that the chronology of events supports the inference that Braintrees infringement suit was motivated primarily by business considerations, rather than legal ones, but went on to conclude that to proceed with its antitrust and tortious interference counterclaims, it is [Schwarzs] burden to establish, by clear and convincing evidence, that Braintrees lawsuit was objectively baseless. The court found that this burden had not been satisfied, despite evidence that Braintree knew that its patent was weak,107 because Braintree did advance at least a colorable argument for validity and for infringement. Even though the court declined to rule on the correctness of this construction, the construction was held not frivolous.108 Because the suit was not objectively baseless, the
105. Abbott won seven of these cases, and the court found that the other ten at least had plausible arguments. 106. Fed. Cir. App. No. 08-1556, opinion below, 568 F.Supp.2d 487 (D. Del. 2008). 107. Braintree, at 497 (citing In re Busiprone Patent Litig., 185 F.Supp.2d 363, 375 (S.D.N.Y. 2002) ([I]t is not what the parties think of the merits of their positions that matters; it is whether there are, in fact, sufficient bases for the positions taken.)). 108. The court cites Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295, 1301 (Fed. Cir. 2004) (objective baselessness not established by pre-filing claim interpretation that followed the standard canons of claim construction and was reasonably supported by the intrinsic record.).
Abuse of the Standard-Making Process 129
Noerr-Pennington doctrine immunizes Braintree from Schwarzs Sherman Act and torious interference counterclaims. Courts will also not find that the assertion of a valid patent following a Paragraph IV ANDA certification constitutes a sham litigation.109
C. Abuse of the Standard-Making Process

A theory embraced almost solely by the FTC may be used by a few accused infringers. The FTC, in its Dell,110 Rambus,111 and Unocal112 rulings, has developed theories that a patent-holding firm that participates in industry standard-setting activities competes unfairly if it proposes or supports a standard which, if used, would lead to infringement of one or more patents held by, or being applied for, by such firm, but which the firm does not disclose to others in the standard-setting group or agree in advance to license widely on fair and equal terms. There are conceptual problems with this theory, such that it has been rejected in many of its forms, except at the FTC. The theoretical problems include the following: First, if, as in the Unocal case, a government agency promulgates the favorable standard, the accused patent holder can rely both on its Noerr-Pennington right to try to persuade the government to take action helpful to the firms interest and the rival will be injured by state action rather than private action. Second, not all standard-making organizations play the same role, or have the same rules regarding disclosure or licensing. Doctrinally, it is usually not the case that an antitrust violation can be bottomed on a breach of the rules of a private organization. Otherwise, the same conduct would be legal or illegal depending on the strictness of the associations rule, not on an immutable principle of antitrust law. Also dubious in these cases is the premise that earning royalties obtained by trickery (if that) is an antitrust violation or even a misuse. Antitrust prohibits conspiracy and monopolization. The underhanded standard setter generally has no co-conspirators. Monopolization does not seem intended in such cases. The schemers market share is not necessarily dominant. The scheme is to license, and this involves competitors: unless the royalties sought are prohibitive, competition is likely.
109. Braintree, at 500 at fn.15 (court was unaware of any such instance, and commented that the party assertion of the sham litigation claim provided no case law refuting this fact). 110. Dell Computer Corp., 121 FTC 616 (1996)(consent order). 111. Rambus, 2006 FTC Lexis 60 (FTC 2006). 112. Chevron Corp., 140 FTC 100 (2005).
Even misuse is not necessarily present. The firms who practice the standard actually are infringing, within the normal scope of the patent. Much of the problem is being corrected by means of clearer, smarter rules promulgated by standards-making associations or governmental bodies. FTC positions are not binding on the courts. The CAFC, for instance, rejected essentially the same theory the FTC embraced.113 The FTCs position turns on whether the standards association required disclosure. The latest decision in this line, in which a dismissed stand-alone antitrust (Sherman Act, Section 2) case by Broadcom against Qualcomm was reinstated by the Third Circuit,114 held that it is actionable when a patentee promises a standards organization to license its necessary patents on fair terms, but then fails to do so. Horizontal license arrangements also take the form of patent pools, arrangements in which a number of firms pool a related group of supposedly complementary or blocking patents and offer all such patents to outsiders for a set price/royalty. The first Supreme Court case on patent pools upheld the arrangements such as reasonable and efficiency enhancing. Major modern pools, such as for DVD technology, have been granted business review clearances by antitrust agencies.115 Assignment of patents to rivals to placate them and attack more rivals has been held to be violative of Sherman Act, Section 1.116 However, more recent cases have treated trade-off settlement of patent disputes as usually reasonable.117 The newest Rambus decision is evidence of a pushback from the pro-patent companies and judges, who want to keep antitrust suits within certain bounds. These groups seem to be winning and thus confining this issue either to a counseling problem for association officials or a limited FTC crusade that does not translate into private antitrust or misuse victories for accused infringers.
D. Antitrust Claims Against Accused or Potential Infringers

As has been discussed above, Walker Process and Handgards provide bases for antitrust damage action claims or counterclaims by accused infringers against an aggressive patent holder. This section deals with the more rare
113. 114. 115. 116. 117.
Rambus Inc. v. Infineon Techs. Ag, 318 F.3d 1081 (Fed. Cir. 2003). Broadcom Corp. v. Qualcomm Inc., 2007 WL 847 (3d Cir. 9/4/07). United States v. Imperial Chemical Ind., 100 F.Supp. 504 (S.D.N.Y. 1951). See United States v. Singer Co., 374 U.S. 174 (1963). MedImmune, Inc. v. Genentech, Inc., 427 F.3d 958 (Fed. Cir. 2005).
RICO Claims or Counterclaims
131
occasions in which the patent holder will have a plausible basis for an antitrust claim against accused infringers. The major basis for such a suit is boycott. It has been held that an agreement among multiple accused infringers to conduct a joint defense and negotiate settlement jointly is legal.118 But an agreement restricting separate settlements has been held to constitute an illegal concerted refusal to deal, or boycott.119 Similarly, a district court has sustained a case against technology users who allegedly agreed on the maximum royalty they would pay.120
E. RICO Claims or Counterclaims

An alleged infringer who has lost customers or spent on legal defense might seek triple its losses under the Racketeer Influenced and Corrupt Organizations Act (RICO), but with little chance of success at present. The Act is designed to punish a pattern of racketeering. Therefore, those alleging violation of it must show repeated crimes (predicate acts), ultimately injuring the plaintiff. The most suitable crime for an accused infringer to allege is mail fraud. In a few cases, the alleged mail fraud was lying to defraud the U.S. Government into issuing an undeserved patent, in other words, a Walker Process violation becomes a RICO offense (without the inconvenient burden of showing market dominance). The rub is that the government does not lose any money when it issues a patent. In the SEL case,121 the CAFC agreed with the patentee that a RICO case bottomed on mail fraud fails when no monetary loss is imposed on the victim of the alleged fraud. The Supreme Court seconded this reasoning, deciding that a RICO action will not lie for using falsehoods to obtain a state gambling license and, on that basis, refused to hear an appeal from the SEL RICO ruling. After this, there really was no way to use a RICO theory based on a cases alleged fraud on the PTO.122 One district court did sustain a RICO complaint against the notorious exploiter of submarine patents, Lemelson.123 The sustained allegation was that Lemelson, knowing that his patents were faulty, pressured a series of
118. 119. 120. 121.
Gould v. Control Laser Corp, 462 F.Supp. 685 (M.D. Fla. 1978). Jones Knitting Corp. v. Morgan, 361 F.2d 451, 459 (3d Cir. 1966). Sony Elecs. v. Soundview Techs., 157 F.Supp.2d 180, 190 (D. Conn. 2001). Semiconductor Energy Lab., Inc. (SEL) v. Samsung, 204 F.3d 1368, supra, at Chapter 3, Section A, subsection 6, J.)Failure to Provide Translation of Foreign Language References. 122. Univ. of W. Va. v. Van Voorhies, 278 F.3d 1288, 1303 (Fed. Cir. 2002) (quoting SEL: inequitable conduct before the PTO cannot qualify as an act of mail fraud or wire fraud for purposes of the predicate act requirement.). 123. Lemelson v. Wang Labs Inc., 874 F.Supp. 430 (D. Mass 1994).
alleged infringers into paying royalties. Such fact patterns are relatively infrequent. Moreover, the PRE ruling makes it harder to show that a patentees belief in its own patent is objectively baseless, especially given the presumption in favor of validity. It does not appear that anyone has found, or succeeded with, a Lemelson type RICO case again. The only attempt, Evercrete v. H-Capt, Ltd.,124 failed for lack of a clear pattern of multiple frauds. For all these reasons, one seldom finds RICO claims or counterclaims in the patent litigation of the last decade.
124. 429 F.Supp.2d 612, 631 (S.D.N.Y. 2006).
CHAP T ER
11
Procedural Issues in Litigation of Patent Antitrust Issues
A. Standing B. Compulsory Counterclaim C. Relevancy of Rule 9(b) D. Bifurcation/Role of Judge and Jury 1. Bifurcation of Trials 2. Advisory Jury 3. Dismissal of Counterclaims and Defenses 4. Jurisdiction E. Choice of Law F. Remedies
134 134 135 136 136 137 139 139 140 141
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134 Chapter 11 Procedural Issues in Litigation of Patent Antitrust Issues
Procedurally, the two main issues in Walker Process litigation have been whether such claims should be treated as compulsory counterclaims and whether, if pleaded in an infringement case, they should be bifurcated.
A. Standing
If an accused infringer characterizes its antitrust-type defense as a misuse defense, it has standing even if it cannot show injury or threat of injury. However, it will not be entitled to damages or injunctive relief.1 If a firm wishes to assert a true antitrust counterclaim or stand-alone claim against a patent holder, it will need to establish standing based on antitrust injury or the imminent threat of such injury. Thus, an accused infringer whose product does not compete with that of the plaintiff lacks standing to assert an antitrust counterclaim because damage to the accused infringers sales will not increase the market share of the patent holder.2
B. Compulsory Counterclaim
The Supreme Court ruled in a Mercoid case in 1944 that an antitrust claim brought against the patentee after a patent infringement suit between the same parties was not barred under the doctrine of compulsory counterclaim.3 The Court reasoned that the antitrust case, based on licensing abuse (tie-ins) raised different issues from those created by the infringement suit. The reaction of virtually all courts after the Mercoid ruling has been to find a way not to follow it, or at least to question its continuing validity.4 In cases involving Walker Process theories, for instance, appeal courts have reasoned that a claim or counterclaim based on invalidity is inextricably intertwined with necessary issues stirred up by the infringement case.5 But, claims based on bad faith enforcement are not considered compulsory because they do not arise until the accused infringer has prevailed.6 The Federal Circuit has not
See B. Braun v. Abbott Labs. 124 F.3d 1419, 1428 (Fed. Cir. 1997). Silva v. Mamula, 1994-1 Trade Cas. (CCH) 70,555 (E.D. Pa 1994). Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661 (1944). See, e.g., Grumman Sys. Support v. Data Gen. Corp., 125 F.R.D. 160 (N.D. Cal 1988); Burlington Indus. v. Milliken & Co., 690 F.2d 380 (4th Cir. 1982). 5. See, e.g., Rohm & Haas v. Biotech, 770 F.Supp. 928, 93033 (D. Del. 1991)(The Supreme Court did not even recognize Walker Process antitrust claims until twenty years after Mercoid, thus, its holding does not apply). 6. Id. at 67071; see also Tank Insulation Intl v. Insultherm, Inc. 104 F.3d 83, 8688 (5th Cir. 1997)(antitrust counterclaim based on initiation of infringement action not compulsory);
1. 2. 3. 4.
Relevancy of Rule 9(b)
135
yet definitively ruled on the compulsory counterclaiming, but has held that treating proposed antitrust claims as compulsory counterclaims in a pending declaratory judgment action against a defendant asserting patent infringement defenses was not erroneous.7 An emerging rule appears to be that rulings on compulsory counterclaims should square with those on bifurcation of trial. If an antitrust counterclaim would be entitled to a bifurcated trial, it is not a true compulsory claim. It seems wrong to conclude that there is a pat yes or no answer to whether antitrust claims against patent enforcement should be compulsory. An accused infringer will usually not know whether fraud on the United States Patent and Trademark Office (PTO) occurred until after document discovery and the deposition of the inventor and any affiants. Taking full discovery on market issues would be expensive and wasteful if the fraud prerequisites for a Walker Process claim never emerge. Thus, only claims based on known facts, or facts developed very early in the litigation, should be treated as compulsory, as there is a major role for judicial discretion and for situation-based rulings.
C. Relevancy of Rule 9(b)

A number of cases hold that since a Walker Process requires classic fraud, such a counterclaim may be immediately challenged if the fraudulent statements are not spelled out.8 Specifically, a mere assertion that the patentee withheld material information, and knowingly and willfully presented false and misleading materials and in doing so perpetrated fraud on the PTO, will not be sufficient.9 On the other hand, alleging that a product covered by the
Hydranautics v. FilmTec Corp., 70 F.3d 533, 53627 (9th Cir. 1995)(defendant in a patent infringement case may delay suing the plaintiff for predatory patent litigation until after the defendant has prevailed in the patent case). But see Longwood Mfg. v. Wheelabrator Clean Water Sys., 954 F.Supp. 17, 18 (D.Maine 1997)(following Mercoid and questioning the continuing validity of its holding); Boston Scientific Corp. v. Schneider (Europe) AG, 983 F.Supp. 245, 267 (D. Mass 1997)(questioning the continuing validity of Mercoid). 7. Genentech, Inc. v. Regents of the Univ. of California, 143 F.3d 1446, 1456 (Fed. Cir. 1998), vacated on other grounds, 527 U.S. 1031 (1999)(also noting the lack of uniformity in the circuits and varied application of Mercoid, while observing that consolidation, efficiency and expedition should be considered in a determination of whether issues must be litigated in the same suit). 8. See, e.g., MedImmune, Inc. v. Genentech, Inc., 427 F.3d 958, 967 (Fed. Cir. 2005), revd on other grounds, 2007 WL 43797 (2007). 9. Papst Motoren GmbH v. Kanematsu-Gosha (U.S.A.) Inc., 629 F.Supp. 864, 87172 (S.D.N.Y. 1986); but see, Rolite, Inc. v. Wheelabrator Envtl. Sys., 958 F.Supp. 992, 1005 (E.D.Pa. 1997) (court declined to decide whether the rule concerning pleading fraud with particularity as per 9(b) applies to Walker Process claims).
patent was sold more than one year prior to patent filing, and that those involved in the prosecution of the patent knew of the on-sale bar and knowingly failed to disclose the prior sales to the PTO, may be considered in compliance with the Federal Rule of Civil Procedure (F.R.C.P.) 9(b) requirements.10
D. Bifurcation/Role of Judge and Jury 1. Bifurcation of Trials

Bifurcation is authorized under F.R.C.P. Rule 42(b), which permits a separate trial of any claim or issue in furtherance of convenience, avoidance of prejudice, or expedition and economy.11 Bifurcation is in within the trial courts discretion, but it is more willing to grant a motion when dispositive issues exist. The CAFCs rule is most clearly articulated as follows: In deciding whether one trial or separate trials will best serve the convenience of the parties and the court, avoid prejudice and minimize expense and delay, the major consideration is directed toward the choice most likely to result in a just final disposition of the litigation.12 For strategy purposes, it is important to know that antitrust issues are frequently postponed until after the determination of patent rights.13 If the
10. Publications Intl v. Western Publg Co., 1994-1 Trade Cas. (CCH) 70,540, at 71,933 (N.D. Ill. 1994)(these allegations, taken together, stated a claim under Rule 9(b)). 11. MCI Communications Corp. v. AT&T, 708 F.2d 1081, 1166 (7th Cir.), cert. denied, 464 U.S. 891 (1983). 12. In re Innotron Diagnostics, 800 F.2d 1077, 1084 (Fed. Cir. 1986)(bifurcating patent infringement claims from antitrust counterclaims was in the interests of economy and avoidance of prejudice). 13. See, e.g., ASM Am., Inc. v. Genus, Inc., 2002-1 Trade Cas. (CCH) 73, 573 at 92, 685 (N.D. Cal. 2002)(severing antitrust claims and staying antitrust discovery because [r]esolution of the invalidity issue may dispose of some of the antitrust counterclaims altogether, and may potentially narrow the damages inquiry on any remaining claims to particular products or product lines.); Ecrix Corp. v. Exabyte Corp., 191 F.R.D. 611, 614 (D. Colo. 2000)(bifurcation is appropriate in the interest of economy and to expedite the trial); Hunter Douglas. Inc. v. Comfortex Corp., 44 F.Supp.2d 145, 157 (N.D.N.Y. 1999)(ordering trifurcated trial in which issues of patent infringement, liability and damages would be decided before patent misuse defense, antitrust and state tort counterclaims); Hewlett-Packard v. Genrad, Inc., 882 F.Supp. 1141 (D. Mass. 1995)(bifurcating patent infringement claim from antitrust and unfair competition counterclaims because failure to prove inequitable conduct in procuring the patent would eliminate the basis for the counterclaim); Virginia Panel Corp. v. MAC Panel Co., 887 F.Supp. 880 (W.D.Va. 1995)(postponing trial on both patent misuse and antitrust issues until after a trial on infringement) aff d, 133 F.3d 860 (Fed. Cir. 1997).
Bifurcation/Role of Judge and Jury 137
allegation is for inequitable conduct in patent procurement, the trial court can address this issue separately, before the jury trial.14 Usually, the patent holder will argue for bifurcation, on grounds that earlier holdings, such as that the patent is valid, will remove the need to try detained issues such as market definition or market effect. The accused infringer usually argues against bifurcation, asserting that its counterclaim is intertwined with its invalidity and inequitable conduct defenses. In truth, the accused infringer will always tend to favor arrangements that put the patent holders conduct on trial to the same jury that is deciding infringement issues. Bifurcation motions are denied more often than not. In Knoll Pharm. Co. v. Teva Pharms. USA,15 the court ordered bifurcated trials of infringement claims and antitrust counterclaims, but refused to separate issues of willfulness and damages from issues of validity and infringement. A court might also decide to stay discovery of antitrust and unfair competition claims until after resolution of the patent issues.16 However, the court in eBay, Inc. v. Bidders Edge Inc.,17 refused to bifurcate trial or stay discovery on a sham litigation counterclaim because it determined that discovery would cause the parties to learn the strengths and weaknesses of their positions, and facilitate settlement. Thus, the patent holders preferred strategy is to defeat Walker Process claims on summary judgment.
2. Advisory Jury
Though it is not required to allow jury consideration of inequitable conduct, the district court may empanel an advisory jury to handle preliminary factual issues, such as doctrine of equivalents and willful infringement claims; and inequitable conduct, laches, estoppel, and patent misuse defenses.18 As a
14. Agfa Corp. v. Creo Prods. Inc., 451 F.3d 1366, 1375 (Fed. Cir. 2006)(judges retain discretion to conduct bench trials on unenforceability, even where invalidity is to later be tried to a jury). See also, Gardco Mfg. v. Herst Lighting Co., 820 F.2d 1209, 1213 (Fed. Cir. 1987). 15. No. 01-C1646, 2002 WL 31050138, at *46 (N.D. Ill. Sep. 13, 2002). 16. Implant Innovations Inc. v. Nobelpharma AB, 930 F.Supp. 1241, 1243 (N.D. Ill. 1996)(ordered separate trials for patent claims and antitrust and unfair competition claims); Simpson v. Stand 21 S.A., 32 U.S.P.Q.2d (BNA) 1848, 1850 (S.D. Ind. 1994); CMI v. Verax Sys., 5 U.S.P.Q. 2d 1676, 1678 (W.D.N.Y. 1987); Components, Inc. v. W. Elec. Co., 318 F.Supp. 959, 96768 (D.Maine 1970). 17. 56 U.S.P.Q.2d (BNA) 1856, 1859 (N.D. Cal. 2000). See also, Innotron Diagnostics, 800 F.2d at 1085 n.14 (granted additional time for antitrust discovery after refusing to stay discovery); Ecrix Corp., 191 F.R.D. at 614(refusing stay of antitrust discovery despite ordering separate trials because there would be overlap in the discovery). 18. See, e.g., Transmatic, Inc. v. Gulton Indus., Inc., 180 F.3d 1343, 1345 (Fed. Cir. 1999).
practical matter, a jury might be preferable if there is a story to tell. For instance, if the alleged inequitable conduct is grounded on a very technical matter, such as a withholding or misrepresentation by the patentee, and there is a believable, good-faith explanation, the judge could impanel a jury to consider the facts. Conversely, if there is any substance to the inequitable conduct claim, or an indication of deliberateness in the failure to fully inform the PTO with respect to prior art materials, the patent owner would almost always prefer a trial court decision without potential advisory findings.19 Whether a jury trial is available as a matter of right depends on nature of the issue: advisory juries are available at the discretion of the court, and may not be demanded as a matter of right.20 After the advisory jury considers the issues presented, the court finds these facts specially and then states its conclusions of law.21 The advisory jury may use their conclusions to come to an amount for a damages award, which may be adopted by the district judge if the judge complies with Federal Rule 52(a).22 In one Delaware case, the issues were bifurcated such that the first phase encompassed the patent issues: infringement, invalidity, and inequitable conduct, and the second addressed the other issues: damages, willfulness and the antitrust counterclaim, with the court staying the second phase until after completion of the trial on the first.23 Your chances for success on the patent validity and infringement issues may be increased by avoiding the confusion, delay and distractions of the other issues. If so, seek bifurcation. Especially do so if you are seeking lost profits; then a bifurcation of liability and damages avoids detailed accounting or market definition issues. Another consideration is whether you are for the defendant and need a counterclaim such as unfair competition to balance the equities of the case. A patent infringement defendant should avoid simply presenting a dry, technical defense. Credible claims of wrongdoing by the plaintiff help to breathe life into the defense, especially with a jury. The defendant should also consider whether evidence of no recognition of the patent in
19. 4-56 Intellectual Property Counseling & Litigation 56.02. 20. See Agfa Corp., 451 F.3d at 1366. 21. Fed. R. Civ. P. 52(a)(1)(2008)(In an action tried on the facts without a jury or with an advisory jury, the court must find the facts specially and state its conclusions of law separately. The findings and conclusions may be stated on the record after the close of the evidence or may appear in an opinion or a memorandum of decision filed by the court. Judgment must be entered under Rule 58.). 22. Transmatic, Inc., 180 F.3d at 1350. In his dissent, Judge Gajarsa notes that the case had to be remanded when the district judges acceptance of the damage amount was based on only sparse findings and reasoning. On remand, the district judge awarded the same amount. 23. Arthrocare Corp. v. Smith & Nephew, Inc., 406 F.3d 1365 (Fed. Cir. 2005).
Bifurcation/Role of Judge and Jury 139
the market will help invalidity. If so, bifurcation may not be best. Further, bifurcation of damages will tend to eliminate a jury compromise on damages in a close case on liability.24
3. Dismissal of Counterclaims and Defenses

Misuse defenses and/or antitrust counterclaims can be and have been successfully challenged at the pleading stages, under Federal Rules 9(b) and 12(b)(6). If a non-per se antitrust type offense is relied upon for a misuse defense, failure to plead a relevant market and market power can be fatal to the asserted claim.25 If a Walker Process defense/counterclaim is asserted, failure to plead dominance in a specific relevant market will be fatal.26
4. Jurisdiction
The Federal Circuit has exclusive jurisdiction over cases arising under the patent law, as set forth in 28 U.S.C. 1338(a), but not over antitrust claims. If an antitrust claim is supported by alternative theories in the complaint, patent law must be an essential element of each theory to maintain 1338(a) jurisdiction.27 Early on, in Atari, Inc. v. JS&A Group, the CAFC held that their jurisdiction over an appeal was proper when the district courts jurisdiction was based on 1338(a), and it was irrelevant that the district court had separated out the patent claim.28 The same principle was affirmed in Abbott Labs. v. Brennan, when the court held that direction of an appeal to the CAFC should not change even if the remaining issues are not in the courts exclusive jurisdiction.29Additionally, the CAFC has opted to exercise jurisdiction over a Rule 54(b) judgment with only antitrust claims remaining, reasoning that since the patent claims had been earlier appealed to the court, they were in the best position to hear the antitrust appeal.30
24. 5-82 Intellectual Property Counseling & Litigation 82.01. 25. B.U. Opstiche v. Hologic, Inc. 909 F.Supp. 162, 17192 (S.D.N.Y. 1995); Thurman Indus. Inc. v. Pay N Pak Stores, Inc., 875 F.2d 1369, 1373 (9th Cir. 1989)(stating that defining the relevant market is indispensable to a monopolization claim under 2 of the Sherman Act). 26. Mitsubishi Elec. Corp. v. EMS Tech., 44 U.S.P.Q. 2d (BNA) 1904 (N.D.Ill. 1997). 27. Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 810 (1988). 28. 747 F.2d 1422, 142932 (Fed. Cir. 1984). This opinion left many jurisdictional questions unanswered. 29. 952 F.3d 1346, 134950 (Fed. Cir. 1991). 30. Korody-Colyer v. General Motors, 828 F.2d 1572 (Fed. Cir. 1987). See also, Zenith Elecs. Corp. v. Exzec, Inc., 182 F.3d 1340, 1346 (Fed. Cir. 1994)(jurisdiction still proper over non-patent claims if patent claims are dismissed via an order with res judicata effect).
In Holmes Group v. Vornado Air Circulation Systems, the Supreme Court held that a compulsory counterclaim for infringement does not, standing alone, confer Federal Circuit jurisdiction over a case.31 Since this decision, regional circuits have exercised jurisdiction over appeals when the only patent issues are in the form of counterclaims.32 The same principle applies when the only patent issue is an invalidity defense: 1338(a) jurisdiction will not be conferred.33
E. Choice of Law
To all patent issues, the CAFC will apply its own law. The antitrust and other issues of law require closer consideration. Before 1998, the law of the circuit in which the case began was applied to all non-patent questions of law. However, this started to change as early as 1996, with the Pro-Mold & Tool v. Great Lakes Plastic decision.34 Here, the court decided to apply its own law to an unfair competition issue, even though the issue did not invoke the courts exclusive jurisdiction.35 Then, in Nobelpharma, the CAFC held that whether a patentees conduct warranted stripping them of antitrust immunity was also to be decided under CAFC law,36 in order to avoid promoting the danger of confusion [that] might be enhanced if [the CAFC] were to embark on an effort to interpret the laws of each circuit.37 Because these antitrust counterclaims usually end up being appealed to the CAFC, it is only logical to adopt this practice, and the CAFC has thus requested that other circuits follow its case law in defining the elements of a Walker Process offense, particularly those that deal with defrauding the Patent Office.38 The former rule, that issues of antitrust law are to be decided under the law of the circuit of origination still applies to issues such as market definition,39 which can arise in Walker Process or non-Walker Process antitrust cases.
31. 32. 33. 34. 35. 36. 37. 38. 39.
535 U.S. 826 (2002). See, e.g., Telecomm Tech. Servs. v. Siemens Rolm Communs., 295 F.3d 1249 (Fed. Cir. 2002). See, e.g., Conroy v. Fresh Del Monte Produce, 325 F.Supp.2d 1049 (N.D. Cal 2004). 75 F.3d 1568, 157475 (Fed. Cir. 1996). Id. at 1574. 141 F.3d 1059, 1068 (Fed. Cir. 1998). Id.(quoting Forman v. U.S., 767 F.2d 875, 880 n.6 (Fed. Cir. 1985)). See Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., 375 F.3d 1341, 1358 (Fed. Cir. 2004). Nobelpharma, at 1068 (relevant market, market power, and damages as issued are all included).
Remedies
141
F. Remedies
Litigants can collect damages in the amount of overcharge, the amount they paid in supracompetitive prices, or the amount lost in profits. A party can also obtain equitable relief, which involves compulsory licenses for the patents that have been misused, which may be either royalty-free or at a reasonable royalty.40
40. See American Bar Association, Intellectual Property (2007) 467.
CHAP T ER
12
Litigation Strategy
A. In Misuse Cases B. As to Walker Process C. As to Handgards Cases D. As to Antitrust Rule of Reason Counterclaims E. Conclusion: General Advice 1. Avoid Contradictions 2. Avoid Being Injured by Friendly Fire 3. Use Deposition Redirect with Summary Judgment in Mind
144 145 145 146 146 146 147 147
143
144 Chapter 12 Litigation Strategy
A. In Misuse Cases
Since almost all misuses arise in the context of licensing, exploration of the feasibility of this defense will usually begin with document requests for all licenses of patents in suit or relatives of them. All correspondence relating to signed licenses or discontinued license negotiations should normally be sought, in that it will often be relevant to know whether the patent holder insisted on various clauses in a coercive way or, in contrast, offered reasonable alternatives. Indication that the licensee favored package licenses of various types will also be relevant in asserting the potential strength of a rule of reason defense by the licensor. At present, the greatest chance for success might stem from a clause that can be characterized as providing for royalty payments or other obligations after the expiration of all the licensed rights, or even some of them. However, the Brulotte ruling remains under strong attack, is being whittled away, and may not survive if it returns to the Supreme Court. The next best chance would come from a clause tying unpatented products to patented ones, or the like. Clearly, there will have to be evidence that the patent gives the licensor market power, that is, there are no comparable substitutes for the patented technology. Tying is an easier quasi-antitrust case to make than full rule of reason cases, because the Patent Act, 35 U.S.C. 271(d)(5), does not mandate proof of anticompetitive effect. Thus, proof of a market-dominating patent plus coerced sale of overpriced unpatented products may be enough for misuse, regardless of whether the licensor and licensee are competitors or whether there is an indication that the tie will ruin the licensee as a competitor. If tying is alleged as a misuse rather than an antitrust counterclaim, it would be sufficient to develop proof that a significant volume of commerce was affected, and that some competitive injury was done to someone, either the person forced to buy the tied product or a rival supplier of it. Nevertheless, there are patent cases holding that tying can be justified with some business reasons, such as its relation to warranties or to quality control generally.1 License clauses setting minimum sale or resale prices will probably remain rare, because they had been considered per se illegal for ninety-five years and because the Leegin decision mandating rule of reason analysis does not guarantee legality or protect the licensor from some state laws or foreign laws (such as in Canada). If a clause does exist, the key issues, according to Leegin, will be whether there is evidence that it was inspired by dealer pressure, or by rival licensors. Market share and prevalence of resale price maintenance in the market, will also be relevant.2
1. United States v. Jerrold Electronics Corp., 187 F.Supp. 545 (E. D. Pa. 1960), aff d per curiam 365 U.S. 567 (1961). 2. Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 127 S.Ct. 2705 (2007). The head of the antitrust subcommittee of the Senate Judiciary Committee, Herbert Kohl, on October 30, 2007,
As to Handgards Cases
145
B. As to Walker Process
A 1993 survey found that since January 1, 1985, only two out of twenty-five cases in which Walker Process claims were finally adjudicated were successful.3 Since 1993, only one case has found liability for a Walker Process claim.4 Furthermore, only two cases appear to have survived summary judgment in this time period.5
C. As to Handgards Cases
If trial judges fully follow PREs dictates, bad faith litigation cases become almost impossible to establish. Not only must the lawsuit be shown to have been baseless, it must also be shown to have been aimed at harassment rather than victory. Infringement plaintiffs seldom write, or say, that their case has fundamental flaws. Even if circumstantial evidence is examined, PREs second requirement is likely to be refuted whenever the infringement defendant is solvent enough to shoulder the expenses of the lawsuit without leaving the market, and because there is seldom any proof that plaintiff only wanted to destroy the defendant through the costs and repercussions of the case while it is pending. It may be worth attacking patent antitrust claims at the pleading stage if the infringement defendant/counterclaimant is not a rival of the patentee. Also attackable at the outset under Rule 9(b) would be any failure to explain alleged fraud with sufficient particularity.6
3.
4. 5.
6.
introduced a bill to amend Sherman Act Section 1 to state that any agreement with a retailer, wholesaler, or distributor setting a price below which a product or service cannot be sold violates the law. It should be noted that there is no direct reference to a patent licensee, though a licensee might well be a retailer, wholesaler or distributor. If the licensee were solely a manufacturer, it would not seem that the amendment would apply. Of course, it is not totally clear that the Leegin decision as a whole refers to misuse allegations or patent licensee situations, though the clear indication is a desire to eliminate all per se illegality of price clauses. Fitzpatrick, Edward J. Walker Process and Handgards: The Necessary Elements and Track Records of Antitrust Claims Predicated on Fraudulent Prosecution of Infringement Actions, 365 PLI/Pat 403, 422 (1993). See Nobelpharma, supra (Federal Circuit concluded that there was substantial evidence to support a finding of Walker Process fraud). See Bristol-Meyers Squibb Co. v. Ben Venue Lab., 90 F.Supp.2d 540 (D.N.J. 2000) (denied plaintiff s motion for summary judgment against the defendants Walker Process counterclaim); DDVAP Direct Purchaser Antitrust Litigation, 2009 WL 3320504 MedImmune, Inc. v. Genentech, Inc., 427 F.3d 958, 967 (Fed. Cir. 2005). See also, Papst Motoren Gmbh v. Kanematsu-Goshu (USA), Inc., 629 F.Supp. 864, 871 (S.D.N.Y. 1986).
Litigation strategies include hiring an expert (or counter expert) regarding market definition and patentees market power or using discovery to look for predation, conspiracy or market definition documents in patentees files.
D. As to Antitrust Rule of Reason Counterclaims

First off, it is advisable to attempt to use summary judgment if no evidence of market dominance is in the record. Once it is clear that the only basis for antitrust/misuse defense or antitrust counterclaim is conduct entitled to rule of reason analysis, the best strategy is usually to forego the defense/counterclaim. Rule of reason challenges to business conduct succeed very infrequently.7 Moreover, usually only public antitrust enforcement agencies have the powers and resources needed to prove a market from scratch. A private litigant seeking sales and profit figures from its rivals will likely encounter dogged resistance from them, with local judges being skeptical about the need for/or bona fides of the inquiry. Data obtained, if any, will likely be clothed with restrictions on what is nonredacted and who may see it. Expenses are likely to be high, and delay is virtually certain. Occasionally, the patent holder may have optimistically estimated its own market share or market power. Even then, the admissibility of such estimate may be destroyed by testimony that the estimates involved speculation.
E. Conclusion: General Advice 1. Avoid Contradictions

Common lawyers were trained that they could plead in the alternative, e.g., my client did not steal the horse, it was sick when he took it and it was really a mule. Unfortunately for those with such creativity, it is possible for one affirmative defense or defense strategy to torpedo another. The authors experience includes an alleged infringer who sued for declaratory judgment of non-infringement, and then defended against the infringement counterclaim by pleading laches and estoppel. The infringer had thus pleaded that it lived in fear of suit (to justify the declaratory judgment action)
7. Former FTC Chairman Robert Pitofsky, favoring legislative action to overrule the Supreme Courts Leegin opinion, noted that only four rule of reason private cases have succeeded in the last 20 years. BNA ATRR (Aug. 2007).
Conclusion: General Advice 147
but had been assured there would be no suit (the pleaded estoppel defense). The court was not amused and granted a motion to strike the defenses. Similarly, it seems to the author to be perilous to defend infringement on grounds that the patent is a picture patent (narrow coverage) but assert a Walker Process counterclaim, which requires that the patent be market dominating. A dilemma may also arise if defense alleges that submitted art is a Section 102 (anticipatory) reference, since this tends to render unsubmitted references cumulative.8
2. Avoid Being Injured by Friendly Fire

Great care must be taken to ensure that experts, or special purpose witnesses (to prove one or two needed facts) do not have dangerous views or histories in regard to any key issues in the case. The obvious beginning is to read all potentially relevant writings of any expert you are considering. You are implicitly vouching for those views by presenting such witness as an expert and as your expert, but unwritten opinions are important too. The author recalls trying to rescue a case in which plaintiff hired an expert who truly believed that the accused product was infringing, but who was a patentee himself and believed that the plaintiff inventors conduct before the United States Patent and Trademark Office (PTO) was highly inadequate in terms of disclosure, due to not making type of disclosures the expert always was careful to make. Thus, the defense could bottom its bad conduct arguments on the deposition testimony of plaintiffs expert.
3. Use Deposition Redirect with Summary Judgment in Mind

Frequently ignore the rule that you should not conduct redirect examination when your key witnesses are deposed. The primary rationale for the presumption against conducting redirect examination of the inventor or other key witness is that such rebuttal testimony can be cited at trial, with a greater element of surprise. A second rationale is that the rebuttal will come out better if the witness is well prepared to give it, rather than trying to figure out what you want on the fly. The key counter factor is the high importance of summary judgment practice in complex protracted litigation. Counsel for the plaintiff should desire greatly to defeat defendants affirmative defenses and counterclaims before
8. See Rolls-Royce Ltd. v. GTE Valeron Corp., 800 F.2d 1101 (Fed. Cir. 1986).
trial, both because settlements terms will improve and because the trial is much more likely to go well when only the defendant is on trial. Federal summary judgment practice largely flows from the Celotex decision.9 Therein, the court stressed the cruciality of the ending of discovery and the usefulness of summary judgment. Rejecting the excuse that something good may pop up at trial, the court made clear that either party had every right to argue that the amassed record contains no support for a necessary element of claim or defense, and thus that such claim or defense should be dismissed if its proponent cannot locate the allegedly missing facts somewhere in the discovered material.10 If the nonmoving party faces a clear and convincing standard of proof, as in regard to attacks on patent validity or enforceability, a question arises whether contradiction by their own evidence can be treated as fatal to their satisfying that high standard of proof. The normal rule appears to be that weighting the impact of any testimony is for the finder of fact.
9. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). 10. Cleveland v. Policy Management Sys. Corp., 526 U.S. 793, 804 (1999).
APPENDIX
A
Excerpts from the Manual of Patent Examiner Practice
I. Chapter 2000: Duty of Disclosure 2001 Duty of Disclosure, Candor, and Good Faith
1. 37 CFR 1.56 Duty to disclose information material to patentability. (a) A patent by its very nature is affected with a public interest. The public interest is best served, and the most effective patent examination occurs when, at the time an application is being examined, the Ofce is aware of and evaluates the teachings of all information material to patentability. Each individual associated with the ling and prosecution of a patent application has a duty of candor and good faith in dealing with the Ofce, which includes a duty to disclose to the Ofce all information known to that individual to be material to patentability as dened in this section. The duty to disclose information exists with respect to each pending claim until the claim is cancelled or withdrawn from consideration, or the application becomes abandoned. Information material to the patentability of a claim that is cancelled or withdrawn from consideration need not be submitted if the information is not material to the patentability of any claim remaining under consideration in the application. There is no duty to submit information which is not material to the patentability of any existing claim. The duty to disclose all information known to be material to patentability is deemed to be satised if all information known to be material to patentability of any claim issued in a patent was cited by the Ofce or submitted to the Ofce in the manner prescribed by 1.97(b)-(d) and 1.98. However, no patent will be granted on an application in connection with which fraud on the Ofce was practiced or attempted or the duty of disclosure was violated through bad faith or intentional misconduct. The Ofce encourages applicants to carefully examine: (1) Prior art cited in search reports of a foreign patent ofce in a counterpart application, and
149
150 Appendix A Excerpts from the Manual of Patent Examiner Practice (2) The closest information over which individuals associated with the ling or prosecution of a patent application believe any pending claim patentably denes, to make sure that any material information contained therein is disclosed to the Ofce. Under this section, information is material to patentability when it is not cumulative to information already of record or being made of record in the application, and (1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim; or (2) It refutes, or is inconsistent with, a position the applicant takes in: (i) Opposing an argument of unpatentability relied on by the Ofce, or (ii) Asserting an argument of patentability. A prima facie case of unpatentability is established when the information compels a conclusion that a claim is unpatentable under the preponderance of evidence, burden-of-proof standard, giving each term in the claim its broadest reasonable construction consistent with the specication, and before any consideration is given to evidence which may be submitted in an attempt to establish a contrary conclusion of patentability. Individuals associated with the ling or prosecution of a patent application within the meaning of this section are: (1) Each inventor named in the application; (2) Each attorney or agent who prepares or prosecutes the application; and (3) Every other person who is substantively involved in the preparation or prosecution of the application and who is associated with the inventor, with the assignee or with anyone to whom there is an obligation to assign the application. Individuals other than the attorney, agent or inventor may comply with this section by disclosing information to the attorney, agent, or inventor. In any continuation-in-part application, the duty under this section includes the duty to disclose to the Ofce all information known to the person to be material to patentability, as dened in paragraph (b) of this section, which became available between the ling date of the prior application and the national or PCT international ling date of the continuation-in-part application.
(b)
(c)
(d) (e)
2001.06(c) Information From Related Litigation [R-2]

Where the subject matter for which a patent is being sought is or has been involved in litigation, the existence of such litigation and any other material information arising therefrom must be brought to the attention of the U.S.
Appendix A Excerpts from the Manual of Patent Examiner Practice Patent and Trademark Ofce. Examples of such material information include evidence of possible prior public use or sales, questions of inventorship, prior art, allegations of fraud, inequitable conduct, and violation of duty of disclosure. Another example of such material information is any assertion that is made during litigation which is contradictory to assertions made to the examiner. Environ Prods., Inc. v. Total Containment, Inc., 43 USPQ2d 1288, 1291 (E.D. Pa. 1997). Such information might arise during litigation in, for example, pleadings, admissions, discovery including interrogatories, depositions, and other documents and testimony. Where a patent for which reissue is being sought is, or has been, involved in litigation which raised a question material to examination of the reissue application, such as the validity of the patent, or any allegation of fraud, inequitable conduct, or violation of duty of disclosure, the existence of such litigation must be brought to the attention of the Ofce by the applicant at the time of, or shortly after, ling the application, either in the reissue oath or declaration, or in a separate paper, preferably accompanying the application, as led. Litigation begun after ling of the reissue application should be promptly brought to the attention of the Ofce. The details and documents from the litigation, insofar as they are material to patentability of the reissue application as dened in 37 CFR 1.56, should accompany the application as led, or be submitted as promptly thereafter as possible. See Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 1258, 1259, 43 USPQ2d 1666, 1670-71 (Fed. Cir. 1997) (patent held unenforceable due to inequitable conduct based on patentees failure to disclose a relevant reference and for failing to disclose ongoing litigation). For example, the defenses raised against validity of the patent, or charges of fraud or inequitable conduct in the litigation, would normally be material to the examination of the reissue application. It would, in most situations, be appropriate to bring such defenses to the attention of the Ofce by ling in the reissue application a copy of the court papers raising such defenses. At a minimum, the applicant should call the attention of the Ofce to the litigation, the existence and the nature of any allegations relating to validity and/or fraud, or inequitable conduct relating to the original patent, and the nature of litigation materials relating to these issues. Enough information should be submitted to clearly inform the Ofce of the nature of these issues so that the Ofce can intelligently evaluate the need for asking for further materials in the litigation. See MPEP 1442.04.
151
2004 Aids to Compliance With Duty of Disclosure [R-2]

While it is not appropriate to attempt to set forth procedures by which attorneys, agents, and other individuals may ensure compliance with the duty of disclosure, the items listed below are offered as examples of possible
152
Appendix A Excerpts from the Manual of Patent Examiner Practice procedures which could help avoid problems with the duty of disclosure. Though compliance with these procedures may not be required, they are presented as helpful suggestions for avoiding duty of disclosure problems. 1. Many attorneys, both corporate and private, are using letters and questionnaires for applicants and others involved with the ling and prosecution of the application and checklists for themselves and applicants to ensure compliance with the duty of disclosure. The letter generally explains the duty of disclosure and what it means to the inventor and assignee. The questionnaire asks the inventor and assignee questions about the origin of the invention and its point of departure from what was previously known and in the prior art, possible public uses and sales, prior publication, knowledge, patents, foreign patents, etc. The checklist is used by the attorney to ensure that the applicant has been informed of the duty of disclosure and that the attorney has inquired of and cited material prior art. The use of these types of aids would appear to be most helpful, though not required, in identifying prior art and may well help the attorney and the client avoid or more easily explain a potentially embarrassing and harmful fraud allegation. 2. It is desirable to ask questions about inventorship. Who is the proper inventor? Are there disputes or possible disputes about inventorship? If there are questions, call them to the attention of the U.S. Patent and Trademark Ofce. 3. It is desirable to ask questions of the inventor about the disclosure of the best mode. Make sure that the best mode is described. See MPEP 21652165.04. 4. It is desirable for an attorney or agent to make certain that the inventor, especially a foreign inventor, recognizes his or her responsibilities in signing the oath or declaration. See 37 CFR 1.69(a). [Note MPEP 602.06 for more detail]. 5. It is desirable for an attorney or agent to carefully evaluate and explain to the applicant and others involved the scope of the claims, particularly the broadest claims. Ask specic questions about possible prior art which might be material in reference to the broadest claim or claims. There is some tendency to mistakenly evaluate prior art in the light of the gist of what is regarded as the invention or narrower interpretations of the claims, rather than measuring the art against the broadest claim with all of its reasonable interpretations. It is desirable to pick out the broadest claim or claims and measure the materiality of prior art against a reasonably broad interpretation of these claims. 6. It may be useful to evaluate the materiality of prior art or other information from the viewpoint of whether it is the closest prior art or other information. This will tend to put the prior art or other information in better perspective.
Appendix A Excerpts from the Manual of Patent Examiner Practice See Semiconductor Energy Laboratory Co. v. Samsung Electronics Co., 204 F.3d 1368, 1374, 54 USPQ2d 1001, 1005 (Fed. Cir. 2000) (A withheld reference may be highly material when it discloses a more complete combination of relevant features, even if those features are before the patent examiner in other references. (citations omitted)). However, 37 CFR 1.56 may still require the submission of prior art or other information which is not as close as that of record. 7. Care should be taken to see that prior art or other information cited in a specication or in an information disclosure statement is properly described and that the information is not incorrectly or incompletely characterized. It is particularly important for an attorney or agent to review, before ling, an application which was prepared by someone else, e.g., a foreign application. It is also important that an attorney or agent make sure that foreign clients, including foreign applicants, attorneys, and agents understand the requirements of the duty of disclosure, and that the U.S. attorney or agent review any information disclosure statements or citations to ensure that compliance with 37 CFR 1.56 is present. See Semiconductor Energy Laboratory Co. v. Samsung Electronics Co., 204 F.3d 1368, 54 USPQ2d 1001 (Fed. Cir. 2000). During prosecution patentee submitted an untranslated 29-page Japanese reference as well as a concise explanation of its relevance and an existing one-page partial English translation, both of which were directed to less material portions of the reference. The untranslated portions of the Japanese reference contained a more complete combination of the elements claimed [in the patent] than anything else before the PTO. 204 F.3d at 1374, 54 USPQ2d at 1005. The patentee, whose native language was Japanese, was held to have understood the materiality of the reference. The duty of candor does not require that the applicant translate every foreign reference, but only that the applicant refrain from submitting partial translations and concise explanations that it knows will misdirect the examiners attention from the references relevant teaching. 204 F.3d at 1378, 54 USPQ2d at 1008. See also Gemveto Jewelry Co. v. Lambert Bros., Inc., 542 F.Supp. 933, 216 USPQ 976 (S.D.N.Y. 1982) wherein a patent was held invalid or unenforceable because patentees foreign counsel did not disclose to patentees United States counsel or to the Ofce prior art cited by the Dutch Patent Ofce in connection with the patentees corresponding Dutch application. The court stated, 542 F.Supp. at 943, 216 USPQ at 985:
Foreign patent attorneys representing applicants for U.S. patents through local correspondent rms surely must be held to the same standards of conduct which apply to their American counterparts; a double standard of accountability would allow foreign attorneys and their clients to escape responsibility for fraud or inequitable conduct merely by withholding from the local correspondent information unfavorable to patentability and claiming ignorance of United States disclosure requirements.
153
154 Appendix A Excerpts from the Manual of Patent Examiner Practice 8. Care should be taken to see that inaccurate statements or inaccurate experiments are not introduced into the specication, either inadvertently or intentionally. For example, stating that an experiment was run or was conducted when in fact the experiment was not run or conducted is a misrepresentation of the facts. No results should be represented as actual results unless they have actually been achieved. Paper >or prophetic< examples should not be described using the past tense. *>Hoffman-La Roche, Inc. v. Promega Corp., 323 F.3d 1354, 1367, 66 USPQ2d 1385, 1394 (Fed. Cir. 2003); see also< MPEP 608.01(p) and 707.07(l). Also, misrepresentations can occur when experiments which were run or conducted are inaccurately reported in the specication, e.g., an experiment is changed by leaving out one or more ingredients. See Steierman v. Connelly, 192 USPQ 433 (Bd. Pat. Int. 1975); 192 USPQ 446 (Bd. Pat. Int. 1976). 9. Do not rely on the examiner of a particular application to be aware of other applications belonging to the same applicant or assignee. It is desirable to call such applications to the attention of the examiner even if there is only a question that they might be material to patentability of the application the examiner is considering. >See Dayco Prod., Inc. v. Total Containment, Inc., 329 F.3d 1358, 1365-69, 66 USPQ2d 1801, 1806-08 (Fed. Cir. 2003) (contrary decision of another examiner reviewing substantially similar claims is material; copending application may be material even though it cannot result in a shorter patent term, when it could affect the rights of the patentee to assign the issued patents).< It is desirable to be particularly careful that prior art or other information in one application is cited to the examiner in other applications to which it would be material. Do not assume that an examiner will necessarily remember, when examining a particular application, other applications which the examiner is examining, or has examined. A lapse on the part of the examiner does not excuse the applicant. KangaROOS U.S.A., Inc. v. Caldor, Inc., 778 F.2d 1571, 1576, 228 USPQ 32, 35 (Fed. Cir. 1985); see also MPEP 2001.06(b). 10. When in doubt, it is desirable and safest to submit information. Even though the attorney, agent, or applicant doesnt consider it necessarily material, someone else may see it differently and embarrassing questions can be avoided. The court in U.S. Industries v. Norton Co., 210 USPQ 94, 107 (N.D. N.Y. 1980) stated In short, the question of relevancy in close cases, should be left to the examiner and not the applicant. See also LaBounty Mfg., Inc. v. U.S. Intl Trade Commn, 958 F.2d 1066, 22 USPQ2d 1025 (Fed. Cir. 1992). 11. It may be desirable to submit information about prior uses and sales even if it appears that they may have been experimental, not involve the specically claimed invention, or not encompass a completed invention. See Hycor Corp. v. The Schlueter Co., 740 F.2d 1529, 1534-37, 222 USPQ 553, 557-559 (Fed. Cir. 1984). See also LaBounty Mfg., Inc. v. U.S. Intl Trade Commn, 958 F.2d 1066, 22 USPQ2d 1025 (Fed. Cir. 1992).
Appendix A Excerpts from the Manual of Patent Examiner Practice 12. Submit information promptly. An applicant, attorney, or agent who is aware of prior art or other information and its signicance should submit same early in prosecution, e.g., before the rst action by the examiner, and not wait until after allowance. Potentially material information discovered late in the prosecution should be immediately submitted. That the issue fee has been paid is no reason or excuse for failing to submit information. See Elmwood Liquid Products, Inc. v. Singleton Packing Corp., 328 F.Supp. 974, 170 USPQ 398 (M.D. Fla. 1971). 13. It is desirable to avoid the submission of long lists of documents if it can be avoided. Eliminate clearly irrelevant and marginally pertinent cumulative information. If a long list is submitted, highlight those documents which have been specically brought to applicants attention and/or are known to be of most signicance. See Penn Yan Boats, Inc. v. Sea Lark Boats, Inc., 359 F.Supp. 948, 175 USPQ 260 (S.D. Fla. 1972), affd, 479 F.2d 1328, 178 USPQ 577 (5th Cir. 1973), cert. denied, 414 U.S. 874 (1974). But cf. Molins PLC v. Textron Inc., 48 F.3d 1172, 33 USPQ2d 1823 (Fed. Cir. 1995). 14. Watch out for continuation-in-part applications where intervening material information or documents may exist; particularly watch out for foreign patents and publications related to the parent application and dated more than 1 year before the ling date of the CIP. These and other intervening documents may be material information. See In re Ruscetta, 255 F.2d 687, 690-91, 118 USPQ 101, 104 (CCPA 1958); In re van Langenhoven, 458 F.2d 132, 173 USPQ 426 (CCPA 1972); Chromalloy American Corp. v. Alloy Surfaces Co., 339 F.Supp. 859, 173 USPQ 295 (D. Del. 1972). 15. Watch out for information that might be deemed to be prior art under 35 U.S.C. 102(f) and (g). Prior art under 35 U.S.C. 102(f) may be available under 35 U.S.C. 103. See OddzOn Products, Inc. v. Just Toys, Inc., 122 F.3d 1396, 1401, 43 USPQ2d 1641, 1644 (Fed. Cir. 1997)(35 U.S.C. 102(f ) is a prior art provision for purposes of 103); Dale Electronics v. R.C.L. Electronics, 488 F.2d 382, 386, 180 USPQ 225, 227 (1st. Cir. 1973); and Ex parte Andresen, 212 USPQ 100, 102 (Bd. App. 1981). Note also that evidence of prior invention under 35 U.S.C. 102(g) may be available under 35 U.S.C. 103, such as in In re Bass, 474 F.2d 1276, 177 USPQ 178 (CCPA 1973). Note 35 U.S.C. 103(c) disqualies 35 U.S.C. 102(f)/103 or 102(g)/103 prior art which was, at the time the second invention was made, owned by or subject to an obligation of assignment to, the person who owned the rst invention. Further note that 35 U.S.C. 103(c) disqualies 35 U.S.C. 102(e)/ 103prior art for applications led on or after November 29, 1999. See MPEP 706.02(l)706.02(l)(2). 16. Watch out for information picked up by the inventors and others at conventions, plant visits, in-house reviews, etc. See, for example, Dale Electronics v. R.C.L. Electronics, 488 F.2d 382, 386-87, 180 USPQ 225, 228 (1st Cir. 1973).
155
156
Appendix A Excerpts from the Manual of Patent Examiner Practice 17. Make sure that all of the individuals who are subject to the duty of disclosure, such as spelled out in 37 CFR 1.56, are informed of and fulll their duty. 18. Finally, if information was specically considered and discarded as not material, this fact might be recorded in an attorneys le or applicants le, including the reason for discarding it. If judgment might have been bad or something might have been overlooked inadvertently, a note made at the time of evaluation might be an invaluable aid in explaining that the mistake was honest and excusable. Though such records are not required, they could be helpful in recalling and explaining actions in the event of a question of fraud or inequitable conduct raised at a later time.
2010 Office Handling of Duty of Disclosure/Inequitable Conduct Issues [R-2]

Determination of inequitable conduct issues requires an evaluation of the intent of the party involved. While some court decisions have held that intent may be inferred in some circumstances, consideration of the good faith of the party, or lack thereof, is often required. In several court decisions, a high level of proof of intent to mislead the Ofce was required in order to prove inequitable conduct under 37 CFR 1.56. See In re Harito, 847 F.2d 801, 6 USPQ2d 1930 (Fed. Cir. 1988) and FMC Corp. v. Manitowoc Co., 835 F.2d 1411, 5 USPQ2d 1112 (Fed. Cir. 1987). The Ofce is not the best forum in which to determine whether there was an intent to mislead; such intent is best determined when the trier of facts can observe demeanor of witnesses subjected to cross-examination. A court, with subpoena power, is presently the best forum to consider duty of disclosure issues under the present evidentiary standard for nding an intent to mislead. The court proceeding involves two participating adverse parties. This is not the case in the Ofce, since even protesting parties are not permitted to participate under the rules. Also, it is the courts and not the Ofce that are in the best position to fashion an equitable remedy to t the precise facts in those cases where inequitable conduct is established. Furthermore, inequitable conduct is not set by statute as a criteria for patentability but rather is a judicial application of the doctrine of unclean hands which is appropriate to be handled by the courts rather than by an administrative body. Because of the lack of tools in the Ofce to deal with this issue and because of its sensitive nature and potential impact on a patent, Ofce determinations generally will not deter subsequent litigation of the same issue in the courts on appeal or in separate litigation. Ofce determinations would signicantly add to the expense and time involved in obtaining a patent with little or no benet to the patent owner or any other parties with an interest.
Appendix A Excerpts from the Manual of Patent Examiner Practice Accordingly, the Ofce does not investigate and reject original or reissue applications under 37 CFR 1.56. Likewise, the Ofce will not comment upon duty of disclosure issues which are brought to the attention of the Ofce in original or reissue applications except to note in the application, in appropriate circumstances, that such issues are no longer considered by the Ofce during its examination of patent applications. Examination of lack of deceptive intent in reissue applications will continue but without any investigation of inequitable conduct issues. Applicants statement of lack of deceptive intent normally will be accepted as dispositive except in special circumstances such as an admission or judicial determination of fraud or inequitable conduct. See notice published in the Ofcial Gazette at 1095 O.G. 16 (October 11, 1988). See also MPEP 2022.05. >Issues of fraud and/or inequitable conduct in an interference proceeding before the Board of Patent Appeals and Interferences (Board) will be considered by the Board if they are raised by way of preliminary motion for judgment under 37 CFR 1.633(a). The motion must be led during the period set for ling preliminary motions (37 CFR 1.636(a)), or good cause (37 CFR 1.655(b)) must be shown as to why the issues of fraud and/or inequitable conduct were not timely raised during the preliminary motion period. Issues of fraud and/or inequitable conduct will not be considered in any interference in which the times for taking testimony or the times for ling briefs for nal hearing have already been set, unless good cause is shown under 37 CFR 1.655(b). An example of good cause would be where fraud or inequitable conduct is rst discovered during taking of testimony. See notice published in the Ofcial Gazette at 1133 O.G. 21 (December 10, 1991).<
157
2012 Reissue Applications Involving Issues of Fraud, Inequitable Conduct, and/or Violation of Duty of Disclosure [R-2]
Questions of fraud, inequitable conduct, or violation of duty of disclosure or candor and good faith can arise in reissue applications. REQUIREMENT FOR ERROR WITHOUT ANY DECEPTIVE INTENTION Both 35 U.S.C. 251 and 37 CFR 1.175 promulgated pursuant thereto require that the error must have arisen without any deceptive intention. In re Heany, 1911 C.D. 138, 180 (1911), unequivocally states: Where such a condition [fraudulent or deceptive intention] is shown to exist the right to reissue the patent is forfeited. Similarly, the court in In re Clark, 522 F.2d 623, 627, 187 USPQ 209, 213 (CCPA 1975) indicated:
Reissue is not available to rescue a patentee who had presented claims limited to avoid particular prior art and then had failed to disclose that prior art . . . after that failure to disclose has resulted in invalidating of the claims.
158 Appendix A Excerpts from the Manual of Patent Examiner Practice It is clear that fraud cannot be purged through the reissue process. See conclusions of Law 89 and 91 in Intermountain Research and Engg Co. v. Hercules Inc., 171 USPQ 577, 631-32 (C.D. Cal. 1971). Clearly, where several patents or applications stem from an original application which contained fraudulent claims ultimately allowed, the doctrine of unclean hands bars allowance or enforcement of any of the claims of any of the applications or patents. See Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245, 19 USPQ 228, 230 (1933); East Chicago Machine Tool Corp. v. Stone Container Corp., 181 USPQ 744, 748 (N.D. Ill.), modied, 185 USPQ 210 (N.D. Ill. 1974). See also Chromalloy American Corp. v. Alloy Surfaces Co., 339 F.Supp. 859, 173 USPQ 295 (D.Del. 1972) and Strong v. General Electric Co., 305 F.Supp. 1084, 162 USPQ 141 (N.D. Ga. 1969), affd, 434 F.2d 1042, 168 USPQ 8 (5th Cir. 1970), cert. denied, 403 U.S. 906 (1971) where fraud or inequitable conduct affecting only certain claims or only one of related patents was held to affect the other claims or patent. Clearly, fraud practiced or attempted in an application which issues as a patent is fraud practiced or attempted in connection with any subsequent application to reissue that patent. The reissue application and the patent are inseparable as far as questions of fraud, inequitable conduct, or violation of the duty of disclosure are concerned. See In re Heany, supra; and Norton v. Curtiss, 433 F.2d 779, 792, 167 USPQ 532, 543 (CCPA 1970), wherein the court stated:
We take this to indicate that any conduct which will prevent the enforcement of a patent after the patent issues should, if discovered earlier, prevent the issuance of the patent.
Clearly, if a reissue patent would not be enforceable after its issue because of fraud, inequitable conduct or violation of the duty of disclosure during the prosecution of the patent sought to be reissued, the reissue patent application should not issue. *>Where no investigation is needed to establish< such circumstances, an appropriate remedy would be to reject the claims in the application in accordance with 35 U.S.C. 251. See MPEP 1448. The examiner is not to make any investigation as to the lack of deceptive intent requirement in reissue applications. Applicants statement (in the oath or declaration) of lack of deceptive intent will be accepted as dispositive except in special circumstances such as an admission or judicial determination of fraud, inequitable conduct or violation of the duty of disclosure, where no investigation need be made and the fact of the admission or judicial determination exists per se. Also, any admission of fraud, inequitable conduct or violation of the duty of disclosure must be explicit, unequivocal, and not subject to other interpretation. Where a rejection is made based upon such an admission (see MPEP 1448) and applicant responds with any reasonable interpretation of the facts that would not lead to
Appendix A Excerpts from the Manual of Patent Examiner Practice a conclusion of fraud, inequitable conduct or violation of the duty of disclosure, the rejection should be withdrawn. Alternatively, if applicant shows that the admission noted by the examiner was not in fact an admission, the rejection should also be withdrawn.
159
2013 Protests Involving Issues of Fraud, Inequitable Conduct, and/or Violation of Duty of Disclosure [R-2]
37 CFR 1.291 permits protests by the public against pending applications. Submissions under 37 CFR 1.291 are not limited to prior art documents such as patents and publications, but are intended to include any information, which in the protestors opinion, would make or have made the grant of the patent improper (see MPEP 1901.02). This includes, of course, information indicating the presence of fraud or inequitable conduct or violation of the duty of disclosure, which will be entered in the application le, generally without comment >other than to state that such information will not be considered (see MPEP 2010).< See MPEP 1901.06. Protests should be in conformance with 37 CFR 1.291(a) and (b), and include a statement of the alleged facts involved, the point or points to be reviewed, and the action requested. Any briefs or memoranda in support of the petition, and any afdavits, declarations, depositions, exhibits, or other material in support of the alleged facts, should accompany the protest.
2014 Duty of Disclosure in Reexamination Proceedings [R-2]

As provided in 37 CFR 1.555, the duty of disclosure in >both ex parte and inter partes reexamination proceedings applies to the patent owner. That duty is a continuing obligation on the part of the patent owner throughout the proceedings. However, issues of fraud, inequitable conduct, or violation of duty of disclosure are not considered in reexamination. See MPEP 2280 for ex parte reexamination proceedings and MPEP 2684 for inter partes reexamination proceedings. If questions of fraud or inequitable conduct or violation of the duty of disclosure are discovered during reexamination proceedings, the existence of such questions will be noted by the examiner in an Ofce action without further comment. See MPEP 2258 for ex parte reexamination proceedings and MPEP 2658 for inter partes reexamination proceedings. For the patent owners duty to disclose prior or concurrent proceedings in which the patent is or was involved, see MPEP 2282 >(for ex parte reexamination), 2686 (for inter partes reexamination),< and 2001.06(c).
160 Appendix A Excerpts from the Manual of Patent Examiner Practice
2016 Fraud, Inequitable Conduct, or Violation of Duty of Disclosure Affects All Claims
A nding of fraud, inequitable conduct, or violation of duty of disclosure with respect to any claim in an application or patent, renders all the claims thereof unpatentable or invalid. See Chromalloy American Corp. v. Alloy Surfaces Co., 339 F.Supp. 859, 173 USPQ 295 (D.Del. 1972) and Strong v. General Electric Co., 305 F.Supp. 1084, 162 USPQ 141 (N.D. Ga. 1969), affd, 434 F.2d 1042, 168 USPQ 8 (5th Cir. 1970), cert. denied, 403 U.S. 906 (1971). In J. P. Stevens & Co. v. Lex Tex Ltd., 747 F.2d 1553, 1561, 223 USPQ 1089, 1093-94 (Fed. Cir. 1984), the court stated:
Once a court concludes that inequitable conduct occurred, all the claimsnot just the particular claims in which the inequitable conduct is directly connectedare unenforceable. See generally, cases collected in 4 Chisum, PATENTS, paragraph 19.03[6] at 19-85 n. 10 (1984). Inequitable conduct goes to the patent right as a whole, independently of particular claims. In re Clark 522 F.2d 623, 626, 187 USPQ 209, 212 (CCPA).
The court noted in footnote 8 of Stevens:

In In re Multiple Litigation Involving Frost Patent, 540 F.2d 601, 611, 191 USPQ 241, 249 (3rd. Cir. 1976), some claims were upheld despite nondisclosure with respect to others. The case is not precedent in this court.
As stated in Gemveto Jewelry Co. v. Lambert Bros., Inc., 542 F.Supp. 933, 943, 216 USPQ 976, 984 (S. D. N. Y. 1982) (quoting Patent Law Perspectives, 1977 Developments, G.1 [1]-189):
The gravamen of the fraud defense is that the patentee has failed to discharge his duty of dealing with the examiner in a manner free from the taint of fraud or other inequitable conduct. If such conduct is established in connection with the prosecution of a patent, the fact that the lack of candor did not directly affect all the claims in the patent has never been the governing principle. It is the inequitable conduct that generates the unenforceability of the patent and we cannot think of cases where a patentee partially escaped the consequences of his wrongful acts by arguing that he only committed acts of omission or commission with respect to a limited number of claims. It is an all or nothing proposition. [Emphasis in original.]
2022.05 Determination of Error Without Any Deceptive Intention [R-2]

If the application is a reissue application, the action by the examiner may extend to a determination as to whether at least one error required by 35 U.S.C. 251 has been alleged, i.e., identied. Further, the examiner should
Appendix A Excerpts from the Manual of Patent Examiner Practice determine whether applicant has averred in the reissue oath or declaration, as required by 37 CFR 1.175(a)(2), (b)(1), and (b)(2), that all errors arose without any deceptive intention. However, the examiner should not normally comment or question as to whether the averred statement as to lack of deceptive intention appears correct or true. See MPEP 1414.
161
II. Chapter 1700: Miscellaneous 1701.01 Office Personnel Not To Testify [R-3]
It is the policy of the United States Patent and Trademark Ofce (USPTO) that its employees, including patent examiners, will not appear as witnesses or give testimony in legal proceedings, except under the conditions specied in 37 CFR Part 104, Subpart C. The denitions set forth in 37 CFR 104.1 and the exceptions in 37 CFR 104.21 are applicable to this section. Any employee who testies contrary to this policy will be dismissed or removed. Whenever an employee of the USPTO, including a patent examiner, is asked to testify or receives a subpoena, the employee shall immediately notify the Ofce of the USPTO General Counsel. Inquiries requesting testimony shall be also referred immediately to the Ofce of the USPTO General Counsel. *** Any individual desiring the testimony of an employee of the USPTO, including the testimony of a patent examiner or other quasi-judicial employee, must comply with the provisions of 37 CFR Part 104, Subpart C. A request by a third party to take deposition testimony of a patent examiner in a pending ex parte reexamination proceeding will generally be denied in view of the ex parte nature of the reexamination proceeding. A request for testimony of an employee of the USPTO should be made to the Ofce of the USPTO General Counsel at least 10 working days prior to the date of the expected testimony. Patent examiners and other USPTO employees performing or assisting in the performance of quasi-judicial functions, are forbidden to testify as experts or to express opinions as to the validity of any patent. If an employee is authorized to testify, the employee will be limited to testifying about facts within the employees personal knowledge. Employees are prohibited from giving expert or opinion testimony. Fischer & Porter Co. v. Corning Glass Works, 61 F.R.D. 321, 181 USPQ 329 (E.D. Pa. 1974). Likewise, employees are prohibited from answering hypothetical or speculative questions. In re Mayewsky, 162 USPQ 86, 89 (E.D. Va. 1969) (deposition of an examiner must be restricted to relevant matters of fact and must avoid any hypothetical or speculative questions or conclusions based thereon); ShafferTool Works v. Joy
162 Appendix A Excerpts from the Manual of Patent Examiner Practice Mfg. Co., 167 USPQ 170 (S.D. Tex. 1970) (deposition of examiner should be limited to matters of fact and must not go into hypothetical or speculative areas or the bases, reasons, mental processes, analyses, or conclusions of the examiner in acting upon a patent application). Employees will not be permitted to give testimony with respect to subject matter which is privileged. Several court decisions limit testimony with respect to quasi-judicial functions performed by employees. Those decisions include United States v. Morgan, 313 U.S. 409, 422 (1941) (improper to inquire into mental processes of quasi-judicial ofcer or to examine the manner and extent to which the ofcer considered an administrative record); Western Electric Co. v. Piezo Technology, Inc., 860 F.2d 428, 8 USPQ2d 1853 (Fed. Cir. 1988) (patent examiner may not be compelled to answer questions which probe the examiners technical knowledge of the subject matter of a patent); McCulloch Gas Processing Co. v. Department of Energy, 650 F.2d 1216, 1229 (Temp. Emer. Ct. App. 1981) (discovery of degree of expertise of individuals performing governmental functions not permitted); In re Nilssen, 851 F.2d 1401, 7 USPQ2d 1500 (Fed. Cir. 1988) (technical or scientic qualications of examinersin-chief are not legally relevant in appeal under 35 U.S.C. 134 since board members need not be skilled in the art to render obviousness decision); Lange v. Commissioner, 352 F.Supp. 166, 176 USPQ 162 (D.D.C. 1972) (technical qualications of examiners-in-chief not relevant in 35 U.S.C. 145 action). In view of the discussion above, if an employee is authorized to testify in connection with the employees involvement or assistance in a quasi-judicial proceeding which took place before the USPTO, the employee will not be permitted to give testimony in response to questions that the Ofce determines are impermissible. Impermissible questions include, but are not limited to, questions directed to discovering the mental processes or expertise of a quasi-judicial ofcial, such as: (A) Information about that employees: (1) Background; (2) Expertise; (3) Qualications to examine or otherwise consider a particular patent or trademark application; (4) Usual practice or whether the employee followed a procedure set out in any Ofce manual of practice (including the MPEP or TMEP) in a particular case; (5) Consultation with another Ofce employee; (6) Understanding of: (a) A patented invention, an invention sought to be patented, or patent application, patent, reexamination or interference le; (b) Prior art; (c) Registered subject matter, subject matter sought to be registered, or a trademark application, registration, opposition, cancellation, interference, or concurrent use le;
Appendix A Excerpts from the Manual of Patent Examiner Practice (d) Any Ofce manual of practice; (e) Ofce regulations; (f ) Patent, trademark, or other law; or (g) The responsibilities of another Ofce employee; (7) Reliance on particular facts or arguments; (B) To inquire into the manner in and extent to which the employee considered or studied material in performing a quasi-judicial function; or (C) To inquire into the bases, reasons, mental processes, analyses, or conclusions of that Ofce employee in performing the quasi-judicial function. Any request for testimony addressed or delivered to the Ofce of the USPTO General Counsel shall comply with 37 CFR 104.22(c). All requests must be in writing. The need for a subpoena may be obviated where the request complies with 37 CFR 104.22(c) if the party requesting the testimony further meets the following conditions: (A) The party requesting the testimony identies the civil action or other legal proceeding for which the testimony is being taken. The identication shall include the: (1) Style of the case; (2) Civil action number; (3) District in which the civil action is pending; (4) Judge assigned to the case; and (5) Name, address, and telephone number of counsel for all parties in the civil action. (B) The party agrees not to ask questions seeking information which is precluded by 37 CFR 104.23; (C) The party shall comply with applicable provisions of the Federal Rules of Civil Procedure, including Rule 30, and give 10 working days notice to the Ofce of the USPTO General Counsel prior to the date a deposition is desired. Fifteen working days notice is required for any deposition which is desired to be taken between November 15 and January 15; (D) The party agrees to notice the deposition at a place convenient to the USPTO. The Conference Room in the Ofce of the USPTO General Counsel is deemed to be a place convenient to the Ofce; and (E) The party agrees to supply a copy of the transcript of the deposition to the USPTO for its records. Absent a written agreement meeting the conditions specied in paragraphs (A) through (E), a party must comply with the precise terms of 37 CFR 104.22(c) and the USPTO will not permit a deposition without issuance of a subpoena.
163
164 Appendix A Excerpts from the Manual of Patent Examiner Practice
III. Chapter 500: Receipt and Handling of Mail and Papers 509.03 Claiming Small Entity Status
(h) Fraud attempted or practiced on the Ofce. (1) Any attempt to fraudulently establish status as a small entity, or pay fees as a small entity, shall be considered as a fraud practiced or attempted on the Ofce. (2) Improperly, and with intent to deceive, establishing status as a small entity, or paying fees as a small entity, shall be considered as a fraud practiced or attempted on the Ofce.
IV. Chapter 1400: Correction of Patents 1448 Fraud, Inequitable Conduct, or Duty of Disclosure Issues [R-7]
The Ofce no longer investigates or rejects reissue applications under 37 CFR 1.56. The Ofce will not comment upon duty of disclosure issues which are brought to the attention of the Ofce in reissue applications except to note in the application, in appropriate circumstances, that such issues are no longer considered by the Ofce during its examination of patent applications. Examination as to the lack of deceptive intent requirement in reissue applications will continue but without any investigation of fraud, inequitable conduct, or duty of disclosure issues. Applicants statement in the reissue oath or declaration of lack of deceptive intent will be accepted as dispositive except in special circumstances such as an admission or judicial determination of fraud, inequitable conduct, or violation of the duty of disclosure.
V. Chapter 2100: Patentability 2165 The Best Mode Requirement

A third requirement of the rst paragraph of 35 U.S.C. 112 is that:
The specication . . . shall set forth the best mode contemplated by the inventor of carrying out his invention.
Appendix A Excerpts from the Manual of Patent Examiner Practice The best mode requirement creates a statutory bargained-for-exchange by which a patentee obtains the right to exclude others from practicing the claimed invention for a certain time period, and the public receives knowledge of the preferred embodiments for practicing the claimed invention. Eli Lilly & Co. v. Barr Laboratories Inc., 251 F.3d 955, 963, 58 USPQ2d 1865, 1874 (Fed. Cir. 2001). The best mode requirement is a safeguard against the desire on the part of some people to obtain patent protection without making a full disclosure as required by the statute. The requirement does not permit inventors to disclose only what they know to be their second-best embodiment, while retaining the best for themselves. In re Nelson, 280 F.2d 172, 126 USPQ 242 (CCPA 1960). Determining compliance with the best mode requirement requires a two-prong inquiry. First, it must be determined whether, at the time the application was led, the inventor possessed a best mode for practicing the invention. This is a subjective inquiry which focuses on the inventors state of mind at the time of ling. Second, if the inventor did possess a best mode, it must be determined whether the written description disclosed the best mode such that a person skilled in the art could practice it. This is an objective inquiry, focusing on the scope of the claimed invention and the level of skill in the art. Eli Lilly & Co. v. Barr Laboratories Inc., 251 F.3d 955, 963, 58 USPQ2d 1865, 1874 (Fed. Cir. 2001). The failure to disclose a better method will not invalidate a patent if the inventor, at the time of ling the application, did not know of the better method OR did not appreciate that it was the best method. All applicants are required to disclose for the claimed subject matter the best mode contemplated by the inventor even though applicant may not have been the discoverer of that mode. Benger Labs. Ltd. v. R.K. Laros Co., 209 F.Supp. 639, 135 USPQ 11 (E.D. Pa. 1962). ACTIVE CONCEALMENT OR GROSSLY INEQUITABLE CONDUCT IS NOT REQUIRED TO ESTABLISH FAILURE TO DISCLOSE THE BEST MODE. Failure to disclose the best mode need not rise to the level of active concealment or grossly inequitable conduct in order to support a rejection or invalidate a patent. Where an inventor knows of a specic material that will make possible the successful reproduction of the effects claimed by the patent, but does not disclose it, speaking instead in terms of broad categories, the best mode requirement has not been satised. Union Carbide Corp. v. BorgWarner, 550 F.2d 555, 193 USPQ 1 (6th Cir. 1977). If the failure to set forth the best mode in a patent disclosure is the result of inequitable conduct (e.g., where the patent specication omitted crucial ingredients and disclosed a ctitious and inoperable slurry as Example 1), not only is that patent in danger of being held unenforceable, but other patents dealing with the same technology that are sought to be enforced in the same cause of action are subject to being held unenforceable. Consolidated Aluminum Corp. v. Foseco Inc., 910 F.2d 804, 15 USPQ2d 1481 (Fed. Cir. 1990).
165
APPENDIX
B
U.S. Patent Law, Title 35
102. Conditions for patentability; novelty and loss of right to patent

A person shall be entitled to a patent unless (a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent, or (b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States, or (c) he has abandoned the invention, or (d) the invention was rst patented or caused to be patented, or was the subject of an inventors certicate, by the applicant or his legal representatives or assigns in a foreign country prior to the date of the application for patent in this country on an application for patent or inventors certicate led more than twelve months before the ling of the application in the United States, or (e) the invention was described in (1) an application for patent, published under section 122(b) [35 USCS 122(b)], by another led in the United States before the invention by the applicant for patent or (2) a patent granted on an application for patent by another led in the United States before the invention by the applicant for patent, except that an international application led under the treaty dened in section 351(a) [35 USCS 351(a)] shall have the effects for the purposes of this subsection of an application led in the United States only if the international application designated the United States and was published under Article 21(2) of such treaty in the English language; or (f ) he did not himself invent the subject matter sought to be patented, or (g) (1) during the course of an interference conducted under section 135 [35 USCS 135] or section 291 [35 USCS 291], another inventor involved therein establishes, to the extent permitted in section 104 [35 USCS 104], that before such persons invention thereof the invention was made by such other inventor and not abandoned, suppressed, or
167
168
Appendix B U.S. Patent Law, Title 35 concealed, or (2) before such persons invention thereof, the invention was made in this country by another inventor who had not abandoned, suppressed, or concealed it. In determining priority of invention under this subsection, there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was rst to conceive and last to reduce to practice, from a time prior to conception by the other.
112. Specification
The specication shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention. The specication shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention. A claim may be written in independent or, if the nature of the case admits, in dependent or multiple dependent form. Subject to the following paragraph, a claim in dependent form shall contain a reference to a claim previously set forth and then specify a further limitation of the subject matter claimed. A claim in dependent form shall be construed to incorporate by reference all the limitations of the claim to which it refers. A claim in multiple dependent form shall contain a reference, in the alternative only, to more than one claim previously set forth and then specify a further limitation of the subject matter claimed. A multiple dependent claim shall not serve as a basis for any other multiple dependent claim. A multiple dependent claim shall be construed to incorporate by reference all the limitations of the particular claim in relation to which it is being considered. An element in a claim for a combination may be expressed as a means or step for performing a specied function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specication and equivalents thereof.
116. Inventors
When an invention is made by two or more persons jointly, they shall apply for patent jointly and each make the required oath, except as otherwise provided in this title. Inventors may apply for a patent jointly even though
Appendix B U.S. Patent Law, Title 35 169 (1) they did not physically work together or at the same time, (2) each did not make the same type or amount of contribution, or (3) each did not make a contribution to the subject matter of every claim of the patent. If a joint inventor refuses to join in an application for patent or cannot be found or reached after diligent effort, the application may be made by the other inventor on behalf of himself and the omitted inventor. The Director, on proof of the pertinent facts and after such notice to the omitted inventor as he prescribes, may grant a patent to the inventor making the application, subject to the same rights which the omitted inventor would have had if he had been joined. The omitted inventor may subsequently join in the application. Whenever through error a person is named in an application for patent as the inventor, or through error an inventor is not named in an application, and such error arose without any deceptive intention on his part, the Director may permit the application to be amended accordingly, under such terms as he prescribes.
271. Infringement of patent

(a) Except as otherwise provided in this title [35 USCS 1 et seq.], whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent. (b) Whoever actively induces infringement of a patent shall be liable as an infringer. (c) Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer. (d) No patent owner otherwise entitled to relief for infringement or contributory infringement of a patent shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having done one or more of the following: (1) derived revenue from acts which if performed by another without his consent would constitute contributory infringement of the patent; (2) licensed or authorized another to perform acts which if performed without his consent would constitute contributory infringement of the patent; (3) sought to enforce his patent rights against infringement or contributory infringement; (4) refused to license or use any rights to the patent; or (5) conditioned
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Appendix B U.S. Patent Law, Title 35 the license of any rights to the patent or the sale of the patented product on the acquisition of a license to rights in another patent or purchase of a separate product, unless, in view of the circumstances, the patent owner has market power in the relevant market for the patent or patented product on which the license or sale is conditioned. (e) (1) It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specic genetic manipulation techniques) solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products. (2) It shall be an act of infringement to submit (A) an application under section 505(j) of the Federal Food, Drug, and Cosmetic Act [21 USCS 355(j)] or described in section 505(b)(2) of such Act [21 USCS 355(b)(2)] for a drug claimed in a patent or the use of which is claimed in a patent, or (B) an application under section 512 of such Act [21 USCS 360b] or under the Act of March 4, 1913 (21 U.S.C. 151-158) for a drug or veterinary biological product which is not primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specic genetic manipulation techniques and which is claimed in a patent or the use of which is claimed in a patent, if the purpose of such submission is to obtain approval under such Act to engage in the commercial manufacture, use, or sale of a drug or veterinary biological product claimed in a patent or the use of which is claimed in a patent before the expiration of such patent. (3) In any action for patent infringement brought under this section, no injunctive or other relief may be granted which would prohibit the making, using, offering to sell, or selling within the United States or importing into the United States of a patented invention under paragraph (1). (4) For an act of infringement described in paragraph (2) (A) the court shall order the effective date of any approval of the drug or veterinary biological product involved in the infringement to be a date which is not earlier than the date of the expiration of the patent which has been infringed,
Appendix B U.S. Patent Law, Title 35 171 (B) injunctive relief may be granted against an infringer to prevent the commercial manufacture, use, offer to sell, or sale within the United States or importation into the United States of an approved drug or veterinary biological product, and (C) damages or other monetary relief may be awarded against an infringer only if there has been commercial manufacture, use, offer to sell, or sale within the United States or importation into the United States of an approved drug or veterinary biological product. The remedies prescribed by subparagraphs (A), (B), and (C) are the only remedies which may be granted by a court for an act of infringement described in paragraph (2), except that a court may award attorney fees under section 285 [35 USCS 285]. (5) Where a person has led an application described in paragraph (2) that includes a certication under subsection (b)(2)(A)(iv) or (j)(2)(A) (vii)(IV) of section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355), and neither the owner of the patent that is the subject of the certication nor the holder of the approved application under subsection (b) of such section for the drug that is claimed by the patent or a use of which is claimed by the patent brought an action for infringement of such patent before the expiration of 45 days after the date on which the notice given under subsection (b)(3) or (j)(2)(B) of such section was received, the courts of the United States shall, to the extent consistent with the Constitution, have subject matter jurisdiction in any action brought by such person under section 2201 of title 28 for a declaratory judgment that such patent is invalid or not infringed. (f ) (1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer. (2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.
172 Appendix B U.S. Patent Law, Title 35 (g) Whoever without authority imports into the United States or offers to sell, sells, or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer, if the importation, offer to sell, sale, or use of the product occurs during the term of such process patent. In an action for infringement of a process patent, no remedy may be granted for infringement on account of the noncommercial use or retail sale of a product unless there is no adequate remedy under this title for infringement on account of the importation or other use, offer to sell, or sale of that product. A product which is made by a patented process will, for purposes of this title, not be considered to be so made after (1) it is materially changed by subsequent processes; or (2) it becomes a trivial and nonessential component of another product. (h) As used in this section, the term whoever includes any State, any instrumentality of a State, and any ofcer or employee of a State or instrumentality of a State acting in his ofcial capacity. Any State, and any such instrumentality, ofcer, or employee, shall be subject to the provisions of this title in the same manner and to the same extent as any nongovernmental entity. (i) As used in this section, an offer for sale or an offer to sell by a person other than the patentee, or any designee of the patentee, is that in which the sale will occur before the expiration of the term of the patent.
285. Attorney fees

The court in exceptional cases may award reasonable attorney fees to the prevailing party.
APPENDIX
C
Antitrust Guidelines for the Licensing of Intellectual Property
Issued by the U.S. Department of Justice* and the Federal Trade Commission
1. Intellectual property protection and the antitrust laws

1.0 These Guidelines state the antitrust enforcement policy of the U.S. Department of Justice and the Federal Trade Commission (individually, the Agency, and collectively, the Agencies) with respect to the licensing of intellectual property protected by patent, copyright, and trade secret law, and of know-how.1 By stating their general policy, the Agencies hope to assist those who need to predict whether the Agencies will challenge a practice as anticompetitive. However, these Guidelines cannot remove judgment and discretion in antitrust law enforcement. Moreover, the standards set forth in these Guidelines must be applied in unforeseeable circumstances. Each case will be evaluated in light of its own facts, and these Guidelines will be applied
* These Guidelines supersede section 3.6 in Part I, Intellectual Property Licensing Arrangements, and cases 6, 10, 11, and 12 in Part II of the U.S. Department of Justice 1988 Antitrust Enforcement Guidelines for International Operations. 1. These Guidelines do not cover the antitrust treatment of trademarks. Although the same general antitrust principles that apply to other forms of intellectual property apply to trademarks as well, these Guidelines deal with technology transfer and innovationrelated issues that typically arise with respect to patents, copyrights, trade secrets, and know-how agreements, rather than with productdifferentiation issues that typically arise with respect to trademarks.
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Appendix C Antitrust Guidelines for the Licensing of Intellectual Property reasonably and exibly.2 In the United States, patents confer rights to exclude others from making, using, or selling in the United States the invention claimed by the patent for a period of seventeen years from the date of issue.3 To gain patent protection, an invention (which may be a product, process, machine, or composition of matter) must be novel, nonobvious, and useful. Copyright protection applies to original works of authorship embodied in a tangible medium of expression.4 A copyright protects only the expression, not the underlying ideas.5 Unlike a patent, which protects an invention not only from copying but also from independent creation, a copyright does not preclude others from independently creating similar expression. Trade secret protection applies to information whose economic value depends on its not being generally known.6 Trade secret protection is conditioned upon efforts to maintain secrecy and has no xed term. As with copyright protection, trade secret protection does not preclude independent creation by others. The intellectual property laws and the antitrust laws share the common purpose of promoting innovation and enhancing consumer welfare.7 The intellectual property laws provide incentives for innovation and its dissemination and commercialization by establishing enforceable property rights for the creators of new and useful products, more efcient processes, and original works of expression. In the absence of intellectual property rights, imitators could more rapidly exploit the efforts of innovators and investors without compensation. Rapid imitation would reduce the commercial value of innovation and erode incentives to invest, ultimately to
2. As is the case with all guidelines, users should rely on qualied counsel to assist them in evaluating the antitrust risk associated with any contemplated transaction or activity. No set of guidelines can possibly indicate how the Agencies will assess the particular facts of every case. Parties who wish to know the Agencies specic enforcement intentions with respect to any particular transaction should consider seeking a Department of Justice business review letter pursuant to 28 C.F.R. 50.6 or a Federal Trade Commission Advisory Opinion pursuant to 16 C.F.R. 1.11.4. 3. See 35 U.S.C. 154 (1988). Section 532(a) of the Uruguay Round Agreements Act, Pub. L. No. 103-465, 108 Stat. 4809, 4983 (1994) would change the length of patent protection to a term beginning on the date at which the patent issues and ending twenty years from the date on which the application for the patent was led. 4. See 17 U.S.C. 102 (1988 & Supp. V 1993). Copyright protection lasts for the authors life plus 50 years, or 75 years from rst publication (or 100 years from creation, whichever expires rst) for works made for hire. See 17 U.S.C. 302 (1988). The principles stated in these Guidelines also apply to protection of mask works xed in a semiconductor chip product (see 17 U.S.C. 901 et seq. (1988)), which is analogous to copyright protection for works of authorship. 5. See 17 U.S.C. 102(b) (1988). 6. Trade secret protection derives from state law. See generally Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974). 7. [T]he aims and objectives of patent and antitrust laws may seem, at rst glance, wholly at odds. However, the two bodies of law are actually complementary, as both are aimed at encouraging innovation, industry and competition. Atari Games Corp. v. Nintendo of America, Inc., 897 F.2d 1572, 1576 (Fed. Cir. 1990).
Appendix C Antitrust Guidelines for the Licensing of Intellectual Property the detriment of consumers. The antitrust laws promote innovation and consumer welfare by prohibiting certain actions that may harm competition with respect to either existing or new ways of serving consumers.
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2. General principles
2.0 These Guidelines embody three general principles: (a) for the purpose of antitrust analysis, the Agencies regard intellectual property as being essentially comparable to any other form of property; (b) the Agencies do not presume that intellectual property creates market power in the antitrust context; and (c) the Agencies recognize that intellectual property licensing allows rms to combine complementary factors of production and is generally procompetitive.
2.1 Standard antitrust analysis applies to intellectual property

The Agencies apply the same general antitrust principles to conduct involving intellectual property that they apply to conduct involving any other form of tangible or intangible property. That is not to say that intellectual property is in all respects the same as any other form of property. Intellectual property has important characteristics, such as ease of misappropriation, that distinguish it from many other forms of property. These characteristics can be taken into account by standard antitrust analysis, however, and do not require the application of fundamentally different principles.8 Although there are clear and important differences in the purpose, extent, and duration of protection provided under the intellectual property regimes of patent, copyright, and trade secret, the governing antitrust principles are the same. Antitrust analysis takes differences among these forms of intellectual property into account in evaluating the specic market circumstances in which transactions occur, just as it does with other particular market circumstances. Intellectual property law bestows on the owners of intellectual property certain rights to exclude others. These rights help the owners to prot from the use of their property. An intellectual property owners rights to exclude are similar to the rights enjoyed by owners of other forms of private property.
8. As with other forms of property, the power to exclude others from the use of intellectual property may vary substantially, depending on the nature of the property and its status under federal or state law. The greater or lesser legal power of an owner to exclude others is also taken into account by standard antitrust analysis.
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Appendix C Antitrust Guidelines for the Licensing of Intellectual Property As with other forms of private property, certain types of conduct with respect to intellectual property may have anticompetitive effects against which the antitrust laws can and do protect. Intellectual property is thus neither particularly free from scrutiny under the antitrust laws, nor particularly suspect under them. The Agencies recognize that the licensing of intellectual property is often international. The principles of antitrust analysis described in these Guidelines apply equally to domestic and international licensing arrangements. However, as described in the 1995 Department of Justice and Federal Trade Commission Antitrust Enforcement Guidelines for International Operations, considerations particular to international operations, such as jurisdiction and comity, may affect enforcement decisions when the arrangement is in an international context.
2.2 Intellectual property and market power

Market power is the ability protably to maintain prices above, or output below, competitive levels for a signicant period of time.9 The Agencies will not presume that a patent, copyright, or trade secret necessarily confers market power upon its owner. Although the intellectual property right confers the power to exclude with respect to the specic product, process, or work in question, there will often be sufcient actual or potential close substitutes for such product, process, or work to prevent the exercise of market power.10 If a patent or other form of intellectual property does confer market power, that market power does not by itself offend the antitrust laws. As with any other tangible or intangible asset that enables its owner to obtain signicant
9. Market power can be exercised in other economic dimensions, such as quality, service, and the development of new or improved goods and processes. It is assumed in this denition that all competitive dimensions are held constant except the ones in which market power is being exercised; that a seller is able to charge higher prices for a higher-quality product does not alone indicate market power. The denition in the text is stated in terms of a seller with market power. A buyer could also exercise market power (e.g., by maintaining the price below the competitive level, thereby depressing output). 10. The Agencies note that the law is unclear on this issue. Compare Jefferson Parish Hospital District No. 2 v. Hyde, 466 U.S. 2, 16 (1984) (expressing the view in dictum that if a product is protected by a patent, it is fair to presume that the inability to buy the product elsewhere gives the seller market power) with id. at 37 n.7 (OConnor, J., concurring) ([A] patent holder has no market power in any relevant sense if there are close substitutes for the patented product.). Compare also Abbott Laboratories v. Brennan, 952 F.2d 1346, 135455 (Fed. Cir. 1991) (no presumption of market power from intellectual property right), cert. denied, 112 S. Ct. 2993 (1992) with Digidyne Corp. v. Data General Corp., 734 F.2d 1336, 134142 (9th Cir. 1984) (requisite economic power is presumed from copyright), cert. denied, 473 U.S. 908 (1985).
Appendix C Antitrust Guidelines for the Licensing of Intellectual Property supracompetitive prots, market power (or even a monopoly) that is solely a consequence of a superior product, business acumen, or historic accident does not violate the antitrust laws.11 Nor does such market power impose on the intellectual property owner an obligation to license the use of that property to others. As in other antitrust contexts, however, market power could be illegally acquired or maintained, or, even if lawfully acquired and maintained, would be relevant to the ability of an intellectual property owner to harm competition through unreasonable conduct in connection with such property.
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2.3 Procompetitive benets of licensing

Intellectual property typically is one component among many in a production process and derives value from its combination with complementary factors. Complementary factors of production include manufacturing and distribution facilities, workforces, and other items of intellectual property. The owner of intellectual property has to arrange for its combination with other necessary factors to realize its commercial value. Often, the owner nds it most efcient to contract with others for these factors, to sell rights to the intellectual property, or to enter into a joint venture arrangement for its development, rather than supplying these complementary factors itself. Licensing, crosslicensing, or otherwise transferring intellectual property (hereinafter licensing) can facilitate integration of the licensed property with complementary factors of production. This integration can lead to more efcient exploitation of the intellectual property, beneting consumers through the reduction of costs and the introduction of new products. Such arrangements increase the value of intellectual property to consumers and to the developers of the technology. By potentially increasing the expected returns from intellectual property, licensing also can increase the incentive for its creation and thus promote greater investment in research and development. Sometimes the use of one item of intellectual property requires access to another. An item of intellectual property blocks another when the second cannot be practiced without using the rst. For example, an improvement on a patented machine can be blocked by the patent on the machine. Licensing may promote the coordinated development of technologies that are in a blocking relationship. Field-of-use, territorial, and other limitations on intellectual property licenses may serve procompetitive ends by allowing the
11. United States v. Grinnell Corp., 384 U.S. 563, 571 (1966); see also United States v. Aluminum Co. of America, 148 F.2d 416, 430 (2d Cir. 1945) (Sherman Act is not violated by the attainment of market power solely through superior skill, foresight and industry).
178 Appendix C Antitrust Guidelines for the Licensing of Intellectual Property licensor to exploit its property as efciently and effectively as possible. These various forms of exclusivity can be used to give a licensee an incentive to invest in the commercialization and distribution of products embodying the licensed intellectual property and to develop additional applications for the licensed property. The restrictions may do so, for example, by protecting the licensee against free-riding on the licensees investments by other licensees or by the licensor. They may also increase the licensors incentive to license, for example, by protecting the licensor from competition in the licensors own technology in a market niche that it prefers to keep to itself. These benets of licensing restrictions apply to patent, copyright, and trade secret licenses, and to know-how agreements.
Example 112 Situation: ComputerCo develops a new, copyrighted software program for inventory management. The program has wide application in the health eld. ComputerCo licenses the program in an arrangement that imposes both eld of use and territorial limitations. Some of ComputerCos licenses permit use only in hospitals; others permit use only in group medical practices. ComputerCo charges different royalties for the different uses. All of ComputerCos licenses permit use only in specied portions of the United States and in specied foreign countries.13 The licenses contain no provisions that would prevent or discourage licensees from developing, using, or selling any other program, or from competing in any other good or service other than in the use of the licensed program. None of the licensees are actual or likely potential competitors of ComputerCo in the sale of inventory management programs. Discussion: The key competitive issue raised by the licensing arrangement is whether it harms competition among entities that would have been actual or likely potential competitors in the absence of the arrangement. Such harm could occur if, for example, the licenses anticompetitively foreclose access to competing technologies (in this case, most likely competing computer programs), prevent licensees from developing their own competing technologies (again, in this case, most likely computer programs), or facilitate market allocation or price-xing for any product or service supplied by the licensees. (See section 3.1.) If the license agreements contained such provisions, the Agency evaluating the arrangement would analyze its likely competitive effects as described in parts 35 of these Guidelines. In this hypothetical, there are no such provisions and thus the arrangement is merely a subdivision of the licensors intellectual property among different elds of use and territories. The licensing arrangement does not appear likely to harm competition among entities that would have been actual or likely potential competitors if ComputerCo had chosen not to license the software program. The Agency therefore would be unlikely to object to this arrangement. Based on these facts, the result of the antitrust analysis would be the same whether the technology was
12. The examples in these Guidelines are hypothetical and do not represent judgments about, or analysis of, any actual market circumstances of the named industries. 13. These Guidelines do not address the possible application of the antitrust laws of other countries to restraints such as territorial restrictions in international licensing arrangements.
Appendix C Antitrust Guidelines for the Licensing of Intellectual Property

protected by patent, copyright, or trade secret. The Agencys conclusion as to likely competitive effects could differ if, for example, the license barred licensees from using any other inventory management program.
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3. Antitrust concerns and modes of analysis 3.1 Nature of the concerns

While intellectual property licensing arrangements are typically welfareenhancing and procompetitive, antitrust concerns may nonetheless arise. For example, a licensing arrangement could include restraints that adversely affect competition in goods markets by dividing the markets among rms that would have competed using different technologies. See, e.g., Example 7. An arrangement that effectively merges the research and development activities of two of only a few entities that could plausibly engage in research and development in the relevant eld might harm competition for development of new goods and services. See section 3.2.3. An acquisition of intellectual property may lessen competition in a relevant antitrust market. See section 5.7. The Agencies will focus on the actual effects of an arrangement, not on its formal terms. The Agencies will not require the owner of intellectual property to create competition in its own technology. However, antitrust concerns may arise when a licensing arrangement harms competition among entities that would have been actual or likely potential competitors14 in a relevant market in the absence of the license (entities in a horizontal relationship). A restraint in a licensing arrangement may harm such competition, for example, if it facilitates market division or price-xing. In addition, license restrictions with respect to one market may harm such competition in another market by anticompetitively foreclosing access to, or signicantly raising the price of, an important input,15 or by facilitating coordination to increase price or reduce output. When it appears that such competition may be adversely affected, the Agencies will follow the analysis set forth below. See generally sections 3.4 and 4.2.
14. A rm will be treated as a likely potential competitor if there is evidence that entry by that rm is reasonably probable in the absence of the licensing arrangement. 15. As used herein, input includes outlets for distribution and sales, as well as factors of production. See, e.g., sections 4.1.1 and 5.35.5 for further discussion of conditions under which foreclosing access to, or raising the price of, an input may harm competition in a relevant market.
180 Appendix C Antitrust Guidelines for the Licensing of Intellectual Property
3.2 Markets affected by licensing arrangements

Licensing arrangements raise concerns under the antitrust laws if they are likely to affect adversely the prices, quantities, qualities, or varieties of goods and services16 either currently or potentially available. The competitive effects of licensing arrangements often can be adequately assessed within the relevant markets for the goods affected by the arrangements. In such instances, the Agencies will delineate and analyze only goods markets. In other cases, however, the analysis may require the delineation of markets for technology or markets for research and development (innovation markets).
3.2.1 Goods markets

A number of different goods markets may be relevant to evaluating the effects of a licensing arrangement. A restraint in a licensing arrangement may have competitive effects in markets for nal or intermediate goods made using the intellectual property, or it may have effects upstream, in markets for goods that are used as inputs, along with the intellectual property, to the production of other goods. In general, for goods markets affected by a licensing arrangement, the Agencies will approach the delineation of relevant market and the measurement of market share in the intellectual property area as in section 1 of the U.S. Department of Justice and Federal Trade Commission Horizontal Merger Guidelines.17
3.2.2 Technology markets

Technology markets consist of the intellectual property that is licensed (the licensed technology) and its close substitutesthat is, the technologies or goods that are close enough substitutes signicantly to constrain the exercise of market power with respect to the intellectual property that is licensed.18 When rights to intellectual property are marketed separately from the products
16. Hereinafter, the term goods also includes services. 17. U.S. Department of Justice and Federal Trade Commission, Horizontal Merger Guidelines (April 2, 1992) (hereinafter 1992 Horizontal Merger Guidelines). As stated in section 1.41 of the 1992 Horizontal Merger Guidelines, market shares for goods markets can be expressed either in dollar terms through measurement of sales, shipments, or production, or in physical terms through measurement of sales, shipments, production, capacity or reserves. 18. For example, the owner of a process for producing a particular good may be constrained in its conduct with respect to that process not only by other processes for making that good, but also by other goods that compete with the downstream good and by the processes used to produce those other goods.
Appendix C Antitrust Guidelines for the Licensing of Intellectual Property in which they are used,19 the Agencies may rely on technology markets to analyze the competitive effects of a licensing arrangement.
Example 2 Situation: Firms Alpha and Beta independently develop different patented process technologies to manufacture the same off-patent drug for the treatment of a particular disease. Before the rms use their technologies internally or license them to third parties, they announce plans jointly to manufacture the drug, and to assign their manufacturing processes to the new manufacturing venture. Many rms are capable of using and have the incentive to use the licensed technologies to manufacture and distribute the drug; thus, the market for drug manufacturing and distribution is competitive. One of the Agencies is evaluating the likely competitive effects of the planned venture. Discussion: The Agency would analyze the competitive effects of the proposed joint venture by rst dening the relevant markets in which competition may be affected and then evaluating the likely competitive effects of the joint venture in the identied markets. (See Example 4 for a discussion of the Agencies approach to joint venture analysis.) In this example, the structural effect of the joint venture in the relevant goods market for the manufacture and distribution of the drug is unlikely to be signicant, because many rms in addition to the joint venture compete in that market. The joint venture might, however, increase the prices of the drug produced using Alphas or Betas technology by reducing competition in the relevant market for technology to manufacture the drug. The Agency would delineate a technology market in which to evaluate likely competitive effects of the proposed joint venture. The Agency would identify other technologies that can be used to make the drug with levels of effectiveness and cost per dose comparable to that of the technologies owned by Alpha and Beta. In addition, the Agency would consider the extent to which competition from other drugs that are substitutes for the drug produced using Alphas or Betas technology would limit the ability of a hypothetical monopolist that owned both Alphas and Betas technology to raise its price.
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To identify a technologys close substitutes and thus to delineate the relevant technology market, the Agencies will, if the data permit, identify the smallest group of technologies and goods over which a hypothetical monopolist of those technologies and goods likely would exercise market powerfor example, by imposing a small but signicant and nontransitory price increase.20 The Agencies recognize that technology often is licensed in ways
19. Intellectual property is often licensed, sold, or transferred as an integral part of a marketed good. An example is a patented product marketed with an implied license permitting its use. In such circumstances, there is no need for a separate analysis of technology markets to capture relevant competitive effects. 20. This is conceptually analogous to the analytical approach to goods markets under the 1992 Horizontal Merger Guidelines. Cf. 1.11. Of course, market power also can be exercised in other dimensions, such as quality, and these dimensions also may be relevant to the denition and analysis of technology markets.
182 Appendix C Antitrust Guidelines for the Licensing of Intellectual Property that are not readily quantiable in monetary terms.21 In such circumstances, the Agencies will delineate the relevant market by identifying other technologies and goods which buyers would substitute at a cost comparable to that of using the licensed technology. In assessing the competitive signicance of current and likely potential participants in a technology market, the Agencies will take into account all relevant evidence. When market share data are available and accurately reect the competitive signicance of market participants, the Agencies will include market share data in this assessment. The Agencies also will seek evidence of buyers and market participants assessments of the competitive signicance of technology market participants. Such evidence is particularly important when market share data are unavailable, or do not accurately represent the competitive signicance of market participants. When market share data or other indicia of market power are not available, and it appears that competing technologies are comparably efcient,22 the Agencies will assign each technology the same market share. For new technologies, the Agencies generally will use the best available information to estimate market acceptance over a two-year period, beginning with commercial introduction.
3.2.3 Research and development: innovation markets

If a licensing arrangement may adversely affect competition to develop new or improved goods or processes, the Agencies will analyze such an impact either as a separate competitive effect in relevant goods or technology markets, or as a competitive effect in a separate innovation market. A licensing arrangement may have competitive effects on innovation that cannot be adequately addressed through the analysis of goods or technology markets. For example, the arrangement may affect the development of goods that do not yet exist.23 Alternatively, the arrangement may affect the development of new or improve
21. For example, technology may be licensed royalty-free in exchange for the right to use other technology, or it may be licensed as part of a package license. 22. The Agencies will regard two technologies as comparably efcient if they can be used to produce close substitutes at comparable costs. 23. E.g., Sensormatic, FTC Inv. No. 941-0126, 60 Fed. Reg. 5428 (accepted for comment Dec. 28, 1994); Wright Medical Technology, Inc., FTC Inv. No. 951-0015, 60 Fed. Reg. 460 (accepted for comment Dec. 8, 1994); American Home Products, FTC Inv. No. 941-0116, 59 Fed. Reg. 60,807 (accepted for comment Nov. 28, 1994); Roche Holdings Ltd., 113 F.T.C. 1086 (1990); United States v. Automobile Mfrs. Assn, 307 F.Supp. 617 (C.D. Cal. 1969), appeal dismissed sub nom. City of New York v. United States, 397 U.S. 248 (1970), modied sub nom. United States v. Motor Vehicles Mfrs. Assn, 198283 Trade Cas. (CCH) 65,088 (C.D. Cal. 1982).
Appendix C Antitrust Guidelines for the Licensing of Intellectual Property goods or processes in geographic markets where there is no actual or likely potential competition in the relevant goods.24 An innovation market consists of the research and development directed to particular new or improved goods or processes, and the close substitutes for that research and development. The close substitutes are research and development efforts, technologies, and goods25 that signicantly constrain the exercise of market power with respect to the relevant research and development, for example by limiting the ability and incentive of a hypothetical monopolist to retard the pace of research and development. The Agencies will delineate an innovation market only when the capabilities to engage in the relevant research and development can be associated with specialized assets or characteristics of specic rms. In assessing the competitive signicance of current and likely potential participants in an innovation market, the Agencies will take into account all relevant evidence. When market share data are available and accurately reect the competitive signicance of market participants, the Agencies will include market share data in this assessment. The Agencies also will seek evidence of buyers and market participants assessments of the competitive signicance of innovation market participants. Such evidence is particularly important when market share data are unavailable or do not accurately represent the competitive signicance of market participants. The Agencies may base the market shares of participants in an innovation market on their shares of identiable assets or characteristics upon which innovation depends, on shares of research and development expenditures, or on shares of a related product. When entities have comparable capabilities and incentives to pursue research and development that is a close substitute for the research and development activities of the parties to a licensing arrangement, the Agencies may assign equal market shares to such entities.
Example 3 Situation: Two companies that specialize in advanced metallurgy agree to cross-license future patents relating to the development of a new component for aircraft jet turbines. Innovation in the development of the component requires the capability to work with very high tensile strength materials for jet turbines. Aspects of the licensing arrangement raise the possibility that competition in research and development of this and related components will be lessened. One of the Agencies is considering whether to dene an innovation market in which to evaluate the competitive effects of the arrangement.
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24. See Complaint, United States v. General Motors Corp., Civ. No. 93-530 (D. Del., led Nov. 16, 1993). 25. For example, the licensor of research and development may be constrained in its conduct not only by competing research and development efforts but also by other existing goods that would compete with the goods under development.

Discussion: If the rms that have the capability and incentive to work with very high tensile strength materials for jet turbines can be reasonably identied, the Agency will consider dening a relevant innovation market for development of the new component. If the number of rms with the required capability and incentive to engage in research and development of very high tensile strength materials for aircraft jet turbines is small, the Agency may employ the concept of an innovation market to analyze the likely competitive effects of the arrangement in that market, or as an aid in analyzing competitive effects in technology or goods markets. The Agency would perform its analysis as described in parts 35. If the number of rms with the required capability and incentive is large (either because there are a large number of such rms in the jet turbine industry, or because there are many rms in other industries with the required capability and incentive), then the Agency will conclude that the innovation market is competitive. Under these circumstances, it is unlikely that any single rm or plausible aggregation of rms could acquire a large enough share of the assets necessary for innovation to have an adverse impact on competition. If the Agency cannot reasonably identify the rms with the required capability and incentive, it will not attempt to dene an innovation market. Example 4 Situation: Three of the largest producers of a plastic used in disposable bottles plan to engage in joint research and development to produce a new type of plastic that is rapidly biodegradable. The joint venture will grant to its partners (but to no one else) licenses to all patent rights and use of know-how. One of the Agencies is evaluating the likely competitive effects of the proposed joint venture. Discussion: The Agency would analyze the proposed research and development joint venture using an analysis similar to that applied to other joint ventures.26 The Agency would begin by dening the relevant markets in which to analyze the joint ventures likely competitive effects. In this case, a relevant market is an innovation marketresearch and development for biodegradable (and other environmentally friendly) containers. The Agency would seek to identify any other entities that would be actual or likely potential competitors with the joint venture in that relevant market. This would include those rms that have the capability and incentive to undertake research and development closely substitutable for the research and development proposed to be undertaken by the joint venture, taking into account such rms existing technologies and technologies under development, R&D facilities, and other relevant assets and business circumstances. Firms possessing such capabilities and incentives would be included in the research and development market even if they are not competitors in relevant markets for related goods, such as the plastics currently produced by the joint venturers, although competitors in existing goods markets may often also compete in related innovation markets. Having dened a relevant innovation market, the Agency would assess whether the joint venture is likely to have anticompetitive effects in that market. A starting point in this analysis is the degree of concentration in the relevant market and the
26. See, e.g., U.S. Department of Justice and Federal Trade Commission, Statements of Enforcement Policy and Analytical Principles Relating to Health Care and Antitrust 2023, 3740, 7274 (September 27, 1994). This type of transaction may qualify for treatment under the National Cooperative Research and Production Act of 1993, 15 U.S.C.A 430105.

market shares of the parties to the joint venture. If, in addition to the parties to the joint venture (taken collectively), there are at least four other independently controlled entities that possess comparable capabilities and incentives to undertake research and development of biodegradable plastics, or other products that would be close substitutes for such new plastics, the joint venture ordinarily would be unlikely to adversely affect competition in the relevant innovation market (cf. section 4.3). If there are fewer than four other independently controlled entities with similar capabilities and incentives, the Agency would consider whether the joint venture would give the parties to the joint venture an incentive and ability collectively to reduce investment in, or otherwise to retard the pace or scope of, research and development efforts. If the joint venture creates a signicant risk of anticompetitive effects in the innovation market, the Agency would proceed to consider efciency justications for the venture, such as the potential for combining complementary R&D assets in such a way as to make successful innovation more likely, or to bring it about sooner, or to achieve cost reductions in research and development. The Agency would also assess the likelihood that the joint venture would adversely affect competition in other relevant markets, including markets for products produced by the parties to the joint venture. The risk of such adverse competitive effects would be increased to the extent that, for example, the joint venture facilitates the exchange among the parties of competitively sensitive information relating to goods markets in which the parties currently compete or facilitates the coordination of competitive activities in such markets. The Agency would examine whether the joint venture imposes collateral restraints that might signicantly restrict competition among the joint venturers in goods markets, and would examine whether such collateral restraints were reasonably necessary to achieve any efciencies that are likely to be attained by the venture.
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3.3 Horizontal and vertical relationships

As with other property transfers, antitrust analysis of intellectual property licensing arrangements examines whether the relationship among the parties to the arrangement is primarily horizontal or vertical in nature, or whether it has substantial aspects of both. A licensing arrangement has a vertical component when it affects activities that are in a complementary relationship, as is typically the case in a licensing arrangement. For example, the licensors primary line of business may be in research and development, and the licensees, as manufacturers, may be buying the rights to use technology developed by the licensor. Alternatively, the licensor may be a component manufacturer owning intellectual property rights in a product that the licensee manufactures by combining the component with other inputs, or the licensor may manufacture the product, and the licensees may operate primarily in distribution and marketing. In addition to this vertical component, the licensor and its licensees may also have a horizontal relationship. For analytical purposes, the Agencies ordinarily will treat a relationship between a licensor and its licensees, or between licensees, as horizontal when they would have been actual or likely potential competitors in a relevant market in the absence of the license.
186 Appendix C Antitrust Guidelines for the Licensing of Intellectual Property The existence of a horizontal relationship between a licensor and its licensees does not, in itself, indicate that the arrangement is anticompetitive. Identication of such relationships is merely an aid in determining whether there may be anticompetitive effects arising from a licensing arrangement. Such a relationship need not give rise to an anticompetitive effect, nor does a purely vertical relationship assure that there are no anticompetitive effects. The following examples illustrate different competitive relationships among a licensor and its licensees.
Example 5 Situation: AgCo, a manufacturer of farm equipment, develops a new, patented emission control technology for its tractor engines and licenses it to FarmCo, another farm equipment manufacturer. AgCos emission control technology is far superior to the technology currently owned and used by FarmCo, so much so that FarmCos technology does not signicantly constrain the prices that AgCo could charge for its technology. AgCos emission control patent has a broad scope. It is likely that any improved emissions control technology that FarmCo could develop in the foreseeable future would infringe AgCos patent. Discussion: Because FarmCos emission control technology does not signicantly constrain AgCos competitive conduct with respect to its emission control technology, AgCos and FarmCos emission control technologies are not close substitutes for each other. FarmCo is a consumer of AgCos technology and is not an actual competitor of AgCo in the relevant market for superior emission control technology of the kind licensed by AgCo. Furthermore, FarmCo is not a likely potential competitor of AgCo in the relevant market because, even if FarmCo could develop an improved emission control technology, it is likely that it would infringe AgCos patent. This means that the relationship between AgCo and FarmCo with regard to the supply and use of emissions control technology is vertical. Assuming that AgCo and FarmCo are actual or likely potential competitors in sales of farm equipment products, their relationship is horizontal in the relevant markets for farm equipment. Example 6 Situation: FarmCo develops a new valve technology for its engines and enters into a crosslicensing arrangement with AgCo, whereby AgCo licenses its emission control technology to FarmCo and FarmCo licenses its valve technology to AgCo. AgCo already owns an alternative valve technology that can be used to achieve engine performance similar to that using FarmCos valve technology and at a comparable cost to consumers. Before adopting FarmCos technology, AgCo was using its own valve technology in its production of engines and was licensing (and continues to license) that technology for use by others. As in Example 5, FarmCo does not own or control an emission control technology that is a close substitute for the technology licensed from AgCo. Furthermore, as in Example 5, FarmCo is not likely to develop an improved emission control technology that would be a close substitute for AgCos technology, because of AgCos blocking patent. Discussion: FarmCo is a consumer and not a competitor of AgCos emission control technology. As in Example 5, their relationship is vertical with regard to this technology. The relationship between AgCo and FarmCo in the relevant market that includes engine valve technology is vertical in part and horizontal in part. It is vertical in part because AgCo and FarmCo stand in a complementary relationship, in which AgCo is a consumer of a technology supplied by FarmCo. However, the relationship between AgCo and FarmCo in the relevant market that includes engine

valve technology is also horizontal in part, because FarmCo and AgCo are actual competitors in the licensing of valve technology that can be used to achieve similar engine performance at a comparable cost. Whether the rms license their valve technologies to others is not important for the conclusion that the rms have a horizontal relationship in this relevant market. Even if AgCos use of its valve technology were solely captive to its own production, the fact that the two valve technologies are substitutable at comparable cost means that the two rms have a horizontal relationship. As in Example 5, the relationship between AgCo and FarmCo is horizontal in the relevant markets for farm equipment.
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3.4 Framework for evaluating licensing restraints

In the vast majority of cases, restraints in intellectual property licensing arrangements are evaluated under the rule of reason. The Agencies general approach in analyzing a licensing restraint under the rule of reason is to inquire whether the restraint is likely to have anticompetitive effects and, if so, whether the restraint is reasonably necessary to achieve procompetitive benets that outweigh those anticompetitive effects. See Federal Trade Commission v. Indiana Federation of Dentists, 476 U.S. 447 (1986); NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984); Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1 (1979); 7 Phillip E. Areeda, Antitrust Law 1502 (1986). See also part 4. In some cases, however, the courts conclude that a restraints nature and necessary effect are so plainly anticompetitive that it should be treated as unlawful per se, without an elaborate inquiry into the restraints likely competitive effect. Federal Trade Commission v. Superior Court Trial Lawyers Association, 493 U.S. 411, 433 (1990); National Society of Professional Engineers v. United States, 435 U.S. 679, 692 (1978). Among the restraints that have been held per se unlawful are naked price-xing, output restraints, and market division among horizontal competitors, as well as certain group boycotts and resale price maintenance. To determine whether a particular restraint in a licensing arrangement is given per se or rule of reason treatment, the Agencies will assess whether the restraint in question can be expected to contribute to an efciency-enhancing integration of economic activity. See Broadcast Music, 441 U.S. at 1624. In general, licensing arrangements promote such integration because they facilitate the combination of the licensors intellectual property with complementary factors of production owned by the licensee. A restraint in a licensing arrangement may further such integration by, for example, aligning the incentives of the licensor and the licensees to promote the development and marketing of the licensed technology, or by substantially reducing transactions costs. If there is no efciencyenhancing integration of economic activity and if the type of restraint is one that has been accorded per se
188 Appendix C Antitrust Guidelines for the Licensing of Intellectual Property treatment, the Agencies will challenge the restraint under the per se rule. Otherwise, the Agencies will apply a rule of reason analysis. Application of the rule of reason generally requires a comprehensive inquiry into market conditions. (See sections 4.14.3.) However, that inquiry may be truncated in certain circumstances. If the Agencies conclude that a restraint has no likely anticompetitive effects, they will treat it as reasonable, without an elaborate analysis of market power or the justications for the restraint. Similarly, if a restraint facially appears to be of a kind that would always or almost always tend to reduce output or increase prices,27 and the restraint is not reasonably related to efciencies, the Agencies will likely challenge the restraint without an elaborate analysis of particular industry circumstances.28 See Indiana Federation of Dentists, 476 U.S. at 45960; NCAA, 468 U.S. at 109.
Example 7 Situation: Gamma, which manufactures Product X using its patented process, offers a license for its process technology to every other manufacturer of Product X, each of which competes world-wide with Gamma in the manufacture and sale of X. The process technology does not represent an economic improvement over the available existing technologies. Indeed, although most manufacturers accept licenses from Gamma, none of the licensees actually uses the licensed technology. The licenses provide that each manufacturer has an exclusive right to sell Product X manufactured using the licensed technology in a designated geographic area and that no manufacturer may sell Product X, however manufactured, outside the designated territory. Discussion: The manufacturers of Product X are in a horizontal relationship in the goods market for Product X. Any manufacturers of Product X that control technologies that are substitutable at comparable cost for Gammas process are also horizontal competitors of Gamma in the relevant technology market. The licensees of Gammas process technology are technically in a vertical relationship, although that is not signicant in this example because they do not actually use Gammas technology. The licensing arrangement restricts competition in the relevant goods market among manufacturers of Product X by requiring each manufacturer to limit its sales to an exclusive territory. Thus, competition among entities that would be actual competitors in the absence of the licensing arrangement is restricted. Based on the facts set forth above, the licensing arrangement does not involve a useful transfer of
27. Details about the Federal Trade Commissions approach are set forth in Massachusetts Board of Registration in Optometry, 110 F.T.C. 549, 604 (1988). In applying its truncated rule of reason inquiry, the FTC uses the analytical category of inherently suspect restraints to denote facially anticompetitive restraints that would always or almost always tend to decrease output or increase prices, but that may be relatively unfamiliar or may not t neatly into traditional per se categories. 28. Under the FTCs Mass. Board approach, asserted efciency justications for inherently suspect restraints are examined to determine whether they are plausible and, if so, whether they are valid in the context of the market at issue. Mass. Board, 110 F.T.C. at 604.

technology, and thus it is unlikely that the restraint on sales outside the designated territories contributes to an efciency-enhancing integration of economic activity. Consequently, the evaluating Agency would be likely to challenge the arrangement under the per se rule as a horizontal territorial market allocation scheme and to view the intellectual property aspects of the arrangement as a sham intended to cloak its true nature. If the licensing arrangement could be expected to contribute to an efciencyenhancing integration of economic activity, as might be the case if the licensed technology were an advance over existing processes and used by the licensees, the Agency would analyze the arrangement under the rule of reason applying the analytical framework described in this section. In this example, the competitive implications do not generally depend on whether the licensed technology is protected by patent, is a trade secret or other know-how, or is a computer program protected by copyright; nor do the competitive implications generally depend on whether the allocation of markets is territorial, as in this example, or functional, based on elds of use.
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4. General principles concerning the Agencies evaluation of licensing arrangements under the rule of reason 4.1 Analysis of anticompetitive effects
The existence of anticompetitive effects resulting from a restraint in a licensing arrangement will be evaluated on the basis of the analysis described in this section.
4.1.1 Market structure, coordination, and foreclosure

When a licensing arrangement affects parties in a horizontal relationship, a restraint in that arrangement may increase the risk of coordinated pricing, output restrictions, or the acquisition or maintenance of market power. Harm to competition also may occur if the arrangement poses a signicant risk of retarding or restricting the development of new or improved goods or processes. The potential for competitive harm depends in part on the degree of concentration in, the difculty of entry into, and the responsiveness of supply and demand to changes in price in the relevant markets. Cf. 1992 Horizontal Merger Guidelines 1.5, 3. When the licensor and licensees are in a vertical relationship, the Agencies will analyze whether the licensing arrangement may harm competition among entities in a horizontal relationship at either the level of the licensor or the licensees, or possibly in another relevant market. Harm to competition from a restraint may occur if it anticompetitively forecloses access to, or increases competitors costs of obtaining, important inputs, or facilitates coordination to
190 Appendix C Antitrust Guidelines for the Licensing of Intellectual Property raise price or restrict output. The risk of anticompetitively foreclosing access or increasing competitors costs is related to the proportion of the markets affected by the licensing restraint; other characteristics of the relevant markets, such as concentration, difculty of entry, and the responsiveness of supply and demand to changes in price in the relevant markets; and the duration of the restraint. A licensing arrangement does not foreclose competition merely because some or all of the potential licensees in an industry choose to use the licensed technology to the exclusion of other technologies. Exclusive use may be an efcient consequence of the licensed technology having the lowest cost or highest value. Harm to competition from a restraint in a vertical licensing arrangement also may occur if a licensing restraint facilitates coordination among entities in a horizontal relationship to raise prices or reduce output in a relevant market. For example, if owners of competing technologies impose similar restraints on their licensees, the licensors may nd it easier to coordinate their pricing. Similarly, licensees that are competitors may nd it easier to coordinate their pricing if they are subject to common restraints in licenses with a common licensor or competing licensors. The risk of anticompetitive coordination is increased when the relevant markets are concentrated and difcult to enter. The use of similar restraints may be common and procompetitive in an industry, however, because they contribute to efcient exploitation of the licensed property.
4.1.2 Licensing arrangements involving exclusivity

A licensing arrangement may involve exclusivity in two distinct respects. First, the licensor may grant one or more exclusive licenses, which restrict the right of the licensor to license others and possibly also to use the technology itself. Generally, an exclusive license may raise antitrust concerns only if the licensees themselves, or the licensor and its licensees, are in a horizontal relationship. Examples of arrangements involving exclusive licensing that may give rise to antitrust concerns include cross-licensing by parties collectively possessing market power (see section 5.5), grantbacks (see section 5.6), and acquisitions of intellectual property rights (see section 5.7). A non-exclusive license of intellectual property that does not contain any restraints on the competitive conduct of the licensor or the licensee generally does not present antitrust concerns even if the parties to the license are in a horizontal relationship, because the nonexclusive license normally does not diminish competition that would occur in its absence. A second form of exclusivity, exclusive dealing, arises when a license prevents or restrains the licensee from licensing, selling, distributing, or using competing technologies. See section 5.4. Exclusivity may be achieved by an explicit exclusive dealing term in the license or by other provisions such as compensation terms or other economic incentives. Such restraints may
Appendix C Antitrust Guidelines for the Licensing of Intellectual Property anticompetitively foreclose access to, or increase competitors costs of obtaining, important inputs, or facilitate coordination to raise price or reduce output, but they also may have procompetitive effects. For example, a licensing arrangement that prevents the licensee from dealing in other technologies may encourage the licensee to develop and market the licensed technology or specialized applications of that technology. See, e.g., Example 8. The Agencies will take into account such procompetitive effects in evaluating the reasonableness of the arrangement. See section 4.2. The antitrust principles that apply to a licensors grant of various forms of exclusivity to and among its licensees are similar to those that apply to comparable vertical restraints outside the licensing context, such as exclusive territories and exclusive dealing. However, the fact that intellectual property may in some cases be misappropriated more easily than other forms of property may justify the use of some restrictions that might be anticompetitive in other contexts. As noted earlier, the Agencies will focus on the actual practice and its effects, not on the formal terms of the arrangement. A license denominated as non-exclusive (either in the sense of exclusive licensing or in the sense of exclusive dealing) may nonetheless give rise to the same concerns posed by formal exclusivity. A non-exclusive license may have the effect of exclusive licensing if it is structured so that the licensor is unlikely to license others or to practice the technology itself. A license that does not explicitly require exclusive dealing may have the effect of exclusive dealing if it is structured to increase signicantly a licensees cost when it uses competing technologies. However, a licensing arrangement will not automatically raise these concerns merely because a party chooses to deal with a single licensee or licensor, or connes his activity to a single eld of use or location, or because only a single licensee has chosen to take a license.
Example 8 Situation: NewCo, the inventor and manufacturer of a new at panel display technology, lacking the capability to bring a at panel display product to market, grants BigCo an exclusive license to sell a product embodying NewCos technology. BigCo does not currently sell, and is not developing (or likely to develop), a product that would compete with the product embodying the new technology and does not control rights to another display technology. Several rms offer competing displays, BigCo accounts for only a small proportion of the outlets for distribution of display products, and entry into the manufacture and distribution of display products is relatively easy. Demand for the new technology is uncertain and successful market penetration will require considerable promotional effort. The license contains an exclusive dealing restriction preventing BigCo from selling products that compete with the product embodying the licensed technology. Discussion: This example illustrates both types of exclusivity in a licensing arrangement. The license is exclusive in that it restricts the right of the licensor to grant other licenses. In addition, the license has an exclusive dealing component in that it restricts the licensee from selling competing products.
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The inventor of the display technology and its licensee are in a vertical relationship and are not actual or likely potential competitors in the manufacture or sale of display products or in the sale or development of technology. Hence, the grant of an exclusive license does not affect competition between the licensor and the licensee. The exclusive license may promote competition in the manufacturing and sale of display products by encouraging BigCo to develop and promote the new product in the face of uncertain demand by rewarding BigCo for its efforts if they lead to large sales. Although the license bars the licensee from selling competing products, this exclusive dealing aspect is unlikely in this example to harm competition by anticompetitively foreclosing access, raising competitors costs of inputs, or facilitating anticompetitive pricing because the relevant product market is unconcentrated, the exclusive dealing restraint affects only a small proportion of the outlets for distribution of display products, and entry is easy. On these facts, the evaluating Agency would be unlikely to challenge the arrangement.
4.2 Efciencies and justications

If the Agencies conclude, upon an evaluation of the market factors described in section 4.1, that a restraint in a licensing arrangement is unlikely to have an anticompetitive effect, they will not challenge the restraint. If the Agencies conclude that the restraint has, or is likely to have, an anticompetitive effect, they will consider whether the restraint is reasonably necessary to achieve procompetitive efciencies. If the restraint is reasonably necessary, the Agencies will balance the procompetitive efciencies and the anticompetitive effects to determine the probable net effect on competition in each relevant market. The Agencies comparison of anticompetitive harms and procompetitive efciencies is necessarily a qualitative one. The risk of anticompetitive effects in a particular case may be insignicant compared to the expected efciencies, or vice versa. As the expected anticompetitive effects in a particular licensing arrangement increase, the Agencies will require evidence establishing a greater level of expected efciencies. The existence of practical and signicantly less restrictive alternatives is relevant to a determination of whether a restraint is reasonably necessary. If it is clear that the parties could have achieved similar efciencies by means that are signicantly less restrictive, then the Agencies will not give weight to the parties efciency claim. In making this assessment, however, the Agencies will not engage in a search for a theoretically least restrictive alternative that is not realistic in the practical prospective business situation faced by the parties. When a restraint has, or is likely to have, an anticompetitive effect, the duration of that restraint can be an important factor in determining whether it is reasonably necessary to achieve the putative procompetitive efciency. The effective duration of a restraint may depend on a number of factors, including the option of the affected party to terminate the arrangement unilaterally and the presence of contract terms (e.g., unpaid balances on minimum purchase
Appendix C Antitrust Guidelines for the Licensing of Intellectual Property commitments) that encourage the licensee to renew a license arrangement. Consistent with their approach to less restrictive alternative analysis generally, the Agencies will not attempt to draw ne distinctions regarding duration; rather, their focus will be on situations in which the duration clearly exceeds the period needed to achieve the procompetitive efciency. The evaluation of procompetitive efciencies, of the reasonable necessity of a restraint to achieve them, and of the duration of the restraint, may depend on the market context. A restraint that may be justied by the needs of a new entrant, for example, may not have a procompetitive efciency justication in different market circumstances. Cf. United States v. Jerrold Electronics Corp., 187 F.Supp. 545 (E.D. Pa. 1960), aff d per curiam, 365 U.S. 567 (1961).
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4.3 Antitrust safety zone

Because licensing arrangements often promote innovation and enhance competition, the Agencies believe that an antitrust safety zone is useful in order to provide some degree of certainty and thus to encourage such activity.29 Absent extraordinary circumstances, the Agencies will not challenge a restraint in an intellectual property licensing arrangement if (1) the restraint is not facially anticompetitive30 and (2) the licensor and its licensees collectively account for no more than twenty percent of each relevant market signicantly affected by the restraint. This safety zone does not apply to those transfers of intellectual property rights to which a merger analysis is applied. See section 5.7. Whether a restraint falls within the safety zone will be determined by reference only to goods markets unless the analysis of goods markets alone would inadequately address the effects of the licensing arrangement on competition among technologies or in research and development. If an examination of the effects on competition among technologies or in research development is required, and if market share data are unavailable or do not accurately represent competitive signicance, the following safety zone criteria will apply. Absent extraordinary circumstances, the Agencies will not challenge a restraint in an intellectual property licensing arrangement that may affect competition in a technology market if (1) the restraint is not facially anticompetitive and (2) there are four or more independently controlled technologies in addition to the technologies controlled by the parties to the
29. The antitrust safety zone does not apply to restraints that are not in a licensing arrangement, or to restraints that are in a licensing arrangement but are unrelated to the use of the licensed intellectual property. 30. Facially anticompetitive refers to restraints that normally warrant per se treatment, as well as other restraints of a kind that would always or almost always tend to reduce output or increase prices. See section 3.4.
194 Appendix C Antitrust Guidelines for the Licensing of Intellectual Property licensing arrangement that may be substitutable for the licensed technology at a comparable cost to the user. Absent extraordinary circumstances, the Agencies will not challenge a restraint in an intellectual property licensing arrangement that may affect competition in an innovation market if (1) the restraint is not facially anticompetitive and (2) four or more independently controlled entities in addition to the parties to the licensing arrangement possess the required specialized assets or characteristics and the incentive to engage in research and development that is a close substitute of the research and development activities of the parties to the licensing agreement.31 The Agencies emphasize that licensing arrangements are not anticompetitive merely because they do not fall within the scope of the safety zone. Indeed, it is likely that the great majority of licenses falling outside the safety zone are lawful and procompetitive. The safety zone is designed to provide owners of intellectual property with a degree of certainty in those situations in which anticompetitive effects are so unlikely that the arrangements may be presumed not to be anticompetitive without an inquiry into particular industry circumstances. It is not intended to suggest that parties should conform to the safety zone or to discourage parties falling outside the safety zone from adopting restrictions in their license arrangements that are reasonably necessary to achieve an efciency-enhancing integration of economic activity. The Agencies will analyze arrangements falling outside the safety zone based on the considerations outlined in parts 35. The status of a licensing arrangement with respect to the safety zone may change over time. A determination by the Agencies that a restraint in a licensing arrangement qualies for inclusion in the safety zone is based on the factual circumstances prevailing at the time of the conduct at issue.32
5. Application of general principles

5.0 This section illustrates the application of the general principles discussed above to particular licensing restraints and to arrangements that involve the cross-licensing, pooling, or acquisition of intellectual property. The restraints and arrangements identied are typical of those that are likely to receive antitrust scrutiny; however, they are not intended as an exhaustive list of practices that could raise competitive concerns.
31. This is consistent with congressional intent in enacting the National Cooperative Research Act. See H.R. Conf. Rpt. No. 1044, 98th Cong., 2d Sess., 10, reprinted in 1984 U.S.C.C.A.N. 3105, 313435. 32. The conduct at issue may be the transaction giving rise to the restraint or the subsequent implementation of the restraint.
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5.1 Horizontal restraints

The existence of a restraint in a licensing arrangement that affects parties in a horizontal relationship (a horizontal restraint) does not necessarily cause the arrangement to be anticompetitive. As in the case of joint ventures among horizontal competitors, licensing arrangements among such competitors may promote rather than hinder competition if they result in integrative efciencies. Such efciencies may arise, for example, from the realization of economies of scale and the integration of complementary research and development, production, and marketing capabilities. Following the general principles outlined in section 3.4, horizontal restraints often will be evaluated under the rule of reason. In some circumstances, however, that analysis may be truncated; additionally, some restraints may merit per se treatment, including price xing, allocation of markets or customers, agreements to reduce output, and certain group boycotts.
Example 9 Situation: Two of the leading manufacturers of a consumer electronic product hold patents that cover alternative circuit designs for the product. The manufacturers assign their patents to a separate corporation wholly owned by the two rms. That corporation licenses the right to use the circuit designs to other consumer product manufacturers and establishes the license royalties. None of the patents is blocking; that is, each of the patents can be used without infringing a patent owned by the other rm. The different circuit designs are substitutable in that each permits the manufacture at comparable cost to consumers of products that consumers consider to be interchangeable. One of the Agencies is analyzing the licensing arrangement. Discussion: In this example, the manufacturers are horizontal competitors in the goods market for the consumer product and in the related technology markets. The competitive issue with regard to a joint assignment of patent rights is whether the assignment has an adverse impact on competition in technology and goods markets that is not outweighed by precompetitive efciencies, such as benets in the use or dissemination of the technology. Each of the patent owners has a right to exclude others from using its patent. That right does not extend, however, to the agreement to assign rights jointly. To the extent that the patent rights cover technologies that are close substitutes, the joint determination of royalties likely would result in higher royalties and higher goods prices than would result if the owners licensed or used their technologies independently. In the absence of evidence establishing efciency-enhancing integration from the joint assignment of patent rights, the Agency may conclude that the joint marketing of competing patent rights constitutes horizontal price xing and could be challenged as a per se unlawful horizontal restraint of trade. If the joint marketing arrangement results in an efciency-enhancing integration, the Agency would evaluate the arrangement under the rule of reason. However, the Agency may conclude that the anticompetitive effects are sufciently apparent, and the claimed integrative efciencies are sufciently weak or not reasonably related to the restraints, to warrant challenge of the arrangement without an elaborate analysis of particular industry circumstances (see section 3.4).
5.2 Resale price maintenance

Resale price maintenance is illegal when commodities have passed into the channels of trade and are owned by dealers. Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 408 (1911). It has been held per se illegal for a licensor of an intellectual property right in a product to x a licensees resale price of that product. United States v. Univis Lens Co., 316 U.S. 241 (1942); Ethyl Gasoline Corp. v. United States, 309 U.S. 436 (1940).33 Consistent with the principles set forth in section 3.4, the Agencies will enforce the per se rule against resale price maintenance in the intellectual property context.
5.3 Tying arrangements

A tying or tie-in or tied sale arrangement has been dened as an agreement by a party to sell one product . . . on the condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that [tied] product from any other supplier. Eastman Kodak Co. v. Image Technical Services, Inc., 112 S. Ct. 2072, 2079 (1992). Conditioning the ability of a licensee to license one or more items of intellectual property on the licensees purchase of another item of intellectual property or a good or a service has been held in some cases to constitute illegal tying.34 Although tying arrangements may result in anticompetitive effects, such arrangements can also result in signicant efciencies and procompetitive benets. In the exercise of their prosecutorial discretion, the Agencies will consider both the anticompetitive effects and the efciencies attributable to a tie-in. The Agencies would be likely to challenge a tying arrangement if: (1) the seller has market
33. But cf. United States v. General Electric Co., 272 U.S. 476 (1926) (holding that an owner of a product patent may condition a license to manufacture the product on the xing of the rst sale price of the patented product). Subsequent lower court decisions have distinguished the GE decision in various contexts. See, e.g., Royal Indus. v. St. Regis Paper Co., 420 F.2d 449, 452 (9th Cir. 1969) (observing that GE involved a restriction by a patentee who also manufactured the patented product and leaving open the question whether a nonmanufacturing patentee may x the price of the patented product); Newburgh Moire Co. v. Superior Moire Co., 237 F.2d 283, 29394 (3rd Cir. 1956) (grant of multiple licenses each containing price restrictions does not come within the GE doctrine); Cummer- Graham Co. v. Straight Side Basket Corp., 142 F.2d 646, 647 (5th Cir.) (owner of an intellectual property right in a process to manufacture an unpatented product may not x the sale price of that product), cert. denied, 323 U.S. 726 (1944); Barber-Colman Co. v. National Tool Co., 136 F.2d 339, 34344 (6th Cir. 1943) (same). 34. See, e.g., United States v. Paramount Pictures, Inc., 334 U.S. 131, 15658 (1948) (copyrights); International Salt Co. v. United States, 332 U.S. 392 (1947) (patent and related product).
Appendix C Antitrust Guidelines for the Licensing of Intellectual Property power in the tying product,35 (2) the arrangement has an adverse effect on competition in the relevant market for the tied product, and (3) efciency justications for the arrangement do not outweigh the anticompetitive effects.36 The Agencies will not presume that a patent, copyright, or trade secret necessarily confers market power upon its owner. Package licensingthe licensing of multiple items of intellectual property in a single license or in a group of related licensesmay be a form of tying arrangement if the licensing of one product is conditioned upon the acceptance of a license of another, separate product. Package licensing can be efciency enhancing under some circumstances. When multiple licenses are needed to use any single item of intellectual property, for example, a package license may promote such efciencies. If a package license constitutes a tying arrangement, the Agencies will evaluate its competitive effects under the same principles they apply to other tying arrangements.
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5.4 Exclusive dealing

In the intellectual property context, exclusive dealing occurs when a license prevents the licensee from licensing, selling, distributing, or using competing technologies. Exclusive dealing arrangements are evaluated under the rule of reason. See Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320 (1961) (evaluating legality of exclusive dealing under section 1 of the Sherman Act and section 3 of the Clayton Act); Beltone Electronics Corp., 100 F.T.C. 68 (1982) (evaluating legality of exclusive dealing under section 5 of the Federal Trade Commission Act). In determining whether an exclusive dealing arrangement is likely to reduce competition in a relevant market, the Agencies will take into account the extent to which the arrangement (1) promotes the exploitation and development of the licensors technology and (2) anticompetitively forecloses the exploitation and development of, or otherwise constrains competition among, competing technologies. The likelihood that exclusive dealing may have anticompetitive effects is related, inter alia, to the degree of foreclosure in the relevant market, the duration of the exclusive dealing arrangement, and other characteristics of the input and output markets, such as concentration, difculty of entry, and the responsiveness of supply and demand to changes in price in the relevant markets. (See sections 4.1.1 and 4.1.2.) If the Agencies determine that a
35. Cf. 35 U.S.C. 271(d) (1988 & Supp. V 1993) (requirement of market power in patent misuse cases involving tying). 36. As is true throughout these Guidelines, the factors listed are those that guide the Agencies internal analysis in exercising their prosecutorial discretion. They are not intended to circumscribe how the Agencies will conduct the litigation of cases that they decide to bring.
198 Appendix C Antitrust Guidelines for the Licensing of Intellectual Property particular exclusive dealing arrangement may have an anticompetitive effect, they will evaluate the extent to which the restraint encourages licensees to develop and market the licensed technology (or specialized applications of that technology), increases licensors incentives to develop or rene the licensed technology, or otherwise increases competition and enhances output in a relevant market. (See section 4.2 and Example 8.)
5.5 Cross-licensing and pooling arrangements

Cross-licensing and pooling arrangements are agreements of two or more owners of different items of intellectual property to license one another or third parties. These arrangements may provide procompetitive benets by integrating complementary technologies, reducing transaction costs, clearing blocking positions, and avoiding costly infringement litigation. By promoting the dissemination of technology, cross-licensing and pooling arrangements are often procompetitive. Cross-licensing and pooling arrangements can have anticompetitive effects in certain circumstances. For example, collective price or output restraints in pooling arrangements, such as the joint marketing of pooled intellectual property rights with collective price setting or coordinated output restrictions, may be deemed unlawful if they do not contribute to an efciency-enhancing integration of economic activity among the participants. Compare NCAA 468 U.S. at 114 (output restriction on college football broadcasting held unlawful because it was not reasonably related to any purported justication) with Broadcast Music, 441 U.S. at 23 (blanket license for music copyrights found not per se illegal because the cooperative price was necessary to the creation of a new product). When cross-licensing or pooling arrangements are mechanisms to accomplish naked price xing or market division, they are subject to challenge under the per se rule. See United States v. New Wrinkle, Inc., 342 U.S. 371 (1952) (price xing). Settlements involving the cross-licensing of intellectual property rights can be an efcient means to avoid litigation and, in general, courts favor such settlements. When such cross-licensing involves horizontal competitors, however, the Agencies will consider whether the effect of the settlement is to diminish competition among entities that would have been actual or likely potential competitors in a relevant market in the absence of the cross-license. In the absence of offsetting efciencies, such settlements may be challenged as unlawful restraints of trade. Cf. United States v. Singer Manufacturing Co., 374 U.S. 174 (1963) (cross-license agreement was part of broader combination to exclude competitors). Pooling arrangements generally need not be open to all who would like to join. However, exclusion from cross-licensing and pooling arrangements among parties that collectively possess market power may, under some
Appendix C Antitrust Guidelines for the Licensing of Intellectual Property circumstances, harm competition. Cf. Northwest Wholesale Stationers, Inc. v. Pacic Stationery & Printing Co., 472 U.S. 284 (1985) (exclusion of a competitor from a purchasing cooperative not per se unlawful absent a showing of market power). In general, exclusion from a pooling or cross-licensing arrangement among competing technologies is unlikely to have anticompetitive effects unless (1) excluded rms cannot effectively compete in the relevant market for the good incorporating the licensed technologies and (2) the pool participants collectively possess market power in the relevant market. If these circumstances exist, the Agencies will evaluate whether the arrangements limitations on participation are reasonably related to the efcient development and exploitation of the pooled technologies and will assess the net effect of those limitations in the relevant market. See section 4.2. Another possible anticompetitive effect of pooling arrangements may occur if the arrangement deters or discourages participants from engaging in research and development, thus retarding innovation. For example, a pooling arrangement that requires members to grant licenses to each other for current and future technology at minimal cost may reduce the incentives of its members to engage in research and development because members of the pool have to share their successful research and development and each of the members can free ride on the accomplishments of other pool members. See generally United States v. Mfrs. Aircraft Assn, Inc., 1976-1 Trade Cas. (CCH) 60,810 (S.D.N.Y. 1975); United States v. Automobile Mfrs. Assn, 307 F.Supp. 617 (C.D. Cal 1969), appeal dismissed sub nom. City of New York v. United States, 397 U.S. 248 (1970), modied sub nom. United States v. Motor Vehicle Mfrs. Assn, 198283 Trade Cas. (CCH) 65,088 (C.D. Cal. 1982). However, such an arrangement can have procompetitive benets, for example, by exploiting economies of scale and integrating complementary capabilities of the pool members, (including the clearing of blocking positions), and is likely to cause competitive problems only when the arrangement includes a large fraction of the potential research and development in an innovation market. See section 3.2.3 and Example 4.
Example 10 Situation: As in Example 9, two of the leading manufacturers of a consumer electronic product hold patents that cover alternative circuit designs for the product. The manufacturers assign several of their patents to a separate corporation wholly owned by the two rms. That corporation licenses the right to use the circuit designs to other consumer product manufacturers and establishes the license royalties. In this example, however, the manufacturers assign to the separate corporation only patents that are blocking. None of the patents assigned to the corporation can be used without infringing a patent owned by the other rm. Discussion: Unlike the previous example, the joint assignment of patent rights to the wholly owned corporation in this example does not adversely affect competition in the licensed technology among entities that would have been actual or likely potential competitors in the absence of the licensing arrangement. Moreover, the licensing arrangement is likely to have procompetitive benets in the use of the technology. Because the manufacturers patents are blocking, the manufacturers are
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not in a horizontal relationship with respect to those patents. None of the patents can be used without the right to a patent owned by the other rm, so the patents are not substitutable. As in Example 9, the rms are horizontal competitors in the relevant goods market. In the absence of collateral restraints that would likely raise price or reduce output in the relevant goods market or in any other relevant antitrust market and that are not reasonably related to an efciency-enhancing integration of economic activity, the evaluating Agency would be unlikely to challenge this arrangement.
5.6 Grantbacks
A grantback is an arrangement under which a licensee agrees to extend to the licensor of intellectual property the right to use the licensees improvements to the licensed technology. Grantbacks can have procompetitive effects, especially if they are nonexclusive. Such arrangements provide a means for the licensee and the licensor to share risks and reward the licensor for making possible further innovation based on or informed by the licensed technology, and both promote innovation in the rst place and promote the subsequent licensing of the results of the innovation. Grantbacks may adversely affect competition, however, if they substantially reduce the licensees incentives to engage in research and development and thereby limit rivalry in innovation markets. A non-exclusive grantback allows the licensee to practice its technology and license it to others. Such a grantback provision may be necessary to ensure that the licensor is not prevented from effectively competing because it is denied access to improvements developed with the aid of its own technology. Compared with an exclusive grantback, a non-exclusive grantback, which leaves the licensee free to license improvements technology to others, is less likely to have anticompetitive effects. The Agencies will evaluate a grantback provision under the rule of reason, see generally Transparent-Wrap Machine Corp. v. Stokes & Smith Co., 329 U.S. 637, 64548 (1947) (grantback provision in technology license is not per se unlawful), considering its likely effects in light of the overall structure of the licensing arrangement and conditions in the relevant markets. An important factor in the Agencies analysis of a grantback will be whether the licensor has market power in a relevant technology or innovation market. If the Agencies determine that a particular grantback provision is likely to reduce signicantly licensees incentives to invest in improving the licensed technology, the Agencies will consider the extent to which the grantback provision has offsetting procompetitive effects, such as (1) promoting dissemination of licensees improvements to the licensed technology, (2) increasing the licensors incentives to disseminate the licensed technology, or (3) otherwise increasing competition and output in a relevant technology or innovation market. See section 4.2. In addition, the Agencies will consider the extent to which grantback provisions in the relevant markets generally increase licensors incentives to innovate in the rst place.
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5.7 Acquisition of intellectual property rights

Certain transfers of intellectual property rights are most appropriately analyzed by applying the principles and standards used to analyze mergers, particularly those in the 1992 Horizontal Merger Guidelines. The Agencies will apply a merger analysis to an outright sale by an intellectual property owner of all of its rights to that intellectual property and to a transaction in which a person obtains through grant, sale, or other transfer an exclusive license for intellectual property (i.e., a license that precludes all other persons, including the licensor, from using the licensed intellectual property).37 Such transactions may be assessed under section 7 of the Clayton Act, sections 1 and 2 of the Sherman Act, and section 5 of the Federal Trade Commission Act.
Example 11 Situation: Omega develops a new, patented pharmaceutical for the treatment of a particular disease. The only drug on the market approved for the treatment of this disease is sold by Delta. Omegas patented drug has almost completed regulatory approval by the Food and Drug Administration. Omega has invested considerable sums in product development and market testing, and initial results show that Omegas drug would be a signicant competitor to Deltas. However, rather than enter the market as a direct competitor of Delta, Omega licenses to Delta the right to manufacture and sell Omegas patented drug. The license agreement with Delta is nominally nonexclusive. However, Omega has rejected all requests by other rms to obtain a license to manufacture and sell Omegas patented drug, despite offers by those rms of terms that are reasonable in relation to those in Deltas license. Discussion: Although Omegas license to Delta is nominally nonexclusive, the circumstances indicate that it is exclusive in fact because Omega has rejected all reasonable offers by other rms for licenses to manufacture and sell Omegas patented drug. The facts of this example indicate that Omega would be a likely potential competitor of Delta in the absence of the licensing arrangement, and thus they are in a horizontal relationship in the relevant goods market that includes drugs for the treatment of this particular disease. The evaluating Agency would apply a merger analysis to this transaction, since it involves an acquisition of a likely potential competitor.
6. Enforcement of invalid intellectual property rights

The Agencies may challenge the enforcement of invalid intellectual property rights as antitrust violations. Enforcement or attempted enforcement of a patent obtained by fraud on the Patent and Trademark Ofce or the Copyright Ofce
37. The safety zone of section 4.3 does not apply to transfers of intellectual property such as those described in this section.
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Appendix C Antitrust Guidelines for the Licensing of Intellectual Property may violate section 2 of the Sherman Act, if all the elements otherwise necessary to establish a section 2 charge are proved, or section 5 of the Federal Trade Commission Act. Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965) (patents); American Cyanamid Co., 72 F.T.C. 623, 68485 (1967), aff d sub. nom. Charles Pzer & Co., 401 F.2d 574 (6th Cir. 1968), cert. denied, 394 U.S. 920 (1969) (patents); Michael Anthony Jewelers, Inc. v. Peacock Jewelry, Inc., 795 F.Supp. 639, 647 (S.D.N.Y. 1992) (copyrights). Inequitable conduct before the Patent and Trademark Ofce will not be the basis of a section 2 claim unless the conduct also involves knowing and willful fraud and the other elements of a section 2 claim are present. Argus Chemical Corp. v. Fibre Glass-Evercoat, Inc., 812 F.2d 1381, 138485 (Fed. Cir. 1987). Actual or attempted enforcement of patents obtained by inequitable conduct that falls short of fraud under some circumstances may violate section 5 of the Federal Trade Commission Act, American Cyanamid Co., supra. Objectively baseless litigation to enforce invalid intellectual property rights may also constitute an element of a violation of the Sherman Act. See Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 113 S. Ct. 1920, 1928 (1993) (copyrights); Handgards, Inc. v. Ethicon, Inc., 743 F.2d 1282, 1289 (9th Cir. 1984), cert. denied, 469 U.S. 1190 (1985) (patents); Handgards, Inc. v. Ethicon, Inc., 601 F.2d 986, 99296 (9th Cir. 1979), cert. denied, 444 U.S. 1025 (1980) (patents); CVD, Inc. v. Raytheon Co., 769 F.2d 842 (1st Cir. 1985) (trade secrets), cert. denied, 475 U.S. 1016 (1986).
Bibliography
Statutory Provisions
35 U.S.C. 101,112, 116, 117, 118, 256, 285.
Federal Regulations
37 CFR 1.56, 1.98, 1.131.
Treatises
Donald Chisum, Patents (Matthew Bender 1978). Carl Moy, Moys Walker on Patents (West 4th ed. 2009). Herbert Hovencamp et al., IP and Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law (Aspen 2002). American Bar Association, Antitrust Law Developments (6th ed. 2007). ABA Section of Antitrust Law, The Antitrust Counterattack in Patent Infringement Litigation (American Bar Association: Chicago 1994). ABA Section of Antitrust Law, Intellectual Property and Antitrust Handbook (American Bar Association: Chicago 1994). 2 William C. Holmes, Intellectual Property and Antitrust Law (Clark, Boardman and Callaghan: New York 1997). 2 Ethan Holmes and Lester Horowitz, Patent Litigation: Procedure & Tactics (Matthew Bender 1998).
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Bibliography
Articles
Alan J. Weinschel, Antitrust and Misuse, in 1 Drafting Licensing Agreements (Micheal A. Epstein and Frank L. Politano eds.) (4th ed. Kluwer: New York 2006). Cono A. Carrano, Cecil E. Key & Brian Su, Rocket Dockets: Coming Soon to a Venue Near You?, Intell. Prop. Today, 10 (December 2006).
Law Journals Part I Best Mode

Dale L. Carson et al., Patent Linchpin for the 21st Century?-Best Mode Revisited, 45 IDEA 267 (2005). Melissa N. McDonough, Note, To Agree, Or Not To Agree: That Is The Question When Evaluating The Best Mode Preferences Of Joint Inventors After Pannu v. Iolab Corp., 80 S. Cal. L. Rev. 151 (Nov. 2006). Donald M. Chisum, Article, Best Mode Concealment And Inequitable Conduct In Patent Procurement: A Nutshell, A Review Of Recent Federal Circuit Cases And A Plea For Modest Reform, 13 Santa Clara Computer & High Tech. L.J. 277 (May 1997).
Inventorship
Antigone Kriss, Note, Misrepresentation of Inventorship and the Inequitable Conduct Defense: PerSeptive Biosystems, Inc. v. Pharmacia Biotech, Inc., 12 Fed. Cir. B.J. 285 (2002).
Prior Art
James B. Gambrell, Article, The Impact of Private Prior Art on Inventorship, Obviousness, and Inequitable Conduct, 13 Fed. Cir. B.J. 425 (2003).
Inequitable Conduct
Kevin Mack, Note, Reforming Inequitable Conduct to Improve Patent Quality: Cleansing Unclean Hands, 21 Berkeley Tech. L.J. 147 (2006). Deirdre L. Conley, Article, Inequitable Conduct: Nobelpharma AB v. Implant Innovations, Inc., 14 Berkeley Tech. 209 (1999).
Bibliography
205
Robert J. Goldman, Article, Evolution Of The Inequitable Conduct Defense In Patent Litigation, 7 Harv. J. Law & Tech. 37 (Fall 1993). Robert A. Migliorini, Article, Lessons For Avoiding Inequitable Conduct And Prosecution Laches In Patent Prosecution And Litigation, 46 IDEA 221 (2006).
Intent & Materiality

Chris Henry, Note, Inequitable Conduct Inequitably Inferred: When Do Patent Applicants Actions Intend to Deceive?, 65 Wash & Lee L. Rev. 1159 (Summer 2008). Elizabeth Peters, Note, Are We Living in a Material World?: An Analysis of the Federal Circuits Materiality Standard Under the Patent Doctrine of Inequitable Conduct, 93 Iowa L. Rev. 1519 (May 2008). James E. Hanft and Stacy S. Kearns, The Return of the Inequitable Conduct Plague: When I Did Not Know Unexpectedly Becomes You Should Have Known, 19 Intell. Prop. & Tech. L.J. 1 (2007). Katherine Nolan-Stevaux, Notes: Inequitable Conduct Claims in the 21st Century: Combating the Plague, 20 Berkeley Tech. L.J. 147 (2005).
Proseuction Laches
Christopher Smith, Comment, The Submarine Defense System Misfires: Patent Prosecution Laches After Symbol Technologies, 40 Gonz. L. Rev. 235 (2004/2005). Kevin G. McBride, Comment, Attributing Knowledge to a Corporation as an Element of Laches in a Suit for Patent Infringement, 80 Nw. U.L. Rev. 698 (Fall 1985). David L. Marcus, Article, Is The Submarine Patent Torpedoed?: Ford Motor Co. v. Lemelson And The Revival Of Continuation Application Laches, 70 Temp. L. Rev. 521 (Summer 1997).
Attorney-Client Privilege
John Drasgeth, Note, Coerced Waiver of the Attorney-Client Privilege for Opinions of Counsel in Patent Litigation, 80 Minn. L. Rev. 167 (November 1985). Matthew R. Rodgers, Note, Patent Law: Attorney-Client Privilege in Patent Litigation: Did the Federal Circuit Go Far Enough with In re Spalding Sports Worldwide?, 55 Okla. L. Rev. 731 (Winter 2002).
206 Bibliography
Todd M. Becker, Note & Comment, Attorney-Client Privilege Versus the PTOs Duty of Candor: Resolving the Clash in Simultaneous Patent Representations, 71 Wash. L. Rev. 1035 (October 1996).
Part II Litigation Abuse

Andrew A. Phillips, Comment, Strengthen Pharmaceutical Patent Rights: Lowering the Cost of Prescription Drugs by Stopping the Reckless Patent Litigation Abuse of Generic Companies, 13 Conn. Ins. L.J. 397 (2006/2007).
Sanctions in Patent Litigation

Thomas F. Cotter, Article, An Economic Analysis of Enhanced Damages and Attorneys Fees for Willful Patent Infringement, 14 Fed. Cir. B.J. 291, (2004/2005).
Part III Walker Process

Christopher R. Leslie, Antitrust and Intellectual Property in Global Context: A Symposium in Celebration of the Work of Lawrence A. Sullivan: The Role Of Consumers In Walker Process Litigation, 13 Sw. J.L. & Trade Am. 281 (2007). David R. Steinman, and Danielle S. Fitzpatrick, Antitrust Counterclaims in Patent Infringement Cases: A Guide to Walker Process and Sham-Litigation Claims, 10 Tex. Intell. Prop. L.J. 95 (2001). Luke McLeroy, Note, In Light of Nobelpharma AB v. Implant Innovations, Inc., Should Walker Process Claims Be Treated as Compulsory or Permissive Counterclaims to Patent Infringement Litigation?, 22 Rev. Litig. 157, (Winter 2003). James B. Kobak Jr., Developments: The Doctrine That Will Not Die: Nobelpharma, Walker Process, and the Patent-Antitrust Counterclaim, 13 Antitrust Aba 47 (Fall 1998).
Standard-Setting Organizations
David Alban, Note, Rambus v. Infineon: Patent Disclosures in StandardSetting Organizations, 19 Berkeley Tech. L.J. 309 (2004).
Bibliography
207
Nicos L. Tsilas, Toward Greater Clarity and Consistency in Patent Disclosure Policies in a Post-Rambus World, 17 Harv. J. Law & Tech. 475 (2004). Janice M. Mueller, Symposium, Patent System Reform: Patent Misuse Through the Capture of Industry Standards, 17 Berkeley Tech. L.J. 623 (2002).
Patent Misuse
Robin C. Feldman, The Insufficiency of Antitrust Analysis for Patent Misuse, 55 Hastings L.J. 399 (2003). Daniel P. Homiller, Patent Misuse in Patent Pool Licensing: From National Harrow to the Nine No-Nos to not Likely, Duke L. & Tech. Rev. 7 (2006). Brett Aaron Mangrum, Patent MisuseA Questionable Permission of Licensing Arrangments That Tie Down the Equitable Scales, 60 SMU L. Rev. 307 (2007). Potenza et al., Patent Misuse-The Critical Balance, A Patent Lawyers View, 15 Fed. Cir. B.J. 69 (2005).
Royalties
Lawrence Schlam, Article, Compulsory Royalty-Free Licensing As An Antitrust Remedy For Patent Fraud: Law, Policy And The Patent-Antitrust Interface Revisited, 7 Cornell J. L. & Pub. Poly 467 (Winter 1998). Michael Koenig, Patent Royalties Extending Beyond Expiration: An Illogical Ban from Brulotte to Scheiber, 2003 Duke L. & Tech. Rev. 5 (Winter 2003). Mark A. Lemley and Carl Shapiro, Symposium, Frontiers of Intellectual Property: Patent Holdup and Royalty Stacking, 85 Tex. L. Rev. 1991 (June 2007). Gregory J. Sidak, Article, Holdup, Royalty Stacking, and the Presumption of Injunctive Relief for Patent Infringement: A Reply to Lemley and Shapiro, 92 Minn. L. Rev. 714 (Feb. 2008).
Use of Juries
Gregory D. Leibold, Comment, In Juries We Do Not Trust: Appellate Review of Patent-Infringement Litigation, 67 U. Colo. L. Rev. 623 (Summer 1996). Louis L. Wu, Comment, Enhanced Damages for Willful Patent InfringementAn Issue for Judge or Jury?, 33 U.S.F. L. Rev. 435 (Spring 1999).
208 Bibliography
Counterclaims
Teague I. Donahey, Article, Antitrust Counterclaims In Patent Infringement Litigation: Clarifying The Supreme Courts Enigmatic Mercoid Decision, 39 IDEA 225 (1999). Suzanne K. Brown, Comment, Omission Possible: Nobelpharma v. Implant Innovations Makes Material Omissions in Patent Applications a Possible Source of Liability for Antitrust Counterclaims, Iowa J. Corp. L. 179 (Fall 1999). S.W. ODonnell, Article, Unified Theory of Antitrust Counterclaims in Patent Litigation, 9 Va. J.L. & Tech. 8 (Summer 2004).
Table of Cases
Abbott Laboratories v. Brennan, 952 F.2d 1346 (Fed. Cir. 1991), cert. denied, 112 S. Ct. 2993 (1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139n29, 176n10 Abbott Laboratories v. Geneva Pharms., Inc., 182 F.3d 1315 (Fed. Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27n44 A.B. Dick Co. v. Burroughs Corp., 798 F.2d 1392 (Fed. Cir. 1986) . . . . . . . . . . . 23n10 A.C. Aukerman Co. v. R.L. Chaides Constr., 960 F.2d 1020 (Fed. Cir. 1992), on remand, 29 U.S.P.Q.2D (BNA) 1054 (N.D. Cal. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44n132, 62n1, 94n63 Adarg v. Fishof, 286 F.3d 1346 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11n6 Aetna Ins. Co. v. Paddock, 301 F.2d 807 (5th Cir. 1962) . . . . . . . . . . . . . . . . . . . 41n116 Agfa Corp. v. Creo Prods. Inc., 451 F.3d 1366 (Fed. Cir. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49n10, 50n15, 137n14, 138n20 Akron Polymer Container Corp. v. Exxel Container, Inc., 148 F.3d 1380 (Fed. Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30n59 Allen Archery, Inc. v. Browning Mfg. Co., 819 F.2d 1087 (Fed. Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38n104 Allen Engineering Corp. v. Bartell Industries, 299 F.3d 1336 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8n31 Aluminum Co. of America; United States v., 148 F.2d 416 (2d Cir. 1945) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115n35, 177n11 Aluminum Co. of America; United States v., 91 F.Supp. 333 (S.D.N.Y. 1950) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95n69 American Cyanamid Co., 72 F.T.C. 623 (1967), aff d sub. nom., 202 American Cyanamid Co. v. Federal Trade Commission, 363 F.2d 757 (6th Cir. 1966). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55n7 Ameritek, Inc. v. Carolina Lasercut Corp., 42 U.S.P.Q.2d 1411 (Fed. Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18n51, 27n41 Amgen v. Chugai Pharm. Co., 927 F.2d 1200 (Fed. Cir. 1991), cert. denied, 112 S. Ct. 169 (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11n10, 16n38 Amsted Indus. v. Buckeye Steel Castings Co., 23 F.3d 374 (Fed. Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78n24 Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) . . . . . . . . . . . . . . . . . . . . . . . 49n7 Andis Clipper Co. v. Oster Corp., 481 F.Supp. 1360 (D. Wis. 1979) . . . . . . . . . . 70n42 Antonious v. Spalding & Evenflo Cos., 275 F.3d 1066 (Fed. Cir. 2002) . . . . . . . . 66n18 Arcade, Inc. v. Minnesota Mining & Mfg. Co., 1991 U.S. Dist. LEXIS 19768 (E.D. Tenn. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119n57 Argus Chemical Corp. v. Fibre Glass-Evercoat, Inc., 812 F.2d 1381 (Fed. Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202 209
210
Table of Cases Ariad Pharms., Inc. v. Eli Lilly & Co., 560 F.3d 1366 (Fed. Cir. 2009) . . . . . . . . . . 10n3 Arkansas Carpenters Health and Welfare Fund v. Bayer AG (In Re Ciprofloxacin Hydrochloride Litigation), Appeal No. 05-2851 (2nd Cir. July 6, 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112n12 Ark Carpenters Health & Welfare Fund v. Bayer A.G., 544 F.3d 1323 (Fed. Cir. 2008) cert. denied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112n10 Arthrocare Corp. v. Smith & Nephew, Inc., 406 F.3d 1365 (Fed. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138n23 Ar-Tik Sys v. Dairy Queen, 302 F.2d 496 (3d Cir. 1962) . . . . . . . . . . . . . . . . . . . . 94n57 Asahi Glass Co. v. Pentech Pharm., Inc., 289 F.Supp.2d 986 (N.D.Ill. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111n7 Asberry v. United States Postal Service, 692 F.2d 1378 (Fed. Cir. 1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76n13 ASM Am., Inc. v. Genus, Inc., 2002-1 Trade Cas. (CCH) 73, 573 at 92, 685 (N.D.Cal. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136n13 Aspinall Mfg. v. Gill, 32 F. 697 (C.C.D.N.J. 1887) . . . . . . . . . . . . . . . . . . . . . . . . 104n130 Atari, Inc. v. JS&A Group, 747 F.2d 1422 (Fed. Cir. 1984) . . . . . . . . . . . . . . . . . 139n28 Atari Games Corp. v. Ninetendo of N. Am. Inc., 879 F.2d 1572 (Fed. Cir. 1990) . . . . . . . . . . . . . . . . . . . 103n125, 104n128, 104n129, 104n130, 174n7 Atlas Powder Co. v. E.I. DuPont De Nemours & Co., 750 F.2d 1569 (Fed. Cir. 1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40n110 Automatic Radio Mfg. Co. v. Hazeltine Research, Inc., 176 F.2d 799 (1st Cir. 1949) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102n114 Automatic Radio Mfg Corp. v. Hazeltine Research, 339 U.S. 827 (1950) . . . . 105n134 Automobile Mfrs. Assn; United States v., 307 F.Supp. 617 (C.D. Cal. 1969) appeal dismissed sub nom, . . . . . . . . . . . . . . . . . . . . . . . 182n23, 199 Ball Corp. v. Xidex Corp., 9 U.S.P.Q. 1491 (D. Colo. 1988) . . . . . . . . . . . . . . . . 45n140 Barber-Colman Co. v. National Tool Co., 136 F.2d 339 (6th Cir. 1943). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196n33 Barr Rubber Prods. v. Sun Rubber Co., 277 F.Supp. 484 (S.D.N.Y. 1967) affd in part and revd in part, 424 F.2d 1114 (2nd Cir. 1970) . . . . . . . . . . . . . . 96n72 Bass, In re, 474 F.2d 1276, 177 U.S.P.Q. 178 (C.C.P.A. 1973) . . . . . . . . . . . . . . . . . . .155 Bauer & Cie. v. ODonnell, 229 U.S. 1, 33 S. Ct. 616, 57 L.Ed. 1041 (1913) . . . . 92n41 Baxter Intl, Inc. v. McGaw, Inc., 149 F.3d 1321 (Fed. Cir. 1998) . . . . . . . . . . . . . 29n53 Baxter Travenol Labs, In re, 952 F.2d 388 (Fed. Cir. 1991) . . . . . . . . . . . . . . . . . . 25n22 Bayer AG v. Housey Pharm., 228 F.Supp.2d 467 (D.Del. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89n22, 95n64, 98n81 Bayer AG v. Schein Pharmaceuticals, Inc., 301 F.3d 1306 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12n15 B.B. Chemical Co. v. Ellis, 314 U.S. 495 (1942) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86n3 B. Braun Medical v. Abbot Laboratories, 124 F.3d 1419 (Fed. Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88n16, 94n59, 103n120, 134n1 Beacon Theatres, Inc. v. Westover, 359 U.S. 500 (1959). . . . . . . . . . . . . . . 49n11, 50n14 Beal Corp. Liquidating Trust v. Valleylab, Inc., 927 F.Supp. 1350 (D. Colo. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90n29 Beckman Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547 (Fed. Cir. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78n24
Table of Cases 211 BelaSeating Co. v. Poloron Prods., Inc., 438 F.2d 733 (7th Cir. 1971), cert. denied Poloron Products, Inc. v. BelaSeating Co., 403 U.S. 922 (1971) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102n109 BelaSeating Co. v. Poloron Products, Inc., 297 F.Supp. 489 (D. Ill.1968) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102n110 Beltone Electronics Corp., 100 F.T.C. 68 (1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .197 Benger Labs. Ltd. v. R.K. Laros Co., 209 F.Supp. 639, 135 U.S.P.Q. 11 (E.D. Pa. 1962) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .165 Berlenbach v. Anderson & Thompson Ski Co., 329 F.2d 782 (9th Cir. 1964). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86n5, 90n28, 91n31 Besser Mfg. Co.; United States v., 96 F.Supp. 304 (E.D. Mich. 1951) . . . . . . . . . . 97n74 Binks Mfg. Co. v. Ransburg Electro-Coating Corp., 122 U.S.P.Q. (BNA) 74, 88 (S.D.Ind. 1959), affd in part revd in part, 281 F.2d 252 (7th Cir. 1960) cert. dismissed, 366 U.S. 211 (1966) . . . . . . . . . . . . . . . . . . . . 105n137 Binks Mfg. Co. v. Ransburg Electro-Coating Corp., 281 F.2d 252 (7th Cir. 1960). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96n72 Biodex Corp. v. Loredan Biomedical, Inc., 946 F.2d 850 (Fed. Cir. 1991). . . . . . 76n15 Boehringer Ingelheim Vetmedica, Inc. v. Schering-Plough Corp., 68 F.Supp.2d 508 (D.N.J. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30n56 Bogese II, In re, 303 F.3d 1362 (Fed. Cir. 2002). . . . . . . . . . . . . . . . . . . . . . . . . . . 44n133 Boggild v. Kenner Prods., 776 F.2d 1315 (6th Cir. 1985) . . . . . . . . . . . . . . . . . . . . 94n57 Boston Scientific Corp. v. Schneider (Europe) AG, 983 F.Supp. 245 (D. Mass 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135n6 Boston Store of Chicago v. American Graphophone Co., 246 U.S. 8, 38 S. Ct. 257, 62 L.Ed. 551 (1918) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92n41 Bourns, Inc. v. Raychem Corp., 331 F.3d 704 (9th Cir. 2003) . . . . . . . . . . . . . . . 122n77 Braintree Laboratories, Inc. v. Schwarz Pharma, Inc., Fed. Cir. App. No. 08-1556, 568 F.Supp.2d 487 (D. Del. 2008) . . . . . . . . . . . . . . . . . . . 127n106 Brano Indept. Living Aids, Inc. v. Acorn Mobility Sorus. LTD., 394 F.3d 1348 (Fed. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22n6 Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp, 93 F.Supp.2d 1255 (S.D. Ga. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69n39 Brasseler USA I, L.P. v. Stryker Sales Corp., 267 F.3d 1370 (Fed. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8n28, 27n40, 36n82 Braun Inc. v. Dynamics Corp. of America, 975 F.2d 815 (Fed. Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37n95 Bristol-Meyers Squibb Co. v. Ben Venue Lab., 90 F.Supp.2d 540 (D.N.J. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145n5 Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11n11, 28n46 Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1, 16 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187, 198 Broadcom Corp. v. Qualcomm Inc., 2007 WL 874 (3d Cir. September 4, 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130n114 Brooks Furniture Mfg. v. Dutailier Intl, Inc., 393 F.3d 1378 (Fed. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68n26 Brown Well v. Ketham Wire & Mfg. Co. 211 F.2d 121 (9th Cir. 1954). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104n128
212 Table of Cases Brulotte v. Thys, 379 U.S. 29 (1964) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94n56, 101n100 Bruno Indep. Living Aids v. Acorn Mobility Servs., 394 F.3d 1348 (Fed. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57n25 Brunswick Corp. v. Riegel Textile Corp., 752 F.2d 261 (7th Cir. 1984). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118n51, 121n66 B.U. Opstiche v. Hologic, Inc. 909 F.Supp. 162 (S.D.N.Y 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50n12, 123n78, 139n25 Burlington Indus. v. Milliken & Co., 690 F.2d 380 (4th Cir. 1982) . . . . . . . . . . . 134n4 Busiprone Patent Litig., In re, 185 F.Supp.2d 363 (S.D.N.Y. 2002) . . . . . . . . . 128n107 California Motor Transport v. Trucking Unlimited., 404 U.S. 508 (1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124n86, 127n103 Cambridge Products, Ltd. v. Penn Nutrients, Inc., 962 F.2d 1048 (Fed. Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77n22 Carborundum Co. v. Molten Metal Equip. Innovations, 72 F.3d 872 (Fed. Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63n10 Cardizem CD Antitrust Litig., In re, 332 F.3d 896 (6th Cir. 2003) . . . . . . . . . . . . 111n8 Carter v. Variflex Inc., 101 F.Supp.2d 1261 (C.D.Cal. 2000) . . . . . . . . . . . . . . . 103n120 Carter-Wallace Inc. v. United States, 167 U.S.P.Q. 667 (Ct. Cl. 1970) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102n111 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) . . . . . . . . . . . . . . . . . . . . . . . . 48n3, 148n9 Cent. Admixture Pharmacy Servs., Inc. v. Advanced Cardiac Solutions, P.C., 482 F.3d 1347 (Fed. Cir. 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . 56n15 Certain Excimer Lasers, In re, Initial Decision, 9899, 337 TA (12/26/99) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6n14 Certain Set-Top Boxes, In re, Inv. No. 337 TA 454, 134 (2002) . . . . . . . . . . . . 105n133 Charles Pfizer & Co., 401 F.2d 574 (6th Cir. 1968), cert. denied, 394 U.S. 920 (1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202 Chemcast Corp. v. Arco Ind. Corp., 913 F.2d 923 (Fed. Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15n36, 17n44 Chemical Engineering Corp. v. Essef Industries, Inc., 795 F.2d 1565 (Fed. Cir. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75n6 Chen; United States v., 99 F.3d 1495 (9th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . 81n4 Chevron Corp., 140 FTC 100 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129n112 Chiron Corp. v. Genentech, Inc., 268 F.Supp.2d 1139 (D. Cal. 2002) . . . . . . . . 44n131 Choat v. Rome Indus. Inc., 462 F.Supp. 728 (N.D. Cal. 1978) . . . . . . . . . . . . . . . . 80n1 Christianson v. Colt Industries Operating Corp., 486 U.S. 800 (1988) . . . . . . . 139n27 Chromalloy American Corp. v. Alloy Surfaces Co., 339 F.Supp. 859, 173 U.S.P.Q. 295 (D. Del. 1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155, 158, 160 Ciba-Geigy Ltd., 123 FTC 842 (1997)(Ciba/Sandoz) . . . . . . . . . . . . . . . . . . . . . . 100n99 Ciprofloxacin Hydrochloride Antitrust Litig., In re, 363 F.Supp.2d 514 (E.D.N.Y. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111n7 Ciprofloxacin Hydrochloride Antitrust Litig., In re, 2008-1097 (Fed. Cir., Oct. 15, 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112n9 City of New York v. United States, 397 U.S. 248 (1970) modified sub nom, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182n23, 199 Clark, In re, 522 F.2d 623, 187 U.S.P.Q 209 (C.C.P.A. 1975) . . . . . . . . . . . . . . 157, 160 Clark v. United States, 289 U.S. 1, 15 (1933) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81n4
Table of Cases 213 ClearValue Inc. v. Pearl River Polymers, Inc., 2009 U.S. App. LEXIS 6061 (Fed. Cir. Mar. 24, 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67n21 Cleveland v. Policy Management Sys. Corp., 526 U.S. 793 (1999) . . . . . . . . . . . 148n10 CMI v. Verax Sys., 5 U.S.P.Q. 2d 1676 (W.D.N.Y. 1987) . . . . . . . . . . . . . . . . . . . 137n16 Colgate & Co.; United States v., 250 U.S. 300 (1919) . . . . . . . . . . . . . . . . . . . . . . . 93n51 Components, Inc. v. W. Elec. Co., 318 F.Supp. 959 (D.Maine 1970) . . . . . . . . . 137n16 Conceptual Engineering Associates, Inc. v. Aelectronic Bonding, Inc., 714 F.Supp. 1262 (D.R.I. 1989). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6n15, 119n56 Congoleum Indus. v. Armstrong Cork Co., 366 F.Supp. 220 (E.D.Pa 1973) affd, 510 F.2d 334 (3d Cir. 1975) . . . . . . . . . . . . . . . . . . . . . . . . . 98n79 Connell v. Sears, Roebuck & Co., 722 F.2d 1542 (Fed. Cir. 1983) . . . . . . . . . . . . 76n11 Conroy v. Fresh Del Monte Produce, 325 F.Supp.2d 1049 (N.D. Cal 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140n33 Consolidated Aluminum Corp. v. Foseco Inc., 910 F.2d 804 (Fed. Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . .12n18, 18n47, 31n68, 43n125, 69n32, 165 Cook Inc. v. Boston Scientific Corp., 2002-1 Trade Cas. (CCH) 73,626, at 93,067 (N.D. Ill.2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91n35 Cordis Corp. v. Boston Sci. Corp., 188 Fed. Appx. 984 (Fed. Cir. 2006) . . . . . . . 24n15 Cornetta v. United States, 851 F.2d 1372 (Fed. Cir. 1988) (en banc) . . . . . . . . . . . 62n3 C.R. Bard Inc. v. Mc Systems, Inc., 157 F.3d 1340 (Fed. Cir. 1998) . . . . . . 4n3, 115n39 Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253 (Fed. Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29n56, 151 Crown Operations Intern. Ltd. v. Solutia, Inc., 289 F.3d 1367 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11n5 Crown Zellerbach Corp.; United States v., 141 F.Supp. 118 (N.D.Ill 1956) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103n126 CSU, L.L.C. v. Xerox Corp. (In re Independent Serv. Orgs. Antitrust Litig.), 203 F.3d 1322 (Fed. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123n79 CTS Corp. v. Electro Materials Corp., 476 F.Supp. 144 (S.D.N.Y. 1979). . . . . . . . 74n1 Cummer-Graham Co. v. Straight Side Basket Corp., 142 F.2d 646 (5th Cir.) cert. denied, 323 U.S. 726 (1944) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196n33 CVD, Inc. v. Raytheon Co., 769 F.2d 842 (1st Cir. 1985) . . . . . . . . . . . 121n67, 125n89, 127n99, 202 Dale Electronics v. R.C.L. Electronics, 488 F.2d 382, 180 U.S.P.Q. 225 (1st Cir. 1973) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .155 Dana Corp. v. IPC Ltd. Partnership, 860 F.2d 415 (Fed. Cir. 1988) . . . . . . . . . . . 15n36 Dawson Chem, v. Rohm & Haas Co., 448 U.S. 175 (1980) . . . . . . . . . . . . . . . . . . 87n11 Dayco Prods. Inc. v. Total Containment, Inc., 329 F.3d 1358 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7n25, 154 In re DDAVP Direct Purchaser Antitrust Litigation, 2009 WL 3320504 (2nd Cir. 2009) . . . . . . . . . . . . . . . . . . . . . 41n115, 120n60, 121n68 Dell Computer Corp., 121 FTC 616 (1996)(consent order) . . . . . . . . . . . . . . . 129n110 Dentsly International Inc.; United States v., 399 F.3d 181 (3d Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9192n39 Detection Sys., Inc. v. Pittway Corp., 96 F.R.D. 152 (W.D.N.Y.1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80n1 Digeo, Inc. v. Audible, Inc. 505 F.3d 1362 (Fed. Cir. 2007) . . . . . . . . . . . . . . . . . . . 75n3
214 Table of Cases Digidyne Corp. v. Data General Corp., 734 F.2d 1336 (9th Cir. 1984) (requisite economic power is presumed from copyright), cert. denied, 473 U.S. 908 (1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176n10 Digital Control Ind. v. Charles Machine Works, 437 F.3d 1309 (Fed. Cir. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21n3, 42n120 DiLeo v. Ernst & Young, 901 F.2d 624 (7th Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . 56n14 Dippin Dots, Inc. v. Mosey, 476 F.3d 1337 (Fed. Cir. 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7n22, 21n4, 121n64 Dow Chem. Co. v. Exxon Corp., 139 F.3d 1470 (Fed. Cir. 1998) . . . . . . . . . . . . . 72n57 Dr. Miles Medical Co. v. John D Park & Sons Co., 220 U.S. 373, 408 (1911) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .196 Du Buit v. Harwell Enterprises, Inc., 540 F.2d 690 (4th Cir. 1976) . . . . . . . . . . . 70n43 Duplan Corp. v. Deering Milliken, Inc., 444 F.Supp. 648 (D.S.C. 1977) . . . . . . . 97n75 East Chicago Machine Tool Corp. v. Stone Container Corp., 181 U.S.P.Q. 744 (N.D. Ill.), modified, 185 U.S.P.Q. 210 (N.D. Ill. 1974) . . . . . . .158 Eastern Railroad Conference v. Noerr Motor Freight, 365 U.S. 127 (1961) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45n139 Eastman Kodak Co. v. Image Technical Services, Inc., 112 S. Ct. 2072 (1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .196 eBay, Inc. v. Bidders Edge Inc., 56 U.S.P.Q.2d (BNA) 1856 (N.D. Cal. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137n17 Ecrix Corp. v. Exabyte Corp., 191 F.R.D. 611 (D. Colo. 2000) . . . . . . . 136n13, 137n17 E.I. DuPont de Nemours & Co.; United States v., 118 F.Supp. 41, 22425 (D.Del. 1953) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97n75, 104n129 E.I. DuPont de Nemours & Co. v. Berkeley & Co., 620 F.2d 1247 (8th Cir.1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122n72 E.I. DuPont de Nemours and Co. v. MacDermid Printing Solutions, LLC., 525 F.3d 1353 (Fed. Cir. 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27n39 Eli Lilly & Co. v. Barr Laboratories Inc., 251 F.3d 955, 58 U.S.P.Q.2d 1865 (Fed. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .165 Elmwood Liquid Products, Inc. v. Singleton Packing Corp., 328 F.Supp. 974, 170 U.S.P.Q. 398 (M.D. Fla. 1971) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24n18, 155 Engel Industries Inc. v. Lockformer Co., 96 F.3d 1398 (Fed. Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13n26,106n142 Environmental Designs Ltd. v. Union Oil Co., 713 F.2d 693 (Fed. Cir. 1983), cert. denied, 464 U.S. 1043 (1984) . . . . . . . . . . . . . . . . . . . . . . 28n50 Environmental Prods., Inc. v. Total Containment, Inc., 43 U.S.P.Q.2d 1288 (E.D. Pa. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54n4, 151 Enzo Biochem, Inc. v. Calgene, Inc., 188 F.3d 1362 (Fed. Cir. 1999) . . . . . . . . . . . 11n9 Ethicon v. U.S. Surgical Corp., 135 F.3d 1456 (Fed. Cir. 1998) . . . . . . . . . . . . . . . . 6n16 Ethyl Corp. v. Hercules Powder Co., 232 F.Supp. 453 (D. Del. 1963) . . . . . . . 104n130 Ethyl Gasoline Corp. v. United States, 309 U.S. 436 (1940) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92n45, 103n122, 196 Evercrete v. H-Capt, Ltd., 429 F.Supp.2d 612 (S.D.N.Y. 2006) . . . . . . . . . . . . . 132n124 Exergen Corp. v. Wal-Mart Stores, Inc., 2006-1491, 2007-1180, slip-op at 22 (Fed. Cir. Aug. 4, 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . 56n14, 56n15, 56n17, 57n19 Ex parte Andresen, 212 U.S.P.Q. 100 (Bd. App. 1981) . . . . . . . . . . . . . . . . . . . . . . . . .155
Table of Cases 215 Federal Trade Commission v. Indiana Federation of Dentists, 476 U.S. 447 (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .187 Federal Trade Commission v. Superior Court Trial Lawyers Association, 493 U.S. 411 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .187 Ferring B. V. v. Barr Labs., Inc., 437 F.3d 1181 (Fed. Cir. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . 22n7, 37n89, 40n112, 41n115, 57n24 Filmtec v. Hydranautics, 67 F.3d 931 (Fed. Cir. 1995) . . . . . . . . . . . . . . . . . . . . . 121n62 Finch v. Hughes Aircraft Co., 926 F.2d 1574 (Fed. Cir. 1991). . . . . . . . . . . . . . . . 76n15 Fischer & Porter Co. v. Corning Glass Works, 61 F.R.D. 321, 181 U.S.P.Q. 329 (E.D. Pa. 1974) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .161 Five Star Mfg. Inc. v. Ramp Lite Mfg. Inc., 44 F.Supp.2d 1149 (D. Kan. 1999). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63n4 FMC Corp. v. Hennessy Industries, Inc., 836 F.2d 521 (Fed. Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24n15, 29n52 FMC Corp. v. Manitowoc Co., 835 F.2d 1411 (Fed. Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7n24, 23n13, 156 Forest Laboratories, Inc. v. Abbott Laboratories, 339 F.3d 1324 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74n2 Forman v. U.S., 767 F.2d 875 (Fed. Cir. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140n37 Fort James Corp. v. Solo Cup Co., 412 F.3d 1340 (Fed. Cir. 2005) . . . . . . . . . . . . . 74n1 Fortner Enterprises v. United States Steel Corp., 394 U.S. 495 (1969) . . . . . . . . . 89n20 Franks Casing Crew & Rental Tools, Inc. v. PMR Technologies, 292 F.3d 1363 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6n18, 26n28 Fresenius United States v. Transonic Systems 207 F.Supp.2d 1009 (N.D. Cal. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71n55 Federal Trade Commission v. Motion Picture Adver. Serv., 344 U.S. 392 (1953) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91n39 Gambro Lundia AB v. Baxter Healthcare Corp., 110 F.3d 1573 (Fed. Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33n72 Gardco Mfg., Inc. v. Herst Lighting Co., 820 F.2d 1209 (Fed. Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18n50, 49n10, 50n15, 137n14 Gasser Chair Co. v. Infanti Chair Mfg. Corp., 60 F.3d 770 (Fed. Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63n7 Gemveto Jewelry Co. v. Lambert Bros., Inc., 542 F.Supp. 933, 216 U.S.P.Q. 976 (S.D.N.Y. 1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29n55, 153, 160 Gen. Cinema v. Buena Vista Distrib., 681 F.2d 594 (9th Cir. 1982) . . . . . . . . . . . 92n45 Genentech, Inc. v. Regents of the Univ. of California, 143 F.3d 1446 (Fed. Cir. 1998), vacated on other grounds, 527 U.S. 1031 (1999) . . . . . . . . . . 135n7 General Electric Co.; United States v., 80 F.Supp. 989, 10056 (S.D.N.Y. 1948) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95n69 General Electric Co.; United States v., 82 F.Supp. 753 (D.N.J. 1949) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95n69, 104n131 General Electric Co.; United States v., 272 U.S. 476 (1926) . . . . . . . . . . . 93n47, 196n33 General Electro Music Corp. v. Samick Music Corp., 19 F.3d 1405 (Fed. Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31n67, 41n118 General Motors Corp.; United States v., Civ. No. 93-530 (D. Del., filed Nov. 16, 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183n24
216
Table of Cases General Talking Pictures v. Western Electric, 304 U.S. 175, affd on rehg, 305 U.S. 124 (1938) . . . . . . . . . . . . . . . . . . . . . . . . . . . 102n115, 103n117 Georgia-Pacific Corp. v. United States Plywood Corp., 318 F.Supp. 1116 (S.D.N.Y. 1970) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98n84 GFI, Inc. v. Franklin Corp., 265 F.3d 1268 (Fed. Cir. 2001) . . . . . . . . . . . . . . . . . 28n49 Gillette Co. v. S.C. Johnson & Son Inc., 919 F.2d 720 (Fed. Cir. 1990) . . . . . . . . . 7n27 Glaxo Inc. v. Novopharm Ltd., 52 F.3d 1043 (Fed. Cir. 1995) . . . . . . . . . . . . . . . 14n27 Globespanvirata, Inc. v. Texas Instruments., 2006-1 Trade Cas. (CCH) 75, 229, at 104,724 (D.N.J. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113n22 Golan v. Pingle Enter., Inc., 310 F.3d 1360 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116n41, 126n95, 126n97 Golden Bridge Technology v. Nokia Inc., 416 F.Supp.2d 525 (E.D. Tex 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115n33 Golden Hour Data Systems, Inc. v. emsCharts Inc., 2009 U.S. Dist. LEXIS 30108 (E.D.Tex. 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . 28n47 Golden Valley Microwave Food, Inc. v. Weaver Popcorn Co., Inc., 837 F.Supp. 1444 (N.D. Ind. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29n56 Gould v. Control Laser Corp., 462 F.Supp. 685 (M.D. Fla. 1978) affd in part and appeal dismissed in part, 650 F.2d 617(5th Cir. 1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115n31, 131n118 GP Indus. v. Eran Indus., 500 F.3d 1369 (Fed. Cir. 2007) . . . . . . . . . . . . . . . . . . . 71n52 Graco, Inc. v. Binks Manufacturing Co., 60 F.3d 785 (Fed. Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12n17, 15n33 Grand Caillou Packing Co., 65 F.T.C. 799 (1964), affd in part & revd in part sub nom, . . . . . . . . . . . . . . . 101n105, 101n106, 102n107 Greenwood v. Seiko Instruments & Electronics Ltd., 711 F.Supp. 30, 13 U.S.P.Q.2d 1245 (D. D.C. 1989), vacated in part, revd in part, 900 F.2d 238, 14 U.S.P.Q.2d 1474 (Fed. Cir. 1990), on remand, 19 U.S.P.Q.2d 1862 (D. D.C. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42n124 Grinnell Corp.; United States v., 384 U.S. 563 (1966). . . . . . . 115n36, 116n40, 177n11 Grumman Sys. Support v. Data Gen. Corp., 125 F.R.D. 160 (N.D. Cal 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134n4 Halliburton Co. v. Schlumbarger Tech. Corp., 925 F.2d 1425 (Fed. Cir. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25n21, 37n93 Handgards, Inc. v. Ethicon, Inc., 601 F.2d 986 (9th Cir. 1979), cert. denied, 444 U.S. 1025 (1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202 Handgards, Inc. v. Ethicon, Inc., 743 F.2d 1282 (9th Cir. 1984), cert. denied, 469 U.S. 1190 (1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124n83, 202 Handgards Inc. v. Ethicon, Inc., 601 F.2d 986 (9th Cir. 1979) . . . . . . . . . . . . . . 118n51 Harito, In re, 847 F.2d 801, 6 U.S.P.Q.2d 1930 (Fed. Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .156 Hartford Empire Co. v. United States, 323 U.S. 386 (1945). . . . . . . . . . . . . . . . . . 95n68 H.B. Fuller Co. v. National Starch and Chemical Corp., 689 F.Supp. 923, 7 U.S.P.Q.2d 1753 (D. Minn. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39n106 Heany, In re, 1911 C.D. 138, 180 (1911) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157, 158 Hemstreet v. Spiegel, Inc., 851 F.2d 348 (Fed. Cir. 1988). . . . . . . . . . . . . . . . . . . . 99n93 Hennessy Indus. v. FMC Corp., 779 F.2d 402 (7th Cir. 1985). . . . . . . . . . . . . . . 123n77
Table of Cases 217 Hercules v. Exxon Corp., 434 F.Supp. 136 (D. Del. 1977)) . . . . . . . . . . . . . . . . . . . 80n1 Hewlett-Packard Co. v. Bausch & Lomb Inc., 882 F.2d 1556 (Fed. Cir. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43n128 Hewlett-Packard v. Genrad, Inc., 882 F.Supp. 1141 (D. Mass. 1995) . . . . . . . . . 136n13 High Concrete Structures, Inc. v. New Enter. Stone & Lime Co., 377 F.3d 1379 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48n6 Hoffman-La Roche, Inc. v. Promega Corp., 323 F.3d 1354, 66 U.S.P.Q.2d 1385 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .154 Hoffmann La Roche, Inc. v. Invamed Inc., 213 F.3d 1359 (Fed. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66n16 Holmes Group v. Vornado Air Circulation Systems, 535 U.S. 826 (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140n31 Howes v. Medical Components, Inc., 761 F.Supp. 1193 (D. Pa. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78n26 Hughes v. Novi American, Inc., 724 F 2d. 122 (Fed. Cir. 1984) . . . . . . . . . . . . . . . 75n5 Hull v. Brunswick, 704 F.2d 1195 (10th Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . 94n60 Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318 (Fed. Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71n52, 72n59 Hunter Douglas. Inc. v. Comfortex Corp., 44 F.Supp.2d 145 (N.D.N.Y. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136n13 Hutzler Bros. v. Sales Affiliates, 164 F.2d 260 (4th Cir. 1947) . . . . . . . . . . . . . . . . 99n93 Hybritech, Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367 (Fed. Cir. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12n12, 15n32 Hycor Corp. v. The Schlueter Co., 740 F.2d 1529, 222 U.S.P.Q. 553 (Fed. Cir. 1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .154 Hydranautics v. FilmTec Corp., 70 F.3d 533 (9th Cir. 1995). . . . . . . . . . 126n92, 135n6 Hydril Co. LP and Hydril UK, Ltd. v. Grant Pride Co. LP and Grant Prideco. Inc., 474 F.3d 1344 (Fed. Cir. 2007) . . . . . . . . . . . . . . 123n81, 124n87 IBM; United States v., 163 F.3d 737 (2d Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . 105n135 Ill. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28 (2006) . . . . . . . . . . . . . 87n9, 89n23 Image Technical Services v. Eastman Kodak Co., 125 F.3d 1195 (9th Cir. 1997). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123n80 Imperial Chemical Ind.; United States v., 100 F.Supp. 504 (S.D.N.Y. 1951) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106n144, 130n115 Implant Innovations Inc. v. Nobelpharma AB, 930 F.Supp. 1241 (N.D. Ill. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137n16 Independent Serv. Orgs. Antitrust Litig., In re, 964 F. Supp 1479 (D.Kan. 1997) affd, 203 F.3d 1322 (Fed. Cir. 2000) . . . . . . . . . . . . . 102n111, 123n79 Indium Corp. v. Semi-Alloys, Inc., 781 F.2d 879 (Fed. Cir. 1985) . . . . . . . . . . . 121n65 Info-Hold, Inc. v. Trusonic, Inc., 2008 U.S. Dist. LEXIS 91418 (S.D. Ohio 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80n1 Informatica Corp. v. Business Objects Data Integration, Inc., 489 F.Supp.2d 1075 (N.D. Cal. 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69n35 Inland Steel Co. v. LTV Steel Co., 364 F.3d 1318 (Fed. Cir. 2004) . . . . . . . . . . . . 68n30 Innomend Labs v. Alza Group, 368 F.3d 148 (2d. Cir. 2004) . . . . . . . . . . . . . . 101n103 Innotron Diagnostics, In re, 800 F.2d 1077 (Fed. Cir. 1986) . . . . . . . . . 136n12, 137n17 Insultherm, Inc. v. Tank Insulation Intl, 54 F.3d 731 (Fed. Cir. 1995) . . . . . . . . 23n13
218
Table of Cases Intel Corp. Microprocessor Antitrust Litig., In re, 2008 WL 2310288 (D. Del. June 4, 2008). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80n2 Intergraph Corp. v. Intel Corp., 89 Fed. Appx. 218 (Fed. Cir. 2004) . . . . . . . . 107n148 Intermountain Research and Engg Co. v. Hercules Inc., 171 U.S.P.Q. 577 (C.D. Cal. 1971) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158 International Salt Co. v. United States, 332 U.S. 392 (1947) . . . . . . . . . . . . . . . . 196n34 International Wood Processors v. Power Dry, 792 F.2d 416 (4th Cir. 1986). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104n127 Intl. Mfg. v. Landon, Inc., 336 F.2d 723 (9th Cir. 1964) . . . . . . . . . . . . . . . . . . . 105n137 Intl Nickel Co. v. Ford Motor Co., 166 F.Supp. 551 (S.D.N.Y. 1958) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97n76 IXYS Corp. v. Advanced Power Tech., Inc., 321 F.Supp.2d 1156 (D. Cal. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63n5 J.A. LaPorte, Inc. v. Norfolk Dredging Co., 787 F.2d 1577 (Fed. Cir. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28n45, 120n58 Jefferson Parish Hospital District No. 2 v. Hyde, 466 U.S. 2, 16 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89n21, 176n10 Jerrold Electronics Corp.; United States v., 187 F.Supp. 545 (E. D. Pa. 1960), affd per curiam 365 U.S. 567 (1961) . . . . . . . . . . . . . . . . 144n1, 193 J.G. Peta, Inc. v. Club Protector, Inc., 65 Fed. Appx. 724 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76n8 Joblove v. Barr Labs., Inc. (In re Tamoxifen Citrate Antitrust Litig.), 429 F.3d 370 (2d Cir. 2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111n7 Jones Knitting Corp. v. Morgan, 361 F.2d 451 (3d Cir. 1966) . . . . . . . 115n30, 131n119 J.P. Stevens & Co., Inc. v. Lex Tex Ltd., Inc., 747 F.2d 1553 (Fed. Cir. 1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13n19, 13n21,25n23, 160 Judin v. United States, 110 F.3d 780 (Fed. Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . 65n14 Kaiser Found. Health Plan v. Abbott Labs., Inc., 552 F.3d 1033 (9th Cir. 2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27n43, 34n75, 55n11, 120, 127n98 KangaROOS U.S.A., Inc. v. Caldor, Inc., 778 F.2d 1571, 228 U.S.P.Q. 32, 35 (Fed. Cir. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57n22, 154 Kennedy v. Hazelton, 128 U.S. 667, 672 (1888) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26n27 Key Pharmaceuticals, Inc., v. Hereon Laboratories Corp., 981 F.Supp. 299 (D. Del. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32n71 Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 19 U.S.P.Q. 228, 230 (1933) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158 Kimberly-Clark Corp. v. Johnson & Johnson, 745 F.2d 1437 (Fed. Cir. 1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12n16, 35n80 Kingsdown Medical Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23n11, 36,37n94, 38,43n128, 49n9 K-Lath, Div. of Tree Island Wire v. Davis Wire Corp., 15 F.Supp.2d 952 (C.D.Cal. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122n71 KMG Kanal-Mulle-Gruppe Intl v. Inliner U.S.A., 1999-2 Trade Cas. (CCH) 72,628 at 85, 641 (S.D. Tex 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . 101n104 Knoll Pharm. Co. v. Teva Pharms. USA, No. 01-C1646, 2002 WL 31050138, at *46 (N.D. Ill. Sep. 13, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137n15
Table of Cases 219 Kobe, Inc. v. Dempsey Pump Co., 198 F.2d 416 (10th Cir. 1952). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113n18, 127n98 Korody-Colyer v. General Motors, 828 F.2d 1572 (Fed. Cir. 1987) . . . . . . . . . . 139n30 Krampe v. Ideal Indus., 347 F.Supp. 1384 (N.D.Ill. 1972) . . . . . . . . . . . . . 90n28, 91n31 Krasnov; United States v., 143 F.Supp. 1984 (E.D.Pa. 1956), aff d per curiam, 355 U.S. 5 (1957) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114n28 LaBounty Mfg., Inc. v. U.S. Intl Trade Commn, 958 F.2d 1066, 22 U.S.P.Q.2d 1025 (Fed. Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .154 Laitram Corp. v. King Crab, Inc., 244 F.Supp. 9 (D.Alaska 1965), modified, 245 F.Supp. 1019 (D.Alaska1965) . . . . . . . . . 101n105, 101n106, 102n107 Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056 (Fed. Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78n25 Lange v. Commissioner, 352 F.Supp. 166, 176 U.S.P.Q. 162 (D.D.C. 1972) . . . . . . .162 LaPeyre v. Federal Trade Commission, 366 F.2d 117 (5th Cir. 1966). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101n105, 101n106, 102n107 Larson Mfg. Co. of South Dakota, Inc. v. Aluminart Products, Ltd., 2008-1096, -1174, slip-op. at 3 (Fed. Cir. Mar. 18, 2009) . . . . . .28n50, 30n60, 36n85 La Salle St. Press, Inc. v. McCormick & Henderson, Inc., 293 F.Supp. 1004 (N.D.Ill.1968) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101n102 Lear, Inc. v. Adkins, 395 U.S. 653 (1969) . . . . . . . . . . . . . . . . . . . . .97n78, 98n81, 98n86 Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 127 S. Ct. 2705 (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87n8, 93n49, 93n55, 144n2 Lemelson v. Wang Labs Inc., 874 F.Supp. 430 (D. Mass 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44n131, 131n123 Libby-Owens-Ford Co. v. BOC Group, Inc., 655 F.Supp. 897 (D. NJ. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31n69 Liebel-Flarsheim Co. v. Medrad, Inc., 481 F.3d 1371, 82 U.S.P.Q.2d (BNA) 1113 (Fed. Cir. 2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10n3 Life Technologies, Inc. v. Clontech Labs., Inc., 224 F.3d 1320 (Fed. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28n49, 35n81 Lightwave Tech. v. Corning Glass Works, 1991 U.S. Dist. LEXIS 543, 19 U.S.P.Q.2d 1838 (S.D.N.Y. Jan. 18, 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96n72 Line Material Co.; United States v., 1333 U.S. 287 (1948) . . . . . . . . . . . . . . . . . . . 92n42 Line Rothman and Glamourmom v. Target, Civ. Action No. 2008-1375 (Fed. Cir.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74n2 Liquid Dynamics Corp. v. Vaughan Co., Inc., 449 F.3d 1209 (Fed. Cir. 2006) cert denied, 127 S. Ct. 599 (2006) . . . . . . . . . . . . . . . . . . . . . . . . 53n1 Li Second Family Ltd. v. Toshiba Corp., 231 F.3d 1373 (Fed. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30n61 Loctite Corp. v. Fed Pro., Inc. 667 F.2d 577 (7th Cir. 1981) . . . . . . . . . . . . . . . . . 70n44 Loctite Corp. v. Ultraseal Ltd., 781 F.2d 861 (Fed. Cir. 1985) . . . . . . . . . . . . . . . . 71n51 Longwood Mfg. v. Wheelabrator Clean Water Sys., 954 F.Supp. 17,18 (D.Maine 1997). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135n6 LucasArts Entertainment Co. v. Humongous Entertainment Co., 870 F.Supp. 285 (N.D.Cal. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93n53 Lummus Industries, Inc. v. D.M. & E. Corp., 862 F.2d 267 (Fed. Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25n23
220 Table of Cases Mach. Corp. of Am. v. Gullfiber Ab, 774 F.2d 467 (Fed. Cir. 1985) . . . . . . . . . . . 69n36 Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed. Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . .71n50, 88n15, 92n41, 94n59, 103n120 Mannington Mills v. Congoleum Indus., 610 F.2d 1059 (3d Cir. 1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104n127 Manville Sales Corp. v. Paramount Sys. Inc., 917 F.2d 544 (Fed. Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38n98 Mason City Tent & Awning Co. v. Clapper, 144 F.Supp. 754 (W.D. Mo. 1956). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114n29 Masonite Corp.; United States v., 316 U.S. 265 (1942) . . . . . . . . . . . . . . 106n145, 111n4 Massachusetts Board of Registration in Optometry, 110 F.T.C. 549 (1988). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188n27 Massillon-Cleveland-Akron Sign Co. v. Golden State Adver., 444 F.2d 425 (9th Cir. 1971) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99n92 Mathis v. Spears, 857 F.2d 749 (Fed. Cir. 1988). . . . . . . . . . . . . . . . . . . . . . . . . . . . 68n29 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49n7 Mayewsky, In re, 162 U.S.P.Q. 86, 89 (E.D. Va. 1969) . . . . . . . . . . . . . . . . . . . 55n8, 161 McCulloch Gas Processing Co. v. Department of Energy, 650 F.2d 1216 (Temp. Emer. Ct. App. 1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .162 McCullough v. Kammerer Corp., 166 F.2d 759 (9th Cir. 1948) . . . . . . . . 90n28, 91n31 MCI Communications Corp. v. AT&T, 708 F.2d 1081 (7th Cir.), cert. denied, 464 U.S. 891 (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136n11 McNeil-PPC, Inc. v. Procter & Gamble Co., 136 F.R.D. 666 (D. Colo. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80n1 MedImmune, Inc. v. Genentech, Inc., 427 F.3d 958 (Fed. Cir. 2005), revd on other grounds, 2007 WL 43797 (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99n94, 111n7, 130n117, 135n8, 145n6 MedImmune Inc., v. Genentech, Inc., 2003 U.S. Dist. LEXIS 23443 at *15 (C.D. Cal. Dec. 24, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . 99n94 MedImmune Inc v. Genentech Inc., 127 S. Ct. 764 (2007) . . . . . . . . . . . . xiiin6, 98n82 Medronic Navigation Inc. v. Brainlab Medizinische Computersystems GMBH, Civ. No. 98-CV-0172 RPM (D. Colo. Feb. 12, 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70n47 Meehan v. PPD Indus., 802 F.2d 881 (7th Cir.1986) . . . . . . . . . . . . . . . . . . . . . . . 94n57 Merck & Co., Inc. v. Danbury Pharmacal, Inc., 873 F.2d 1418 (Fed Cir 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22n8 Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661 (1944) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68n25, 87n11, 90n24,134n3 Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680 (1944) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68n25, 87n11 Meyers v. Brooks Shoes, 912 F.2d 1459 (Fed. Cir. 1990) . . . . . . . . . . . . . . . . . . . . . 63n6 Mfrs. Aircraft Assn, Inc.; United States v., 1976-1 Trade Cas. (CCH) 60,810 (S.D.N.Y. 1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .199 Mfrs. Aircraft Assn, Inc.; United States v., 31 Op. Atty. Gen. 166 (1917) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113n20 Michael Anthony Jewelers, Inc. v. Peacock Jewelry, Inc., 795 F.Supp. 639 (S.D.N.Y. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202
Table of Cases 221 Microsoft Corp.; United States v., 56 F.3d 1448 (D.C. Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106n142 Microsoft Corp.; United States v., 253 F.3d 34 (D.C. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91n36, 91n 37, 91n 38 105n139 Mikohn Gaming Corp. v. Acres Gaming, Inc., 165 F.3d 891 (Fed. Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71n53, 126n96 Minebea Co. v. Papst, 444 F.Supp.2d 68 (D.D.C. 2006) . . . . . . . . . . . . . . . . . . . . 113n22 Mitsubishi Elec. Corp. v. EMS Tech., 44 U.S.P.Q. 2d (BNA 1904) (N.D. Ill. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50n13, 139n26 Modine Mfg. Co. v. Allen Group, Inc., 917 F.2d 538 (Fed. Cir. 1990), cert. denied, 500 U.S. 918 (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69n40 Modrey v. Am Gage & Mach., 478 F.2d 470 (2nd Cir. 1973) . . . . . . . . . . . . . . . . 94n57 Molins PLC v. Textron Inc., 48 F.3d 1172 (Fed. Cir. 1995) . . . . . . . . . . . . . .21n4, 23n9, 24n16, 25n26, 35n79, 37n92, 155 Monolith Portland Midwest Co. v. Kaiser Aluminum & Chem. Corp., 407 F.2d 288 (9th Cir. 1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31n66, 41n119 Monsanto Co. v. Mycogen Plant Science, Inc., 61 F.Supp.2d 133, 19697 (D. Del. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30n59 Monsanto Co. v. Rohm & Haas Co., 312 F.Supp. 778 (E.D. Pa. 1970), affirmed, 456 F.2d 592 (3d Cir. 1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39n105 Monsanto Co. v. Rohm & Haas Co., 456 F.2d 592 (3d Cir. 1972) . . . . . . . . . . . 40n111 Monsanto Co. v. Scruggs, 459 F.3d 1328 (Fed. Cir. 2006) . . . . . . . . . . . . . . . . . . . 90n27 Monsanto Co. v. Trantham, 156 F.Supp.2d 855 (W.D.Tenn. 2001). . . . . . . . . 103n120 Monsanto v. McFarling, 302 F.3d 1291 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . 103n118 Monsanto v. McFarling, 363 F.3d 1336 (Fed. Cir. 2004) cert denied, 125 S. Ct. 2956 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102n116 Monsanto v. Spray-Rite Serv. Co., 465 U.S. 752 (1984) . . . . . . . . . . . . . . . . . . . . . 93n52 Moraine Prods. v. ICI Am., Inc., 538 F.2d 134, 14548 (7th Cir. 1976) . . . . . . 114n29 Morgan; United States v., 313 U.S. 409, 422 (1941) . . . . . . . . . . . . . . . . . . . . . . . . . . .162 Morse v. Nintendo of America, Inc., 1990 WL 118100, *7, 1990-2 Trade Cases P 69,116, 69116 (N.D.Cal 1990). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116n43 Morton Salt Co. v. G.S. Supplier Co., 314 U.S. 488 (1942) . . . . . . . . . . . . . 86n2, 89n17 Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502 (1917) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86n1, 92n41 Motor Vehicles Mfrs. Assn; United States v., 198283 Trade Cas. (CCH) 65,088 (C.D. Cal. 1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182n23, 199 Mueller Brass Co. v. Reading Industries, Inc., 352 F.Supp. 1357 (D. Pa. 1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68n27 Multiple Litigation Involving Frost Patent, In re, 540 F.2d 601, 191 U.S.P.Q. 241 (3rd. Cir. 1976). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160 National Lead Co.; United States v., 63 F.Supp. 513 n.8 (S.D.N.Y. 1945) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111n3 National Land Co.; United States v., 332 U.S. 319 (1947) . . . . . . . . . . . . . . . . . 106n143 National Lockwasher Co. v. George K. Garrett Co., 137 F.2d 255 (3d Cir. 1943) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90n28, 91n31 National Society of Professional Engineers v. United States, 435 U.S. 679 (1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .187
222
Table of Cases NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187, 188, 198 Nelson, In re, 280 F.2d 172, 126 U.S.P.Q. 242 (C.C.P.A. 1960). . . . . . . . . . . . . . . . . .165 Newburgh Moire Co. v. Superior Moire Co., 237 F.2d 283 (3rd Cir. 1956) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92n44, 196n33 Newell Window Furnishings v. Spring Window Fashions Div., Inc., 53 U.S.P.Q.2d 1302, 1331 (N.D. Ill. 1999) 15 Fed. Appx. 836 (Fed. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29n56 New Wrinkle; United States v., 342 U.S. 371 (1952) . . . . . . . . . . . . . . 92n44, 93n54, 198 Nilssen, In re, 851 F.2d 1401, 7 U.S.P.Q.2d 1500 (Fed. Cir. 1988) . . . . . . . . . . . . . . .162 Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223 (Fed. Cir. 2007) . . . . . . . . . . . . . 42n122 Nilssen v. Osram Sylvania, Inc., 528 F.3d 1352 (Fed. Cir. 2008) . . . . . . . . . . . . . . 30n57, 42n122, 42n124 Nobelpharma Ab v. Implant Innovations, 141 F.3d 1059 (Fed. Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18n48, 117n49, 118n54, 121n63, 122n74, 140n36, 140n37, 140n39 North Am. Phillips Co. v. Stewart Engg Co., 319 F.Supp. 335 (N.D.Cal. 1970) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105n137 Northern Pac. Ry Co. v. United States, 356 U.S. 1 (1958) . . . . . . . . . . . . . . . . . . . 89n19 Northlake Mktg. & Supply v. Glaverbel S.A., 861 F.Supp. 653 (N.D.Ill. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122n71 Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284 (1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .199 Norton v. Curtiss, 433 F.2d 779, 167 U.S.P.Q. 532 (C.C.P.A. 1970) . . . . . . . . . . . . . .158 Novo Indus., L.P. v. Micro Molds Corp., 350 F.3d 1348 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76n17 Novo Nordisk Pharmaceuticals, Inc. v. Bio-Technology General Corp., 424 F.3d 1347 (Fed. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39n107 OddzOn Products, Inc. v. Just Toys, Inc., 122 F.3d 1396, 43 U.S.P.Q.2d 1641 (Fed. Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .155 Omark Industries, Inc. v. Textron, Inc., 688 F.2d 1242 (9th Cir. 1982) . . . . . . . . . 10n2 Ontario Die Co. v. Independent Die Assn, 1992 U.S. App. LEXIS 2627, *7 (Fed. Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77n21 Pall Corp. v. Micron Separations, Inc., 792 F.Supp. 1298 (D. Mass. 1992), affd, in part, modified in part, revd in part, all on other grounds 66 F.3d 1211 (Fed. Cir. 1995), cert. denied 520 US 1115 (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70n46 Pannu v. Iolab Corp., 155 F.3d 1344 (Fed. Cir. 1998). . . . . . . . . . . . . . . . . . . . . . . 15n33 Panther Pumps Equip Co. v. Hydrocraft, Inc., 468 F.2d 225 (7th Cir. 1972). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98n80 Papst Motoren GmbH v. Kanematsu-Gosha (U.S.A.) Inc., 629 F.Supp. 864 (S.D.N.Y. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135n9, 145n6 Paragon Podiatry Lab. v. KLM Lab., 984 F.2d 1182 (Fed. Cir. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37n90, 41n117, 48n4, 57n23 Paramount Pictures, Inc.; United States v., 334 U.S. 131 (1948). . . . . . . . . . . . . 196n34
Table of Cases 223 Parker Rust-Proof Co.; United States v., 61 F.Supp. 805 (E.D. Mich. 1945) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104n130 Parson Podiatry Lab. v. KLM Lab., 984 F.2d 1182 (Fed. Cir. 1993) . . . . . . . . . . . 27n40 Peelers Co. v. Wendt, 260 F.Supp. 193 (W.D. Wash. 1966). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101n105,101n106, 102n107 Pennwalt Corp. v. Akzona, Inc., 570 F.Supp. 1097 (D. Del. 1983), affd 740 F.2d 1573. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69n38 Penn Yan Boats, Inc. v. Sea Lark Boats, Inc., 359 F.Supp. 948, 175 U.S.P.Q. 260 (S.D. Fla. 1972), affd, 479 F.2d 1328, 178 U.S.P.Q. 577 (5th Cir. 1973), cert. denied, 414 U.S. 874 (1974) . . . . . . . . . . . . . . . . . . . . . . . . . . .155 Penn Yan Boats, Inc. v. Sea Lark Boats, Inc., 479 F.2d 1328 (5th Cir. 1973). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25n25, 35n78 PerSeptive Biosystems, Inc. v. Pharmacia Biotech, Inc., 12 F.Supp.2d 69 (D. Mass. 1998), affd 225 F.3d 1315 (Fed. Cir. 2000) . . . . . . 26n33 PerSeptive Biosystems, Inc. v. Pharmacia Biotech, Inc., 225 F.3d 1315 (Fed. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26n32, 26n34, Pharmacia & Upjohn Co. v. Mylan Pharmaceuticals, Inc., 182 F.3d 1356 (Fed. Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69n34 Pharmacia Corp. v. Par Pharm., 417 F.3d 1369 (Fed. Cir. 2005) . . . . . . . . . . . . 43n129 Phillips Petroleum Co. v. Esso Standard Oil Co., 91 F.Supp. 215 (D. Md. 1950) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74n1 Phillips Petroleum Co. v. United States Steel Corp., 673 F.Supp. 1278 (D. Del. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69n37 Pitney Bowes, Inc. v. Mestre, 701 F.2d 1365 (11th Cir. 1983) . . . . . . . . . . . . . . . . 94n57 Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306 (Fed. Cir. 2008) . . . . . . . . . . . . . . . . . . 36n87 Precision Instrument Mfg. Co. v. Auto Maintenance Mach. Co., 324 U.S. 806 (1945) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21n1,2 Princo Corp. v. ITC, No. 07-1386 (Fed. Cir. Apr. 20, 2009) . . . . . . . . . . . . . . . . . 89n23 Proctor & Gamble Co. v. Nabisco, Inc., 3 U.S.P.Q. 2d 1207 (D. Del. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45n139 Professional Real Estate Investors, Inc. v. Columbia Picture Ind., 113 S. Ct. 1920, 508 U.S. 49 (1993) . . . . . . . . . . . . . . . . . . . . . . . 124n85, 127n104,202 Pro-Mold Tool Co. v. Great Lakes Plastics, Inc. 75 F.3d 1568 (Fed. Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4n7, 6n13, 140n34 Publications Intl. v. Western Publg Co. 1994-1 Trade Cas. (CCH) 70, 540 at 71, 933 (N.D. Ill. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . 7n23, 136n10 Purdue Pharma L.P. v. Endo Pharmaceuticals, 77 U.S.P.Q.2d 1767 (Fed. Cir. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22n6 Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66n17, 128n108 Rambus, 2006 FTC Lexis 60 (FTC 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129n111 Rambus Inc. v. Infineon Techs. Ag, 318 F.3d 1081 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64n11, 130n113 Ransburg Elector-Coating Corp. v. Spiller & Spiller, Inc., 489 F.2d 974 (7th Cir. 1973). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96n72, 99n92
224
Table of Cases ReAlco Indus. v. National Ctr. for Health Educ., 812 F.Supp. 387 (S.D.N.Y. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123n78 Recombinant DNA Tech Patent & Contract Litig., 850 F.Supp. 769 (S.D. Ind. 1994). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90n29, 91n32 Refac Intl, Ltd. v. Hitachi, Ltd., 921 F.2d 1247 (Fed. Cir. 1990) . . . . . . . . . . . . . . 77n19 Refac Intl, Ltd. v. Lotus Dev. Corp., 81 F.3d 1576 (Fed. Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38n103, 40n113, 75n7 Regents of the University of California v. Eli Lilly & Co. 119 F.3d 1559 (Fed. Cir. 1997), cert. denied, 523 U.S. 1089 (1998) . . . . . . . . . . . . . . 40n109, 42n121 Roadway Express v. Piper, 447 U.S. 752 (1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78n27 Robinson; United States v., 530 F.2d 1076 (D.C.Cir. 1976) . . . . . . . . . . . . . . . . . 41n116 Robintech Inc. v. Chemidus Wavin, Ltd., 628 F.2d 142 (D.D.C. 1980) . . . . . . 103n125 Rocform v. Acitelli-Standard Concrete Wall, 367 F.2d 678 (6th Cir. 1966). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94n57 Roche Holdings Ltd., 113 F.T.C. 1086 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182n23 Rohm & Haas Co. v. Crystal Chemical Co., 722 F.2d 1556 (Fed. Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43n125 Rohm & Haas v. Biotech, 770 F.Supp. 928 (D. Del. 1991) . . . . . . . . . . . . . . . . . . . 134n5 Roland Mach v. Dresser Industries, 749 F.2d 380 (7th Cir. 1984) . . . . . . . . . . . . 91n39 Rolite, Inc. v. Wheelabrator Envtl. Sys., 958 F.Supp. 992, 1005 (E.D.Pa. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135n9 Rolls-Royce Ltd. v. GTE Valeron Corp., 800 F.2d 1101 (Fed Cir 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53n2, 147n8 Romala Corp. v. United States, 927 F.2d 1219 (Fed. Cir. 1991) . . . . . . . . . . . . . . 76n16 Rothman v. Target Corp., Civ. No. 05-4829, 2008 WL 4559698, at *3 (D.N.J. Oct. 8, 2008). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74n2 Royal Indus. v. St. Regis Paper Co., 420 F.2d 449 (9th Cir. 1969). . . . . . . . . . . . 196n33 Ruiz v. A.B. Chance Co., 234 F.3d 654 (Fed. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . 35n81 Ruscetta, In re, 255 F.2d 687, 118 U.S.P.Q. 101, 104 (C.C.P.A. 1958) . . . . . . . . . . . .155 Samsung Elec. Co. Ltd. v. Rambus, Inc., 398 F.Supp.2d 470 (E.D.Va. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68n31 Sanford Redmond, Inc. v. Mid-America Dairymen, Inc., 29 U.S.P.Q. 2d 1222 (S.D.N.Y. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94n58 Santa Fe-Pomeroy, Inc. v. P&Z Co., 569 F.2d 1084 (9th Cir. 1978) . . . . . . . . . . . 97n75 S. Bravo Sys. v. Containment Techs. Corp., 96 F.3d 1372 (Fed. Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65n15, 76n14 Scheiber v. Dolby Labs, 293 F.3d 1014 (7th Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . 94n61 Schering-Plough Corp. v. Federal Trade Commission, 402 F.3d 1056 (11th Cir. 2005), cert. denied, Federal Trade Commission v. Schering-Plough Corp., 2006 U.S. LEXIS 5128 (June 26, 2006) . . . . . . 111n6, 111n7 Schering-Plough Corp., et. al., In re, FTC Dkt. 9297 (Apr. 2, 2001). . . . . . . . . . . 111n5 SCM Corp. v. Xerox Corp., 645 F.2d 1195 (2d Cir. 1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100n97, 115n37, 116n43 Scripps Clinic & Research Found. v. Genentech, Inc., 927 F.2d 1565 (Fed. Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29n51 Semiconductor Energy Lab. Co. v. Samsung Elecs, Co., 4 F.Supp.2d 473 (E.D.Va. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118n52
Table of Cases 225 Semiconductor Energy Lab. Co. v. Samsung Elecs. Co., 204 F.3d 1368 (Fed. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34n73, 123n82, 131n121, 153 ShafferTool Works v. Joy Mfg. Co., 167 U.S.P.Q. 170 (S.D. Tex. 1970) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16162 Shields Jetco v. Torti, 314 F.Supp. 1292 (D.R.I. 1970) . . . . . . . . . . . . . . . . . . . . . . 94n57 Shun v. Intel Corp., No. 061249 (Fed. Cir. 8/24/07) . . . . . . . . . . . . . . . . . . . . . . . . 6n17 Silva v. Mamula, 1994-1 Trade Cas. (CCH) 70,555 at 71,98788 (E.D.Pa. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122n75, 134n2 Simpson v. Stand 21 S.A., 32 U.S.P.Q. 2d (BNA) 1848 (S.D. Ind. 1994) . . . . . . 137n16 Singer Manufacturing Co.; United States v., 374 U.S. 174 (1963). . . . . . . 130n116, 198 Smithkline Diagnostics v. Helena Labs. Corp., 859 F.2d, 878 (Fed. Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiin5 Sony Elecs. v. Soundview Techs., 157 F.Supp.2d 180 (D. Conn. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115n32, 131n120 Spectra-Physics Inc. v. Coherent, Inc., 827 F.2d 1524 (Fed. Cir. 1987), cert. denied, 484 U.S. 954 (1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13n20 Spectrum Sports v. McQuillan, 506 U.S. 447 (1993) . . . . . . . . 115n38, 116n44, 117n50 SSIH Equip. S.A. v. United States ITC, 713 F.2d 746, 218 U.S.P.Q. 678 (Fed. Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43n127 Standard Oil Co. v. United States, 283 U.S. 163 (1931) . . . . . . . . . . . . . 99n91, 102n108 Stark v. Advanced Magnetics, Inc., 119 F.3d 1551, 43 U.S.P.Q.2d (BNA) 1321, 1325 (Fed. Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26n29 Star Sci., Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357 (Fed. Cir. 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36n83, 37n88 State Indus., Inc., v. Mor-Flo Indus., Inc., 948 F.2d 1573 (Fed. Cir. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76n8, 76n 10, 76n 12 State Oil Co. v. Khan, 522 U.S. 3 (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87n8, 93n48 Steierman v. Connelly, 192 U.S.P.Q. 433 (Bd. Pat. Int. 1975); 192 U.S.P.Q. 446 (Bd. Pat. Int. 1976). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .154 Stephens v. Tech. Intern., Inc., 393 F.3d 1269 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . 74n2 Steward v. Abend, 495 U.S. 207 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101n100 Stillman v. Edmund Scientific Co., 522 F.2d 798 (4th Cir. 1975) . . . . . . . . . . . . . 67n23 Strathayr Instant Lawn Pty., Ltd. v. Gunn, 1993 U.S. App. LEXIS 5579 (Fed. Cir. Mar. 18, 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77n20 Straus v. Victor Talking Machine Co., 243 U.S. 490, 37 S.Ct. 412, 61 L.Ed. 866 (1917) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92n41 Strong v. General Electric Co., 305 F.Supp. 1084, 162 U.S.P.Q. 141 (N.D. Ga. 1969), affd, 434 F.2d 1042, 168 U.S.P.Q. 8 (5th Cir. 1970), cert. denied, 403 U.S. 906 (1971) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158, 160 Stryker Corp. v. Intermedics Orthopedics, 898 F.Supp. 116, 122 (E.D.N.Y. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78n24 Studiengesellschaft Kohle M.B.H.; United States v., 670 F.2d 1122 (D.C. Cir. 1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103n119 Studiengesellschaft Kohle M.B.H. v. Shell Oil Co., 112 F.3d 1561 (Fed. Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98n87 Summit Tech, 63 Fed. Reg. 46,452, 46, 453 (FTC 1998) 127 FTC 208 (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86n5, 114n28 Sunrise Med. HHG v. AirSep Corp., 95 F.Supp.2d 348 (W.D. Pa. 2000). . . . . . . 94n63
226
Table of Cases Symbol Techs., Inc. v. Lemelson Med., Educ. & Research Found., 277 F.3d 1361 (Fed. Cir. 2002); remanded, dist. ct. affd, 422 F.3d 1378 (Fed. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43n129 Symbol Techs., Inc. v. Lemelson Med., Educ. & Research Found., LP, 422 F.3d 1378 (Fed. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43n130 Sys. Div., Inc. v. Teknek, LLC, 298 Fed. Appx. 950 (Fed. Cir. 2008) . . . . . . . . . . 78n27 T&T Geotech. v. Union Pac. Res. Co., 944 F.Supp. 1317 (N.D. Tex. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122n74 Takeda Chem. Indus., Ltd. v. Mylan Labs., Inc., 549 F.3d 1381 (Fed. Cir. 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69n33 Tamoxifen Citrate Antitrust Litig., In re, 466 F.3d 187 (2d Cir. 2006) . . . . . . . 112n10 Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320 (1961) . . . . . . . . . . . . . . . . .197 Tank Insulation Intl v. Insultherm, Inc. 104 F.3d 83 (5th Cir. 1997) . . . . . . . . . 134n6 T.A. Pelsue Co. v. Grand Enterprises, Inc., 782 F.Supp. 1476 (D. Colo. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70n46 Technicon Instruments Corp. v. Alpkem Corp., 866 F.2d 417 (Fed. Cir. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123n77 Telecomm Tech. Servs. v. Siemens Rolm Communs., 295 F.3d 1249 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140n32 Teleflex Inc. v. Ficosa North American Corp., 299 F.3d 1313 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15n34, 16n39 Tennant Co. v. Hako Minuteman Inc., 651 F.Supp. 945 (N.D. Ill. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37n91 Texas Instruments, Inc. v. Hyundai Elecs. Indus., 49 F.Supp.2d 893 (E.D. Tex. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90n26, 90n29, 91n32 Therma-Tru Corp. v. Peachtree Doors Inc., 44 F.3d 988 (Fed. Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38n99 Thurman Indus. Inc. v. Pay N Pak Stores, Inc., 875 F.2d 1369 (9th Cir. 1989). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139n25 TIF Instruments, Inc. v. Colette, 713 F.2d 197 (6th Cir. 1983) . . . . . . . . . 77n18, 78n27 Timken Roller Bearing Co. v. United States, 341 U.S. 593 (1951) . . . . . . . . . . 103n126 T.N. Dickinson v. LL Corp., 227 U.S.P.Q. 145 (D. Conn. 1985) . . . . . . . . . . . . . 45n138 Transco Products Inc. v. Performance Contracting, Inc., 821 F.Supp. 537 (N.D. Ill. 1993), revd in part, vacated in part, & remanded in part, 38 F.3d 551, (Fed. Cir. 1994), cert. denied, 513 U.S. 1151 (1995) . . . . . . . . . . . 13n26 Transmatic, Inc. v. Gulton Indus., Inc., 180 F.3d 1343 (Fed. Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137n18, 138n22 Transparent-Warp Machine Corp. v. Stokes & Smith Co., 329 U.S. 637 (1947) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95n67, 200 Under Seas Indus. Inc. v. Dacor Corp., 833 F.2d 1551 (Fed. Cir. 1987) . . . . . . . 35n80 Unidynamics Corp. v. Automatic Products International, Ltd., 157 F.3d 1311 (Fed. Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31n63 Union Camp Corp. v. Lewis, 385 F.2d 143 (4th Cir. 1967) . . . . . . . . . . . . . . . . . . . . 4n1 Union Carbide Corp. v. Borg-Warner, 550 F.2d 555, 193 U.S.P.Q. 1 (6th Cir. 1977). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .165
Table of Cases 227 Union Carbide Corp. v. Dow Chem. Co., No. 75-G-79, 1981 U.S. Dist. LEXIS 17790 (S.D. Tex. July 8, 1981), affd, 682 F.2d 1136 (5th Cir. 1982). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15n33 Union Oil Co., In re, 138 F.T.C. 1 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126n94 Union Pac. Resources Co. v. Chesapeake Energy Corp., 236 F.3d 684 (Fed. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11n7 United Mine Workers v. Pennington, 381 U.S. 657 (1965) . . . . . . . . . . . . . . . . . 45n139 United States Gypsum Co.; United States v., 333 U.S. 364 (1948) . . . . . 92n42, 92n44, 93n54, 106n146 United States Gypsum Co. v. Natural Gypsum Co., 74 F.3d 1209 (Fed. Cir.1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18n45 United States Industries v. Norton Co., 210 U.S.P.Q. 94, 107 (N.D. N.Y. 1980). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .154 United States Phillips Corp. v. International Trade Commn., 424 F.3d 1179 (Fed. Cir. 2005), cert denied sub nom Princo Corp v. United States Phillips Corp., 126 S. Ct. 2899 (2006) . . . . . . . . . . . . . 89n22, 105n136, 105n137, 107n138,113n21 Unitherm Food Sys., Inc. v. Swift-Eckrich Inc., 375 F.3d 1341 (Fed. Cir. 2004) revd on other grounds, 1265 St. 980 (2006) . . . . . . . . . . . . . 117n50, 122n70, 140n38 University of Rochester v. G.D. Searle & Co., 358 F.3d 916 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10n4 University of West Virginia v. Van Voorhies, 278 F.3d 1288 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26n30, 131n122 Univis Lens Co.; United States v., 316 U.S. 241 (1942) . . . . . . . . . . . . 63n9, 92n45, 196 Upjohn Co. v. Mova Pharm. Corp., 225 F.3d 1306 (Fed. Cir. 2000) . . . . . . . . . . 35n81 USM Corp. v. SPS Techs., 694 F.2d 505 (7th Cir.1982) . . . . . . . . . . . . . . . . . . . 102n111 Valley Drug Co. v. Geneva Pharm., 344 F.3d 1294 (11th Cir. 2003). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111n7, 112n10 Valmet Paper Machinery, Inc. v. Beloit Corp., 895 F.Supp. 1158 (W.D.Wis. 1995). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32n70 van Langenhoven, In re, 458 F.2d 132, 173 U.S.P.Q. 426 (C.C.P.A. 1972) . . . . . . . .155 Velt v. Norton Simon Inc., 425 F.Supp. 774 (S.D.N.Y. 1977) . . . . . . . . . . . . . . . . 94n57 View Engg, Inc. v. Robotic Vision Sys., 208 F.3d 981 (Fed. Cir. 2000) . . . . . . . . 65n13 Virginia Panel Corp. v. MAC Panel Co., 887 F.Supp. 880, 869 (W.D. Va. 1995), affd, 133 F.3d 860 (Fed. Cir. 1997) . . . . . . . . . . . . 71n51, 107n149, 127n100, 136n13 VISX, Inc., 1999 FTC LEXIS 113 (FTC 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86n6 Wahl Instruments, Inc. v. Acvious, Inc., 950 F.2d 1575 (Fed. Cir. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13n24, 14n28, 18n46 Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7n21, 117n45, 202 Wallace Clark & Co. v. Acheson Indus., 401 F.Supp. 637 (S.D.N.Y. 1975) affd, 532 F.2d 846 (2d Cir. 1976) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98n79 Wang Lab. v. Mitsubishi Elecs. Am., 103 F.3d 1571 (Fed. Cir. 1997). . . . . . . . . . 63n10
228 Table of Cases Warner-Jenkinson Co. v. Allied Chemical Corp., 567 F.2d 184 (2d Cir. 1977) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9899n87 Well Surveys v. McCullough Tool, 199 F.Supp. 374 (N.D. Okla. 1961), affd, 343 F.2d 381 (10th Cir. 1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96n72 Well Surveys v. Perfo-log, 396 F.2d 15 (10th Cir. 1968). . . . . . . . . . . . . . . . . . . . . 94n63 Westavco Corp. v. International Paper Co., 23 U.S.P.Q. 2d 1401 (E.D. Va. 1991), affd 991 F.2d 735 (Fed. Cir. 1993) . . . . . . . . . . . . . . . . . . . . . . . 81n3 Western Electric Co. v. Piezo Technology, Inc., 860 F.2d 428, 8 U.S.P.Q.2d 1853 (Fed. Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .162 Winbond Elecs. Corp. v. Intl Trade Commn., 262 F.3d 1363 (Fed. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30n58 Windsurfing International, Inc. v. AMF, Inc., 782 F.2d 995 (Fed. Cir. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87n12, 88n15 W.L. Gore & Assoc. v. Carlisle Corp., 529 F.2d 614 (3d Cir. 1976) . . . . . . . . . 101n100 Xerox Corp., In re, 86 F.T.C. 364 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100n98 Xerox Corp. v. Media Sciences Intern., Inc., 511 F.Supp.2d 372 (S.D.N.Y. 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116n43 Young Dental Mfg. Co. v. Q3 Special Prods., 112 F.3d 1137 (Fed. Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14n30, 17n40, 49n8 Young v. Lumenis, Inc., 492 F.3d 1336 (Fed. Cir. 2007) . . . . . . . . . . . . . . . 21n5, 25n24 Zenith Elecs. Corp. v. Exzec, Inc., 182 F.3d 1340 (Fed. Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72n60, 139n30 Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100 (1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87n7, 90n25, 105n138, 113n19 Zolin; United States v., 491 U.S. 554 (1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81n4
Index
Advisory jury, 13739 Ambush theory and patent infringement, 6364 Anticompetitive effects analysis and intellectual property licensing exclusivity and, 19092 market structure, coordination and foreclosure, 18990 Anticompetitive patent pooling, 106, 11314 Antitrust cases, and misuse contention clauses, 88 counterclaims. See Antitrust counterclaims price restriction and, 92 violations, 18, 50, 87, 113 Antitrust counterclaims, 4950, 78, 109, 121, 13436, 139, 140, 14647 abuse of standard-making process, 12930 antitrust claims against accused and potential infringers, 130 antitrust rule of reason counterclaims, 146 compulsory counterclaim and, 134 litigation strategy and, 146 patentees cartel conduct anticompetitive patent pooling, 11314 boycotts, 11415 sham cross-licenses and settlements, 11012 RICO claims and counterclaims, 13132 single firm abuses of patentee, 115 Handgards claims, 12429 monopoly offenses, elements of, 116 Walker Process claims, 11723 Assign-back clauses, 97 Attorney-client privilege, 48, 8081 Bad conduct, 11, 43, 59, 70, 88, 147. See also Improper conduct issues; Inequitable conduct avoiding, 68
contentions, offensive use of, xiii issues, xiixiii Bad faith, 145, 149 absence, 71 compensable items and, 78 correction over invalidation, 6 enforcement, claims on, 134 fees, and, 69, 74 frivolous patent appeals and, 76 infringement action and, 119, 125, 126 state tort claims, 72 Best mode, 10, 48, 49, 152 discovery, 52 failure to disclose, for achieving invention, 1218, 165 brand names and model numbers of inputs, 1718 burden of proof, 1314 claims and adjuncts, 1516 disclosure, adequacy of, 1617 inventors view of best, 1415 violations and conduct sanction, 18 patentability and, 16465 proving and disproving concealment of, 5354 violations, as inequitable conduct, 31 Brand names and model numbers of inputs and disclosure, 1718 Bundling and tying misuse, 90 Candor, duty of, 153, 160 duty of disclosure and, 21, 14950 and good faith, 23, 14950 misclaiming priority and, 42 PTO and, 23 Cartel cases, 83 cross-license schemes, 106 patentees conduct, 11015 Case histories, relevant and nondisclosure, 2930
229
230
Index
Clayton Act, Section 7, 100, 201 Compensable items, litigation misconduct issues in, 78 Compulsory counterclaim, 13435 Conduct defense, xiv, 21, 137. See also Inequitable conduct; Patent and Trademark Office (PTO) developing, 83 and reward to accused infringer, xiii Conduct sanction and best mode violations, 18 Copyright protection, 174 Correction of patents fraud, inequitable conduct, and duty of disclosure issues, 164 Correction of inventorship, 5 Counterclaims, xiv, 136 antitrust. See Antitrust counterclaims bifurcation of trials and, 137 challenging, 135 compulsory, 13435, 140 dismissal of, 139 inventorship and, 4 jury trial for, 50 patentee misconduct and, xiii Court of Appeals for the Federal Circuit (CAFC), xv, 4, 8, 11, 13, 22, 27, 34, 35, 36, 41, 42, 52, 56 Cracking Patents case (1931), 113 Crime/fraud exception, 48, 81 Cross-licensing and patent pooling, 113 and pooling arrangements, 198200 Department of Justice (DOJ), 110 clearances for MPEG-2 and DVD pools, 114 Derivative invention, 4 Disclosure, 129. See also Nondisclosure aids to compliance with, 15156 of best mode, failure to brand names and model numbers of inputs, 1718 burden of proof, 1314 claims and adjuncts, 1516 disclosure, adequacy of, 1617 inventors view of best, 1415 violations and conduct sanction, 18 and candor and good faith, 21, 14950 error determination without any deceptive intention, 16061 fraud, inequitable conduct, and violation of affecting all claims, 160 protests involving, 159 reissue applications, 15759 inadequate. See Inadequate disclosure information from related litigation, 15051 office handling of, and inequitable conduct issues, 15657 patent correction and, 164 in reexamination proceedings, 159 Discovery misconduct and recalcitrance, 6667 Discriminatory royalties, 1012 Egregious litigation conduct in losing case, 6870 Equitable estoppel, 63 Equitable laches, 63 Estoppel, 62 equitable, 63 litigation misconduct issues, 74 and prejudice, 63 European Patent Office (EPO), 33 Examiner testimony, in potential misconduct, 5556 Exclusive dealing, 19798 Exclusive grantback, 200 Exclusive license, 96, 190 Export restrictions, 104 False statements disinterestedness of providers of expert declaration supporting patentability, 4041 distinguished from omissions, 39 intent and, 3738 misclaiming priority, 42 petitions to make special, 4142 to PTO by third party, 45 small-entity status, 42 and test results, 3940 Fault and sanctions, xiv Federal Food, Drug, and Cosmetic Act (21 USCS 355), 170, 171 Federal Rules of Civil Procedures (F.R.C.P), 4950, 55 Rule 9(b), 56, 13536, 139 Rule 11, 6465, 80 Rule 12(b)(6), 139 Rule 37, 6667 relationship with Section 285, 7577 Rule 42(b), 136
Index
Rule 52(a), 138 Rule 54(b), 139 Federal Trade Commission (FTC), U.S., 86, 126, 129 Licensing Guidelines, 110 Act, section 5, 101, 201, 202 Fees assessment against attorneys, 7071 Field of use restrictions, 1023 Foreign language references translation failure to provide, 3134, 153 Geographic restrictions, 1034 Good faith, 23, 3436, 126 litigant, 75 Goods and markets and intellectual property licensing, 180 Grantbacks exclusive, 200 misuse defense clauses, 9597 nonexclusive, 1045 royalty-free and, 97 Gross negligence standard, 36, 37 Handgards claims, 12429 Hatch-Waxman Act, 111 High royalties, 101 Horizontal antitrust offenses and misuse defense, 106 Horizontal license arrangements, 130 Horizontal relationships, 189 and intellectual property licensing, 18586 restraint, 195 Implied license, 63 Improper conduct, as to invention, 48 derivative invention, 4 failure to disclose prior sales, 78 inventorship, inaccurate or incomplete disclosure of, 47 Inadequate disclosure, 9. See also Nondisclosure failure to disclose best mode, for achieving invention, 1218 lack of description, 10 lack of enablement, 11 Inequitable conduct, xiv, 7, 8, 19, 49 court abuse of discretion in finding, 3334 court treatment of claims, 58 discovery patent prosecution attorney discovery, 5456 prior art search, 54 duty of candor and good faith, 23 duty of disclosure, 2123, 15657 false statements, 3742, 45 and fraud and duty of disclosure affecting all claims, 160 protests involving, 159 reissue applications, 15759 infection of related patents, 43 jury and, 138 materiality and intent, 3537 noncumulative, meaning of, 25 nondisclosure types, 25 best-mode violations, 31 burying references, 35 case histories, 2930 failure to provide foreign language references translation, 3134 fee reduction requests, defects in, 31 inventorship, 2627 obviousness of process/product, 28 patentees inventive efforts, 3031 prior art writings, 2829 prior use and sales, 2728 PTO history, 30 pleading, 5657 prosecution laches, 4345 reversal of, 35 scope of duty, 24 timing of disclosure, 24 Walker Process claims and, 122124 Information Disclosure Statement (IDS), 28, 31 Infringement, of patent, 64 non-sanctionable complaint, 65 Infringers, potential, 71 Innovation markets and intellectual property licensing, 18285 Intellectual property licensing and antitrust analysis, 17576 horizontal and vertical relationships, 18587 licensing restraints, framework to evaluate, 18789 markets affected by licensing arrangements, 18085 nature, 179 anticompetitive effects analysis exclusivity and licensing arrangement, 19092 market structure, coordination and foreclosure, 18990 antitrust safety zone, 19394
231
232
Index
Intellectual property licensing (cont.) application, 194 acquisition of intellectual property rights, 201 cross-licensing and pooling arrangements, 198200 exclusive dealing, 19798 grantbacks, 200 horizontal restraints, 195 invalid intellectual property rights enforcement, 2012 resale price maintenance, 196 tying arrangements, 19697 efficiencies and justifications, 19293 and market power, 17677 and procompetitive benefits of licensing, 17779 protection, and antitrust laws, 17375 Intellectual Property Licensing Guidelines of 1995 (IP Guidelines) acquisition of competing technologies, 100 field of use restrictions, 102103 infringement litigation and, 107 patent pools and, 113 price clauses, 93 settlements, 99 tie-out clauses, 91 Intent, 14, 23, 67, 156 bad, 57, 80, 124, 127 to conceal and mislead, 12 to deceive, 7, 8, 30, 32, 34, 36, 37, 38, 56, 156, 157, 158, 164 and false statements, 3738 fraudulent, 123, 127 inequitable conduct and, 13, 39 to lie, 117 and materiality, 3537 to mislead, 156, to monopolize, 115, 116, 118 prior art and, 37, 38 specific, 115, 116 threshold level of, 21, 29 International Trade Commission (ITC), U.S., xivxv, 86, 113 Invalidity litigation, 98 Inventor witness preparation, 53 Inventorship inaccurate or incomplete disclosure of, 47 inequitable conduct, 2627 relevant procedural issues, 48 Joint Electron Device Engineering Council (JEDEC), 64 Jury trial, 6, 28, 49, 70, 137, 138 for overlapping equitable and nonequitable issues, 50 Laches equitable, 63 litigation misconduct issues, 74 prosecution, 4345 statutory, 6263 Licensed products and disclosure adequacy, 17 Litigation abuse, 61. See also Litigation misconduct issues ambush theory and patent infringement, 6364 discovery misconduct and recalcitrance, 6667 egregious litigation conduct in losing case, 6870 equitable estoppel and implied license, 63 equitable laches, 63 fees assessment against attorneys, 7071 reckless cases and pleadings, 6466 statutory laches, 6263 threats, by patent holders, 7172 Litigation misconduct issues, procedural issues in raising, 74 compensable items, 78 laches and estoppel, 74 Rule 37 (F.R.C.P.) and Section 285, relationship between, 7577 Litigation strategies, 79, 143 antitrust rule of reason counterclaims, 146 attorney-client privilege, 8081 contradictions, avoiding, 14647 danger from experts, avoiding, 147 deposition redirect and summary judgment, using, 14748 in misuse cases, 144 Rule 11 (F.R.C.P.), 80 Walker Process, 145 Mail and papers, receipt and handling of small entity status, claiming, 164 Manual of Patent Examiner Practice (MPEP), 24, 32, 34, 49, 55, 15165 Material references, 24 Materiality, 2223 definition of, 22 and intent, 3537 Misuse defense, 4950, 86
Index
acquisition of competing technologies, 100 antitrust guidelines relevance, 1067 discriminatory royalties, 1012 export restrictions, 104 field of use restrictions, 1023 geographic restrictions, 1034 grantback clauses, 9597 high royalties, 101 history, 8688 horizontal antitrust offenses and, 106 litigation strategy and, 144 no-challenge clauses, 9798 non-exclusive grantback clauses, 1045 packages of patents, 105 post-expiration royalties, 9395 price clauses, 9293 quantity restrictions, 104 royalties on unpatented and unused products, 1056 settlements, 99 tie-in clauses, 8890 tie-out clauses, 9192 Monopoly, 115 intent and, 115, 116, 118 offenses, elements of, 116 No-challenge clauses, 9798 Noerr-Pennington doctrine, 45, 99, 128 Noncumulative, meaning of, 25 Nondisclosure. See also Disclosure best-mode violations, 31 burying references, 35 case histories, 2930 failure to provide foreign language references translation, 3134 fee reduction requests, defects in, 31 inventorship, 2627 obviousness of process/product, 28 patentees inventive efforts, 3031 prior art writings, 2829 prior use and sales, 2728 PTO history, 30 Non-essential patents, 113 Non-exclusive grantback, 200 clauses, 104 Non-exclusive license, 96, 190 Non-infringement, xii Novelty and infringement, xii Obviousness, 28, 53, 54 Office personnel, not to testify, 16163 Omissions, 38, 39 Package licensing, 197 Patent Act, 15 U.S.C. 2, 115 Patent Act, 15 U.S.C. 13 (a), 101 Patent Act, 15 U.S.C. 18, 100 Patent Act, 28 U.S.C. 1338(a), 139, 140 Patent Act, 28 U.S.C. 1927, 70 Patent Act, 35 U.S.C. 102(f), 155 Patent Act, 35 U.S.C. 103(c), 155 Patent Act, 35 U.S.C. 104, 167 Patent Act, 35 U.S.C. 112, 10, 164 Patent Act, 35 U.S.C. 122(b), 167 Patent Act, 35 U.S.C. 135, 167 Patent Act, 35 U.S.C. 256, 4, 26, 48 Patent Act, 35 U.S.C. 261, 103 Patent Act, 35 U.S.C. 271(d), 89, 90 Patent Act, 35 U.S.C. 271(d)(4), 87 Patent Act, 35 U.S.C. 271(d)(5), 87, 90, 144 Patent Act, 35 U.S.C. 284, 68 Patent Act, 35 U.S.C. 285, xiii, 6869 litigation misconduct issues, 7475 relationship with Rule 37 (F.R.C.P.), 7577 Patent Act, 35 U.S.C. 286, 62 Patent Act, 35 U.S.C. 287, 71 Patent Act, 35 U.S.C. 291, 167 Patent Act, 35 U.S.C. 351(a), 167 Patent Act, 37 C.F.R. 98, 31 Patent Act, 37 C.F.R. 104.22(c), 163 Patent and Trademark Office (PTO), 4, 10, 22, 24, 32 conduct defenses, strategies in litigating, 51 best mode concealment factor, 5354 best mode discovery, 52 inequitable conduct, 5457 inventor evidence, 52 summary judgment, 5758 false statements to, by third party, 45 important history, 30 and licensor protection, 98 in patent prosecution context, 44 Patent antitrust issues, procedural issues in litigation of, 133 advisory jury role in handling, 13739 bifurcation of trials, 13637 choice of law, 140 compulsory counterclaim, 13435 dismissal of counterclaims and defenses, 139 jurisdiction, 13940 remedies, 141 Rule 9(b) (F.R.C.P.) relevancy, 13536 standing, 134
233
234
Index
Patent Co-operation Treaty (PCT) International Search Report, 32 Patent holders, threats by, 7172 Patent law, Title 35 (U.S.) attorney fees, 172 infringement of patent, 16972 inventors, 16869 patentability conditions, and novelty and loss of right to patent, 16768 specification, 168 Patent pooling, 111 and horizontal license arrangements, 130 Patent prosecution attorney discovery, 5456 Patentability best mode requirement, 16465 Patentees cartel conduct anticompetitive patent pooling, 11314 boycotts, 11415 sham cross-licenses and settlements, 11012 Patentee misconduct and counterclaims, xiii Pleading, 65 Posner, Richard, 94, 102 Post-expiration royalties, 9395 Prejudice and estoppel, 63 Pretrial discovery, 48 Price clauses, 9293 Prior art, 24, 53, 152 and intent, 37, 38 search, 54 writings, 2829 Prior use and sales, 2728 Privilege claims, 48 Procedural issues, relevant, 47 attorney-client privilege, 48 inequitable conduct, 4950 inventorship, 48 jury trial, 50 summary judgment feasibility, 4849 Prosecution laches, 4345 Purging, of misuse, 86 Quantity restrictions, 104 Racketeer Influenced and Corrupt Organizations Act (RICO) claims and counterclaims, 13132 Reasonable examiner standard, 22 Reckless cases and pleadings, 6466 Relevant references, 24 Reverse payments and pharmaceutical settlements, 111112 Robinson-Patman Act, 15 U.S.C. 13, 101 Royalties discriminatory, 1012 high, 101 post-expiration, 9395 on unpatented and unused products, 1056 Royalty-free and grantback clause, 97 Sham, 103, 125, 189 cross-licenses and settlements, 11012 pharmaceutical settlements, 11112 exception, 45 litigation, 12325, 127, 137 Sherman Act Section 1, 110, 130, 201 Section 2, 101, 110, 115, 116, 117, 201 Single firm abuses of patentee, 115 Handgards claims, 12429 monopoly offenses, elements of, 116 Walker Process claims, 11724 Statutory laches, 6263 Summary judgment, 5758 and deposition redirect, 14748 feasibility, 4849 precluding, 120 Technology markets and intellectual property licensing, 18082 Tie-in clauses, 8890 Tie-out clauses, 9192 Tort claims and state, 72 Trade secret protection, 174 Trial bifurcation, 13637 Trial judge, 49 Tying arrangements, 19697 Unenforceability of patent, 36, 38, 43 Utility patent infringement, 8 Vertical licensing restraint, 107 Vertical price-fixing, 93 Vertical relationships, 190 and intellectual property licensing, 185 Walker Process, 139, 140 antitrust violation, 18, 50 claims, and single firm abuses, 11724 comparison with Handgards, 124, 125, 126 refuting, 122 reversal of, 127 RICO and, 131

Patent Related Misconduct Issues in U S Litigation

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