American Calcar, Inc. v. American Honda Motor Co., Inc.

Docket No. 2013-1061

September 26, 2014

Brief Summary: Inequitable conduct found where entirety of material information was not disclosed and DC determined “the only reasonable inference [was] that [he] knew the prior art was material to his invention and that he made a deliberate decision to withhold” it. Judge Newman’s dissent argued information was not material (allowed after reexamination) and other inferences were plausible.

Summary: American Calcar appealed DC finding that three of its patents relating to automobile navigation systems were unenforceable due to inequitable conduct; the FC panel affirmed. At trial, Honda alleged that one of the co-inventors (Mr. Obradovich, Calcar’s founder), who was also primarily responsible for preparing the patent application, intentionally did not disclose an operating manual for and photographs of a prior art navigation system that was in his possession, even though he did disclose the existence of that system by mentioning it in the specification and submitting a newspaper article describing the same. The first DC decision (“Calcar I”) was established prior to Therasense (FC 2011) and the FC subsequently affirmed as to materiality of the manual with respect to one of the patents but vacated the other determinations of materiality (“but for” test) and for all of the patents regarding intent (Am. Calcar, FC 2011 (“Calcar II”)). In Calcar III, the DC again found all three patents were unenforceable, confirming both the materiality of the manual and the inventor’s intent to deceive the PTO (“the only reasonable inference [was] that [he] knew the prior art was material to his invention and that he made a deliberate decision to withhold” it). The FC opinion explains that “[p]artial disclosure of material information about the prior art to the PTO cannot absolve a patentee of intent if the disclosure is intentionally selective” (citing Aventis (FC 2012), Semiconductor Energy (FC 2000) (partial translation of JP reference did not include portion material to patentability)) and Apotex (FC 2014) (misrepresentation of material information in prior art)). And “because direct evidence of deceptive intent is rare, a district court may infer intent from indirect and circumstantial evidence”. The DC “expressly rejected Calcar’s suggestion that it would have been equally reasonable for [it] to infer that Mr. Obradovich’s actions were merely negligent or grossly negligent” (i.e., “inexperience may have contributed to a mistaken or accidental failure to disclose”) because the testimony regarding that point lacked credibility (which the FC leaves to the DC to judge (citing Therasense, and FilmTec, FC 1992)). The DC decision was therefore affirmed. Judge Newman’s dissent argued that “but for” materiality was not established (claims were allowed after reexamination in view of the manual (which “ended the inequitable conduct inquiry” in Therasense) and there was no evidence of an intent to deceive (“a more likely inference is that a savvy inventor and businessman would know that a patent obtained through concealment of a material reference is not a reliable commercial asset”; “when there are multiple reasonable inferences that may be drawn, intent to deceive cannot be found” (Therasense; Kingsdown Med., FC 2012); jury did not find intent).

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