Patent Prosecutors Beware, Litigators Take Note: Federal Circuit Affirms Novel Inequitable Conduct Ruling

On May 18, 2007, the U.S. Court of Appeals for the Federal Circuit ruled in favor of Morrison client Bridge Medical, Inc., affirming a trial court ruling which had taken the rare step of holding an asserted patent unenforceable due to inequitable conduct. In the opinion, the Federal Circuit emphasizes several categories of information that a patent prosecutor must disclose to the Patent and Trademark Office in order to satisfy the duty of candor. Specifically, the Court held the patent at issue unenforceable because the prosecuting attorney intentionally withheld three pieces of material information from the PTO: (1) a prior art patent that had been brought to the attorney's attention by the examiner of a co-pending application, (2) the rejection of claims in that same co-pending application, and (3) the allowance of another co-pending application.

In December 2002, plaintiff McKesson Information Solutions sued Bridge Medical in the Eastern District of California, alleging infringement of U.S. Patent 4,857,716 ("the '716 patent"). The patent claims a three-node "patient identification system" for monitoring patients and medical items in a hospital setting. Bridge counterclaimed, asserting that the patent was unenforceable due to inequitable conduct committed by the prosecuting attorney. Following several years of discovery and motion practice, the district court presided over a bench trial on inequitable conduct in May 2006. The district court issued its findings of fact and conclusions of law in June 2006 holding that Bridge had proven, by clear and convincing evidence, that the patent was obtained through inequitable conduct and is therefore unenforceable.

The Federal Circuit's 50-page opinion affirms all three grounds for the inequitable conduct ruling. First, the prosecuting attorney withheld a prior art patent ("Baker") from the PTO. That patent had been brought to his attention by another PTO examiner in a co-pending application, but was never disclosed to the examiner who ultimately allowed the '716 patent. The Baker patent contradicted arguments the attorney had made for patentability, and was not cumulative to other art that had been cited. Moreover, the patentee had cancelled claims in the co-pending application in response to Baker, and those claims covered the asserted point of novelty of the '716 patent.

Second, the prosecuting attorney failed to disclose several rejections of claims in the same...