Cargill, Inc. v. Canbra Foods, Ltd., __ F.3d __ (Fed. Cir. Feb. 14, 2007) (Linn, Prost, JORDAN) (D. Ore: Mosman)
KEY WORDS: INEQUITABLE CONDUCT, MATERIALITY, INTENT, BALANCING, MOTIVE, ON-SALE BAR, COMMERCIAL OFFER FOR SALE, READY FOR PATENTING, REDUCTION TO PRACTICE (ACTUAL)
Fed Cir affirms summary judgment of invalidity by on-sale bar for two patents, and affirms judgment of inequitable conduct for other two patents. The patents relate to heart-healthy canola oil.
Inequitable conduct:
Materiality: By the "reasonable examiner" standard, two withheld documents -- a research report and certain test data -- were material because they contradicted the patentee's representations during prosecution that the claimed canola oil exhibited properties superior to a prior art oil. Although the withheld results may not have been comparable to the data before the examiner because the research report used unusual conditions and the test data document did not show the testing conditions, "[a] reasonable examiner would certainly want to consider test data that is directly related to an important issue of patentability, along with the applicant's interpretation of that data. Whether the examiner would have ultimately allowed the patent to issue is irrelevant ...." Slip op. at 9.
Intent: The district court did not err in finding intent based on a number of circumstantial factors, including (i) the repeated nature of the omission, where "[a]n applicant should know information is material when the examiner repeatedly raises an issue to which the information relates," id. at 10; (ii) the patentee's motive to deceive, as long as "the district court did not rely solely on the applicant's motive in drawing an inference of intent," id. at 11; and (iii) the high degree of materiality of the undisclosed test data. The patentee's good faith belief that the data did not need to be disclosed did not undermine the finding of intent, because "[e]ven if there were a mitigating explanation for the withheld data, it was no excuse for the applicant's purposeful omission in this case." Id. While recognizing "that subjective good faith can support a defense to inequitable conduct," the Fed Cir ruled that "[w]hen an applicant knows or obviously should know that information would be material to the examiner, as was true here, but the applicant decides to withhold that information, 'good faith' does not negate an intent to manipulate the evidence. Indeed, self-serving manipulation of highly material evidence can hardly be called 'good faith.'" Id. at 13.
Balancing: The Fed Cir found no abuse of discretion in the district court's conclusion of inequitable conduct.
On-sale bar:
Commercial offer: A pre-critical date letter to a third-party was a sale/offer for sale, because the "letter explicitly sets forth an amount of oil to be delivered…, at a specified unit price, and under a standard contract designation, FOB (free on board), which allocates the risks and responsibilities of a buyer and a seller." Id. at 16. In affirming the district court, the Fed Cir (i) relied on inconsistencies in the patentee's arguments that the letter only showed the provision of samples for testing purposes or the response to the customer’s concerns about costs; (ii) ruled that "expressing a desire to do business in the future does not negate the commercial character of the transaction then under discussion"; (iii) dismissed as irrelevant the customer’s failure to pay the agreed amount because "[t]here is no requirement that the sale be completed" for the bar to apply; and (iv) ruled that a declaration submitted in opposition to the summary judgment motion did not create genuine factual disputes.
Ready for patenting: The oil was ready for patenting because it was reduced to practice and the evidence indicated that the patentee was aware of its utility. That the transacted oil was intended for experimental purposes was irrelevant, because "that does not mean that the invention had not been reduced to practice," and because the patentee's lack of awareness of the specific characteristics making the invention useful did not contradict a finding of actual reduction to practice.
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