April 25, 2024

The Federal Circuit in Luv N’ Care, Ltd. v. Laurain, ---F.4th---, 2024 WL 1590593 (Fed. Cir. Apr. 12, 2024), reviewed, among other things, a district court’s bench trial decision that Luv N’ Care and co-appellant Nouri E. Hakim (collectively, “LNC”) failed to prove inequitable conduct.  The Court vacated the district court’s findings and decision on this issue and remanded for further proceedings.  The Court’s opinion provides guidance for addressing the materiality and intent requirements for proving inequitable conduct, including “intent” in the context of serial misconduct.

LNC and cross-appellants Lindsey Laurain and Eazy-PZ, LLC (jointly, “EZPZ”) compete in the manufacturing of dining mats for toddlers. 2024 WL 1590593, at *1-3.  LNC sued EZPZ on several causes of action. Id.  Several months later LNC amended its complaint to include declaratory judgment claims that a newly issued patent (“the ’903 patent”) was invalid, unenforceable, and not infringed. Id.  The inequitable conduct decision on appeal concerns the ‘903 patent.

The ’903 patent claims “a surface contact self-sealing dining mat integrated with tableware, thereby preventing the separation of tableware from the dining mat, while also preventing the lateral displacement and overturning of the dining mat.” 2024 WL 1590593, at *1-2.  LNC alleged, among other things, that Ms. Laurain and her patent agent made material misrepresentations to the PTO about a prior art mat (“Platinum Pets”) and failed to disclose other prior art. Id. at *4.  The district court found that although Ms. Laurain and her patent agent misrepresented the Platinum Pets mat by telling the PTO that it did not exhibit self-sealing functionality, the misrepresentations were not but-for material to the patentability of the ’903 patent since the mat itself was disclosed to the PTO. Id.  The district court also found that the other withheld references were not material because they were cumulative of the Platinum Pets mat. Id.  The district court further found that misrepresentations about the Platinum Pets mat showed gross negligence but not a specific intent to deceive the PTO. Id.  Declarations alleged by LNC as containing false or misleading information about advertising, marketing, branding, and promotional activity (as well as the impact these actions had on product sales) and as failing to disclose other pertinent information also did not establish intent to deceive. Id.

On appeal, the Federal Circuit reiterated that a party seeking to prove inequitable conduct “must show that the patentee withheld material information from the PTO and did so with the specific intent to deceive the PTO.” 2024 WL 1590593, at *7 (citing Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1290 (Fed. Cir. 2011) (en banc)).  The Court also reiterated that “[b]oth requirements must be proven by clear and convincing evidence” and “deceptive intent must be the single most reasonable inference based on the evidence.” Id. (citing Therasense, 649 F.3d at 1287).

The Court then addressed LNC’s arguments on materiality. 2024 WL 1590593, at *7.  LNC contended that the misrepresentations about the self-sealing functionality of the Platinum Pets mat were per se material. Id.  While the Court observed that materiality is established per se in cases of affirmative egregious misconduct, without need to prove its impact on the PTO’s patentability determination, it could not discern from the trial opinion if findings on affirmative egregious misconduct and per se materiality were made. Id.  The Court explained that “the district court’s analysis of those issues seems to have been embedded with its assessment of deceptive intent. Intent and materiality, however, are separate requirements, both of which must be proven to establish inequitable conduct.” Id.  It ordered the district court to determine on remand whether misrepresentations about the self-sealing functionality of the Platinum Pets mat amounted to affirmative egregious misconduct and were thus per se material. Id.  The district court was also instructed to reassess its prior determination that LNC failed to prove the misrepresentations were but-for material if affirmative egregious misconduct is not found. Id. at *8.  The Court explained, “An undisclosed prior art reference is but-for material ‘if the PTO would not have allowed a claim had it been aware of’ the reference.” Id. (quoting Therasense, 649 F.3d at 1291).  It noted the district court seemingly found the prior art mat could not be but-for material because the mat itself was disclosed to the PTO, which had an opportunity to consider it before issuing the ’903 patent. Id.  The Court also noted LNC’s point that Ms. Laurain and her patent agent were found to have misrepresented the characteristics of the mat by describing it falsely to the PTO (i.e., as a prior art device that does not practice self-sealing) and by withholding a video showing that the mat self-seals to an underlying surface. Id.  The Court instructed that, in connection with evaluating the totality of evidence, the district court must evaluate whether the PTO’s patentability decision may have differed if the Platinum Pets mat was accurately described, and the video disclosed. Id.

The other withheld references at issue were each found by the district court to disclose “the surface contact self-sealing characteristic.” 2024 WL 1590593, at *8.  In view of this and the district court’s finding that the Platinum Pets mat was misrepresented to the PTO as not possessing this self-sealing functionality, the Court vacated the finding that the other withheld references are cumulative and not material. Id.  It reasoned that, on remand, the district court may find that the withheld references “would have taught more than what a reasonable examiner would have considered to have been taught by the misrepresented Platinum Pets mat” and thus would not be cumulative. Id.

On deceptive intent, LNC contended that the district court erred by failing to consider the overall conduct of Ms. Laurain and her patent agent, which unequivocally showed a pattern of deceit. 2024 WL 1590593, at *8.  The Court observed that “[a]cts which are not ‘per se unreasonable when considered in isolation’ may still demonstrate ‘repeated attempts to avoid playing fair and square with the patent system’ and, collectively, support a finding of deceptive intent.” Id. (quoting Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223, 1235 (Fed. Cir. 2007)).  The Court explained, “When a person having a duty of candor and good faith has engaged in serial misconduct during the prosecution of the same or related patents, it is not enough for a court to consider each individual act of misconduct without also considering the collective whole.” Id.  The Court further explained, “Because an intent to deceive the PTO can be inferred from a person’s ‘pattern of lack of candor,’ a district court must consider the person’s multiple acts of misconduct ‘[i]n the aggregate.’” Id. (quoting Apotex Inc. v. UCB, Inc., 763 F.3d 1354, 1362 (Fed. Cir. 2014)).  The Court determined that the district court abused its discretion by failing to apply this legal standard. Id. at *9.  The district court only considered each individual act of misconduct by Ms. Laurain and her patent agent in isolation and did not “address the collective weight of the evidence regarding each person’s misconduct as a whole.” Id.  Consequently, the Court vacated the findings on deceptive intent and instructed the district court to “reevaluate Ms. Laurain’s deceptive intent based on her misconduct in the aggregate” and do the same with respect to her patent agent. Id.

The Court also determined that the district court erred in finding the misrepresentations about the self-sealing functionality of the Platinum Pets mat were mere gross negligence. 2024 WL 1590593, at *9.  Specifically, the Court determined the findings that Ms. Laurain and her patent agent “made a conscious choice to misrepresent” the prior art mat as lacking the self-sealing functionality—despite them having observed it self-sealing to the underlying surface to some extent—should not have been discounted as gross negligence. Id.  The Court explained, “Such purposeful omission or misrepresentation of key teachings of prior art references may, instead, be indicative of a specific intent to deceive the PTO.” Id. (collecting cases).  The Court instructed the district court to “analyze whether…[the] misrepresentations relating to the Platinum Pets mat, considered in aggregate with…other acts of misconduct, demonstrate that these individuals intended to deceive the PTO.” Id.

Lastly, the Court considered LNC’s assertion that declarations Ms. Laurain and her patent agent obtained and submitted to the PTO contain false statements about “advertising,” “marketing,” “branding,” and “promotional activity,” as well as the impact these actions had on product sales, and LNC’s related claim that the declarations fail to disclose the declarants’ financial interests. 2024 WL 1590593, at *9.  While the district court analyzed the declarants’ intent, it did not expressly address the intent of Ms. Laurain or her patent agent other than to broadly conclude that the two “did not commit inequitable conduct by submitting these declarations to the USPTO.” Id. (quoting from the district court’s ruling).  The district court was instructed to make findings on the intent of Ms. Laurain and her patent agent with respect to the submission of the declarations as part of its evaluation of the evidence regarding each person’s misconduct as a whole. Id.