American Calcar, Inc. v. American Honda Motor Co., Inc., No. 2009-1503, -1567 (Fed. Cir. Jun. 27, 2011) (Judges Lourie, Bryson, and Gajarsa)

The court applied the new Therasense standard, and ACI drove back to the district court with a chance to swerve away from an unenforceability ruling.

American Calcar, Inc. (ACI) sued Honda for infringing 15 patents that covered various dashboard control and display options. The district court held 3 of ACI’s patents unenforceable due to inequitable conduct, even though a jury had issued an advisory finding of no inequitable conduct. The district court found evidence that the inventors of the ACI patents borrowed a vehicle that employed a dashboard system “substantially similar” to the one disclosed and that ACI had photographs of the dashboard system that were taken before ACI’s patent applications were filed. Slip op. at 18. The district court determined that ACI did not disclose this information to the PTO, that it was highly material, and that there was circumstantial evidence of deceptive intent. The district court used the “sliding scale” approach to reach a finding of inequitable conduct.  ACI appealed.

The Federal Circuit first noted that the jury’s finding of no inequitable conduct was merely advisory and not binding, so no Seventh Amendment interest was prejudiced by the trial court’s contradictory conclusion. The Federal Circuit then reviewed the new standard for inequitable conduct that Therasense introduced: (1) the undisclosed prior art must be “but-for” material, and (2) “clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference.” Slip op. at 24 (citing Therasense). The court also stated that the two requirements are separate and specifically rejected the “sliding scale” approach used regularly before Therasense.

On the materiality issue, the Federal Circuit concluded that one patent clearly met the materiality prong because the asserted claims were anticipated by the deliberately withheld information. For the other two patents, however, the district court had evaluated materiality under two rejected standards, the PTO’s Rule 56 standard and the “reasonable examiner” standard. The court vacated and remanded the materiality ruling as to these two patents, directing the trial court to determine whether the withheld information would have blocked issuance of the claims.

As for intent, the Federal Circuit determined that the circumstantial evidence offered did not clearly show that the inventors knew the withheld information was material and that they deliberately decided to withhold it. The court gave deference to the district court’s finding that one inventor’s testimony lacked credibility, but “that alone is insufficient to find a specific intent to deceive under the knowing and deliberate standard.” Slip op. at 27. The Federal Circuit directed the trial court to make specific finding regarding the inventors’ knowledge of materiality and whether they made a deliberate decision to withhold the information.

The Federal Circuit also affirmed the district court’s grant of summary judgment of noninfringement for several patents and reversed the district court’s denial of JMOL concerning the invalidity of one of ACI’s patents.

Read the original opinion here.