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Mass Engineered Design, Inc. v. Planar Systems, Inc.

United States District Court, D. Oregon

July 20, 2018

MASS ENGINEERED DESIGN, INC., Plaintiff,
v.
PLANAR SYSTEMS, INC., Defendant.

          John Mansfield, Harris Bricken, llp, John J. Edmonds, Stephen F. Schlather, Shea N. Palavan, Brandon G. Moore, and Eric R. Carr, Collins Edmonds & Schlather, pllc, Of Attorneys for Plaintiff.

          Jacob S. Gill, Stoll Stoll Berne Lokting & Shlachter, pc, Jenny W. Chen, Chen IP Law Group, Rueiguang Road, Neihu District, Taipei Taiwan Andrew T. Oliver, Amin, Turocy & Watson, llp, Of Attorneys for Defendant.

          FINDINGS OF FACT AND CONCLUSIONS OF LAW

          Michael H. Simon United States District Judge.

         Defendant Planar Systems, Inc. (“Planar”) alleges in its Amended Answer and Counterclaims that Plaintiff Mass. Engineered Design, Inc. (“Mass”) engaged in inequitable conduct before the United States Patent and Trademark Office (“PTO”). First, Planar alleges inequitable conduct in the reissue proceedings relating to U.S. Patent No. RE36, 978 (the '978 Patent). Specifically, Planar alleges that Mr. Jerry Moscovitch, the owner of Mass. and inventor of the '978 Patent, submitted a false declaration dated October 1, 1998 (the “Moscovitch Declaration”).

         Second, Planar alleges that Mass. engaged in inequitable conduct before the PTO in prosecuting U.S. Patent No. 8, 102, 331 (the '331 Patent), by failing to disclose material information. Planar alleges that Mass. failed to disclose a provisional application, U.S. Patent Application Serial No. 60/113, 742 (the '742 Application), filed December 23, 1998. Because of pretrial rulings made by the Court, however, no evidence of Planar's inequitable conduct claim relating to the '331 Patent was admissible at trial.

         Planar requests only equitable relief. The Court has jurisdiction over this matter under 28 U.S.C. §§ 1331 and 1338. The Court held a bench trial on July 11 and 12, 2018. Having weighed and evaluated all of the evidence and considered the legal arguments of counsel, the Court makes the following Findings of Fact and Conclusions of Law pursuant to Federal Rule of Civil Procedure 52(a). For the reasons that follow, the Court finds in favor of Mass.

         LEGAL STANDARDS FOR INEQUITABLE CONDUCT

         1. Inequitable conduct is an equitable defense to patent infringement. Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1285 (Fed. Cir. 2011). “To prevail on the defense of inequitable conduct, the accused infringer must prove that the applicant misrepresented or omitted material information with the specific intent to deceive the PTO.” Id. at 1287.

         2. “The accused infringer must prove both elements-intent and materiality-by clear and convincing evidence.” Id. These are separate elements. Id. at 1290. “[A] court must weigh the evidence of intent to deceive independent of its analysis of materiality.” Id.

         3. “In a case involving nondisclosure of information, clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference.” Id. at 1290 (emphasis in original) (quotation marks omitted). “Proving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive.” Id.

         4. “Because direct evidence of deceptive intent is rare, a district court may infer intent from indirect and circumstantial evidence. However, to meet the clear and convincing evidence standard, the specific intent to deceive must be the single most reasonable inference able to be drawn from the evidence.” Id. (citation and quotation marks omitted). This means that when multiple reasonable inferences can be drawn, intent to deceive cannot be found. Id. “[T]he evidence must be sufficient to require a finding of deceitful intent in the light of all the circumstances.” Id. (emphasis in original) (quotation marks omitted).

         5. Generally, “the materiality required to establish inequitable conduct is but-for materiality.” Id. at 1291.

         6. “When an applicant fails to disclose prior art to the PTO, that prior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art.” Id. In making this assessment, the court applies the preponderance of the evidence standard, and gives the patent claims their broadest interpretation. Id. at 1291-92.

         7. In cases of “affirmative egregious misconduct, such as the filing of an unmistakably false affidavit, the misconduct is material.” Id. at 1292.

         8. If the party asserting inequitable conduct meets its burden to prove both elements, then the court “must weigh the equities to determine whether the applicant's conduct before the PTO warrants rendering the entire patent unenforceable.” Id. at 1287.

         FINDINGS OF FACT

         Pursuant to Federal Rule of Civil Procedure 52(a)(1), the Court finds the following facts by a preponderance of the evidence.

         A. Credibility of Witnesses

         At trial, the Court received testimony from Mr. Mirek Waraksa and Mr. Moscovitch. Although the Court does not find that either witness intentionally testified falsely or in a misleading manner, the Court finds that Mr. Waraksa had problems with his recollection and testified inconsistently, both on the stand and as compared to his previous sworn testimony, which was received only for impeachment purposes. The Court notes that Mr. Waraksa testified regarding his longstanding mental illness diagnosis and medications, and their effect on his memory and ability to recall details. The Court also received testimony via deposition designations from Mr. Mark Elchuk, a former patent attorney for Mr. Moscovitch. The Court finds that testimony to be generally credible, although Mr. Elchuk did not have a clear recollection of the relevant events.

         B. Background of the Relevant Patents

         1. On April 26, 1996, Mr. Waraksa, as the patent agent for Mr. Moscovitch, filed U.S. Patent Application No. 08/638, 158 (the '158 Application) titled “Dual Display System.” On November 18, 1997, this application issued as U.S. Letters Patent No. 5, 687, 939 (the '939 Patent).

         2. On October 13, 1998, patent attorney Mark Elchuk filed U.S. Patent Application No. 09/172, 193 (the '193 application), on behalf of Mass. and named inventor Mr. Moscovitch, seeking a reissue of the '939 Patent. On December 5, 2000, this ...


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