TiVo Raises Claims of Inequitable Conduct That Survive Dismissal

September 23, 2011

TiVo filed a patent infringement action against Verizon and Verizon counterclaimed alleging that TiVo infringed six of its patents. TiVo raised inequitable conduct counterclaims against certain of the Verizon patents. Verizon filed a motion to dismiss, which the district court granted under the principles set forth in Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009), but permitted TiVo to amend its pleading. TiVo amended its pleadings and Verizon renewed its motion to dismiss.

The district court began its analysis by noting that the Federal Circuit's decision in Therasense, Inc. v. Becton, Dickinson and Company, 2011 WL 2028255 (Fed. Cir. May 25, 2011) was decided after the parties had completed their briefing on the motion. Although Therasense changed the standard for proving inequitable conduct, the district court stated that Thereasense did not address the pleading standard because it was decided based on the review of a bench trial. Accordingly, Exergen remains the leading authority on the pleading standard for inequitable conduct. "Exergen held that for 'pleading inequitable conduct in patent cases, Rule 9(b) requires identification of the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.'"

In ruling on the specific allegations made by TiVo, the district court found that with respect to one of the patents TiVo sufficiently alleged the "how" and "why" of materiality by alleging that the patent prosecutor submitted applications on behalf of inventors who were professionally acquainted and that both applications were assigned to the same entity but the patent prosecutor failed to disclose the co-pending applications. In addition, TiVo also alleged that the patent prosecutor withheld that a reference used elements that the patent prosecutor claimed was missing from the prior art before examiner. With respect to the other patent, the district court found the allegations insufficient to establish materiality because TiVo failed to allege what information in the reference was not already in front of the examiner based on other references.

Turning to the issue of intent, the district court concluded that the fact that the same patent prosecution counsel worked on both applications was not by itself sufficient to support an allegation of intent to deceive. The district court also analyzed the failure to file an Information Disclosure Statement, the failure to disclose a co-pending application and concluded that none of these justified an inference of intent. Nonetheless, the district court noted that at the pleading stage, "allegations need only give rise to an inference of intent to deceive that is 'plausible and that flows logically from the facts alleged.'"
The district court then concluded that withholding the reference with intent to deceive may be a plausible inference because the patent prosecutor was handling both applications, because the applications allegedly pertain to substantially similar subject matter and because the patent prosecutor responded to office actions for both applications on the same day. Thus, the district court permitted the inequitable conduct claim with respect to this patent.

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As the district courts continue to issue decisions on inequitable conduct, some are starting to focus on the distinction between the pleading stage and the summary judgment stage for evaluating claims on of inequitable conduct. The courts that focus on this distinction are permitting inequitable conduct claims to proceed past the pleading stage.

Tivo Inc. v. Verizon Communications, Inc., Case No. 2:09-CV-257 (E.D. Tex. Sept. 7, 2011)

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.