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District Court Finds Patents Invalid for Inequitable Conduct Because Inventor Withheld Material Information Of Prior Sales From USPTO And Litigation Misconduct Justified Inference of Non-Disclosure with An Intent to Deceive

In this patent infringement action, Plaintiff Total Rebuild (“Total”) asserted that Defendant PHC (“PHC”) infringed claims of United States Patent No. 8,146,428 (“the ’428 Patent”), which is directed to systems and methods for safely testing devices and components under high-pressure. The district court conducted a bench trial on inequitable conduct and concluded that the patent was invalid for several reasons.

First, the district court noted that the inventor, Mr. Lavergne, had a duty to disclose material information to the United States Patent and Trademark Office (“USPTO”). The district concluded that material prior art had been withheld because certain devices had been offered for sale prior to the August 8, 2007, which was one year prior to the earliest application (the “Critical Date”). The district court explained that: “Here, the Cameron MTSs, Haliburton MTS, and Superior MTS were prior art under 35 U.S.C. § 102(b) because it was an offer for sale, sale, or public use by Total, Cameron, Haliburton, or Superior of a pressure testing system prior to the Critical Date. Furthermore, the offer for sale, sale, or public use of the Cameron MTSs, Haliburton MTS, and Superior MTS was material to the patentability of the ’428 Patent because claim 1 and claim 16 would not have issued had the sale been disclosed to the USPTO. This is especially true in view of the broadest reasonable interpretation and preponderance of the evidence standards that apply to the materiality prong of claims for inequitable conduct.”

Second, the district court analyzed whether the non-disclosure was with an intent to deceive. Here, the district court found the inventor was specifically advised about his duty of disclosure: “Mr. Phung informed Mr. Lavergne about Mr. Lavergne’s duty to disclosure material information to the USPTO and the on-sale bar. Mr. Lavergne understood that he could not obtain a patent on the concept of placing the pumps in the safety housing where testing occurs because Total, Mr. Lavergne’s alleged alter ego, had been selling such systems for years. There is no reasonable excuse for the nondisclosure. Indeed, Mr. Lavergne’s failure to discuss the sales to Mr. Phung indicates that Mr. Lavergne intended to conceal them. To be sure, Mr. Phung testified he would not have filed the patent applications on behalf of Mr. Lavergne had the prior art been disclosed to him.”

Third, the district court found that the inventor’s intent to deceive could also be inferred from his litigation misconduct. The district court explained: “In this case, as it did during prosecution of the ’428 Patent, Total engaged in litigation misconduct by concealing its pre-Critical Date sales of Millennium Test Systems. The evidence of litigation misconduct is overwhelming. For example, Total intentionally withheld material prior art evidence that was only produced after the Court granted PHC’s motion to compel. Because PHC has shown Total engaged in post-prosecution misconduct and inequitable conduct during prosecution, the Court applies an adverse inference to the question of fact as to whether Total intended to deceive the USPTO. That said, even without this adverse inference, the Court concludes that Mr. Lavergne intentionally failed to disclose the pre-Critical Date sales of Millennium Test Systems to deceive the USPTO and obtain issuance of the ’428 Patent. The adverse inference only further confirms that Mr. Lavergne intentionally withheld material prior art during litigation to obfuscate his prosecution misconduct and hide his specific intent to deceive the USPTO.”

As a result, the district court found that the patent was invalid for inequitable conduct.

Total Rebuild, Inc. v. PHC Fluid Power, LLC, Case No. 6:15-CV-1855 (W.D. La. Oct. 15, 2019)

The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or