Intellect Wireless, Inc. v. HTC Corporation ( 2013 )

United States Court of Appeals
for the Federal Circuit
______________________
INTELLECT WIRELESS, INC.,
Plaintiff-Appellant,
v.
HTC CORPORATION AND HTC AMERICA, INC.,
Defendants-Appellees.
______________________
2012-1658
______________________
Appeal from the United States District Court for the
Northern District of Illinois in No. 09-CV-2945, Senior
Judge William T. Hart.
______________________
Decided: October 9, 2013
______________________
MEREDITH MARTIN ADDY, Steptoe & Johnson LLP, of
Chicago, Illinois, argued for plaintiff-appellant. With her
on the brief was AMANDA K. STREFF. Of counsel on the
brief were RAYMOND P. NIRO and PAUL K. VICKREY, Niro,
Haller & Niro, of Chicago, Illinois.
STEPHEN S. KORNICZKY, Sheppard Mullin Richter &
Hampton, LLP, of San Diego, California, argued for
defendants-appellees. With him on the brief were MARTIN
R. BADER and MATTHEW M. MUELLER. Of counsel on the
brief were NAGENDRA SETTY and GEORGE KANABE, of San
2 INTELLECT WIRELESS, INC. v. HTC CORPORATION
Francisco, California. Of counsel was GRAHAM MARC
BUCCIGROSS, of San Diego, California.
______________________
Before PROST, MOORE, and O’MALLEY, Circuit Judges.
MOORE, Circuit Judge.
Intellect Wireless, Inc. (Intellect) appeals from the
district court’s judgment that U.S. Patent Nos. 7,266,186
(’186 patent) and 7,310,416 (’416 patent) are unenforcea-
ble due to inequitable conduct. We affirm.
BACKGROUND
The technology at issue in this case involves wireless
transmission of caller identification (ID) information. The
asserted patents share the same specification, which
discloses providing caller ID information from a message
center to a personal communication device, such as a cell
phone, via a wireless network. ’186 patent, at [57]; id. col.
4. l. 66 - col. 5 l. 4. The specification also teaches display-
ing the caller ID information on the cell phone’s screen.
Id. col. 15 ll. 20–24. Claim 1 of the ’186 patent is repre-
sentative:
A wireless portable communication device for use
by a message recipient for receiving a picture from
a message originator having a telephone number,
comprising:
a receiver operably coupled to receive a message
from a message center over a wireless connection,
the message including a non-facsimile picture
supplied by the message originator and a caller ID
automatically provided by a communications net-
work that identifies the telephone number of the
message originator, the message originator send-
ing the caller ID with the picture to the message
center;
INTELLECT WIRELESS, INC. v. HTC CORPORATION 3
a display; and
a controller operably coupled to display the picture
and caller ID on the display.
’186 patent, claim 1 (emphasis added).
Intellect sued HTC Corporation and HTC America,
Inc. (HTC) for patent infringement. After a bench trial,
the district court held the asserted patents unenforceable
due to inequitable conduct by the sole inventor, Mr.
Daniel Henderson. Intellect Wireless, Inc. v. HTC Corp.,
910 F. Supp. 2d 1056 (N.D. Ill. 2012).
Intellect appeals. We have jurisdiction under 28
U.S.C. § 1295(a)(1).
DISCUSSION
“To prove inequitable conduct, the challenger must
show by clear and convincing evidence that the patent
applicant (1) misrepresented or omitted information
material to patentability, and (2) did so with specific
intent to mislead or deceive” the U.S. Patent and Trade-
mark Office (PTO). In re Rosuvastatin Calcium Patent
Litig., 703 F.3d 511, 519 (Fed. Cir. 2012). “When the
patentee has engaged in affirmative acts of egregious
misconduct, such as the filing of an unmistakably false
affidavit, the misconduct is material.” Therasense, Inc v.
Becton, Dickinson & Co., 649 F.3d 1276, 1292 (Fed. Cir.
2011) (en banc). “We review the district court’s ultimate
finding of inequitable conduct for abuse of discretion, and
review the underlying findings of materiality and intent
for clear error.” Novo Nordisk A/S v. Caraco Pharm.
Labs., Ltd., 719 F.3d 1346, 1357 (Fed. Cir. 2013).
I. Materiality
The district court held that HTC proved the materiali-
ty prong of inequitable conduct. The court found that Mr.
Henderson submitted to the PTO a declaration under 37
C.F.R. § 1.131 (Rule 131) containing false statements. To
4 INTELLECT WIRELESS, INC. v. HTC CORPORATION
overcome a prior art reference during prosecution, Mr.
Henderson averred that “the claimed invention was
actually reduced to practice and was demonstrated at a
meeting . . . in July of 1993.” J.A. 7731 ¶ 9. However, the
district court found that the claimed subject matter was
never actually reduced to practice. Intellect, 910 F. Supp.
2d at 1071–72; see J.A. 2169; J.A. 5389; J.A. 5470. The
court also found “no evidence that any of the false state-
ments in any of the declarations were actually withdrawn,
specifically called to the attention of the PTO or fully
corrected.” Intellect, 910 F. Supp. 2d at 1072.
Intellect argues that the district court clearly erred in
its materiality finding. Intellect contends that Mr. Hen-
derson’s prosecuting attorney quickly corrected the false
declaration by filing a revised Rule 131 declaration, which
did not include facts supporting actual reduction to prac-
tice. See J.A. 7742–846. It argues that the attorney
explained to the Examiner that the applicant was relying
on constructive reduction to practice. Intellect contends
that, after the asserted patents issued, the Examiner
confirmed that he relied on constructive, as opposed to
actual, reduction to practice. Intellect lastly argues that
the district court discounted evidence that the remaining
reference to “actual reduction to practice” in the revised
declaration was an inadvertent mistake.
HTC counters that the district court did not clearly
err when it found materiality because Mr. Henderson
filed multiple unmistakably false declarations during
prosecution. Specifically, it argues that Mr. Henderson
falsely claimed actual reduction to practice in the original
Rule 131 declaration in order to overcome a prior art
reference. HTC points out that the revised declaration
still referred to “actual reduction to practice.” HTC
argues that Mr. Henderson made this false assertion
during prosecution of other family patents, which sug-
gests that this language was not mere drafting error.
HTC contends that neither Mr. Henderson nor his attor-
INTELLECT WIRELESS, INC. v. HTC CORPORATION 5
ney expressly advised the PTO about the misrepresenta-
tions during prosecution, as required to cure the miscon-
duct. It further argues that Mr. Henderson’s post-
issuance efforts to clarify the record do not cure the
misconduct because they are self-serving statements
made during litigation.
We agree with HTC. It is undisputed that Mr. Hen-
derson’s original declaration was unmistakably false.
Absent curing, this alone establishes materiality. There
is no dispute in this case that Mr. Henderson did not
actually reduce the claimed invention to practice—nor did
he demonstrate a prototype in July of 1993. Thus, the
original declaration contains multiple unmistakably false
statements. See J.A. 7731 ¶¶ 9, 10, 11 (“the claimed
invention was actually reduced to practice and was
demonstrated at a meeting”; “the working prototype
demonstration included communicating information from
a calling party connected to a communications network
that provided caller identifying information to a called
party”; referring to a device that “displayed the caller
identification and associated image information transmit-
ted via a wireless network”). Intellect argues that Mr.
Henderson’s revised declaration and subsequent state-
ments to the PTO corrected these misrepresentations. We
do not agree.
When an applicant files a false declaration, we re-
quire that the applicant “expressly advise the PTO of [the
misrepresentation’s] existence, stating specifically where-
in it resides.” Rohm & Haas Co. v. Crystal Chem. Co., 722
F.2d 1556, 1572 (Fed. Cir. 1983). Further, “if the misrep-
resentation is of one or more facts, the PTO [must] be
advised what the actual facts are.” Id. Finally, the
applicant must “take the necessary action . . . openly. It
does not suffice that one knowing of misrepresentations in
an application or in its prosecution merely supplies the
examiner with accurate facts without calling his attention
6 INTELLECT WIRELESS, INC. v. HTC CORPORATION
to the untrue or misleading assertions sought to be over-
come, leaving him to formulate his own conclusions.” Id.
The district court did not err in concluding that Mr.
Henderson’s revised declaration failed to correct the
falsehoods in the original declaration under the Rohm &
Haas standard. See Intellect, 910 F. Supp. 2d at 1071–73.
At best, the revised declaration obfuscated the truth. It
mentioned “diligence from the date of conception to the
effective filing date,” implying that Mr. Henderson was
now relying upon constructive reduction to practice. J.A.
7745. But the revised declaration did not cure the mis-
conduct because it never expressly negated the false
references to actual reduction to practice in the original
declaration. In the original declaration, Mr. Henderson
told the PTO that he actually reduced the invention to
practice and demonstrated it at a meeting in July of 1993.
See J.A. 7731 ¶ 9. In the revised declaration, he described
a “prototype now in the Smithsonian that was in devel-
opment for a . . . demonstration” in July of 1993, a state-
ment that could be read to mean that a device embodying
the claimed invention was actually built during that
month. J.A. 7746 ¶ U. The revised declaration also
described a “product brochure and packing receipt,” which
further implied the existence of an actual working device.
J.A. 7747 ¶ GG; J.A. 7852–57. Finally, the revised decla-
ration expressly mentioned “actual reduction to practice”
and “bringing the claimed subject matter to commerciali-
zation,” further obscuring the truth. J.A. 7747 ¶ 11; J.A.
7748 ¶ 12. Most importantly, the declaration nowhere
expressly stated the actual facts, which are that “neither
[Mr. Henderson] nor Intellect Wireless actually reduced to
practice” the inventions claimed in the asserted patents.
J.A. 2169. Nowhere did the declaration openly advise the
PTO of Mr. Henderson’s misrepresentations, as our
precedent clearly requires. See Rohm & Haas, 722 F.2d
at 1572.
INTELLECT WIRELESS, INC. v. HTC CORPORATION 7
Intellect asserts that Mr. Henderson’s attorney “spe-
cifically advised the Examiner on multiple occasions of
the mistaken claim of actual reduction to practice.”
Intellect Br. 35. But the record contradicts Intellect’s
position. The prosecution history of the asserted patents
is devoid of any statement by Mr. Henderson openly
admitting that he did not actually reduce the claimed
invention to practice. Mr. Henderson’s attorney testified
that, in a phone call, he told the Examiner that the “re-
vised declaration had none of the actual reduction to
practice elements in it” because “Mr. Henderson had some
misgivings about the actual reduction to practice.” J.A.
4026. And Mr. Henderson claims that the Examiner
allowed the claims based on constructive reduction to
practice. See id.; see also J.A. 5602 (“[The Examiner] told
us that he had considered only constructive reduction to
practice . . . .”); J.A. 7982 (indicating reliance on the
revised declaration). Neither the PTO nor the public was
apprised of the falsehoods in Mr. Henderson’s declara-
tions and told the actual facts. Thus, the district court
correctly found that “[a] full disclosure or correction of the
record was never made.” Intellect, 910 F. Supp. 2d at
1074. We hold that the district court did not clearly err in
concluding that HTC proved materiality by establishing
that Mr. Henderson engaged in affirmative egregious
misconduct when he filed a false declaration.
We note that Therasense in no way modified Rohm &
Haas’s holding that the materiality prong of inequitable
conduct is met when an applicant files a false affidavit
and fails to cure the misconduct. Therasense expressly
cited Rohm & Haas with approval and made clear that
filing a false affidavit is exactly the sort of “affirmative
act[] of egregious misconduct” that renders the miscon-
duct “material.” 649 F.3d at 1292. Indeed, Therasense
quoted Rohm & Haas for the proposition that “there is no
room to argue that submission of false affidavits is not
material.” Id. (quoting 722 F.2d at 1571) (internal quota-
8 INTELLECT WIRELESS, INC. v. HTC CORPORATION
tion marks omitted). The district court was faithful to the
requirements articulated in Rohm & Haas. Given the
false statements and the clear failure to do what is neces-
sary according to our precedent to cure the misconduct,
the argument that materiality has not been established is
entirely without merit.
II. Intent
The district court found that Mr. Henderson acted
with specific intent to deceive the PTO. Intellect, 910 F.
Supp. 2d at 1073–74. The court found that, in addition to
misrepresentations during prosecution of the asserted
patents, Mr. Henderson made false statements regarding
actual reduction to practice during prosecution of related
patents in order to overcome prior art. For example,
during prosecution of another patent in the family, Mr.
Henderson submitted a declaration stating that he had
constructed a handheld device that “displayed . . . mes-
sage information transmitted via the wireless network.”
Id. at 1062–63; see J.A. 21910 ¶ 11. However, the court
found that no such transmission took place—the device
only contained preloaded images for the purpose of
demonstration. Intellect, 910 F. Supp. 2d at 1071.
During prosecution of still another patent in the fami-
ly, Mr. Henderson submitted a press release to the PTO
stating that the Smithsonian acquired “two prototypes . . .
for a pioneering picturephone technology developed in
1993.” J.A. 25811. The district court found that this
statement was misleading because Mr. Henderson gave
the Smithsonian a device identified as “Intellect proto-
type” in 2003, and later gave the Smithsonian imitation
smartphones made of wood and plastic. Intellect, 910 F.
Supp. 2d at 1067–68. To be clear, the wood and plastic
imitation smartphones were not capable of performing the
claimed functions. The court found that, given the pat-
tern of false and misleading statements during prosecu-
tion of related patents, Mr. Henderson’s explanations for
INTELLECT WIRELESS, INC. v. HTC CORPORATION 9
the misrepresentations during prosecution of the asserted
patents were not credible. Id. at 1073. The court there-
fore concluded that intent to deceive the PTO was the
single most reasonable inference from Mr. Henderson’s
false assertions. Id.
Intellect argues that there was no specific intent to
deceive. It contends that Mr. Henderson’s multiple at-
tempts to correct the record demonstrate that intent to
deceive is not the most reasonable inference. Intellect
argues that Mr. Henderson’s attorney explained that he
made an inadvertent mistake in the original declaration
by including references to actual reduction to practice.
Intellect further argues that the court ignored evidence
that the Examiner relied on constructive, rather than
actual, reduction to practice. It contends that these facts
demonstrate that the district court’s finding that Mr.
Henderson intended to defraud the PTO was not the most
reasonable inference.
Intellect also contends that the court’s findings re-
garding a pattern of deceit are erroneous. Intellect argues
that, even though a device that Mr. Henderson used in his
demonstration contained only preloaded images, that
feature is consistent with the specification’s teaching that
the device can display a “preselected image, such as an
icon.” ’186 patent, col. 39 ll. 18–19. It argues that the
Smithsonian press release is irrelevant because it was
submitted after the asserted patents were allowed, during
prosecution of a later application. With regard to state-
ments about actual reduction to practice in the revised
declaration, Intellect contends that the district court
should have drawn the inference that it was a “copy-and-
paste” error. It further argues that the court’s finding
that Mr. Henderson lacked credibility was clear error
because HTC failed to prove that deceit was deliberate.
We see no clear error in the district court’s fact find-
ing on intent. Submission of an affidavit containing
10 INTELLECT WIRELESS, INC. v. HTC CORPORATION
fabricated examples of actual reduction to practice in
order to overcome a prior art reference raises a strong
inference of intent to deceive. See Rohm & Haas, 722
F.2d at 1571. Further, Mr. Henderson engaged in a
pattern of deceit, which makes the inference stronger. In
order to obtain claims directed to wireless transmission in
several related patents, Mr. Henderson told the PTO that
he built a device that could receive images via wireless
transmission. See, e.g., J.A 17001–02 ¶¶ 5–13 (U.S.
Patent No. 7,426,264); J.A. 21910 ¶ 11 (U.S. Patent No.
7,251,318); J.A. 24136–37 ¶¶ 5–13 (U.S. Patent No.
7,454,000). Nevertheless, the device was, at best, a
“simulation”—it contained only preloaded images and was
not capable of wireless communication. See, e.g., J.A.
5449–52; J.A. 5461–65; J.A. 5535; see also Intellect, 910 F.
Supp. 2d at 1071 (“Whatever . . . data was pre-loaded in
the device, the means, a wireless network or telephone,
did not exist in July of 1993 to transmit caller ID infor-
mation, a picture, an image or an emoticon.”). Intellect’s
argument that the declaration “satisfies the specification”
fails because the patent claims are directed to wireless
communication. See, e.g., U.S. Patent No. 7,251,318,
claim 1 (reciting a “communications network to wirelessly
transmit the caller ID and the picture from the message
center to the wireless portable communication device”).
While the misleading Smithsonian press release was
submitted after the asserted patents were allowed, it
reinforces the pattern of deceit.
Moreover, the district court’s finding of intent could
be affirmed based on the content of the two declarations.
The completely false statements in a first declaration
were followed by a replacement declaration that, rather
than expressly admitting the earlier falsity, dances
around the truth. The second declaration, which claims to
rely on constructive rather than actual reduction to
practice, continues to reference a “prototype” (that was
never built), a “product brochure” (even though there was
INTELLECT WIRELESS, INC. v. HTC CORPORATION 11
no product), and “commercialization” (that never oc-
curred). J.A. 7746 ¶ U; J.A. 7747 ¶ GG; J.A. 7748 ¶ 12.
As discussed earlier, neither Mr. Henderson nor his
attorney told the Examiner the truth. Thus, the district
court did not clearly err in concluding that specific intent
to deceive the PTO was the most reasonable inference
from Mr. Henderson’s conduct.
The district court also did not err when it decided not
to credit Mr. Henderson’s explanations for the repeated
submission of false affidavits. “[C]redibility determina-
tions are an aspect of fact-finding that appellate courts
should rarely reverse.” Star Scientific, Inc. v. R.J. Reyn-
olds Tobacco Co., 537 F.3d 1357, 1368 (Fed. Cir. 2008).
The pattern of deceit supports the court’s finding that Mr.
Henderson’s explanations for making false statements
during prosecution of the asserted patents are not credi-
ble.
CONCLUSION
We have considered the parties’ remaining arguments
and do not find them to be persuasive. We affirm the
district court’s judgment that the asserted patents are
unenforceable due to inequitable conduct.
AFFIRMED