Giuliano v. Sandisk LLC

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
ALFRED T. GIULIANO, CHAPTER 7 TRUSTEE OF
THE RITZ ESTATE, CPM ELECTRONICS, INC, ON
BEHALF OF THEMSELVES AND ALL OTHERS
SIMILARLY SITUATED, E.S.E. ELECTRONICS, ON
BEHALF OF THEMSELVES AND ALL OTHERS
SIMILARLY SITUATED, MFLASH, INC.,
Plaintiffs-Appellants
v.
SANDISK LLC,
Defendant-Appellee
______________________
2016-2166
______________________
Appeal from the United States District Court for the
Northern District of California in No. 4:10-cv-02787-SBA,
Judge Saundra Brown Armstrong.
______________________
Decided: July 27, 2017
______________________
PETER SLATIN RATNER, Kellogg, Huber, Hansen,
Todd, Evans & Figel, PLLC, Washington, DC, argued for
plaintiffs-appellants. Also represented by AMELIA
FRENKEL, JOSEPH S. HALL.
2 GIULIANO v. SANDISK LLC
RAOUL D. KENNEDY, Skadden, Arps, Slate, Meagher
& Flom LLP, Palo Alto, CA, argued for defendant-
appellee. Also represented by MICHAEL H. MENITOVE,
New York, NY.
______________________
Before PROST, Chief Judge, BRYSON and HUGHES, Circuit
Judges.
HUGHES, Circuit Judge.
Plaintiffs-Appellants Alfred T. Giuliano, Chapter 7
Trustee of the Ritz bankruptcy estate; CPM Electronics
Inc.; E.S.E. Electronics, Inc.; and MFLASH, Inc. filed this
Walker Process antitrust class action against SanDisk
LLC. The district court granted summary judgment in
favor of SanDisk. Because the record does not show
evidence sufficient to raise a triable issue on SanDisk’s
intent to deceive the Patent and Trademark Office, we
affirm.
I
Alfred T. Giuliano, Chapter 7 Trustee of the Ritz
bankruptcy estate; CPM Electronics Inc.; E.S.E. Electron-
ics, Inc.; and MFLASH, Inc. (collectively, Ritz) brought
this Walker Process antitrust class action alleging
SanDisk fraudulently obtained U.S. Patent Nos.
5,172,338 and 5,991,517 from the Patent and Trademark
Office and enforced the patents to monopolize the NAND
flash memory markets.
SanDisk moved for summary judgment asserting, in
part, that it did not obtain either the ’338 or ’517 patents
by fraud on the PTO. Specifically, SanDisk argued that
Ritz had not produced any evidence to prove that two
undisclosed prior art references by Dr. Richard Simko
GIULIANO v. SANDISK LLC 3
(“Simko references”) were material and were withheld
with the intent to deceive the PTO. 1
Ritz, in opposition, submitted evidence purporting to
create a triable issue on materiality and intent to deceive.
To establish materiality, Ritz relied on a summary judg-
ment ruling in a prior district court action involving the
’338 and ’517 patents brought by SanDisk against
STMicroelectronics (STM) and an administrative law
judge determination from a concurrent International
Trade Commission (ITC) investigation involving the same
patents. In the district court action, STM filed Walker
Process counterclaims against SanDisk alleging in part
that SanDisk had withheld the Simko references. At
summary judgment, the court determined that there was
a question of fact regarding the materiality of the Simko
references. In reaching this decision, the court relied on
expert testimony presented by STM and findings from the
concurrent ITC investigation involving the ’338 and ’517
patents. Here, although Ritz submitted the prior sum-
mary judgment ruling and ALJ determination from that
ITC investigation to the district court, Ritz did not proffer
any separate expert testimony.
To establish intent to deceive, Ritz again relied pri-
marily on the STM summary judgment ruling. According
to Ritz, the STM court had identified at least three cir-
cumstances that created a material issue of fact as to
SanDisk’s intent. First, SanDisk had retained Dr. Simko,
1 Ritz also argues the same regarding the undis-
closed prior art references Japan Unexamined Patent
Application S62-188100 (“JP100 patent”) and Great
Britain Patent GB 2,029,145. Because the evidence of
deceptive intent as to those two references is far less than
the evidence of deceptive intent as to the Simko refer-
ences, we affirm the summary judgment ruling as to those
references as well.
4 GIULIANO v. SANDISK LLC
the inventor of the undisclosed references, as a consultant
in connection with a reexamination of the ’338 patent.
Second, SanDisk cited the Simko references during the
prosecution of related U.S. Patent No. 5,293,560 just a
few years prior to the ’338 patent reexamination and ’517
patent application. Third, SanDisk had entered the
Simko references into a searchable database designed to
ensure compliance with its disclosure obligations to the
PTO. In addition to relying on the STM summary judg-
ment order, Ritz also submitted copies of the database
entries, excerpts from the file history of the ’560 patent,
and excerpts from the testimony of Eliyahou Harari, one
of SanDisk’s founders, from an ITC hearing involving the
’338 and ’517 patents.
The district court determined that the STM summary
judgment order and the ALJ determination were inad-
missible as evidence. After finding that Ritz failed to
provide independent evidence of intent to deceive, the
court granted SanDisk’s motion for summary judgment.
Ritz appeals. We have jurisdiction under 28 U.S.C.
§ 1295(a)(1).
II
We review summary judgment determinations de no-
vo. Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1334
(Fed. Cir. 2016). Summary judgment is only appropriate
if “there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.”
FED. R. CIV. P. 56(a). In reviewing summary judgment,
“[t]he evidence of the non-movant is to be believed and all
justifiable inferences are to be drawn in [the non-
movant’s] favor.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255 (1986).
Ritz argues that the district court erred in granting
summary judgment to SanDisk on the issue of intent to
deceive. According to Ritz, a reasonable juror could rely
on the following to conclude that SanDisk intended to
GIULIANO v. SANDISK LLC 5
defraud the PTO by failing to disclose the Simko refer-
ences: (1) SanDisk hired Dr. Simko as a consultant in the
’338 patent reexamination proceedings, which took place
at the same time as the ’517 patent application; (2)
SanDisk cited the Simko references in a related patent
application for the ’560 patent a few years prior to the
’338 patent reexamination and ’517 patent application;
and (3) SanDisk had entered the Simko references into a
searchable database created specifically for identifying
relevant prior art. 2
To overcome summary judgment, a Walker Process
claimant must present evidence showing that the patent-
ee obtained a patent “through actual fraud upon the
PTO.” Dippin’ Dots, Inc. v. Mosey, 476 F.3d 1337, 1346
(Fed. Cir. 2007). To prove Walker Process fraud, the
plaintiffs must make high threshold showings of intent
and materiality. Nobelpharma AB v. Implant Innova-
tions, Inc., 141 F.3d 1059, 1070 (Fed. Cir. 1998). The
misrepresentation or omission alleged to be fraudulent
2 Ritz, in its opening brief, also provided a fourth
reason for why a reasonable juror could conclude that
SanDisk intended to deceive the PTO: SanDisk knew that
JP100 also needed to be disclosed to the PTO because the
PTO had rejected claims in another SanDisk application
related to the ’517 over that reference. But Ritz never
raised this argument at the district court. Plaintiffs’
Opposition to SanDisk Corporation’s Renewed Motion for
Summary Judgment and Memorandum of Points and
Authorities (Opposition to SJ), Dkt. 322, Ritz v. SanDisk
Corp., No. 4:10-cv-2787-SBA (N.D. Cal. Nov. 10, 2015).
Even if Ritz had preserved the argument, its only sup-
porting evidence is the STM summary judgment order,
which is not admissible as evidence and cannot create a
genuine issue of material fact. Nipper v. Sipes, 7 F.3d
415, 417 (4th Cir. 1993).
6 GIULIANO v. SANDISK LLC
“must evidence a clear intent to deceive the examiner and
thereby cause the PTO to grant an invalid patent.” Id.And a finding of inequitable conduct does not by itself
support a finding of Walker Process fraud. Dippin’ Dots,
476 F.3d at 1348. The claim “must be based on independ-
ent and clear evidence of deceptive intent . . . .” No-
belpharma, 141 F.3d at 1071. “Direct evidence of intent
to deceive or mislead the PTO is rarely available but may
be inferred from clear and convincing evidence of the
surrounding circumstances.” Kaiser Found. Health Plan,
Inc. v. Abbott Labs., Inc., 552 F.3d 1033, 1047 (9th Cir.
2009) (citing Purdue Pharma L.P. v. Endo Pharms. Inc.,
438 F.3d 1123, 1133–34 (Fed. Cir. 2006)); see also Tyco
Healthcare Grp. LP v. Mutual Pharm. Co., Inc., 762 F.3d
1338 (Fed. Cir. 2014) (holding that a Walker Process
claimant has the “burden to show ‘no less than clear,
convincing proof of intentional fraud involving affirmative
dishonesty.’” (citing C.R. Bard, Inc. v. M3 Sys., Inc., 157
F.3d 1340, 1364 (Fed. Cir. 1998))).
We conclude that Ritz has not brought forward suffi-
cient evidence for a reasonable juror to find that SanDisk
intended to deceive the PTO. As an initial matter, Ritz
overstates the record when it argues SanDisk hired Dr.
Simko as a consultant in the ’338 patent reexamination
proceedings. At the district court, Ritz relied predomi-
nantly on the STM summary judgment order to support
its contention that Dr. Simko was hired as a consultant
for the ’338 patent reexamination. Opposition to SJ at 14,
Ritz, (No. 4:10-cv-2787-SBA). Notwithstanding the fact
that the STM summary judgment order is inadmissible as
evidence, Nipper, 7 F.3d at 417, the summary judgment
order’s description of the evidence states only that Dr.
Simko was hired “as a litigation consultant for the ITC
382 Investigation” and does not state that Dr. Simko was
GIULIANO v. SANDISK LLC 7
hired for the ’338 patent reexamination. 3 SanDisk Corp.
v. STMicroelecs., Inc., No. C 04-4379, 2008 WL 4615605,
at *2 (N.D. Cal. Oct. 17, 2008). Ritz also pointed to the
testimony of Mr. Harari, procured at an ITC Hearing
during an ITC investigation. While Mr. Harari testified
that Dr. Simko became a consultant of SanDisk, he could
not recall any details about when he was hired or what he
did with SanDisk. J.A. 12254–55. Thus, contrary to
Ritz’s assertion, the record does not support the fact that
Dr. Simko was hired as a consultant for the ’338 patent
reexamination.
Next, Ritz argues that SanDisk cited the Simko refer-
ences during the prosecution of the “related [’560] patent.”
But the ’560 patent does not claim priority to the ’338 or
’517 patents. Nor is it a parent, continuation, continua-
tion-in-part, or divisional application of those patents.
Instead, all three patents have one inventor in common.
Ritz has not submitted any testimony or evidence explain-
ing how, other than the overlap of one inventor, the ’560
patent is “related” to the ’338 and ’517 patents. And the
’560 patent’s prosecution history reveals no information
on why the Simko references were cited. See J.A. 12212–
13. Therefore, the evidence in the record shows only that
the Simko references were cited during the prosecution of
the ’560 patent, a patent whose relationship to the ’338
3 While the STM summary judgment order did
state in the analysis section that Dr. Simko had been
hired “in connection with the ’338 reexamination,” this
was clearly referring to the fact that Dr. Simko had been
hired to assist with the ITC 382 investigation, which
occurred at the same time as the ’338 reexamination.
SanDisk, 2008 WL 4615605, at *8. The STM summary
judgment order did not describe any evidence indicating
that Dr. Simko had been hired specifically to assist with
the ’338 reexamination.
8 GIULIANO v. SANDISK LLC
and ’517 patents is unknown except for the fact that all
three patents have an overlapping inventor.
Finally, Ritz argues that SanDisk must have known
of the Simko references because SanDisk entered the
references into a searchable database created specifically
to identify relevant prior art. Here, Ritz has supported its
argument by submitting the database entries as evidence.
J.A. 12032; 12047. The database entries contained the
reference’s patent number, title, inventor’s name, assign-
ee’s name and publication date. J.A. 12064–65. Ritz also
submitted testimony from a SanDisk employee about the
database. J.A. 12063–71.
In sum, Ritz has brought forward the following evi-
dence at summary judgment to show SanDisk’s intent to
deceive: (1) SanDisk cited the Simko references in a
patent application that shares one inventor with the ’338
and ’517 patents and (2) SanDisk entered the Simko
references into a database. This evidence in the aggre-
gate is not enough to raise a triable issue of material fact
on intent to deceive.
For example, in Nordberg, Inc. v. Telsmith, Inc., 82
F.3d 394 (Fed. Cir. 1996), we considered the situation
where an undisclosed reference was found amongst hun-
dreds of patents in the patentee’s files. We found that the
mere presence of an undisclosed reference, where there
was no evidence showing that the patentee had searched
and found a copy of that reference during the prosecution
of the patent, was not enough to show an intent to deceive
for purposes of inequitable conduct, let alone the height-
ened standard for Walker Process claims. Similarly here,
SanDisk’s database contained hundreds of entries, J.A.
12071, and Ritz submitted no evidence showing that
SanDisk had searched the database entries during the
prosecution of the ’338 and ’517 patents.
The additional fact that SanDisk had cited the Simko
references during the prosecution of the ’560 patent is still
GIULIANO v. SANDISK LLC 9
not enough to survive summary judgment. This is be-
cause Ritz has not pointed to any evidence showing that
when SanDisk cited the Simko references, it knew of the
specific information in the Simko references alleged to be
material to the ’338 and ’517 patents. The fact that
SanDisk had entered the Simko references in a database
is not sufficient to close that gap. As we explained in
Exergen Corporation v. Wal-Mart Stores, Inc., 575 F.3d
1312, 1330 (Fed. Cir. 2009), “[a] reference may be many
pages long, and its various teachings may be relevant to
different applications for different reasons. Thus, one
cannot assume that an individual, who generally knew
that a reference existed, also knew of the specific material
information contained in that reference.” The ’560’s
prosecution history does not reveal why the references
were disclosed to the PTO. See J.A. 12212–13. Perhaps
most problematically, Ritz has provided no evidence
regarding how the ’560 patent is relevant to the ’338 and
’517 patents, beyond the fact that all share one overlap-
ping inventor.
In conclusion, when viewing the totality of the evi-
dence in the record, we find that Ritz has not come for-
ward with enough evidence to create a triable issue of
material fact on intent to deceive. In light of this, we do
not reach Ritz’s remaining arguments on appeal. Accord-
ingly, we affirm the district court’s grant of SanDisk’s
motion for summary judgment.
AFFIRMED
COSTS
Costs to Appellee.