Exergen Corp. v. Brooklands Inc.

Citation: 290 F. Supp. 3d 113Docket: CIVIL ACTION NO. 12–12243–DPW

Court: District Court, District of Columbia; February 19, 2018; Federal District Court

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The court, led by Judge Douglas P. Woodlock, has determined that Exergen's pursuit of patent infringement litigation against Brooklands has been unproductive, culminating in the invalidation of claims 51 and 54 of U.S. Patent No. 7,787,938. Despite this, Exergen sought a ruling on whether it committed inequitable conduct in securing these invalid claims. Initially, the court considered if the invalidity ruling would preclude further litigation but found that the inequitable conduct issue was not entirely moot. Ultimately, the judge granted Exergen summary judgment on the inequitable conduct claim, concluding the case in the court.

The procedural background reveals that Exergen filed the suit on December 4, 2012, against Brooklands for alleged infringement, while Brooklands countered with claims of invalidity based on unpatentable subject matter and inequitable conduct. The court had previously ruled in favor of Brooklands concerning unpatentable subject matter under 35 U.S.C. § 101. Following the ruling, Exergen attempted to sidestep the inequitable conduct discussion, but Brooklands sought a resolution on the merits. 

Factual context includes details about Dr. Francisco Pompei, Exergen's founder and inventor of the '938 patent, alongside the examination of related patents, such as the '813 and '238 patents, which detail the technology behind the heat balance method used in ear thermometers.

Claim 36 of the '238 patent describes a temperature detector that includes a radiation sensor for viewing a target, a temperature sensor for measuring ambient temperature, an electronic circuit that processes signals from both sensors to determine the internal temperature of the target while accounting for ambient conditions, and an output indicating this internal temperature.

The '435 patent, issued to Dr. Pompei on May 2, 2000, outlines a device for detecting internal body temperature specifically in the armpit area, without covering measurements from the forehead or temporal artery, although some claims are broader. Claim 16 involves a body temperature detector that uses a radiation sensor to view a body surface area and electronics to compute the internal body temperature based on ambient and surface temperatures, assuming a specific ambient temperature.

In prior litigation, Exergen sued forehead thermometer manufacturers in Exergen Corp. v. Wal-Mart Stores, Inc., claiming infringement of the '813, '435, '238, '205, and '685 patents. During the case, Judge Lindsay defined "biological surface tissue" and "internal temperature" within the context of claim construction. The jury found infringement of the '813, '205, and '685 patents, but the Federal Circuit later overturned the infringement findings for the '813 and '685 patents and ruled the '205 patent was not invalid.

In a more recent case, Exergen Corp. v. Kids-Med, Inc., Exergen alleged that forehead thermometers infringed the '813 and '435 patents, with the court distinguishing the term "target surface area" in the '435 patent from "target of biological surface area" in the '813 patent.

Dr. Pompei holds the '938 patent and its predecessor, the '685 patent, both of which focus on measuring body temperature at unprotected sites like the forehead. James Smith, an experienced patent attorney, prosecuted the '938 patent and previously submitted an Information Disclosure Statement during the '685 patent prosecution that included the '813 and '238 patents. In advocating for the '938 patent, Smith argued that the '813 patent does not suggest forehead temperature measurement and that such measurement is not a clear extension of the earlier patent.

The determination that claims 51 and 54 of the '938 patent are invalid under 35 U.S.C. 101 raises the question of whether Brooklands' remaining inequitable conduct counterclaim is moot. Under Article III, courts can only adjudicate actual, ongoing controversies, and a case becomes moot when a material change in circumstances terminates the controversy. Although a case is moot when there is no longer an Article III controversy, courts may decline to decide a case on its merits based on equitable considerations. Exergen argues that Brooklands' counterclaim is moot due to the invalidation of the patent claims, asserting that further litigation is unnecessary. Brooklands counters that the invalidity does not moot the unenforceability counterclaim because a request for attorney fees under 35 U.S.C. 285 is pending. The Supreme Court has indicated that attorney fee determinations under § 285 require equitable discretion and are reserved for exceptional cases, suggesting that it is at the court's discretion to address attorney fees related to inequitable conduct once the patent has been invalidated on other grounds. The Federal Circuit case Monsanto Company v. Bayer Bioscience N.V. reinforces that a district court retains jurisdiction to address inequitable conduct and attorney fees even when the infringement claims are dismissed, indicating that such jurisdiction extends to findings of inequitable conduct for patents no longer in suit.

In Advanced Magnetic Closures, Inc. v. Rome Fastener Corporation, the Federal Circuit affirmed that courts maintain jurisdiction to consider attorney's fees and inequitable conduct claims even after a patent invalidity counterclaim has been withdrawn. Similarly, in Fort James Corp. v. Solo Cup Co., the court reversed a district court's dismissal of a counterclaim for unenforceability as moot, citing unresolved issues related to patent unenforceability and attorney fees despite a jury verdict of non-infringement. However, some interpretations suggest that unenforceability claims may be considered moot unless significant trial preparations have occurred. Exergen contends that Brooklands' counterclaim for the unenforceability of the '938 patent is moot since the invalidation of claims 51 and 54 was not fully litigated. The Federal Circuit has previously ruled that inequitable conduct claims can be moot if the relief sought is only attorney fees and no formal request for fees has been made. In contrast, in Zenith Electronics Corp. v. PDI Communications Systems, the court found that the inequitable conduct claim was not moot since not all claims of the patent were invalidated, distinguishing it from the Liebel-Flarsheim case where all asserted claims were invalid and the inequitable conduct claim was deemed moot.

The inequitable conduct claim remains relevant despite the invalidation of claims 51 and 54 of the '938 patent, as it could potentially render the entire '281 patent unenforceable. The central issue is whether the request for attorney fees under 35 U.S.C. § 285 is sufficient to keep the inequitable conduct claim from being moot. The Federal Circuit has typically declined to declare cases moot when attorney fees are still sought. In prior cases, such as Buildex Inc. v. Kason Indus. Inc., the court noted that questions regarding conduct in patent procurement could impact the determination of whether a case is "exceptional" for attorney fees purposes. The court also referenced decisions that distinguished between cases with overlapping facts regarding inequitable conduct and invalidity claims, asserting that the Federal Circuit has not adopted the reasoning from Sony Electronics v. Soundview Technologies, which suggested inequitable conduct claims could be moot if not based on the same facts as invalidity claims. Thus, the presence of a counterclaim for attorney fees related to inequitable conduct prevents dismissal of the claim as moot, even if the underlying patent has been declared invalid. The court emphasized that as long as a request for attorney fees exists, a case or controversy remains, warranting judicial resolution.

Liebel-Flarsheim is distinguishable from the current case due to the absence of a request for attorney fees in its counterclaim, unlike the present case where Brooklands has explicitly framed such a claim. The Federal Circuit in Ohio Willow affirmed that a case is not moot when a request for attorney fees is included, emphasizing the importance of case management in determining whether to resolve claims of inequitable conduct before other grounds for invalidity are explored. If a claim of inequitable conduct does not significantly impact the case's progression, it may be reasonable to defer its resolution. However, if substantial resources have been invested in developing the inequitable conduct issue, it may not be appropriate to deem it moot, even if other grounds for invalidity are established.

The court recognizes a failure in managing the case effectively, which led to unnecessary delays and expenses. Although treating the inequitable conduct claim as moot could have been a preferable option, the court opts to resolve it due to its presence in the pleadings and its prior briefing. Summary judgment on the inequitable conduct claim is acknowledged as a valid procedural option, contingent upon the absence of genuine issues of material fact and the moving party's entitlement to judgment as a matter of law, per Federal Rule of Civil Procedure 56.

Material facts that could influence the outcome of a case under applicable law can prevent summary judgment. In the context of the present motion regarding inequitable conduct, Brooklands carries the burden of proof concerning its counterclaim against Exergen. Brooklands alleges misrepresentation of Exergen's prior art '813 patent during the prosecution of the '938 patent, failure to disclose various U.S. patents and other documents during the '685 patent prosecution, and misrepresentations about the state of the art related to the '685 patent. 

Legal standards require individuals dealing with patent applications to maintain a duty of candor and disclose material information that could affect patentability. A breach of this duty may lead to a finding of inequitable conduct, which can invalidate a patent if the undisclosed information is found to be material and if there was intent to deceive the Patent and Trademark Office (PTO). The burden of proving inequitable conduct lies with the accused infringer, who must demonstrate by clear and convincing evidence both a misrepresentation or failure to disclose material information and intent to deceive the PTO.

Materiality is determined by whether a reasonable examiner would find the undisclosed information significant in deciding patentability. Intent to deceive requires more than mere non-disclosure; there must be a factual basis showing culpable intent, which needs to be proven by clear and convincing evidence. Negligence does not suffice for a finding of intent to deceive.

Intent is typically inferred from the circumstances surrounding the conduct, as direct evidence is rare. A more significant omission or misrepresentation reduces the burden of proving intent for inequitable conduct findings. Brooklands alleges that Dr. Pompei and Attorney Smith engaged in inequitable conduct during the prosecution of the '938 patent by misrepresenting the '813 patent, asserting it does not disclose forehead temperature measurement methods. Brooklands contends this misrepresentation is evident as Exergen had previously claimed the '813 patent broadly covered such methods in related litigations. The Manual of Patent Examining Procedure mandates that material information from litigation should be disclosed to the Patent and Trademark Office (PTO). During the '938 prosecution, Exergen submitted litigation documents related to Wal-Mart and Kids-Med cases and discussed the '813 patent with the Examiner, who noted that measuring forehead temperature is not an obvious extension of the '813 patent due to differences in temperature variability of the tympanic membrane and forehead. Exergen argues that characterizing the patents is merely attorney argument and cannot constitute inequitable conduct. Case law supports that patent examiners can independently evaluate material, and representations regarding interpretations do not imply inequitable conduct. Attempting to distinguish a claimed invention from prior art does not equate to material omission or misrepresentation when the examiner has access to the prior art. Therefore, even if the characterization was inaccurate, it does not rise to material misrepresentation under the Federal Circuit's standards.

In the prosecution of the '938 patent, the examiner considered the '813, '238, and '435 patents, as well as litigation documents from Wal-Mart and Kids-Med, which provided prior art and relevant information. The primary issue involves attorney arguments, which are deemed non-material since the examiner had the discretion to independently evaluate the '938 patent using all disclosed information. The Federal Circuit distinguishes between valid attorney arguments and "gross mischaracterizations." Exergen's assertion regarding the '813 patent's lack of a forehead temperature measurement device is not proven false and represents a reasonable interpretation. Previous rulings indicated no clear evidence contradicting Exergen's legal position regarding the prior art. Materiality is not established without evidence of deceptive intent, which must be the "single most reasonable inference" according to the Therasense standard. Brooklands claims a genuine issue of material fact regarding intent, but case law supports summary judgment when intent is not sufficiently demonstrated. The evidence presented by Brooklands, mainly consisting of contradictions in Exergen's litigation positions, does not convincingly indicate deceptive intent. The patent examiner's access to all relevant information undermines claims of misrepresentation. Brooklands also raises a stare decisis argument, emphasizing that legal determinations bind future cases, as established in relevant case law.

Brooklands references the Wal-Mart jury verdict affirming the validity of the '813 patent, which was claimed by Exergen to apply to forehead thermometer measurements, a finding upheld on appeal. The Federal Circuit noted that stare decisis is not applicable in the current litigation context as prior validity determinations do not encompass the full record on inequitable conduct claims. Exergen successfully met its summary judgment burden by demonstrating a lack of evidence supporting Brooklands' allegations of inequitable conduct related to affirmative misrepresentation in the '938 patent prosecution.

Brooklands contends that Exergen engaged in inequitable conduct by failing to disclose specific prior art during the '685 patent prosecution, claiming this could invalidate the '938 patent due to the doctrine of infectious unenforceability. This doctrine allows courts to examine the interrelation of patent claims, as inequitable conduct can render an entire patent, and related patents, unenforceable. The relationship between the '635 and '938 patents is acknowledged as immediate and necessary.

Brooklands lists several patents and other documents that Exergen allegedly failed to disclose. In response, Exergen argues that these patents were disclosed during the '938 patent prosecution, negating the infectious inequitable conduct claim. The Federal Circuit has established that misrepresentations in patent prosecution can be cured by notifying the PTO of such misrepresentations and providing the correct facts, which must be done for earlier inequitable conduct to avoid tainting subsequent applications. Thus, the obligation to address past inequitable conduct remains crucial to the integrity of related patent applications.

Failure to address inequitable conduct related to prior omissions results in the unenforceability of a later patent. However, in cases like *Applied Materials, Inc.*, the omission of prior art in an abandoned application does not constitute inequitable conduct if disclosed in a continuing application. The later patents that incorporated earlier publications by reference are not adversely affected by any inequitable conduct associated with the original patent. Courts are divided on whether the Rohm. Haas requirements apply to alleged misconduct involving undisclosed prior art. In *eSpeed, Inc.*, the court differentiated between cases of inequitable conduct during patent prosecution and those involving abandoned applications, concluding that the patentee must meet Rohm. Haas requirements when improper omissions occur in a successful application. The question of whether subsequent disclosures can remedy prior omissions remains unresolved, but the court grants summary judgment on other grounds. Exergen contends that, even assuming all omitted references were material, there is insufficient evidence of deceptive intent necessary to deny summary judgment for lack of equitable conduct. Under the *Therasense* standard, proving inequitable conduct necessitates clear and convincing evidence of the applicant's deliberate decision to withhold known material references, which cannot be inferred from materiality alone.

A patentee is not obligated to provide an explanation for their actions unless an accused infringer demonstrates intent to deceive with clear and convincing evidence. In the case at hand, Brooklands asserts there is a genuine question of material fact regarding Exergen's intent but fails to present sufficient evidence to establish that deceptive intent is the most reasonable inference. Exergen argues that Dr. Pompei and Attorney Smith believed the prior art references in question were immaterial or already disclosed. Various patents related to measuring surface temperatures and ear thermometers are discussed, with Exergen asserting that there is no evidence indicating that these patents were deemed more relevant than others that were disclosed. Brooklands has not provided substantial evidence to counter Exergen's claims, including the acknowledgment of a disclosed patent that teaches body temperature measurement but was distinguished during prosecution for its lack of specific computation methods. Ultimately, there is insufficient evidence to support a finding of deceptive intent regarding the omission of prior art references.

Brooklands alleges Exergen engaged in inequitable conduct by failing to disclose the Physician's Reference Handbook during the prosecution of the '685 patent, which describes heat-sensitive liquid crystal strips and infrared thermometers for measuring temperature. Exergen contends that the Handbook merely references previously disclosed inventions, including the '091 and '813 patents. Brooklands has not provided clear evidence of deceptive intent, as other interpretations suggest Exergen had a good faith belief that the information was not material. The court referenced Exergen Corp. v. Kaz USA, Inc., which found no deceptive intent in similar circumstances.

Additionally, Brooklands claims Exergen failed to disclose letters from Marybeth Pompei that consider an "arterial thermometer" for measuring temperature at the ear. Exergen disputes the characterization of these letters as prior art and argues Brooklands has not shown deceptive intent regarding this omission. The court concludes that multiple interpretations exist for the withheld information, with deceptive intent being the least likely.

Brooklands further argues that Exergen mischaracterized the state of the art, citing marketing materials that suggest a historical precedent for temperature measurement at the temporal artery. Exergen responds that the disclosed brochure aligns with its marketing materials considered by the examiner, and the statement does not pertain specifically to forehead temperature measurement.

The court grants Exergen's motion for summary judgment on the inequitable conduct claim. Although Brooklands requested attorney fees in its counterclaim, it has not submitted a supported motion for them. To conclude the case, the court also grants Brooklands' motion to dismiss its antitrust counterclaims, rendering moot Exergen's motion for a Rule 54(b) judgment and stay pending appeal.