The case is an extraordinary example of establishing inequitable conduct in the face of federal judicial guidelines that severely limited one’s ability to prove inequitable conduct in court
Tampa, Fla. (PRWEB) July 22, 2014
A recent appeals court decision (Case Number is 2012-1642,2013-1024) in a case litigated by Shumaker, Loop & Kendrick, LLP attorney Ronald A. Christaldi is setting new legal standards in the realm of inequitable conduct, an important portion of U.S. patent law. Based on that Appellate decision, trial is now eminent, beginning next week.
“The case is an extraordinary example of establishing inequitable conduct in the face of federal judicial guidelines that severely limited one’s ability to prove inequitable conduct in court,” said Christaldi. “The move should signal an ability of companies to more aggressively protect their patents and crack down on fraud,” he said.
A panel composed of Circuit Judges from the Federal District Court of Appeals in Washington DC, including Timothy B. Dyk, William C. Bryson and Jimmie V. Reyna, issued the ruling late last year in a case that originated in 2004 in the Southern District of Ohio (case number 04-cv-1223), when a competitor targeted the Florida manufacturer ALPS South and accused the company of patent infringement.
ALPS is an international industry leader in designing and manufacturing prosthetic liners, the gel cushioning interface between a prosthesis and the residual limb. Christaldi guided the defense in the case and led a decade-long fight to protect ALPS, citing inequitable conduct in an effort to show that the competitor had fraudulently obtained the patents over which it was suing.
That strategy was made more perilous by new federal judicial standards as a result of a 2011 decision in the case of Therasense, Inc. v. Becton, Dickinson and Co. Before that decision, a judge could use his or her discretion in invalidating a patent if he or she believed the patent holder had engaged in unfair practices. In Therasense, the Court limited inequitable conduct to cases in which one could prove that a patent holder’s actions were directly related to the most material evidence on the patentability of patent in dispute and that the patent holder intentionally deceived the U.S. Patent and Trademark Office.
“Before Therasense, almost everyone who was sued for patent infringement claimed inequitable conduct as a defense,” Christaldi says. “The perception of the court was the inequitable conduct defense was being abused.”
In raising the standard to prove inequitable conduct, the decision in Therasense created a “but-for” rule: The party charging someone with inequitable conduct was required to show that he or she obtained the patent only by withholding vital information. Therasense also required someone claiming inequitable conduct to prove the patent holder had deliberately misled the Patent and Trademark Office, rather than doing so simply through negligence.
The Therasense decision was handed down in the middle of ALPS’ battle, well after Christaldi had asserted the company’s inequitable conduct strategy, but he confidently pursued the defense nevertheless. Citing Therasense, U.S. District Court Judge Gregory L. Frost ruled against ALPS in 2012 (case #2:04-cv-01223-GLF-MRA), arguing that ALPS had failed to prove that its competitor had withheld information “with the specific intent to deceive.”
“ALPS has failed to raise a genuine issue of material fact with respect to inequitable conduct, particularly in light of the heightened standard set forth by the Federal Circuit in Therasense,” Frost wrote.
The U.S. Court of Appeals disagreed, arguing that information withheld during the patent application process could indeed rise to the level of inequitable conduct. The judges also found that there was reason to infer that the competitor targeting ALPS had intentionally “withheld various pieces of material information and had no reasonable explanation for the several misrepresentations it made to the [Patent and Trademark Office].”
Ultimately, the appeals court remanded the dispute over inequitable conduct back to the lower federal court. That case will be heard in Columbus, Ohio, beginning July 30th. A jury sided with ALPS in a separate lawsuit that concluded in March. In that action, ALPS was awarded $15.5 million, plus attorneys’ fees, by Judge Mary S. Scriven in the Middle District of Florida (case # 8:08-cv-01893-MSS-MAP).
“This is a significant instance since Therasense where the appeals court has weighed in on inequitable conduct in such dramatic fashion,” Christaldi says. “The decision tells companies that while it may be difficult to prove inequitable conduct, that’s not an open invitation for them to commit fraud. I’m happy for my client, ALPS South, and its founder, Dr. Aldo Laghi, but I’m also happy the appeals court sent such a strong message about inequitable conduct. And I’m proud that Shumaker, Loop & Kendrick isn’t just winning cases—we’re helping shape the law at the highest levels.”
Shumaker, Loop & Kendrick is a full-service business law firm with more than 225 lawyers, 55 paralegals and 475 employees in five offices: Toledo and Columbus, Ohio; Tampa and Sarasota, Florida; and Charlotte, North Carolina. In each of its markets, Shumaker is the premier provider of quality legal services to individuals, small businesses, health care providers, nonprofits and Fortune 500 and international corporations. For more information, call 813-229-7600 or visit slk-law.com.