United States: Patentee’s Demonstrated Knowledge of Prior Art Device Raises Inference of Materiality

Affirming a district court finding of a case as "exceptional" predicated on a determination of inequitable conduct, the U.S. Court of Appeals for the Federal Circuit found that the patent owner’s failure to disclose to the U.S. Patent and Trademark Office (USPTO) information on prior art devices. Bruno Independent Living Aids, Inc. v. Acorn Mobility Services, Ltd., Case Nos. 04-1114, -1125, (Fed. Cir., Jan. 11, 2005) (Lourie, J.).

Bruno manufactures and sells "stairlifts," which are devices that allow people with mobility impairments to ascend and descend stairways on a chair that travels along a rail.

Bruno sued Acorn, a competitor, alleging infringement of certain claims its patent. Acorn moved for summary judgment of invalidity based on numerous prior art stairlifts that had not been considered by the patent examiner. Admitting that the asserted claims were invalid in view of the prior art identified by Acorn, Bruno filed a reissue application at the USPTO, and the district court granted Acorn’s motion for summary judgment.

Subsequently, Acorn accused Bruno of having intentionally withheld invalidating prior art from the USPTO and asked the district court to declare the case "exceptional" under 35 U.S.C. §285. The district court, after finding that Bruno had failed to disclose to the USPTO information on several invalidating prior art stairlifts that Bruno had submitted to the U.S. Food and Drug Administration (FDA) in seeking approval to sell a stairlift covered by the patent.

Observing that the disclosure to the FDA occurred concurrently with the prosecution of the patent, the district court – noting the absence of a credible, good faith explanation from Bruno for not disclosing the same information to the USPTO – inferred that the information had been withheld with deceptive intent.

On appeal, Bruno challenged the district court’s determination of an exceptional case. While conceding awareness of the prior art devices during prosecution, Bruno contended that a duty to disclose did not arise because it had failed to appreciate its materiality.

The Federal Circuit, citing to a letter to the FDA in which Bruno indicated its "stairlift was similar in design and function to the [prior art] units," affirmed finding that the "record supports the district court’s finding that Bruno possessed actual knowledge of the [prior art device] and that it knew or should have known of its materiality." Significantly, the record reflected that the individual who prepared the FDA letter was also involved in the prosecution of the patent and had asked Bruno’s patent attorney to conduct a prior art search in preparation for filing the patent application.

On the issue of intent, the Federal Circuit affirmed the "negative inference" found by the district court, noting that "... in the absence of a credible explanation, intent to deceive is generally inferred from the facts and circumstances surrounding a knowing failure to disclose material information."

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