Brief Summary
Claims of inequitable conduct in patent litigation must meet a high threshold of particularity.

Complete Summary
Exergen Corporation sued Systems Application of Advanced Technology, Ltd. (“SAAT”) for patent infringement. In response, SAAT claimed inequitable conduct. The Federal Circuit, affirming the district court, held that SAAT’s inequitable conduct claim did not meet the heightened pleading standards under Federal Rule of Civil Procedure 9(b).

SAAT pled facts that established that Exergen was aware of two arguably, non-cumulative prior art patents, which it failed to disclose during the prosecution of the patent at issue. SAAT also alleged that one of the key arguments Exergen made during the prosecution was directly contradicted by a statement on Exergen’s website. SAAT alleged on information and belief that Exergen’s withholding of the prior art was intentional and its misrepresentation/omission was made with intent to deceive.

The Federal Circuit held that SAAT’s pleading did not provide the requisite specific identification of who, what, when, where and how the material misrepresentation or omission was committed before the Patent and Trademark Office (PTO). Neither did the pleading allege sufficient facts to support a reasonable inference of scienter. As a preliminary matter, the court noted that the Federal Circuit’s interpretation of Rule 9(b) is independent of, and likely more strict than other Circuits’ interpretations.

Starting with the “who” prong of the particularity test, the court held that SAAT’s pleading was deficient because it merely referred to Exergen and did not refer to specific individuals. Regarding the “what” and “where” of the alleged material omissions, the court held that SAAT failed to state which claims the withheld references were relevant to. Further, SAAT failed to explain “why” the withheld information was material and non-cumulative, and “how” an examiner could have used the withheld information to assess the patentability of the claims at issue.

Although these deficiencies alone were fatal to SAAT’s claim, the court also addressed the deficiencies in SAAT’s pleading of mental state. The court held SAAT’s pleading of scienter was deficient in two ways. First, the pleading did not give rise to a reasonable inference that Exergen had knowledge of the falsity of a material misrepresentation or knowledge of withheld material information. This deficiency was tied to the fact that, without linking specific individuals to the facts plead, it was impossible to infer that any specific individual involved in the application process knew of and withheld the relevant prior art claims or the statement on the website. Second, SAAT failed to plead specific intent to deceive the PTO. The court noted that while Rule 9(b) permits pleading on information and belief, SAAT failed to provide the information on which it relied and the reasons for its belief.

Significance of Opinion
Given the frequency with which inequitable conduct is pled in patent cases, this opinion may be an attempt to cut down both on frivolous claims and on the cost of patent litigation.

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.

Register Today for the 8th Annual Law Firm General Counsel Forum: Risk Management in Troubled Times

Presented by Hinshaw & Culbertson LLP, The Hildebrandt Institute and WestLegalEdCenter

Date: December 2-3, 2009

Location

Thomson Reuters
Thomson Hall, 4th Floor
195 Broadway
New York, NY

Who Should Attend?

• Law Firm General Counsel
• Chief Human Resources Directors
• Chief Compliance Officers
• Human Resources Professionals
• Risk Management Partners

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Space is limited so register early by contacting WestLegalEdCenter at 1-800-241-0214 or by clicking on the link below. Provide offer code 000000.
http://westlegaledcenter.com/program_guide/course_detail.jsf?courseId=19390351&sc_cid=ws_hild

Topics Include

• Managing opportunities and risks in the current economy
• The evolving role of the general counsel
• Risks of disagreeing litigation services
• Implications of abandoning the hourly fee
• Legal issues surrounding laterals

Fee and Discounts

$1,495 for Law Firm Registration

5,000 for Non-Law Firm and Non-Corporate Law Department Registration (Insurance Professionals: Mention Hinshaw to Receive Law Firm Rate of $1,495)

Receive a 10% discount off the registration fee for all participants if you send three or more people from the same organization to the Forum.

CLE Credit

States have widely varying regulations regarding MCLE credit. Please note that some jurisdictions do not accredit Law Practice Management programs. WestLegalEdCenter is an approved provider in AK, CA, GA, IL, ME, MO, ND, NV, NY, OK, SC, VT and WV. Credit may be applied for in additional jurisdictions upon request and in accordance with state MCLE rules.

REGISTER NOW for the Ninth Annual Legal Malpractice & Risk Management Conference and receive a 10% Early Bird Discount before December 1, 2009

Attend the industry's premier annual event focused on current and important developments in the law and litigation of malpractice claims, legal malpractice insurance and risk management strategies. Each conference panel examines recent case law and significant developments throughout the last year. One and one-half days will be devoted to legal malpractice (March 3-4), and one and one-half days will be devoted to risk management (March 4-5). The conference will be held in Chicago at The Westin Chicago River North Hotel.

Earn up to 15 hours of CLE credit, including up to 6.50 ethics credit!

Conference Topics

Legal Malpractice Sessions (March 3-4)

• Standing to Sue, Privity and Duty of Disclosure
• Litigation/Litigation Attorney
• What's Your Little Secret? They Want to Know
• Judgmental Immunity
• Insurance Coverage Update: The Year in Review – Prior Knowledge Redux and the Definition of Professional Services
• 2009 Updates and Statutory Causes of Action
• Stump the Panel

Legal Malpractice/Risk Management Cross-Over Sessions (March 4)

• The Insurance Marketplace and Considerations
• Who is the Client and Standing to Sue – Successor Entities, Affiliates and Subsidiaries
• Advance Conflict Waivers, Screening and How to Do It

Risk Management Sessions (March 4-5)

• The General Counsel Forum
• Suits for Fees/Mandatory Fee Arbitration
• Risk Management Considerations in Restructuring and Winding-Up Law Firms
• Managing Client and Law Firm Data, and What Gives When Client and Firm Policies Conflict?
• On the Horizon – The Slow Motion Revolution

Registration Fees

$1,300 for the Entire Conference - March 3-5
$925 for the Legal Malpractice Sessions Only - March 3-4
$925 for the Risk Management Sessions Only - March 4-5

Discounts (maximum 15% discount per registration)

Returning registrants receive 5% off the conference price
Multiple registrants receive 15% off when two or more colleagues from the same company register for the conference
Early birds receive 10% until December 1, 2009

For more information, please visit www.LMRM.com or click here to Register Now!

To speak with the Conference Planner, Katherine McCormack, please call 312-704-3329.