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Brandt v. Honnecke

United States District Court, D. Colorado

September 19, 2018

STEVEN LEE BRANDT, an individual, JAMES CLAY WALTERS, an individual, and COLORADO BOX COMPANY, INC., a Colorado corporation, Plaintiffs,
VON HONNECKE, an individual, CHASE HONNECKE, an individual, and S & H SHEET METAL, INC., a Colorado corporation, Defendants.



         Plaintiffs accuse Defendants of infringing U.S. Patent No. 8, 999, 029 (the “'029 Patent”). Defendants assert, among other things, by way of defense and counterclaim that the patent-in-suit is unenforceable because of misuse or inequitable conduct. This matter is before the Court on Plaintiffs' Motion for Summary Judgment (ECF No. 138), arguing that Defendants cannot produce any evidence in support of misuse or inequitable conduct. In Response, Defendants withdraw, without prejudice, their affirmative defense of misuse (ECF No. 145, page 10), [1] but assert the evidence is sufficient as to inequitable conduct. Plaintiffs' Reply argues otherwise.[2]

         I. BACKGROUND

         The '029 Patent concerns a furnace filter box, which is made with various panels (two sides, front, back, and bottom) and other pieces. The furnace filter box may be shipped disassembled and its height can be reduced to fit under a furnace. As stated, Plaintiffs' complaint alleges Defendants infringe the '029 Patent. Defendants' affirmative defenses include the following: “(m) the patent in suit has been so misused in violation of the antitrust laws as to render said patents [sic] unenforceable”; and “(o) the claims of the patent are invalid and/or unenforceable due to the patentee's inequitable conduct before the United States Patent and Trademark Office in failing to disclose material information, which was known to the applicants or its, his or their attorneys, at the time the application for patent was filed.” (SUMF at ¶¶1-4, (bracketed matter and brackets in original).)[3] In addition, Defendants' counterclaim alleges “[t]he '029 patent is, on information and belief, invalid and unenforceable for one or more of the reasons as alleged in the above specified Affirmative Defenses, all of which are incorporated herein by this reference.” (SUMF at ¶¶1-4 (brackets in original).) Thus, Defendants' counterclaim also alleges unenforceability of the ‘029 Patent based on misuse or inequitable conduct.

         Plaintiffs' Motion seeks a determination that Defendants cannot prevail on these two affirmative defenses/counterclaims. As Defendants withdraw the affirmative defense of misuse (and, therefore, their counterclaim based on misuse), Plaintiffs' Motion based on misuse is moot. Accordingly, at issue is Plaintiffs' alleged inequitable conduct and the facts and law applicable to this affirmative defense and counterclaim (hereafter, collectively, “defense”). The inequitable conduct defense is based on Plaintiffs' alleged failure to disclose prior art during the prosecution of the '029 Patent.

         Exactly which alleged prior art is at issue is unclear. Plaintiffs' Motion refers the Court to the Whitehair Report, issued by Defendants' expert, which references the Smith & Willis and Gustafson boxes and identifies the following alleged prior art: Allen; Schumacher; Goetl; Hong; Wu; Kearsley; and Livingston. (Motion, p. 13, referring the Court to SUMF ¶10 (ECF No. 124-2, pp. 3-4).) Defendants' Response, however, refers to “identical prior art” “including” Smith & Willis, HVAC, and Gustafson, [4] and it appears that those are the boxes on which their expert is relying.[5] (ECF No. 145, pp. 9-10; No. 124-2, e.g., p. 6.) The references (prior art) cited by the examiner at United States Patent and Trademark Office (the “PTO”) during the '029 Patent included Wu, Kearsley, Livingston, Delaney, Parker, and Miller. (ECF No. 151-2 to 151-5; No. 154-2 to 154-5.) Smith & Willis, HVAC, Gustafson, and Allen, which are apparently at issue, were not cited.


         Summary judgment is appropriate only if there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Gutteridge v. Oklahoma, 878 F.3d 1233, 1238 (10th Cir. 2018). Whether there is a genuine dispute as to a material fact depends upon whether the evidence presents a sufficient disagreement to require submission to a jury or is so one-sided that one party must prevail as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986); Stone v. Autoliv ASP, Inc., 210 F.3d 1132, 1136 (10th Cir. 2000). Once the moving party meets its initial burden of demonstrating an absence of a genuine dispute of material fact, the burden then shifts to the nonmoving party to demonstrate the existence of a genuine dispute of material fact to be resolved at trial. See 1-800-Contacts, Inc. v., Inc., 722 F.3d 1229, 1242 (10th Cir. 2013) (citation omitted). “The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Scott v. Harris, 550 U.S. 372, 380 (2007) (citation omitted). The facts, however, must be considered in the light most favorable to the nonmoving party. Cillo v. City of Greenwood Vill., 739 F.3d 451, 461 (10th Cir. 2013) (citations omitted).

         III. ANALYSIS

         Inequitable conduct, a judge-made doctrine, “is an equitable defense to patent infringement that, if proved, bars enforcement of a patent.” Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1285 (Fed. Cir. 2011). This remedy - rendering the entire patent unenforceable - has been referred to as the “atomic bomb” of patent law. Id. at 1288 (citing Aventis Pharma S.A. v. Amphastar Pharm., Inc., 525 F.3d 1334, 1349 (Fed. Cir. 2008) (Rader, J., dissenting)). Thus, in Therasense, supra, the Federal Circuit tightened the standards to trigger the doctrine.

         There are two separate requirements for the defense of inequitable conduct: intent and materiality. Absent affirmative egregious conduct, to prevail on the defense, the accused infringer must prove by clear and convincing evidence that: (1) “the patentee acted with the specific intent to deceive the PTO”; and (2) the non-disclosed information was but-for material. Therasense, 649 F.3d at 1290-91. See also, e.g., KFx Med. Corp. v. Arthrex, Inc., No. 11cv1698 DMS (BLM), 2012 WL 12847287, at *3 (S.D. Cal. Oct. 15, 2012).

         To show the patentee acted with the specific intent to deceive, the accused infringer must prove that the patentee “knew of the reference, knew that it was material, and made a deliberate decision to withhold it.” Therasense, 649 F.3d at 1290 (emphasis added). Neither gross negligence nor negligence under a “should have known” standard satisfies this intent requirement. Id.

         Intent may be inferred from indirect and circumstantial evidence. “However, to meet the clear and convincing evidence standard, the specific intent to deceive must be ‘the single most reasonable inference able to be drawn from the evidence.'” Id. (quoting Star Scientific Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1366 (Fed. Cir. 2008)). “[T]he evidence must be sufficient to require a finding of deceitful intent in the light of all the circumstances.” Id. (quotation marks and citation omitted) (emphasis in original). “[W]hen there are multiple reasonable inferences that may be drawn, intent to deceive cannot be found.” Id. at 1290-91. Moreover, intent may not be inferred solely from materiality. Id. at 1290. “Proving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive.” Id.

         The patentee need not offer any good faith explanation for withholding material information unless the accused infringer first proves an intent to deceive by clear and convincing evidence. Id. at 1291. And, “[t]he absence of a good faith explanation for withholding a ...

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