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Wednesday, 01/07/2009 9:16:47 AM

Wednesday, January 07, 2009 9:16:47 AM

Post# of 53
trying to understand this all that went down in june...
their patent was ruled not enforceable or something
but the decision that they had to pay 3+ mill in lawyer fees was reversed...
but appeals continue?


http://www.patenthawk.com/blog/2008/06/balled_out.html
June 19, 2008
Balled Out

Wily guys Mork & Beaty of Scanner Technologies got semiconductor packaging inspection patents. I thought it was Mork and Mindy, but I was wrong again. In the patenting process, they got hot under the collar about a competitor's product, hastening prosecution with a "make special" petition. Enforcing the patents, which were about ball grid arrays (BGA), turned out to be not such a ball. Defendant ICOS fought back with an affirmative defense of bad juju, patent street jive for inequitable conduct. Courts love street jive. Works every time. Well, not this time. At least, not for that.

Scanner Technologies v. ICOS Vision Systems (CAFC 2007-1399)

Inventors Elwin M. Beaty ("Beaty") and David P. Mork ("Mork") discovered an apparatus and method for the three-dimensional inspection of ball array devices in mid-1997 and filed a patent application.

Two patent applications, actually, a parent and a divisional, which matured into 6,064,756 and 6,064,757.

Scanner displayed its first embodiment of the method and apparatus--an inspection module called the Ultra Vim Plus ("UV+")--in July 1998 at the Semicon West trade show in San Jose, California, and again in December 1998 at the Semicon Japan trade show.

ICOS representatives were attendees of these trade shows, and interacted with Scanner representatives on at least one occasion. Based at least in part on what ICOS observed at the trade shows, ICOS engaged Scanner in preliminary discussions regarding ICOS's interest in licensing or acquiring Scanner's BGA technology. ICOS eventually abandoned those pursuits in light of its own progress in developing a 3D BGA inspection system.

By February 1999, Scanner learned that ICOS had launched the competing CyberSTEREO 3D BGA inspection product. In Scanner's view, ICOS's new product infringed the proposed claims of Scanner's patent applications. Consequently, while the applications were pending, Scanner submitted a petition to make special to the Commissioner of Patents and Trademarks at the United States Patent and Trademark Office ("PTO"). The purpose of such a petition is to seek accelerated review of the pending application.1 In its petition, Scanner's patent attorney, George A. Leone ("Leone") submitted that the application was entitled to special handling status because of actual infringement. The petition contained all the prerequisites that the PTO requires, including Leone's statement that a "rigid comparison" of the alleged infringing method with the claims of the application had been made, and that in Leone's opinion, some of the claims are "unquestionably infringed." The petition was accompanied by a statement from the applicant and assignee, Beaty, describing the claimed invention, his role in the invention, certain interactions between Scanner and ICOS, and ICOS's competing system. The PTO granted Scanner's petition and advanced the application process. Literature describing the Projector system was considered by the PTO Examiner as prior art to the patents in suit, and the claims were considered patentable over the system as described in the literature.

1 Petitions to make special are governed by Section 708.02 of the Manual of Patent Examining Procedure (MPEP), which provides that an application may be made special because of actual, but not prospective, infringement upon payment of the fee and the filing of a petition accompanied by a statement by the applicant, assignee, or an attorney/agent alleging the following:

(A) That there is an infringing device or product actually on the market or method in use;
(B) That a rigid comparison of the alleged infringing device, product, or method with the claims of the application has been made, and that, in his or her opinion, some of the claims are unquestionably infringed; and
(C) That he or she has made or caused to be made a careful and thorough search of the prior art or has a good knowledge of the pertinent prior art.

Manual of Patent Examining Procedure § 708.02 (8th ed. 2006).

So, out of the PTO toaster the patents popped, and into the courthouse frying pan. The mixed analogy bode ill.

Scanner filed suit against ICOS on July 7, 2000, accusing ICOS's CyberSTEREO ball grid array inspection system of infringing the patents in suit. ICOS filed an answer denying the substantive allegations contained in the complaint. In its counterclaim, ICOS sought damages for unfair competition under the Lanham Act, common law unfair competition and trade disparagement, and tortious interference with advantageous business relations. ICOS also asked the court to declare Scanner's '756 and '757 patents invalid, unenforceable, and not infringed by ICOS. The parties agreed that the case would rise and fall on claim 1 of the '756 patent.

After this court reviewed the district court's Markman ruling in a 2004 interlocutory appeal, Scanner Technologies Corp. v. ICOS Vision Systems Corp., N.V., 365 F.3d 1299, 1300 (Fed. Cir. 2004) ("Scanner I"), the district court, on remand, held a bench trial on infringement, validity and enforceability in March 2005.

The "make special" petition was based on fibbing, the district court concluded.

Regarding inequitable conduct, the district court took issue with Leone's statement in the petition that he had made a "rigid comparison" of the CyberSTEREO system with the claims of the application, when the district court found, based on Leone's deposition testimony, that Leone "had not actually seen the ICOS device, as suggested." Scanner II, 486 F. Supp. 2d at 346. Leone's statements were not the only basis for the court's finding of inequitable conduct; the district court also found Beaty's statements in connection with the petition to make special to be problematic.

The patents were Obzillified by ICOS's Projector system.

With regard to obviousness, the district court enumerated what it accepted to be well known principles in the prior art, including illumination in camera-based systems, two-camera systems where one camera is disposed at an angle to another, use of triangulation calculations to make measurements, triangulation calculations utilized with a two-camera system, use of stereo vision, and the idea of calibrating cameras. In view of those prior art principles, the district court concluded that ICOS's Projector system rendered Scanner's claims obvious.

The district court, considering the triangulation calculations, bilinear interpolation, coplanarity, phase of the moon, shoe size, and trim of the rim of the fedora, concluded non-infringement. Reading the court opinion would hurt your head. Trust me on this.

The district court rendered its findings of fact and conclusions of law in a May 22, 2007 opinion. Scanner Techs. Corp. v. Icos Vision Sys. Corp., N.V., 486 F. Supp. 2d 330 (S.D.N.Y. 2007) ("Scanner II"). The district court entered final judgment on June 1, 2007, finding the asserted patents unenforceable, invalid for obviousness, and not infringed. The final judgment also included a provision that rendered related patents, derived from the same common parent application, unenforceable.

Scanner appealed. But you knew that.

Scanner complained about the materiality and intent of the inequitable conduct finding. First we groove on inequitable conduct case law.

In order to establish inequitable conduct, the party challenging the patent is required to establish by clear and convincing evidence that the patent applicant "(1) either made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the U.S. Patent and Trademark Office." Symantec Corp. v. Computer Assoc. Int'l, Inc, 522 F.3d 1279, 1296 (Fed. Cir. 2008) (quoting Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1363 (Fed. Cir. 2007). Both intent and materiality are questions of fact, and must be proven by clear and convincing evidence. Young v. Lumenis, Inc., 492 F.3d 1336, 1344 (Fed. Cir. 2007).

In Akron Polymer Container Corp. v. Exxel Container, Inc., 148 F.3d 1380 (Fed. Cir. 1998), we reviewed a holding of inequitable conduct that was based on a patentee's failure to disclose codependency of related applications to one examiner when the other examiner had been apprised. The district court had found that "only inferences of deceitful intent can be drawn from the joint prosecution of both applications by the same attorney." Id. at 1382. In that case, we found clear error because the district court failed to give due weight to evidence of good faith that would call for inferences contrary to a finding of deceit.

The rule of Akron Polymer is as clear as it is necessary. Whenever evidence proffered to show either materiality or intent is susceptible of multiple reasonable inferences, a district court clearly errs in overlooking one inference in favor of another equally reasonable inference. All reasonable inferences must be drawn from the evidence, and a judgment then rendered on the evidence as informed by the range of reasonable inferences. Where the rule is breached, no inequitable conduct may be found. The rule is necessary, for without it findings of inequitable conduct, with the punishment of unenforceability of the entire patent, could wrongly stand.

The CAFC cut slack that inferences in several instances were not necessarily as damning as the district court deemed.

When the individual facts are properly assessed, with all reasonable inferences being drawn, there is no clear and convincing evidence that Scanner told the PTO that ICOS had copied its invention. To be sure, Beaty's declaration stated that he believed that ICOS's product met the limitations of the claims in his application. But such a belief leaves room for nothing more than the bare assertion of infringement. The limitations of the claims can be met by slavish copying, or equally met by independent development of the accused products. The record, when properly analyzed, reveals Scanner telling the PTO that it believed ICOS to infringe. Under the clear error standard, Scanner cannot be held to have told the PTO that ICOS came by infringement by way of copying.

When the record evidence in this case on the issue of whether Scanner made false statements to the PTO in its petition to make special is measured by the rule of Akron Polymer, the grounds supporting the district court's ultimate finding of materiality dissolves. Because we hold that the district court clearly erred in its finding of materiality, the issue of intent to deceive the PTO is moot. Consequently, we reverse the district court's determination that the patents in suit are unenforceable for inequitable conduct.

Obzilla goes unmentioned, the rampaging elephant in the room unspoken. After all, the jerks at the Supreme Court gratuitously denigrated the CAFC in its 2007 KSR ruling. We don't need your stinking KSR. We speak not its name.

Obviousness is a question of law based on underlying questions of fact. Daiichi Sankyo Co., Ltd. v. Apotex, Inc., 501 F.3d 1254, 1256 (Fed. Cir. 2007) (citing Winner Int'l Royalty Corp. v. Wang, 202 F.3d 1340, 1348 (Fed. Cir. 2000). We therefore review the ultimate determination of obviousness by a district court de novo and the underlying factual inquiries for clear error. Id. The underlying factual determinations made by the district court that this court must review for clear error include (1) the scope and content of the prior art, (2) the level of ordinary skill in the art, (3) the differences between the claimed invention and the prior art, and (4) objective indicia of non-obviousness. Graham v. John Deere Co., 383 U.S. 1, 17 (1966).

Scanner's arguments regarding the level of ordinary skill in the art and evidence of objective indicia of nonobviousness ring hollow.

Actually, the CAFC later quoted the classic "ordinary = fraking genius" KSR quote. After all, no other ruling went so far to sink so many patent boats in one tidal wave.

As the Supreme Court reaffirmed in KSR Int'l Co. v. Teleflex Inc., 127 S. Ct. 1727, 1741 (2007), an obviousness analysis "need not seek out precise teachings directed to the specific subject matter of the challenged claim, for a court can take account of the inferences and creative steps that a person of ordinary skill in the art would employ."

Patents invalid by obviousness.

Patents also not infringed.

Scanner then tried to backtrack of having hung its hat solely on claim 1.

ICOS cites to the parties' stipulation "that the case stands and falls on Claim 1 of the '756 Patent."

Scanner limits the import of the stipulation to claim construction. The record does not include the stipulation itself, only acknowledgement by both parties that the stipulation had been made. When asked at oral argument, neither party was aware of whether the stipulation was memorialized in writing or part of the record below... In this case, we have an unambiguously proposed finding of fact that stated simply "ICOS and Scanner have stipulated that the case stands and falls on Claim 1 of the '756 Patent," to which Scanner replied, "True." The pleadings represented that "the case" constituted allegations of infringement of both patents, and a declaratory judgment action seeking invalidity, noninfringement, and unenforceability of all the claims of the patent in suit. Scanner's response to ICOS's proposed finding of fact and conclusions of law provided no caveat to its unqualified agreement with the nature of the parties' stipulation. Finding no ambiguity in the parties' representation of the stipulation before the district court, we affirm the district court's judgment invalidating the claims of both patents in suit.

The district court finding of this being an exceptional case, thus awarding ICOS attorney fees, was vacated. Inequitable conduct reversed, but for dead patents not infringed.

Posted by Patent Hawk at June 19, 2008 11:19 PM | Inequitable Conduct
Comments

Was that a clean cut and paste where the CAFC said:

"The parties agreed that the case would rise and fall on claim 1 of the '756 patent."

Never heard of a case rising on a claim. Most of them stand. Must have been a Freudian slip.

Compare this case to Nilssen where Lourie/Mayer hand the trial court judges a noose to hang any attorney on inequitable conduct they want, without review of the judges' finding of "facts." This case is, essentially, an application of Newman's dissent in Nilssen. Is it any wonder nobody can figure out which way is up? Flip-flop jurisprudence.

Posted by: Babel Boy at June 20, 2008 8:39 AM
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