Lack of Explanation for Non-Disclosure Insufficient to Infer Intent to Deceive for Inequitable Conduct

In M. Eagles Tool Warehouse v. Fisher Tooling Co. (Fed. Cir. February 27, 2006) the court held that failure to disclose a prior art device to the PTO, where the only evidence of intent is a lack of a good faith explanation for the nondisclosure, cannot constitute clear and convincing evidence sufficient to support a determination of culpable intent for inequitable conduct.

To satisfy the requirement of the intent to deceive element of inequitable
conduct, "the involved conduct, viewed in light of all the evidence, including
evidence of good faith, must indicate sufficient culpability to require a
finding of intent to deceive." See Paragon Podiatry Lab. v. KLM Lab., 984 F.2d
1182, 1189 (Fed. Cir. 1993) (quoting Kingsdown Med. Consultants Ltd. v.
Hollister, Inc., 863 F.2d 867, 876 (Fed. Cir. 1988)). Intent need not be proven
by direct evidence. See Merck & Co., Inc. v. Danbury Pharm. Inc., 873 F.2d
1418 (Fed. Cir. 1989). Intent is generally inferred from the facts and
circumstances surrounding the applicant’s overall conduct, especially where
there is no good faith explanation for a nondisclosure. Bruno Indep. Living
Aids, Inc. v. Acorn Mobility Servs., Ltd., 394 F.3d 1348, 1354 (Fed. Cir. 2005).
There still must be a factual basis, however, for a finding of intent. Hebert,
99 F.3d at 1116. The only evidence that the district court relied upon in its
determination that Astro intended to deceive the PTO was Astro’s failure to
offer a good faith explanation of its nondisclosure of the Model 220. To be
sure, just as a good faith explanation can be presented as evidence to refute an
inference of intent, and usually is so presented, the absence of such an
explanation can constitute evidence to support a finding of intent. When the
absence of a good faith explanation is the only evidence of intent, however,
that evidence alone does not constitute clear and convincing evidence warranting
an inference of intent.

The court distinguished its analysis from Bruno Independent Living Aids, Inc., in which it held that a lack of a good faith explanation of a nondisclosure can be evidence of intent to deceive:

The standard of review was different in Bruno Independent Living Aids,
Inc., in which we reviewed the district court’s determination on intent for
clear error. This case was decided on summary judgment and so we review this
judgment de novo. Moreover, in Bruno Independent Living Aids, Inc., there were
circumstances beyond the lack of a good faith explanation from which one could
infer intent. In that case, an official of Bruno disclosed material prior art to
the FDA while simultaneously withholding it from the PTO. We found that because
Bruno disclosed the prior art to one agency and not the other, and offered no
good faith explanation for not disclosing the prior art to the PTO, there was
substantial evidence for the district court’s determination of intent. In this
case, there is no evidence from which to infer intent beyond the lack of a good
faith explanation for the nondisclosure. There was no deliberate choice to
disclose the information to one agency but not to the other. Furthermore, the
inventor was unable to provide a good faith explanation because he died six
months after the filing of the application. Without any other evidence of
intent, we cannot find that a lack of a good faith explanation for the
nondisclosure is sufficient to constitute clear and convincing evidence that
Astro acted with a culpable intent to deceive the PTO.

In light of all the facts and circumstances surrounding the applicant’s
conduct, we conclude that Astro’s acts do not demonstrate on summary judgment
that Astro had a culpable intent during prosecution. "Intent to deceive should
be determined in light of the realities of patent practice, and not as a matter
of strict liability whatever the nature of the action before the PTO." Northern
Telecom, Inc. v. Datapoint Corp., 908 F.2d 931, 939 (Fed. Cir. 1990). The
district court’s finding of inequitable conduct based on the nondisclosure of
the Model 220 essentially amounted to a finding of strict liability for
nondisclosure. Such is not the law. Even if there were evidence of gross
negligence in nondisclosure, which was not found, that would not necessarily
constitute inequitable conduct. Kingsdown Med. Consultants Ltd. v. Hollister,
Inc., 863 F.2d 867, 873 (Fed. Cir. 1988). Given the dearth of evidence as to the
element of intent in light of the clear and convincing evidentiary standard, and
the disputed assumption made by the district court concerning Astro’s knowledge
of the relevance of the Model 220, we reverse the district court’s grant of
summary judgment of inequitable conduct.