No Right to a U.S. Jury Trial on Inequitable Conduct

In AGFA Corp. v. CREO Products, Inc. (Fed. Cir., June 26, 2006) a divided panel of the Federal Circuit held that there is no Seventh Amendment right to a jury trial for inequitable conduct, even where one would exist for an invalidity claim.

According to the majority opinion by Circuit Judge Rader,

In Beacon Theatres, Inc. v. Westover, 359 U.S. 500 (1959), the Supreme
Court explained that a trial judge could not conduct a bench trial (and preclude
a jury trial) on equitable declaratory relief claims where that trial would
resolve "common" issues with a claim subject to jury resolution. 359 U.S. at
503-04. In Beacon Theatres, the declaratory judgment plaintiff sought to raise
essentially the same antitrust issues for which the declaratory judgment
defendant sought a jury trial. Id. The Supreme Court declined to limit the
declaratory judgment defendant’s jury trial rights solely "because Fox took
advantage of the availability of declaratory relief to sue Beacon first." Id. at
504. Beacon Theatres specifically noted that both the petitioner’s claim and the
declaratory relief claim involved "a common issue." Id.

This case involves issues of inequitable conduct (including the
materiality of the undisclosed prior art) and validity. Although these issues
overlap to some degree, they are not "common" issues as in Beacon Theatres.
Because this case does not involve "common" issues, this court need not apply
the Beacon Theatres rule to honor Agfa’s jury trial request. Beacon Theatres did
not use the term "overlapping." While the inequitable conduct and validity
questions in this case overlap in the consideration of some aspects of the same
relevant evidence, they do not involve a common issue. As Gardco explained:

The simple fact is that a patent may be valid and yet be rendered
unenforceable for misuse or inequitable conduct. Similarly, a valid patent
may be (in the abstract) infringed, that is, the accused device may fall
within the scope of the claim, but there will be no liability to the patentee when the patent is unenforceable. Thus the conduct-of-the-applicant-in-the-PTO issue raised in the nonjury trial and the separated infringement/validity issues are distinct and without commonality either as claims or in relation to the underlying fact issues.

Nonetheless, as noted in the dissent by Circuit Judge Newman, ther could still be some wiggle room on this issue for patent ltigants:

The decision now offered joins a few cases in which panels of the Federal
Circuit diverged from history and the weight of our precedent, as in Gardco
Mfg., Inc. v. Herst Lighting Co., 820 F.2d 1209 (Fed. Cir. 1987), Paragon
Podiatry Lab, Inc. v. KLM Labs, 984 F.2d 1182, 1190 (Fed. Cir. 1993), where the
panel rejected the right to a jury, and a few other cases. This continuing
conflict within our court's precedent disserves the public, as does the
selective citation in this opinion of only Gardco, ignoring the entire body of
contrary precedent, and leaving litigants and trial judges with the burdensome
jousting here illustrated.

The panel majority misconstrues the Court's holding in Beacon Theatres,
Inc. v. Westover, 359 U.S. 500 (1959), where the Court held that factual
elements in common with both legal and equitable issues or, in that case,
subject to equitable remedy, could not be deprived of the jury right as to the
factual aspects. The Court made clear that when there is judicial discretion it
must, wherever possible, be exercised to preserve the jury trial.

In Gardco a panel of this court found that there were no common relevant
elements in the specific circumstances of that case. In contrast, in the case at
bar where asserted misinformation is charged with being material to
patentability and deceptively withheld, these are questions of fact that are
directly concerned with both validity and enforceability. Thus the panel
majority, in its ruling that the trial judge can always exercise discretion and
refuse to try these issues to a jury, misses the point that when there is a jury
right as to legal elements, as in Beacon Theatres, there is no discretion to
deny the jury right as to factual questions relevant to both the legal and
equitable issues.