November 8, 2012
Fitch Even attorneys recently won several key issues in an appeal at the Court of Appeals for the Federal Circuit. The firm was retained as appellate counsel after proceedings in the district court had led to rulings that the asserted patents were invalid, unenforceable, and not infringed. In Outside the Box Innovations, LLC. v. Travel Caddy, Inc., No. 2009-1171, decided September 21, 2012, the court held in favor of Fitch Even client Travel Caddy, Inc., on issues of inequitable conduct and invalidity.
The appellate court reversed the district court’s holding that two Travel Caddy patents were unenforceable for inequitable conduct. The court also held that the district court abused its discretion in excluding Travel Caddy’s proffered expert witness, and granted a new trial on the issue of patent validity.
The lawsuit involved two of Travel Caddy’s patents, nos. 6,823,992 and 6,991,104. The ’014 patent is a continuation of the ’992 patent. The lawsuit on the ’992 patent began while the ’104 patent was still pending. Travel Caddy’s former attorneys did not advise the U.S. Patent and Trademark Office (USPTO) of the existence of the litigation on the ’992 patent during the pendency of the ’104 patent. The district court held that this nondisclosure constituted inequitable conduct.
Additionally, Travel Caddy had an agreement with a distributor known as The Rooster Group. The distributor agreement contained a clause that granted Rooster the ability to source the distributed products from other manufacturers under certain circumstances. The district court found that Rooster had more than 500 employees, counting an affiliated company, and that the distributor agreement constituted a license. Travel Caddy had claimed small entity status when prosecuting the applications. One of the conditions of small entity status is that the applicant cannot have licensed the application to an entity with more than 500 employees. The district court thus held that Travel Caddy’s claim of small entity status was improper and constituted inequitable conduct.
On appeal, the Federal Circuit reversed on both grounds. The court first held that the existence of pending litigation on the parent ’992 patent was not necessarily material to the pending ’104 patent, observing that Outside the Box had not asserted invalidity in the ’992 litigation. Also, under Star Scientific, Inc., v. R.J. Reynolds Tobacco Co., a finding of inequitable conduct is proper only where the “single most reasonable inference” is that the conduct complained of was made with intent to deceive. The court held that such intent had not been established via clear and convincing evidence.
With regard to the claim for small entity status, the court expressly declined to decide whether the claim of small entity status was a material misrepresentation. The court reversed on the grounds that there was no clear and convincing evidence of intent to deceive the USPTO.
The district court had also invalidated many of the claims over prior art, and had refused to hear testimony from Travel Caddy’s expert witness on the grounds that he was not an attorney. The Federal Circuit vacated the invalidity holding. Under Sundance, Inc. v. DeMonte Fabricating Ltd., the court held that it was an abuse of discretion to exclude a technical expert on the grounds that the technical expert lacked legal training. The court noted that “patents are not for inventions of laws; they are for inventions of technology.” The court further observed that “although advances in technology may in retrospect appear obvious to a judge, stimulated by advocacy, it is relevant that the advance eluded persons in the field. … The foil to judicial hindsight is the testimony of persons experienced in the field of the invention.” In light of these observations, the court remanded for review of the validity question on the entirety of the evidence including the proffered expert testimony.
The court also considered complex procedural issues relating to its ability to review the district court’s claim construction rulings. A prior panel of the Federal Circuit had affirmed these rulings when Travel Caddy earlier appealed the district court’s denial of its request for a preliminary injunction. The court ultimately affirmed the district courts’ claim construction in a 2-to-1 decision and affirmed the district court's holding that a portion of the accused products were noninfringing.
Travel Caddy was represented on the appeal by Fitch Even attorneys Timothy P. Maloney, Mark W. Hetzler, and Nicole L. Little, with assistance on the brief by Vance L. Liebman and Glenn A. Rice at Funkhouser, Vegosen, Liebman, and Dunn Ltd.