Thursday, February 22, 2007

Jury Finding of Walker Process Fraud Overturned

This posting was written by Jeffrey May, editor of CCH Trade Regulation Reporter.

An ice cream product manufacturer’s failure to disclose, in a patent application, sales of the product made more than a year before the application was filed did not support a finding of patent procurement through fraud on the Patent Office, the U.S. Court of Appeals for the Federal Circuit has held.

A jury’s determination that the manufacturer violated the antitrust laws by asserting a patent procured by fraud on the Patent Office was reversed, and an award of attorney fees under the Clayton Act (2005-2 Trade Cases ¶74,996) was vacated.

The heightened standard of materiality in a Walker Process case required that the patent would not have issued but for the patent examiner’s justifiable reliance on the patentee’s misrepresentation or omission. Materiality was established based on a finding that the patent would not have issued if the manufacturer had disclosed the relevant sales.

However, it could not be said that the omission of the sales was done with fraudulent intent. In order to find a prosecution omission fraudulent, there had to be evidence of intent separable from the simple fact of the omission. An omission could happen for any number of non-fraudulent reasons, the court noted. The applicant could have had a good-faith belief that disclosure was not necessary or could have forgotten to make the required disclosure.

The manufacturer’s argument for not disclosing the relevant sales to the Patent Office was not refuted to the extent necessary for a reasonable jury to find Walker Process fraud, according to the court.

The case is Dippin’ Dots, Inc. v. Mosey, Docket Nos. 2005-1330 and 2005-1582, decided February 9, 2007. It is reported at 2007-1 Trade Cases ¶75,590.

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