Petition for Writ of Certiorari — Rohm & Haas Co. v. Crystal Chemical Co.

8 4 | { Oftice Supreme Court, U.S.

ia ‘ k ILE OD

No. JUL 5 1984

a et STEVAS,

IN THE CLERK

Supreme Court of the Uuited States

OCTOBER TEKM, 1983

ROHM AND HAAS COMPANY,

Petitioner,

CRYSTAL CHEMICAL COMPANY and JOE C. ELLER,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

Of Counsel:

JANUAR D. BOVE, JR.

JEFFREY B. BOVE

CONNOLLY, BOVE, LODGE

& HUTZ

1220 Market Building

1220 Markei Street

Wilmington, Delaware 19899

E. BARRETT PRETTYMAN, JR.

HOGAN & HARTSON

815 Connecticut Avenue, N.W.

Washington, D.C. 20006

* Counsel of Record

RUDOLF E. Hutz *

1220 Market Building

1220 Market Street

Wilmington, Delaware 19899

(302) 658-9141

Counsel for Petitioner

PHILIP W. TONE

JENNER & BLOCK

One IBM Plaza

Chicago, Illinois 60611

GEORGE W. F. SIMMONS

Route 2

Box 3377

Lopez, Washington 98261

WILLIAM E. LAMBERT III

ROHM AND HAAS COMPANY

Philadelphia, Pennsylvania

19195

A NE GI RT EI EL EAT DE

- 789-0096 - WASHINGTON, D.C. 20001

WILSON - EPES PRINTING Co., INC.

QUESTIONS PRESENTED

1. Whether the test adopted by the Court of Appeals

for the Federal Circuit which, in that court’s words,

“breaks new ground on the subject of fraud in the PTO

and sets new standards in this area of the law,” is con-

trary to both prior law and public policy, and in partic-

ular is inconsistent with 35 U.S.C. § 282, which requires

the party challenging the validity of the patent, rather

than the patentee, to shoulder the burden of proof on

the key elements of fraud.

2. Whether the Court of Appeals’ retroactive applica-

tion of an admittedly novel rule of law, without affording

any opportunity to comply with the “new standards”, is

inconsistent with Chevron Oil Co. v. Huson, 404 U.S. 97

(1971).

3. Whether, as has been its pattern in a series of re-

cent cases as particularly illustrated by this one, the new

Court of Appeals for the Federal Circuit may (a) over-

turn or ignore District Court findings of fact on con-

trolling issues, including intent to defraud, which are not

and could not have been held clearly erroneous, and (b)

make its own de novo findings on these issues without

remanding the case to the District Court—all in violation

of Fed. R. Civ. P. 52(a).

ii

PARTIES TO THE PROCEEDING

In addition to Respondents Crystal Chemical Company

(“Crystal”) and Joe C. Eller (“Eller”), the following

parties were also defendants in this case: Dawson Chemi-

eal Company and Crystal Manufacturing Corporation

(predecessor corporations of Crystal), Wilton W. Varde-

man (“Vardeman”), Helena Chemical Company (“Hel-

ena’), Vertac Chemical Company (‘“Vertac’), and the

American Rice Growers Exchange (“ARGE’’).*

Rohm and Haas Company has the following subsidaries

or affiliates: Modipon, Limited, Japan Acrylic Chemical

Co., Ltd., Tokyo Organic Chemical Industries, Ltd.,

Quimica Trepic, S.A., Yugocryl, Indofil Chemicals, Ltd.,

Curachem, Shipley Company, Rohm and Haas Mexico

S.A. de C.V., and Advanced Genetic Sciences, Inc. In

addition, Rohm and Haas has twenty-four domestic and

thirty-one foreign, wholly-owned subsidiaries, none of

which is publicly owned or has any interest in the out-

come of this case.

* Vardeman was dismissed prior to trial. Helena, Vertac and

ARGE settled their differences with Rohm and Haas Company and

admitted that the patent in suit was valid and enforceable (H: ‘ena

settlec: just prior to trial, Vertac settled during trial, and ARGE

settled after trial). Crystal and Eller are, therefore, the only re-

maining defendants. For ease of reference we hereafter refer to

the remaining defendants as “respondents”. In a related case in

Louisiana, Rohm and Haas Company was awe “ded substantial com-

pensatory damages against another defendant. The Louisiana case

is presently on appeal before the CAFC. See Rohm and Haas Co. V.

Thompson-Hayward Chemical Co., No. 1614 (E.D.La. Feb. 28,

1983), appeal docketed, Nos. 88-981 and 83-1017 (Fed. Cir. May 9

and 19, 1983).

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ......00000...... nec eeeeeeeeeee. i

PARTIES TO THE PROCEEDING ..................00.......... ii

A I suscsasenebctammosanaenence 1

Teen inueubaninn 1

CONSTITUTIONAL PROVISION, STATUTE AND

RE EL a 2

ST AR 2

A. The Nature of the Case and Proceedings in the

EE a a

B. The Decision of the District Court

i sae seen Of te CAPS 10

REASONS FOR GRANTING THE PETITION 11

> wee eee cee Sor Cove ................................... 11

2. Retroactive Application of the New Test for

(a STEGER RS S161 ISO cD 19

3. The CAFC’s Pattern of Fact-Finding 24

a stusichis aninisisdhulons 29

(iii)

iv

TABLE OF AUTHORITIES

Cases: Page

Abramson v. Nytronics, Inc., 312 F. Supp. 519

Cec. Bee © heccaieincihinindtthiatienictniiitthaciaiatioaatasinidiinene 16

Aktiebolaget Karlstads Mekaniska Werkstad V.

USITC, 705 F.2d 1565 (Fed. Cir. 1983) ............ 25

Alabama Farm Bureau Mut. Cas. Co. V. American

Fidelity Life Ins. Co., 606 F.2d 602 (5th Cir.

1979), cert. denied, 449 U.S. 820 (1980) -........... 16

Allen v. W.H. Brady Co., 508 F.2d 64 (7th Cir.

| ES eae een anes ei eh NL SE Oe 15

American Hoist & Derrick Co. v. Manitowoc Co.,

Inc., 448 F. Supp. 1872 (E.D. Wisc. 1978), aff'd,

608 F.2d 6239 (7th Cir. 1979) ................................. 15

American Hoist & Derrick Co. v. Sowa & Sons,

Inc., 725 F.2d 1850 (Fed. Cir. 1984) —............... 15, 19

American Optical Corp. v. United States, 179

ok 4 6G | eee 14

Avnet, inc. v. Scope Industries, 499 F. Supp. 1121

I I es 16

Baginsky v. United States, 697 F.2d 1070 (Fed.

Cir.), cert. denied, 104 S.Ct. 423 (1983)................ 2, 25

Bose Corp. ¥. Consumers Union of the U.S., Inc.,

52 U.S.L.W. 4513 (U.S. April 30, 1984) (No.

Re EPA Es Ra a ea Lae ANE ee So SE 26

Brown-Bridge Mills, inc. v. Eastern Fine Paper,

Inc., 700 F.2d 759 (1st Cir. 1983)

Chevron Oil Co. v. Huson, 404 U.S. 97 (1971)......i, 19, 22

Citizens to Preserve Overton Park v. Volpe, 401

A i 19

CMI Corp. v. Barber-Greene Co., 683 F.2d 1061

CR a 28

Connell v. Sears, Roebuck & Co., 722 F.2d 1542

(Fed. Cir. 1983) ............. ec eG We Pe 24, 28

Digital Equipment Corp. v. Diamond, 653 F.2d 791

I Sa ....14, 21, 23

Driscoll v. Cebalo, 731 F.2d 878 (Fed. Cir. 1984).. 14

Edward Valves, Inc. v. Cameron Iron Works, Inc.,

286 F.2d 933 (5th Cir.), mod. on other grounds,

289 F.2d 355 (5th Cir.), cert. denied, 368 U.S.

833 (1961) 28

Vv

TABLE OF AUTHORITIES—Continued

Page

Garlock, Ine. v. W. L. Gore & Associates, 721 F.2d

i? Fi, Se | eee 24

Graver Tank & Manufacturing Co. v. Linde Air

Products Co., 336 U.S. 271 (1949) ............-.------ 26

Guzman Vv. Pichirilo, 369 U.S. 698 (1962) ........... 28

Hughes Aircraft Co. v. United States, 717 F.2d

Se. Cs I, IID macecccetetrennsenstenetieerentncsninainne 24

In re Certain Steel Rod Treating Apparatus

& Components Thereof, 215 U.S.P.Q. 237

og tA. Gh | EA eee ane mene 24

In re Clark, 522 F.2d 623 (C.C.P.A. 1975) ............ 24

Inwood Laboratorics, Inc. Vv. Ives Laboratories,

Pei: Ie My IN III socinencteeteesctnnncintanndiclensanices 26, 28

Kingsland v. Dorsey, 338 U.S. 318 (1949) ............ 17

Lefkowitz v. Cunningham, 431 U.S. 801 (1977) -... 17

Lefkowitz v. Turley, 414 U.S. 70 (1973) ............. 17

Litton Systems, Inc. v. Whirlpoel Corp., 728 F.2d

RR a oe ee 24

Lundy Elec. & Sys., Inc. Vv. Optical Recognition

Sys., Inc., 362 F. Supp. 180 (E.D. Va. 1973),

aff'd, 493 F.2d 1222 (4th Cir. 1974) 2.000022. 20

Minnesota v. Murphy, 104 S. Ct. 1186 (1984) ........ 17

Monsanto Co. v. Rohm and Haas Co., 312 F.Supp.

778 (E.D. Pa. 1970), aff'd, 456 F.2d 592 (3d

Cir.), cert. denied, 407 U.S. 934 (1972) ....... 5, 6, 7, 17,

18, 19, 20, 21, 27

Nicholson File Co. v. H.K. Porter Co., 341 F.

Supp. 508 (D.R.I. 1972), aff'd, 482 F.2d 421

Ee UOTE Sccuineccsicoiocn nace itinachednaiddatin oats 16

North Carolina v. Chas. Pfizer & Co., Inc., 384

F.Supp. 265 (E.D.N.C. 1974), aff’d, 537 F.2d 67

4th Cir.), cert. denied, 429 U.S. 870 (1976).... 19, 28

Norton Vv. Curtiss, 433 F.2d 779 (C.C.P.A. 1970).. 14, 27

Oetiker v. Jurid Werke GMBH, 671 F.2d 596

0 | Gg. Rg RRC eran OOD Mee ORO 14, 28

Orthopedic Equipment Co., Inc. v. All Orthopedic

Appliances, Inc., 707 F.2d 1876 (Fed. Cir.

TDINUEET scidnshcsscucttacenseinulshiieicesctidaais’tataibacebatiniaaianiinaniagtsecaiasiaa 14, 27

vi

TABLE OF AUTHORITIES—Continued

Page

Pfizer, Inc. v. International Rectifier Corp., 545

F.Supp. 486 (C.D. Cal. 1980), aff'd, 685 F.2d

357 (9th Cir. 1982), cert. denied, 103 S.Ct. 818

(1983) ....... sc cnieiaias itieesihieinihasitamaina dda ities 15, 20

Pfizer, Inc. v. International Rectifier Corp., 538

F.2d 180 (8th Cir. 1976), cert. denied, 429 U.S.

WORD CIC ED cevctenwecienenteeceeeaceties 14, 20, 28

Plastic Container Corp. v. Continental Plastics,

607 F.2d 885 (10th Cir. 1979), cert. denied,

Be Ee Saar 18, 19

Precision Instrument Mfg. Co. v. Automotive

Maintenance Mach. Co., 324 U.S. 806 (1945) ....6, 16, 17,

18, 19, 20, 21

Pullman Standard v. Swint, 456 U.S. 273 (1982).. 26, 28

RCA Corp. Vv. Applied Digital Data Systems, Inc.,

730 F.2d 1440 (Fed. Cir. 1984) .......................... 24

Rohm & Haas Co. v. Dawson Chemical Co., 448

oS a lt ee 2

Rohm and Haas Co. v. Thompson-Hayward Chemi-

cal Co., No. 1614 (E.D.La. Feb. 28, 1983), appeal

docketed, Nos. 83-981 and 83-1017 (Fed. Cir.

Ee Oe Fe vcecentieetenstetiinninatterntcernetncniinnn ii

Ronson Corp. Vv. Liquitin Aktiengesellschaft, 370

F.Supp. 597 (D.N.J. 1974), aff'd, 497 F.2d 394

(3d Cir.), cert. denied, 419 U.S. 870 (1974)........ 16

Rosenblatt v. Northwest Airlines, Inc., 485 F.2d

gh RISER A err co See ea 16

Santosky v. Kramer, 455 U.S. 745 (1982) ............. 22

Schnadig Corp. v. Gaines Mfg. Co., 494 F.2d 383 |

RRL ee EN CANES 14, 15, 28

Skil Corp. v. Lucerne Products, Inc., C84 F.2d 346

(6th Cir.), cert. denied, 459 U.S. 991 (1982) ...... 28

Sonesta International Hotels Corp. Vv. Wellington

Associates, 483 F.2d 247 (2d Cir. 1973) 2.0.0... 16

Spevak v. Klein, 385 U.S. 511 (1967) -...00-.00.. 17

Square Liner 360°, Inc. v. Chisum, 691 F.2d 362

OE RI RRR SS rk Ra See 15, 28

Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530

CHOG. CUR. BBG) cecceeccceweeesnss (isinalihinipaseidiaaindaadandiinetics 24

vii

TABLE OF AUTHORITIES—Continued

Page

TP Laboratories, Inc. v. Professional Positioners,

Inc., 724 F.2d 965 (Fed. Cir. 1984), petition

for cert. filed, No. 83-1939 (U.S. April 2, 1984) .. 24

Triumph Hosiery Mills, Inc. v. Alamance Indus-

tries, Inc., 299 F.2d 793 (4th Cir.), cert. denied,

ee .sscmmiennbanenaiangeen 19

United States v. American Bell Telephone Co.,

I I ttle 14

United States v. Chemical Foundation, Inc., 272

Ue a 19

United States v. Cold Metal Process Co., 62 F.

Supp. 127 (N.D. Ohio 1945), aff'd, 164 F.2d

754 (6th Cir. 1947), cert. denied, 334 U.S. 811

I ii a a 15

United States v. Pfizer, Inc., 498 F.Supp. 28 (E.D.

Pa. 1980), aff'd, 676 F.2d 51 (3d Cir. 1982)... 19, 28

United States v. National Association of Real

Estate Boards, 339 U.S. 485 (1950) 00000000000... 26

United States v. United States Gypsum Co., 333

I a 25

United States v. Yellow Cab, 338 U.S. 338

MERE EE eee eee RNC Tmo em 26

White v. Jeffrey Mining Mach. Co., 723 F.2d 1553

(2d Cir. 1984), petition for cert. filed, No. 83-

I a ae

Zenith Radio Corp. Vv. Hazeltine Research, Inc.,

3 8s Re en en enre

Statutes :

i ee

8 ARTS

40 63, Sa

Sra

“= = ee ceigieeeees

I 2, 14, 15, 16, 22

Regulations:

oy CPLR. $6 1.866-61 (1068) ..........-.......ccccccccccccrs

re Mr re eet

48 Fed. Reg. 36480 et seq. (1983) (to be codified

at 37 C.F.R. §§ 1.844-61) _....... .

viii

TABLE OF AUTHORITIES—Continued

Page

Congressional Materials:

Hearings on S.677 and S.678 Mar. 20, May 7, 9,

10 and June 18, 1979 Before the Subcommittee

on Improvements in Judicial Machinery of The

Senate Committee on The Judiciary, 96th Cong.,

ist Sess. 675-677, 698-700 (1979) ...................... 27

Hearings on H.R. 6033, H.R. 6934, H.R. 3806, H.R.

2414, April 3, 15, 17, 22, 24, May 8, and June 9,

1980 Before the Subcommittee on Courts, Civil

Liberties and the Administration of Justice of

The House Committee on The Judiciary, 96th

Cong., 2nd Sess. 771-772 (1980) ........................ 27

Hearings on H.R. 2405 April 2 & 8, 1981 Before

the Subcommittee on Courts, Civil Liberties, and

The Administration of Justice of The House

Committee on The Judiciary, 97th Cong., Ist

Ss I a emenianenieenan 27

H. Rep. No. 97-312, 97th Cong., Ist Sess. 37-38

RRS Se a aer SE AECE RP 26

Rules:

ns Ts I, I a eesuiineieioeniell i, 2, 24-26, 28, 29

Constitution :

7 i, ETE ceeereer 2, 16,17

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

No.

ROHM AND HAAS COMPANY,

Petitioner,

Vv.

CRYSTAL CHEMICAL COMPANY and JoE C. ELLER,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

Rohm and Haas Company respectfully prays that a

writ of certiorari issue to review the judgment entered

by the Court of Appeals for the Federal Circuit in this

case.

OPINIONS BELOW

The opinion of the District Court (1la-223a) is reported

at 557 F. Supp. 739. The opinion of the Court of Appeals

on the merits (224a-260a) is reported at 722 F.2d 1556.

The opinion of the Court of Appeals on attorneys’ fees

and costs (268a-279a) is not yet officially reported.

JURISDICTION

The judgment of the Court of Appeals is dated and

was entered December 7, 1983. Petitioner filed a timely

petition for rehearing on January 6, 1984, which was

denied on February 21, 1984. On May 3, 1984, the Chief

Justice granted petitioner’s motion to extend the time to

2

file this petition until July 5, 1984. The jurisdiction of

this Court is invoked under 28 U.S.C. §§ 1254(1) and

2101 (c).

CONSTITUTIONAL PROVISION,

STATUTE AND RULE INVOLVED

The Fifth Amendment to the Constitution of the

United States provides in pertinent part:

No person * * * shall be compelled in any crim-

inal case to be a witness against himself.

35 U.S.C. § 282 provides in pertinent part:

A patent shall be presumed valid * * *. The bur-

den of establishing invalidity of a patent or any

claim thereof shall rest on the party asserting such

invalidity.

Fed. R. Civ. P. 52(a) provides in pertinent part:

Findings of fact shall not be set aside unless

clearly erroneous, and due regard shall be given to

the opportunity of the trial judge to judge the credi-

bility of the witnesses.

STATEMENT

A. The Nature of the Case and Proceedings in the PTO

This case is the culmination of 25 years of litigation,

including a prior decision by this Court’, over patent

rights to the herbicidal use of a chemical compcund known

as propanil. The case now presents the Court with ques-

tions of substantial practical importance involving both

standards of conduct before the Patent and Trademark

Office (“PTO”) and the administration of justice by the

Court of Appeals for the Federal Circuit (“CAFC”).

Rohm and Haas Company (“R&H’’) owns the Wilson

and McRae patent at issue, which claims methods of

1 Rohm & Haas Co. v. Dawson Chemical Co., 448 U.S. 176 (1980).

3

using propanil as a herbicide to kill weeds in food crops

such as wheat and rice. Propanil itself is not patented.

Its only commercial use is in the methods claimed in

R&H’s patent. R&H commercialized propanil in 1961

after years of costly and painstaking research (11la-24a,

88a-89a). As found by the District Court, propanil is

truly a unique herbicide (89a).2 It tremendously in-

creased rice yield and virtually eliminated the need for

hand weeding and deep water flooding of rice, enabling

growers to supply the public with this staple at a lower

cost (24a-25a, 89a-90a) .?

R&H’s inventors, Drs. Wilson and McRae, filed three

patent applications, the first in 1958, the second in 1960,

and the third in 1961 (25a, 37a, 43a). During the period

1959-62, R&H filed nine affidavits in the PTO. The

CAFC bottomed its reversal for fraud on parts of two

of these filed by Dr. MeRae in 1961 and 1962 (252a-

253a). The criticized McRae affidavits were prepared by

Dr. Myers, an R&H patent agent who died in 1963 before

any question regarding the affidavits arose (58a).* Dr.

Myers prepared the affidavits based on tests which Dr.

McRae had conducted or directed.®

? For example. propanil kills weeds associated with rice but does

not kill the rice.

3 The benefit to growers and the public has been reflected in sales

figures. R&H’s sales of »ropanil in the United States for the

patented use have exceec :d $170 million, and its foreign sales

have exceeded $67 million (25a). Since the Wilson and McRae

patent issued in 1974, defendants’ combined sales for the patented

use have exceeded $40 million (CAFC App. 8429-30).

4A patent agent is a non-lawyer who is licensed to practi:e be-

fore the PTO.

5 Dr. McRae was the major witness at trial. He was extensively

questioned about his affidavits. The District Court found that

Dr. McRae believed his affidavits were accurate and correctly re-

flected his views as to the unique herbicidal properties of propanil

(72a).

4

The first of these criticized affidavits compared the

herbicidal activity of propanil to nine related compounds.

One table compared the activity of propauil with one of

these compounds called DCAA in the greenhouse, but did

not disclose that the data on propanil were obtained in

December while the data on DCAA were obtained the fol-

lowing May. As respondents’ expert agreed, plants grown

in May are hardier than those grown in December anc

thus more closely approximate field conditions (CAFC

App. 2714-15).° fod

The second affidavit compared the herbicidal activity

of propanil with two related compounds, DCIBA and

DCMVA, on various crops at different concentrations.

DCIBA and DCMVA were both shown to have high her-

bicidal activity against all the crops tested. At trial, re-

spondents charged that R&H had changed the data on

rice, one of the crops tested, and that the “actual” data

indicated that rice was not harmed by these compounds

at 2 lbs/acre, even though photographs attached to the

affidavit showed that both DCIBA and DCMVA at 2 lbs/

acre killed the rice. R&H admitted that ten years later it

could not find the original data sheet from which the rice

data had been taken. But Dr. McRae testified that his

practice was to compare the affidavit data with the orig-

inal raw data, and that he would never have executed

any affidavit if it was incorrect (CAFC App. 1009-11,

1278, 1282) .7

6 Dr. McRae testified at trial that he was aware of how propanil

behaved in the field and that the relative comparison between

propanil and DCAA shown in the affidavit was accurate (CAFC

App. 1009-11, 1217-18, 1292-93, 1376-77, 1502-03).

7 Dr. McRae explained at trial that the original raw data had not

been transcribed into a permanent notebook (CAFC App. 825, 830-

31, 1009-12). The trial court assessed all of the evidence “in light

of the arguments raised by defendants [respondents]"’ (137a) and

refused to find that any data had been falsified by R&H. See also

n.12 and n.14, infra.

5

In August 1963, the PTO allowed one process claim to

R&H, Monsanto Company and another applicant for in-

terference purposes (35 U.S.C. $185) to determine

which of them had first invented the claimed herbicidal

method of using propanil. Ten years later, in 1973, R&H

won the interference (48a-57a).

During the interference, Monsanto obtained a patent

on propanil itself and sued R&H. On February 17, 1970,

Monsanto’s patent was held invalid for fraud (67a-58a)

because Monsanto had filed affidavits which failed to dis-

close complete data on compounds related to propanil, and

it never supplied the PTO with the missing information.

The Monsanto court ruled that:

The patent applicant should be held to the same

standard of truthful disclosure to the patent office

that Congress has required of the seller of securities

to the public * * * [and] must not omit to state

* * * any material fact necessary to be stated in

order to make the communication taken as [a] whole,

not misleading. [Monsanto Co. v. Rohm and Haas

Co., 312 F. Supp. 778, 793 (E.D. Pa. 1970), aff’d,

456 F.2d 592 (8d Cir.), cert. denied, 407 U.S. 934

(1972) .°]

During the Monsanto litigation, Mr. Simmons, the new

head of R&H’s Patent Department, learned for the first

time of alleged deficiencies in the affidavits filed by R&H’s

patent agent, the deceased Dr. Myers. Although these

affidavits were not at issue in the Monsanto case, they

were attacked by Monsanto’s counse!, and the Monsanto

District Court stated on the record that both Monsanto

and R&H had been “equally disingenuous” in their pre-

sentation of data to the PTO (63a).

Prosecution of the Wilson and McRae application re-

sumed in 1973, after ten years of interference proceed-

8 Emphasis supplied in all quotations in this petition unless

otherwise indicated.

6

ings and litigation between R&H and Monsanto. The

Monsanto decision was the then-leading case on the re-

quirements for avoiding a charge of fraud. Following

the guidelines of that case and this Court’s decision in

Precision Instrument Mfg. Co. v. Automotive Mainte-

nance Mach. Co., 324 U.S. 806 (1945), R&H, under

Mr. Simmons’ direction, compared its voluminous data

on propanil and related compounds with the previously

filed McRae affidavits to determine the accuracy and suf-

ficiency of the affidavits (58a-59a). The District Court

here found that Mr. Simmons “wanted to ensure that

Rohm and Haas disclosed completely all operative facts

to the Patent Office” (58a).

On February 16, 1973, Dr. McRae and outside counsel

retained to assist in the renewed prosecution held an ex-

tensive conference in the PTO with the Examiner respon-

sible for this application, Mr. Thomas (60a). He was

the same Examiner who had initiated the interference

with Monsanto (id). The PTO was informed that a

purpose of this conference was fully to disclose and make

available to the PTO R&H’s existing records on the

herbicidal properties of propanil and related compounds

(CAFC App. 4146-48, 8482-84). R&H invited to the

conference representatives of the Department of Justice,

the PTO Solicitor’s Office (which was responsible for is-

sues of fraud), and the Chief of the Examining Group

for the PTO (60a). Examiner Thomas, along with

R&H’s outside counsel, was present throughout the con-

ference, and the Chief of his Division was present for

part of the time (60a). Dr. McRae was also present to

answer any questions raised by Mr. Thomas, and to ex-

plain any documents or test data in which the Examiner

expressed an interest (61a-68a).

At the time of the conference, Examiner Thomas was

the recognized PTO herbicide expert. He had examined

and was then examining numerous applications involv-

ing propanil and related subject matter. He was thor-

7

oughly familiar with the efforts of both R&H and Mon-

santo to obtain propanil patent rights and stated that he

had already reviewed the Wilson and McRae prosecution

files, which he brought with him to the conference (60a-

61a).°

During the conference, R&H explained the Monsanto

litigation (61la-62a) and specifically discussed with Mr.

Thomas Monsanto’s claim that R&H had withheld data

from the PTO, as well as the Monsanto District Court’s

comment that Monsanto and R&H had been “equally

disingenuous with respect to the comparison of the

herbicidal effects” of propanil and related compounds

(63a) .?°

Many of the documents present at the conference had

been prenumbered and included the test data from which

the criticized McRae affidavits had been prepared. These

base data records, numbering less than 100 pages, were

(1) especially singled out in the documents and specifi-

cally identified at the conference, (2) keyed to the prior

affidavits, (3) compared side by side with each of the

® When respondents finally took Mr. Thomas’ deposition nine

years after this conference, Mr. Thomas testified that he had vir-

tually no recollection of anything that transpired at the 21% hour

conference (258a). The trial judge specifically commented upon the

Examiner’s inability to recall most of what transpired during the

interview (CAFC App. 4536-37) and properly accorded little weight

to this testimony. The CAFC as well noted that Mr. Thomasg’ testi-

mony indicated that “he had forgotten nearly all of what happened

at the interview” (258a).

10 Key documents from the Monsanto case, appropriately marked

with items of particular concern to the Examiner, were left with

Mr. Thomas at his request. Dr. McRae’s testimony in Monsanto

concerning his affidavits was one of the items specifically marked

for the Examiner’s consideration. Mr. Thomas stated that he would

review these documents, and he acknowledged that he had done so

when he returned the documents several weeks later (62a).

8

affidavits, aud (4) discussed in detail with Examiner

Thomas (63a-67a) ."*

Following the conference, R&H filed an amendment to

its application in which it cancelled all existing claims

and introduced an entirely new set of claims. The amend-

ment summarized the conference, and R&H offered to sup-

ply more information and copies of any additional docu-

ments discussed at the conference, but the Examiner did

not request additional dccumentation (68a-70a).

After a series of rejections and further amendments,

the Examiner finally held the Wilson and McRae claims

patentable. The patent in suit thereafter issued on June

11, 1974 (73a-78a).

B. The Decision of the District Court

The tria! in this case lasted over two months. The Dis-

trict Court, sitting without a jury, heard the deposition

and trial testimony of over 40 witnesses, including the

patent applicant, Dr. McRae, whose affidavits before the

PTO were later the basis for the CAFC’s reversal. The

trial transcript exceeded 4900 pages, and over 3000 pages

of exhibits were introduced. Dr. McRae was examined

and cross-examined at length by respondents and the Dis-

trict Court about his affidavits and their background

tests. The District Court filed a 268-page opinion weigh-

ing the evidence, resolving conflicts, and making explicit

findings of fact and conclusions of law on all issues.

In its opinion, the District Court stated that the record

was “replete with inconsistencies.” It found, however,

11 The criticized McRae affidavits were filed by R&H after re-

jection of its claims by the PTO based on certain prior art. Ex-

aminer Thomas testified he was aware of these rejections (CAFC

App. 3879-80). Moreover, at the conference, R&H discussed not

only the McRae affidavits but also the prior art that precipitated

the rejections during the prosecution of the Wilson and McRae

applications (61a-66a).

9

after carefully reviewing all of the evidence, that “the

more credible evidence” supported its rejection of respond-

ents’ fraud defense (109a, 113a, 137a-138a).

On the issue of alleged wrongful intent—one of the

elements respondents had to prove to establish fraudulent

procurement of a patent—the District Court found as

a fact that Dr. McRae believed in good faith that his

affidavits were accurate (72a). The court further found

that R&H “was of the good faith belief that patent Ex-

aminer Thomas appreciated the information supplied and

its implications,” and that R&H reasonably believed he

“understood what he had been told and had taken the

disclosures into account when allowing the Wilson patent”

(70a-7la). The District Court therefore found that “the

patent in suit was procured by Rohm and Haas in good

faith and not through fraudulent or inequitable conduct”

(109a; see also 193a).

With respect to R&H’s alleged misrepresentation and

inadequate disclosure of propanil test data—other ele-

ments as to which respondents had the burden of proof—

the District Court found that during the interview, R&H

specifically informed Mr. Thomas: (1) “of the omissions

of herbicidal test data from the earlier filed affidavits”

(72a); (2) that R&H “had been unable to locate all of

the test data in its records corresponding to the data re-

cited in the affidavits” (67a); and (3) that R&H “sup-

plied to the extent possible the omitted data and all other

herbicidal data in Rohm and Haas’ possession” (72a).

The court also made the factual finding that R&H’s dis-

closures had “alerted the patent examiner to the im-

portance of comparative herbicidal data” (63a) and that

“all of the deficiencies which existed in the prosecution

* * * were corrected by the complete and detailed dis-

closure of herbicidal data and information to the Patent

Office in 1973” (72a).

10

The District Court explicitly held that:

[D]efendants have failed to carry the burden and

adduce sufficient probative evidence to establish that

Rohm and Haas procured the patent in suit by

fraud or inequitable conduct. The record * * * un-

equivocally indicates that the patent examiner was

fully informed of all of the factors material to the

patentability of the methods claimed in plaintiff's

patent. [137a.]

C. The Opinion of the CAFC

The CAFC reversed and invalidated the Wilson and

McRae patent because it found the McRae affidavits to

be fraudulent and the fraud not “cured.” The opinion

was bottomed on the assumption that “R&H intentionally

made material misrepresentations * * * the effects of

which were not eliminated prior to issuance” (224a-

225a). The CAFC did not hold that the District Court’s

contrary findings of fact were “clearly erroneous” or

lacking in record support. Instead, it treated all key

findings of fact by the trial court as either “irrelevant”

or “legal error,” and made its own contrary factual find-

ings based on “facts revealed by the arguments [of re-

spondents’ counsel] on appeal” (231la).”

The CAFC then, swa sponte, announced a new test

imposing novel and unprecedented requirements for al-

leviating or curing the presumed effect of the purported

misrepresentations. The test had not been advocated by

the prevailing party or discussed in any of the briefs

12 For example, the CAFC incorrectly assumed that certain data

in one of the McRae affidavits were “falsified” (252a). It based

this assumption on R&H’s alleged failure to deny the charge.

The record in this case unequivocally establishes, however, that

R&H consistently denied in both its briefs and at oral argument

any intentional misstatement or falsification (see, e.g., Brief for

Appellee in the CAFC at 12 n.18, 19 n.36; Transcript of Oral

Argument annexed to Hutz Affidavit filed in the CAFC on Feb. 3,

1984), and the trial court found that Dr. McRae believed his affi-

davits were accurate (72a). See also n.7, supra, and n.14, infra.

11

before the court. The CAFC cited no precedent for its

test.

Under the CAFC’s test, patent applicants, who are pre-

sumed to be “aware” of “intentional material misrepre-

sentations,” are required to: (1) “expressly advise the

PTO” in writing of the misrepresentations; (2) provide

the “actual facts” and, if “any PTO action has been

based on the misrepresentation,” request “further exami-

nation in light thereof”; and (3) establish patentability

“on the basis of the new and factuaily accurate record”

(255a-256a). The “complete cure must also be demon-

strated by clear, unequivocal, and convincing evidence”

(256a).

The CAFC applied its newly-announced test retroac-

tively, without affording R&H any opportunity to satisfy

it, and held that R&H had failed to comply with it as a

matter of law—a determination in direct conflict with

the numerous explicit findings of fact of the District

Court, including a direct finding that “all of the defi-

ciencies * * * were corrected” (72a). The CAFC thus

held that the Wilson and McRae patent was invalid be-

cause of fraud (258a).

REASONS FOR GRANTING THE PETITION

1. The CAFC’s Test For Cure. The defense of fraud

on the PTO is one of the most pervasive and vexing prob-

lems with which federal courts must currently cope. Wil-

ful infringers of valid patents almost invariably assert

this defense, and they then spend inordinate amounts of

time exploiting it during discovery, at trial, and on ap-

peal. Fraud is also being asserted with ever increasing

frequency in proceedings before the PTO. For example,

statistics provided by that office show that in January

1982, 78% of the protested reissue applications pending

in the PTO which were also in litigation involved issues

of fraud and candor. Less than two years later, in De-

iia

12

cember 1983, that figure had risen to 84%—more than

4 out of every 5 such protested reissue applications.

The case at bar thus presents the Court with questions

of national importance vital to the enforcement of the

patent law which are now shrouded in doctrinal uncer-

tainty by the unprecedented fraud-purging standards

adopted by the CAFC. These “new standards” will in-

terfere with the effective handling of patent cases by

District Courts throughout the United States. The de-

termination of the issues will have a direct, dramatic,

and immediate impact on the patent system.

It should be noted at the outset that the alleged “fraud”

dealt with here was not a misrepresentation or omission

which a party left uncorrected or that produced results.

To the contrary, R&H took the steps it then believed were

proper and sufficient to rectify any misrepresentation

that may have occurred well before the PTO made a

final decision on the merits of R&H’s patent application.

Indeed, the only data relied upon by respondents to sup-

port their fraud charges consisted of data R&H itself

independently discovered and voluntarily submitted to

the PTO (68a). Hence, the issue is: what must a party

do while its patent application is pending in order to

correct an earlier misrepresentation or omission?’

The CAFC’s decision formulated entirely new re-

quirements for curing fraud which no other court had

theretofore adopted. The CAFC has acknowledged the

unique and far-ranging nature of its decision. In deny-

ing respondents’ application for attorney fees, the court

stated that its previous holding on the merits “breaks

new ground on the subject of fraud in the PTO and sets

new standards in this area of the law” (277a) .¥

13 The court recognized that in prior cases, attorney fees had

been awarded where the patentee had committed fraud or engaged

in other inequitable conduct before the PTO (276a-277a). Never-

theless, it refused to award either attorney fees or costs in this

13

a. Under the CAFC’s “new standards,” it is not enough

for an applicant to inform the PTO fully and accurately

of all the material facts bearing on the application in

such a manner that the PTO could not be misinformed

about those facts. Instead, an applicant who is concerned

about the possibility of “intentional material misrepre-

sentations” (here an alleged failure to disclose**) must

“expressly advise the PTO” in writing that there has

been a misrepresentation. Only then is the applicant en-

titled to provide the “actual facts” (255a-256a).

Mechanical compliance with this unprecedented rule is

mandatory. In this case, its application by the CAFC has

resulted in the destruction of a pioneer herbicide patent

which the District Court held met all of the statutory

criteria for patentability.“ The District Court also found

that the patent had been infringed from the day it was

issued. Fraud was found de novo by the Court of Ap-

peals for nondisclosure or misstatement of facts even

though the District Court found that all the facts had

been disclosed long prior to final PTO action and within

ample time for the PTO to act (72a).

b. Until this decision, it was the well established rule

that the proponent of the defense of fraud had the bur-

case precisely because its prior holding “breaks new ground” and

“sets new standards” (277a).

14 The CAFC’s test as posited assumes the commission of “inten-

tional misstatements” and “misconduct.” R&H has steadfastly

maintained that no “intentional misstatements” or “misconduct”

occurred. See n.7 and n.12, supra. The District Court found that

R&H acted in good faith. R&H has admitted only that some avail-

able data, both favorable and unfavorable, were omitted from

affidavits during the early stages of the Wilson and McRae prosecu-

tion and that the reasons for this omission cannot be ascertained.

15 Both the Patent Examiner and the District Court, with all of

the “actual facts” before them, determined respectively that the

Wilson and McRae invention was unique and thus patentable and

that the R&H patent was valid. Respondents have repeatedly

acknowledged that propanil’s herbicidal activity is unique.

14

den of proving each of the traditional elements of fraud

(misrepresentation, materiality, reliance, and wrongful

intent) by clear, unequivocal and convincing evidence.”*

Contrary to all these authorities, in the case at bar the

CAFC made its own findings, and on the basis thereof,

under the guise of a test for cure, required the patentee

to admit in writing to the commission of misrepresenta-

tion, to the existence of materiality and reliance (e.g.,

that the PTO’s prior actions were based on the misrepre-

sentation), and, in effect, to wrongful intent—each of the

key elements of fraud.’ The required admissions plainly

force the patentee to carry the challenger’s burden of

proof on the elements of fraud, even though each ele-

ment is disputed.

ce. The CAFC presumed wrongful intent from the as-

sumed misrepresentation of “asserted material facts”

(258a-255a)—pivotal facts that R&H disputed and the

District Court found respondents had failed to prove.

By requiring the patentee to admit the elements of mis-

representation, materiality, and reliance, from which

wrongful intent was inferred, the CAFC effectively elimi-

nated scienter as an element of the challenger’s burden

of proof.* The Court of Appeals also totally failed to

16 See 85 U.S.C. § 282 (the burden of proving invalidity is on the

patent’s challenger) ; United States v. American Bell Tel. Co., 167

U.S. 224, 251 (1897); Orthopedic Equipment Co. v. All Orthopedic

Appliances, Inc., 707 F.2d 1876, 1883 (Fed. Cir. 1983); Oetiker

v. Jurid Werke GMBH, 671 F.2d 596, 600 (D.C. Cir. 1982) ; Digital

Equipment Corp. v. Diamond, 653 F.2d 701, 714-16 (1st Cir. 1981) ;

Pfizer, Inc. v. International Rectifier Corp., 538 F.2d 180, 187 (8th

Cir. 1976), cert. denied, 429 U.S. 1040 (1977); American Optical

Corp. v. United States, 179 U.S.P.Q. 682 (Ct. Cl. 1973) ; Norton v.

Curtis, 483 F.2d 779, 792-797 (C.C.P.A. 1970).

17{]t should be emphasized, however, that under prior case law

reliance was considered an element of fraud. In the case at bar, the

CAFC eliminated reliance as a separate element. See Driscoll Vv.

Cebalo, 731 F.2d 878 (Fed. Cir. 1984) (citing the instant case).

18In Schnadig Corp. Vv. Gaines Mfg. Co., 494 F.2d 3838, 392-394

(6th Cir. 1974), the Sixth Circuit expressly rejected utilization of

15

consider whether the PTO ever relied upon the allegedly

false or withheld test data in issuing the patent in suit.

The CAFC thereby eliminated the reliance element under

the pretext of a test for curing fraud.

d. In addition, the CAFC required the patentee, after

it had “expressly” admitted the key elemerts of the in-

fringer’s case, to demonstrate so-called curative disclo-

sures by the clear, unequivocal, and convincing evidence

standard of proof. The patentee must itself bear the

burden of disproving the asserted fraud. The CAFC’s

bifurcated procedure therefore clearly places the ulti-

mate burden of proof on the patentee. That result is

plainly at odds with 35 U.S.C. § 282, which unequivocally

mandates that the burden of proving invalidity rests on

the party asserting it. The CAFC’s decision is thus con-

trary not only to every prior case on the subject but to

the governing statute itself.

e. Under prior law, the courts did not examine an ap-

plicant’s multi-year prosecution at intermediate points;

rather, the patent application process was considered as

a whole."* By contrast, the CAFC concluded that there

was patent-defeating behavior due to interim omissions

or misstatements, and then separately evaluated the later

presentation of corrective information prior to issuance

“strict liability” in resolving patent fraud issues. In the instant

case the District Court found as a fact that R&H acted in good

faith (109a), but the CAFC ruled that this finding was irrelevant

(246a). The CAFC’s decision is therefore in conflict with the Sixth

Circuit’s decision in Schnadig Corp. See also Square Liner 860°,

Inc. V. Chisum, 691 F.2d 862, 874 (8th Cir. 1982).

19 See, e.g., Allen v. W. H. Brady Co., 508 F.2d 64, 67 (7th Cir.

1974) ; Pfizer, Inc. v. International Rectifier Corp., 545 F. Supp. 486,

522-524 (C.D. Cal. 1980), aff'd, 685 F.2d 857 (9th Cir. 1982), cert.

denied, 103 S. Ct. 818 (1983); American Hoist & Derrick Co. v.

Manitowoc Co., Inc., 448 F. Supp. 1872, 1884-85 (E.D. Wise.

1978), aff'd, 603 F.2d 629 (7th Cir. 1979); United States v. Cold

Metal Process Co., 62 F. Supp. 127, i140 (N.D. Ohio 1945), aff'd,

164 F.2d 754 (6th Cir. 1947), cert. denied, 884 U.S. 811 (1948).

16

of the patent under different standards of disclosure and

a different burden of proof. Prior cases followed an ap-

proach consistent with 35 U.S.C. § 282 and principles

developed in the securities laws.” Misstatements and

omissions could be rectified before final PTO action by

full disclosure of all material facts, thereby defeating

assertions of wrongful intent, misrepresentation, materi-

ality, and reliance. The patents’ challengers had the bur-

den of proving that these elements of fraud were not

nullified by corrective disclosures. Courts then assessed

the fraud defense at the eid of the patent prosecution,

when all of the bases of allowance could be accurately

determined. The District Court in the case at bar, fol-

lowing that procedure, thus found that R&H had made

a “complete and detailed disclosure” of all material facts

to the PTO “within sufficient time for the Patent Office

to take whatever action it deemed necessary” (72a). The

Court of Appeals erroneously rejected this approach.

f. The CAFC’s “cure” rule is fundamentally flawed for

another equally important reason. The rule is contrary

to the policies underlying the Fifth Amendment and to

public policy generally. In order to satisfy the rule for

cure and the concomitant burden and standard of proof,

the patent applicant, usually a corporation, will have to

force an individual, 7.e., the inventor, another affiant or

20 Under the securities laws, timely disclosure of the facts and

third-party allegations of wrongdoing are all that is required to

nullify a charge of fraud. See Alabama Farm Bureau Mut. Cas.

Co. v. American Fidelity Life Ins. Co., 606 F.2d 602, 610-611 (5th

Cir. 1979}, cert. denied, 449 U.S. 820 (1980) ; Sonesta International

Hotels Corp. v. Wellington Associates, 483 F.2d 247, 255 (2d Cir.

1973) ; Rosenblatt v. Northwest Airlines, Inc., 485 F.2d 1121, 1128

(2d Cir. 1970); Avnet, Inc. v. Scope Industries, 499 F. Supp.

1121, 1124-25 (S.D.N.Y. 1980); Ronson Corp. v. Liquifin Aktien-

gesellschaft, 370 F. Supp. 597, 602 (D.N.J. 1974), aff'd, 497 F.2d

394 (3d Cir.), cert. denied, 419 U.S. 870 (1974); Nicholson File

Co. v. H. K. Porter Co., 341 F. Supp. 508, 521 (D.R.I. 1972), aff'd,

482 F.2d 421 (1st Cir. 1973); Abramson v. Nytronics, Inc., 312

F. Supp. 519, 526 (S.D.N.Y. 1970).

17

an attorney-agent, to confess in writing to facts from

which, without more, the court holds that fraud can be

inferred. In this case, the patent was invalidated be-

cause the applicant had not characterized certain prior

disclosures as fraudulent misrepresentations and had not

made written admissions as to each element on which

the CAFC based its finding of fraud, even though the

facts were disputed, a key participant was dead, and in-

ferences were, at best, conflicting. Requiring, as a pre-

requisite to cure, that the applicant admit the elements

from which a court can find fraud, thereby compelling

the applicant to expressly admit facts which may tend

to incriminate the affiant or attorney-agent, directly con-

flicts with the policies underlying the Fifth Amendment

strictures against self-incrimination;* where the appli-

cant is an individual, these strictures are directly vio-

lated.

g. In adopting the “new standards,” the CAFC lost

sight of the most important policy considerations on

which the applicant’s duty of full disclosure is based.

These considerations, set forth by this Court in Precision

Instrument Mfg. Co. v. Automotive Maintenance Mach.

Co., supra, were interpreted by the Third Circuit in an

earlier chapter of this litigation, Monsanto Co. v. Rohm

21 Under 18 U.S.C. § 1001 the affiant or attorney-agent may be

subject to fines up to $10,000 and imprisonment up to five years.

See also 18 U.S.C. § 371. Under proposed amendments to 37 C.F.R.

§§ 1.344 et seq., any such admission of wrongdoing subjects the

involved attorney or agent to “suspension, disbarment or exclusion

from practice.” 48 Fed. Reg. 36480 et seq. (1983) (to be codified

at 37 C.F.R. §§ 1.344-61). Cf. Kingsland vy. Dorsey, 338 U.S. 318

(1949). See Lefkowitz v. Turley, 414 U.S. 70 (1973). See also

Lefkowitz v. Cunningham, 481 U.S. 801, 806 (1977) (“direct eco-

nomic sanctions and imprisonment are not the only penaities capable

of forcing the self-incrimination which the Amendment forbids’’) ;

Spevak v. Klein, 385 U.S. 511, 516 (1967) (threat of disbarment,

loss of professional standing, and loss of livelihood are sufficient

compulsion and violate the Fifth Amendment). See gene lly Minne-

sota Vv. Murphy, 104 8S. Ct. 1136, 1146 (1984).

18

& Haas Co., 456 F.2d at 600: a “failure to make total

disclosure” of test data, thereby making it “impossible

for the Patent Office fairly to assess * * * [the] applica-

tion against the prevailing statutory criteria,” constituted

a transgression of “equitable standards of conduct owed

the public by the applicant.” Precision Instrument and

Monsanto insure informed agency decision-making by re-

quiring that complete and reliable facts be provided to

the agency within time for the agency to act. In keeping

with this requirement, the decisions uniformly held, un-

til the CAFC’s decision in this case, that timely disclo-

sure of all material facts precluded a charge of fraud.”

The District Court below correctly followed the holdings

of these prior decisions.

The CAFC’s new rule is inconsistent with Precision

Instrument and Monsanto. Requiring a written admis-

sion of facts which may tend to prove criminal conduct

as a prerequisite to cure will deter disclosure. The

CAFC’s rule thus conflicts with the public interest in

full, fair, and timely disclosure of all material facts to

the affected agency. Moreover, the application of the

rule in this case resulted in the invalidation of an ob-

jectively meritorious patent. Viewed in this light, the

CAFC’s rule also conflicts with the underlying basis of

the patent system, which attempts to promote innovation

and full disclosure of inventions for the benefit of the

public.

h. In applying its rule for “cure”, the CAFC com-

mitted two additional errors. First, it concluded that

R&H’s good faith belief that the Patent Examiner “ap-

preciated the information supplied and its implications”

was “irrelevant” (257a). Second, the CAFC concluded

that R&H had no right to rely on the expertise of the

PTO or Examiner to assess the “actual” facts (which the

District Court had found were fully and fairly disclosed

22 See n.19 and n.20, supra.

Ses de Nes ae

ey en

19

in good faith) (256a-258a).2* These determinations also

run contrary to the decisions of this Court holding that a

government agency is presumed to do its job.

The CAFC was in error both in establishing its new

rule and in applying it in this case. But regardless of

the propriety of its decision, the rule is of such enormous

importance in the patent law, particularly in view of the

extraordinary and increasing use being made of fraud

claims, that the rule and its underlying rationale should:

be examined by this Court for adoption or rejection.

Absent such a review, there will be increasing turmoil

and litigation in this important area of law.

2. Retroactive Application Of The New Test For Cure.

The CAFC applied its new and unprecedented standards

on burden of proof and “cure” retroactively to a patent

prosecution which commenced 25 years before the deci-

sion was handed down and to a “cure” which occurred

ten years before that date. In so doing, the court ignored

the principles enunciated by this Court in Chevron Oil

Co. v. Huson, 404 U.S. 97, 106-107 (1971).

Gross unfairness has resulted from this retroactive ap-

plication. A party in good faith prosecuted a patent and

23 The CAFC’s ruling on these points is in conflict with estab-

lished law. See, e.g., Plastic Container Corp. v. Continentai Plastics,

607 F.2d 885, 901 (10th Cir. 1979), cert. denied, 444 U.S. 1018

(1980) ; United States v. Pfizer, Inc., 498 F. Supp. 28, 35-36 (E.D.

Pa. 1980), aff'd, 676 F.2d 51 (3d Cir. 1982); North Carolina v.

Chas. Pfizer & Co., Inc., 384 F. Supp. 265, 279 (E.D.N.C. 1974),

aff'd, 537 F.2d 67 (4th Cir.), cert. denied, 429 U.S. 870 (1976).

24 See Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402,

413-416 (1971); United States v. Chemical Foundation, Inc., 272

U.S. 1, 14-15 (1926); American Hoist & Derrick Co. v. Sowa &

Sons, Inc., 725 F.2d 1350, 1859 (Fed. Cir. 1984) (recognizing “the

deference that is due to a qualified government agency presumed

to have properly done its job, which includes one or more examiners

who are assumed to have some expertise * * * and whose duty it is

to issue only valid patents”).

20

litigated its validity under then-existing standards, only

to be later instructed by the Court of Appeals that the

applicable iaw, including the controlling burden and

standard of proof and evidentiary rules, was materially

different from the rules upon which the litigant and the

District Court had reasonably relied.

In Precision Instrument, 324 U.S. at 818 (citation

omitted), the Court delineated the duty of disclosure to

the PTO as follows:

Those who have applications pending with the Patent

Office or who are parties to Patent Office proceedings

have an uncompromising duty to report to it all facts

concerning possible fraud or inequitableness under-

lying the applications in issue. * * * This duty is

not excused by reasonable doubts as to the sufficiency

of the proof of the inequitable conduct nor by resort

to independent legal advice. Public interest demands

that all facts relevant to such matters be submitted

formally or informally to the Patent Office, which

can then pass upon the sufficiency of the evidence.

This Court thus expressly stated that in cases involving

possible fraud, an applicant must “report * * * all facts,”

and this submission may be made “informally.” In Pfizer,

Inc. v. International Rectifier Corp., 538 F.2d at 193 n.27,

the Eighth Circuit construed this Court’s admonition in

Precision Instrument to provide that matters could be

brought “oraily or informally to the attention of the

Patent Office.” 2 Similarly, in Monsanto Co. v. Rohm and

Haas Co., supra, the Third Circuit held that, under Preci-

sion Instrument, it was a “failure to make total dis-

closure” of all material information and test data that

25 See also Triumph Hosiery Mills, Inc. v. Alamance Industries,

Inc., 299 F.2d 793, 796-797 (4th Cir.), cert. denied, 370 U.S. 924

(1962) ; Pfizer, Inc. v. International Rectifier Corp., 545 F. Supp.

at 535; Lundy Elec. & Sys., Inc. Vv. Optical Recognition Sys., Inc.,

362 F. Supp. 130, 142 (E.D. Va. 1973), aff'd, 493 F.2d 1222 (4th

Cir. 1974).

21

constituted a transgression of “equitable standards of

conduct.” 456 F.2d at 598-600.

In 1973, when R&H resumed prosecution of its appli-

cation after the Monsanto litigation, the PTO rules of

practice and precedent offered no guidance to an appli-

cant in R&H’s position.** R&H could find guidance only

in prior case law. In accordance with Precision Instru-

ment and Monsanto, R&H presented “all facts concern-

ing possible fraud or inequitableness” (inciuding all data

on propanil and related compounds) to the Examiner in

charge of the application. R&H also extended invitations

to the Justice Department, the PTO’s Solicitor’s Office,

and the Chief of the PTO’s Examining Group to review

the facts (60a).

The District Court carefully applied the tests set forth

in Precision Instrument and Monsanto, and ruled that

the “record * * * unequivocally indicates that the patent

examiner was fully informed of all of the factors mate-

rial to patentability” (137a). The District Court thus

held that respondents “failed to establish fraud or in-

equitable conduct” (id.).

In rejecting the traditional rules followed by the Dis-

trict Court and applying a new burden and standard of

26 As the First Circuit stated in Digital Equipment Corp. v.

Diamond, 653 F.2d at 715, “the only relevant codified administra-

tive standard governing the conduct of applicants before the PTO

was former Rule 56’s cryptic proscription of ‘fraud.’” This rule

simply provided:

Improper applications. Any application signed or sworn to in

blank, or without actual inspection by the applicant, and any

application altered or partly filled in after being signed or

sworn to, and also any application fraudulently filed or in

connection with which any fraud is practiced or attempted on

the Patent Office, may be stricken from the files. [37 C.F.R.

§ 1.56 (1949).]

In 1977, long after the Wilson and McRae prosecution, Rule 56 was

substantially revised to set forth detailed procedures for disclosures.

22

proof, the CAFC denied R&H any opportunity to comply

with the new standards. This Court has recognized that

such a result is fundamentally unfair. Cf. Santosky Vv.

Kramer, 455 U.S. 745, 757 (1982).27 The CAFC’s deci-

sion clearly meets the standard for wholly prospective

application set forth in Chevron Oil Co. v. Huson, 404

U.S. at 106-107: (a) it establishes new principles of law;

(b) retrospective application of the new principles will

not, given their purpose and effect, further their opera-

tion; and (c) retroactive application will produce “sub-

stantial inequitable results.’ The CAFC utterly dis-

regarded the Chevron standards.

(a) The CAFC sua sponte established new rules of

civil law, including procedure and evidence, and set new

standards of conduct before the PTO.%* The CAFC de-

cided an issue of first impression whose resolution was

not clearly foreshadowed.” Given that the CAFC’s rules

are inconsistent with 35 U.S.C. § 282, leading precedent,

and public policy, it is indisputable that they not only

27 The Court there stated:

[T]his Court never has approved case-by-case determination

of the proper standard of proof for a given proceeding. Stand-

ards of proof, like other “procedural due process rules[,] are

shaped by the risk of error inherent in the truth-finding proc-

ess as applied to the generality of cases, not the rare excep-

tions.” * * * Since the litigants and the fact-finder must know

at the outset of a given proceeding how the risk of error will

be allocated, the standard of proof necessarily must be cali-

brated in advance. Retrospective case-by-case review cannot

preserve fundamental fairness when a class of proceedings is

governed by a constitutionally defective evidentiary standard.

[Id.; emphasis in original; citation omitted.]

28 As noted above, the CAFC itself has stated that its decision

“breaks new ground on the subject of fraud in the PTO and sets

new standards in this area of law” (277a).

29 In the case at bar, none of the parties ever suggested a test

for cure or standard and burden of proof such as that announced

by the CAFC.

23

were entirely unexpected but also could not have been

foreseen.

(b) The rules in question were designed to ensure

“that inventions meeting the statutory requirements for

patentability be patented” (256a) and to encourage volun-

tary “expiation of wrongdoing where an applicant

chooses to take the necessary action on his own initia-

tive and to take it openly” (id.). Because the CAFC pro-

mulgated new standards of conduct, a new burden and

standard of proof, and new rules of evidence, retroactive

application to completed prosecutions and trials can

hardly further the goals of the rule. Indeed, here a pio-

neer patent has been invalidated notwithstanding the

applicant’s voluntary efforts taken on its own initiative

in compliance with existing standards to expiate any

asserted prior wrongdoing.

(c) Retroactive application will produce substantial

inequitable results. As the District Court found, R&H

acted reasonably and in good faith. R&H supplied all

the facts to the PTO in a timely fashion and did so volun-

tarily (see pp. 6-8, supra). It offered to file any docu-

ments, to answer any questions, and to take any action

deemed necessary by the PTO. Under these circum-

stances, retroactive application works a grave injustice

and unfairly punishes R&H,™ as well as any other party

similarly situated, for its good-faith disclosure of the

facts and reasonable corrective efforts consistent with

established cases and rules.*

%°It is estimated that retroactive application will deprive R&H

of $100 million in revenue. Moreover, respondents have argued

in their opposition to R&H’s motion for extension of time that

as a result of the CAFC’s decision they intend to press forward

with their antitrust counterclaims. Respondents further claim that

the decision by the CAFC in this case will necessitate the entry

of judgment against Rohm and Haas in two other cases.

$1 As the First Circuit said in Digital Equipment, 653 F.2d at

716 n.17: “It would obviously be improper * * * to judge the con-

24

8 The CAFC’s Pattern Of Fact-Finding. Ordinarily,

of course, petitioner would not present to this Court a

challenge to the Court of Appeals’ de novo review of the

facts, even if that review were egregiously erroneous.

The ruling below, however, is not an isolated one. It is

an integral part of a pattern that has developed whereby

this particular Court of Appeals has either ignored or

taken unto itself the task of reviewing and reweighing

facts found by the trial courts, and reversing these facts

without finding them clearly erroneous—all in violation

of Rule 52(a). This pattern has developed during the

first two years of the CAFC’s existence, and is presented

in at least two cases already pending before the Court

and in two others in which certiorari will be sought in

the near future.” We respectfully submit that ignoring

duct of these applicants retroactively in terms of a ‘duty’ created

by a regulation promulgated years after the events at issue.”

Accord, Connell v. Sears, Roebuck & Co., 722 F.2d 1542, 1551-52

(Fed. Cir. 1983); In re Clark, 522 F.2d 623, 633 (C.C.P.A. 1975)

(Miller, J., concurring) (“to retroactively apply a newly developed

standard and, at the same time, to deny appellant the opportunity

to correct the situation by reissue is manifestly unfair”) ; In re

Certain Steel Rod Treating Apparatus & Components Thereof, 215

U.S.P.Q. 237, 257 (U.S.I.T.C. 1981).

32 TP Laboratories, Inc. v. Professional Positioners, Inc., 724 F.2d

965 (Fed. Cir. 1984), petition for cert. filed, No. 83-1939 (April 2,

1984); White v. Jeffrey Mining Mach. Co., 723 F.2d 1553 (Fed.

Cir. 1984), petition for cert. filed, No. 83-1913 (May 22, 1984);

Garlock, Inc. v. W. L. Gore & Associates, 721 F.2d 1540 (Fed. Cir.

1983) ; RCA Corp. v. Applied Digital Data Systems, Inc., 730 F.2d

1440 (Fed. Cir. 1984). See Litton Systems, Inc. Vv. Whirlpool Corp.,

728 F.2d 1423 (Fed. Cir. 1984) (on Lanham Act question of likeli-

hood of confusion, CAFC treats evidence as “equivocal and eva-

sive” and reverses District Court finding); Hughes Aircraft Co.

v. United States, 717 F.2d 1351 (Fed. Cir. 1983) (CAFC reverses

trial court and finds patent infringement under the doctrine of

equivalents) ; Stratoflex, Inc. V. Aeroquip Corp., 713 F.2d 1530

(Fed. Cir. 1983) (District Court applies incorrect legal standard

but CAFC, instead of remanding, independently weighs the evi-

dence, makes findings of fact, and concludes that a patent is in-

25

of facts, reweighing of evidence, and independent fact-

finding by the Court of Appeals that now has exclusive

appellate jurisdiction over all patent cases has become so

pronounced and pervasive that it calls for intervention

by this Court in the exercise of its supervisory powers.

In this case, without once acknowledging the require-

ments or even the existence of Rule 52(a), the CAFC

itself reweighed the evidence, reversed the key findings of

the District Court, and made its own findings of fact

based upon “facts revealed by the arguments on appeal’

(231a). The CAFC did not rule that the District Court’s

findings were “clearly erroneous”; it simply dismissed

them as “legal error’ or “irrelevant” and then, instead of

remanding the case to the District Court, substituted its

own contrary findings.

The CAFC ruled, in direct conflict with the findings of

the District Court, that R&H “intentionally made mate-

rial misrepresentations * * * the effects of which were

not eliminated prior to issuance” of the Wilson and

McRae patent (224a-225a). The CAFC thus necessarily

held that respondents had met their burden of proving

fraud by clear, unequivocal, and convincing evidence,

even though the District Court, after a two-month trial

which included extensive live testimony, held that respond-

ents failed to carry their burden of proof on the fraud

issue (137a). The CAFC made no pretense of applying

the standard this Court has established for determining

whether the findings of the District Court were clearly

erroneous.* This critical error occurred with respect to

valid for obviousness); Aktiebolaget Karlstads Mekaniska Werk-

stad v. USITC, 705 F.2d 1565 (Fed. Cir. 1983) (CAFC evaluates

evidence, makes findings on obviousness issue, reverses USITC, and

invalidates patent). See also Baginsky v. United States, 697 F.2d

1070 (Fed. Cir.), cert. denied, 104 S. Ct. 423 (1983).

33In United States v. United States Gypsum Co., 333 U.S. 364,

395 (1948), the standard was set forth as follows: “A finding is

clearly erroneous when, although there is evidence to support it, the

26

at least three pivota! factual issues: (a) intent, (b) the

effectiveness of R&H’s cure, and (c) the ultimate finding

of fraud.

This Court has repeatedly held that Rule 52(a) “means

what it says.” * In Inwood, the Court pointed out that

“(djetermining the weight and credibility of the evi-

dence is the special province of the trier of fact.” 456

U.S. at 856. In Pullman, the Court observed that “[t] reat-

ing issues of intent as factual matters for the trier of

fact is commonplace” and that issues of intent are pure

questions of fact. 456 U.S. at 288. See also United

States v. Yellow Cab, 338 U.S. 388, 341 (1949).* The

decision of the CAFC is contrary to prior decisions of

this Court, the intent of Congress as expressed in the

legislative history of the Federal Courts Improvement

Act of 1982,* and the efficient administration of justice.

reviewing court on the entire evidence is left with a definite and

firm conviction that a mistake has been committed.”

84 Bose Corp. Vv. Consumers Union of the United States, Inc., 52

U.S.L.W. 4518, 4517 (U.S. April 30, 1984) (No. 82-1246). See also

Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844

(1982); Pullman Standard v. Swint, 456 U.S. 273 (1982); Zenith

Radio Corp. Vv. Hazeltine Research, Inc., 395 U.S. 100, 128 (1969) ;

United States v. National Ass’n of Real Estate Boards, 339 U.S.

485, 495-496 (1950).

85 The Court has further observed that in no type of case are the

restraints of Rule 52(a) “more appropriately applicable” than to

trial court findings on scientific matters. Graver Tank & Mfg. Co.

v. Linde Air Products Co., 886 U.S. 271, 274 (1949). This case is

precisely the type that is governed by Rule 52(a).

86 The House Committee on the Judiciary admonished the CAFC

to adhere to “the settled practice of the circuit courts of appeals in

patent cases to honor and respect Rule 52(a).” H. Rep. No. 97-312,

97th Cong., lst Sess. 37-88 (1981). The Committee further cau-

tioned that “[t]he circuit courts have repeatedly held that it is not

their function to pass upon or consider de novo the evidence re-

ceived at the trial or to weigh controverted evidence.” Jd. This

report echoed the concerns expressed by many witnesses appearing

before Congress, including representatives of the Bar Association

of the Seventh Circuit and the American Bar Association. See

27

a. In this case, after a two-month trial, the District

Court found that Dr. McRae—the principal trial witness,

one of the inventors, and the person who signed the ac-

cused affidavits—believed in good faith that the affidavits

were accurate (7la-72a, 109a, 229a n.2). The District

Court also found that R&H had prosecuted the Wilson

and McRae patent in good faith (109a, 193a).*"

The CAFC’s predecessor court, the CCPA, held in

Norton v. Curtiss, supra, that “[t]he state of mind of

the one making the representations is probably the most

important of the elements to be considered in determin-

ing the existence of ‘fraud.’” 433 F.2d at 795. Indeed,

it is inconceivable that consideration of evidence of an

applicant’s actual state of mind is “legal error” on the

issue of scienter where his affidavits are the focal point

of a charge of fraud. Moreover, a finding of good faith

precludes a finding of fraud. See, e.g., Orthopedic Equip-

ment Co. Vv. All Orthopedic Appliances, 707 F.2d at 1383;

Hearings on H.R. 2405 April 2 and 8, 1981, Before the Subcommit-

tee on Courts, Civil Liberties, and the Administration of Justice of

the House Committee on the Judiciary, 97th Cong., Ist Sess. 485-

488 (1981); see also Hearings on S. 677 and S. 678 March 20,

May 7, 9, 10, and June 18, 1979, Before the Subcommittee on Im-

provements in Judicial Machinery of the Senate Committee on the

Judiciary, 96th Cong., Ist Sess. 675-677, 698-700 (1979) (quoting

in part the presentation on behalf of the Seventh Circuit by Judge

(now Justice) Stevens); Hearings on H.R. 6033, H.R. 6934, H.R.

8806, H.R. 2414, April 3, 15, 17, 22, 24, May 8 and June 9, 1980,

Before the Subcommittee on Courts, Civil Liberties and the Admin-

istration of Justice of the House Committee on the Judiciary, 96th

Cong., 2nd Sess. 771-772 (1980).

37 Dr. McRae submitted all available records to the PTO after

his affidavits were challenged in the Monsanto case. Respondents

herein were given access to all these records, and they deposed Dr.

McRae at length about these affidavits and all the background tests.

He was the major witness at the trial and was exhaustively ques-

tioned about every aspect of this issue. The District Court had

ample opportunity to judge his competence, his ability to recall and

explain the background tests, and his credibility. It thereupon

made the key findings of fact which should have been dispositive

of this issue.

s

28

Square Liner 360°, Inc. v. Chisum, 691 F.2d at 374;

Oetiker v. Jurid Werke GMBH, 671 F.2d at 600;

Schnadig Corp. v. Gaines Mfg. Co., 494 F.2d at 392-394.

But the CAFC held that this finding was irrelevant

(246a).

b. While acknowledging that the question of “cure”

was a “question of fact,” the CAFC also ignored all of

the key findings of the trial court on this issue, including

the express finding that “all of the deficiencies which

existed * * * were corrected” (72a), and the finding

that R&H reasonably and in “good faith” had made a

complete and timely disclosure of all the “facts” (70a-

73a).°° If the District Court failed to consider relevant

evidence or failed to make a finding because of an er-

roneous view of the law, the Court of Appeals should have

remanded for further proceedings. See Inwood, 456 U.S.

at 857 n.19; Pullman, 456 U.S. at 291-292. See also

Guzman Vv. Pichirilo, 369 U.S. 698, 701 (1962).

ce. Most courts of appeals have held that the ultimate

determination of fraud must be assessed under the clearly

erroneous standard of review,” and this Court in Pull-

man also held that such “ultimate facts” are subject to

the constraints of Rule 52(a). 456 U.S. at 286-287 n.16.

The CAFC, however, found fraud as a matter of law but

38 See n.9, supra.

39 See, e.g., Brown-Bridge Mills, Inc. v. Eastern Fine Paper, Inc.,

700 F.2d 759, 764 (1st Cir. 1983); United States v. Pfizer, Inc.,

676 F.2d 51, 52, 56 (3d Cir. 1982); North Carolina v. Chas. Pfizer

& Co., 537 F.2d 67, 76 (4th Cir.), cert. denied, 429 U.S. 870 (1976) ;

Edward Valves, Inc. v. Cameron Iron Works, Inc., 286 F.2d 933,

947-48 (5th Cir.), mcd. on other grounds, 289 F.2d 355 (5th Cir.),

cert. denied, 368 U.S. 833 (1961); Skil Corp. v. Lucerne Products,

Inc., 684 F.2d 346, 349 (6th Cir.), cert. denied, 459 U.S. 991 (1982) ;

CMI Corp. v. Barber-Greene Co., 683 F.2d 1061, 1063 (7th Cir.

1982); Pfizer, Inc. v. International Rectifier Corp., 5388 F.2d 180,

193 (8th Cir. 1976), cert. denied, 429 U.S. 1040 (1977) ; Oetiker

v. Jurid Werke GMBH, 671 F.2d 596, 599-600 (D.C. Cir. 1982).

But cf. Connell v. Sears, Roebuck & Co., 722 F.2d 1542, 1551 (Fed.

Cir. 1983) (fraud is a conclusion of law).

i at ais ls Loot whee wat le

29

did not rule that the District Court’s rejection of respond-

ents’ fraud defense was clearly erroneous.

The CAFC has therefore totally transgressed Rule

52(a). Its approach has injected a wave of uncertainty

and confusion into the law of fraud. Only an exercise of

this Court’s supervisory powers will stop this unwar-

ranted and improper pattern of independent fact-finding

by the CAFC.

CONCLUSION

The petition for a writ of certiorari should be granted

and the judgment below reversed.

Of Counsel:

JANUAR D. Bove, JR.

JEFFREY B. BOVE

CONNOLLY, Bove, LoDGE

& HuTz

1220 Market Building

1220 Market Street

Wilmington, Delaware 19899

E. BARRETT PRETTYMAN, JR.

HOGAN & HARTSON

815 Connecticut Avenue, N.W.

Washington, D.C. 20006

* Counsel of Record

Respectfully submitted,

RUDOLF E. Hutz *

1220 Market Building

1220 Market Street

Wilmington, Delaware 19899

(302) 658-9141

Counsel for Petitioner

PHILIP W. TONE

JENNER & BLOCK

One IBM Plaza

Chicago, Illinois 60611

GEORGE W. F. SIMMONS

Route 2

Box 3377

Lopez, Washington 98261

WILLIAM E. LAMBERT III

ROHM AND Haas COMPANY

Philadelphia, Pennsylvania

19105