Petition for Writ of Certiorari — R.J. Reynolds Tobacco Co. v. Star Scientific, Inc. (No. 08-918)

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a 06-918 JAN 16 2009

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OFFICE OF THE CLERK

No. 08-___

IN THE

Supreme Court of the Anited States

R.J. REYNOLDS TOBACCO COMPANY,

Petitioner,

Vv.

STAR SCIENTIFIC, INC.,

Respondent.

On Petition for a Writ of Certiorari to the United

States Court of Appeals for the Federal Circuit

PETITION FOR A WRIT OF CERTIORARI

RICHARD A. KAPLAN DONALD B. AYER

RALPH J. GABRIC Counsel of Record

K. SHANNON MRKSICH MICHAEL S. FRIED

CYNTHIA A. HOMAN SUSAN M. GERBER

JEROLD A. JACOVER RACHAEL A. REAM

BRINKS HOFER GILSON CHRISTOPHER J. SMITH

& LIONE JONES DAY

455 N. Cityfront Plaza Dr. 51 Louisiana Ave., NW

NBC Tower — Suite 3600 Washington, DC 20001

Chicago, IL 60611 (202) 879-3939

(312) 321-4227

January 16, 2009 Counsel for Petitioner

i

QUESTION PRESENTED

The Federal Circuit in this case reversed a district

court ruling that two patents were unenforceable

due to inequitable conduct. It thus overturned as

clearly erroneous district court findings made after a

week-long trial, which relied expressly on credibility

findings. The district court found that the applicant,

Jonnie Williams, had made affirmative misstate-

ments to the Patent Office—which the Federal Cir-

cuit acknowledged—and never over several years

disclosed known prior art that the district court

ruled, and the Federal Circuit did not dispute, was

highly material. The district court expressly found

that this pattern of conduct demonstrated intent to

deceive the Patent Examiner.

In reversing, the Federal Circuit substantially ig-

nored this reasoning, and focused instead on a single

incident that was peripheral to the district court’s

analysis. The court below never mentioned the dis-

trict court's finding that the prolonged non-

disclosure of known highly material information

showed an intent to deceive and, contrary to its own

precedents, strongly suggested that the materiality

of concealed information should not be considered in

assessing intent for purposes of inequitable conduct.

The Question Presented is whether the decision

below unduly narrows the duty of candor owed by a

patent applicant to the Patent Office and violates

fundamental principles of appellate review of trial

court fact-finding.

il

PARTIES TO THE PROCEEDING

AND CORPORATE DISCLOSURE STATEMENT

The parties to the proceeding below were Peti-

tioner R.J. Reynolds Tobacco Company (a North

Carolina Corporation), R.J. Reynolds Tobacco Com-

pany (a New Jersey Corporation), and Star Scien-

tific, Inc., the Respondent. R.J. Reynolds Tobacco

Company (a North Carolina Corporation) is succes-

sor by merger of R.J. Reynolds Tobacco Company (a

New Jersey Corporation), which ceased to exist as of

July 30, 2004.

Petitioner R.J. Reynolds Tobacco Company is di-

rectly and wholly owned by R.J. Reynolds Tobacco

Holdings, Inc. (a Delaware Corporation). R.J. Rey-

nolds Tobacco Holdings, Inc. is an indirect wholly-

owned subsidiary of Reynolds American, Inc., a pub-

licly traded corporation. Brown & Williamson Hold-

ings, Inc. owns more than 10% of the common stock

of Reynolds American, Inc. and is an indirect,

wholly-owned subsidiary of British American To-

bacco, ple., a publicly traded corporation.

ili

TABLE OF CONTENTS

Page

QUES EIN FRE ET BID sv occcsscsessncsnsuvensesvsevesceossseces 1

PARTIES TO THE PROCEEDING AND

CORPORATE DISCLOSURE

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TAs CIE AUTOR 0 BIG ie cccocccsecscccsesvesasessssessosss vi

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STATUTORY PROVISIONS INVOLVED ................ 1

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A. Legal FYAMeCWOPK.....0.....cssccacsecsssesecsreees 2

B. IPI cance on eccenadadcumsialahaveacauassuaal cea enare: 3

C. The District Court’s Inequitable

Coratanet TO Cem nsciseiscccssncecsbiesssecnsss 10

D. The Federal Circuit’s Inequitable

COMUAOE TROGIR cosicssncasscossvecncsssnvesnes 13

REASONS FOR GRANTING THE WRIT.............. 15

I. THE DECISION BELOW MARKEDLY

NARROWS THE INEQUITABLE

CONDUCT DEFENSE IN A MANNER

AT ODDS WITH PREVIOUS FEDERAL

CIRCUIT DECISIONS AND WITH

DECISIONS OF OTHER CIRCUITS ..........

II.

If.

iv

IN REVERSING THE DISTRICT

COURT'S FINDINGS OF

INEQUITABLE CONDUCT, THE

FEDERAL CIRCUIT VIOLATED THIS

COURT’S PRECEDENTS REGARDING

THE USE OF CIRCUMSTANTIAL

EVIDENCE AND THE PROPER ROLE

OF APPELLATE COURTS ............ccceccseees

A. The Decision Below Offends

Basic Principles Governing Trial

Court Factfinding Based on

Circumstantial Evidence .................

B. The Decision Below Also Violates

This Court’s Clear Directives

Concerning the Role of Appellate

Courts in Reviewing Trial Court

| REE: ee EE Ne

C. The Federal Circuit’s Approach

to Appellate Review and Trial

Court Assessment of

Circumstantial Evidence Cannot

Be Defended on the Basis that a

Different Approach is

Appropriate in Patent Cases............

THE DECISION BELOW CREATES

GREAT CONFUSION AND WEAKENS

THE DUTY OF CANDOR BY PLACING

A VERY HIGH THRESHOLD ON

PROOF OF INEQUITABLE CONDUCT ....

30

Vv

IV. THE FEDERAL CIRCUIT'S DECISION

REVERSING THE TRIAL COURT'S

FINDINGS OF INEQUITABLE

CONDUCT ON BOTH PATENTS IS

WRONG ON THE MERITS ......................04. 32

8 | __RERED I renee ONCE D EE DOR oE me NRO ORE 35

APPENDIX

Star Scientific, Inc. v. R.J. Reynolds Tobacco Co.,

637 F.3G 1967 (Ped. Civ. 20GB) .......cccrccsorccssreess la

Star Scientific, Inc. v. R.J. Reynolds Tobacco Co.,

No. MJG-01-1504 (D. Md. June 26, 2007)

PU NOTNE CIUTIOPD osinesscicvecaceccnseceevenisescontorsceeees 30a

Star Scientific, Inc. v. R.J. Reynolds Tobacco Co.,

2007 WL 1890709 (D. Md. June 26, 2007)

(Memorandum of Decision Re: Inequitable

ei as apa a a caer dla

Star Scientific, Inc. v. R.J. Reynolds Tobacco Co.,

No. MJG-01-1504 (D. Md. June 22, 2007)

(Corrected Memorandum and Order Re:

IN i siiccscpcentctsiciacecuamebaauvae T7Ta

Star Scientific, Inc. v. R.J. Reynolds Tobacco Co.,

No. MJG-01-1504 (D. Md. Dec. 2, 2004)

(Memorandum and Order Re: Crime-Fraud

Teo ke SRE ENE, WY Aaa NRE Oe 90a

Disposition Sheet, Order Denying

Petition for Rehearing and Rehearing En

Banc (Fed. Cir. Oct. 22, 2008) ..............000.000. 106a

U7. Comet... PGE. ©, BG, CL. Biicvcciccsnccasnesocsicssecseness BOTM

2 t 2 oS Seer openeeee sens Guise edamame 108a

vl

TABLE OF AUTHORITIES

Page

CASES

A.H. Emery Co. v. Marcan Products Corp.,

Oe We EL COE Cb, LOGB) on... cccscsscssocsensevesccsoneses 23

Abbott Laboratories v. Sandoz, Inc., 544

F.3d 1341 (Fed. Cir. 2008) .......cccccccccssesseseseseseeees 27

Anderson v. City of Bessemer, 470 U.S. 564

ee cepanun 26

Aventis Pharma S.A. v. Amphastar Phar-

maceuticals, Inc., 525 F.3d 1334 (Fed.

age a aa as snsbanansnneen’ 20

Batson v. Kentucky, 476 U.S. 79 (1986)................. 25

Blonder-Tongue Laboratories, Inc. v. Uni-

versity of Illinois Foundation, 402 U.S.

aaa 39

Bonito Boats, Inc. v. Thunder Craft Boats,

Be OF a BOE © LUI svcicncnnsskctecsecdecscsseveceseases 17

Bristol-Myers Squibb Co. v. Rhone-Poulenc

Rorer, Inc., 326 F.3d 1226 (Fed. Cir.

ais sgnleponansbeanenes 19

Cardinal Chemical Co. v. Morton Interna-

tional, Inc., 28 U.S. 83 (1998) .............. Re eens 17

Cargill, Inc. v. Canbra Foods, Ltd., 476

ee Re CG, FUR, BF TP bia sncccsscseccccnscesecvcccecsces 19

vli

Consolidated Aluminum Corp. v. Foseco

International Ltd., 910 F.2d 804 (Fed.

Ci III ua itt tia cucuaceesediveevauuidlasonsstiimmensouseetaanuune 35

Critikon, Inc. v. Becton Dickinson Vascular

Access, Inc., 120 F.3d 1253 (Fed. Cir. 1997)....... 19

Dayco Products, Inc. v. Total Containment,

Inc., 329 F.3d 1358 (Fed. Cir. 2003) ......... iamaneabaa 3

Dennison Manufacturing Co. v. Panduit

Cs Be Crees te CD ci catrshessecsrtetsasscnesasencsan 29

Desert Palace, Inc. v. Costa, 539 U.S. 90

RIPE tic cosiedieucdraeeksstasatdneriacensdebeamiadisaiabuenmion 23, 24

Dickinson v. Petroleum Conversion Corp.,

BE WE CPE CINE sexocscndesccncndenctcdmredeindotuasditosnens 18

Digital Control, Inc. v. Charles Machine

Works, 437 F.3d 1309 (Fed. Cir. 2006)...... iiiaainaian 3

Digital Equip. Corp. v. Diamond, 653 F.2d

Pe Tc ciscubienkoten 22

Dippin’ Dots, Inc. v. Mosey, 476 F.3d 1337

(Fed. Cir. 2007), cert. denied, 128 S.Ct.

375 (2007), and 128 S.Ct. 391 (2007)............ 19, 20

Ebay Inc. v. MercExchange, L.L.C., 547

re ME oa a 28

Ferring B.V. v. Barr Laboratories, I[nc., 437

F.3d 1181 (Fed. Cir. 2006) ................. 18, 19, 20, 27

General Electro Music Corp. v. Samick Mu-

sic Corp., 19 F.3d 1405 (Fed. Cir. 1994)............... 8

Vill

Graham v. John Deere Co., 383 U.S. 1

RIES Sa es RMR pore ior ee Pon Ne ie ee 2, 30, 31

Holland v. United States, 348 U.S. 121

ia aa aaa ea 24

Holmes Group, Inc. v. Vornado Air Circula-

tion Systems, Inc., 535 U.S. 826 (2002) ...... 22, 28

Honeywell International Inc. v. Universal

Avionics System Corp., 488 F.3d 982

a ssavecddaavinds 19

Huddleston v. United States, 485 U.S. 681

aah EARL aah oh erry Po SEDO EN to 24, 25

International Telephone & Telegraph Corp.

v. Raychem Corp., 538 F.2d 453 (1st Cir.

SERRE RIE TON ROU RRR EEE ON ARE | ERNST San 22

Inwood Laboratories, Inc. v. Ives Laborato-

108, Inc., 466 U.S. 844 (1982) ..........c.c.cccccccoceseces 26

Jackson v. Virginia, 443 U.S. 307 (1979) ......... 24, 25

KSR International Co. v. Teleflex Inc., 550

Fs es BT he BF I ED ic evesosensiscecahsscesss 28

Kendall v. Winsor, 62 U.S. 322 (1858)...............0000 3]

Kingsdown Medical Consultants, Ltd. v.

Hollister Inc., 863 F.2d 867 (Fed. Cir.

a Rs Ase SERS LTS RPS Ee Oe aa, Si

Kingsiand v. Dorsey, 338 U.S. 318 (1949).....2, 15, 31

Lear, Inc. v. Adkins, 395 U.S. 653 (1969)............... 31

ix

li Second Family Ltd. Partnership v. To-

shiba Corp., 231 F.3d 1373 (Fed. Cir.

yt) Al 7 19

MOSAID Technologies Inc., v. Samsung

Electronics Co., 362 F. Supp. 2d 526

CD, Sines evssessesecescess0. 35

McKessor Information Solutions, Inc. v.

Bridge Medical, Inc., 487 F.3d 897 (Fed.

Cin, BOBF) vcchccoctaeitbaeateennecesacceccccsccese 20, 21

Miller-El v. Cockrell, 537 U.S. 322 (2008).............. 25

Pfizer, Inc. v. Teva Pharms. USA, Inc., 518

F.3d 1868 Ged. Cir, BOB) ...cccccsescccsccssscccccevcsecees 19

Pope Manufacturing Co. v. Gormully, 144

US Bo Be Ce oat ecetccdateasscossescocsccnecees OL

Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306

(Pred, Gist, Sie katerssaacnccovesscccccccccces. 19

Precision Instrument Manufacturing Co. v.

Automobile Maintenance Machine Co.,

324 U.S. SOG CR cermeicescecesscsscessee 2, 16, 28, 29, 31

Schinzing v. Mid-States Stainless, Inc., 415

F.3d SOT CGE Go, Be rcatensccccccesccsccccccsccscsccces: 22

Sinclair & Carroll Co. v. Interchemical

Corp., 325 U.S. 327 (1945) .c.cccccccsccscsssscesesssseecees 31

True Temper Corp. v. CF&I Steel Corp.,

601 F.2d 495 (TOG Car. EO TB) ..........00.0.0..00cc0ccc00 23

x

Turzillo v. P&Z Mergentime, 532 F.2d 1393

Pa ane MNEs, - UE cisiucicens soaeinkaandatseibandoubueneenimekdcenents 23

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

SE TL SS LAIST 26

United States Postal Service Board Of

Governors v. Alkens, 460 U.S. 711 (1983).......... 23

Warner-Jenkinson Co., Inc. v. Hilton Davis

Chemical Co., 520 U.S. 17 (1997) .............cccceeeeee 17

Zenith Radio Corp. v. Hazeltine Research,

Pa. GS VF tic Fe Ue a tave nt nckdathescecstcessvetenivsvens 29

CONSTITUTIONS, STATUTES

AND REGULATIONS

UF OE, BR: 0.8 Bietiincictintcmnnsinusn 2, 15, 30

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BE UBC. © UDB ecccesissssorcosoverescscosesossccscessecosesene 1

OR TIR SO 1006 ccc 1

ee res Oe EU Tak cnsdsscudacessesecinvcntuesataceaesapcdunteaseieds |

ee i eae aeiani 5,11

Be ee ie EE Sodasatsdaschndkctsdscsaeeteaasiasaaeaneua 1

ee Seis cis We Re) 5 WE EA ccssndcsnccsicvacoussocsanouatorenteens 3

Oe GecW cies BD COD overs sccnécsccccsnenccnsccsséecseranscun 3

xl

LEGISLATIVE MATERIALS

Bee BA, DOD Wee Chee decsccnnsccsesconevscesessesisecesess 17

OTHER AUTHORITIES

Scott D. Anderson, Jncquitahle Conduct:

Persistent Problems and Recommended

Resolutions, 82 Marg. L. Rev. 845 (1999)........... 21

Jon W. Dudas, The Patent System: Today

and Tomorrow, at www.uspto.gov/web/

offices/com/speeches/2005apr21.pdf (Apr.

21, 2005) (visited Jan. 4, 2009)................00 31, 32

Kevin F. O’Malley, et al, Federal Jury

Practice and Instructions § 17:07 (6th ed.

EU TAR ERECT ana RR Dre PROTEC Cen aR 23, 24

Michael A. Weidinger, Note, Jnequitable

Pleading: Defendants’ Particular Burden

in Patent Infringement Suits, 62 Geo.

PEGG. Ea, BOOU. TTT COD cvcccccsdciaccaccesscnccscsscscsss 21

The Doctrine of Inequitable Conduct and

the Duty of Candor in Patentrocurement,

Ad Hoc Committee on Rule 56 and Ineq-

uitable Conduct American Intellectual

Property Law Association, 16 AIPLA

Be i EE isicscidatrinhtentsdustasucdisnandcdeciseiescessocans 30

Manual of Patent Examining Procedure

eg gt hk | Re eee 8

PETITION FOR A WRIT OF CERTIORARI

R.J. Reynolds Tobacco Company (“Reynolds”) re-

spectfully petitions for a writ of certiorari to review

the judgment of the United States Court of Appeals

for the Federal Circuit in this case.

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a) is

reported at 537 F.3d 1357. The district court’s deci-

sion finding the patents-in-suit unenforceable based

on inequitable conduct (Pet. App. 31a) and its opin-

ion granting summary judgment for Reynolds based

on indefiniteness (Pet. App. 77a) are unreported.

JURISDICTION

The district court had jurisdiction over Respon-

dent’s claims under 28 U.S.C. §$§ 1331 and 1338(a).

The Court of Appeals had jurisdiciion to review the

district court’s final judgment under 28 U.S.C.

§ 1295(a)(1). The United States Court of Appeals for

the Federal Circuit entered its judgment and opinion

on August 25, 2008, and denied Reynolds’s petition

for rehearing or rehearing en banc on October 22,

2008. This Court has jurisdiction under 28 U.S.C.

§ 1254(1).

STATUTORY PROVISIONS INVOLVED

Section 282 of 35 U.S.C. provides, in relevant part:

The following shall be defenses in any action in-

volving the validity or infringement of a patent

and shall be pleaded: (1) Noninfringement, ab-

sence of liability for infringement or unenforce-

ability. |

2

STATEMENT

A. Legal Framework

The Patent Clause of the Constitution autaorizes

the Congress “To promote the Progress of. . . useful

Arts, by securing for limited Times to .. . Inventors

the exclusive Right to their . . . Discoveries.” Art. I,

§ 8, cl. 8. It “is both a grant of power and a limita-

tion.” Graham vy. John Deere Co., 383 U.S. 1, 5

(1966). Congress may neither “enlarge the patent

monopoly without regard to the innovation, ad-

vancement or social benefit gained thereby,” nor “au-

thorize the issuance of patents whose effects are to

remove existent knowledge from the public domain.”

Id. at 6.

The primary responsibility for drawing this consti-

tutional distinction between patentable and “unpat-

entable material lies in the Patent Office,” and it is

“a most difficult task.” Jd. at 18. Those pursuing

applications before the Patent and Trademark Office

(“PTO”) must act with the “highest degree of candor

and good faith,” so that the Office can “rely upon

their integrity and deal with them in a spirit of trust

and confidence.” Aings/land v. Dorsey, 338 U.S. 318,

319 (1949). Patent applicants and their representa-

tives “have an uncompromising duty to report to [the

PTQ] all facts concerning possible fraud or inequita-

bleness underlying the applications in issue.” Preci-

sion Instrument Mfg. Co. v. Auto. Maint. Mach. Co.,

324 U.S. 806, 818 (1945).

The inequitable conduct doctrine is a principal way

the duty of candor is enforced. Inequitable conduct

exists where clear and convincing evidence shows

that the applicant withheld or misstated information

in its submissions to the PTO, that information was

3

“material” to patentability,! and the misstatement or

omission was made with “intent to deceive” the PTO.

Dayco Prods., Inc. v. Total Containment, Inc. 329

F.3d 1358, 1362-63 (Fed. Cir. 2003). Where material

information has thus been intentionally misstated or

withheld, a court must “weigh[ ] . . . the materiality

and intent in light of all the circumstances to deter-

mine whether the applicant’s conduct is so culpable

that the patent should be held unenforceable.” Jd.

(internal quotation marks and emphasis omitted).

B. Facts

This petition arises from a suit brought by Re-

spondent Star Scientific, Inc. (“Star”) against Rey-

nolds, alleging infringement of two patents, United

States Patents No. 6,202,649 (the “649 patent”) and

No. 6,425,401 (the “401 patent’). Pet. App. 32a.

Jonnie Williams is the named inventor of both pat-

ents. App. A281-82.?

' Information is material to patentability when it is not cumu-

lative, and “(1) [i]t establishes, by itself or in combination with

other information, a prima facie case of unpatentability of a

claim; or (2) {ijt refutes, or is inconsistent with, a position the

applicant takes in: (4) [o]pposing an argument of unpatentabil-

ity relied on by the Office, or (ii) [ajsserting an argument of pat-

entability.” 37 C.F.R. § 1.56(b) (2000) (“Rule 56”).

Before 1992 the test was formulated as whether there was a

substantial likelihood that a reasonable examiner would con-

sider it important. 37 C.F.R. § 1.56(a) (1991). The Federal Cir-

cuit has held that the 1992 rule change to “an arguably nar-

rower standard of materiality does not supplant or replace our

case law. Rather, it merely provides an additional test of mate-

riality.” Digital Control, Inc. v. Charles Mach. Works, 437 F.3d

1309, 1316 (Fed. Cir. 2006).

* App. A _ refers to the Federal Circuit Appendix. Star brought

suit on the ‘649 patent on May 23, 2001, while the ‘401 patent

4

The patents relate to methods for treating tobacco

plants to purportedly prevent formation of chemi-

cals called tobacco specific nitrosamines (“TSNAs’).

Pet. App. 33a-35a. These TSNAs, which may be car-

cinogenic, can form in the tobacco plants during the

curing process, and the tobacco industry has looked

for curing techniques that minimize or eliminate

their formation. Jd. at 34a-35a.

There are several ways to cure tobacco. The old-

est, “air curing,” simply relies on the exposure of to-

bacco leaves to untreated air to dry and cure them.

Pet. App. at 34a. To accelerate the curing process,

heated air is commonly used in several ways. In

“radiant heat indirect-fired curing,” zd. at 3a, (some-

times called “flue-curing”), pipes conduct heated air

through a curing barn and the exhaust from the

burned fuel is discharged outside. Roughly since the

1970s, in the United States, it has become much

more common to pack the tobacco more closely to-

gether and blow hot air through it (“bulk-curing”

methods). One method, “forced air indirect-fired

curing,” blows air warmed by a heat exchanger into

the curing barn with a fan, and the resultant ex-

haust is expelled outside the barn. /d Another

method—the most popular one in recent decades—is

“direct-fired curing,” where heated air produced by

combustion of clean-burning fuels like propane is

application was still pending. On July 30, 2002, the same da,

that the ‘401 patent issued, Star brought a second lawsuit al-

leging violation of that patent, and the two cases were merged

for trial. Pet. App. 3la-32a.

9)

blown through the curing barn, thus exposing the

tobacco to exhaust gases during curing. /d.

The patents-in-suit claim curing methods applied

to prevent the formation of TSNAs during curing.

The patents theorize that TSNAs form “by the action

of the micro flora on the surface of the leaf under an-

aerobic conditions,” which can be greatly curtailed or

stopped by controlling certain conditions, including

“humidity, rate of temperature change, temperature,

the time of treatment of the tobacco, the airflow

(through the curing apparatus or barn), CO level,

CO: level, O2 level, and the arrangement of the to-

bacco leaves.” App. A5837 (coi. 1, ll. 57-59), A5838

(col. 4, ll. 25-29). The ‘649 patent pertuins to tobacco

generally, while the ‘401 patent applies specifically

to Virginia flue-cured tobacco. See, e.g., App. A5846

(col. 20, ll. 4-14) and A6022 (col. 20, Il. 8-19).

After a seven-day bench trial regarding Reynolds’

inequitable conduct defense, the district court held

both patents unenforceable. It held that “Williams

and others kept critical information from the PTO so

as to give the false impression that .. . there had

been no curing processes used in the United States .

. . capable of producing tobacco with low levels of

TSNA.” Pet. App. 71a, 31a-76a.

Evidence of low TSNA levels being achieved by

longstanding curing methods, without employing

applicant’s techniques, bears on whether the patents

identify a patentable innovation. 35 U.S.C. § 102.

Some such evidence is summarized in a letter, dated

August 28, 1998, prepared for Star’s patent counsel

by Star’s technical consultant, Dr. Harold Burton, on

the direct request of inventor Jonnie Williams, App.

A281-82:

6

I was in China for two weeks during 1997 and

I was given commercial Chinese cigarettes. . .

Yo my surprise I could not detect TSNA or

when I did they were very low. ... Since

China is a developing country, they are still

usfing] the old curing technology that was

abandoned in the US during the sixties. It

seemed to me that the probable cause for the

absence of TSNA was their use of the old flue-

curing techniques.

App. A6238 (emphasis added); see also Pet. App.

47a-49a.

Dr. Burton testified that ke told Williams that he

“had analyzed cigarettes from China” and found that

“they were low in nitrosamines.” App. A523; see also

App. A288 (Williams testimony). And Williams ac-

knowledged knowing, “by September 15, 1998,” that

the existing indirect fire curing barns could produce

low TSNA tobacco, indeed sometimes tobacco “as low

as [he was] endeavor|ing] to claim with [his] own in-

vention.” App. A290.

Williams’ first patent counsel, Romulo Delmendo,

likewise discussed with Williams “the Chinese com-

mercial cigarettes and also the radiant curing proc-

ess,” while trying to understand what the TSNA lev-

els in U.S. tobacco would be if you “just heated [the

tobacco] up” without the controls reflected in the pat-

ent. App. A216. Williams told Delmendo that, in

that circumstance, “you'll get high TSNA levels.”

App. A289 (Williams testimony); A217 (Delmendo

testimony).

Based on that information, the provisional appli-

cation which led to the ‘649 patent, filed on Septem-

ber 15, 1998, contained the concededly false state-

7

ment, Pet. App. 17a n.7, that flue-curing practiced in

China and other countries—where “radiant heat

emanating from the flue pipes is used to cure the to-

bacco leaves ... Aas been determined... [when] ap-

plied to tobacco grown in the United States [to]

yield{ ] tobacco products with high levels of TSNA.”

See Pet. App. 49a-50a; App. A290. “[G]reat portions

of the [Burton] let*er” were included in the provi-

sional application. App. A82. The language of the

letter reporting “the TSNA results for the Chinese

commercial cigarettes” was almost the only part of

the letter omitted. App. A225.

After filing the provisional application, Williams

personally visited a farm in Virginia and secured

samples of tobacco cured using another prior art

method—forced air indirect-fired curing—coupled

with microwave at the end of the process—and, after

testing, learned that “very low” TSNA levels had

been achieved. App. A292. (“Curran data.”) Wil-

liams withheld that data both from the PTO and

from his patent counsel Delmendo. App. A292 (Wil-

liams testimony); App. A216 (Delmendo testimony);

Pet. App. 6a. This occurred at a time when Del-

mendo “had concerns about whether the information

in the Burton letter should be disclosed to the PTO.”

Pet. App. 20a, 51a-52a; App. A219-20.

The non-provisional (“final”) ‘649 application that

was filed on September 15, 1999 also failed to dis-

close the Burton letter, the Curran data, or, more

generally, the fact that low TSNA levels had been

produced using longstanding curing methods, with-

out using applicant’s claimed innovation. The provi-

sional application’s false statement regarding radi-

ant heat curing was cmitted from the final applica-

tion, which instead acknowledged that the method is

8

still used commercially outside the United States, in

China and elsewhere, App. A5837 (col. 2, ll. 54-60),

but said nothing about the TSNA levels produced us-

ing that method.

After filing the final ‘649 application, Williams

and Star changed legal counsel. Star’s initial coun-

sel, Delmendo, who had concerns about whether the

Burton letter should be disclosed, Pet. App. 20a, was

replaced by Paul Rivard and the firm of Banner &

Witcoff. Pet. App. 7a, 54a. The files were trans-

ferred to Banner & Witcoff through an intermediary

attorney from a third law firm. /d@ Rivard testified

that neither Williams nor their predecessor counsel

called the Burton letter or the Curran data to his at-

tention. App. A228-29.

Thereafter, on February 15, 2000, Star’s new

counsel filed a “Petition to Make Special” to acceler-

ate the processing of the ‘649 application. App.

A10327-40. Notwithstanding the heightened disclo-

sure obligations under such a petition,’ and even

though Rivard asked Williams to provide relevant

information about vhe prior art, Williams did not

provide him with the Burton letter, the Curran

data, or the essential fact that low TSNA levels had

been produced with conventional curing methods.

App. A228 (Rivard testimony); App. A294 (Williams

> A Petition to Make Special requires the applicant to certify

“that the applicant or assignee has made or caused to be made

a careful and thorough search of the prior art, or has good

knowledge of the pertinent prior art.” Manual of Patent Exam-

ining Procedure (“MPEP”) § 708.02. Such a petition requires

“an extra effort to look for and produce all relevant prior art.”

General Electro Music Corp. v. Samick Music Corp., 19 F.3d

1405, 1411 (Fed. Cir. 1994) (emphasis omitted).

testimony).

Williams had another opportunity to disclose the

withheld information at an interview with the pat-

ent examiner in August 2000, but again failed to do

so. App. A295-296 (Williams testimony); App. A234

(Rivard testimony). Indeed, at no point before the

issuance of the ‘649 patent on March 20, 2001 did

Williams or his lawyers share with the PTO the

Burton letter, the Curran data, or the fact that con-

ventional curing methods had produced low TSNA

tobacco. See Pet. App. 4a-7a.

Eleven days after the PTO allowed the ‘649 patent

on September 14, 2000, Williams filed the continua-

tion application that led to the ‘401 patent.4 Again,

Star’s lawyers filed a Petition to Make Special that

expedited the examination of the ‘401 patent, and at

that time again failed to disclose the relevant prior

art. App. A10327-40. Nor was that information ever

disclosed to the PTO during the ‘401 patent prosecu-

tion.

The ‘401 patent application had been pending

nearly seventeen months when the Burton letter

came to the attention of Star’s trial counsel. App.

A275 (Attorney McMillan testified he had read the

Burton letter by February 11, 2002). Following its

allowance, on June 10, 2002 trial counsel brought it

to the attention of Star’s patent counsel, Rivard, id,

who immediately drafted a supplemental informa-

tion disclosure statement including the Burton letter

and the Curran data, and circulated it among four

* In a continuation application, applicant seeks a new “child”

patent (here, the ‘401) with an identical specification but differ-

ent claims than the “parent” patent (here, the ‘649).

10

Star lawyers. Star’s trial counsel and patent counsel

from the Banner firm discussed whether the infor-

mation contained in the Burton letter should be dis-

closed to the PTO, and all but one (who said that

others should decide) agreed that it should be. Pet.

App. 66a-68a. Nonetheless, the information was

never disclosed. App. A240, A253-54. The ‘401 pat-

ent issued on July 30, 2002.

C. The District Court’s Inequitable Conduct

Decision

In a 47-page opinion, the district court ruled that

both patents-in-suit were unenforceable based on in-

equitable conduct. Pet. App. 3la-76a.5 The district

court concluded that “Williams and others deliber-

ately misled the PTO in a material manner by keep-

ing from the PTO the critical fact known to Williams

and others that the claimed beneficial result—

tobacco with low to undetectable TSNA levels—Aad

been achieved in the United States prior to the ap-

plication that led to the Patents-in-Suit.” Jd. at 43a

(emphasis in original). In its “Inequitable Conduct

Determination” at the end of its opinion, the district

court first stated: ®

Even if one could argue that the Burton Let-

ter per se need not have been disclosed, the

5 In a previous order addressing many of the same facts, the

trial court had ordered disclosure of certain documents over

Star’s attorney-client privilege claims, based on the crime/fraud

exception. Pet. App. 90a.

° The district court noted several times that certain of its con-

clusions rested in part on assessments of witness credibility.

Pet. App. 54a-55a, 59a-60a, 69a-70a. The district court also

included a section in its decision addressing “Particular Credi-

bility Concerns.” /d. at 68a-70a.

11

essential fact revealed therein—that a curing

method previously used in the United States

was capable of, and indeed was the probable

cause for, the production of tobacco with low

to undetectable levels of TSNA—should not

have been kept from the PTO.

Id. at 71a. The district court characterized as “criti-

cal” the prior art information showing low TSNA

levels achieved with established curing methods, :d.

at 7la-72a, and quoted in support an October 25,

2000 letter written by Star’s lead trial lawyer: “The

fact that the traditional heat exchange curing proc-

ess might have produced low-TSNA leaf some of the

time, raises the issue of whether the product claimed

[by the applications for the Patents-in-Suit] are

novel, as required by 35 U.S.C. § 102.” Jd. at 72a.

Having found the withheld information material,

the district court focused on the extended period of

non-disclosure—nearly four years—in concluding

“that RJR has established the intent to deceive by

Williams and others by clear and convincing evi-

dence.” Pet. App. 72a.

They engaged in a consistent scheme to avoid

informing the Patent Office that the prior art

could produce low TSNA tobacco. The scheme

started with the false statement [in the provi-

sional application that led to the ‘649 patent]

that “[iJt has been determined that this process

as applied to tobacco grown in the United

State[s] yiclds tobacco products with high lev-

els of TSNA,” and proceeded through the entire

course of prosecution in the PTO.

Id.

12

The district court also noted that the prior art in-

formation continued to be withheld after the ‘649

patent had issued and the ‘401 patent was still pend-

ing, even though a discussion among Star’s lawyers

suggested disclosure. Pet. App. 74a-75a; see also id.

at 68a. The district court rejected the alleged non-

deceptive explanation—a desire to avoid cost and de-

lay—offered by patent counsel Rivard for failing to

disclose the Burton letter and Curran data when he

finally became aware of them in June 2002, after the

notice of allowance of the ‘401 patent had issued. /d.

at 75a. It found such reasoning to be inconsistent

with “a purported practice of erring on the side of

disclosure,” zd, at 73a, and with Rivard’s statement

that he would have disclosed the information had he

known about it earlier. /d. at 74a; App. A258. See

App. A239-240.

Nowhere in the section of the decision that the

court labeled its “Determination” did the district

court even mention the shift of law firms that oc-

curred in the middle of the patent prosecution.’ In-

stead, it relied on the conduct over several years, in-

cluding the fact that the disputed prior art was

highly material, and the persistent unexplained fail-

ure to disclose throughout the extended patent proc-

ess. Pet. App. 7la-72a. After weighing the equities

based on “a strong showing of materiality and in-

tent,” the court held the patents unenforceable. /d.

at 76a.

7 The court discussed the change of law firms earlier, during

its discussion of all the background facts. Pet. App. 54a.

13

D. The Federal Circuit’s Inequitable Conduct

Decision

The Federal Circuit reversed the trial court’s ineq-

uitable conduct ruling as to both patents. With re-

gard to the ‘649 patent, the panel reversed as clearly

erroneous the finding of intent to deceive, but left

undisturbed the finding that the undisclosed infor-

mation was material. Pet. App. 12a, 18a n.8.

With regard to the ‘401 patent, the panel left

standing the finding of intent to deceive, but re-

versed on materiality because immediately prior to

the issuance of that patent in 2002, Star submitted

Reynolds’ interrogatory responses that the Federal

Circuit said rendered the undisclosed information

cumulative. Pet. App. 22a-25a.

The panel noted the need to “be vigilant in not per-

mitting the defense [of inequitable conduct] to be ap-

plied too lightly.” Pet. App. 14a. It described intent

to deceive as “a separate and essentia! component of

inequitable conduct,” zd, and stated that withhold-

ing material information “cannot, by itself, satisfy

the deceptive intent clement,” zd. at 15a. In assess-

ing the evidence of intent, the Federal Circuit never

acknowledged the trial court’s actual rationale that

persistent failure to disclose over an extended period

is itself powerful evidence of such intent, zd. at 72a-

75a, and instead asserted:

Here, the district court’s finding of deceptive

intent as to both patents-in-suit was based

primarily on its acceptance of RJR’s theory that

Williams and Star conspired to deliberately

prevent Delmendo and his colleagues at the

Sughrue firm from disclosing the Burton letter

to the PTO by replacing them with the Banner

14

firm and purposely keeping the Banner firm

ignorant of the Burton letter. We hold that this

“quarantine” theory was not supported by clear

and convincing evidence.

Pet. App. 17a; 7d. n.7 (acknowledging false state-

ments in the provisional application).

The panel found that Star had offered reasons (re-

lating to personnel changes) for the change in firms.

Pet. App. 18a. Noting that the trial court found this

testimony not credible, and that “this credibility de-

termination was a major basis for its finding of de-

ceptive intent,” the panel responded that Reynolds

had the burden of proof and the “patentee need not

offer any good faith explanation unless the accused

infringer first carried his burden to prove a thresh-

old level of intent to deceive by clear and convincing

evidence.” /d. at 18a-19a. The panel found that Rey-

nolds had failed to present evidence sufficient to

show a deceitful purpose behind the firm change, /d.

at 19a, and on this basis, held the finding of decep-

tive intent as to the ‘649 patent clearly erroneous.

With respect to the ‘401 patent, the panel noted

that “the district court also relied on additional evi-

dence to find inequitable conduct”—primarily the

decision to continue withholding the prior art even

though communications among Star’s lawyers sug-

gested a contrary course. Pet. App. 22a, 66a-68a.

Noting that the “district court’s finding of deceptive

intent ... may [still] be flawed,” the pancl left that

issue unresolved and instead reversed on material-

ity. Id. at 22a.

The panel explained that, following issuance of the

‘649 patent, in the course of the patent infringement

litigation, Reynolds had given interrogatory re-

15

sponses stating that “Reynolds recognized in or

about 1994 that tobacco . . . cured in the indirect

fired barns Aad significantly reduced levels of

TSNAs as compared to the commercial, direct-fired,

bulk curing barns ....” Pet. App. 24a (emphasis in

original). These were disclosed to the PTO during

2002, after the ‘401 patent had already been allowed,

and shortly before it issued in July 2002, zd. at 8a-

9a, with an accompanying notation that Star dis-

agreed with the assertion. App. Al0419. The Fed-

eral Circuit concluded that these responses con-

tained the essential information that existing curing

methods had achieved low TSNA levels, thus render-

ing the withheld information cumulative with regard

to the ‘401 prosecution by the time “the Banner law-

yers were made aware of [it] in June 2002.” Pet.

App. 24a.

Reynolds filed a petition for rehearing and rehear-

ing en banc, which was denied on October 22, 2008.

REASONS FOR GRANTING THE WRIT

The Federal Circuit’s contortions to overturn the

trial court’s considered fact-finding based cn a full-

trial record, articulated credibility concerns, and rea-

sonable inferences drawn from applicant’s mislead-

ing statements and prolonged non-disclosure of ma-

terial information require the attention of this

Court.

The functioning of the patent system within the

constitutional limitation that patent monopolies

must “[p]romote the progress of . . . useful [a]rts,”

U.S. Const. art. J, § 8, cl. 8, means that patent appli-

cants must conduct themselves with the “highest de-

gree of candor and good faith,” Aings/and v. Dorsey,

338 U.S. at 319. “Public interest demands that all

16

facts relevant to such matters be submitted formally

or informally to the Patent Office, which can then

pass upon the sufficiency of the evidence. Only in

this way can that agency act to safeguard the public

in the first instance against fraudulent patent mo-

nopolies.” Precision Instrument, 324 U.S. at 818.

The inequitable conduct doctrine, which allows

patents to be held unenforceable when there is an

intentional breach of the duty of candor, is an essen-

tial bulwark in confining patent monopolies to their

constitutional hmits. Apparently influenced by “the

severity of the penalty” of unenforceability, Pet. App.

14a, the Federal Circuit decision here departs from

common sense and the mainstream of its own deci-

sions to announce an approach that greatly under-

mines the duty of candor by making proof of intent

to deceive a difficult scholastic exercise. In setting

aside the trial court’s well-grounded findings without

discussing its actual reasoning, the decision is also a

gross affront to this Court’s principles governing ap-

pellate review of trial court fact-finding.

I. THE DECISION BELOW MARKEDLY

NARROWS THE INEQUITABLE CONDUCT

DEFENSE IN A MANNER AT ODDS WITH

PREVIOUS FEDERAL CIRCUIT DECISIONS

AND WITH DECISIONS OF OTHER CIRCUITS

The decision below reversed the trial court’s find-

ing of deceptive intent as to the ‘649 patent, even

though that finding rested on express misrepresen-

tations to the PTO and a carefully-analyzed pattern

of conduct revealing “a consistent scheme to avoid

informing the Patent Office that the prior art could

produce low TSNA tobacco.” Pet. App. 72a. The

Federal Circuit did not dispute the materiality of the

17

withheld information, and also did not even discuss

the trial court’s reasoning that prolonged non-

disclosure of such information in the face of a clear

duty to disclose supports an inference of intent to

mislead. See Pet. App. 17a.

Instead, the Federal Circuit focused on events sur-

rounding a change of law firms, wrongly asserting

that these events were the primary basis for the

finding of deceptive intent. Pet. App. 17a-18a. It fol-

lowed this course after commenting at some length

about the “separate” nature of the elements of mate-

riality and intent to deceive, id. at 14a, and the

“need to strictly enforce the .. . elevated standard of

proof... because the penalty ...is so severe.” Jd. at

13a.

In reversing on this record, the decision below is «¢

odds with many Federal Circuit decisions and those

of regional courts of appeals reviewing inequitable

conduct findings, which take a more conventional

approach to appellate review. As such, it evidences a

sharp divide in thinking among the judges of the

Federal Circuit, and threatens the special need rec-

ognized by Congress for “nationwide uniformity in

patent law,” Bonito Boats, Inc. v. Thunder Craft

Boats, Inc., 489 U.S. 141, 162 (1989) (quoting H.R.

Rep. No. 97-312, at 20 (1981)) (internal quotation

marks omitted). If uncorrected, it is likely to result

in unpredictable and irreconcilable decisions. See,

e.g. Warner-Jenkinson Co., Inc. v. Hilton Davis

Chem. Co., 520 U.S. 17, 21 (1997) (noting that divi-

sions within the Federal Circuit warrant review by

this Court); Cardinal Chem. Co. v. Morton Int’, Inc.,

508 U.S. 83, 89 (1993) (noting that uniformity of

patent law “is a matter of special importance to the

18

entire Nation”); see also, e.g., Dickinson v. Petroleum

Conversion Corp., 338 U.S. 507, 508 (1950) (finding

that an “intracircuit conflict” can support certiorari).

The decision below directs that the inequitable

conduct defense not be “applied too lightly,” and that

intent to deceive is an “essential component of ineq-

uitable conduct” “separate” from materiality. Pet.

App. 14a. Perhaps on that account, the panel failed

even to discuss the actual rationale of the trial

court’s inference of intent, based in substantial part

on the prolonged failure to disclose known, conced-

edly material prior art.

In that regard, the decision here departs sharply

from prior decisions of the Federal Circuit, which

view the materiality of withheld information as rele-

vant in assessing intent. Indeed, some cases have

held that the requirement of actual intent may be

replaced by a lesser requirement that the applicant

merely should have known of the materiality of a

withheld reference if the materiality of the reference

is sufficiently significant.

This line of cases is exemplified by Ferring B.V. v.

Barr Laboratories, Inc., 437 F.3d 1181 (Fed. Cir.

2006), which held that, where an applicant offers no

credible explanation for withholding known highly

material information, no proof of actual intent is re-

quired and it is enough that the applicant “should

have known of the materiality of the information.”

Id. at 1191 (emphasis added).

In evaluating whether this “should have known”

intent standard is applicable, Ferring considered the

full range of circumstantial evidence, including evi-

dence related to materiality. See id. Panels of the

19

Federal Circuit have reiterated this “knew or should

have known” standard in a number of other cases.

See, e.g., Praxair, Inc. v. ATMT, Inc., 543 F.3d 1306,

1313-15, 1318 (Fed. Cir. 2008); Pfizer, Inc. v. Teva

Pharms. USA, Inc., 518 F.3d 1353, 1367 (Fed. Cir.

2008); Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d

1359, 1366 (Fed. Cir. 2007).

Other Federal Circuit decisions conflict with the

decision below by permitting the consideration of

materiality as evidence of intent, even where actual

intent continues to be required. Thus, in Li Second

Family “Ltd. Partnership v. Toshiba Corp., 231 F.3d

1373 (Fed. Cir. 2000), the panel held that “[t]he more

material the information misrepresented or withheld

by the applicant, the less evidence of intent will be

required in order to find that inequitable conduct

has occurred.” Jd. at 1378. Panels in other cases

have held similarly. See, e.g., Honeywell Int] Inc. v.

Universal Avionics Sys. Corp., 488 F.3d 982, 999

(Fed. Cir. 2007) (“The more material the information

misrepresented or withheld by the applicant, the less

evidence of intent will be required in order to find

inequitable conduct.”); Critikon, Inc. v. Becton Dick-

inson Vascular Access, Inc., 120 F.3d 1253, 1257

(Fed. Cir. 1997) (holding that “a patentee facing a

high level of materiality and ¢lear proof that it knew

or should have known of that materiality, can expect

to find it difficult to establish ‘subjective good faith’

sufficient to prevent the drawing of an inference of

intent to mislead” (internal quotation omitted)); see

also Bristol-Myers Squibb Co. v. Rhone-Poulenc

Rorer, Inc., 326 F.3d 1226, 1239 (Fed. Cir. 2003).

For instance, the panel in Dippin’ Dots, Inc. v. Mo-

sey, 476 F.3d 1337 (Fed. Cir. 2007), cert. denied, 128

S.Ct. 375 (2007), and 128 S.Ct. 391 (2007), con-

20

cluded that, while “the evidence reveal[ed] less than

an egregiously willful intent to deceive” the PTO, an

inequitable conduct determination was proper “in

light of the high materiality of the nondisclosure.”

Id. at 1346 n.4.

The Federal Circuit's ordinary consideration of

materiality evidence in evaluating intent is illus-

trated by McKesson Information Solutions, Inc. v.

Bridge Medical, Inc., 487 F.3d 897 (Fed. Cir. 2007),

which affirmed a finding of inequitable conduct

based significantly on the principle that intent may

be inferred from “[t]he high materiality of the with-

held prior art coupled with the lack of a credible ex-

planation for the nondisclosure.” Jd. at 916 (internal

quotation omitted). Similarly, Aventis Pharma S.A.

v. Amphastar Pharmaceuticals, Inc., 525 F.3d 1334

(Fed. Cir. 2008), held that an inventor’s failure to

disclose information about certain data constituted

inequitable conduct, concluding that the denials of

one involved in the process “did not outweigh the

cumulative evidence evincing an intent to deceive.”

Id. at 1348.

The decision below was foreshadowed by dissent-

ing opinions in several previous cases. For example,

in Aventis, Judge Rader in dissent characterized in-

equitable conduct as an “atomic bomb” remedy, and

argued that the case furthered a trend in “empha-

siz[ing] materiality almost to the exclusion of any

analysis of the lofty intent requirement for inequita-

ble conduct,” and of “[mJerging intent and material-

ity.” /d. at 1349-50. Judge Newman similarly dis-

sented in Ferring, noting the inconsistency in the

Federal Circuit’s inequitable conduct cases, and

claiming that the panel majority had “replac[{ed] the

21

need for evidence with a ‘should have known’ stan-

dard” in alleged contravention of Federal Circuit

precedent. 437 F.3d at 1196. Judge Newman also

dissented in McKesson, contending that the panel

majority had improperly weakened the standard for

proving intent. See 487 F.3d at 926.

The decision below, in its sharp departure from

prior Circuit precedent, thus brings to a head a sim-

mering dispute among the judges of the Federal Cir-

cuit regarding the propriety of relying on the mate-

riality of misstatements or )missions in assessing

deceptive intent. By offering guidance on the “sepa-

rate” character of the materiality and intent inquir-

ies, and then wholly ignoring the trial court’s reli-

ance on the materiality of the undisclosed prior art,

see Pet. App. 17a—which the Federal Circuit did not

dispute—the court here compounded a confusion in

Federal Circuit inequitable conduct law that was al-

ready well recognized.®

In addition tc being out of step with other Federal

Circuit decisions, the decision below is in even

sharper conflict with decisions of the regional courts

8 See, e.g., Scott D. Anderson, Jnequitable Conduct: Persistent

Problems and Recommended Resolutions, 82 Marq. L. Rev. 845,

848-49 (1999) (noting the Federal Circuit’s “narrow and incon-

sistent interpretations” of inequitable conduct standards,

“which confuses patent applicants, complicates patent prosecu-

tion, and misleads district court judges”); Michael A. Weid-

inger, Note, Jnequitable Pleading: Defendants’ Particular Bur-

den in Patent Infringement Suits, 62 Geo. Wash. L. Rev. 1178,

1188 (1994) (noting that the Federal Circuit standards “have

changed rapidly,” “causing confusion in the patent bar,” and

producing “confused standards”).

22

of appeals.? Indeed, there is a stark and longstand-

ing circuit split over whether the “intent” prong of

the inequitable conduct test requires, as a general

matter, actual intent or merely recklessness or gross

negligence.

In the decision below, the Federal Circuit followed

its own precedent in expressly requiring a finding of

specific intent to deceive. Pet. App. 13a; see also

Kingsdown Med. Consultants, Ltd. v. Hollister Inc.,

863 F.2d 867, 873-74 (Fed. Cir. 1988) (en banc) (re-

jecting gross negligence standard). The First Cir-

cuit, however, has held, to the contrary, that “reck-

less, or grossly negligent conduct” can suffice to sat-

isfy the mental state prong of the inequitable con-

duct analysis. Digital Equip. Corp. v. Diamond, 653

F.2d 701, 709 (1st Cir. 1981); see also Int] Tel. &

Tel. Corp. v. Raychem Corp., 538 F.2d 453, 461 (1st

Cir. 1976) (same). The Tenth Circuit has similarly

held that intent is not required, and that reckless-

ness or gross negligence may be enough. See True

8 The Federal Circuit’s nationwide patent jurisdiction does not

render this circuit split inert or irrelevant, because the regional

circuits continue to decide issues of patent law in some cases,

such as where patent issues are raised in counterclaims under

Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc.,

535 U.S. 826, 834 (2002). See, e.g., Schinzing v. Mid-States

Stainless, Inc., 415 F.3d 807 (8th Cir. 2005) (regional circuit

deciding inequitable conduct issue). Justice Stevens’s separate

opinion in Holmes Group specifically noted that because “other

circuits will have some role to play in the development of” pat-

ent law, “[a]n occasional conflict in decisions [could] be useful in

identifying questions that merit this Court’s attention.” 535

U.S. at 839 (Stevens, J., concurring in part and concurring in

the judgment).

23

Temper Corp. v. CF&I Steel Corp., 601 F.2d 495,

501, 504-05 (10th Cir. 1979). See also A.H. Emery

Co. v. Marcan Prods. Corp., 389 F.2d 11, 18 (2d Cir.

1968). The D.C. Circuit has noted the division over

whether something less than actual intent may suf-

fice, but reserved the question. See Turzillo v. P&Z

Mergentime, 532 F.2d 1393, 1400 (D.C. Cir. 1976).

These cases present a sharp and irreconcilable

split over the requisite mental state under the ineq-

uitable conduct doctrine. They also serve more gen-

erally to highlight how greatly the Federal Circuit

here has departed from traditional approaches to

proving intent, and to show the extent of the confu-

sion that the decision here is likely to sow.

Il. IN REVERSING THE DISTRICT COURT’S

FINDINGS OF INEQUITABLE CONDUCT,

THE FEDERAL CIRCUIT VIOLATED THIS

COURT'S PRECEDENTS REGARDING THE

USE OF CIRCUMSTANTIAL EVIDENCE AND

THE PROPER ROLE OF APPELLATE COURTS

A. The Decision Below Offends Basic Principles

Governing Trial Court Factfinding Based on

Circumstantial Evidence

The law “makes no distinction between the weight

or value to be given to either direct or circumstantial

evidence,” Desert Palace, Inc. v. Costa, 539 U.S. 90,

100 (20038) (quotation omitted), and “[t]he trier of

fact should consider all the evidence, giving it what-

ever weight and credence it deserves.” U.S. Postal

Serv. Bd. Of Governors v. Aikens, 460 U.S. 711, 714

n.3 (1983). Indeed, “[t]he intent . . . that a person

possesses at any given time may not ordinarily be

proved directly,” and thus usually must be shown by

circumstantial evidence. Kevin F. O’Malley, et a/,

24

Federal Jury Practice and Instructions § 17:07 (6th

ed. 2008) (treatise cited at 539 U.S. at 100).

Many of this Court’s cases uphold proof of specific

intent—including as an element of a crime where

proof beyond a reasonable doubt is required—based

on circumstantial evidence less compelling than that

rejected sub silentio by the Federal Circuit. Indeed,

this Court has approved inferences based on circum-

stantial evidence much like the one relied upon by

the trial court—that improper conduct is more likely

done with culpable intent where it is done repeateaiy

or over an extended period of time.

In Jackson vy. Virginia, 443 U.S. 307, 325 (1979),

for example, the Court found sufficient the proof of

premeditated intent to kill based on circumstantial

evidence including the facts that the “petitioner shot

the victim not once but twice.”

In Holland v. United States, 348 U.S. 121, 139-140

(1954), in affirming a conviction for tax evasion, the

Court concluded that the jury could have found spe-

cific intent based on “a consistent pattern of under-

reporting large amounts of income, and... failure. .

. to include all of their income in their books and re-

cords.” /d, at 139.

Likewise, in Huddleston v. United States, 485 U.S.

681 (1988), the Court affirmed a district court’s al-

lowance of evidence that a defendant had twice be-

fore dealt in goods under suspicious circumstances to

prove that the defendant knew certain goods were

stolen. The Court explained that “[e]xtrinsic acts

evidence may be critical to the establishment of the

truth as to a disputed issue, especially when that is-

sue involves the actor’s state of mind and the only

25

means of ascertaining that mental state is by draw-

ing inferences from conduct.” Jd. at 685.

Similarly, this Court has made clear that a prose-

cutor’s conduct in making peremptory challenges can

support discriminatory intent under Batson v. Ken-

tucky, 476 U.S. 79 (1986). In Miller-E/ v. Cockrell,

537 U.S. 322 (2003), the Court found that the dis-

proportionate use of peremptory challenges and dif-

ferential questioning with regard to African-

American jurors was probative of discriminatory in-

tent. See id. at 342, 344.

Certainly, the inference of intent to deceive drawn

by the district court in this case, based on a patent

applicant who claims an invention to produce low

TSNA tobacco and fails over several years to disclose

known evidence of such tobacco being produced by

existing methods, is no less reasonable than the in-

ferences drawn in these cases. Yet the Federal Cir-

cuit here apparently deemed that inference unwor-

thy even of discussion. See Pet. App. 17a.

B. The Decision Below Also Violates This

Court’s Clear Directives Concerning the Role

of Appellate Courts in Reviewing Trial Court

Factfinding

The Federal Circuit also ignored this Court’s ad-

monitions about the proper role of appellate courts

in reviewing trial court factfinding. While the court

claimed to review for clear error, Pet. App. 12a, it did

not reference the relevant question such review

raises—“whether, after viewing the evidence in the

light most favorable to the [facts found below], any

rational trier of fact” could have found intent. Jack-

son, 443 U.S. at 319.

26

Determining the weight of the evidence “is the spe-

cial province of the trier of fact,” Inwood Labs., Inc.

v. Ives Labs., Inc., 456 U.S. 844, 856 (1982), and a

“reviewing court oversteps the bounds of its duty

under Rule 52(a) if it undertakes to duplicate the

role of the lower court.” Anderson v. City of Besse-

mer, 470 U.S. 564, 573 (1985). “There is no excep-

tion which permits [a party] . . . to come to this Court

for what virtually amounts to a trial de novo on the

record of such findings as intent, motive and design.”

United States v. Yellow Cab Co., 338 U.S. 338, 341-

42 (1949). Thus, “[w]here there are two permissible

views of the evidence, the factfinder’s choice between

them cannot be clearly erroneous.” Anderson, 470

U.S. at 574.

This point has a heightened importance where, as

here, trial court factfinding is premised upon deter-

minations of witness credibility. See Pet. App. 54a,

59a-60a, 68a-70a, 74a. “When findings are based on

determinations regarding the credibility of wit-

nesses, Rule 52(a) demands even greater deference

to the trial court’s findings ... .” Anderson, 470 U.S.

at 575. Yet the Federal Circuit gave no deference to

the several credibility judgments by the trial judge

who heard the witnesses, including inventor Wil-

liams whose intent to deceive is most centrally at is-

sue. Pet. App. 54a-55a, 59a, 69a-70a.

Ultimately, the Federal Circuit did not even ac-

knowledge the trial court’s explicit rationale that in-

tent to deceive was shown in part by the prolonged

and repeated failure to disclose known, highly mate-

rial information, in the face of a legal duty to do so.

Pet. App. 7la-72a. Far from deferring to the trial

court findings if reasonable, the Federal Circuit here

27

simply ignored them, and reversed based on a

lengthy discussion of a minor piece of the overall

evidentiary record.!°

C. The Federal Circuit’s Approach to Appellate

Review and Trial Court Assessment of

Circumstantial Evidence Cannot Be

Defended on the Basis that a Different

Approach is Appropriate in Patent Cases

The decision below warns that courts must “be

vigilant in not permitting the defense to be applied

too lightly.” Pet. App. 14a. In this statement the

court mirrors sentiments that have appeared from

time-to-time in Federal Circuit cases.'!' Whatever

the relevance of those sentiments, they cannot mean

that well-established principles governing appellate

review of trial court factfinding are somehow less

applicable where inequitable conduct is in issue.

This Court has recently noted that “familiar prin-

ciples apply with equal force to disputes arising un-

10 Moreover, the Federal Circuit held that a finding of intent

“must ... be the single most reasonable inference able to be

drawn from the evidence... .” Pet. App. 15a-16a. To the ex

tent this statement is intended to govern appellate review of

trial court findings, it is obviously unsound in that it substi-

tutes the judgment of appellate court for that of the initial fact-

finder.

"' See, e.g., Abbott Labs. v. Sandoz, Inc., 544 F.3d 1341, 1358

(Fed. Cir. 2008) (referring to inequitable conduct as a “plague”);

Ferring B.V. v. Barr Labs., Inc., 437 F.3d 1181, 1195 (Fed. Cir.

2006) (opining that the inequitable conduct doctrine was

“grossly misused,” leading to “disproportionally pernicious”

consequences) (Newman, J., dissenting); Kingsdown Med. Con-

sultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876 n.15 (Fed. Cir.

1988) (referring to inequitable conduct claims as “an absolute

plague”).

28

der the Patent Act.” Hbay Jnc. v. MercExchange,

L.L.C., 547 U.S. 388, 391 (2006). It has also recog-

nized the risk that a specialized patent court “may

develop an institutional bias.” Ho/mes Group, Inc. v.

Vornado Air Circulation Sys., Inc., 585 U.S. 826, 839

(2002) (Stevens, J., concurring in part and concur-

ring in the judgment). In Ebay, this Court rejected a

special departure from the “well-established princi-

ples of equity” governing the issuance of injunctions

in patent cases. 547 U.S. at 391. In ASR Jnterna-

tional Co. v. Teleflex Inc., 550 U.S. 398, 127 S.Ct.

1727, 1742-43 (2007), the Court similarly rejected a

novel approach to obviousness, referring to a Federal

Circuit approach there as “rigid” and denying “fact-

finders recourse to common sense.”

The Federal Circuit’s reversal of the trial court's

exercise of common sense in this case is no more ac-

ceptable. Indeed, it is at odds with decisions of this

Court addressing factfinding and appellate review in

patent cases. In Precision Instrument Manufactur-

ing Co., this Court rejected an appellate reversal of a

district court finding of inequitable conduct following

a trial “on the sole issue of .. . alleged inequitable

conduct.” 324 U.S. at 808. In reinstating the district

court’s inequitable conduct determination, this Court

surveyed the evidence relied upon by the district

court in finding inequitable conduct and found it suf-

ficient. See id. at 818. The Court held that the pat-

entee should have disclosed misstatements to the

PTO, despite the fact that “it did not have positive

and conclusive knowledge” of them at the time be-

cause the misstatements had occurred before it had

been assigned the patent application. /d. at 816-17.

The Court held that a patent applicant’s duty of dis-

closure to the PTO “is not excused by reasonable

29

doubts as to the sufficiency of the proof of the inequi-

table conduct.” Jd. at 818.

Similarly, in Zenith Radio Corp. v. Hazeltine Re-

search, Inc., 395 U.S. 100 (1969), the court of appeals

had reversed a finding of patent misuse and anti-

trust violation. This Court reversed the court of ap-

peals, noting that “Zenith’s evidence, although by no

means conclusive, was sufficient to sustain the infer-

ence that Zenith had in fact been injured.” Jd. at

114. The opinion emphasized that “appellate courts

must constantly have in mind that their function is

not to decide factual issues de novo. The authority of

an appellate court, when reviewing the findings of a

judge as well as those of a jury, is circumscribed by

the deference it must give to decisions of the trier of

the fact, who is usually in a superior position to ap-

praise and weigh the evidence,” /d. at 123.

This Court’s more recent GVR decision in Denni-

son Manufacturing Co. v. Panduit Corp., 475 U.S.

809 (1986), was premised on the same principles.

Dennison vacated a Federal Circuit decision on obvi-

ousness. As here, the district court decision under

review (there, a finding of obviousness) was made

“by clear and convincing evidence,” id. at 810, and

the Federal Circuit reversed under a clear error

standard of review. This Court vacated the Federal

Circuit’s decision in light of the petitioner’s conten-

tion that the Federal Circuit had improperly “substi-

tuti[ed] its view of factual issues for that of the Dis-

trict Court.” Jd. Finding this contention “not insub-

stantial,” id., this Court vacated and remanded for

further proceedings.

Accordingly, this Court should grant review to

make clear that there are no special limitations upon

30

the trial court’s assessment of circumstantial evi-

dence of intent applicable to ineguitable conduct or

to patent cases, and to reaffirm that the Federal Cir-

cuit is no different than other circuits in its appellate

role.

Ill. THE DECISION BELOW CREATES GRLAT

CONFUSION AND WEAKENS THE DUTY OF

CANDOR BY PLACING A VERY HIGH

THRESHOLD ON PROOF OF INEQUITABLE

CONDUCT

The inequitable conduct defense is raised in more

than half of all patent infringement cases. The Doc-

trine of Inequitable Conduct and the Duty of Candor

in Patent Procurement, Ad Hoc Committee on Rule

56 and Inequitable Conduct American Intellectual

Property Law Association, 16 AIPLA Q.J. 74, 75

(1988). The proper standard for its proof, and the

way in which trial courts are to assess the evidence,

including whether and how the materiality of mis-

statements or omissions may be probative of intent,

is thus a matter of utmost importance in patent liti-

gation.

Moreover, the issue is one of constitutional dimen-

sion, as the inequitable conduct doctrine plays an

important role in policing the constitutional bound-

ary on the power to issue temporary patent monopo-

hes only for the purpose of encouraging genuine in-

novations. See U.S. Const. art. I, § 8; Graham, 383

U.S. at 5. “[T]he limited and temporary monopoly

granted to inventors was never designed for their ex-

clusive profit or advantage; the benefit to the public

or community at large was another and doubtless

the primary object in granting and securing that

31

monopoly.” Kendal/ v. Winsor, 62 U.S. 322, 327-28

(1858).

Wrongly issued patents obstruct the free inter-

change of ideas and technological developments.

See, e.g., Lear, Inc. v. Adkins, 395 U.S. 653, 670

(1969). Thus, this Court has long emphasized the

public importance of precluding enforcement of

wrongfully issued patents. See, e.g., Pope Mfg. Co. v.

Gormully, 144 U.S. 224, 234 (1892) (noting that it is

“important to the public that competition should not

be repressed by worthless patents”). Consequently,

issues relating to the propriety of the issuance of a

patent are even more important than questions re-

lating to infringement. See, e.g., Sinclair & Carroll

Co. v. Interchemical Corp., 325 U.S. 327, 330 (1945).

Because the PTO is charged with making the deci-

sions regarding patentability in the first instance,

and because the task of sorting patentable from un-

patentable subject matter is “most difficult”, Gra-

ham, 383 U.S. at 18, this Court has emphasized the

uncompromising duty of candor owed by “[t]hose who

have applications pending with the Patent Office.”

Precision Instrument, 324 U.S. at 818. See also, e.g.,

Kingsland, 338 U.S. at 319.

The need for full candor in dealings with the PTO

is all the more crucial in light of the “record work-

load crisis” that Office faces. Jon W. Dudas, The

Patent System: Today and Tomorrow, at 4, at

www.uspto.gov/web/offices/com/speeches/2005apr21.

pdf (Apr. 21, 2005) (visited Jan. 4, 2009). Applica-

tions more than doubled between 1992 and 2005,

with the greatest increases in the most complex sub-

ject areas, and there is recognized need for patent

32

applicants to share the burden of improving the sys-

tem’s functioning. Jd. at 3, 8.

The critical nature of the issue here for all of those

reasons is compounded further by the greatly ex-

panded volume of patent litigation in recent years,

the fact that it is a “very costly process,” Blonder-

Tongue Labs., Inc. v. Univ. of Illinois Found., 402

U.S. 313, 334 (1971), and the tremendous impor-

tance of patents to American commerce and indus-

try. For all of these reasons, this case merits the

Court’s attention.

IV. THE FEDERAL CIRCUIT'S DECISION

REVERSING THE TRIAL COURT'S FINDINGS

OF INEQUITABLE CONDUCT ON BOTH

PATENTS IS WRONG ON THE MERITS

The court below should have decided whether the

trial court could reasonably have found clear and

convincing evidence that Williams and those assist-

ing him made material misstatements or omissions

with intent to mislead the PTO. After evaluation of

the evidence received at a lengthy trial, this was not

a difficult question for the trial court, and it should

not have been a close one for the Federal Circuit ei-

ther.

The district court found that Williams failed over a

period of years to disclose known evidence that cur-

ing methods used in the United States could produce

low or undetectable TSNA levels. Pet. App. 71a-72a;

App. A290 (Williams admits such knowledge by Sep-

tember 15, 1998). The court found this known prior

art to be highly material. J/d. It also found flatly

false the provisional application’s statement—that

came from Williams, App. A217, A289—that the

longstanding radiant heating method had been de-

33

termined to produce high TSNA tobacco. The dis-

trict court’s several credibility findings, Pet. App.

54a, 59a-60a, 68a-70a, 74a, and other factors, led it

to discount various testimony asserting non-

materiality or explaining why the information had

not been produced. Jd. at 66a-70a, 74a-75a. On all

these grounds, the district court concluded that “Wil-

liams and others deliberately misled the PTO in a

material manner by keeping from [it] the critical fact

known to Williams and others that the claimed bene-

ficial result—tobacco with low to undetectable TSNA

levels—Aad been achieved in the United tates prior

to the application that led to the Patents-in-Suit.”

Id. at 43a.

The Federal Circuit did not disturb the finding

that the withheld information was material with re-

gard to the ‘649 patent. It further acknowledged

that the statement in the provisional application was

“inaccurate.” Pet. App. 17a-18a nn.7, 8. Nor did the

Federal Circuit ever make reference, see Pet. App.

17a, to the trial court’s essential reasoning that the

persistent non-disclosure of known, highly material

prior art over a period of several years, in the face of

numerous occasions triggering renewed duties to

produce it, is probative of deceptive intent. Instead,

the Federal Circuit focused on a straw man, the mid-

stream change of law firms, stating falsely that the

finding of deceptive intent was based primarily upon

that series of events. In this respect, the Federal

Circuit seems to have been acting on its assertion

that in the world of inequitable conduct, materiality

and intent must be proven separately, thus prohibit-

ing the trial court’s reliance on materiality.

34

Had the Federal Circuit considered the reasoning

of the trial court and rejected it as beyond the limits

of rationality, it would certainly merit reversal as

contrary to decisions of this Court affirming infer-

ences of intent on much weaker evidence. The Fed-

eral Circuit’s failure even to discuss the actual rea-

soning of the trial court, and reversal for the reasons

it gave, is an affront to the judicial process.

The Federal Circuit’s reversal of the unenforceabil-

ity ruling as to the ‘401 patent is also obviously in-

correct. The court conceded that even more evidence

of deceptive intent existed as to that patent. Pet.

App. 22a. The panel nonetheless reversed on the

ground that the prior art at issue, whose previous

materiality the court had not disputed, became cu-

mulative in early 2002, when, after the ‘401 patent

had already been allowed, Star submitted to the

PTO a Reynolds litigation discovery response assert-

ing that, as of 1994, indirect fired barns had pro-

duced “significantly reduced levels of TSNAs.” Jd. at

24a.

The notion that such a litigation response by an

obviously interested party, submitted at the eleventh

hour, would render cumulative the well-known but

long-concealed, objective evidence that low TSNA

levels had long been achieved using traditional cur-

ing methods, is at best highly implausible.12. And

Star submitted Reynolds’ interrogatory responses to

the PTO only with the express disclaimer that “Ap-

12 In addition, the uncontradicted expert testimony was that

the Burton letter was not cumulative of the RJR discovery re-

sponses for anything else in the record in the prosecution. App.

A319, A325-326.

plicant respectfully disagrees with R.J. Reynolds’

characterization of the documents.” App. A10419.13

CONCLUSION

The petition for a writ of certiorari should be

granted.

RICHARD A. KAPLAN

RALPH J. GABRIC

K. SHANNON MRKSICH

CYNTHIA A. HOMAN

JEROLD A. JACOVER

BRINKS HOFER GILSON

& LIONE

455 N. Cityfront Plaza Dr.

NBC Tower — Suite 3600

Chicago, IL 60611

(312) 321-4227

January 16, 2009

Respectfully submitted,

DONALD B. AYER

Counsel of Record

MICHAEL S. FRIED

SUSAN M. GERBER

RACHAEL A. REAM

CHRISTOPHER J. SMITH

JONES DAY

51 Louisiana Ave., NW

Washington, DC 20001

(202) 879-3939

Counsel for Petitioner

13 The facts that the two patents have an identical specification

and nearly identical claims—with the ‘401 patent being some-

what narrower—also strongly suggest that the ‘401 is unen-

forceable if the ‘649 is, under the doctrine of “infectious unen-

forceability.” See Consol. Aluminum Corp. v. Foseco Inti. Ltd.,

910 F.2d 804 (Fed. Cir. 1990); MOSAID Techs. Inc., v. Samsung

Elecs. Co., 362 F. Supp. 2d 526, 553-54 (D.N.J. 2005). Ata

minimum, a finding of inequitable conduct as to the ‘649 patent

would require a remand to assess the continuing enforceability

of the ‘401 pa. at.

APPENDIX

lu

STAR SCIENTIFIC, INC.,

Plaintiff—Appellant,

Vv.

R.J. REYNOLDS TOBACCO COMPANY

(a North Carolina Corporation)

and R.J. Reynolds Tobacco Company

(a New Jersey Corporation), Defendants—Appellees.

No. 2007-1448.

United States Court of Appeals,

Federal Circuit.

Aug. 25, 2008.

Rehearing and Rehearing En Banc

Denied Oct. 22, 2008.

Carter G. Phillips, Sidley Austin LLP, of

Washington, DC, argued for plaintiff-appellant. With

him on the brief were Eric A. Shumsky and Peter S.

Choi. Of counsel on the brief were Richard McMillan,

Jr., Clifton S. Elgarten, Mark M. Supko, and Michael

I. Coe, Crowell & Moring LLP, of Washington, DC.

Richard A. Kaplan, Brinks Hofer Gilson & Lione,

of Chicago, Illinois, argued for defendants-appellees.

With him on the brief we’ e Jerold A. Jacover, Ralph

J. Gabric, K. Shannon Mrksich, Cynthia A. Homan,

and Julie L. Leichtman

Beiore MICHEL, Chief Judge, SCHALL and DYK,

Circuit Judges.

MICHEL, Chief Judge.

Plaintiff—Appellant Star Srientific, Inc. (“Star”)

appeals from a final ju; gment in favor of

Defendants—Appellees R.J. Reynolds Tobacco

Company (N.C.) and RwJ. Reynolds Tobacco

2a

Company (N.J.) (collectively, “RJR”). The district

court entered memoranda and orders: (1) holding,

after a bench trial, that Star's U.S. Patent Nos.

6,202,649 (“the ‘649 patent”) and 6,425,401 (“the ‘401

patent”) ar: unenforceable due to inequitable

conduct; and (2) granting summary judgment of

invalidity of all asserted claims of the ‘649 and ‘401

patents due to indefiniteness. See Star Scientific,

Inc. v. R.J. Reynolds Tobacco Co., No. 8:01—cv—1504,

2007 WL 1890709, slip op. at 46 (D. Md. June 26,

2007) (“Inequitable Conduct Order’); Star Scientific,

Inc. v. R.J. Reynolds Tobacco Co., No. 8:01—cv—1504,

slip op. at 12-14 (D. Md. June 22, 2007)

(“Indefiniteness Order’).

Because the district court’s judgment as to

inequitable conduct was based on factual findings

that we deem clearly erroneous, we reverse the

judgment of unenforceability of the 649 and ‘401

patents. We also reverse the grant of summary

judgment as to indefiniteness because we conclude

that the claim term at issue, “anaerobic condition,” is

not indefinite, and ‘ve remand for further

proceedings on infringement and validity.

I. BACKGROUND

A. Tobacco Curing Technology

Fresh tobacco (“green tobacco”) must be dried in a

process called “curing” before it is suitable for

consumption as cigarettes or other such products.

Curing is done in curing “barns,” and commercial

tobacco companies like RJR cure their tobacco in

bulk-curing barns in which substantial quantities of

harvested tobacco are cured together in large stacks.

Smaller operations may use the older and long-used

3a

technology of “stick barns” in which much smaller

quantities of tobacco are cured.

Four major mechanisms of curing have been used

in the United States:

(1) air curing, where the tobacco is air-dried

without the application of heat;

(2) radiant heat indirect-fired curing (“radiant

heat curing”), where fuel (typically oil) is

burned and the hot exhaust gases are passed

through pipes running through the barn such

that the hot pipes radiate heat into the barn to

dry the tobacco, but the exhaust gases are

then expelled outside the barn;

(3) direct-fired curing, where fuel (typically

propane) is burned and the hot exhaust gases

themselves are blown directly into the barn to

dry the tobacco; and

(4) forced air indirect-fired curing, where fuel is

burned to heat clean air that is then blown

into the barn to dry the tobacco, while the

exhaust gases from the fuel burning are

expelled outside the barn.

In the 1960s, the primary method used by

American tobacco companies was radiant heat

curing. By the 1970s, most companies switched to

direct-fired curing, which was the predominant

method used until at least the late 1990s.

Cured tobacco contains a number of hazardous

chemicals, including carcinogens known as tobacco

specific nitrosamines (“TSNAs”), which are not

present in green tobacco. In the 1990s, researchers

began to explore TSNA formation in tobacco and

discovered links between TSNAs and direct-fired

4a

curing. As a result, some researchers began to

investigate how curing methods could be altered to

minimize TSNA formation.

B. The ‘649 Patent

In August 1998, Jonnie Williams of Star engaged

attorney Romulo Delmendo of Sughrue, Mion, Zinn,

Macpeak & Seas (“the Sughrue firm”) to prosecute a

patent application on a tobacco curing process aimed

at lowering TSNA levels. Williams, the inventor,

believed that TSNAs were formed due to the

presence of microbes on the tobacco leaves.

According to this theory, ambient oxygen in the

vicinity of the drying leaves is reduced during cure

by the production of carbon dioxide as the green

tobacco leaves degrade and by the oxygen-poor

combustion gases blown in during direct-fired

curing. The microbes thus must _ operate

anaerobically and obtain oxygen through reduction-

oxidation reactions involving nitrates also produced

from leaf degradation. Those reactions produce

nitrites, which in turn form TSNAs through further

chemical reactions. Williams’ method sought to

prevent TSNA formation by lessening the drop in

oxygen levels through control of airflow, humidity

and temperature inside the curing barn, thereby

reducing the microbes’ need to resort to anaerobic

processes.

As part of the preparation of Williams’ patent

application, Delmendo was sent a letter on August

28, 1998, by scientist and Star consultant Dr. Harold

Burton (“the Burton letter”). Burton wrote to relate

his recent observation that Chinese tobacco products

contain very low TSNA levels. The Burton letter

further stated:

5a

Since China is a developing country, they are still

use [sic] the old curing technology that was

abandoned in the U.S. during the sixties. It

seemed to me that the probable cause for the

absence of TSNA was their use of the old [radiant

heat] flue-curing techniques.

J.A. at A6237. Delmendo testified that although he

was initially concerned about the information, he

then spoke with Burton, analyzed the letter, and

ultimately concluded that neither it nor its content

was material to the contemplated patent application.

Delmendo filed with the United States Patent and

Trademark Office (“PTO”) a provisional patent

application, Application Serial No. 60/100,372 (“the

Provisional”), on behalf of Williams on September

15, 1998. The application disclosed that some

nations, including China, still utilize radiant heat

curing. J.A. at A5808—09. The disclosure also stated:

“It has been determined that [the radiant heat]

process as applied to tobacco grown in the United

States yields tobacco products with high levels of

TSNA.” Jd. at A5809. Williams testified that this

statement was based on inferences he drew from

information he received from Brown & Williamson,

another tobacco company, indicating that Brazilian

tobacco cured using radiant heat techniques resulted

in TSNA levels of 2—3 ppm.

Shortly after the Provisional was filed, Williams

received samples from two Virginia farms that still

used radiant heat curing and forwarded them to

Burton for measurements of TSNA content. The

first, from the Jennings farm, contained 1.0—1.5 ppm

TSNAs (“the Jennings data”). The second, from the

Curran farm, contained 0.39 ppm (“the Curran

data”). Unlike the Jennings data, however, the

6a

Curran data was derived from a partially-cured

sample; the sample was partially-cured using

radiant heat curing, but Williams’ associate

completed the cure using a microwave prior to

Burton’s tests.! Williams informed Delmendo of the

Jennings data over the phone but never showed him

the actual data in document form. He did not inform

Delmendo of the Curran data. Delmendo testified

that he and Williams considered the Jennings data

to be relevant but not a significant concern because

Williams’ method produced a significantly greater

reduction in TSNAs.?

On September 15, 1999, exactly one year after

filing the Provisional, Delmendo filed Application

Serial No. 09/397,018 (“the ‘018 application”) on

behalf of Williams. The ‘018 application’s draft

specification adopted most of the Provisional’s

disclosure but deleted the statement that radiant

heat curing of U.S.-grown tobacco produced “high

levels of TSNA.” Instead, it stated:

In flue curing processes that utilize a heat

exchanger capable of providing relatively low

airflow through the curing barn, I have discovered

that it is possible to somewhat reduce the TSNA

levels by not venting combustive exhaust gases

<

1 It is undisputed that microwave curing produces vastly lower

TSNA levels than any indirect-fired or direct-fired curing

process.

2 According to Delmendo, he understood that direct-fired curing

produced TSNA levels ex ceeding 3.0 ppm, thus the 1.0—-1.5

ppm produced by the indirect-fired process on the Jennings

farm was “somewhat reduced.” J.A. at A219. By contrast,

Williams informed Delmendo that his process reduced TSNA

levels much further to the 0.1-0.2 ppm range.

7a

into the curing apparatus or barn. The preferred

aspects of the present invention are premised on

the discovery that other parameters, as identified

above (e.g., airflow), can be adjusted to ensure the

prevention or reduction of at least one TSNA

regardless of the ambient conditions.

‘649 patent col.6 11.22—-30 (emphasis added).

Delmendo testified that this new disclosure was

based on his discussion of the Jennings data with

Williams.

Shortly after the filing of the ‘018 application,

Williams and Star elected to terminate the Sughrue

attorneys’ involvement in the prosecution and

replace them with attorneys from Banner & Witcoff

(“the Banner firm”), including Paul Rivard and Dale

Hoscheit. Hoscheit testified that he met with

Delmendo and others from the Sughrue firm to

discuss the transfer of files and the status of pending

applications. Paul Perito, « partner of the law firm

Paul, Hastings, Janofsky & Walker (“Paul

Hastings”) who became the chairman of Star, tapped

Scott Flicker from Paul Hastings to facilitate the

transfer of files from the Sughrue firm to the Banner

firm. Upon receiving the files, Rivard searched them

for prior art but did not notice the Burton letter.

On February 15, 2000, Rivard filed a Petition to

Make Special regarding the ‘018 application,

including an Information Disclosure Statement

(“IDS”) discussing and distinguishing certain prior

art. The IDS did not include the Burton letter. The

Petition was ultimately granted, and the application

was allowed on September 14, 2000, and ultimately

issued on March 20, 2001, as the ‘649 patent.

8a

C. The ‘401 Patent and the Present Litigation

On September 25, 2000, on behalf of Williams,

Rivard filed Application Serial No. 09/668,144 (“the

‘144 application”), a continuation of the ‘018

application. Rivard also filed a Petition to Make

Special for the ‘144 application with an

accompanying IDS listing many of the same

references as his earlier IDS for the petition

regarding the ‘018 application. This IDS also did not

include the Burton letter.

Star filed the present suit on May 23, 2001,

alleging that RJR infringed claims 4, 12 and 20 of

the ‘649 patent. As the litigation proceeded, Rivard

periodically filed supplemental IDSs to the ‘144

application to disclose to the PTO some of the

additional prior art raised by RJR against the ‘649

patent during discovery. For example, on June 12,

2001, Rivard disclosed RJR’s Application Serial No.

09/735,177, which was published on April 26, 2001.

Rivard also disclosed RJR’s interrogatory responses

regarding invalidity along with the cited references.

These disclosures continued after the ‘144

application was allowed in January 2002. In April

2002, the issue fee for the ‘144 application was paid.

In June 2002, while waiting for the ‘144

application to issue as a patent, Rivard became

aware of the Burton letter and Curran data when

Star’s trial counsel, Crowell & Moring (“Crowell”),

informed him that RJR had raised those documents

in the litigation. Rivard’s initial reaction was that

they should be disclosed out of an abundance of

caution. Several Crowell attorneys exchanged e-

mails amongst themselves discussing whether they

thought the Burton letter and/or Curran data was

required to be disclosed to the PTO given that the

9a

‘144 application had yet to be issued; several agreed

that it may be best to “err on the side of disclosure.”

J.A. at A10998—99. Meanwhile, Rivard and Hoscheit

at the Banner firm conferred and ultimately decided

that the Burton letter and the Curran data were not

material and thus did not need to be disclosed to the

PTO. They were never disclosed to the PTO. The ‘144

application thus issued as expected on July 30, 2002,

as the ‘401 patent. Star immediately moved to

amend its complaint to add allegations that RJR was

infringing claim 41 of the ‘401 patent as well.

D. Claim Construction, Trial

and Summary Judgment

Claim 4 of the ‘649 patent is representative of all

of the asserted claims:

A process of substantially preventing the

formation of at least one nitrosamine in a

harvested tobacco plant, the process comprising:

drying at least a portion of the plant, while said

portion is uncured, yellow, and in a state

susceptible to having the formation of

nitrosamines arrested, in a controlled

environment and for a time sufficient to

substantially prevent the formation of said at

least one nitrosamine;

wherein said controlled environment comprises

air free of combustion exhaust gases and an

airflow sufficient to substantially prevent an

anaerobic condition around the vicinity of said

plant portion; and

wherein said controlled environment is provided

by controlling at least one of humidity,

temperature, and airflow.

10a

The district court construed three terms relevant to

this appeal: “substantially prevent the formation of

at least one nitrosamine,” “controlled environment,”

and “anaerobic condition.”

The court construed “substantially prevent the

formation of at least one nitrosamine” to mean “the

level of at least one of the nitrosamines falls within

the following ranges: less than about 0.05 mg/g for

NNN, less than about 0.10 mg/g for NAT plus NAG,

and less than about 0.05 mg/g for NNK.”3 Star

Scientific, Inc. v. R.J. Reynolds Tobacco Co., No.

8:01-cv—1504, slip op. at 2 (D.Md. Mar. 31, 2004)

(“Markman Order’). The court then construed

“controlled environment” to mean “controlling one or

more of humidity, temperature and airflow in the

curing barn, in a manner different from conventional

curing, in order to substantially prevent the

formation of TSNAs.” Jd. Finally, the court

construed “anaerobic condition” to mean “an oxygen

deficient condition (such as is created by an

atmosphere of combustion gases or from the release

of carbon dioxide by the plant during cure) which

promotes microbial nitrate reductase activity.”4 Jd.

at 1-2. These claim constructions are not disputed in

this appeal.

The district court held a bench trial on RJR’s

inequitable conduct defense in January and

February of 2005. Star and RJR also filed cross

3 These abbreviations (e.g, NNN, NNK) represent different

known TSNAs. These units of measurement, micrograms per

gram (mg/g), are equivalent to parts per million (ppm).

4 Nitrate reductase is the enzyme used by the microbes on the

surface of curing tobacco leaves to catalyze some of the

chemical reactions that ultimately produce TSNAs.

lla

motions for summary judgment on RJR’s

indefiniteness defense, and RJR filed another

summary judgment motion on its anticipation and

best mode defenses.

On January 19, 2007, the district court issued its

decisions on the parties’ summary judgment

motions. The court granted RJR’s motion for

summary judgment that the asserted claims of both

patents are invalid for indefiniteness, holding that

the term “anaerobic condition” was indefinite.

Indefiniteness Order, slip op. at 12—14.5 The court

also denied RJR’s motion for summary judgment

that the asserted claims are invalid due to

anticipation and violations of the best mode

requirement, holding that Star raised genuine issues

of material fact as to those defenses.§ Star Scieniific,

Inc. v. R.J. Reynolds Tobacco Co., No. 8:01—cv—1504,

slip op. at 12-15 (D.Md. Jan. 19, 2007) (“Anticipation

Order’).

On June 26, 2007, the district court issued a

decision on RJR’s inequitable conduct defense. The

5 The district court replaced its January 19, 2007 opinion

regarding indefiniteness with a corrected opinion on June 22,

2007, to rectify a minor clerical error.

6 The district court purported to grant partial summary

judgment to RJR by holding that neither asserted patent could

claim priority to the filing date of the Provisional, a predicate to

RJR’s invalidity arguments. Anticipation Order, slip op. at 16.

Star argues tnat this decision was erroneous and should be

reversed. However, this holding is not properly before this court

since it did not form the basis of any judgment. Priority date in

and of itself is not a claim or defense on which summary

judgment can be granted, and the district court denied RJR’s

motion for summary judgment on anticipation and best mode,

which RJR does not cross-appeal.

12a

court held both of Star’s asserted patents

unenforceable due to inequitable conduct and

entered final judgment in favor of RJR. See

Inequitable Conduct Order, slip op. at 46. Star

timely appealed. We have jurisdiction under 28

U.S.C. § 1295(a)(1).

Il. DISCUSSION

A. Inequitable Conduct

a

We review the district court’s inequitable conduct

determination under a two-tier standard; we review

the underlying factual determinations for clear

error, but we review the ultimate decision as to

inequitable conduct for an abuse of discretion.

Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359,

1364-65 (Fed. Cir. 2007). If the district court’s

determination of inequitable conduct is based on a

clearly erroneous finding of materiality and/or

intent, it constitutes an abuse of discretion and must

be reversed. Jmpax Labs., Inc. v. Aventis Pharms.

Inc., 468 F.3d 13866 .375 (Fed. Cir. 2006). With

respect to the ‘649 pawnt, we hold that the district

court clearly erred in finding that RJR had proven

that Williams and Star had an intent to deceive the

PTO. With respect to the ‘401 patent, we hold that

the district court clearly erred in finding that the

information contained in the Burton letter and

Curran data was material.

The burden of proving inequitable conduct les

with the accused infringer. Ulead Sys., inc. v. Lex

Computer & Mgmt. Corp., 351 F.3d 1139, 1146 (Fed.

Cir. 2003). To successfully preve inequitable conduct,

the accused infringer must present “evidence that

the applicant (1) made an affirmative

13a

misrepresentation of material fact, failed to disclose

material information, or submitted false material

information, and (2) intended to deceive the [PTO].”

Cargill, 476 F.3d at 1363 (citing Jmpax Labs., 468

F.3d at 1374). Further, at least a threshold level of

each element—-ze., both materiality and intent to

deceive—must be proven by clear and convincing

evidence. /d.; Digital Control Inc. v. Charles Mach.

Works, 437 F.3d 1309, 1313 (Fed. Cir. 2006). And

even if this elevated evidentiary burden is met as to

both elements, the district court must still balance

the equities to determine whether the applicant’s

conduct before the PTO was egregious enough to

warrant holding the entire patent unenforceable.

Monsanto Co. v. Bayer BioScience N.V., 363 F.3d

1235, 1239 (Fed. Cir. 2004). Thus, even if a threshold

level of both materiality and intent to deceive are

proven by clear and convincing evidence, the court

may still decline to render the patent unenforceable.

The need to strictly enforce the burden of proof

and elevated standard of proof in the inequitable

conduct context is paramount because the penalty

for inequitable conduct is so severe, the loss of the

entire patent even where every claim clearly meets

every requirement of patentability. This penalty was

originally applied only in cases of “fraud on the

Patent Office.” See Hazel—Atlas Glass Co. v-.

Hartford—Empire Co., 322 U.S. 238, 250-51, 64 S.Ct.

997, 88 L.Ed. 1250 (1944); see also Precision

Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324

U.S. 806, 816, 65 S.Ct. 993, 89 L.Ed. 1381 (1945)

(“The far-reaching social and economic consequences

of a patent, therefore, give the public a paramount

interest in seeing that patent [grants] spring from

backgrounds free from fraud or other inequitable

14a

conduct and that such [grants] are kept within their

legitimate scope.”); Digital Control, 437 F.3d at 1315

(discussing the roots of inequitable conduct in

common law fraud). Subsequent case law has

broadened the doctrine to encompass misconduct

less egregious than fraud, see for example

Nobelpharma AP v. Implant Innovations, Inc., 141

F.3d 1059, 1069—70 (Fed. Cir. 1998), but the severity

of the penalty has not changed, and thus courts must

be vigilant in not permitting the defense to be

apphed too lightly. Just as it is inequitable to permit

a patentee who obtained his patent through

deliberate misrepresentations or omissions of

material information to enforce the patent against

others, it is also inequitable to strike down an entire

patent where the patentee only committed minor

missteps or acted with minimal culpability or in good

faith. As a result, courts must ensure that an

accused infringer asserting inequitable conduct has

met his burden on materiality and deceptive intent

with clear and convincing evidence before exercising

its discretion on whether to render a_ patent

unenforceable.

With regard to the deceptive intent prong, we

have emphasized that “materiality does not presume

intent, which is a separate and essential component

of inequitable conduct.” GFT, Inc. v. Franklin Corp.,

265 F.3d 1268, 1274 (Fed. Cir. 2001). Moreover, as

we explained in Molins PLC Textron, Inc.:

[T]he alleged conduct must not amount merely to

the improper performance of, or omission of, an

act one ought to have performed. Rather, clear and

convincing evidence must prove that an applicant

had the specific intent to... mislead[ ] or deceiv[e}

the PTO. In a case involving nondisclosure of

15a

information, clear and convincing evidence must

show that the applicant made a deliberate

decision to withhold a known material reference.

48 F.3d 1172, 1181 (Fed. Cir. 1995) (emphases

added). Thus, the fact that information later found

material was not disclosed cannot, by itself, satisfy

the deceptive intent element of inequitable conduct.

M. Eagles Tool Warehouse, Inc. v. Fisher Tooling

Co., 439 F.3d 1335, 1340 (Fed. Cir. 2006). Rather, to

prevail on the defense, the accused infringer must

prove by clear and convincing evidence that the

material information was withheld with the specific

intent to deceive the PTO. Jd; see also Kingsdown

Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d

867, 876 (Fed. Cir. 1988) (en banc) (holding even

gross negligence insufficient to prove intent to

deceive).

We have also held that because dire«* evidence of

deceptive intent is rarely available, such intent can

be inferred from indirect and _ circumstantial

evidence. Cargi/], 476 F.3d at 1364. But such

evidence must still be clear and convincing, and

inferences drawn from lesser evidence cannot satisfy

the deceptive intent requirement. See Ferring, 437

F.3d at 1186 (“The predicate facts must be proven by

clear and convincing evidence.”). Further, the

inference must not’ only be based on sufficient

evidence and be reasonable in light of that evidence,

but it must also be the single most reasonable

inference able to be drawn from the evidence to meet

the clear and convincing standard. Scanner Techs.

Corp. v. ICOS Vision Sys. Corp., 528 F.3d 1365, 1376

(Fed. Cir. 2008) (“Whenever evidence proffered to

show either materiality or intent is susceptible of

multiple reasonable inferences, a district court

16a

clearly errs in overlooking one inference in favor of

another equally reasonable inference.”).

With respect to the materiality prong, we have

held that “information is material when a reasonable

examiner would consider it important in deciding

whether to allow the application to issue as a

patent.” Symantec Corp. v. Computer Assocs. Int7,

Ine., 522 F.3d 1279, 1297 (Fed. Cir. 2008); see also

Digital Control, Inc. v. Charles Mach. Works, 437

F.3d 1309, 1314 (Fed. Cir. 2006). It is well-

established, however, that information is not

material if it is cumulative of other information

already disclosed to the PTO. Honeywell Int Inc. v.

Universal Avionics Sys. Corp., 488 F.8d 982, 1000

(Fed. Cir. 2007) (“Information cumulative of other

information already before the Patent Office is not

material.”); 37 C.F.R. § 1.56(b) (“[IJnformation is

material to patentability when it is not cumulative

to information already of record or being made of

record in the application... .”).

If a threshold level of intent to deceive or

materiality is not established by clear and

convincing evidence, the district court does not have

any discretion to exercise and cannot hold the patent

unenforceable regardless of the relative equities or

how it might balance them. See Nordberg, Inc. v.

Telsmith, Inc., 82 F.3d 394, 398 (Fed. Cir. 1996)

(holding that the district court properly refrained

from balancing materiality and intent when a

threshold showing of intent to deceive was not

clearly and convincingly made). Only after adequate

showings are made as to both materiality and

deceptive intent may the district court look to the

equities by weighing the facts underlying those

showings. “The more material the omission or the

17a

misrepresentation, the lower [the] level of intent [is]

required to establish inequitable conduct, and vice

versa.” Critikon, Inc. v. Becton Dickinson Vascular

Access, Inc., 120 F.3d 1253, 1256 (Fed. Cir. 1997). At

this second stage, however, the question is no longer

whether materiality and/or intent to deceive were

proven with evidence that is sufficiently clear and

convincing. While the facts of materiality and intent

to deceive must be proven by clear and convincing

evidence, the district court must balance the

substance of those now-proven facts and all the

equities of the case to determine whether the severe

penalty of unenforceability should be imposed. It is

this balancing that is committed to the district

court’s discretion. Molins, 48 F.3d at 1178.

2.

Here, the district court’s finding of deceptive

intent as to both patents-in-suit was based primarily

on its acceptance of RJR’s theory that Williams and

Star conspired to deliberately prevent Delmendo and

his colleagues at the Sughrue firm from disclosing

the Burton letter to the PTO by replacing them with

the Banner firm and purposely keeping the Banner

firm ignorant of the Burton letter. We hold that this

“quarantine” theory was not supported by clear and

convincing evidence.? As a resuit, we hold that the

7 The district court also inferred intent to deceive from the

statement in the Provisional that prior art radiant heat curing

produced high levels of TSNAs in American tobacco. There is no

dispute that this statement was inaccurate. While we do not

hold that inaccurate statements made in_ provisional

applications cannot evidence an intent to deceive, we note that

provisional applications are not examined and that the alleged

misrepresentation here was corrected prior to examination of

the non-provisional applications. As such, we hold that this

18a

district court’s finding of deceptive intent with

regard to the ‘649 patent was clearly erroneous.

Star’s witnesses testified that the reasens behind

the replacement of the Sughrue firm were that a key

partner passed away and that Williams observed a

Sughrue attorney perform unsatisfactorily in an

unrelated prosecution. The district court indicated

that it viewed this testimony as not credible and that

this credibility determination was a major basis for

its finding of deceptive intent. Certainly, credibility

determinations are an aspect of fact-finding that

appellate courts should rarely reverse. But even if

Star’s explanations are not to be believed, it

remained AJF’s burden to prove its allegation

regarding the reason for the Sughrue firm’s

dismissal. RJR cannot carry its burden simply

because Star failed to prove a credible alternative

explanation. See M. Eagles Tool Warehouse, 439

F.3d at 1341 (“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 patentee need not offer any good faith

explanation unless the accused infringer first carried

statement is not clear and convincing evidence of deceptive

intent.

8 Thus, we need not address whether the district court’s finding

of materiality as to the ‘649 patent Was clearly crroneous.

Regarding the ‘401 patent, the district court’s finding of

deceptive intent was in part based on additional evidence

concerning events following the issuance of the ‘649 patent. As

explained further below, we need not decide whether that

deceptive intent finding was also clearly erroneous because we

find the district court’s finding of matcriality as to the ‘401

patent clearly erroneous.

19a

his burden to prove a threshold level of intent to

deceive by clear and convincing evidence. Nordberg,

82 F.3d at 398. Only when the accused infringer has

met this burden is it incumbent upon the patentee to

rebut the evidence of deceptive intent with a good

faith explanation for the alleged misconduct. See /d.

In reviewing the affirmative evidence, it becomes

clear that RJR’s evidence had a major gap—RJR

failed to elicit any testimony or submit any other

evidence indicating that Star knew what the Burton

letter said prior to replacing the Sughrue firm, or

that the letter was a, reason for changing firms. RJR

admitted at oral argument that it failed to even ask

Wilhams or Star’s other executives about these

critical facts, and RJR failed to identify any

vestimony or other evidence when specifically asked

by us to do so in supplemental briefing. Further, a

review of the record shows that Williams actually

testified, in response to a different question, that he

had never seen the Burton letter prior to his

deposition in the present litigation. This statement

was never impeached, questioned, or explored by

RJR’s counsel. RJR identified Perito, Star’s

chairman, as the officer who made the decision to

terminate the Sughrue firm, but Perito was never

asked whether he had knowledge of the Burton

letter or whether it played any role in his decision to

change firms. As noted earlier, the district court may

infer facts supporting an intent to deceive from

indirect evidence. Cargi//, 476 F.3d at 1364. But no

inference can be drawn if there is no evidence, direct

or indirect, t':at can support the inference. RJR’s

lack of any evidence at all on the crux of its theory,

let alone clear and _ convincing’- evidence,

demonstrates that it failed to carry its burden.

20a

Other facts and inferences relied on by the district

court do not plug this hole in RJR’s evidence. First,

the district court found that Delmendo had concerns

about whether the information in the Burton letter

should be disclosed to the PTO, the suggested

inference being that Star would have been motivated

to replace him to ensure he did not disclose the letter

to the PTO. Indeed, both Delmendo’s testimony and

his written notes provide evidence supporting the

finding that he had such concerns. However, he was

not asked whether he ever expressed those concerns

to Williams or anyone else at Star. No Star witness

was asked whether Delmendo expressed his

concerns to them cither. This record cannot support

an inference that Star was motivated to replace

Delmendo due to his concerns about the Burton

letter since there is no evidence, let alone clear and

convincing evidence, that Star even knew about the

letter or his concerns. Again, RJR failed to carry its

turden of proof.

Second, the district court also found that Perito’s

use of an intermediary, Flicker of Paul Hastings, to

facilitate the transfer of files from the Sughrue firm

to the Banner firm evidenced an intent to prevent

any communication between the firms. The inference

drawn, therefore, was that Star was deliberately

insulating the Banner lawyers from the Sughrue

lawyers to prevent the former from learning of

Delmendo’s concerns regarding the Burton letter.

But RJR’s failure to adduce any evidence that Star

knew of Delmendo’s concerns or the Burton letter’s

contents renders this inference clearly erroneous as

well. Moreover, Hoscheit of the Banner firm

specifically testified that he did meet with the

Sughrue attorneys, and the district court did not

2la

indicate that it found this testimony or Hoscheit in

general to not be credible. In fact, it did not address

this testimony at all. Furthermore, the district court

rejected RJR’s allegation that the Sughrue files, and

the Burton letter in particular, were tampered with

before being conveyed to the Banner firm. Thus, the

Banner firm was clearly given the Burton letter. Yet

again, RJR failed to provide clear and convincing

evidence to support its allegations.

We also question the district court’s reliance on

the admitted fact that Star never instructed Rivard

or his colleagues at the Banner firm to disclose the

Burton letter, nor specifically brought it to their

attention prior to June 2002. As already noted, RJR

failed to provide evidence that Star knew anything

about the Burton letter’s contents or that the letter

raised any concerns relevant to the prosecution of its

patents. Thus, the evidence does not support an

inference that Star’s failure to bring the Burton

letter to the Banner firm’s attention was motivated

by a deceptive intent to keep it from the examiner.

And there is no evidence indicating that Williams,

Star or their attorneys at the Banner firm became

aware of the Burton letter before June 2002, well

after the ‘649 patent issued in March 20, 2001. Given

the heavy reliance by the district court on the

Burton letter and RJR’s “quarantine” theory, the

numerous evidentiary failings relating to this theory

gives us a “definite and firm conviction” that the

resulting finding of deceptive intent as to the ‘649

patent was clearly erroneous. See Molins, 48 F.3d

at 1178.

9 To the extent the district court also relied on the non-

disclosure of the Curran data, we note that even tho district

22a

3.

Because the district court’s finding of deceptive

intent as to the ‘401 patent was also heavily based

on RJR’s “quarantine” theory, that finding is also

weakened by the failings in that theory. But the

district court also relied on additional evidence to

find inequitable conduct as to the ‘401 patent. As

Star concecaes, its attorneys at the Banner firm were

made aware of the Burton letter and Curran data in

June 2002, at which time the ‘401 patent had not yet

been issued.!° Although Star had the opportunity to

disclose them at that time, it did not disclose either

document to the PTO. While the district court’s

finding of deceptive intent even with regard to this

additional evidence may be flawed in some respects,

we reverse the holding of inequitable conduct as to

the ‘401 patent because the district court’s finding of

materiality was clearly erroneous.

The district court found that the Burton letter and

Curran data disclosed “the essential fact that the

prior art could yield low TSNA tobacco at least some

of the time,” and that this fact was “manifestly

material.” /nequitable Conduct Order, slip op. at 41-—

42. However, in the course of the prosecution of the

‘401 patent, Star disclosed to the PTO other

references that made this information contained in

the Burton letter and Curran data _ clearly

court acknowledged that the materiality of the Curran data

was questionable given that the Curran tobacco was partially

cured using a microwave.

10 Tt is clear that the events in June 2002 and the events that

followed cannot render the ‘649 patent unenforceable due to

inequitable conduct because the ‘649 patent had already issued.

23a

cumulative.!! Star points to the disclosure of several

references, including RJR’s interrogatory responses

from this litigation and the language of the ‘401

patent’s specification.

The ‘401 patent’s specification, lke the ‘649

patent’s specification, states:

In flue curing processes that utilize a heat

exchanger capable of providing relatively low

airflow through the curing barn, I have discoverea

that it is possible to somewhat reduce the TSNA

levels by not venting combustive exhaust gases

into the curing apparatus or barn.

‘401 patent, col.6 11.27—31 (emphasis added). Thus,

the specification points out that “somewhat

reduce[d]” levels of ‘TSNA were previously

attainable. This alone may not render cumulative

the Burton letter’s disclosure that low to

undetectable levels of TSNA _ were previously

unattainable, but another disclosure fills this gap.

In particular, Star disclosed RJR’s interrogatory

responses produced during the ‘649 patent

infringement litigation. Of particular relevance is

interrogatory question number 1:

Describe in detail all research, field tests or other

studies that you or others on your behalf have

conducted, sponsored, or participated in regarding

TSNA formation and/or reduction (including,

without limitation, work conducted in Greece,

\! These disclosures were made after the ‘649 patent was

zssued, thus our analysis of materiality here applies only to the

‘401 patent. As already discussed, we reverse the holding of

inequitable conduct as to the ‘649 patent due to the clearly

erroneous finding of deceptive tntent with regard to that

patent.

24a

Turkey or North Carolina), including the results of

such research, test or study, and any documents

concerning such research, test or study.

J.A. at 6303. RJR’s response to that interrogatory

provided that: “Reynolds recognized in or about 1994

that tobacco (whether flue-cured or burley) cured in

the indirect fired barns Aad significantly reduced

levels of TSNNAs as compared to the commercial

direct-fired, bulk curing barns at Reynolds’ Avoca

facility.” J.A. at 6305 (emphasis added). Also, “[b]y

about 1997, Reynolds recognized that it was the

absence of combustion exhaust gases in the indirect

fired barns that was responsible for the significantly

reduced TSNA /evels obtained in flue-cured tobacco

cured in those barns.” Jd. (emphasis added).

“Reynolds then confirmed that tobacco cured in

existing commercial, indirect-fired, bulk curing

barns also contained significantly reduced levels of

TSNAs as compared to tobacco cured in the

commercial, gas-fired, bulk curing barns.” J.A. at

6305-06 (emphasis added). The _interrogatory

response also provided a specific example: “Data

collected in 1996 from tobacco cured in one of Hassell

Brown’s indirect fired barns, which was heated with

a heat exchanger, revealed that flue-cured tobacco

cured in this barn had undetectable levels of

TSNAs.” J.A. at 6306 (emphasis added).

We conclude that this interrogatory response,

which Star disclosed to the PTO, contained the

critical information that the prior art had achieved

low to insignificant levels of TSNA, and that the

information contained in the Burton letter ana in the

Curran data would therefore have been cumulative

in the ‘401 prosecution by the time the Banner

lawyers were made aware of them in June 2002.

25a

Because cumulative information is not material, we

hold that the district court clearly erred in finding

that the information contained in the Burton letter

and in the Curran data was material to the

prosecution of the ‘401 patent. Under these

circumstances, the finding of inequitable conduct

with respect to the ‘401 patent must also be set

aside. Therefore, we reverse the judgment of

unenforceability of both the ‘649 and ‘401 patents.

B. Indefiniteness

Though we reverse the district court’s holding of

inequitable conduct, its judgment of no lability for

infringement may still be affirmed if we uphold the

district court’s grant of summary judgment as to

claim indefiniteness because it covered all asserted

claims of both patents. We review both a district

court’s grant of summary judgment and a holding of

claim indefiniteness de novo. Datamize, LLC v.

Plumtree Software, Inc., 417 F.3d 13842, 1347 (Fed.

Cir. 2005). The district court held that the term

“anaerobic condition” is indefinite and thus, since it

appears in every asserted independent claim, held

that all asserted claims are invalid as indefinite.

Indefiniteness Order, slip op. at 12—14. However,

because the claim term “anaerobic condition” is not

indefinite, we also reverse the grant of summary

judgment.

The requirement of claim definiteness is set ferth

in 35 U.S.C. § 112, 4 2, which requires claims

“particularly pointing out and distinctly claiming the

subject matter which the applicant regards as his

invention.” We have held that “lo|]nly claims not

amenable to construction or insolubly ambiguous are

indefinite.” Datamize, 417 F.3d at 1347 (citations

omitted). A claim term is not indefinite just because

26a

“it poses a difficult issue of claim construction.”

Exxon Research & Engg Co. v. United States, 265

F.3d 1371, 1375 (Fed. Cir. 2001). Rather, the

standard is whether “the claims [are] amenable to

construction, however difficult that task may be.” /d.

“By finding claims indefinite only if reasonable

efforts at claim construction prove futile, we accord

respect to the statutory presumption of patent

validity ....” ld.

The parties do not dispute the claim constructions

reached by the district court, and the district court

did construe all terms relevant to this appeal. In and

of itself, a reduction of the meaning of a claim term

into words is not dispositive of whether the term is

definite. Halliburton Energy Serv., Inc. v. M—I LLC,

514 F.8d 1244, 1251 (Fed. Cir. 2008). And if

reasonable efforts at claim construction result in a

definition that does not. provide _ sufficient

particularity and clarity to inform skilled artisans of

the bounds of the claim, the claim is insolubly

ambiguous and invalid for indefiniteness. See id. at

1249-51.

The district court construed the term “anaerobic

condition” to mean “an oxygen deficient condition

(such as is created by an atmosphere of combustion

gases or from the release of carbon dioxide by the

plant during cure) which promotes microbial nitrate

reductase activity.” Markman Order, slip op. at 1-2.

Thus, a skilled artisan would know that the claim

term contemplates only conditions where the dearth

of oxygen promotes the activity of the nitrate

reductase enzyme. It is undisputed that those of

ordinary skill would understand from the patents’

specifications that the significance of nitrate

reductase activity to the claimed invention is that it

27a

produces nitrites, which then form TSNAs. See ‘649

patent col.7 11.89-55; ‘401 patent col.7 11.43—59.

Therefore, from the claim term “anaerobic condition”

and the intrinsic record, a skilled artisan would

discern that the term delineates those conditions

where the shortage of oxygen results in increased

TSNA formation. This is further supported by

statements to that effect in the _ patents’

speciiications. See, eg., “649 patent col.4 11.36—39

(“For example, it is postulated that if the conditions

[contemplated for the present invention] are made

aerobic, the microbes will consume oxygen in the

atmosphere for their energy source, and therefore no

nitrites will form.”).

We have stated that “[w]hen a word of degree is

used ... the patent’s specification [must] provide[ |

some standard for measuring that degree” to be

definite. Datamize, 417 F.3d at 1351 (quoting Seattle

Box Co. v. Indus. Crating & Packing, Inc., 731 F.2d

818, 826 (Fed. Cir. 1984)). Here, the term “anaerobic

condition” is in effect a term of degree because its

bounds depend on the degree of oxygen deficiency.

And as the district court determined in its claim

construction, the intrinsic record provides a

standard for measuring that degree and assessing

the bounds of “anaerobic condition” as required by

Datamize, namely the level of TSNA formation. In

fact, the claims explicitly refer to the standard,

requiring that the tobacco be cured in a “controlled

environment” that prevents an “anaerobic condition”

in order to “substantially prevent the formation of at

least one nitrosamine.” See ‘649 patent cl.4.

The district court further determined that TSNA

formation is itself a well-defined standard as

disclosed by the asserted patents. It construed the

28a

term “substantially prevent the formation of at least

one nitrosamine” to mean “the level of at least one of

the nitrosamines falls within the following ranges:

less than about 0.05 mg/g for NNN, less than about

0.10 mg/g for NAT plus NAG, and less than about

0.05 mg/g for NNK.” Markman Order, slip op. at 2.

In other words, the district court was able to discern

from the intrinsic record that TSNA formation, as

contemplated by the asserted patents, is tied to

highly specific measurements of four very specific

chemical compounds. Far from being insolubly

ambiguous, a_ skilled artisan could determine

whether an “anaerobic condition” was present—or,

rather, was prevented—simply by measuring the

levels of NNN, NAT, NAG, and NNK.

The district court’s contrary conclusion was based

on its misunderstanding that claim definiteness

requires that a potential infringer be able to

determine if a process infringes before practicing the

claimed process.!2 But we disclaimed any such

approach in =Jnvitrogen Corp. vv. SBiocrest

Manufacturing, L.P., 424 F.3d 1374, 1384 (Fed. Cir.

2005). We explained that Stratagene, in making a

12 The district court misunderstood our decision in Geneva

Pharmaceuticals, Inc. v. GlaxoSmithKline PLC, 349 F.3d 1373,

1383-84 (Fed. Cir. 2003). There, we rejected a proposed

construction that, if adopted, would have rendered the term

indefinite because a given composition could both infringe and

not infringe simultaneously. We did not hold the claim term at

issue to be indefinite; in fact, after rejecting that proposed

construction, we arrived at the correct construction which did

not render the term indefinite. /d at 1384. And while we

emphasized that a claim is indefinite if a skilled artisan cannot

determine if an accused product infringes or not, we did not

hold that the infringement determination must be able to be

made at any particular time.

29a

similar argument, was “really talking about the

difficulty of avoiding infringement, not

indefiniteness of the claim.” Jd. “The test for

indefiniteness does not depend on a _ potential

infringer’s ability to ascertain the nature of its own

accused product to determine infringement, but

instead on whether the claim delineates to a skilled

artisan the bounds of the invention.” /d. (citing

SmitaKline Beecham Corp. v. Apotex Corp., 403

F.3d 13381, 1341 (Fed. Cir. 2005)); see also Datamize,

417 F.3d at 1354 (holding that “indefiniteness does

not depend on the difficulty experienced by a

particular person in comparing the claims with the

prior art or the claims with allegedly infringing

products or acts”). As construed by the district

court, the term “anaerobic condition” clearly

delineates the bounds of claim scope and thus is not

indefinite. The district court’s grant of summary

judgment of indefiniteness must therefcre be

reversed.

CONCLUSION

For the reasons provided above, we reverse the

district court’s judgment of unenforceability of both

asserted patents due to inequitable conduct. We also

reverse the district court's grant of summary

judgment of invalidity of all asserted claims due to

indefiniteness and remand for further proceedings

on the infringement complaint consistent with this

opinion.

REVERSED and REMANDED

30a

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

STAR SCIENTIFIC, INC. *

Plaintiff sd

vs. * CIVIL ACTION

R.J. REYNOLDS TOBACCO’ - * NO. MJG-01-1504

COMPANY, et al. *

Defendants °

* * * * *

*

ME RDE

On January 19, 2007, the Court issued its

Memorandum and Order Re: Indefiniteness granting

summary judgment to Defendants, but withheld the

entry of Judgment pending decision of Defendants’

Inequitable Conduct defense. The Court has, this

date, issued its Memorandum of Decision Re:

Inequitable Conduct.

Accordingly:

1. Judgment shall be, and hereby is, entered

in favor of Defendants R.J. Reynolds

Tobacco Company, et al against Plaintiff

Star Scientific, Inc. dismissing all claims,

with prejudice, with assessable costs.

3. This Order shall be deemed to be a final

judgment within the meaning of Rule 58

of the Federal Rules of Civil Procedure.

SO ORDERED, on Tuesday, June 26, 2007.

/s/

Marvin J. Garbis

United States District Judge

3la

United States District Court, D. Maryland.

STAR SCIENTIFIC, INC. Plaintiff

Vv

R.J. REYNOLDS TOBACCO COMPANY, et al.

Defendants

No. Civ.A. MJG-01-1504.

June 26, 2007.

Richard McMillan, Jr., Jonathan H. Pittman,

Kathryn D. Kirmayer, Mark Michael Supko, Crowell

and Moring L.L.P., Washington, DC, for Plaintiff.

Richard A. Kaplan, Ralph J. Gabric, K. Shannon

Mrksich, Jerold A. Jacover, Cynthia A. Homan,

Harold V. Johnson, Dominic P. Zanfardino, Laura

Beth Miller, Christopher M. Dolan, Howard

S. Michael, Jeffry M. Nichols, Robert G. Pluta,

Justin B. Rand, Amanda M. Miller, Julie L.

Leichtman, Andrea L. Evensen, Scott A.

Timmerman, Brinks Hofer Gilson & Lione, Chicago,

IL, August J. Borschke, R.J. Reynolds Tobacco Co.,

Winston-Salem, NC, Barry Jay Rosenthal, Bromberg

Rosenthal, Rockville, MD, for Defendants.

MEMORANDUM OF DECISION RE:

INEQUITABLE CONDUCT

GARBIS, J.

These cases, consolidated for trial of Defendant’s

inequitable conduct defense, were tried before the

Court without a jury.

The Court has heard the evidence, reviewed the

exhibits, considered the materials submitted by the

parties, and had the benefit of the arguments of

counsel. The Court now issues this Memorandum of

Decision as its findings of fact and conclusions of law

in compliance with Rule 52(a) of the Federal Rules of

32a

Civil Procedure.! The Court finds the facts stated

herein based upon an evaluation of the evidence

including the credibility of witnesses and the

inferences which the Court has found reasonable to

draw from the evidence.

I. BACKGROUND

A. Procedural Setting

Plaintiff Star Scientific, Inc. (“Star”) is the

exclusive licensee? of United States Patent Nos.

6,202,649 (“the ‘649 patent”) and 6,425,401 (“the ‘401

patent”) (collectively, “the Patents-in-Suit”), relating

to the curing of tobacco. At all times relevant hereto,

Defendants R.J. Reynolds Tobacco Company, a

North Carolina corporation and RwJ. Reynolds

Tobacco Company, a New Jersey corporation

(collectively, “KRJR”), have been engaged in the

business of producing tobacco products, including

cigarettes.

Cn May 23, 2001, Star sued RJR (Case No.

MJG01-1504), claiming infringement of claims 4, 12,

and 20 of the ‘649 patent. On July 30, 2002, Star

sued RJR (Case No. MJG-02-2504) for infringement

of claim 41 of the ‘401 Patent. In cach case, RJR

counterclaimed seeking a declaratory judgment

establishing non-infringement and invalidity. RJR

denies infringement and asserts that the Patents-in-

1 “In all actions tried upon the facts without a jury... the court

shall find the facts specially and state separately its

conclusions of law thereon, and judgment shall be entered

pursuant to Rule 58.” Fed.R.Civ.P. 52(a).

2 The original assignee of the Patents-in-Suit, Regent Court

Technologies, granted Star an exclusive license which included

the right to bring legal action to enforce the Patents-in-Suit

33a

Suit are invalid and/or unenforceable due to

indefiniteness and inequitable conduct.

On January 19, 2007, the Court issued its

Memorandum and Order’ Re: Indefiniteness

[Document 704], granting summary judgment to

RJR on the issue of indefiniteness, but deferred its

entry of judgment pending decision on _ the

consolidated trial of RJR’s inequitable conduct

defense.

B. Industry Setting

1. Tobacco Curing Methods

Tobacco that is freshly harvested must be “cured”

before it can be used for cigarettes and other

products. Essentially, “raw” tobacco is dried in a

curing barn without exposure to rain or direct

sunlight:

In practice, tobacco leaves are generally cured

according to one of three methods. First, in some

countries, such as China, a variation of the flue

curing process (described below) is still being used

on a commercial scale to cure tobacco leaves.

Specifically, this variation of the flue curing

process features the use of a heat exchanger and

involves the burning of fuel and the passing of

heated air through the flue pipes in a curing barn.

‘649 Patent, Col. 2 ll. 52-54.5 In this first method,

there is no contact between the exhaust gases and

the tobacco and curing takes place in what is

referred to as an “indirect fire” barn.

4 Both Patents-in-Suit make the same statements in regard to

curing methods. Accordingly, citations to the ‘649 Patent will

suffice here.

34a

A second method, in which exhaust gases come

into contact with the tobacco, takes place in what is

referred to as a “direct fire” barn:

For more than twenty years, the heat exchanger

method described above has been supplanted in

the U.S. with [a second method,] the so-called “flue

curing” method [using a propane burner]. This

process involves placing the tobacco leaves in a

barn and subjecting the leaves to curing with the

application of convective heat using a hot gaseous

stream that includes combustion exhaust gases.

When convective heat is used to dry the tobacco

leaves, the combustion exhaust gases (including

carbon monoxide, carbon dioxide, and water) are

passed directly through the tobacco.

Id. at Col. 3 Il. 4-14.

There is a third method of curing tobacco known

as “air curing”:

This process involves placing the tobacco leaves in

a barn and subjecting the leaves to air curing

without controlling the ambient conditions (e.g. air

flow through the barn, temperature, humidity,

and the like) and without the application of any

heat.

Id. at Col. 3 ll. 19-24.

2. Nitrosamines-TSNA

By about the 1990's, those working in the tobacco

industry becarne aware of a _ possible problem

regarding the forr ution of nitrosamines in the

curing process. Nitrosamines’ are _ nitrogen-

containing chemical compounds that form in plants.

The nitrosamines that form in tobacco plants during

the curing process are referred to as “tobacco specific

35a

nitrosamines” (“T'SNAs”). Some TSNAs were thought

to be carcinogenic. Accordingly, those in the tobacco

industry sought to find ways to avoid TSNA

formation in the curing process.

Persons connected with Reserca, a Swedish

research company also known us “Swedish Match,”

came to believe that the TSNAs that were found in

air-cured tobacco were caused by microbes (micro-

organisms). By approximately 1993, Swedish Match

had developed a method whereby the formation of

TSNAs was prevented in brown tobacco (a sub-

category of burley tobacco).

Swedish Match sponsored Professor Harold

Burton (“Burton”), an agronomy professor at the

University of Kentucky, to assist with research

regarding TSNA formation. Burton published a

paper in 1995 discussing a method for substantially

preventing the formation of at least one nitrosemine

in a harvested tobacco plant. He concluded thet this

could be done by drying uncured tobacco in a

combustion gas free environment and substantially

preventing an anaerobic condition around the plants

by controlling at least one of three curing conditions,

humidity, temperature, and airflow.

At about the same time that Swedish Match was

researching nitrosamines in air-cured tobacco, RJR,

under the direction of Dr. David Peele (“Peele”),

began researching the causes of nitrosamine

formation in Virginia tobacco. RJR’s research

indicated that the primary reason for TSNA

formation in Virginia flue-cured tobacco was not the

presence of microbes, but instead the fact that

exhaust gases came in contact with the tobacco. He

found that old indirect-fire barns that had utilized

heat exchangers and prevented exhaust gases from

36a

coming inte contact with tobacco yielded

substantially lower levels of TSNA than the newer

direct-fire barns.

In late 1997 or early 1998, RJR disclosed some of

its work to scientists at Swedish Match as well as to

Burton. Later, in approximately May or June of

1998, Peele discovered that the particular

component of the combustion exhaust gases which

was the primary cause of TSNAs forming during the

curing of Virginia tobacco was nitric oxide.

3. RJR (Peele)-Curing Operations

Beginning in August of 1998, Peele experimented

with the curing of tobacco in indirect-fire barns to

prevent the exposure of tobacco to nitric oxide. He

discovered that tobacco that was cured by this

method had low to undetectable levels of at least one

TSNA.

On April 26, 1999, Peele filed the patent

application that led to U.S. Patent No. 6,805,134.

Peele’s application disclosed that if, during the

curing process, the tobacco’s exposure to the nitric

oxide found in combustion exhaust gases is

minimized, the formation of TSNAs is substantially

prevented. 2ele’s application also disclosed means

by which direct-fire barns could be converted into

indirect-fire barns to prevent tobacco exposure to

nitric oxide during the curing process.

In 1999, RJR contracted with certain farmers to

have them provide tobacco cured in barns retrofitted

with heat exchangers purchased from Vencon-

374

Varsos,4 a Greek company, and assembled and

installed in the farmers’ barns by Evans Machinery

and Metal Fabrication, a U.S. company.

By the summer of 1999, these farmers had cured

tobacco with low TSNA levels. In November 1999,

RJR spent over $11,000,000 to purchase 2050 heat

exchangers and retrofit hundreds of curing barns to

use this technology. RJR contracted with many

farmers to provide tobacco cured in barns utilizing

this heat exchanger technology for the 2000 curing

season.> In early 2001, RJR replaced many of the

2000 season curing contracts with new agreements

that were utilized in the 2001 season and thereafter.

4. Patents-in-Suit Filings

The following is the chronology of the Patent

Office filings pertinent to the Patents-in-Suit:

The 649 Patent

9/15/98 Application No. 60/100,372 (the

“Williams Provisional Appli-

cation”) filed.

9/15/99 Application No. 09/397,018 (the

“Williams Non-Provisional Appli-

cation”) filed.

3/20/01 Patent No. 6,202,649 issued.

The ‘401 Patent

9/25/00 Application No. 09/688, 144 filed

4 Vencon-Varsos adapted technology whereby heat exchangers

could be utilized in virtually any existing bulk tobacco barn,

enabling conversion from direct-fire to indirect-fire barns.

5 Some of the farmers owned their own heat exchangers while

others used heat exchangers provided by RJR.

38a

as a continuation of the Williams

Non-Provisiona! Application”)

filed.

7/30/02 Patent No. 6,425,401 issued.

Il. LEGAL FRAMEWORK

A. The Duty of Candor

“Applicants for patents are required to prosecute

patent applications in the PTO with candor, good

faith, and honesty.” Molins PLC v. Textron, Inc., 48

F.3d 1172, 1178 (Fed. Cir. 1995). It is well

established that:

[T]he duty to disclose information material to

patentability rests on the inventor, on each

attorney or agent who prepares or prosecutes an

application and on every other individual who is

substantively involved in the preparation or

prosecution of the application and who is

associated with the inventor, with the assignee, or

with anyone to whom there is an obligation to

assign the application.

Id. at 1178 n. 6

Moreover, “[t]he duty of candor’ extends

throughout the patent’s entire prosecution history.”

Fox Indus., Inc. v. Structural Pres. Sys., Inc., 922

F.2d 801, 803 (Fed. Cir. 1990). Accordingly: “ijn

determining inequitable conduct, a trial court may

look beyond the final claims to their antecedents....

[A] breach of duty of candor early in the prosecution

may render’ unenforceable all claims which

eventually issue from the same or a _ related

application.” Jd. at 803-04. “The duty to disclose

material information extends to information such

39a

individuals [covered by 37 C.F.R. § 1.56] are aware

of prior to or at the time of filing the application or

become aware of during the prosecution thereof.”

Manual for Patent Examining Procedure (“MPEP”)

§ 2001.06 (8th ed. Rev. 5, 2006).

B. Inequitable Conduct

“A breach of [the] duty [of candor] may constitute

inequitable conduct.” Purdue Pharma. L.P. v. Endo

Pharma. Inc., 438 F.3d 1123, 1128 (Fed. Cir. 2006).

As stated by the Urited States Court of Appeals

for the Federal Circuit: “inequitable conduct includes

affirmative misrepresentation of a material fact,

failure to disclose material information, or

submission of false material information, coupled

with an intent to deceive.” Hspeed, Inc. v. Brokertec

USA, 480 F.3d 1129, 1135 (Fed. Cir. 2007) (quoting

Pharmacia Corp. v. Par Pharm., Inc., 417 F.3d 1369,

1373 (Fed. Cir. 2005)); Molins PLC, 48 F.3d at 1178.

“{I]nequitable conduct requires not [merely] intent to

withhold, put rather intent to deceive.” Dayco

Prods., Inc. v. Total Containment, Inc., 329 F.3d

1358, 1367 (Fed. Cir. 2003). “The party asserting

inequitable conduct must prove a threshold level of

materiality and intent by clear and convincing

evidence.” Digital Control, Inc. v. ‘Charles Mach.

Works, 437 F.3d 1309, 1313 (Fed. Cir. 2006).” The

court must then determine whether the questioned

conduct amounts to inequitable conduct by balancing

the levels of materiality and intent, ‘with a greater

showing of one factor allowing a lesser showing of

the other.” Union Pac. Res. Co. v. Chesapeake

Energy Corp., 236 F.3d 684, 693 (Fed. Cir. 2001)

(internal citation omitted).

40a

1. Materiality

The PTO Regulations state, with regard to

materiality:

(b) Under this section, information is material to

patentability when it is not cumulative to

information already of record or being made of

record in the application, and

(1) It establishes, by itself or in combination with

the other information a prima facie case of

unpatentability of a claim; or

(2) It refutes, or is inconsistent with, a position the

applicant takes in: (i) Opposing an argument of

unpatentability relied on by the [Patent] Office, or

(ii) Asserting an arguinent of patentability.

37 C.F.R. § 1.56. The Federal Circuit recognizes

several different standards of materiality. The first

is the “objective but for” standard, “where the

misrepresentation was so material that the patent

should not have issued.” Digital Control, 437 F.3d at

1315. A second test, the “subjective but for” test,

finds materiality “where the misrepresentation

actually caused the examiner to approve the patent

application when he would not otherwise have done

so.” Id. Lastly, the “but it may have” standard finds

materiality “where the misrepresentation may have

influenced the patent examiner in the course of

prosecution.” Jd. The Federal Circuit has stated:

In addition, in 1977, the PTO amended Rule 56

to clarify the duty of candor and good faith before

the PTO. That version of Rule 56 required

applicants to disclose “information they are aware

of which is material” stating that information is

material “where there is a substantial likelihood

that a reasonable examiner would consider it

4la

important in ceciding whether to allow the

application to issue as a patent.” 37 C.F.R. § 1.56

(1977).

kek

Even though the PTO’s “reasonable examiner”

standard became the dominant standard invoked

by this court, in no way did it supplant or replace

the case law precedent.

kk*

However, because a party alleging inequitable

conduct need only prove a “threshold level” of

materiality in order to proceed to the second

“balancing” portion of the inequitable conduct

inquiry, and because the PTO’s “reasonable

examiner” standard was broader than the other

three standards, the PTO standard gradually

became the sole standard invoked by this court.

Digital Control, 437 F.3d at 1315.

The Federal Circuit expressed in speed that

“under the reasonable examiner — standard,

information is material when ‘a reasonable examiner

would consider it important in deciding whether to

allow the application to issue as a patent.” Espeed,

Inc., 480 F.3d at 1136, (quoting A.B Dick Co. v.

Burroughs Corp., 798 F.2d 1392, 1397 (Fed. Cir.

1986)). However, it is not necessary for materiality

that the disclosure of the information would have

resulted in disallowance of the patent. Li Second

Family LP vy. Toshiba Corp., 231 F.3d 1373, 1380

(Fed. Cir. 2000) (stating that “information concealed

from the PTO may be material even though it would

not invalidate the patent.”).

42a

2. Intent to Deceive

To satisfy 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.” Hspeed, Inc., 480 F.3d

at 1137-38 (quoting Kingsdown Med. Consultants v.

Hollister, Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (en

banc in relevant part)). The intent to deceive need

not be proven by direct ev:dence; in fact, “it is rarely

proven by such evidence.” speed, Inc., 48C F.3d at

1138. The intent to deceive may be “inferred from

the facts and circumstances surrounding the

applicant’s overall conduct.” Jmpax Labs. v. Aventis

Pharms., 468 F.3d 1366, 1375 (Fed. Cir. 2006) (citing

Merck & Co. v. Danbury Pharmacal, Inc., 873 F.2d

1418, 1422 (Fed. Cir. 1989)).

Although intent may be found based on either

direct or circumstantial evidence, the intent to

deceive cannot be inferred solely from the fact that

material information was not disclosed. Braun Inc. v.

Bynamics Corp. of Am., 975 F.2d 815, 822 (Fed. Cir.

1992). “[M]ateriality does not presume intent, which

is a separate and essential component of inequitable

conduct.” Manville Sales Corp. v. Paramount Sys.,

Ine., 917 F.2d 544, 552 (Fed. Cir. 1990).

3. The Balancing Test

The Court, after finding that a false statement or

omission was made in the course of patent

prosecution, must determine the extent to which the

conduct was material and intentional. “The court’s

final step in the determination of inequitable

conduct is a balancing of the degree of materiality

against the degree of intent to deceive.” Union Oil

43a

Co. of Cal. v. Atlantic Richfield Co., 34 F.Supp.2d

1208, 1212 (C.D. Cal. 1998). “This balancing process

considers all the evidence, including that of the

patentee’s good faith.” Jd. (citing Molins PLC, 48

F.3d at 1181).

Where an omission or misrepresentation is “highly

material, ‘less evidence of intent will be required in

order to find that inequitable conduct has occurred.”

Espeed, Inc., 480 F.3d at 1135 (quoting PerSeptive

Biosystems, Inc. v. Pharmacia Biotech, 225 F.3d

1315, 1319 (Fed. Cir. 2000)). Ultimately, the

“conclusion that a patent is unenforceable is an

equitable decision committed to the discretion of the

district court.” Hspeed, Inc., 480 F.3d at 1135; see

Flex-Rest, L.L.C. v. Steelcase, Inc., 455 F.3d 1351,

1357 (Fed. Cir. 2006).

Ill. DISCUSSION

A. Introduction

As discussed more fully herein, the actions of

Patentee Johnnie Williams (“Williams”) and others

participating in the prosecution of the Patents-in-

Suit constitute a substantia! failure to meet the duty

of candor vis-a-vis the Patent and Trademark Office.

Williams and others deliberately misled the PTO in

a material manner by keeping from the PTO the

critical fact known to Williams and others that the

claimed beneficial result — tobacco with low to

undetectable TSNA levels — had been achieved in

the United States prior to the application that led to

the Patents-in-Suit.

A letter written by the patentee’s technical

consultant, Professor Burton (the “Burton Letter”) to

the patent attorney drafting the initial application,

was a focus of the evidence at the inequitable

44a

conduct trial. It was RJR’s discovery of this letter

that provided clear proof that Williams, the

prosecuting patent attorney and others, had been

aware that low and undetectable levels of TSNA had

been achieved under the prior art. The Burton Letter

establishes that they knew that the alleged

inventicn did not, for the first time, enable curing of

tobacco with low levels of TSNA. Rather, the benefit

that could be claimed from the alleged invention

would be, at most, to teach a method that might

permit some degree of confidence that a curing

operation could produce tobacco with low levels of

TSNA. As discussed more fully herein, the Burton

Letter provides evidence of the knowing material

failure to disclose, but RJR’s inequitable conduct

proof is not limited to the document itself.

Counsel for Star, Randy McMilian, admitted in

final argument that Williams and patent counsel

had, at all pertinent times, been fully aware that,

prior to the alleged invention, tobacco could be, and

had been, cured in the United States in a process

that yielded low to undetectable levels of TSNA:

MR. MCMILLAN: I think everyone involved on

the patent side had the belief that, in an

uncontrolled environment, it’s the very nature of

an uncontrolled environment, that you can get it

in some _ uncontrolled way. You can_ get

uncontrolled results in some uncertain.

THE COURT: You can get undetectable TSNAs?

MR. MCMILLAN: Yes, Your Honor.

Tr. 1109.6

6 References to “Tr.” are to the trial transcript.

45a

Even with this belief on the part of Star, Williams,

his patent attorney, and “everyone involved on the

[Star] patent side,” the application leading to the

Patents-in-Suit falsely stated that:

[I]t has been determined that [the prior art] as

applied to tobacco grown in the United States

yields tobacco products with high levels of TSNA.

Pl.’s Ex. 9 (hereinafter cited as “Provisional

Application”) at 3.

This statement in the Provisional Application was

designed to mislead the PTO into believing that the

prior art could not yield tobacco with low levels of

TSNA. There had been no determination of the type

claimed. Yet, the PTO was led to believe that the

alleged invention enabled the achievement of low-

TSNA tobacco for the first time. The purported

“determination” on which Williams (and his attorney

who relied upon Williams’? based the statement, did

not even relate to tobacco grown in the United

States. As Williams admitted at trial:

Q. So you were the person that told Mr. Delmendo

to say, to say in the provisional application that

when this old flue-curing process is used in the

United States, that you get high levels of TSNA?

[Williams:] Yes.

Q. And you told him that, notwithstanding the

fact that in the Burton letter, Professor Burton

se.d that you get low TSNA,; is that right?

[Wilhams:] That’s true. But I’m saying if you

practiced that in the United States, you won’t—

you won't get low levels of TSNA, because in

7Tr, 422.

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Brazil, where most of our tobacco comes from,

that’s what they do, and the levels are high.

Q. So you—

[Williams:] That was the basis for me saying that.

Q. The basis for your discussion here in the

provisional about what goes on in the United

States was based on what goes on in Brazil; is that

your testimony”?

[Williams:] Yes. Which is either the first or the

second largest supply of flue-cured tobacco to

America.

Q. You also based that statement on a complete

absence of data for a curing done in the United

States; is that correct?

[Williams:] Well, did I make a stretch from Brazil

to the United States? Yes, sir. Kut I made that

stretch with the third largest tobacco company in

the United States information, that that tobacco

was very similar and near identical to what is

grown in Virginia with the same conditions. So did

I make a stretch from Brazil to here? Yes.

Tr. 422-23.

This “stretch” kept the PTO from knowing that, as

Williams knew, cured tobacco with low levels of

TSNA had been achieved in the United States with

tobacco grown in the United States. It is

substantially likely that knowledge that the prior art

could—albeit not every time—achieve low levels of

TSNA would have affected a reasonable PTO

examiner's evaluation of the claims at issue in the

instant case. The materiality of the omission is

particularly strong because of the absence of a

specification of precisely how one practicing the

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alleged invention is to obtain the purportedly

assured result.§

B. The Burton Letter

As noted above, Professor Burton assisted

Swedish Match with research regarding TSNA

formation and published a paper in 1995 based upon

his research. Sometime prior to August 27, 1998,

Burton was engaged as a technical consultant for

Williams with regard to a planned application for a

patent relating to a tobacco curing process.

On August 27, 1998, Romulo Delmendo

(“Delmendo”), a patent attorney at Sughrue Mion

Zinn MacPeak & Seas (“the Sughrue firm”), was

contacted by Star and asked to prepare a patent

application for Williams. On August 28, 1998,

Burton sent the Burton Letter at Williams’ request

to Delmendo to aid the patent lawyer in preparation

of the planned patent application. Because of its

significance, a substantial part of the Burton Letter

is set forth below:

Tobacco specific nitrosamines (TSNA) are formed

primarily during the curing process. I have

observed that TSNA in cured tobacco leaf are [sic]

dependent on the accumulation of nitrite in the

leaf during curing. I have been postulated [sic]

that nitrite accumulates during curing by the

reduction of nitrate. Nitrite accumulates during

the death of the cell and experimental evidence

indicates that it is formed by the micro flora on

the surface of the leaf. It must be noted that for

the micro flora to reduce nitrate to nitrite

8 See Memorandum and Order Re: Indefiniteness [Document

704).

48a

conditions should be approaching anaerobic

(oxygen deficient) conditions. If conditions are

aerobic, the microbes will use the oxygen in the

atmosphere for their energy source. If the curing

in a micro climate is aerobic then no nitrite will

form. The curing process is certainly more complex

than this explanation but it should give a

thumbnail sketch on what is happening during

curing.

I was in China for two weeks during 1997 and I

was given commercial Chinese cigarettes. I

brought some of them back to the U.S. and decided

to analyze them for TSNA. To my surprise I could

not detect TSNA or when I did they were very low.

We analyzed at least five different commercial

cigarettes and the [sic] were the leading cigarettes

in China. These cigarettes were made of only flue

cured tobacco and are more like the cigarettes

manufactured in England. China does not import

any tobacco and therefore it was all grown in

China. Since China is a developing country, they

are still use [sic] the old curing technology that

was abandoned in the U.S. during the sixties. It

seemed to me that the probable cause for the

absence of TSNA was their use of the old fue-

curing techniques. This technique uses burning

fuel and passing the hot gasses through flue pipes

in the curing barn. Therefore, tobacco in the old

barns were exposed to radiant heat. The modern

curing barns are different since the fuel source

(propane) is combusted and the exhaust is passed

directly through the tobacco. This can create

anaerobic condition [sic] since the oxygen in the

atmosphere is depleted by combustion and the

combustion gases (carbon dioxide and water) are

49a

not aerobic. During curing, the tobacco leaf also

emits carbon dioxide and will dilute the oxygen

further.

Defs.’ Ex. 53 (hereinafter cited as “Burton Letter”)

(emphasis added).

It is important to note, at the threshold, that the

significance of the Burton Letter—in context—is

that Burton affirmatively stated to Williams that he

attributed the low levels of TSNA found in the

Chinese cigarettes to the use of the indirect fire flue-

curing process that had previously been used in the

United States. It is of no moment whether the

practice in China constituted prior art. The

significance is that the Burton Letter reveals that he

knew, and informed Williams and Delmendo, that

the prior art practiced in the United States had been

able to achieve tcbacco with low to undetectable

levels of TSNA.

C. The 1998 Provisional Application

Patent counsel (Delmendo) and Williams were

aware from the Burton Letter that Burton had

obtained cigarettes in China that had low or non-

existent levels of TSNA. Moreover, Burton had

stated that “the probable cause for the absence of

TSNA [in the Chinese cigarettes] was their use of

the old flue-curing techniques” formerly used in the

United States. Burton Letter at 1.

Nevertheless, the Provisional Application did not

reveal even the possibility that the old curing

method could produce low levels of TSNA. Rather,

the Provisional Application stated:

In some countries, such as China, an older

version of the flue curing process (hercinafter

discussed in detail) is still being used on a

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commercial scale to cure _ tobacco leaves.

Specifically, this particular flue curing process

involves the burning of fuel and the passing of the

hot combustion exhaust gases through flue pipes

in a curing barn. Accordingly, in this process,

primarily radiant heat emanating from the flue

pipes is used to cure the tobacco leaves. /t Aas

been determined that this process as applied to

tobacco grown In the United States yields tobacco

products with high levels of TSNA.

Provisional Application at 2-3 (emphasis added).

Not only was the PTO not informed that low levels

of TSNA had been obtainable, but there was no

adequate basis for the statement of a

“determination” that the process applied to United

States-grown tobacco yields high levels of TSNA.

This “fact” did not come from Burton. As he testified

at his deposition:

[Burton:] Let me repeat the question that I think I

heard. After August 24, 1998, did I ever tell

anyone that if you use the old-the Chinese, the old

flue-curing process, that we would get high levels

of nitrosamines?

No, not specifically that I’m aware of, I ever told

anybody that.

Q. Do you recall ever telling Mr. Delmendo that?

[Burton:] No.

kkk

Q. And as you sit here today, though, you can’t

recall ever, after the date of this letter, Exhibit 53,

informing anyone that it was your view that use of

this, what you refer as this old flue-curing

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technique, in the U.S., flue-cured tobacco, would

result in high nitrosamines?

[Burton:] I’m not aware of it.

Q. And as you sit here today, you certainly don’t

recall telling Mr. Delmendo that?

[Burton:] No.

Burton Dep. 24:10-24:20, 25:15-25:24, Jan. 22, 2003.

As noted above, Williams “stretched” to transform

some kind of information relating to the curing of

Brazilian tobacco into a “determination” as to what

would result with tobacco grown in the United

States.

Prior to filing the Provisional Application,

Williams obtained some samples of cured tobacco

from old indirect-fired barns in the United States, as

well as data referred to as “the Curran data” and

“the Jennings data.” Plaintiff has been unable to

provide this data. The Court finds from the evidence

presented at trial that the Curran data would have

indicated that tobacco cured in an oil-fired barn with

no exhaust had low TSNA levels, 0.39 parts per

million (“ppm”), and the Jennings data indicated a

level of TSNA of 1.5 ppm in tobacco cured in

indirect-fired barns. See Tr. 436, 439 (testimony of

inventor Williams as to the contents of the Curran

and Jennings data); id. at 606 (testimony of

Defendants’ expert Dr. Otten that the Curran data

reflected TSNA levels of 0.39 ppm). These data were

ot disclosed to the Patent and Trademark Office.

While the weight to be given this data might be

debated, the Court finds that the information should

have been provided to the PTO for the examiner’s

consideration-particularly in a context in which

Star’s patent counsel failed to disclose even that the

52a

prior art had been capable of achieving low-TSNA

tobacco.

After filing the Provisional Application, Delmendo

called Williams on September 18, 1998. Delmendo’s

notes from that conversation indicate that there

remained a “prior art concern” ‘Tr. 95. Delmendo

testified that the “prior art concern” was that the

indirect heat exchange method (“the oil-type barn

with the airflow natural heat sucked in from the side

has a fan in it”) produces tobacco with “very low”

nitrosamine levels. J/d.; see id. at 94-98. Since the

Provisional Application did not disclose that the

prior art could achieve such low levels of TSNA,

Delmendo felt “concern” as to whether the

information should be disclosed in an Information

Disclosure Statement (“IDS”) or in the patent

specification, as the information might be important

to the Patent Office. Jd. at 97. However, the PTO

was not informed that the prior art was at least

capable of yielding TSNA levels as low as that

purportedly yielded by practice of the alleged

invention. Moreover, as noted below, the concern on

the part of Delmendo was not communicated to,

indeed, affirmatively kept from, his successor patent

counsel after he was discharged by Star.

D. The 1999 Non-Provisional Application

The statement in the Provisional Application that

“fijt has been determined that this process as

applied to tobacco grown in the United States yields

tobacco products with high levels of TSNA” was

removed by Delmendo for the 1999 Non-Provisional

Application. Nevertheless, the Non-Provisional

Application that was ultimately filed still did not

reveal that the prior art could yield low levels of

53a

TSNA. Instead it “danced” around the matter,

stating:

[T]his [old] process does not appreciate, and does

not provide for, controlling the conditions within

the barn to achieve prevention or reduction of

TSNA’s. This technique has been largely replaced

in the United States by a different flue-curing

process.

Pl.’s Ex. 11 (hereinafter cited as “Non-Provisional

Application”) at 4.

Delmendo did not provide a reason why the

“determined” language had been replaced:

Q. And this was a change from the language that

we talked about earlier today, from the provisional!

application that had made reference to the high

TSNA levels?

A. Yes. This, now, that sentence was not deleted,

because I felt that it was incorrect. I still believe

that sentence to be correct in substance. But for

whatever reason, it was replaced with this

language, which is a correct characterization of

the differences between the claimed invention and

the prior art.

Tr. 101 (emphasis added).

Delmendo stated that the words “the process does

not appreciate” were used in reliance on information

provided by Williams and a technical advisor,

Mr. O’Donnell:

Q. And is it true that you relied on Mr. Williams

and Mr. O’Dennell as the _ source of that

information?

A. Yes. We were advised that in te prior art they

threw in tobacco into the curing barn without any

54a

regard for reducing TSNAs, whereas in the

claimed invention, what we were doing, or what

the inventor was doing, was to determine and

select one or more of the specified conditions in

order to ensure the reduction and prevention of

TSNAs.

Tr. 102.

The record confirms that Williams and patent

prosecution counsel were well aware throughout the

PTO process that the prior art had been capable of

providing low-TSNA tobacco and that the purported

benefit of the alleged invention was to enable one to

“ensure the reduction and prevention of TSNAs.” Jd.

The PTO was not, however, candidly and clearly

informed of this, but was led to believe that the prior

art could not achieve tobacco with low levels of

TSNA.

E. The Firing and Quarantine of Delmendo and his

firm

Just two days after the Non-Provisional

Application was filed, Star discharged Delmendo and

the Sughrue firm. Tr. 103. Paul Rivard (“Rivard”)

and the law firm of Banner & Witcoff (“the Banner

firm”) were hired to replace Delmendo and the

Sughrue firm in representing Williams during the

remaining prosecution of the Patents-in-Suit. /d. at

126.

There was no contact between the two firms, even

for the purpose of effecting a turnover of the

pertinent files. See id. at 104, 380. Instead, Scott

Flicker, a lawyer from Paul Hastings—the law firm

of Star's Chairman, Paul Perito—acted as a

“prophylactic intermediary” to transfer the files

between the two firms. See id. at 375-81. Flicker

55a

testified that he was a liaison, physically

transporting files from the Sughrue firm to the

Banner firm and acted as a communication conduit

between the two firms, but never set up a meeting

between the Banner and Sughrue firms. See id. No

plausible reason has been presented for this course

of action other than the obvious one—to keep the

Banner firm from learning what the Sughrue firm

knew and thought.

The Court finds, upon evaluation of the credibility

of witnesses and inferences from the evidence, that

isolation of the Banner firm from _ predecessor

counsel was part of an intentional effort to avoid

“tainting” the Banner firm with Delmendo’s

knowledge and concerns about disclosures to the

PTO. The change of counsel was arranged so as to

“insulate” replacement patent counsel from

Delmendo and the Sughrue firm.

There is a question as to whether the Burton

Letter was included in the Sughrue firm files that

were turned over to the Banner firm. Rivard could

not testify as to whether or not the Burton Letter

was, in fact, in the Sughrue firm file that was

delivered to him. He testified:

[Rivard:]. . . Initially, when we had received the

file, I had it put into a Banner Witcoff folder, as

you see here, essentially in the same order that we

received it from the Sughrue firm. It was

transferred into our file, put into our docketing

system, and at that point it was sent. to the file

room, and I did not—I did not think to request it

when I was working on the ‘649 patent.

56a

When I went through it initially, I did go through

it to see if there was any patents or articles, as I

mentioned, I did not see

This text is long and has been trimmed here. Open the source document for the complete record.