Appendix — Semiconductor Energy Laboratory Co. v. Samsung Electronics Co.
Supreme Court brief2001
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FILED
0 127 JUL21 200
o-
IN THE
Supreme Court of the United States
SEMICONDUCTOR ENERGY LABORATORY CO., LTD.,
Petitioner,
Vv.
SAMSUNG ELECTRONICS Co., LTD.,
SAMSUNG ELECTRONICS AMERICA, INC.,
AND SAMSUNG SEMICONDUCTOR, INC.,
Respondents.
Petition For Writ Of Certiorari to the
United States Court of Appeals
for the Federal Circuit
APPENDIX TO
PETITION FOR WRIT OF CERTIORARI
J. ALAN GALBRAITH
Counsel of Record
DAVID S. BLATT
WILLIAMS & CONNOLLY LLP
725 Twelfth Street, N.W.
Washington, D.C. 20005
(202) 434-5000
JOEL DAVIDOW
ABLONDI, FOSTER, SOBEN &
DAVIDOW, P.C.
1150 Eighteenth Street, N.W.
Ninth Floor
Washington, D.C. 20036-4129
(202) 296 3355
Attorneys for Petitioner
A REA RE OAT ETA: NICS ATONE OH
WILSON-EPES PRINTING Co., INC. — (202) 789-0096 -— WASHINGTON, D.C. 20001
iC2ADP
APPENDIX TABLE OF CONTENTS
Page
Appendix A:
Opinion of the United States Court of Appeals of
the Federal Circuit, March 2, 2000 ...........ssessesses la
Appendix B:
Order amending the Opinion of March 2, 2000,
RIE Ey SD <osineinnesexiacensnnsensenvuinnsonsahvenmnencdehill 28a
Appendix C:
Order amending the Opinion of March 2, 2000,
I i, SOOT sectniininireanricceitnitacceniniinninniiiniisaiainineninns 30a
Appendix D:
District Court Oral Opinion Denying Samsung’s
Motion For Summary Judgment To Declare The
’'636 Patent Invalid For Obviousness, March 6,
8 Dei ssiddienenpibcnwoaheiiniissaciovendiinsabisineskigiinneitiseshadindbeenbih 32a
Appendix E:
District Court Opinion Granting SEL’s Summary
Judgment Motion on Samsung’s RICO Counter-
CORI BRC BD, BOI wi sseciisncssisesrcsctensinsnlincescicnances 36a
Appendix F:
District Court Opinion Holding That The ‘636
Patent Was Unenforceable, April 15, 1998............ 43a
Appendix G:
District Court Opinion And Order Denying
Reconsideration Of Its April 15, 1998 Order,
BE 5 SEFC INUIT SSI MONLOD OES SE MESO 84a
ii
APPENDIX TABLE OF CONTENTS—Continued
Appendix H: Page
Order of the United States Court of Appeals for
the Federal Circuit, April 26, 2000, Denying
Motion For Rehearing En Banc ...............csccsseseeeees 100a
Appendix I:
35 U.S.C. § 6(a), Duties of [PTO] Commissioner
‘Eg; | Eee iommrbne oinine Naaerica eae Soheesint tate Leon “te 102a
Appendix J:
35 - USA. § S, LIB y CSTD) .ccrccsscikiassisentsciscumtins 103a
Appendix K:
PTO Rule 56 (37 C.F.R. §1.56), Duty to disclose
information material to patentability (1992)......... 104a
Appendix L:
PTO Rule 98 (37 C.F.R. §1.98), Content of
information disclosure statement (1992) .........0000+ 107a
Appendix M:
PTO, Duty of Disclosure, Notice of final
rulemaking, 57 Fed. Reg. 2021 (January 17,
NDZ) ns cssencocrasicsinicsnionnsesiadiaaiateuinauamamein acti 109a
Appendix N
PTO, Implementation of Rules on Information
Disclosure Statements, 1138 Official Gazette 37
CBlty TD, TO GE ) visccssscscisnscccstnconsipcieinasntinmineante 114a
Appendix O:
MPEP § 609, Information Disclosure Statement
CRY. Z, FOES TID aissavinicccniisisticassastncsnnaibaceienpa 115a
iii
APPENDIX TABLE OF CONTENTS
Appendix P: Page
MPEP § 901.05(d), Translation (Rev. 1, Sept.
1995) ..ccccocssssescercessssscssssereesenssarsensnssosssessensensensnsenees 125a
Appendix Q:
MPEP § 901.06(a), Scientific and Technical
Information Center (STIC) (Rev. 1, Sept. 1995)..... 126a
Appendix R
SEL’s Information Disclosure Statement (“IDS”). 132a
Appendix S
Canon '968 Patent .............ccccccccssessssceresersererereesees 152a
Appendix T
Pre-existing Partial Translation of Canon '968...... 163a
Appendix U
Claim 1, '636 Patent...........ccecsscerseeresssrssersesersenerers 165a
Appendix W
Testimony of Shumpei Yamazaki re Canon '968 .. 166a
la
APPENDIX A
(Federal Circuit Decision)
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
98-1377, 99-1103
SEMICONDUCTOR ENERGY LABORATORY CO., LTD.,
Plaintiff-Appellant,
Vv.
SAMSUNG ELECTRONICS Co., LTD.,
SAMSUNG ELECTRONICS Co. AMERICA, INC.
AND SAMSUNG SEMICONDUCTOR, INC.,
Defendants-Cross Appellants.
J. ALAN GALBRAITH, Williams & Connolly, of Wash-
ington, DC; and JoEL DAvipow, Ablondi, Foster, Sobin &
Davidow, P.C., of Washington, DC, argued for plaintiff-
appellant. With them on the brief was DAvip S. BLATT,
Williams & Connolly. Of counsel was MICHAEL T. BRADY,
Ablondi, Foster, Sobin & Davidow. P.C
DAVID J. HEALEY, Tobor, Goldstein & Healey L.L.P., of
Houston, Texas, argued for Defendants-cross appellants.
With him on the brief was GARY J. FISCHMAN. of counsel on
the brief were RICHARD L. STANLEY, Amold White &
Durkee, of Houston, Texas; and CECILIA H, GONZALEZ,
Howrey & Simon, of Washington. DC. Of counsel was BASIL
CARL CULVBA, Howrey & Simon.
Appealed from: United States District Court for the Eastern
District of Virginia
Judge Thomas Selby Ellis Il
2a
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
98-1377, 99-1103
SEMICONDUCTOR ENERGY LABORATORY CO., LTD.,
Plaintiff-Appellant,
V.
SAMSUNG ELECTRONICS Co., LTD.,
SAMSUNG ELECTRONICS AMERICA, INC.
AND SAMSUNG SEMICONDUCTOR, INC.,
Defendants-Cross Appellants.
DECIDED: March 2, 2000
Before MICHEL, Circuit Judge, SKELTON, Senior Circuit
Judge, and SCHALL, Circuit Judge.
[2] MICHEL, Circuit Judge.
On October 10, 1996, Semiconductor Energy Laboratory
Co., Ltd. (“SEL”) sued Samsung Electronics Co., Ltd.,
Samsung Electronics America, Inc., and Samsung
Semiconductor, Inc. (collectively “Samsung”) in the United
States District Court for the Eastern District of Virginia,
alleging that Samsung’s production and sales of active matrix
displays infringed SEL’s U.S. Patent No. 5,543,636 (“the
- '636 patent”) directed to semiconductor technology. The
district court first granted SEL’s motion for summary
judgment dismissing Samsung’s federal and New Jersey
Racketeer Influenced and [3] Corrupt Organizations
(“RICO”) counterclaims. See SEL v. Samsung, 4 F. Supp. 2d
473 (E.D. Va. 1998) (“SEL 1”). After a seven-day bench trial,
the district court also held the 636 patent to be unenforceable
3a
for SEL’S inequitable conduct before the Patent and
Trademark Office (“PTO”). See SEL v. Samsung, 4 F. Supp.
2d 477-(E.D. Va. 1998) (“SEL 2”); SEL v. Samsung, 24 F.
Supp. 2d 537 (ED. Va. 1998) (“SEL 3”). Both parties appeal.
Because we are not persuaded that the district court either
abused its discretion in holding the ‘636 patent unenforceable
for inequitable conduct or improperly dismissed Samsung’s
federal and New Jersey RICO counterclaims. we affirm.
BACKGROUND
SEL is a Japanese company specializing in the research
and development of semiconductor technology. SEL engages
in no manufacturing and supports its research efforts from
revenues from patent licensing. Since 1980, SEL has filed
over 5,000 patent applications worldwide and has been
awarded approximately 1,500 U.S. and foreign patents. Dr.
Shunpei Yamazaki, a solid state physicist and the president
and majority shareholder of SEL, is the named inventor or co-
inventor on most of SEL’s patents, including the ‘636 patent.
Entitled “Insulated Gate Field Effect Transistor”
(“IGFET”), the ‘636 patent claims a non-single crystal silicon
thin film transistor (“TFT”), a type of IGFET. Such TFTs can
be used to switch the pixels in an active matrix display unit
on or off. The TFT includes a source, a drain, a silicon nitride
gate insulator, an insulated substrate, and an intrinsic
amorphous silicon channel region. The channel region is
“sandwiched” between the gate insulator and the insulated
substrate. By limiting the level of oxygen, carbon, or nitrogen
in the channel region to an amount not exceeding 5 x 10"
atoms/cm’, the [4] claimed invention greatly improves the
TFT’s electrical properties and consequently overcomes
potential deficiencies, such as hysteresis (blurring).
The application for the ‘636 patent was filed on June 7,
1995, and the ‘636 patent itself issued on August 6, 1996;
4a
SEL alleges a much earlier priority date of May 18, 1984,
however. Gerard Ferguson, SEL’s patent attorney, prosecuted
the application for the ‘636 patent and its ancestor
applications, except for a brief period when Dr. Yamazaki
revoked his power of attorney because Mr. Ferguson sought
to submit certain material prior art references to the PTO.
The '636 patent began as a former 37 C.F.R. § 1.60 (1995)
(“Rule 60”) divisional application, and thus had its own
Information Disclosure Statement (“IDS”) ' The IDS, filed on
November 15, 1995, was fifteen pages long. The IDS was
accompanied by a Form PTO-1449 listing ninety references
that it wished to make of record, each of which the examiner
initialed. These references included Japanese Laid-Open
Application No. 56-135968, assigned to Canon K.K. (“the
Canon reference’). In the IDS, SEL submitted the entire 29-
page Canon reference in its original Japanese, a concise
explanation of its relevance, and an existing one-page partial
English translation from a prior unrelated patent application.
The concise explanation succinctly described the Canon
reference as disclosing “the use of silicon nitride for a gate
insulating layer of a thin film transistor.” The one-page partial
translation covered four short sections of the Canon reference
describing a TFT structure, a semiconductor layer consisting
of [5] amorphous silicon, a gate electrode coated with silicon
nitride, and an empirical observation of the effect of
substituting silicon oxide for silicon nitride. SEL also made of
record three references that a potential licensee, IBM, had
brought to its attention as important prior art for obviousness
purposes: a 1983 article by C.C. Tsai, entitled “Amorphous Si
Prepared in a UHV Plasma Deposition System” (“the Tsai
' Under former Rule 60, a divisional application included a copy of the
previous application, but did not include the previous file wrapper. By
contrast, a 37 C.F.R. § 1.62 (1995) (“Rule 62”) continuation application
required the application to “utilize the file wrapper and contents of the
prior application.” 37 C.F.R. § 1.62(e).
Sa
article”), and two of Dr. Yamazaki’s solar cell patents,
Japanese Patent Laid-Open Application Nos. 59-35423 (“the
‘423 application”) and 59-35488 (“the '488 application”). The
Tsai article and the ‘423 and ‘488 applications all teach the
reduction of impurities below the level claimed in the '636
patent.
On October 10, 1996, SEL filed a complaint in the United
States District Court for the Eastern District of Virginia
alleging that Samsung's active matrix displays and computers
having such displays infringed three of SEL’s semiconductor
patents: the ‘636 patent, U.S. Patent No. 5,521,400 (“the ‘400
patent”), and U.S. Patent No. 5,349,204 (“the '204 patent”).”
Samsung denied infringement and asserted numerous
affirmative defenses, including non-enablement, obviousness,
best mode violation, and inequitable conduct. Samsung
subsequently counterclalmed, charging SEL with federal and
New Jersey RICO, antitrust, and unfair competition
violations.
SEL moved for summary judgment on Samsung’s
inequitable conduct defense and on Samsung’s RICO,
antitrust, and unfair competition counterclaims. The district
court granted SEL’s motion on the RICO and antitrust
counterclaims, but denied it on the inequitable conduct
defense and the unfair competition counterclaim.
[6] After a seven-day bench trial, the district court found the
'636 patent to be unenforceable for inequitable conduct under
two alternative theories. First, the district court determined
that, by submitting a concise explanation and a one-page
partial translation of the Canon reference that were accurate
but misleadingly incomplete, SEL had intentionally withheld
the Canon reference from the PTO. See SEL 2, 4 F. Supp. 2d
2 On March 4, 1998, SEL by stipulation amended its complaint to
remove its allegations that Samsung was infringing the ‘400 and ‘204
patents. leaving the '636 patent the only patent-in-suit.
6a
at 484. The concise statement, for example, identified only
the silicon nitride gate as pertinent, and neglected to discuss
the Canon reference’s admonition to avoid impurities.
Second, the district court determined that, by
mischaracterizing the Tsai article as applying primarily to
solar cells rather than TFTs in arguments to the PTO. SEL
had intentionally misled the examiner into believing that the
Tsai articie was not material. See id. at 486.
The district court cited multiple facts as demonstrating SEL’s
deceitful intent. For example, Dr. Yamazaki could not
satisfactorily account for his misstatement of the level of
impurities discussed in U.S. Patent No. 4,766,477 to
Nakagawa (“the Nakagawa _ reference”) during the
prosecution of U.S. Patent No. 5, 315, 132 (“the ‘132
patent”), which issued on an ancestor application to that of
the ‘636 patent.’ The district court similarly discredited Dr.
Yamazaki’s claim that he did not comprehend the
significance of the Tsai article, since he had described a
speech by Dr. Tsai discussing her work as “spectacular,” had
requested the article from Dr. Tsai in October 1983, and had
cited it [7] in a 1984 article in the Journal of Non-Crystalline
Solids. Moreover, Dr. Yamazaki’s own '423 and ‘488
applications had expressly stated that the benefits of the low
levels of impurities in solar cells also applied to TFTs.
Though Dr. Yamazaki had submitted the Tsai article and his
‘423 and '488 applications to the PTO during the prosecution
of the application for the ‘636 patent and the ‘455 application,
the district court noted that he did so only after IBM, a
potential licensee, expressly called its attention to these
* SEL 2 provides a genealogy chart clarifying the relationships between
the '132 patent, the ‘636 patent, and interim applications. See 4 F. Supp.
2d at 497. In short, the '636 patent resulted from a divisional application
of U.S. Patent Application No. 425,455 (“the '455 application”), which in
turn was a continuation of U.S. Patent Application No. 214,494 (“the '494
application”), which in turn was a divisional application of the application
which resulted in the '132 patent.
7a
references. Thus, the district court concluded that “[t]he
evidence demonstrate[d] a sophisticated, subtle, and
consistent effort to hide the ball from the PTO in a manner
plainly at odds with an applicant’s duty of candor, good faith,
and honesty.” SEL 2. 4 F. Supp. 2d at 496.
In response to SEL’s motion to reconsider SEL 2, the
district court issued a new opinion correcting its previous
discussion of the Tsai article. See SEL 3, 24 F. Supp. 2d at
537. The district court recognized that SEL’s
misrepresentations with respect to the Tsai reference had
actually occurred during SEL’s prosecution of the ‘455 and
'494 applications, the two applications immediately preceding
the application that resulted in the ‘636 patent, and were not
repeated during the prosecution of the application that
resulted in the ‘636 patent. Relying upon a doctrine of
“infectious unenforceability” discussed, but not applied, in
SEL 2, 4 F. Supp. 2d at 493, however, the district court held
that SEL’s misrepresentations during the prosecution of the
ancestor ‘455 and ‘494 applications provided an alternative
basis for rendering the ‘636 patent unenforceable. See SEL 3,
24 F. Supp. 2d at 545.
[8] DISCUSSION
I. Inequitable Conduct
Patent applicants are required to prosecute patent
applications with candor, good faith, and honesty. See Molins
PLC v. Textron, Inc., 48 F.3d 1172, 1178, 33 USPQ2d 1823,
1826 (Fed. Cir. 1995). “{l]}nequitable 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.” id. The
alleged infringer, whether a defendant in a patent
infringement suit or a declaratory judgment plaintiff must
demonstrate by clear and convincing evidence both that the
_
8a
information was material and that the conduct was intended
to deceive. See id.
The court first discerns whether the withheld references or
misrepresentations satisfy a threshold level of materiality and
whether the applicant’s conduct satisfies a threshold showing
of intent to deceive. See id. If these thresholds are satisfied,
the trial court balances materiality and intent to determine
whether the equities warrant the conclusion that inequitable
conduct occurred. See id. at 1178, 33 USPQ2d at 1827. “In
light of all circumstances, an equitable judgment must be
made concerning whether the applicant’s conduct is so
culpable that the patent should not be enforced. “ id.
We may reverse a determination of inequitable conduct
only if it is based on “clearly erroneous findings of fact or on
a misapplication or misinterpretation of applicable law, or
evidences a clear error of judgment on the part of the district
court.” Jd. We review the district court’s subsidiary
determinations of materiality and intent for clear error, and
may disturb them only if we are left with “a definite and firm
conviction” [9] that the district court committed a mistake. /d.
We review a district court’s ultimate determination of
inequitable conduct under an abuse of discretion standard.
See id.
A. Materiality
37 C.F.R. § 1.56 (1995) (“Rule 56’’) defines information as
material to patentability when:
[I]t 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 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:
9a
(i) Opposing an argument of unpatentabiiity relied
on by the Office, or
(ii) Asserting an argument of patentability.
A withheld reference may be highly material when it
discloses a more complete combination of relevant features,
even if those features are before the patent examiner in other
references. Molins, 48 F.3d at 1180, 33 USPQ2d at 1828.
Reiterating many of its arguments before the district court,
SEL contends that the untranslated portions of the Canon
reference were not material to patentability because they were
cumulative to other information. More particularly, SEL
alleges that the Canon reference, only discloses a
conventional IGFET device and generally teaches the
avoidance of impurities on the surface of the intrinsic
semiconductor layer. SEL also contends that the Canon
reference, whether alone or combined with other references.
would not have established a prima facie case of
unpatentability, since it does not disclose the maximum
impurity level of oxygen, nitrogen, or carbon in the channel
region for overcoming the hysteresis problem.
[10] We discern no clear error in the district court’s finding
that the Canon reference was material. The district court cited
several reasons for finding the Canon reference to be material
to patentability. First, the district court found that the Canon
reference was not cumulative, since the untranslated portions
of Canon contained a more complete combination of the
elements claimed in the ‘636 patent than anything else before
the PTO. Specifically, the Canon reference discloses the
intrinsic amorphous silicon layer, the silicon nitride gate
insulator, the sandwich structure, and the key admonition to
avoid impurities in semiconductor materials, each of which is
claimed by the ‘636 patent. Second, the district court found
that the Canon reference established a prima facie case of
unpatentability in combination with other information,
particularly the teachings of the Tsai article or Dr.
10a
Yamazaki’s own ‘423 or ‘488 applications. As Samsung’s
expert, Dr. Fonash, explained, a fully translated Canon
reference would have provided a “good blueprint” for making
the exact device described by the ‘636 patent. Consequently,
taken together with the Tsai article, the Canon reference
would have rendered obvious the asserted claims of the ‘636
patent.
B. Intent
“Intent need not be proven by direct evidence; it is most
often proven by a showing of acts, the natural consequence of
which are presumably intended by the actor.” Molins, 48 F.3d
at 1180. 33 USPQ2d at 1828-29. Generally, intent must be
inferred from the facts and circumstances surrounding the
applicant’s conduct. id. at 1180-81, 33 USPQ2d at 1829.
“Since the fact-finder has personally heard and observed the
demeanor of witnesses, we accord deference to the fact-
finder’s assessment of a witness’s credibility and character.”
ki. at 1131 , 33 USPQ2d at 1829.
[11] Proof of high materiality and that the applicant knew or
should have known of that materiality makes it difficult to
show good faith to overcome an inference of intent to
mislead. See Critikon. Inc. v. Becton Dickinson Vascular
Access, Inc.. 120 F.3d 1253, 1257, 43 USPQ2d 1666, 1669
(Fed. Clr. 1997). “The more material the omission or the
misrepresentation, the lower the level of intent required to
establish inequitable conduct, and vice versa.” id. at 1256. 43
USPQ2d at 1668. In evaluating whether the district court
Clearly erred in its factual finding of deceitful intent, we must
assure ourselves that the district court did not overlook
mitigating factors. See Akron Polymer Container Corp. v.
Exxel Container, Inc., 148 F.3d 1380, 1384, 47 USPQ2d
1533, 1536 (Fed. Cir. 1998).
Again reiterating its arguments to the district court, SEL
argues that it did not intend to mislead the examiner by
lla
submitting only a partial translation of the Canon reference
and a concise statement not addressing its key teachings, such
as its admonition to avoid impurities. SEL contends that Dr.
Yamazaki subjectively believed that the Canon reference was
valuable only for its disclosure of the conventional IGFET
structure.
As evidence of its good faith, SEL emphasizes that it
submitted the entire Canon reference in its original Japanese.
SEL also underscores the fact that it meticulously complied
with 37 C.F.R. § 1.98(a),(c)* (1995) by providing an accurate,
concise [12] explanation of the relevance of the Canon
reference and a pre-existing partial translation. SEL further
claims that Manual of Patent Examining Procedure (“MPEP”)
§ 609 establishes “permissive,” “non-burdensome,” “free of
risk,” and “gently suggestive at best, and certainly not
mandatory” standards for foreign language references. For
example, SEL notes that MPEP § 609 does not require that
the applicant discuss differences between the cited
information and the claims. See MPEP § 609A(3); see also
4 4 Rule 98 (“Content of information disclosure statement”) provides in
pertinent part:
(a) Any information disclosure statement filed under § 1.97 shall
include:
(3) A concise explanation of the relevance, as it is presently
understood by the individual designated in § 1.56(c) most
knowledgeable about the content of the information, of each
patent, publication, or other information listed that is not in
the English language. The concise explanation may be either
separate from the specification or incorporated therein.
(c) ... if a written English-language translation of a non-English
document, or portion thereof, is within the possession, custody,
or control of, or is readily available to any individual designated
in § 1.56(c), a copy of the translation shall accompany the
Statement.
(emphasis added.)
12a
Duty of Disclosure, 57 Fed. Reg. 2021, 2026, cmts. 24 & 26
(1992) (stating that Rule 56 does not require that applicant
combine references against its own claims or analyze
references.). According to SEL, its technical compliance with
the FTO Rules should weigh against an inference of intent to
deceive the examiner. Cf Northern Telecom, Inc. v. Datapoint
Corp., 908 F.2d 931, 939, 15 USPQ2d 1321, 1327 (Fed. Cir..
1990) (holding that amendment made as of right under MPEP
weighs against an inference of intent to deceive). As further
proof of its good faith, SEL highlights the fact that it
voluntarily provided the Canon reference to the PTO without
any prodding from a licensee (e.g., IBM).
[13] We discern no clear error in the district court’s finding
that SEL willfully misrepresented the Canon reference. As a
general matter, we first note that the district court found Dr.
Yamazaki and SEL’s other witnesses to be not credible.
Instead, the district court credited the testimony of Samsung’s
witnesses over that of SEL’s whenever there was a conflict.
The district court further found that Dr. Yamazaki, a solid
state physicist whose native language is Japanese, understood
the materiality of the Canon reference. The district court also
determined that Dr. Yamazaki knew that a more complete
translation or concise explanation of the relevance of the
Canon reference would decrease the likelihood of the '636
patent being issued, given his understanding of the Canon
reference and his immense experience in prosecuting patents.
The district court thus concluded that Dr. Yamazaki must
have consciously decided which sections to reveal to the PTO
through SEL’s partial translation.
Though SEL repeatedly highlights those actions that are
not improper, SEL cannot overcome a finding of deceitful
intent merely by showing that it did certain things properly.
Rather, SEL must explain its conduct in failing to provide a
more complete translation or concise explanation of the
Canon reference. This it simply does not do. As the district
13a
court noted, “the record as a whole reflects a clear pattern and
practice of initial disclosure, followed by incremental
disclosure only when compelled by the circumstances to do
so, followed, at times, by mischaracterization.” SEL 2, 4 F.
Supp. 2d at 496.
SEL’s technical compliance with Rule 98 and its entreaty
to MPEP § 609A(3) lend it little aid. Though Rule 98 requires
that the applicant provide any existing translation of a foreign
reference, Rule 98 provides neither a safe harbor nor a shield
[14] against allegations of inequitable conduct. As the district
court explained, Rule 98 merely “provides a floor for required
submissions of translations of foreign applications, not a
ceiling; it is by no means an excuse oF license for concealing
material portions of a prior art reference.” SEL 3, 24 F. Supp.
2d at 541. The district court found that Dr. Yamazaki knew
that the Canon reference disclosed the important admonition
to avoid impurities and that the preexisting, one-page partial
translation did not discuss this teaching. Given the critical
absence of this teaching from the partial translation and his
knowledge of this absence, “[i]t was incumbent upon [Dr.
Yamazaki] to provide the PTO with sufficient information for
a reasonable examiner to consider the [submission] in
context, not with a selective and misleading disclosure. The
inventor{] failed to do that and cannot post facto hide behind
the MPEP guidelines to argue that what [he] did with a
purpose should be disregarded.” Refac Int'l, Ltd. v. Lotus
Dev. Corp:, 81 F.3d 1576, 1584, 38 USPQ2d 1665, 1672
(Fed. Cir. 1996).
Similarly, MPEP § 609A(3) merely indicates that “[t}he
concise explanation may indicate that a particular figure or
paragraph of the patent or publication is relevant to the
claimed invention. It might be a simple statement pointing to
similarities between the item of information and the claimed
invention.” Thus, though MPEP § 609A(3) allows the
applicant some discretion in the manner in which it phrases
14a
its concise explanation, it nowhere authorizes the applicant to
intentionally omit altogether key teachings of the reference.
If, as SEL suggests, the concise statement requirement
allowed applicants to selectively disclose what they know as
long as what they selected for disclosure was accurate,
applicants could easily mislead the examiner by explaining all
but one of the relevant elements, thereby leaving the
examiner with the impression [15] that the reference did not
anticipate, render obvious, or otherwise make unpatentable
the claimed invention.
C. Failure to Disclose
Finally, SEL contends that, because it submitted the entire
untranslated Canon reference to the PTO, it cannot be deemed
to have withheld the reference from the examiner. See Scripps
Clinic & Research Found. v. Genentech, Inc., 927 F.2d 1565,
1582, 18 USPQ2d 1001, 1015 (Fed. Cir. 1991) (“When a
reference was before the examiner. . . , it can not be deemed
to have been withheld from the examiner.”’). SEL notes that
the PTO does not require applicants to translate foreign
references into English, See MPEP § 609C(2) (“The
examiner should not require that a translation be filed by the
applicant.”). SEL thus claims that it cannot be fau!ted for not
providing a more complete translation of the Canon
reference.
SEL argues that the examiner, who is presumed to have
done his job correctly, must also be presumed to have read
and understood the Canon reference in its native Japanese.
See Molins, 48 F.3d at 1184, 33 USPQ2d at 1832 (absent
proof to the contrary, court assumed that examiner had
considered a post-issuance, English-language submission
under 37 C.F.R. § 1.501 that the examiner had initialed). SEL
emphasizes that the PTO maintains a staff of translators and
that an examiner “may request translations throughout the
15a
examination process. “Gambro Lundia AB v. Baxter
Healthcare Corp., 110 F.3d 1573, 1582, 42 USPQ2d 1378.
1386 (Fed. Cir. 1997). :
We perceive no clear error in the district court’s conclusion
that SEL effectively failed to disclose the Canon reference to
the PTO by providing a one-page, partial translation of the
entire 29-page application. By submitting the entire
untranslated [16] Canon reference to the PTO along with a
one-page, partial translation focusing on less material
portions and a concise statement directed to these less
material portions, SEL left the examiner with the impression
that the examiner did not need to conduct any further
translation or investigation. Thus, SEL deliberately deceived
the examiner into thinking that the Canon reference was less
relevant than it really was, and constructively withheld the
reference from the PTO. SEL’s submission hardly satisfies
the duty of candor required of every applicant before the
PTO.
SEL’s contention that the examiner must have both read
and fully understood the entire untranslated Canon reference
based on his having read the misleadingly incomplete one-
page translation and concise statement is absurd. Though the
examiner is indeed presumed to have done his job correctly,
there is no support in the law for a presumption that the
examiner will understand foreign languages such as Japanese
or will request a costly complete translation of every
submitted foreign language document, particularly in the
absence of any reason to do so. Rather, as MPEP § 609C(2)
reveals, the examiner’s understanding of a foreign reference
is generally limited to that which he or she can glean from the
applicant’s concise statement:
Information which complies with requirements as
discussed in this section but which is in a non-English
language will be considered in view of the concise
explanation submitted (A (3) above) and insofar as it is
16a
understood on its face; e.g. drawings, chemical
formulas, in the same manner that non-English language
information in Office search files is considered by
examiners in conducting searches. The examiner need
not have the information translated unless it appears
necessary to do so. The examiner will indicate that the
non-English language information has been considered
in the same manner as consideration is indicated for
information submitted in English. The examiner should
not require that a translation be filed by applicant. The
examiner should not make any [17] comment such as
that the non-English language information has been
considered to the extent understood since this fact is
inherent.
(emphasis added). Consequently, while the examiner’s initials
require that we presume that he or she considered the Canon
reference, this presumption extends only to the examiner’s
consideration of the brief translated portion and the concise
statement.
SEL’s contention that the PTO should not require
applicants to translate all foreign references into English
misses the critical point. The duty at issue in this case is the
duty of candor, not a duty of translation. The duty of candor
does not require that the applicant translate every foreign
reference, but only that the applicant refrain from submitting
partial translations and concise explanations that it knows will
misdirect the examiner’s attention from the reference’s
relevant teaching. Here, the desirability of the examiner
securing a full translation was masked by the affirmatively
misleading concise statement and one-page translation.
Thus, we discern no clear error in the district court’s
findings with respect to materiality and intent, and hold that
the district court did not abuse its discretion in finding the
‘636 patent to be unenforceable for SEL’s inequitable conduct
in providing a misleadingly incomplete, partial translation of
17a
the Canon reference and a narrow and incomplete concise
statement. Given our holding that the ‘636 patent is
unenforceable in light of SEL’s inequitable conduct with
respect to the Canon reference, we expressly decline to reach
the district court’s alternative determination of “infectious
unenforceability” based on SEL’s misconduct during the
prosecution of the ‘455 and '494 applications.
Il. Federal and New Jersey RICO Counterclaims
Samsung cross-appeals the district court’s grant of
summary judgment dismissing its federal and New Jersey
RICO counterclaims. We review a grant of summary
judgment without deference, reapplying the same legal
standard as the district court to the same record before it and
drawing all reasonable inferences in favor of the non-moving
party, here Samsung. See Ford Motor Co. v. United States,
157 F.3d 849, 854 (Fed. Cir. 1998).
A. Federal RICO 3
The asserted sections of the federal RICO statute provide:
(a) It shall be unlawful for any person who has received
any income derived, directly or indirectly, from a
pattern of racketeering activity . . . to use or invest,
directly or indirectly, any part of such income, or the
proceeds of such income, in acquisition of any interest
in, or the establishment or operation of, any enterprise
which is engaged in, or the activities of which affect,
interstate or foreign commerce.
(c) It shall be unlawful for any person employed by or
associated with any enterprise engaged in, or the
activities of which affect, interstate or foreign
commerce, to conduct or participate, directly or
indirectly, in the conduct of such enterprise’s affairs
18a
through a pattern of racketeering activity or collection
of unlawful debt.
18 U.S.C. § 1962. Section 1962(a) makes it illegal to invest
the income of racketeering activity. Section 1962(c), by
contrast, makes it illegal to engage in racketeering activity.
Section 1964(c) provides a person with a civil remedy for
injuries to business or property from violations of Section
1962.
A RICO plaintiff must demonstrate a “pattern of
racketeering activity” consisting of at least two instances of
racketeering activity. 18 U.S.C. § 1961(5); Mylan Labs. Inc.
[19] v. Matkari, 7 F.3d 1130, 1135 (4th Cir. 1 993). Mail and
wire fraud both qualify as predicate acts under the federal
RICO statute. See 18 U.S.C. § 1961(1) The mail fraud statute
makes illegal the use of U.S. mail for “any scheme or artifice
to defraud, or for obtaining money or property by means of
false pretenses.” 18 U.S.C. § 1341 (emphasis added).
Similarly, the wire fraud statute makes illegal the use of
“wire, radio, or television communication” for “any scheme
or artifice to defraud, or for obtaining money or property by
means of false or fraudulent pretenses, representations, or
promises.” 18 U.S.C. § 1343.
Samsung alleges a “three-party pass-through fraud
structure” wherein SEL committed numerous acts of mail
and/or wire fraud on the PTO. Samsung first claims that, long
before the ‘636 patent issued, SEL targeted Samsung as a
defendant for a patent infringement suit Samsung alleges that
a competitor of Samsung, a “VIP” client of SEL, then agreed
to pay SEL’s litigation costs in its suit against Samsung.
According to Samsung, SEL made material mis-
representations to the PTO using the U.S. mail and withheld
material references from the PTO. Samsung claims that this
fraud resulted in the improper issuance of the three originally
asserted patents, which SEL in turn has employed to extort
Samsung and others. Although Samsung concedes that the
19a
direct fraud was perpetrated upon the PTO, Samsung asserts
that it was the indirect but intended victim of this scheme. As
a result of this litigation, Samsung claims to have spent
millions of dollars on legal fees and design-around efforts and
to have sustained injury to its relationships with its customers,
who sought assurances that Samsung will indemnify them
against potential patent infringement liability claims brought
by SEL.
[20] The district court cited Mylan Labs., Inc. v. Akzo. N.V.,
710 F. Supp. 1053, 1071-73 (D. Md. 1991 ), affd sub nom.
Mylan Labs., Inc. v. Matkani, 7 F.3d 1130 (4th Cir. 1993), as
foreclosing inequitable conduct during patent prosecution
from qualifying as a required predicate act. In Akzo, the RICO
plaintiff alleged that the defendants committed predicate acts
of mail fraud against the Food and Drug Administration
(“FDA”) in obtaining its approval of abbreviated new drug
applications (“ANDAs”). The Akzo court ruled that ANDAs,
as unissued licenses, were not property in the government's
hands for mail fraud purposes, and thus the defendant’s
conduct before the FDA did not constitute predicate acts for
purposes of the federal RICO statute. See id. at 1072-73. The
district court viewed ANDAs and patents to be
indistinguishable.
On appeal, Samsung distinguishes Akzo as involving
licenses, in which the government has no financial interest
and which therefore are not property. By contrast, under
federal patent law and Supreme Court precedent, an issued
patent constitutes property. See 35 U.S.C. § 261 (“[P]atents
shall have the attributes of personal property.”); Hartford-
Empire Co. v. United States, 323 U.S. 386, 415 (1945).
Samsung notes that 35 U.S.C. § 261 does not expressly
distinguish between a patent in the hands of the patentee or
the government. In fact, the federal government is subject to
suit when it infringes a patent that it has granted. See 28
U.S.C. § 1498(a).
20a
Alternatively, Samsung contends that a patent is actually
more closely analogous to a franchise than a license. Whereas
a license is a promise by the government not to interfere, see
Toulabi v. United States, 875 F.2d 122, 125-26 (7th Cir.
1989), a franchise is a right that belongs to the government
when conferred upon a citizen and that inheres in the
sovereign power, see Borre v. United States, 940 F.2d 21 5,
220 (7th [27] Cir. 1991). The Seventh Circuit has held that
fraud in procuring a franchise is subject to the mail fraud
statute. See Borre, 940 F.2d at 220. According to Samsung, a
patent, like a franchise, enables its owner to exclude others,
including the government.
We apply our own law to determine whether SEL’s
conduct before the PTO qualifies as mail fraud for purposes
of the predicate acts requirement of the federal RICO statute.
See Pro-Mold & Tool Co. v. Great Lakes Plastics. Inc., 75
F.3d 1568, 1574, 37 USPQ2d 1626, 1631 (Fed. Cir. 1996)
(holding that, though we do not have exclusive jurisdiction
over unfair competition claims, our own circuit law
nonetheless determines when inequitable conduct also
constitutes unfair competition). We agree with the district
court that inequitable conduct before the PTO cannot qualify
as an act of mail fraud or wire fraud for purposes of the
predicate act requirement. In the context of the mail fraud
statutes, “the words ‘to defraud’ commonly refer ‘to
wronging one in his property rights by dishonest methods or
schemes’ and ‘usually signify the deprivation of something of
value by trick, deceit, chicane or overreaching.’ ” McNally v.
United States, 483 U.S. 350, 358 (1987) (quoting
Hammerschmidt v. United States, 265 U.S. 182, 188 (1924)).
* We note that, in 1988, Congress added 18 U.S.C. § 1346 in response
to McNally. Section 1346 provides:
For purposes of this chapter, the term “scheme or artifice to
defraud” includes a scheme or artifice to defraud another of the
intangible right of honest services.”
On appeal, however, Samsung does not argue that SEL’s conduct before
the PTO was intended to “defraud another of the intangible right of honest
2la
In this case, however, the PTO has not been defrauded of
property. Although that “a patent is property, protected
against appropriation both by individuals [22] and by
government, has long been settled,” Hartford-Empire, 323
U.S. at 415, an application that has not yet matured into a
patent cannot properly be deemed government property.
We also reject Samsung’s attempt to analogize a patent to a
franchise for purposes of the mail and wire fraud statutes. A
franchise involves a transfer of extant rights previously held
exclusively by the sovereign. See California v. Central Pac.
R. Co., 127 U.S. 1, 40 (1888). Examples of franchises include
cable television and public utilities. See Borre, 940 F.2d at
220. By contrast, the patent right to exclude a party from
practicing a particular invention is never held by the
sovereign, but only by the patentee after issuance.
In short, Samsung has failed to satisfy the predicate act
requirement for its federal RICO counterclaims, as SEL’s
inequitable conduct did not “defraud” the government of any
“property” under either the federal mail or wire fraud statutes.
Consequently, we hold that the district court properly granted
summary judgment dismissing Samsung’s federal RICO
claims.
B. New Jersey RICO
The district court noted that the New Jersey RICO statute
was modeled after the federal statute, see State v. Ball, 661
A.2d 251, 258 (N.J. 1995), and that its relevant sections,
N.J.S.A. § 2C:41-2(a),(c), also require proof of a pattern of
racketeering activity. In view of its rejection of Samsung’s
mail and wire fraud allegations as predicate acts with respect
to the federal RICO counterclaims, the district court
services,” and thus we do not address the possibility of such defrauding
here.
22a
concluded that Samsung’s New Jersey RICO counterclaims
were similarly deficient.
[23] On appeal, Samsung argues that racketeering under the
New Jersey RICO Act includes New Jersey crimes as well as
“equivalent crimes under the laws of any other jurisdiction,”
N.J.S.A. § 20:41-l.a. Samsung notes that qualifying predicate
acts under the New Jersey statute would include forgery and
fraudulent practices, see N.J.S.A. §2C:41-1.a(1)(O), offering
a false instrument for filing, see N.J.S.A. § 2C:21-3.b, and
making false statements to PTO examiners in violation of
federal penal provisions such as 18 U.S.C. § 1001.° Samsung
contends that the district court ignored these additional state
and federal violations and hence improperly dismissed its
state RICO claims.
SEL responds that, regardless of the expanded scope of
predicate acts under the New Jersey RICO statute, we can
still affirm the district court’s dismissal of the NewJersey
RICO claims on the alternative ground of federal preemption.
In dismissing Samsung’s federal RICO counterclaims, the
district court suggested that RICO claims and the inequitable
conduct defense are mutually exclusive remedies. The district
court noted that the affirmative defense of inequitable
conduct supplies an adequate remedy by rendering the patent
° 18 U.S.C. § 1001 provides:
Whoever in any matter within the jurisdiction of any department or
agency of the United States knowingly or willfully falsifies,
conceals, or covers up by any trick, scheme, or device a material
fact, or makes any false, fictitious or fraudulent statements on
representations, or makes or uses any false writing or document
knowing the same to contain any false, fictitious or fraudulent
statement on entry, shall be fined not more than $10,000 or
imprisoned not more than five years, or both.
23a
unenforceable and possibly also entitling the alleged infringer
to attorney fees under 35 U.S.C. § 285.
[24] Samsung disputes that the federal patent laws preempt its
state RICO counterclaims, noting that the patent statute
nowhere expressly excludes RICO remedies. Samsung claims
that SEL’s misconduct is not a “garden-variety” instance of
inequitable conduct, and emphasizes the Supreme Court’s
recognition of concurrent RICO and state law remedies for a
single activity. See Humana, Inc. v. Forsyth, 525 U.S. 299,
303 (1999) (holding that the McCarran-Ferguson Act, which
bars application of a federal law in the face of a state law
enacted “for the purpose of regulating the business of
insurance,” did not preclude the concurrent assertion of the
federal RICO statute and Nevada insurance law). Samsung
also notes that the New Jersey RICO Act states that “[t}he
remedies provided in this act shall be cumulative with each
other and other remedies at law.” N.J.S.A. § 2C:41-6.1.
Samsung underscores the broad remedies available under
the RICO statutes. With respect to monetary relief, the patent
laws would permit only the recovery of attorney fees, while
the New Jersey RICO statute would allow the prevailing
plaintiff “threefold any damages he sustains and the cost of
the suit, including a reasonable attorney’s fee, costs of
investigation and litigation.” N.J.S.A. § 2C:41-4.c. Samsung
asserts that its alleged damages, which include design-around
costs and loss of goodwill, are a recognized form of RICO
damages. See. e.g., Khuana v. Innovative Health Care Sys.,
Inc., 130 F.3d 143, 150-51 (Sth Cir. 1997), cert. granted,
judgment vacated, and case dismissed as moot, 119 S. Ct. 442
(1998).
Finally, Samsung analogizes its New Jersey RICO
counterclaims to the state tort claims held not to be preempted
in Dow Chem. Co. v. Exxon Corp., 139 F.3d 1470, 46
USPQ2d 1120 (Fed. Cir. 1998). in Dow, we held that the state
law claim of intentional [25] interference with actual and
24a
prospective contractual relationships was not preempted by
federal patent law, even though the claim was based partly on
acts of alleged inequitable conduct before the PTO. We
reasoned that because the state cause of action also included
elements not found in the patent infringement defense of
inequitable conduct, but in the marketplace against
inhabitants of the state, the state tort as applied was not an
impermissible attempt to offer patent-like protection. See id.
at 1477, 46 USPQ2d at 1126. Samsung claims that, like the
state claim in Dow, Its RICO counterclaims allege “additional
elements not found in the federal patent law cause of action,”
id. at 1473, 46 USPQ2d at 1123, such as SEL’s targeting of
Samsung and its eventual filing of this lawsuit.
We agree with SEL that the federal patent laws preempt
Samsung’s New Jersey RICO counterclaims. As applied, the
state RICO counterclaims in this case are more closely
analogous to the state abuse of process counterclaim held to
be preempted in Abbott Labs. v. Brennan, 952 F.2d 1346, 21
USPQ2d 1192 (Fed. Cir. 1991), than the intentional
interference with contractual relationship counterclaim in
Dow. In Abbott, the applicant had committed inequitable
conduct by backdating a request for an extension of time and
falsely averring that the request had been timely made,
resulting in his loss of priority. This court concluded that “the
federal administrative process of examining and issuing
patents, including proceedings before the PTO’s boards, is
not subject to collateral review in terms of the common law
tort of abuse of process.” id. at 1357, 21 USPQ2d at 1201.
Like the state abuse of process claim in Abbott, “the wrong
alleged and for which state law tort damages [are] sought [is]
no more than bad faith misconduct before the [26] PTO.”
Dow, 139 F.3d at 1477, 46 USPQ2d at 1126. As pleaded by
Samsung, its New Jersey RICO counterclaims occupy a field
identical in scope with the inequitable conduct defense. If the
conduct constituting inequitable conduct, without more, could
25a
be considered predicate acts under federal or state RICO law,
then every accused infringer asserting an inequitable conduct
defense would also bring such a RICO counterclaim. An
additional state cause of action predicated so squarely on the
acts of inequitable conduct would be “contrary to Congress’
preewptive regulation in the area of patent law.” Abbott, 952
F.2d at 1357, 21 USPQ2d at 1201.
Samsung’s contention that its New Jersey RICO
counterclaims allege additional elements not found in the
federal patent law cause of action for inequitable conduct is
inaccurate. Samsung conveniently ignores the distinction
between acts that may be proven as part of a state RICO
violation and those which must be proven for liability. As
applied by Samsung, the New Jersey RICO statute does not
contain as necessary elements of the offense the sorts of acts
beyond misrepresentations or willful omissions to the PTO
that Samsung alleges in this case. To satisfy the predicate act
requirement (and indeed all requirements) of the state RICO
statute, Samsung alleges only the act of filing a false
statement, but this act completely overlaps with the alleged
misrepresentations giving rise to its inequitable conduct
defense. Samsung’s additional allegations that SEL targeted
and intended to assert the '400, '204. and ‘636 patents against
Samsung even before these patents issued do not take
Samsung’s application of the New Jersey RICO statute
outside of the ambit of the inequitable conduct defense. Every
patent applicant files its application believing it could assert
the resulting patent against infringers (or else seeking the
patent would be a worthless [27] endeavor), and it is not
unusual for a patent applicant to “target” potential defendants
even before the patent issues. Cf MPEP § 708.02(11)
(allowing an applicant to file a Petition to Make Special to
accelerate prosecution in view of actual infringement by
another party). We therefore reject Samsung’s attempts to
contort the elements of inequitable conduct to satisfy the New
26a
Jersey RICO statute, with its stated purpose of combating
organized crime. See N.J.S.A. § 2C:41-1.1.c.
Thus, we affirm the district court’s grant of summary
judgment dismissing Samsung’s New Jersey RICO
counterclaims as preempted by the patent laws of the United
States.’
CONCLUSION
The district court did not abuse its discretion in holding the
‘636 patent unenforceable for inequitable conduct. The
district court correctly applied the statute, regulations, and
case law, and did not make clearly erroneous findings of fact
on materiality and deceptive intent. Under all the
circumstances of record, the court did not seriously misjudge
the import of the evidence, particularly the degree of
materiality as against the level of deceptive intent, in reaching
the conclusion that equity warranted rendering the patent
unenforceable. In addition, the district court correctly granted
[28] summary judgment dismissing Samsung’s federal and
New Jersey RICO counterclaims, the former as failing to
allege legally adequate predicate acts. and the latter as
preempted by the patent laws of the United States.
Accordingly, we
AFFIRM.
’ For a civil federal RICO claim under 18 U.S.C. § 1962(c), the RICO
“enterprise” must be distinct from the RICO “person,” i.e., the defendant.
See Palmetto State Med. Ctr.. Inc. v. Operation Lifeline, 117 F.3d 142,
148 (4th Cir. 1997). The district court also dismissed Samsung’s federal
and state RICO counterclaims on the ground that the alleged SEL
“enterprise” consisting of SEL, Dr. Yamazaki, and Mr. Ferguson was
insufficiently distinct from the SEL “person.” Because we affirm the
district court’s dismissal of Samsung’s respective federal and New Jersey
RICO counterclaims as failing to allege a predicate act and as preempted
under the circumstances of this case, we decline to reach the correctness
of the district court’s holding regarding this “enterprise” element.
27a
[29] ADDENDUM B
PTO RULE § 1.56
§ 1.56 Duty to disclose information material to
patentability.
(a) A patent by its very nature is affected with a public
interest. The public interest is best served, and the most
effective patent examination occurs when, at the time an
application is being examined, the Office is aware of and
evaluates the teachings of all information material to
patentability. Each individual associated with the tiling and
prosecution of a patent application has a duty of candor and
good faith in dealing with the Office, which includes a duty to
disclose to the Office all information known to that individual
to be material to patentability as defined in this section. The
duty to disclose information exists with respect to each
pending claim until the claim is cancelled or withdrawn from
consideration, or the application becomes abandoned.
Information material to the patentability of a claim that is
cancelled or withdrawn from consideration need not be
submitted if the information is not material to the
patentability of any claim remaining under consideration in
the application. There is no duty to submit information which
is not material to the patentability of any existing claim. The
duty to disclose all information known to be material to
patentability is deemed to be satisfied if all information
known to be material to patentability of any claim issued in a
patent was cited by the Office or submitted to the Office in
the manner prescribed by §§ 1.97(b)-(d) and 1.98. However,
no patent will be granted on an application in connection with
which fraud on the Office was practiced or attempted or the
duty of disclosure was violated through bad faith or
intentional misconduct. The Office encourages applicants to
carefully examine:
28a
APPENDIX B
(Order on Rehearing)
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
[Filed Mar. 29, 2000]
98-1377, 99-1103
SEMICONDUCTOR ENERGY LABORATORY CO., LTD.,
Plaintiff-Appellant,
v.
SAMSUNG ELECTRONICS Co., LTD.,
SAMSUNG ELECTRONICS AMERICA, INC.,
AND SAMSUNG SEMICONDUCTOR, INC.,
Defendants-Cross Appellants.
NOTE: Pursuant to Fed. Cir. R. 47.6, this order is
not citable as precedent. It is a public order.
ORDER
A combined petition for rehearing and petition for
rehearing en banc having been filed by the APPELLANT,
and the petition for rehearing having been referred to the
panel that heard the appeal,
Upon consideration thereof,
IT IS ORDERED THAT:
The petition for rehearing is granted for the limited and
sole purpose of amending the opinion issued on March 2,
2000 as follows:
29a
On the thirteenth line from the top of page 5, replace
“Dr. Yamazaki” with “Kunitaka Yamamoto, SEL’s in-
house patent agent.”
The petition for rehearing en banc is still pending.
FOR THE COURT,
/s/ Jan Horbaly
JAN HORBALY
Clerk
Dated: March 29, 2000
cc: J. Alan Galbraith, Esq.
David J. Healey, Esq.
30a
APPENDIX C
(Order on Rehearing)
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
[Apr. 5, 2000]
98-1377, 99-1103
SEMICONDUCTOR ENERGY LABORATORY CO., LTD.,
Plaintiff-Appellant,
Vv.
SAMSUNG ELECTRONICS Co., LTD.,
SAMSUNG ELECTRONICS AMERICA, INC.,
AND SAMSUNG SEMICONDUCTOR, INC.,
Defendants-Cross Appellants.
CORRECTED
NOTE: Pursuant to Fed. Cir. R. 47.6, this order is
not citable as precedent. It is a public order.
ORDER
A combined petition for rehearing and petition for
rehearing en banc having been filed by the APPELLANT,
and the petition for rehearing having been referred to the
panel that heard the appeai,
Upon consideration thereof,
IT IS ORDERED THAT:
The petition for rehearing is granted for the limited and
sole purpose of amending the opinion issued on March 2,
2000 as follows:
3la
On the last line of page 5, replace “Dr. Yamazaki” with
“Kunitaka Yamamoto, SEL’s in-house patent agent.”
The petition for rehearing en banc is still pending.
FOR THE COURT,
/s/ Jan Horbaly
JAN HORBALY
Clerk
Dated: April 5, 2000
cc: J. Alan Galbraith, Esq.
David J. Healey, Esq.
32a
APPENDIX D
Obviousness Ruling
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
ALEXANDRIA DIVISION
C.A. No. 96-1460-A
SEMICONDUCTOR ENERGY LABORATORY CO., LTD.
Plaintiff,
VS
SAMSUNG ELECTRONICS Co., LTD., et al.,
Defendants.
The above-entitled matter came on to be heard in the
United States District Court, Alexandria, Virginia,
commencing at 10 a.m. on March 6, 1998.
BEFORE: The Honorable JAMES C. CACHERIS, Presiding
United States District Judge
xk * *
[6] THE COURT Okay. I’m ready to rule on this one.
This matter is before the Court on Defendant’s Motion for
Summary Judgment Declaring U.S. Patent 5,543,636, the
‘636 patent referred to in this case, Invalid as Obvious under
35 USC Section 103.
Plaintiff, Semiconductor Energy Laboratory Co., Lid.,
alleges that Defendants Samsung Electronics Company,
Samsung Electronics America, and Samsung Semiconductor,
Inc. infringed its '636 patent. The ‘636 Patent describes a type
of insulated gate field effect transistor, the IGFET.
Defendants claim that the patent is invalid because it involves
a combination of concepts which would have been
33a
[7] obvious to a person of ordinary skill in the art at the time
of the patent application.
The '636 Patent describes an IGFET with a concentration
level of the impurity atoms oxygen, carbon, and nitrogen
below 5x10'* atoms per cubic centimeter in the channel
region. For purposes of this motion, the parties apparently
agree that at the time of the patent application, conventional
IGFETs were well known, as were methods for obtaining the
specified level of impurity. Defendants argue that based on
this knowledge, the m.*thod impurity level in the channel
region would have been obvious to one skilled in the art.
Summary judgment is appropriate only if “the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show there’s no
genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Fed. R.
Civ. P. 56(c). “A district court must grant summary judgment
if, after an adequate time for discovery, a party fails to make a
showing sufficient to establish the existence of an essential
element of that party’s case.” Baber v. Hospital Corp. of
America, 977 F.2d 872, 874 (4th Cir.1992) (citation omitted).
[8] However, a court may only grant a summary judgment
motion “if the non-movant failed to make a sufficient
showing on an element on which he had the ultimate burden
of proof.” Brock v. Entre Computer Ctrs., Inc., 933 F.2d
1253, 1259 (4th Cir. 1991) (citation omitted).
“The mere existence of a scintilla of evidence in support of
the party’s position would be insufficient; there must be
evidence on which the jury could reasonably find for that
party.” Anderson, 477 U.S. 252. In reviewing the evidence
submitted by the parties, “the court must draw any inferences
in the light most favorable to the non-movant.” Brock, 933
F.2d at 1259 (citation omitted).The court must ultimately
34a
“determine whether the record taken as a whole could lead a
reasonable trier of fact to find for the non-movant.” The
Brock case.
Patents are presumed to be valid under 35 USC Section 282,
and invalidity because of obviousness must be, demonstrated
by clear and convincing evidence.
Para-Ordinance Manufacturing, Inc. v. SGS Importers
Int'l, Inc., 73 F.3d 1085 (Fed. Cir. 1985).
35 USC Section 103(a) states:
“A patent may not be obtained if the differences between
the subject matter sought to be patented and the prior art
are such that the subject matter as a whole would have
been obvious at the time the [9] invention was made to a
person having ordinary skill in the art to which said
subject matter pertains.
The determination of obviousness is a matter of law and is
based on findings of fact relating to the scope and content of
the prior art, the differences between the claimed invention
and the prior art, and the level of ordinary skill in the art.
Para-Ordinance Mfg., Inc., 73 F.3d at 1088; Glaverbel
Societe Anonyme Ordinance Mfg., & Supply, Inc., 73 F.3d,
1550, 1555 (Fed. Cir. 1995). When present, objective
evidence such as commercial success, copying or long-felt
need must be considered. The Glaverbel case. Obviousness
may not be established using hindsight or in view of the
inventor’s teachings or suggestions.
In opposition to Defendants’ Motion, Plaintiff cites a report
of its expert, Dr. Gerald Lucovsky, “Report” In the report Dr.
Lucovsky describes the scope and content of the prior art, the
differences between the '636 Patent and the prior art, and the
level of ordinary skill in the art at the time of the application.
Dr. Lucovsky states that prior to the application for the
‘636 Patent, no one had suggested that impurities in the
35a
channel region of a thin film transistor, “TFT”, a type of
IGFET, have any effect on performance or reliability. Report,
paragraph 44. Therefore, according to Dr. Lucovsky, [10] any
argument that the claims at issue in the ‘636 Patent are
_ obvious could only be based entirely on hindsight.
In its Motion for Summary Judgment, Defendants argue
that this Court can conclude that the '636 Patent is obvious by
examining statements made by the inventor, Dr. Yamazaki,
and reviewing the prior art. However, after reviewing the
materials cited by Defendants, this Court cannot find that
from the perspective of a person of ordinary skill in the art at
the time of the patent application, the claims would have been
obvious. Simply put, Defendants do not provide an expert
report or any other clear and convincing evidence refuting Dr.
Lucovsky’s claims.
Therefore, Defendants failed to meet their burden of
demonstrating invalidity for obviousness. Accordingly, De-
fendants’ Motion for Summary Judgment Declaring the '636
Patent Invalid as Obvious under 35 USC Section 103 is
denied.
36a
APPENDIX E -
(Dismissal of RICO Counterclaims,
4 F.Supp.2d 473-77)
UNITED STATES DISTRICT COURT
E.D. VIRGINIA ;
ALEXANDRIA DIVISION
No. CIV. A. 96.1460-A
SEMICONDUCTOR ENERGY LABORATORY CO., LTD.,
Plaintiff;
Vv. 4
SAMSUNG ELECTRONICS Co., LTD., 4
SAMSUNG. ELECTRONICS AMERICA, INC., AND
SAMSUNG SEMICONDUCTOR, INC.,
Defendants.
March 20,1996
[474] MEMORANDUM OPINION
CACHERIS, District Judge.
This case is before the Court on Plaintiffs Motion for
Summary Judgment on Defendants’ Racketeer Influenced and
Corrupt Organizations (“RICO”) Counterclaims.
l.
Plaintiff, Semiconductor Energy Laboratory Co., Lid.
(“SEL”) originally alleged that Defendants Samsung
Electronics Company, Samsung Electronics America, and
37a
Samsung Semiconductor, Inc. (collectively “Samsung’’)
infringed three of its patents. SEL has since dismissed its
claims as to two of the patents. Samsung filed a counterclaim
alleging antitrust violations as well as violations of Title IX of
the Organized Crime Control Act of 1970, 18 U.S.C. Sections
1961-1968, or the RICO statute, and its New Jersey
counterpart, New Jersey Statute 2C:41-2. Samsung argues
that SEL fraudulently obtained the three patents originally at
issue in this lawsuit and then filed infringement claims
against Samsung in an effort to receive money for the patents.
I.
[475] Summary judgment is appropriate only if “the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct.
2505, 91 L.Ed.2d 202 (1986); Fed.R.Civ.P. 56(c). “A district
court must grant summary judgment if, after an adequate time
for discovery, a party fails to make a showing sufficient to
establish the existence of an essential element of that party’s
case.” Baber v. Hospital Corp. of Am., 977 F2d 872, 874 (4th
Cir.1992). However, a court may only grant a summary
judgment motion “if the non-movant failed to make a
sufficient showing on an element on which he had the
ultimate burden of proof.” Brock v. Entre Computer Ctrs.,
Inc., 933 F.2d 1253, 1259 (4th Cir.1991).
“The mere existence of a scintilla of evidence in support of
the [party’s] position will be insufficient; there must be
evidence on which the jury could reasonably find for th{at]
[party].” Anderson, 477 U.S. at 252. In reviewing the
evidence submitted by the parties, “the court must draw any
inferences in the light most favorable to the non-movant”
Brock, 933 F.2d at 1259. The court must ultimately
38a
“determine whether the record taken as a whole could lead a
reasonable trier of fact to find for the non-movant” /d.
II.
Samsung claims that SEL violated 18 U.S.C. Section
1962(a) and (c).' To prove RICO violations, the RICO
plaintiff must demonstrate a “pattern of racketeering activity”
which must consist of at least two instances of racketeering
activity. 18 U.S.C. § 1961(5); Mylan Lab., Inc. v. Matkari.,
7 F.3d 1130, 1135 (4th Cir.1993). In this case, Samsung
asserts a “three-party pass-through fraud structure”, arguing
that SEL committed numerous acts of mail and/or wire fraud
on the United States Patent and Trademark Office (“PTO”)
which resulted in approval of certain patent applications.
According to Samsung, SEL then sought money from
Samsung and others by threatening them with litigation over
these fraudulently obtained patents. Put another way,
Samsung claims that SEL defrauded the PTO, but the
intended, albeit indirect, victim of the fraud is Samsung.
' Section 1962(a) and (c) state:
(a) It shall be unlawful for any person who has received any
income derived, directly or indirectly, from a pattern of racketeering
activity to use or invest, directly or indirectly, any part of such
income, or the proceeds of such income, in acquisition of any
interest in, or the establishment or operation of, any enterprise
which is engaged in, or the activities of which affect, interstate or
foreign commerce.
(c) It shall be unlawful for any person employed by or associated
with any enterprise engaged in, or the activities of which affect,
interstate or foreign commerce, to conduct or participate, directly or
indirectly, in the conduct of such enterprise’s affairs through a
pattern of racketeering activity[.]
* See 18 U.S.C. § 1341, 1343.
SOREN CT 88 i ac sane imose ences tte
39a
Mail and wire fraud are both predicate acts of racketeering
activity for RICO purposes. 18 U.S.C. § 1961(1). However,
SEL argues that the PTO cannot be “defrauded” of approval
of patent applications under the federal mail and wire fraud
statutes. Specifically, SEL argues that the PTO does not lose
money or property when it grants a patent, therefore, in
granting a patent, the PTO cannot be the victim of mail or
wire fraud.
In support, SEL cites Mylan Lab., Inc. v. Akzo, N.V., 770
F.Supp. 1053, 1071-73 (D.Md.1991). In that case, the RICO
plaintiff alleged that the defendants committed predicate acts
of fraud against the Food and Drug Administration (“FDA”)
in obtaining FDA approval of their abbreviated new drug
applications (“ANDAs”). The District of Maryland ruled that
an unissued license is not property in the government’s hands
for fraud purposes, therefore, the defendants’ conduct before
the FDA did not amount to predicate acts under RICO.’
Mylan Lab., Inc. v. Akzo, [476] N.V., 770 F.Supp. at 1072-73.
Although the Fourth Circuit reversed a related decision in
Mylan Lab., Inc. v. Matkari, supra., it expressly stated “[We
affirm a ruling that precludes Mylan from relying on, as its
sole basis for the predicate acts in its RICO counts, the theory
that the FDA was defrauded out of its ANDA approvals
within the meaning of the mail and wire fraud statutes.”
Mylan Lab., Inc. v. Matkari 7 F.3d at 1137.
* The court declined to follow the Third Circuit’s decision on this
issue in United States v. Martinez, 905 F.2d 709, 715 (3rd Cir.1990), and
instead followed the decisions of the First, Second, Sixth, Seventh, Eighth
and Ninth Circuits. Mylan Lab., Inc. v. Akzo. N.V. 770 F.Supp. at 1072
(citing, e.g., McEvoy Travel Bureau, Inc. v. Heritage Travel, Inc., 904
F.2d 786, 792-93 (ist Cir.1990). United States v. Schwartz, 924 F.2d 410,
417 (2nd Cir.1991), United States v. Murphy, 836 F.2d 248, 254 (6th
Cir.1988). Toulabi v. United States, 875 F.2d 122, 125 (7th Cir.1989)
United States v. Granberry, 908 F.2d 278. 280 (8th Cir.1990), United
States v. Kato, 878 F.2d 267, 268-69 (9th Cir. 1989)).
40a
In response, SEL argues that Mylan Lab., Inc. v. Akzo, N.V.
and the cases it cites are distinguishable because they
involved licenses, not patents, and patents involve valuable
property interests. In addition, Samsung argues that by
deceiving the PTO, SEL deprived Samsung and others of the
“intangible right of honest services” in violation of the mail
fraud statute. See 18 U.S.C. § 1346.
Samsung cites no cases which indicate that approval of a
patent application by the PTO should be treated differently
than approval of an ANDA by the FDA. In both cases, the
United States confers certain rights, but it does not forfeit
anything. Just as the FDA does not lose money or property
when it grants a license, the PTO does not lose money or
property when it issues a patent. In addition, Samsung makes
no allegations and no evidence indicates that the PTO
provided anything less than honesi services or that SEL
intended for them to provide dishonest services. Furthermore,
there is no claim by Samsung that it had an intangible right to
SEL’s honest services.
Because SEL’s alleged conduct before the PTO does not
violate the federal mail and wire fraud statutes, that conduct
cannot satisfy the predicate acts requirement under RICO. If
such conduct could properly be-considered predicate acts,
then nearly every inequitable conduct claim in a patent case
could be brought as a RICO claim. However, the Patent Act
imposes a severe penalty for those who mislead or wrongfully
withhold information in an attempt to obtain a patent: all
claims in the patent will be rendered unenforceable. See, J.P.
Stevens & Co., Inc. v. Lex Tex, Ltd, Inc., 747 F.2d 1553. 1561
(Fed.Cir.1984). Additionally, if Samsung can prove its
allegations, not only will the patents at issue be rendered
unenforceable, but Samsung may be entitled to attorney’s
fees pursuant to 35 U.S.C. Section 285. Through these
provisions, the Patent Act provides appropriate remedies for
4la
the type of rnisconduct from which Samsung seeks to recover
in its RICO claims.
In its counterclaim, Samsung alleges that SEL’s fraudulent
acts also include “numerous use of mail and/or wire fraud on
Samsung and others[.]” Samsung’s Amended Answer and
Counterclaim, § 117. However, while the evidence indicates
that some companies own licenses to the relevant patents,
Samsung has not provided evidence that SEL has committed
mail or wire fraud with respect to Samsung or others. Rather,
Samsung relies on the theory that SEL’s alleged fraud on the
PTO satisfies the predicate acts requirement. Because Sam-
sung provides no evidence on which a jury could reasonably
find the predicate acts necessary to sustain a RICO claim,
SEL is entitled to summary judgment on this issue.
The New Jersey RICO statute is modeled after the federal
statute, State v. Ball, 141 N.J. 142, 661 A.2d 251, 258 (1995),
and the relevant sections, 2C:41-2(a) and (c), require proof of
a pattern of racketeering activity. Samsung relies on the same
predicate acts in support of its New Jersey RICO claim.
Because those acts do not support a federal RICO violation,
they fail to support a New Jersey RICO violation.
In addition, Samsung fails to satisfy the “enterprise”
element of Section 1962(c). Samsung argues that the RICO
enterprise consists of SEL, Dr Shunpei Yaznazaki (SEL’s
president), and Gerald Ferguson (SEL’s patent attorney)
However, the Fourth Circuit has ruled that under Section
1962(c), the RICO enterprise and the defendant must be
distinct. Palmetto State Med. Ctr., Inc. v. Operation Lifetime,
117 F.3d 142, 148 (4th Cir. 1997).
Samsung contends that SEL, Yamazaki, and Ferguson
should be considered separate entities because each had a
duty to the PTO, and Yamazaki and Ferguson committed
independent acts of fraud on the PTO. However, “[B]y
alleging a RICO enterprise that consists merely of a corporate
defendant associated with its own employees or agents carry-
42a
ing on the regular affairs of the defendant, the distinctness
requirement may not be circumvented.” Riverwoods
Chappaqua Corp.v. Marine Midland Bank, NA., 30 F.3d
339, 344 (2nd Cir.1994) (citations omitted); see also Disccm,
Inc. v. NYNEX Corp., 93 F.3d. 1055, 1063 (2nd
Cir.1996Xattorneys acting on behalf of corporation are agents
under River-woods Chappaqua Corp.).
SEL generates its income by obtaining and licensing
patents. It does not manufacture or distribute any products.
Samsung does not argue that Yamazaki or Ferguson acted
beyond the scope of their agency when they committed the
alleged misconduct. Therefore, because the RICO enterprise
is not distinct from the RICO defendant in this case, SEL is
entitled to summary judgment on Samsung’s Section 1962(c)
claims.
For these reasons, Samsung fails to make a showing
sufficient to establish the existence of the essential elements
of its RICO claims. Accordingly, SEL’s Motion for Summary
Judgment on Samsung’s Racketeering Counterclaims is
GRANTED.
An appropriate Order granting summary judgment in favor
of SEL on Counts Six, Seven, Eight, and Nine of Samsung’s
counterclaim shall issue.
ORDER
In accordance with the accompanying Memorandum
Opinion, it is hereby Ordered that:
1) Plaintiff Semiconductor Energy Laboratory Co., Ltd.’s
Motion for Summary Judgment on Defendants Samsung
Electronics. Company, Samsung Electronics America, and
Samsung Semiconductor, Inc.’s RICO Counterclaim is
GRANTED as to Counts Six, Seven, Eight, and Nine; and
2) the Clerk shall forward copies of this Order and ac-
companying Memorandum Opinion to all counsel of record.
RVI PS ea bak
ae ES DS a a We eine ee Bis a a
SHPO S P S D
43a
APPENDIX F
(Initial Unenforceability Ruling,
4 F.Supp.2d 477-97)
UNITED STATES DISTRICT COURT,
E.D. VIRGINIA
C.A. No. 96-1460-A.
APRIL 15, 1998.
SEMICONDUCTOR ENERGY LABORATORY CO., LTD.,
Plaintiff,
v.
t
SAMSUNG ELECTRONICS Co., LTD., SAMSUNG ELECTRONICS
AMERICA, INC., and SAMSUNG SEMICONDUCTOR, INC.,
Defendants.
[479] MEMORANDUM OPINION
ELLIS, District Judge.
In this patent infringement action, plaintiff Semiconductor
Energy Laboratory Co. (“SEL”) alleges that defendants
Samsung Electronics, Samsung Electronics America, and
Samsung Semiconductor, (collectively “Samsung”’) made or
sold active matrix display units that infringe SEL’s U.S.
Patent No. 5,543,636 (“the ‘636 patent”). Among its defenses
to SEL’s charge of infringement, Samsung alleges that the
‘636 patent is unenforceable owing to SEL’s inequitable
conduct before the Patent and Trademark Office (“PTO”).
Between March 17, 1998 and April 3, 1998, a seven-day
bench trial was held on Samsung’s affirmative defense of
inequitable conduct, during which time the Court heard fact
and expert opinion testimony from several witnesses,
admitted into evidence numerous exhibits, and considered the
parties’ written and oral arguments. This Memorandum
44a
Opinion sets forth the Court’s findings of fact and
conclusions of law, as announced from the bench pursuant to
Fed.R.Civ.P. 52(a). But, to begin with and before listing the
detailed findings and conclusions, it is useful as context to
describe briefly the parties, the pertinent patents, and the
genera] law of inequitable conduct. Indeed, the settled legal
principles of the doctrine of inequitable conduct are the lens
through which the factual record must be examined and
weighed.
I.
SEL is a Japanese research and development company that
specializes in semiconductor technology. Over the past
eighteen years, SEL has filed over 5,000 patent applications
worldwide, and has been awarded approximately 1,500 U.S.
and foreign patents for its inventions. Dr. Shunpei Yamazaki,
the president and majority shareholder of SEL, is the inventor
or co-inventor on most of SEL’s patents, including the ‘636
patent.
SEL filed its application for the ‘636 patent, titled
“Insulated Gate Field Effect Transistor,” on June 7, 1995, and
the patent issued on August 6, 1996. SEL is the owner of the
‘636 patent. The asserted claims of the ‘636 patent (claims 1-3
and 5) are generally directed to a thin film transistor (“TFT”),
a type of insulated gate field effect transistor (“IGFET”) used
in active matrix display units. Active matrix displays, which
are commonly used as screens in laptop computers, have
thousands of pixels that create a picture or image. The pixels
are turned on and off by TFT’s. The invention claimed in the
'636 patent is a TFT with a semiconductor layer made of
intrinsic amorphous silicon having a channel region
sandwiched between a silicon nitride gate insulator and
another insulator, wherein the concentration of impurities
(e.g., carbon and oxygen) in the channel region are 5 x 10 '*
atoms/cm or less. It is the combination of the specific
structure together with the low impurity levels that constitutes
the invention.
45a
In October 1996, SEL brought this infringement action
against the Samsung defendants, a group of companies
engaged, inter alia, in the manufacture and sale of active
matrix displays as well as laptop computers containing active
matrix displays. Specifically, SEL’s complaint alleges that
the active matrix display units made and sold by Samsung
infringe the ‘636 patent. Initially, SEL’s complaint also
included claims for in fringement of U.S. Patent Nos. 5,349,
204 (“the '204 patent”) and 5,521,400 (“the ‘400 patent”).
However, on March 4, 1998, an agreed order was entered
withdrawing the '204 and the ‘400 patents from the action,
thereby leaving the ‘636 patent as the sole remaining patent-
in-suit. -
[480] Samsung alleges, as an affirmative defense, that the
'636 patent is unenforceable owing to SEL’s inequitable
conduct before the PTO in connection with three separate
patent applications: (i) the application for the ‘636 patent
itself; (ii) the application for U.S. Patent No. 5,315,132 (“the
‘132 patent’’); and (iii) the application for the '204 patent.
The relationship of these patents to each other is pertinent
to the disposition of the issue at bar. In this regard, the
genealogy of the ‘636 and ‘132 patents is well illustrated in
SEL’s Exhibit No. 432, which is attached to this
Memorandum Opinion as an appendix. In essence, the ‘132
patent is antecedent to, in the direct priority chain of the ‘636
patent. Specifically, the ‘636 patent resulted from
continuation and divisional applications from the application
that issued as the '132 patent. The priority date of the ‘636
patent thus relies on the chain of applications that includes the
'132 patent. Further, because the subject matter of the ‘636
patent is so closely related to the ‘132 patent, a terminal
disclaimer was filed with respect to the ‘636 patent, giving it
46a
the expiration date of the ‘132 patent.' Both the ‘132 and the
‘636 patents rely upon the May 18, 1984 filing date for SEL’s
Japanese laid-open Application No. 59-100250 (“the ‘250
application”), which has a “one-to-one” relationship with
both the '132 and the ‘636 patents. Both patents have the same
inventor (Dr. Yamazaki), owner (SEL), disclosure,
specification, and title. The ‘132 patent issued on May 24,
1994, resulting from an application that was filed on
December 8, 1992.
The ‘204 patent is not a part of the ‘250 application-132-
‘636 chain. Yet, like the ‘636 patent, the ‘204 patent claims an
invention related to low levels of impurities, contains similar
prior art references, and was prosecuted at roughly the same
time as the ‘636 patent. Specifically, the ‘204 patent issued on
September 20, 1994, based on an application filed on
December 7, 1993.
In support of its inequitable conduct defense, Samsung
alleges that SEL made deliberate, material misrepresentations
to, and withheld material prior art references from, the PTO
during its prosecutions of these three applications. The
specifics of these allegations for each patent are set forth as a
preface to the findings for that patent. In essence, Samsung
argues that SEL’s misconduct during each of these three
patent prosecutions is sufficient to render all of the claims of
the ‘636 patent unenforceable for the life of the patent.
' In this regard, the 132 patent also claims a TFT with the same low
levels of impurities as are claimed in the ‘636 patent. As Dr. Yamazaki
testified during the hearing, the “essential nature of the ['636 & ‘132]
invention[s]” is the same. The difference between the two patents is that
the asserted claims of the ‘636 patent are narrower than the claims of the
‘132 patent. For example, the ‘132 patent is not limited to an IGFET with a
silicon nitride gate, or an intrinsic silicon layer, while the claims of the
‘636 patent are so limited.
~ 47a
Il.
It is fundamental that all applicants for patents have a duty
to prosecute patent applications in the PTO with candor,
good faith, and honesty. See Precision Instrument Mfg. Co. v.
Automotive Maintenance Mach. Co., 324 U.S. 806, 818, 65
S.Ct. 993, 89 L.Ed. 1381 (1945). The vital importance of this
duty cannot be overstated. Without it, the edifice of patent
law cannot stand. Indeed, the cornerstone presumption of an
issued patent’s validity, and the placement of a heavy burden
on the infringer to show invalidity, both rest on the proper
fulfillment of this duty.
A breach of this duty of candor, good faith, and honesty
constitutes inequitable conduct,” and renders all claims of the
patent involved unenforceable. See Molins PLC v. Textron,
Inc., 48 F.3d 1172, 1178 (Fed.Cir.1995). And inequitable
conduct includes “affirmative misrepresentation of a material
fact, failure to disclose material in formation, or submission
of false material information, coupled with an intent to
deceive.” Jd. The party raising the affirmative defense of
inequitable conduct must offer clear and convincing evidence
that the conduct is both material and intended. See id.’ More
specifically, the doctrine of inequitable conduct requires the
trial court to undertake a two-step analysis. See Halliburton
Co. v. Schlumbeger Tech. Corp., 925 F.2d 1435, 1439
Fed.Cir.1991). First, the court must discern whether the
withheld references or misrepresentations satisfy a threshold
? Inequitable conduct is simply “the unclean hands doctrine applied to
particular conduct before the PTO.” Consolidated Aluminum Corp.
v.Foseco Int'l Lid., 910 F.2d 804, 812 (Fed.Cir.1990).
* Clear and convincing evidence is evidence “which proves in the mind
of the trier or fact ‘an abiding conviction that the truth of [the] factual
contentions [is] “highly probable.” ’” Intel Corp. United States Int'l
Trade Comm'n 946 F.2d 821, 830 (Fed.Cir.1991) (quoting Colorado v.
New Mexico. 467 U.S. 310, 316, 104 S.Ct. 2433, 31 L.Ed.2d 247 1984)).
48a
level of materiality. See Jd. The court must also determine
whether the applicant’s conduct in this regard satisfies a
threshold showing of intent to mislead. See id.* Next,
assuming satisfaction of the thresholds, “the trial court must
balance materiality and intent. . . . The more material the
omission [or misrepresentation], the less culpable the intent
required, and vice versa.” /d. Finally, an equitable judgment
must be made that, “in light of all the particular
circumstances, the conduct of the patentee is so culpable that
its patent should not be enforced.” LaBounty Mfg., Inc. v.
United States Int'l trade Comm'n, 958 F.2d 1066, 1070
(Fed.Cir. 1992).
Materiality is defined at 37 C.F.R. § 1.56 (Rule 56), and, as
the Federal Circuit teaches,” this is the starting point in the
materiality analysis. Thus, since 1992,° Rule 56 has provided,
in pertinent part, as follows:
* It is worth noting that a finding of gross negligence itself is
insufficient to satisfy the intent threshold. See Tom Kingsdown Med.
Consultants Ltd. v. Hollister Inc., 863 F.2d 807, 876 Fed.Cir. 1988). At
the same time however the precise content of the intent “threshold”
remains essentially undefined. In any event, the defense of inequitable
conduct will not succeed in rendering a patent unenforceable unless it is
shown by clear and convincing evidence that the offending conduct was
material and done with an intent to deceive.
> See Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120
F.3d 1253, 1257 (Fed.Cir. 1997).
° Prior to the 1992 amendment, Rule 56 defined information as
material when “there is a substantial likelihood that a reasonable examiner
would consider it important in deciding whether to allow the application
to issue as a patent.” 37 C.F.R. § 156 (1989). The Federal Circuit has not
discussed the meaning of the new Rule 56 which appears narrower, i.e.,
less information is defined as material, than the former version of Rule 36.
Nevertheless, the new (1992) version of Rule 36 does not purport to alter
the previously settled principle that a “but for” test is inappropriate
determinations of materiality. See Merck & Co., Inc. v. Dambury
Pharmacal Inc., 373 F.2d 1418, 1421 (Fed.Cir. 1989) (rejecting “but for”
49a
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 other
information, a prima facie case of unpatentability of a
claim:’ ,
or
standard of materiality under pre-1992 Rule ‘56). In other words,
Materiality does not require a finding that ‘but for” the inequitable
conduct, the patent would not have issued.
Also worth noting is that the new version of Rule 36 does not refer to a
hypothetical reasonable examiner or to any standard for an examiners
competence. Application of the new rule does not require the use of any
such standard. In any event, it is clear that patent examiners are not
presumed to be omniscient, i.e., to know all the prior art. together with its
relevance and significance. Were this not so, there would be no need for a
duty of disclosure of prior art. But this duty is vital given that patent
prosecution proceedings are typically ex parte. and examiners, while
technically skilled, are not omniscient. Consistent with this, examiners are
properly characterized as “quasi-judicial officials trained in the law and
presumed to ‘have some expertise in interpreting the [prior art] references
and to be familiar from their work with the level of skill in the art and
whose duty it is to issue only valid patents.” ” Markman v. Westview
Instruments, Inc., 52 F.3d 967. 986 (Fed.Cir.1995) (quoting American
Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1359
(Fed.Cir.1984)). Thus, examiners are skilled in the art insofar as they are
technically competent to understand information and references in some
technical or scientific field, but they are not of ordinary skill in the art to
the extent that this might imply that they are aware of all the pertinent
prior art.
” Rule 56 further provides that “[a] prima facie ease of unpatentability
is established when the information compels a conclusion that a claim is
unpatentable under the preponderance of evidence, burden-of-proof
standard, giving each term in the claim its broadest reasonable
construction consistent with the specification, and before any
consideration is given to evidence which may be submitted in an attempt
to establish a contrary conclusion of patent ability.” 37 C.F.R. § 1.56(6).
50a
(2) It refutes, or is inconsistent with, a position the
applicant takes in:
(i) Opposing an argument of unpatentability relied on by
the Office, or
(ii) Asserting an argument of patentability.
Thus, under the new Rule 56, materiality is phrased in
terms of whether a misrepresentation, if corrected, or an
omitted reference, if disclosed, would, itself or together with
other information, give rise to a prima facie (i.e., rebuttable)
case of unpatentability. If so, the omitted reference or
misrepresentation is material. But this is not the only test of
materiality. The omitted reference or misrepresentation may
also be material if it refutes or is inconsistent with the
applicant’s patentability arguments.
Whether a withheld reference or omitted information is
cumulative plays a prominent role in this case. Thus, it is
important to note that while cumulative information is not
material under Rule 56, a withheld reference may be highly
material when it discloses a more complete combination of
relevant features, even if those features are before the patent
examiner in other references. See, e.g., Molins, 48 F.3d at
1180; LaBounty, 958 F.2d at 1075-76; In re Jerabek, 789
F.2d 886, 890 (Fed.Cir.1986). Thus, where, as here, the
invention is a combination of elements, an undisclosed prior
art reference that contains more of the combined elements
than the disclosed references is not cumulative simply
because various elements of the invention appear in other
disclosed references.
Inequitable conduct requires more than mere materiality of
the withheld or misrepresented reference or information; it
also requires an intent to act inequitably. And no presumption
of intent to deceive arises merely from the materiality of an
undisclosed reference. See Halliburton, 925 F.2d 1435, 1442.
Even gross negligence “does not of itself justify an inference
Sla
of intent to deceive.” /d. Rather, such conduct “can support
an inference of intent only when, ‘viewed in light of all the
evidence, including evidence indicative of good faith,’ the
conduct is culpable enough ‘to require a finding of intent to
deceive.’ ” Jd. (quoting Kingsdown, 863 F.2d at 876). Yet, it
is also true that a patentee facing a “high level of materiality
and clear 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.” Critikon, 120 F.3d at 1257. In
such circumstances, a “mere denial of intent to mislead
(which would defeat every effort to establish inequitable
conduct) will not suffice.” /d.
The test, then, requires a consideration of, and a judgment
on, the totality of the circumstances. In the words of the
Federal Circuit, courts must determine whether the conduct
“in its totality manifests a sufficiently culpable state of mind
to warrant a determination that it was inequitable.” Molins, 48
F.3d at 1181. This sensible formulation recognizes that direct
proof of intent is rarely available and that it is impossible to
scrutinize directly the workings of the human mind.
It is against these general legal principles that Samsung’s
claims of inequitable conduct must be assessed. Thus,
analysis of Samsung’s claims will proceed by an _ initial
assessment as to the materiality of any withheld or mis-
_ characterized information during SEL’s prosecution of the
'636, ‘132, and ‘204 patent applications. An assessment of
SEL’s intent will follow.
Ill.
A. The ‘636 Patent Application
Samsung alleges two specific instances of inequitable
conduct by SEL during its prosecution of the ‘636 patent.
First, SEL submitted to the PTO as prior art the Japanese laid-
open Application No. 56-135968, assigned to Cannon K.K.
52a
(“the Canon '968 application”), which is also directed to
TFT’s. Specifically, SEL submitted the full 29-page Japanese
language version and a one-page partial English translation of
the Canon '968 application. Samsung contends that by
highlighting, through translation, only one of the many
elements in the Canon reference that was relevant to the ‘636
application, and by leaving the others untranslated, SEL
deliberately mischaracterized the importance of Canon and
attempted to conceal material information from the examiner.
Second, SEL also revealed as prior art a 1983 article by Dr.
CC, Tsai titled “Amorphous Si Prepared in a UHV Plasma
Deposition System,” which teaches the reduction of
impurities in amorphous silicon to improve performance in
electronic devices. SEL distinguished the Tsai article before
the PTO by claiming that it applied primarily to solar cells
and not TFT’s, and by stating that the current in the devices
discussed in the article runs in a perpendicular direction,
while the current in the type of TFT’s referred to in the ‘636
patent runs in a parallel direction. Samsung alleges that
SEL’s statements in this regard were disingenuous attempts to
distinguish the Tsai article from the ‘636 patent application,
and that they were contrary to its own knowledge and
inconsistent with its own position in other patent applications.
1. The Canon '968 Application
On November 15, 1993, in connection with its ‘636 patent
application, SEL disclosed approximately 90 references of
prior art to the PTO, including the Canon '968 application.
SEL submitted the full 29-page Japanese language version of
the Canon "968 application to the PTO, but not a full English
translation. Instead, it submitted a one-page document titled
“Partial Translation of JP-Laid Open 56-135968:” which
selectively translated for the PTO sections of the application
appearing both before and after the untranslated portions of
the Canon '968 application. Dr. Yamazaki testified that the
53a
partial translation had already been prepared in connection
with another patent application, and that he made the decision
that only certain portions of the Canon '968 application
should be translated and submitted to the PTO together with
the full Japanese language version in connection with the '636
application.
The partially translated portion of the Canon reference
discloses a silicon nitride gate insulator, one of the elements
of the asserted claims of the ‘636 patent. Dr. Yamazaki
testified that at the time he submitted the partially translated
Canon 968 reference, the silicon nitride gate insulator was
the only disclosure in the Canon '968 application that he
believed to be relevant to the ‘636 patent. Indeed, when he
disclosed the Canon "968 application to the PTO, he identified
its relevance only as “disclos[ing] the use of silicon nitride for
a gate insulating layer of a thin film transistor.”
Yet, this was not accurate; the untranslated portions of the
Canon '968 application ‘were also relevant to a consideration
of the patentability of the invention claimed in the '636
patent. In general, these portions were (a) the frequent
admonitions to prevent or limit atmospheric impurities in
semiconductor materials’ which provide an express
suggestion to employ teachings such as those found in the
Tsai article or the ‘423 or the ‘488 applications’ to reduce
carbon, oxygen and nitrogen impurities below the levels
claimed in the ‘636 patent, and (b) a description of the same
structure for a thin film transistor as is described in the '636
patent. More specifically, the untranslated portion of the
* In this regard, and indeed generally, the Court credits the testimony of
Samsung's witnesses Dr. Fonash, Dr. Tsai, and Dr. Meyerson over SEL’s
witnesses Dr. Lucovsky, Dr. Yamazaki whenever there is a conflict.
” That is SEL’s Japanese laid-open Application No. 59-33423 “the 423
application” 59-33488 (“the 488 application”), which were laid open
(published in Japan) on February 27, 1984.
54a
Canon '968 teaches avoiding exposure of the channel region
to impurities resulting from air or oxygen. Further, the
untranslated portion teaches the cleaning of the substrate by
etching part of it away, prior to depositing the amorphous
silicon. Further, it teaches that the substrate can introduce
impurities, and that washing alone is insufficient to avoid
impurities. Although other prior art disclosed by SEL during
the prosecution of the ‘636 patent, such as the Tsai article, '
teach avoidance of impurities, none [484] disclose or teach
the processing sequence useful in avoiding impurities, such as
etching the substrate. The translated portion of the Canon
'968 application submitted by SEL to the PTO omitted this
teaching.
It is also significant that the translated portion of the Canon
‘968 application describes a TFT structure that is somewhat
different from that described in the ‘636 patent, whereas the
structure described in the untranslated portion of the Canon
'968 application describes the same structure found in the
‘636 patent. Thus, the structure described in the untranslated
portion of the Canon "968 application has the same intrinsic
semiconductor layer made from amorphous silicon; the same
channel region sandwiched between the insulators; and (in
both the translated and the untranslated portions), the same
silicon nitride gate insulator as claimed in the '636 patent. To
be sure, other references cited to the PTO disclose the various
elements described in the '636 patent claims. Yet, no other
reference before the examiner contained as complete a
combination of the ‘636 elements as is disclosed in the un-
translated Canon '968 application.
Thus, contrary to SEL’s contention, Dr. Fonash’s
testimony convincingly establishes that the untranslated
'° Findings relating both to the nature of the Tsai article and to Dr.
Yamazaki's and SEL’s knowledge of it are set forth in the following
sections.
55a
portions of Canon are not merely cumulative, as they contain
a more complete combination of the elements-the intrinsic
amorphous silicon, the silicon nitride gate insulator, and the
admonition to avoid impurities—that are claimed in the '636
patent itself.'' Dr. Fonash further convincingly testified that
the untranslated portions of the Canon '968 application and
the Tsai article, taken together, would disclose a device
having every element of the asserted claims of the ‘636
patent. As Dr. Fonash put it, a fully translated Canon '968
application provides a “good blueprint” for making the exact
device described in the '636 patent, and additionally provides
the admonition to avoid impurities. The Tsai article,
discussed infra in more detail, discussed amorphous silicon
films with specific low levels of impurities within the claim
limitations of the ‘636 patent. Thus, Dr. Fonash concluded
that the fully translated Canon '968 application, when taken
together with the Tsai article, renders obvious the asserted
claims of the ‘636 patent. Moreover, he concluded that failing
to disclose the untranslated portions of the Canon application
would significantly hinder a patent examiner’s ability to
determine whether the ‘636 patent application was an
unobvious advancement over the prior art. In a grudging
admission of this, Dr. Yamazaki testified during the
inequitable conduct hearing that submitting a complete
translation of the Canon 968 application would have been a
“kinder thing” for him to do, and that a full translation
“would be more convenient” for the PTO.
Accordingly, the evidence is clear and convincing that
untranslated portions of the Canon '968 application contained
information highly material to the prosecution of the ‘636
patent application as they, together with other information,
establish a prima facie case of unpatentability. See 37 C.F.R.
'' Worth nothing in this regard is that Dr. Yamazaki acknowledged his
duty to provide the PTO with prior art references “most simlar to” his
claimed invention.
56a
§ 1.56. The evidence is also clear and convincing that the
fully translated Canon '968 application was knowingly
withheld from the PTO.
2. The Tsai Article
In the course of prosecuting the application that led to the
issuance of the ‘636 patent, SEL disclosed to the PTO as prior
art a 1983 article by Dr. Tsai titled “Amorphous Si Prepared
in a UHV Plasma Deposition System.” This article teaches
the reduction of impurities in amorphous silicon to improve
performance in electronic devices.
During the prosecution of the ‘636 patent application, SEL
sought to distinguish the Tsai article before the PTO by
suggesting that it applied primarily to solar cells rather than to
TFT’s. Further, SEL argued before the PTO that the Tsai
article was distinguishable in that the electrical current in the
devices discussed in her article runs in a_ perpendicular
direction, while the electrical current in the TFT’s referred to
in the ‘636 patent runs in a parallel direction. At the
inequitable conduct hearing, SEL, through the testimony of
Dr. Yamazaki, expressed the view that impurities such as
carbon and oxygen affect solar cells differently from TFT’s
and create different problems in the two devices. Thus, SEL
asserted both before the PTO and in the course of this
hearing, that teachings concerning the effects of impurities in
solar cells are not relevant to TFT’s.
The record as a whole discloses that SEL’s efforts to
distinguish the Tsai article before the PTO were neither valid
nor accurate. Thus, Dr. Tsai testified convincingly that her
article, which refers to “large area devices,” would have been
understood by those in the field, both at the time of its
publication and thereafter, to include devices made with
TFT’s as well as solar cells. Dr. Fonash agreed, testifying that
in 1983 at the time the Tsai article was published, he
understood the term “large area device” to include devices
57a
made with TFT’s. Dr. Yamazaki also testified that the current
active matrix display units that utilize TFT’s are large area
devices. In sum, the expert testimony convincingly
establishes that contrary to SEL’s representation to the PTO,
the Tsai article would have been understood by persons of
ordinary skill in the art in 1983 and thereafter to apply not
just to solar cells, but to TFT’s as well.
Record evidence reflects that Dr. Yamazaki, a
distinguished and accomplished solid state physicist, surely
knew this. Thus, his ‘423 and ‘488 Japanese laid-open
applications, which deal mainly with solar cells, expressly
‘state that the benefits of the lower levels of impurities
described in those applications also apply to insulated gate
field effect semiconductor device[s]” such as TFT’s. So, as
the ‘423 and the ‘488 laid-open applications reflect, Dr.
Yamazaki recognized by 1984 a clear connection between
solar cells and TFT’s in that the importance of reducing
impurity levels is applicable to both. Moreover, SEL was
prosecuting the ‘400 patent application, one of the original
patents-in-suit, at approximately the same time it was
prosecuting the ‘636 patent application. The 400 patent,
which is also directed mainly to solar cells, contains a figure
(figure 9) that illustrates that the invention applies to
insulated gate field effect transistors, as well.
In summary for the limited purpose of trying to persuade
the examiner that the Tsai article was not material, SEL
adopted a position contrary to its own knowledge, and
inconsistent with its own previously stated position on an
important issue before the PTO. Specifically, in its '423, ‘488,
and '400 patent applications, SEL asserts that its claimed
inventions, which are primarily directed to reducing
impurities in solar cells, are equally applicable to TFT’s. Yet,
in its prosecution of the ‘636 patent application, SEL
distinguished the Tsai article on the basis that its teachings
apply primarily to solar cells, not TFT’s. Thus, contrary to the
58a
clear statements found in the ‘423, ‘488, and ‘400
applications, SEL argued before the PTO, in effect, that
references concerned with the effects of impurities in solar
cells are not germane to a TFT’s patentability. SEL never
revealed this inconsistency to the PTO as required under 37
C.F.R. 1.56. .
Next, convincing expert testimony also contradicts SEL’s
representation to the PTO. that the Tsai article is
distinguishable based on the direction of the current. Thus,
Dr. Tsai and Dr. Fonash persuasively testified that it is
irrelevant to the effect of impurities in a device as to whether
current runs perpendicular or parallel. Accordingly, it is clear
from this record that the difference in the direction of current
flow was not a valid basis for distinguishing the Tsai article
from the ‘636 patent application. Moreover, Dr. Yamazaki, as
an accomplished solid state physicist, was certainly aware
that this was a distinction without significance as well.
Knowledge that the teachings of the Tsai article were
equally applicable to TFT’s was material to the prosecution
of the ‘636 patent application. The expert testimony of Dr.
Fonash clearly established that the Tsai article teaches the
making of amorphous silicon with impurity concentrations in
the amorphous silicon layer within the levels recited in all
claims of the ‘636 patent. The deposition testimony of Dr.
Lucovsky confirms this conclusion. Further, as the testimony
of Dr. Fonash convincingly establishes, the Tsai article, taken
together with the untranslated portions of the Canon ‘968
application, disclose a device having every element of the
[486] asserted claims of the ‘636 patent.'? Thus, the clear and
convincing evidence demonstrates that the Tsai article, taken
'? The Tsai article’s materiality to the 636 patent is confirmed by Dr.
Yamazaki’s own January 1995 letter to his licensing agent, in which he
acknowledges the Tsai article as being highly relevant to the '132 patent,
which, like the ‘636 patent, is directed to TFT’s, not solar cells.
59a
together with other information, would give rise to a prima
facie case of unpatentability, and was therefore highly
material to the prosecution of the ‘636 patent application.
Equally clear and convincing is that SEL knowingly
mischaracterized the article as not relevant to TFT” s, the
subject matter of the ‘636 invention.
B. The ‘132 Application
Samsung asserts that during the prosecution of the ‘132
patent application, SEL made a material misrepresentation
regarding information disclosed in a prior art reference, and
additionally failed to disclose at least three material prior art
references. Specifically, SEL represented to the PTO that the
levels of impurities recited in a prior art reference, U.S. patent
No. 4,766,477 issued to Nakagawa (“the Nakagawa ‘477
patent”), was 4x10" atoms/cm” when the correct value was
approximately eight times lower. Samsung alleges that SEL
deliberately misrepresented the figure in order to distinguish
the ‘636 patent from the Nakagawa ‘477 patent. Further,
Samsung contends that SEL deliberately withheld at least
three material prior art references, namely (1) the 1983 Tsai
article “Amorphous Si Prepared in a UHV Plasma Deposition
System,” (2) the ‘423 laid-open application, and (3) the ‘488
laid-open application.
A threshold issue is the relevance of any inequitable
conduct by SEL in connection with its prosecution of the ‘132
patent application. Samsung contends that where inequitable
conduct is found in an application that results in an issued
patent, all subsequent patents relying on the same chain of
priority, whether from divisional or continuation applications,
must also be held unenforceable, whether or not the
applicant’s inequitable conduct continued during the
subsequent application. Thus, Samsung invites the Court to
hold that inequitable conduct during SEL’s prosecution of the
60a
‘132 patent application necessarily renders unenforceable all
the claims of the '636 patent.
This argument requires an extension of existing law. To
date, no Federal Circuit case has squarely decided this issue,
although there is supporting Federal Circuit dictum, '* and
supporting district court case law, '* upon which Samsung
'? See Fox Indus., Inc. v. Structural Preservation Sys., 922 F.2d 801,
804 (Fed.Cir.1990) (stating that inequitable conduct “early in the
prosecution may render unenforceable all claims which eventually issue
from the same or a related application”); see also Consolidated Aluminum,
910 F.2d at 810-11 (inequitable conduct in procuring one patent-in-suit
may render related patents-in-suit unenforceable where the inequitable
conduct has an “immediate and necessary relation” to the equity patentee
seeks, namely enforcement of the related patents).
'* See Baxter Int'l. Inc. v. McGaw, Inc., 958 F.Supp. 1313, 1315—17
(N.D.II1. 1997) (Inequitable conduct in original application which gave rise
to multiple divisional applications resulted in all three resulting patents
being held unenforceable, even when inequitable conduct did not affect
the claims of one of the resulting patents); Jack Frost Lab., Inc. v.
Physicians & Nurses Mfg. Corp., 901 F.Supp. 718 729 (S.D.N.Y. 1995)
Inequitable conduct in original application that resulted in issued patent
also made later patent resulting from continuation application unen-
forceable); Golden Valley Microwave Foods, Inc. v. Weaver Popcorn Co.,
Inc., 837 F.Supp. 1444, 1478 (N.D.ind.1992) (Inequitable conduct in
prosecution of original application that resulted in issued patent could not
be purged in continuation application, and therefore, subsequent patent in
the same chain held unenforceable); Molins PLC v. Textron, Inc., 821
F.Supp. 1551, 1581 (D.Del.1992) aff'd, 48 F.3d 1172, 1187 (Fed.Cir.
1995) (Inequitable conduct in original application that resulted in an
issued patent likewise rendered later patent issued from a divisional ap-
plication unenforceable); East Chicago Mach. Tool Corp. v. Stone
Container Corp., 181 U.S.P.Q. 744, 748 (N.D.I11.1974), vacated in part,
185 U.S.P.Q. 210 (N.D.IIl. 1974) (Where inequitable conduct was com-
mitted in the original application, all patents stemming from it, whether
resulting from continuation or divisional applications, are unenforceable
for inequitable conduct regardless of whether the inequitable conduct
relates to any of the issued claims in the subsequent patents).
Closely read, none of these cases is precisely on point factually; none
involves, as here, misrepresentations or nondisclosure made with respect
6la
relies. In the [487] final analysis, however, this issue need not
be reached, as SEL’s inequitable conduct during its prosecu-
tion of the ‘636 patent application is sufficient to render the
claims of the ‘636 patent unenforceable. Nevertheless, given
the close relationship between the '636 and the ‘132 patents,’°
any inequitable conduct by SEL during its prosecution of the
‘132 is still relevant to show plan, motive, intent and pattern
and practice under Rules 402, 403, & 404(b), Fed.R.Evid.'®
to an earlier patent in a chain, but not repeated in connection with the later
challenged patent in the chain. Instead, the cited cases generally involve
misconduct with respect to an earlier patent that is repeated and hence
permeates. In a sense, the prosecution of the later, elated patent, See, e.g.,
Jack Frost, 901 F.Supp. at 718; Golden Valley. 837 F.Supp, at 1444; but
cf. Baxter, 958 F.Supp. at 1315-1318 inequitable conduct committed
during original application not repeated during prosecution of subsequent,
divisional application).
'S Again, the ‘636 patent resulted from continuation and divisional
applications from the application that issued as the 132 patent. See
appendix. Because the subject matter of the two patents is so closely
related, a terminal disclaimer was filed, giving the 636 patent the
expiration date of the ‘132 patent.
'© It is worth emphasizing the distinction drawn here between relying
on inequitable conduct relating to the ‘132 patent as an independent basis
for holding the ‘636 patent unenforceable which is not the course followed
here, and relying on inequitable conduct relating to the ‘132 patent as
evidence that may aid in the determination of SEL’s intent with respect to
conduct. relating to the prosecution of the ‘636 patent application. The
latter course is followed here. In other words, this Memorandum Opinion
proceeds on the basis that conduct related to the prosecution the ‘636 is
the sole basis for a finding of inequitable conduct, but that conduct
relating to the ‘132 is relevant and probative as it provides important
context, given the close relation of the patents and as it sheds light on the
intent underlying the conduct relating to the prosecution of the 636 patent.
A further digression on this subject is warranted. Although there do not
appear to be any Federal Circuit decisions involving or applying Rule
404(b), Fed.R.Evid., there can be little doubt that it is as applicable in
patent litigation as in other iitigation contexts. See Arcade, Inc. v.
Minnesota Mining and Mfg. Co., 24 U.S.P.Q.2d 1578, 1589 (E.D.Tenn.
62a
1. The Nakagawa ‘477 Patent
During SEL’s prosecution of the ‘132 patent application,
the PTO originally rejected some of its claims relating to low
levels of impurities based on the same or similar impurity
levels described in the Nakagawa ‘477 application. In
response, SEL, in an amendment filed on May 25, 1993.
argued that the rejected ‘132 claims should be allowed over
the Nakagawa application because the ‘132 claimed a lower
level of impurities. To prove this vital point, the amendment
submitted to the PTO included a calculation premised on an
incorrect, overstated figure for the atomic density of
amorphous silicon. Specifically, the figure used was 4 x 10 7°
atoms/cm* which was approximately eight times higher than
the correct value of 5 x 10” atoms/cm’. The result of using
this artificially inflated figure was that SEL’s calculation of
the level of impurities disclosed in the Nakagawa ‘477 patent,
4 x 10'’ atoms/cm? was also approximately eight times higher
than the figure actually disclosed in the Nakagawa ‘477
patent. Thus, the impurities range claimed in the ‘132 patent,
namely 5 x 10'* atoms/cm’ or less, appeared lower than that
disclosed and claimed in the Nakagawa ‘477 patent. On this
basis, the examiner allowed the previously rejected claims in
the '132 patent over the Nakagawa reference.
1991) (finding prior inequitable conduct to he 404(b) evidence from
which to infer intent to deceive during later patent prosecutions). Yet,
because the inequitable conduct defense is so often frivolously pied, see
Burlington Indus., Inc. v. Davco Corp., 849 F.2d. 1418, 1422 (Fed.Cir.
1988) (characterizing the practice of charging inequitable conduct in
almost every patent case as “an absolute plague”), district courts must take
care to ensure that assertions of the defense of inequitable conduct plus
reliance on Rule 404(b) do not become a license for a fishing expedition
into a patentee’s files concerning related patents and applications.
Discovery of such files should not be allowed absent a significant
threshold showing of inequitable conduct and relevance with respect to
the patent-in-suit.
63a
Dr. Yamazaki testified that the incorrect silicon atomic
density figure provided to the PTO was the result of a
careless error by Mr. Kunitaka Yamamoto, SEL’s in-house
patent representative who was assisting Dr. Yamazaki with
the ‘132 prosecution. Mr. Yamamoto confirmed in his
testimony that he had made the error. Yet, no satisfactory
explanation was provided by Mr. Yamamoto as to how he
arrived at this incorrect figure, [488] or why he was able to
provide the correct atomic density figure for silicon in later
applications.'’ Mr. Yamamoto merely testified that the
mistake occurred because his “memory of the number of
[silicon] atoms was incorrect.”
Dr. Yamazaki gave conflicting testimony on precisely how
he learned of the error. At one point during the hearing, Dr.
Yamazaki testified that I.B.M. had pointed out the mistake
sometime following a March 1995 licensing meeting. Later,
Dr. Yamazaki testified that I.B.M. had not revealed the
mistake, but rather that he had discovered the error while
preparing for this lawsuit. In any event, it is clear that neither
Dr. Yamazaki nor Mr. Yamamoto informed the PTO that an
error had been made regarding the silicon density figure
provided in connection with the prosecution of the ‘132
patent. Specifically, Dr. Yamazaki testified that he did not
disclose the error when it came to his attention because the
'132 patent had already issued. Rather, he thought that it was
sufficient that the correct figure had been submitted in
connection with SEL’s pending prosecution of the ‘636 patent
application.'"* Mr. Yamamoto also testified that he did not
'’ Specifically, SEL used the correct atomic density figure for
amorphous silicon in an April 1995 filing to the PTO in connection with
the ‘636 proceeding, and again later in the same proceeding in a
November 15, 1995 filing.
'® On this point, it is worth noting that Mr. Yamamoto testified that Dr.
Yamazaki suggested calling the error to the PTO’s attention, but that he,
Mr. Yamamoto, essentially vetoed this suggestion. This testimony is flatly
64a
think that he had any obligation to inform the PTO that an
error had been made during the prosecution of the then issued
‘132 patent.'”
implausible; the record leaves no doubt that Dr. Yamazaki pays close
attention to matters of this sort, and that in all matters relating to his patent
applications, Dr. Yamazaki ultimately calls the shots. This fact is made
pellucidly clear by Samsung's Exhibit No. 1417, a January 1996 letter
from Dr. Yamazaki to his licensing agent explaining Dr. Yamazaki's
decision to revoke a power of attorney in connection with the prosecution
of Application No. 425,455, an application in the ‘250 application-’132-
‘636 chain. See appendix. There, Dr. Yamazaki writes:
The Revocation was necessary because our view regarding certain
prior art references was entirely different from Mr. Ferguson's
[SEL’s patent attorney] view. That is, after we received a Notice of
Allowance, Mr. Ferguson suggested that it was necessary to submit
the references to the Patent Office as a duty of disclosure. To do
this, a Rule 62 continuation application was necessary. However,
contrary to Mr. Ferguson, it was our belief that these references
were not more material than the references cited during the
prosecution. We and Mr. Ferguson extensively discussed this matter
but could not finally reach a conclusion. Mr. Ferguson suggested
that even though we (SEL) believed that these references were
immaterial, he himself had an obligation to disclose the references
as a patent attorney since he believed the references were more
relevant than the prior art considered by examiners. In view of the
above situation, we decided to file the Revocation of Power of
Attorney in order to allow the application to issue as a patent.
There is no doubt, then, that it is Dr. Yamazaki who ultimately determines
what information is disclosed to the PTO in connection with his patent
applications.
'’ In this regard, Mr. Yamamoto testified that he had read pertinent
portions of the Code of Federal regulations and the PTO’s Manual of
Patent Examining Procedure and understood his duty of candor to the
PTO. More specifically, he confirmed his understanding of the duty of
candor as encompassing a duty to disclose to the FFO material information
resulting from Japanese patent proceedings, including any material prior
art or information cited or brought to his attention in any related foreign
application.
65a
The expert testimony of Dr. Fonash established by clear
and convincing evidence that disclosure of the correct figure
for the density of silicon was highly material to the
prosecution of the ‘132 patent application. Specifically, the
PTO originally rejected claims in the ‘132 patent application
based in part on the impurity concentrations disclosed in the
Nakagawa ‘477 application. Yet, as Dr. Fonash testified, the
use of an overstated silicon atomic density figure enabled
SEL to argue that the ‘132 patent application claimed a lower
level of impurities than the Nakagawa ‘477 application.
Disclosure of the correct silicon atomic density figure, then,
would have deprived SEL of this important argument in
support of patentability.
2. The Tsai Article”
On August 26, 1983, Dr. Yamazaki attended a lecture
given by Dr. C.C. Tsai at a [489] technical conference in
Tokyo. The lecture dealt with depositing amorphous silicon
films with specific low levels of impurities. Significantly,
these low impurity levels also fall within the claim limitations
of the ‘132 and the ‘636 patents. Dr. Yamazaki testified that
his work on lowering impurity levels preceded Dr. Tsai’s
speech, and that he had given a similar speech concerning his
own work in reducing levels of impurities at a Reston,
Virginia conference in May 1983. He initially testified that he
does not remember being particularly impressed with the Tsai
speech, given that it followed his own on _ reducing
impurities.” He continued that he did not really recall
” This is the same article that SEL mischaracterized as limited to solar
cells in connection with its prosecution of the ‘636 patent application See
supra Part ITl(A)(2)
1 Yet, in a later appearance on the witness’ stand, Dr. Yamazaki
admitted that Dr. Tsai’s presentation at the 1983 Tokyo conference “left
an impression” on him because it was a large conference and Dr. Tsai
was one of the few women speaker there.
66a
anything in particular about Dr. Tsai’s speech, including
whether she discussed specific impurity levels. This
testimony was not in accord with his testimony at a February
27, 1998 deposition, at which time he characterized his initial
impression of Dr. Tsai’s speech as being “spectacular.” Other
experts, including Dr. Meyerson, confirmed that the Tsai
article was a path breaking work of great importance.
At the time of the conference, Dr. Yamazaki received an
abstract of Dr. Tsai’s lecture. Dr. Tsai also testified that she
spoke with Dr. Yamazaki following her lecture, and that he
asked her for a copy of “Amorphous Si Prepared in a UHV
Plasma Deposition System,” the article on which her lecture
had been based. The Tsai article was in fact published later
that year in the Journal of Non-Crystalline Solids, Volume 59
& 60 (1983). Dr. Tsai stated that she directed her secretary to
send Dr. Yamazaki a reprint of the article and that it was
accordingly sent to him. Further, Dr. Tsai stated that all
conference attendees, including Dr. Yamazaki were sent a
copy of all conference papers in a bound volume.
During his first appearance at the hearing Dr. Yamazaki
testified that he did not recall having a conversation with Dr.
Tsai, or requesting a copy of her article at the August 1983
conference. Rather, he only remembered speaking to her for
the first time, apparently on an unrelated matter, one year
later at a conference in Snowbird, Utah. Further, Dr.
Yamazaki testified that he did not remember receiving
anything other than the abstract of her speech.”
In 1984, Dr. Yamazaki and others submitted an article, also
to the Journal of Non Crystalline Solids, which was published
later that year. The 1984 Yamazaki article cites to a 1984
article written by Dr. Tsai, which in turn references her 1983
article, “Amorphous Si Prepared in a UHV Plasma
~ The abstract alone does not discuss specific impurity levels.
67a
Deposition System.” Dr. Yamazaki testified that the portion
of his 1984 article that refers to the Tsai publication was
written by a co-author, and that he in fact never read the Tsai
reference.
Given the sequence of events, and the record as a whole,
Dr. Yamazaki’s testimony on the Tsai article is neither
plausible nor credible. It is simply implausible that Dr.
Yamazaki did not review and comprehend the significance of
the Tsai article in 1983-4 and thereafter. He testified that he
delivered a similar speech on lowering impurities just months
before he heard Dr. Tsai’s own presentation, a presentation
Dr. Yamazaki once described as “spectacular,” an assessment
consistent with Dr. Meyerson’s and Dr. Fonash’s. but
inconsistent with his (Dr. Yamazaki’s) own _ hearing
testimony. Further, Dr. Tsai distinctly remembers speaking
with Dr. Yamazaki following her presentation, and granting
his request for a reprint of her article. And, Dr. Yamazaki’s
own 1984 article, although a collaborative work, specifically
cites to a Tsai article which itself references her 1983 article.
Dr. Yamazaki, as an accomplished physicist with a focused
interest in this area and as an experienced inventor with a
demonstrated interest in securing patents, had every reason to
review and remember Dr. Tsai’s article.
Yet, the 1983 Tsai article was not disclosed as prior art
during the prosecution [490] the '132 patent. Rather, SEL
first disclosed the Tsai article to the PTO in November 1994
in connection with Application No. 214, ‘494 (“the '494
application”), which was soon thereafter abandoned.”° At that
time, SEL represented to the PTO that the Tsai article had
only recently come to its attention. Similarly, Dr. Yamazaki
testified at the inequitable conduct hearing that the Tsai
article was first called to his attention as relevant prior art to
*3 See appendix. The Tsai article was also disclosed to the PTO on June
7, 1995 during the prosecution of the ‘636 patent application.
68a
the ‘132 patent during licensing negotiations with Toshiba in
October, 1994, after the ‘132 patent had issued. Yet, as
already noted, this is simply not credible; the record as a
whole reflects that Dr. Yamazaki was well aware of the Tsai
article throughout the relevant period.
As was true in the prosecution of the ‘636 patent, the Tsai
article was highly material to the '132 patent application. In a
January 1995 letter to his licensing agent for the ‘132 patent,
Dr. Yamazaki himself stated that “we do not think there is a
more relevant reference than C.C. Tsai’s abstract of August
22, 1983 and his (sic) papers of December 1983, that you
know.” Despite the admission, Dr. Yamazaki testified at the
hearing that the abstract is not in fact relevant. Yet, any
attempt by Dr. Yamazaki to rely on a distinction between the
abstract and the entire article is unpersuasive. The record as a
whole leaves the Court with a clear conviction that Dr.
Yamazaki was well aware of the Tsai article throughout the
relevant period. And, expert testimony established by clear
and convincing evidence that the 1983 Tsai article was highly
material. Specifically, Tsai’s article teaches the making of
amorphous silicon with impurity concentrations in the
amorphous silicon layer within the levels recited in all claims
of the ‘132 patent. Dr. Fonash also testified that the Tsai
article shows “you in great depth, in greater detail, how to
attain those impurity levels, and has data showing how they
actually did attain those impurity levels.” He further testified
that the Tsai article is directed to “large area device
applications” which include TFT’s.
Claim 7 of the ‘132 patent is directed to a TFT with low |
impurities. Accordingly, the evidence clearly and
convincingly shows that disclosure of the Tsai article during
the prosecution of the '132 patent would have given rise to a
prima facie case of unpatentability.
69a
3. The '423 and ‘488 Laid-open Applications
Dr. Yamazaki is the sole inventor on the '423 and the '488
Japanese laid-open applications, which were filed in 1982 and
published by the Japanese patent office in 1984. Neither
reference was disclosed to the PTO during the prosecution of
the '132 patent. The ‘423 and the '488 laid-open applications
have very similar disclosures. The ‘423 and the ‘488 are
directed to solar cell technology, and specifically to the
efficiencies to be achieved in photoelectric devices from low
levels of impurities. Both laid-open applications conclude,
however, that the “present invention is also effective for an
insulated gate field effect semiconductor device having an
NIN junction (i.e., a junction comprising, in this order, a
source or drain, a channel forming region, and a source or
drain) or a PIP junction, as well as for a transistor having an
NIPIN or a PINIP junction.” ~* It is clear, therefore, that Dr.
Yamazaki himself knew and believed that the ‘423 and ‘488
laid-open applications, though directed to solar cells, were
also pertinent to TFT’s.
Yet, Dr. Yamazaki testified during the hearing that he
forgot that the ‘423 and ‘488 applications taught lowering
impurities in insulated gate field effect semiconductor de-
vices, and therefore he did not disclose them to the PTO in
connection with the ‘132 patent prosecution. Specifically, he
testified that because the ‘423 and the '488 dealt chiefly with
solar cells, he thought that neither had any relevance to the
‘132 patent application. This contention is belied by the terms
of the ‘423 and the '488 applications themselves, and by the
convincing expert testimony of Dr. Tsai and Dr. Fonash.
Most tellingly, though, Dr. Yamazaki’s contention is flatly
4 Indeed, the claims of the ‘423 are not limited to solar cells, but also
claim semiconductor devices. Also worth noting is that the prosecution
application was protracted, extending from 1982 to a rejection on appeal
in 1992.
70a
refuted by the fact that SEL referenced other works directed
primarily to solar cells during its prosecution of the ‘132
patent, including one of Dr. Yamazaki’s own U.S. solar cells
patents, U.S. Patent. No. 4,239,554, and an article by Magee
and Carlson in a publication called “Solar Cells.” Even if Dr.
Yamazaki’s testimony that he forgot about the specific
passages contained in the ‘423 and the ‘488 applications
describing their relevance to TFT’s were plausible, it is not
plausible that he forgot the scientific principle underlying
those passages, i.e., that the importance of reducing impurity
levels is germane to both solar cells and TFT’s.
Dr. Yamazaki also testified that he first became aware of
the significance of the '423 and the ‘488 through a rejection
by the Japanese patent office in his corresponding ‘250
application.” The rejection, mailed on October 19, 1994, was
based in part on the disclosures in Dr. Yamazaki’s '423 laid-
open application. Further, Dr. Yamazaki remembered
Toshiba representatives suggesting, during licensing
negotiations in October 1994, that the ‘423 and ‘488
applications were prior art to the ‘132 patent. Dr. Yamazaki
testified that he then looked into the matter. Significantly, Dr.
Yamazaki thereafter, in January 1995, told his licensing agent
that he considered the ‘423 and the '488 references to be more
material to the ‘132 patent than other references already
disclosed to the PTO. Tellingly, he further instructed his
licensing agent not to disclose the ‘423 and the ‘488 laid-open
> Although Dr. Yamazaki initially testified that he learned in 1992 that
the ‘250 had been rejected in part because of the ‘423 laid-open
application, he later clarified that it was not until 1994 that the ‘423
application was cited as a basis for the rejection. Had Dr. Yamazaki
discovered in 1992 that the '423 was a basis on which his ‘250 application
had been rejected, he would have been immediately placed on notice of
his duty to disclose the ‘423 in connection with his pending 132 patent
application. As Dr. Yamazaki testified, the Japanese '250 application has
One-to-one relationship with both the ‘132 one the ‘636 patents.
Tla
applications to 1.B.M., a prospective licensee.”” This ploy
failed as during his licensing meeting with I.B.M. in March
1995, 1.B.M. representatives specifically called attention to
the fact that Dr. Yamazaki had failed to disclose the ‘423 and
‘488 applications to the PTO as prior art in the ‘132
proceeding. Following the meeting with I.B.M. Dr. Yamazaki
submitted the references to the PTO on April 20, 1995 in
connection with the continuation application of the ‘494
application. Dr. Yamazaki also subriitted the ‘423 and the
‘488 references to the PTO on June 7, 1995, in connection
with the ‘636 patent application.
The materiality of the ‘423 and the ‘488 laid-open
applications to the prosecution of the ‘132 application is
pellucidly clear. Dr. Fonash convincingly testified that the
elements in claim 7 of the ‘132 patent are taught in the ‘488
and the '423 laid open applications. The disclosures in the
'423 were in fact, part of the basis on which the Japanese
patent office had earlier rejected the corresponding ‘250
application. Thus, disclosure of the ‘423 and the ‘488 laid
open applications during the ‘132 prosecution would have
given rise to a prima facie case of unpatentability. They were
highly material prior art.
C. Additional Omissions During the ‘132 and the ‘636
Patent Applications
Samsung, during the inequitable conduct hearing, alleged
two additional instances of materiai withholdings by SEL
° Specifically, in a January 1995 letter, Dr. Yamazaki instructed his
licensing agent that:
We think SEL’s laid-open applications indicated in our letter of
January 10, 1995 would be more relevant than any other materials.
Please be careful not to disclose these laid-open applications to
I.B.M.
72a
during the ‘132 and the ‘636 patent applications.”’ First
Samsung claims that SEL deliberately failed to disclose as
prior art Japanese Patent No. 58-2073 issued to Sony (“the
Sony ’2073 patent”), even though it was aware that the Sony
‘2073 patent was a basis on which the Japanese patent office
ejected its corresponding '250 patent application. Second,
Samsung contends that SEL deliberately failed to disclose the
materials [492] produced in connection with Dr. Yamazaki’s
1983 Reston Virginia speech, even though these materials
discuss the importance of low levels of impurities in
electronic devices.
1. The Sony '2073
Dr. Yamazaki testified that in 1992, when he originally
received the rejection of the ‘250 Japanese laid-open
application, the Sony '2073 was cited as one basis for the
rejection.“* Mr. Yamamoto, who also learned of the basis for
the ‘250 rejection in 1992, thus initially instructed SEL’s
patent attorney to disclose the Sony ‘2073 reference to the
PTO in connection with an application within the '250
application-'132-'636 chain.”” Inexplicably, SEL later
instructed its patent attorney to file an Information Disclosure
Statement (“IDS”) in connection with the application that
omitted the Sony '2073 reference. The '250 application was
finally rejected by the Japanese patent office in October 1994
based on the disclosures in the Sony ‘2073 and Dr.
77 These additional allegations of inequitable conduct were raised for
the first time at the hearing. Accordingly, the evidence adduced
concerning these allegations is considered for the limited purpose of
ascertaining SEL’s motive, plan, and intent with respect to the ‘636 patent.
See Rules 402, 403, 404(b), Fed. R. Evid.
78 The Japanese patent office later cited to the ‘423 laid-open
application as an additional basis for rejection.
° Specifically, this was Application No. 885,643, which was filed on
May 19, 1992, and which was later abandoned. See appendix.
73a
Yamazaki’s own ‘423 laid-open application. Yet, the Sony
'2073 was not disclosed as prior art during the prosecutions of
the ‘132 or the '636 patents. And significantly, the Sony ‘2073
patent was not a reference that was asserted against SEL by a
prospective licensee, as were the Tsai article and the '423 and
'488 applications that were eventually cited to the PTO by
SEL in the ‘636 proceeding, but omitted from the ‘132
proceeding.
Thus, by 1992, SEL was aware that the '250 application,
which Dr. Yamazaki conceded has a “one-to-one”
relationship with both the ‘132 and the '636 patents,” had
been rejected by the Japanese patent office based in part on
the Sony '2073 patent. Yet, it failed to disclose the reference
to the PTO despite the specific admonitions found in Rule
56."' Further, Dr. Fonash testified that the Sony '2073
combined with the '423 application rendered obvious every
element of Claim | of the '132 patent. Thus, the Sony '2073
was clearly a highly material reference that came to the
attention of Dr. Yamazaki during the '132 application and
well before the prosecution of the ‘636 application.
” Both of which also rely on the '250 application for priority stemming
from the ‘250 application's May 1984 filing date. This, of course, is
significant in assessing the patentability of the invention claimed in the
‘132 and '636 patents.
*' In connection with an applicant's duty to disclose all information
known to be material to patentability, 37 C.F.R. § 1.56 specifically
“encourages” applicants to examine
(1) Prior art cited in search reports of a foreign patent office in a
counterpart application, and
(2) The closest information over which individuals associated
with the filing or prosecution of a patent application believe any
pending claim patentability defines, to make sure that any material
information contained therein is disclosed to the Office. ;
74a
2. The Reston Materials
Dr. Yamazaki testified that his May 1983 speech in Reston,
Virginia concerned the development of low impurity levels in
the semi conductor layer. The speech was thus antecedent to,
and concerned the same subject matter as, the August 1983
Tsai speech. Notably, Dr. Yamazaki conceded that the speech
and related materials disclose the importance of low levels of
impurities and “would be important” on this issue. An
abstract from Dr. Yamazaki’s speech was published, and he
eventually published a full paper in the Journal of Non-
Crystalline Solids. SEL did not disclose any of these
materials to the PTO during its prosecution of either the ‘132
or the ‘636 patent applications. And significantly, unlike the
references disclosed in the '636 proveeding but not in the ‘132
proceeding,” none of these materials was asserted against
SEL by a prospective licensee in the course of licensing
negotiations on these patents.
Dr. Yamazaki gave inconsistent testimony with regard to
the materiality of his Reston speech and materials. He
initially testified at the hearing that he only became aware of
[493] the importance of the Reston materials during the
Spring of 1996, and even then, only considered them to be
important with regard to the '204 patent. Dr. Yamazaki
testified that he did not submit the materials to the PTO
because the ‘204 patent had issued prior to the Spring of
1996. Later, however, Dr. Yamazaki seemed to retreat from
this position, stating that he did not understand the Reston
materials to be prior art, even with regard to the '204 patent.
Further, Dr. Yamazaki stated that his discussion at Reston
was in fact cumulative of other references cited during the
‘636 prosecution. Yet, Dr. Yamazaki also _ stated,
inconsistently, that the one-page abstract from his Reston
speech did not overlap with other references cited. In any
* Such as the Tsai article and the ‘423 and ‘488 laid open applications.
75a
event, the record is inconclusive on whether the Reston
speech was material prior art.
D. The '204 Patent Application
Samsung alleges two instances of inequitable conduct by
SEL during its prosecution of the ‘204 patent. First, Samsung
contends that SEL deliberately withheld reliable test results
which conclusively established that prior art devices attained
lower impurity levels than those claimed in the '204 patent.
Second, Samsung contends that SEL knowingly overstated
the efficiency levels achieved in the '204 patent in arguing for
patentability.
Again, the threshold issue is the relevance of any
inequitable conduct by SEL in connection with its
prosecution of the '204 patent. And, in this regard, it is
significant that the '204 patent is not a part of the ‘250
application-’132-'636 chain. Samsung contends, however, that
where inequitable conduct is found in an application that
results in an issued patent, that misconduct may render a
closely related patent-in-suit unenforceable. This contention
is an application of what is sometimes referred to as the
“infectious unenforceability” doctrine. Relying on_ this
doctrine, Samsung contends that because the '204 patent and
the ‘636 patent have a common inventor, common owner,
similar prior art references, and a similar subject matter (i. e.,
inventions relating to low impurity levels), inequitable
conduct during the prosecution of the '204 patent may be
sufficient to render the ‘626 patent unenforceable.
This argument like Samsung’s argument in connection
with the ‘132 patent, also requires an extension of existing
law. To date, no Federal Circuit decision has applied the
infectious unenforceability doctrine based solely upon such
commonalities. See Consolidated Aluminum, 910 F.2d at 812
(infectious unenforceability applied where inequitable
76a
conduct during prosecution of one patent “permeated the
prosecution of the other” patents-in-suit).”> And, because
SEL’s inequitable conduct during its prosecution of the ‘636
patent application is sufficient to render the claims of the ‘636
patent unenforceable, this issue need not be reached.
Moreover, the alleged misconduct during the prosecution
of the '204 patent is too remote from the patent-in-suit to be
probative of SEL’s plan, motive, intent and pattern and
practice with regard to-the ‘636 patent. See Fed.R Evid. 402.
403, & 404(b). The information allegedly withheld and
mischaracterized during the prosecution of the 204 patent is
not information that was material to the prosecution of the
'636 patent. And, there is no suggestion that the alleged
misconduct was connected to, or of consequence, during
SEL’s subsequent prosecution of the ‘636 patent. Thus,
Samsung has failed to establish the relevance of the alleged
misconduct with respect to the patent-in-suit.
IV.
It is clear that SEL knowingly made several highly material
withholdings and [494] mischaracterizations during the
prosecution of its ‘132 and '636 patent applications. The issue
of intent remains. And in this regard, it is worth restating that
* In Consolidated Aluminum, the Federal Circuit found that the
patentee’s inequitable conduct during the prosecution of one patent
enabled it to make “argument([s] it could not have made” in prosecuting
the applications that became the other patents-in-suit. 910 F.2d at 811.
Therefore, the patentee’s misconduct “permeated the prosecution of the
other patents-in-suit. id. at 812. On this basis, the court held that the
inequitable conduct in prosecuting the one patent had the “immediate and
necessary relation” to the equity sought by the patentee, namely the
enforcement of the other patents-in-suit, to render them similarly
unenforceable. /d. at 811-812. In the instant case, there is no such relation
between the alleged misconduct during the prosecution of the ‘204 patent
and the sought after enforcement of the '636 patent.
T7a
the “materiality of an undisclosed reference does not presume
an intent to deceive.” Halliburton, 925 F.2d 1435. Yet,
where, as here, a patentee faces a “high level of materiality
and clear proof that it knew or should have known of that
materiality, it can expect to find it difficult to establish
‘subjective good faith’ sufficient to prevent the drawing of an
inference of intent to mislead.” Critikon, 120 F.3d at 1257. In
such circumstances, a “mere denial of intent to mislead
(which would defeat every effort to establish inequitable
conduct) will not suffice.” Jd. In the final analysis, intent is a
judgment that must be made on the totality of the
circumstances; courts must determine whether an applicant’s
conduct, when “viewed in light of all the evidence, including
evidence indicative of good faith, . . . is culpable enough to
require a finding of intent to deceive.” Halliburton, 925 F.2d
at 1443.
In the instant case, a review of the record as a whole points
clearly and convincingly to the conclusion that SEL’s conduct
before the PTO with regard to the ‘636 is sufficiently culpable
to warrant a finding of intent to deceive. The evidence clearly
reveals that Dr. Yamazaki is an accomplished inventor who is
intimately involved in the prosecution of his patent
applications. As he testified, “patents are my life. They are
very important to me.” Securing a patent on the ‘636, given
its revenue generating potential, was particularly important to
Dr. Yamazaki and his company. In pursuit of this goal, the
evidence shows clearly that Dr. Yamazaki compromised his
fundamental duty of candor to the PTO.
Thus, SEL submitted to the PTO a full Japanese language
version of the Canon ‘968 application, but only a one-page
partial English translation. The partially translated portion of
Canon disclosed only one of the elements of the asserted
claims in the ‘636 application, the silicon nitride gate
insulator. Further, SEL identified the relevance of the Canon
968 application to the PTO only as "disclos[ing] the use of
78a
silicon nitride for a gate insulating layer of a thin film
transistor.” Yet, clear and convincing expert testimony
established that the untranslated portions of the Canon '968
application disclosed other elements of the structure found in
the ‘636 patent; i.e. the same intrinsic semi conductor layer,
the same sandwich structure, and the admonition to avoid
impurities. The Canon '968 thus contained the most complete
combination of the elements” described in the ‘636 patent.
These same elements, such as the limitation of an intrinsic
semiconductor layer, were used by SEL to distinguish the
‘636 patent application from prior art. And, given that Dr.
Yamazaki decided to submit just a partial translation of
Canon, it is simply not credible that Dr. Yamazaki was
unaware that the untranslated portions of the Canon '968
application disclosed the additional elements described in his
'636 patent application. These elements, of course, formed a
basis for SEL’s patentability argument.
SEL contends that its decision to provide the PTO with a
full Japanese language version of the Canon '968 application
and a partial English translation along with 90 other
references of prior art, is indicative of its good faith
compliance with the duty to disclose. Yet, far more plausible,
on this record, is that SEL’s submission of a partial
translation was an effort to conceal from the PTO the full
importance of the Canon '968 application; i.e., that it
disclosed the same structure found in the '636 patent, and not
merely one of its elements, While SEL correctly notes that
the patent examiner could have secured a full translation from
within the PTO, SEL’s brief statement of relevance
identifying only the silicon nitride gate as pertinent, coupled
with the partial translation disclosing that element, certainly
removed any incentive to do so. Thus, the evidence points
* That is, in addition to the silicon nitride gate insulator.
*> See Manual of Patent Examining Procedure § 901.05(d).
79a
clearly and convincingly to the conclusion that (1) SEL knew
that a full translation of Canon, which disclosed the same
TFT structure as described in the ‘636, would decrease the
likelihood of the ‘636 patent being issued, and (2) it
knowingly concealed the full importance of the Canon ‘968
reference in an effort to mislead the PTO.
SEL also disclosed to the PTO the Tsai article, which, as
expert testimony clearly and convincingly established, is
highly material to the subject matter of the ‘636 patent, as it
teaches the making of amorphous silicon with impurity
concentrations within the levels recited in all claims of the
‘636 patent. Also clear from the record is that SEL’s efforts to
distinguish the Tsai article, based on it’s application primarily
to solar cells and on the perpendicular direction of the current
flow, were not only invalid, but also inconsistent with its own
position on the subject. Thus, in a January 1995 letter to his
licensing agent for the ‘132 patent, Dr. Yamazaki concedes
that “we do not think there is a more relevant reference than
C.C. Tsai’s abstract of August 22, 1983 and his (sic) papers
of December, 1983.” In his ‘423 and ‘488 laid-open
applications and his ‘400 patent application, Dr. Yamazaki
clearly recognized that inventions directed to low levels of
impurities in solar cells are highly relevant to TFT’s.
Moreover, SEL’s argument before the PTO is flatly belied by
the fact that in this very infringement action, SEL originally
asserted two patents against Samsung that are directed mainly
to low levels of impurities in solar cells, the '204 and the ‘400
patents. Thus, the record points clearly and convincingly to
the conclusion that in distinguishing the Tsai article before
the PTO, SEL knowingly advanced a meritless argument in
an effort to mislead the PTO.”
% Tt is worth noting that advocacy before the PTO is appropriate. But,
there is a line between legitimate advocacy in accordance with the duty of
candor, and advocacy that the applicant surely knows has a propensity to
mislead the examiner. Here, that line was crossed.
80a
Moreover, SEL’s motive for engaging in such conduct is
illuminated by Dr. Yamazaki’s testimony of why, following
the issuance of the ‘132 patent, he felt compelled to file the
application which led to ‘636 patent. In essence, Dr.
Yamazaki testified that he knew, after meeting with several
prospective licensees who called attention to SEL’s with-
holdings during the ‘132 prosecution, that his potentially
lucrative patent was vulnerable. To remedy this problem, he
decided not to seek reissue of the 132 patent,°’ but to pursue
a new patent on the same invention that would be immune
from the problems that infected the ‘132 patent. Thus, SEL
filed and pursued the ‘636 patent. In doing so, SEL was not
required to surrender the ‘132 patent or to disclose the
specific errors that were made in connection with the
prosecution of that patent.*®
Yet, SEL still had to avoid the prior art references that it
was now forced to disclose to the PTO, such as the Tsai
article and the ‘423 and the ‘488 applications. Thus, SEL
mischaracterized the Tsai article as applying primarily to
solar cells. Further, as Dr. Yamazaki testified, SEL had to
limit the claims of the '132 patent.*? Specifically, the '636
patent is limited to an IGFET with a silicon nitride gate, and
an intrinsic silicon layer, and a sandwich structure in the
*” Reissue is the well-established procedure available to patentees who
have inadvertently and without any deceptive intention made errors before
the PTO. This procedure first requires surrender of the patent at issue as
well as a specification of errors or omissions previously made. See 35
U.S.C. § 251.
** Note, however, that the result reached here does not depend in any
way on SEL’s decision not to surrender and seek reissue of the ‘132
patent, nor does this decision suggest that SEL had a duty to do so.
°° Specifically, when asked why he limited the claims of the ‘636, Dr.
Yamazaki testified that “there were these various references. These
references were to be avoided, but I don't believe that the essential nature
of the invention also [was] changed.”
8la
channel region, while the claims in the ‘132 patent are not so
limited. Of all the references cited to the PTO in connection
with the ‘636 patent application, only the Canon ‘968
application describes a TFT containing each of these three
elements. Clearly, then, the Canon '968 was a highly material
reference to the ‘636 patent application, which posed a
significant threat to rendering the ‘636 unpatentable. It is
simply implausible, under the circumstances, that SEL was
not aware of this fact. Rather, the evidence points clearly and
convincingly to the conclusion [496] that SEL’s awareness of
this fact motivated its decision to submit just the partial
English translation in an effort to hide material information.
Finally, when viewed in conjunction with SEL’s conduct
during the prosecution of the ‘132 patent application, the
record as a whole reflects a clear pattern and practice of
initial nondisclosure, followed by incremental disclosure only
when compelled by the circumstances to do so, followed, at
times, by mischaracterization. Thus, SEL intentionally
withheid four material prior art references; the Tsai article,
the ‘423 and the ‘488 laid-open applications, and the Sony
‘2073 patent. The record as a whole points clearly and
convincingly to the fact that SEL knew of these materials
during the pertinent period. Yet, SEL disclosed the references
to the PTO only when forced to do so by a prospective
licensee. Thus, the Tsai article and the ‘423 and ‘488
applications were cited to the PTO only after these matters
were asserted by prospective American licensees during
negotiations, whereas the Sony '2073, which was called to
SEL’s attention by the Japanese patent office and not a
potential licensee, was never disclosed to the PTO.
And, after receiving an initial rejection of the ‘132 patent
based on the impurity levels in the Nakagawa ‘477 patent,
SEL submitted to the PTO an amendment which erroneously
calculated the level of impurities disclosed in the Nakagawa
'477 patent as 4 x 10'° at oms/cm’. The error, for which no
82a
satisfactory explanation was provided, conveniently provided
SEL with a basis from which to overcome the Nakagawa ‘477
patent. And when prosecuting the ‘636 patent application, the
patentability of which was dependant on its specific
limitations combined with its impurity levels, SEL concealed
the importance of the Canon "68 application and
disingenuously distinguished Tsai.
The evidence demonstrates a sophisticated, subtle, and
consistent effort to hide the ball from the PTO in a manner
plainly at odds with an applicant’s duty of candor, good faith,
and honesty. The record, as a whole, simply contains too
many instances of information withheld, and references
mischaracterized, to reach any conclusion other than that the
withholding and mischaracterizations were part of an
intentional, not accidental or inadvertent, plan to mislead the
PTO.
» 2
During its prosecution of the ‘636 patent application, SEL
knowingly made two highly material withholdings and/or
mischaracterizations. The prior art references withheld and/or
mischaracterized were not trivial, but rather were central to
the essential question of patentability. The evidence points
clearly and convincingly to the conclusion that this conduct
was performed with the intent to deceive the PTO.
Consideration of SEL’s conduct in connection with the
prosecution of the '132 patent only bolsters this conclusion.
Thus, SEL engaged in inequitable conduct during the
prosecution of the ‘636 patent, and accordingly, the entire
patent is unenforceable.
For the foregoing reasons, SEL’s patent infringement suit
against Samsung must be dismissed with prejudice.
An appropriate order shall issue.
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APPENDIX G
(Unenforceability Ruling On Reconsideration,
24 F.Supp.2d 537-45)
UNITED STATES DISTRICT COURT
E.D. VIRGINIA
No. CIV. A. 96-1460-A
October 23, 1998
SEMICONDUCTOR ENERGY LABORATORY, CO., LTD.,
Plaintiff,
Vv.
SAMSUNG ELECTRONICS Co. LTD., SAMSUNG ELECTRONICS
AMERICA, INC. AND SAMSUNG SEMICONDUCTOR, INC.,
Defendants.
[538] MEMORANDUM OPINION
ELLIS, District Judge.
In this patent infringement action, plaintiff Semiconductor
Energy Laboratory Co. (“SEL”) alleged that defendants
Samsung Electronics, Samsung Electronics America, and
Samsung Semiconductor (collectively [539] “Samsung’’)
made or sold active matrix display units that infringed SEL’s
U.S. Patent No. 5,543,636 (“the ‘636 patent”). Among its
defenses to SEL’s charge of infringement, Samsung alleged
that the ‘636 patent was unenforceable owing to SEL’s
inequitable conduct before the Patent and Trademark Office
(“PTO”). Between March 17, 1998 and April 3, 1998, a
seven-day hearing was held on Samsung’s affirmative
defense of inequitable conduct, during which time the parties
85a
presented fact and expert opinion testimony from several
witnesses, offered into evidence numerous exhibits, and
submitted written and oral arguments. By Memorandum
Opinion and Order dated April 15, 1998, the Court found that
SEL engaged in inequitable conduct during the prosecution of
the ‘636 patent, and accordingly dismissed the complaint with
prejudice. See Semiconductor Energy Laboratory, Co., Ltd. v.
Samsung Electronics Co., Ltd., 4 F.Supp.2d 477 (E.D.-
Va.1998) (“SEL 1”).
This matter is now before the Court on SEL’s motion to
reconsider the Court’s inequitable conduct ruling.
Specifically, SEL contends that numerous legal errors and
factual misunderstandings formed the foundation of this
Court’s April 15, 1998 Memorandum Opinion, and that such
errors entitle plaintiff to relief under Rule 59(e), Fed.
R.Civ.P.'
I.
Rule 59(e) permits an aggrieved
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