STC.UNM v. Intel Corporation

Filing 103

Intel's RESPONSE to STC's Submission of Supplemental Authority Regarding STC's Motion to Dismiss Intel's Inequitable Conduct Allegations re 101 Unopposed MOTION for Leave to File A Submission of Supplemental Authority filed by Intel Corporation. (Rodriguez, Justin)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW MEXICO
STC.UNM,

Civil No. 1:10-cv-01077-RB-WDS
Plaintiff,

v.
INTEL CORPORATION,
Defendant.

I NT E L ’S R E SP O NSE T O ST C ’S SUBM I SSI O N O F SUP P L E M E NT AL
AUT H O R I T Y R E G AR DI NG ST C ’S M O T I O N T O DI SM I SS
I NT E L ’S I NE Q UI T ABL E C O NDUC T AL L E G AT I O NS

By agreement of the parties and Order of the Court [Doc. No. 102], Intel submits this
response to STC’s Submission of Supplemental Authority Regarding STC’s Motion to Dismiss
[Doc. No. 101]. As shown below, STC’s Submission neglects to mention an important aspect of
the Federal Circuit’s recent en banc decision in Therasense, Inc. v. Becton, Dickinson & Co.,
2011 WL 2028255 (May 25, 2011), and then proceeds to misapply that decision to the facts of
this case and Intel’s pleading.
The Federal Circuit majority did adopt a general rule that inequitable conduct claims
based on a patent applicant’s failure to disclose a prior art reference to the PTO require proof of
“but-for materiality”—i.e., that the PTO would have disallowed one or more patent claims if it
had known of the undisclosed reference. But the Federal Circuit pointedly distinguished “mere
nondisclosure of prior art references” from “cases of affirmative egregious misconduct,” Id. at
*12. And it expressly held that but-for materiality is not required in cases of “affirmative acts of
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egregious misconduct, such as the filing of an unmistakably false affidavit.” Id. Instead, such
affirmative misconduct is material per se. Id. Indeed, the majority provided a detailed historical
analysis of Supreme Court case law supporting its view that such affirmative misconduct is the
fundamental core of the doctrines of inequitable conduct and “unclean hands.” Id. at *4-6, *12.
Here, Intel’s primary ground for claiming inequitable conduct is not mere failure to
disclose a prior art reference. Intel primarily alleges that STC deliberately and affirmatively
deceived the PTO into issuing a “Certificate of Correction” stating that the ’998 patent was a
“continuation-in-part” of an earlier Brueck/Zaidi patent (the ’321 patent). [See Doc. No. 38,
¶¶ 20-29, 31-45, 65, 67, 71-94]. As explained in Intel’s pleading [id.] and its opposition to
STC’s motion to dismiss [Doc. No. 51], shortly after STC began trying to enforce the ’998
patent, STC sought to backdate the patent’s effective filing date so that it could avoid
invalidation by a prior art reference (the ’258 patent) raised by one of the targets of its
enforcement campaign. STC could and should have asked the PTO to reissue the ’998 patent as
a continuation-in-part of the ’321 patent. But if STC had done that, it would have had to disclose
the ’258 patent, it would have had to identify precisely where the ’321 patent application’s
specification supported the ’998 patent claims, and it would have had to explain away the named
inventors’ vehement, repeated assertions during the original prosecution that there was no
connection between the inventions claimed in the ’998 patent and ‘321 patents. Instead, STC
pursued the summary “Certificate of Correction” procedure, which entails far less scrutiny. To
get the PTO to issue the “correction” and backdate the ’998 patent with minimal review, STC
and its counsel affirmatively misrepresented that the applicants’ failure to claim priority to the
’321 patent when prosecuting the ’998 patent was a mere “clerical mistake.”

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Intel’s allegation of inequitable conduct in connection with the Certificate of Correction
is consistent with Therasense for two reasons:
1. Intel alleges affirmative egregious misconduct, which is material per se. STC
falsely claimed to the PTO that it was merely seeking to correct a “clerical mistake” when, in
truth, the applicants never thought they deserved priority to the ’321 patent. Contrary to STC’s
suggestion, the PTO was not aware that STC’s claim of “clerical mistake” was false. Nor was
the PTO aware of STC’s ulterior motive for pursuing “correction” rather than reissue.
2. Intel can establish but-for materiality even if STC’s misconduct does not
qualify as affirmative egregious misconduct. Intel contends that if STC had been honest and
asked the PTO to reissue the ’998 patent with an earlier priority date, STC would have been
forced to disclose the ’258 patent and the PTO would have disallowed one or more claims of the
’998 patent because they lacked support in the ’321 patent application.
Of course, Intel drafted its pleading before Therasense, so it could not have anticipated
and did not use Therasense’s precise terminology. Accordingly, to the extent the Court
concludes that Intel’s current pleading regarding the Certificate of Correction does not satisfy the
newly announced standards, Intel requests (and the Court should grant) leave to replead.
Intel’s answer and counterclaims also include an alternative ground for finding
inequitable conduct, a theory involving the applicants’ failure to disclose during the original
prosecution an article that two of them (Brueck and Zaidi) published years before. [See Doc. No.
38, ¶¶ 30, 66, 68-70] As to this ground, STC’s Submission offers no new argument based on
Therasense and instead rehashes its earlier argument that its Certificate of Correction eliminated
the article as prior art. Intel’s Opposition already rebuts this point. [Doc. No. 50 at 16-17]

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Nevertheless, Intel acknowledges that its alternative theory alleges “mere” failure to disclose the
Brueck/Zaidi article, and that Therasense thus requires proof that the PTO would have rejected
one or more claims if the applicants had disclosed the article. Intel doubts that it can satisfy the
newly heightened standard and therefore agrees to strike the corresponding portions of its Fifth
Affirmative Defense and Third Counterclaim. Intel’s agreement assumes that Therasense
remains good law, and Intel reserves the right to move to reinstate its allegation of failure to
disclose the Brueck/Zaidi article if the Supreme Court or Congress alters the but-for materiality
standard adopted in Therasense.
Dated: June 9, 2011.

Respectfully submitted,
A TKINSON , T HAL & B AKER , P . C .
/s/ Clifford K. Atkinson
Clifford K. Atkinson
Douglas A. Baker
Justin D. Rodriguez
201 Third Street, N.W., Suite 1850
Albuquerque, New Mexico 87102
[phone]
K EKER & V AN N EST

LLP

Robert A. Van Nest
Brian L. Ferrall
P ERKINS C OIE

LLP

Chad S. Campbell
Timothy J. Franks
Attorneys for Defendant
Intel Corporation

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Certificate of Service
The undersigned hereby certifies that on June 9, 2011, the foregoing document was
electronically filed with the Clerk of Court using the CM/ECF system, which will automatically
send notification of such filing to all counsel who have entered an appearance in this action.
A TKINSON , T HAL & B AKER , P . C .
/s/ Justin D. Rodriguez
Justin D. Rodriguez

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