Here is the court ruling from the magistrate (from about 10 days ago I think). This is a publicly available court document (available electronically through a system called PACER). As legal opinions go, it has its share of mind-numbing legalese; I'll give my take on it in a later post:
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
ERICSSON RADIO SYSTEMS, INC., et al,
Plaintiffs,
V.
INTERDIGITAL COMMUNICATIONS CORPORATION, et al,
Defendants.
Civil No. 3:93-CV-1809-H
(Consolidated with
Civil No. 3:93-CV-2119-H)
MEMORANDUM OPINION AND ORDER
Pursuant to the District Court?s Order of Reference, filed October 8, 1999, came on to be considered Plaintiff?s Motion to Compel Based on Crime-Fraud, filed October 8, 1999. At issue is whether Plaintiff Ericsson Radio Systems, Inc. ("Ericsson") is entitled to discover certain documents based on the crime-fraud exception to the attorney-client privilege and work-product immunity doctrines. Having considered the pertinent pleadings and the evidence submitted, this Court DENIES the motion for the reasons that follow:
I. Background
This is a patent infringement case. The patents involved in this motion are United States Patent Nos. 5,657,358 ("the ?358 patent"); 5,687,194 ("the ?194 patent"); and 4,817,089 ("the ?089 patent"). [Note 1] Also relevant to the Court?s analysis of this motion is the case of Motorola, Inc. v. Interdigital Tech. Corp., 121 F.3d 1461 (Fed. Cir. 1997).
In October 1993, Motorola sued Interdigital Technology Corporation ("ITC") for a declaration of non-infringement and invalidity for six of ITC?s patents. [Note 2] Motorola, 121 F.3d at 1464-65. ITC counter-sued Motorola for infringement of those patents, which included the ?089 patent that is the subject of this motion. 14 at 1464-65. After a trial, the jury returned a verdict on March 29, 1995, in favor of Motorola finding all of ITC?s patent claims not infringed or invalid. Id. at 1465.
According to Ericsson, at the time of the jury?s verdict, Interdigital had two additional patent applications pending before the United States Patent and Trademark Office ("PTO"). Pl.?s Mot. at 2. Those applications became the ?194 patent and the ?358 patent that are also the subject of this motion. Id. at 2 n.4.
Following the Motorola jury?s verdict, Interdigital advised the PTO that its claims had been found invalid. Pl.?s Mot., Selinger Decl., Ex. E at 39. Interdigital also advised the PTO that some of its claims had been invalidated due to "anticipation" by two 1981 articles published by Kinoshita, a Japanese engineer. [Note 3] Id., Ex. E at 40-41. The PTO thereafter rejected Interdigital?s pending
applications for the ?194 and ?358 patents and also rejected the ?089 patent during a reexamination.
Pl.?s Mot. at 3.
Subsequent to these rejections, Interdigital successfully argued to the PTO that its claims in the ?194, ?358, and ?089 patents were distinguishable from relevant prior art and from those claims that were invalidated by the Motorola jury. See Pl.?s Mot., Selinger Decl., Ex. E at 55-57 and Ex. F at 17. Accordingly, the PTO reissued the ?089 patent and allowed issuance of the ?194 and ?358
patents. See Id., Exs. O and P.
Ericsson filed the instant motion to compel on October 8, 1999, alleging that Interdigital committed fraud on the PTO in connection with the prosecution of the ?089, ?194, and ?358 patents. Def.?s Br. at 3-4, 6-7. More specifically, Ericsson alleges that Interdigital (1) misrepresented the meaning of a 1984 article published by Kinoshita despite its own expert?s contrary interpretation of the article; (2) misrepresented the findings of the Motorola jury regarding a memory component of the ?358 patent; (3) misled the PTO into concluding that Interdigital had a nonobvious design goal of "spectral efficiency," and (4) misrepresented to the PTO that claim 1 of the ?194 patent was distinct from claim 91 of the 5,119,375 patent which was invalidated by the Motorola jury. Id. at 3 n.7, 6-7.
As a consequence of Interdigital?s alleged fraud, Ericsson requests the Court to compel Interdigital to produce all documents pertaining to the prosecution of the ?194 and ?358 patents and the reexamination of the ?089 patent that have been withheld on the basis of attorney-client privilege and work-product immunity. Id. at 1; Def.?s Mot. at 1. Ericsson also requests that it be allowed to depose or re-depose the lawyers, in-house counsel, and outside consultants involved in the prosecution of these patents free from any objections by Interdigital based on grounds of attorney-client privilege or work-product immunity. Id.; Id. Interdigital filed its response on October 28, 1999, and Ericsson filed its reply on November 12, 1999. Before turning to address the allegations in Ericsson?s motion, the Court will review the standards governing a motion to compel based on crime-fraud.
II. Analysis
A. Crime-Fraud Exception as Applied in Patent Prosecutions
"Communications between attorney and client made in furtherance of a crime or fraud are not protected by either the attorney-client privilege or work-product immunity." Derrick Mfg. Corp. v. Southwestern Wire Cloth, Inc., 934 F. Supp. 813, 815 (S.D. Tex. 1996)(citations omitted). The
person asserting the crime-fraud exception must establish a prima facie case that fraud has been committed, and that the communications sought to be discovered bear a relationship to the alleged fraud. Id. at 815-16 (citing Ward v. Succession of Freeman, 854 F.2d 780, 790 (5th Cir. 1988), cert. denied, 490 U.S. 1065, 109 S.Ct. 2064, 104 L.Ed.2d 629 (1989)).
"Applicants for patents are required to prosecute applications in the PTO with candor, good faith, and honesty." Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed. Cir. 1995). A breach of this duty constitutes inequitable conduct which may include affirmative misrepresentation of a material fact or failure to disclose material information with the intent to deceive the PTO. Id. In order to overcome the attorney-client privilege and work-product immunity, however, it is insufficient
to simply show that inequitable conduct occurred before the PTO. Am. Optical Corp. v. United States, 179 U.S.P.Q. 682, 684 (Ct.Cl. 1973); Monon Corp. v. Stoughton Trailers, Inc., 169 F.R.D. 99, 101-02 (N.D. Ill. 1996). Rather, the party asserting the crime-fraud exception must prove a prima facie case of common law fraud by establishing (1) a knowing, willful, and intentional act of misrepresentation or omission before the PTO; (2) materiality of the misrepresentation or omission; and (3) actual reliance by the PTO on the misrepresentation or omission. Id.; Id. at 102.
With these standards in mind, the Court now turns to address the allegations in Ericsson?s motion.
B. 1984 Kinoshita Article
Ericsson contends that Interdigital committed fraud on the PTO by misrepresenting the teachings of a 1984 Kinoshita article discussing wireless telephone systems. [Note 4] Specifically, Ericsson contends that Interdigital misled the PTO by arguing that the 1984 Kinoshita article taught away from using TDMA, when its consulting expert, Professor Helgert, expressed a contrary opinion; i.e., that the 1984 article "applied to use of TDMA over the 25 kHz bandwidth." Pl.?s Br. at 11; Pl.?s Reply at 5. Ericsson further complains that Interdigital failed to mention both the 1984 article in Helgert?s final declaration and his opinion relating thereto. Id.; Id.
Interdigital counters that it did not intentionally mislead the PTO because it disclosed the 1984 Kinoshita article on the Information Disclosure Statement [Note 5] submitted with the patent applications, and it spent numerous hours with the patent examiner reviewing all of the prior art references. Def.?s Resp. at 6,8. Interdigital further contends that its conduct was not fraudulent because the examiner had all of the relevant prior art before him and, therefore, he was free and competent to reach his own
conclusion regarding the 1984 Kinoshita article. Id. at 6-7.
When an examiner knows of the relevant prior art and can reach his own conclusions regarding patentability, an attempt to distinguish or to advocate a particular interpretation of the prior art does not constitute a material omission or misrepresentation absent evidence of an intent to deceive. Akzo v. U.S. Int?l Trade Comm?n, 808 F.2d 1471, 1482 (Fed. Cir. 1986), cert. denied, 482 U.S. 909, 107 S.Ct. 2490, 96 L.Ed.2d 382 (1987); Gargoyles, Inc. v. United States, 33 U.S.P.Q.2d 1595 (Fed. Cl. 1994), aff'd, 113 F.3d 1572 (Fed. Cir. 1997). Ericsson does not dispute that the 1984 Kinoshita article was submitted to the examiner and that he considered it during the
reexamination of the ?089 patent and before the issuance of the ?358 and ?194 patents. Nor does Ericsson dispute Interdigital?s contention that Berner spent numerous hours reviewing all of the prior art references with the examiner. In the amendment filed with Professor Helgert?s declaration, Berner stated, "n a 1984 paper by Kinoshita ... it is noted that there is absolutely no mention anymore of TDMA. This paper is entirely an FDMA approach. It would thus appear that by 1984, Kinoshita
himself had no longer any interest in TD-FDMA and only focused on FDMA." Pl.?s Mot., Selinger Decl., Ex. C at 23.
Berner?s statements to the PTO do not show an intent to deceive, but rather an attempt to distinguish relevant prior art and to advocate for the issuance of Interdigital?s patents. Under these circumstances, the Court cannot say that Interdigital made any intentional misrepresentations or omissions.
Furthermore, there is no evidence that the PTO actually relied on the alleged misrepresentations or omissions. In order to establish reliance, Ericsson must show that the examiner would have rejected the patent applications had he been aware of or known the truth of the alleged omission or misrepresentation. Laser Indus., Ltd v. Reliant Tech, Inc., 167 F.R.D. 417, 423 (N.D. Cal. 1996); Am. Optical, 179 U.S.P.Q. at 684. Ericsson contends that the PTO relied on
Interdigital?s misrepresentations regarding the 1984 Kinoshita article simply because it withdrew its
objections over the ?089, ?358, and ?194 patents after Interdigital submitted the Helgert declaration and accompanying amendments. Pl.?s Br. at 12. There is no evidence that Helgert?s opinion regarding the 1984 Kinoshita article would have, without more, caused the PTO to reject these patents. See Laser Indus., 167 F.R.D. at 423. Accordingly, with regard to the 1984 Kinoshita
article, Ericsson?s motion to compel should be denied.
C. Memory Component of ?358 Patent
Ericsson next contends that Interdigital committed fraud by failing to disclose to the PTO the significance of the Motorola jury?s findings regarding a memory component of its ?358 patent. [Note 6] Pl?s Br. at 12-13; Pl.?s Reply at 2-3.
Similar to the above analysis, the Court finds that Ericsson has failed to show either an intentional misrepresentation rising to the level of common law fraud, or the PTO?s reliance on the alleged misrepresentation. Ericsson admits in its briefing that Interdigital identified to the PTO the claims which the Motorola jury had invalidated, including claim 10 of the ?863 patent. Pl.?s Reply at 2-3. In fact, Berner testified that when he received a written copy of the jury verdict, he called the
examiner, gave him the details of the verdict, and told him that he would be submitting an amendment to clarify. Pl?s Mot., Selinger Deci., Ex. B at 52. Although Berner was unsure whether the examiner received a copy of the verdict, Berner did provide him with an amendment explaining the
jury verdict. Id. at 52-53. Further, Berner stated that he and the examiner discussed the invalidated claims through telephone and personal interviews and discussed how the PTO was going to view the verdict. Id. In these interviews, Berner and the examiner compared the invalidated claims with those that were pending before the PTO because the examiner told Berner that any pending claims which
were identical to the invalidated claims would be rejected as unpatentable. Id. at 53-54. Otherwise, if the pending claims were different from the invalidated claims, the PTO would review those claims de novo for patentability. Id at 54. Berner also informed the examiner that Interdigital intended to file post-trial motions and to appeal the jury?s verdict to the Federal Circuit Court of Appeals. Id.
at 55.
The evidence clearly shows that the examiner had before him all of the relevant prior art regarding the ?358 patent, including the 1981 Kinoshita article and the Motorola jury?s findings. Ericsson has presented no evidence suggesting that the examiner was incompetent to review and
interpret the jury?s findings and the 1981 Kinoshita article. As such, the examiner was capable of determining the patentability of the ?358 application, and therefore, Interdigital?s advocacy for a particular interpretation of the 1981 Kinoshita article will not be deemed a material misrepresentation absent evidence of an intent to deceive. See Akzo, 808 F.2d at 1482.
With regard to the reliance element, Ericsson contends that the PTO relied on Interdigital?s alleged misconduct because it stated as a basis for its decision to issue the ?358 patent that "the prior art [the 1981 Kinoshita article] fails to teach the feature of a time-frequency multiplexing system in which memory is used to keep track of time/frequency channel assignment in the manner and type of
system claimed." Pl.?s Br. at 14; PL?s Mot., Selinger Decl., Ex. P at para 3. Although this statement indicates that the PTO agreed with Interdigital?s arguments, the very next sentence in the PTO decision states, "[s]econd, the prior art fails to teach the periodic exchange of information during the course of communication ... concerning connection status, link quality, power and timing .. ." Pl.?s Mot., Selinger Decl., Ex. P at para 3. Thus, the PTO had a second, unrelated basis for issuing the ?358 patent. Accordingly, Ericsson cannot show that had the PTO been aware of Interdigital?s alleged misconduct regarding the 1981 Kinoshita article, it would have rejected the ?358 application without more. See Laser Indus., 167 F.R.D. at 423. Therefore, Ericsson?s motion to compel should be denied.
D. Design Goal of "Spectral Efficiency" [Note 7]
Ericsson next contends that Interdigital committed fraud by alleging to the PTO that its patents had a unique design goal of "spectral efficiency," despite the fact that GTE had previously defined the goal in a product specification issued to Interdigital in 1983. [Note 8] Pl.?s Br. at 15-16; Pl.?s Reply at 7-8. Interdigital counters that it was not required to disclose the previous GTE product
specification because (1) it is not considered "prior art" as defined in 35 U.S.C. õ 102; and (2) it was cumulative of other prior references already before the PTO that addressed the goal of spectral efficiency. Def.?s Reap. At 10-11.
If information that is allegedly withheld from the examiner is merely cumulative of information considered by him, such withheld information is not material. Molins, 48 F.3d at 1179. The evidence here indicates that the examiner, in considering Interdigital?s patent applications, reviewed
three prior references discussing the design goal of spectrum efficiency as well as two other references
discussing efficient frequency utilization. Def.?s Resp., Ex. C at 4-6. Therefore, even assuming that the GTE product specification is considered prior art, the Court agrees that it is cumulative of information considered by the examiner in deciding to issue Interdigital?s patents.
Moreover, because the examiner reviewed other prior references addressing the goal of spectral efficiency, Ericsson cannot show that he relied on Interdigital?s alleged misrepresentation by showing that he would have rejected the patent applications had he known of GTE?s product specification. See Laser Indus., 167 F.R.D. at 423
Accordingly, Ericsson has not established the necessary elements of common law fraud and, consequently, its motion should be denied.
E. Claim 91 of 5,119,375 Patent vs. Claim 1 of ?194 Patent
Ericsson also contends that Interdigital misled the PTO by asserting that claim 1 of the ?194 patent was distinct from claim 91 of the ?375 patent which was invalidated by the Motorola jury. Pl.?s Br. at 3 n.7. Ericsson alleges that the two claims are not substantively different and, thus,
Interdigital committed fraud by convincing the PTO otherwise. Id.
As explained more fully above, Interdigital?s patent attorney reviewed the Motorola jury?s findings with the examiner, including the claims that were invalidated. Ericsson has provided no evidence showing that Interdigital withheld any information regarding these two claims from the examiner. The examiner had all relevant information before him, and he was capable of comparing the claims and reaching his own conclusions as to the ?194 patent. Under these circumstances, Interdigital?s advocacy in pursuing the ?194 patent does not rise to the level of common law fraud. Accordingly, Ericsson?s motion to compel should be denied.
III. Conclusion
For the foregoing reasons, Ericsson?s Motion to Compel Based on Crime-Fraud is DENIED.
SO ORDERED,
December 28, 1999.
Jane J. Boyle
UNITED STATES MAGISTRATE JUDGE
Note 1 Ericsson?s motion seeks relief pertaining to these patents and United States Patent Nos. 4,785,450 and 5,022,024. Ericsson?s briefing, however, discusses the Defendant?s alleged misconduct only in connection with the ?358 patent, the ?194 patent, and the ?089 patent.
Note 2 According to the complaint filed in this case, ITC is wholly-owned subsidiary of Defendant Interdigital Communications Corporation ("Interdigital") that was formed for the sole purpose of licensing the patents belonging to Interdigital. Pl.?s Original Compl. at para 6.
Note 3 These articles, as well as others published by Kinoshita, discussed the workings of digital wireless telephone systems.
Note 4 After the ?358, ?194, and ?089 patents were initially rejected by the PTO, Interdigital filed certain
amendments attempting to distinguish these patents from the patent claims invalidated by the Motorola jury and from other relevant prior art including the articles published by Kinoshita. See Def.?s Mot., Selinger Decl., Exs. C, E, F, L. Accompanying one of these amendments was a declaration by Interdigital?s consulting expert, Professor Herman Helgert, which discussed Interdigital?s patents in relation to previous Kinoshita publications. Id., Ex. J. A portion of Helgert?s declaration addressed two different
techniques known as Time Division Multiple Access ("TDMA") and Frequency Division Multiple Access ("FDMA") which are used for communications between a base station and multiple subscriber stations in wireless telephone systems. Id., Ex. para 6. According to Kenneth Berner, Interdigital?s patent attorney, he was trying to convey to the PTO . . . |
