I Hear Ya – No Intent to Deceive, No Inequitable Conduct

By on March 7, 2024
Posted In Patents

The US Court of Appeals for the Federal Circuit affirmed a district court’s finding that the asserted patents were not unenforceable for inequitable conduct, determining that statements made by counsel to the US Patent & Trademark Office (PTO) to revive an abandoned application were not shown to have been made with deceptive intent. Freshub, Inc. v. Amazon.com, Inc., Case No. 2022-1391 (Fed. Cir. Feb. 26, 2024) (Reyna, Taranto, Chen, JJ.)

Freshub sued Amazon for infringement of patents directed to voice processing technology. Amazon denied infringement and defended on the basis that the patents should be declared unenforceable based on inequitable conduct by Freshub’s parent company, Ikan Holdings, during prosecution of the application at the PTO. Amazon alleged that Ikan improperly revived an earlier-abandoned parent application from which the asserted patents descend.

The predicate facts are as follows: In June 2011, the PTO issued a final office action rejecting the claims of the parent application. Ikan failed to respond to the office action, rendering the application abandoned in January 2012. In January 2017, Ikan petitioned the PTO to revive the application. In support of its revival petition, Ikan’s counsel asserted that “[t]he entire [five-year] delay in filing the required reply . . . was unintentional.” “[R]elying on petitioner’s duty of candor and good faith,” the PTO granted the petition, eventually resulting in issuance of the three patents-in-suit.

At trial, a jury found that Amazon did not infringe the asserted patents. The district court subsequently conducted a bench trial on inequitable conduct and found that Amazon had failed to prove inequitable conduct by clear and convincing evidence. Freshub appealed, arguing that it was entitled to judgment as a matter of law that Amazon infringed. Amazon cross-appealed, seeking reversal of the district court’s inequitable conduct ruling.

The Federal Circuit affirmed the district court’s determination of failure to prove inequitable conduct, finding that Amazon had not shown by clear and convincing evidence that Ikan misrepresented or omitted material information with the specific intent to deceive the PTO. The Court focused its analysis on deceptive intent, finding that the district court did not commit clear error in rejecting Amazon’s inequitable conduct defense.

The Federal Circuit noted that the record was minimal due to the passage of time and the limited testimonial and documentary evidence available, as well as the many unchallenged claims of attorney-client privilege. Nevertheless, both parties presented evidence concerning Ikan’s intent between 2012 and 2017.

To support its position, Freshub relied on the 2017 statement by Ikan’s counsel asserting that Ikan’s delay in filing its reply to the PTO’s final office action was unintentional. The Federal Circuit found this evidence probative, even without the presentation of additional evidence to further explain why the period of non-response was so long. On the other hand, Amazon presented specific evidence that it contended demonstrated deceptive intent. For example:

  • The 2017 statement to revive the parent application was made by the same counsel that prosecuted the application at the time of its 2012 abandonment.
  • Ikan’s counsel admitted that he was aware of the PTO’s notices in 2011 to 2012, including the January 2012 Notice of Abandonment.
  • Ikan’s counsel admitted that it was his typical practice to communicate such notices to his clients.
  • A subsequent assignment agreement – signed by an Ikan principal – was also prepared by the same counsel and listed the parent application as “Inactive/Abandoned/Expired.”
  • Several privilege log entries showed that Ikan’s counsel communicated with Ikan regarding the parent application immediately after the June 2011 final office action, to which Ikan did not respond.

The Federal Circuit concluded that Amazon did not demonstrate by clear and convincing evidence that the abandonment was intentional. The Court explained that to demonstrate inequitable conduct, the relevant deceptive intent must be held by Ikan’s principals. The Court concluded that the evidence was insufficient to establish that Ikan’s principals had received and understood the relevant communications and intentionally authorized the abandonment of the parent application at any point from 2012 through 2017. Even though the evidence showed that Ikan’s counsel knew that the application had been abandoned, whether the statement to the PTO was made with deceptive intent depends on what counsel believed about the intent of Ikan itself. Therefore, regardless of whether counsel’s belief was legally correct, the district court could properly find that Ikan itself had not intended to abandon the parent application.

Kyle Sorenson, PhD
Kyle Sorenson, PhD, focuses his practice on patent litigation, patent prosecution, due diligence and licensing. Read Kyle Sorenson's full bio.