Large corporations are constantly railing against the alleged unethical conduct of NPEs (Non-practicing Entities, also pejoratively known as “trolls” and “those X!#?Z”) which have the temerity to sue when their patents are being infringed.

Now, in a surprising and long overdue turn of events, one of the NPEs has moved for sanctions against a large corporate defendant, claiming that the defendant’s allegations of inequitable conduct, leveled against the plaintiff’s founder and inventor, were a baseless smear campaign. (Intellect Wireless Inc. v. LG Electronics Inc. et al.)

“Inequitable conduct,” f/k/a “fraud on the Patent Office,” is an overused defense invariably raised by defense counsel who are paid by the hour. In its most common form, it is a boilerplate allegation that the patentee, or the patentee’s attorney, failed to disclose known, material prior art references to the patent examiner during prosecution of the patent application.

Inequitable conduct is a capital offense – if proven, it renders the patent unenforceable. As a practical matter, it is rarely proven and has become increasingly disfavored by the courts, which consider it an unseemly waste of resources. Regrettably, this has not discouraged the defense bar from its near universal use.

In this case, however, one of the defendants went further, specifying a number of references and other documents which the inventor failed to disclose. The inventor, taking umbrage at having his reputation tarnished, introduced evidence establishing that all of the references and documents HAD properly been brought to the examiner’s attention and sought sanctions from the defendant, arguing that this evidence had been available to the defendant and that the charge of inequitable conduct was not brought in “good faith.”

The defendant quietly withdrew its allegation, but the inventor – bless his soul – continues to seek sanctions. We wish him the best of luck.