As the reader may (read: “should”) know, Patent Office rules impose a duty of candor and good faith upon “all individuals associated with” the filing and prosecution of a patent application.
In addition to each named inventor and each attorney or agent involved in the prosecution, the duty extends to “every other person who is substantively involved in the preparation or prosecution of the application and who is associated with the inventor or assignee [of the application].” Heretofore, the C.A.F.C. has not addressed the question of what constitutes “substantive involvement.” Well, the reader can relax, they just corrected that omission. (Avid Identification Systems, Inc. v. The Crystal Import Corporation et al.)
In 1985, Dr. Hannis Stoddard conceived the idea of implanting encrypted computer chips beneath the skin of household pets for the purpose of aiding in their identification and return if they strayed or became lost – and, incidentally, giving rise to the plots of several science fiction novels. Not himself being a techno-weenie, he hired two individuals to design and develop the chip and an associated chip-reading device. The results of their efforts became the subject of a patent application in which the said two individuals were named as the sole inventors. Dr. Stoddard was not so named.
The patent, which ultimately issued on this application, was assigned to Avid, a closely held corporation, of which Dr. Stoddard was president. Avid sued Crystal Import, alleging infringement of this patent.
During the litigation, it was disclosed that Dr. Stoddard had sold patented pet identification systems more than a year prior to the filing of the corresponding patent application. It was further determined that Dr. Stoddard was aware that these sales invalidated any patent which issued on the said application and that he “intentionally withheld evidence of such sales from the PTO in an effort to deceive the PTO and secure allowance of the … patent.”
Remember here that Dr. Stoddard was not a named inventor of the patented invention and claimed that he was not involved in the preparation or prosecution of the subject patent application. So, is Dr. Stoddard “an individual associated with” the prosecution of the patent, such that his actions constituted “inequitable conduct” which invalidated it? To quote that great American stateswoman, Sarah Palin, “you betcha”!
The C.A.F.C. held – in a footnote, but actually it’s the key to the decision – that, “the district court may properly consider a variety of factors, such as an individual’s position within the company, role in developing or marketing the patented idea, contact with the inventors or prosecutors, and representations to the PTO in deciding whether that individual is ‘substantially involved’ within the meaning of [the patent statute] and thus owes a duty of candor to the PTO.”
Of course, it didn’t help Avid’s case that “the district court determined that Dr. Stoddard’s testimony at trial was not credible, his memory of facts was suspiciously selective, and he refused to acknowledge certain incontrovertible events.”
THE LESSONS TO BE LEARNED: (1) Assume everyone in sight owes a duty of candor to the PTO; and (2) don’t do anything which could result in a loss of credibility.