Let’s Get Ready To Rumble: Dickson Smacks Down PET

Posted on | May 26, 2008 | 3 Comments

2008-1372 Dickson Industries v. Patent Enforcement Team LLC
WE/OK 02-0467

Patentee Patent Enforcement Team (PET) appeals from the judgment of Judge Joe Heaton entering the jury’s verdict that claim 5 of 4,701,069 is invalid under §§ 102/103 and that PET tortuously interfered with Dickson’s business relations–awarding over $500k in actual and $1 million in punitive damages.  The jury verdict is nicely covered by Peter Zura here.  The court also found the ‘069 unenforceable due to inequitable conduct during reexamination and the case to be exception under § 285, awarding Dickson an additional $600k for attorney’s fees.

The ‘069 patent is directed to an apparatus and method for cutting grooves in a road
surface, such as at the edges of the road to form a road marker system.  Think "rumble strips."  Dickson makes machines to cut such grooves, and PET sent threatening letters to Dickson and its customers.  When business suffered, Dickson filed a declaratory judgment action and, later, state law claims against PET.

Invalidity: Dickson presented several pieces of prior art, including patents and a road cutting device, that invalidated claim 5.  In its JMOL, PET argues that the prior art and testimony do not "clearly and convincingly" contain each element of claim 5.  The judge disagreed, noting evidence which, if believed by the jury, would support the jury’s verdict.  The jury’s invalidity views may have been influenced by the inequitable conduct evidence presented (see below). 

Also, as Peter Zura pointed out, the judge instructed the jury that it needn’t give the patent a presumption of validity due to the reexamination because the ‘069 overcame a non-final rejection under the TSM test rather than the later-decided KSR analysis:

The reexaminer’s determination as to obviousness of the ‘069 patent had
relied on the approach of those courts which improperly applied the
[TSM] test. You are therefore instructed that the reexaminer’s
determination as to obviousness of the ‘069 patent is not entitled to a
presumption of validity due to this improper application of the
applicable test.

Tortuous Interference: Essentially PET argue that it has the right to put potential infringers on notice and to threaten litigation–the jury clearly felt PET crossed the line, particularly given its inequitable conduct and "knoewledge" that the ‘069 was likely invalid.

Inequitable Conduct: Dickson asserted inequitable conduct during both the original prosecution of the ‘069 and during reexamination.  The court’s ruling on inequitable conduct specified it was based on the reexamination.

In about 2001, PET sued Dustrol in ED/TX and, after some discovery, the case settled.  In discovery Dustrol produced several pieces of prior art, including charts applying the art, to claim 5.  During the subsequent reexamination, however, PET did not disclose this prior art or any of Dustrol’s other discovery responses or charts.  Noting that the duty of disclosure covers art that establishes a prima facie case of invalidity or is inconsistent with arguments taken by the patentee with the examiner, the court found inequitable conduct.

PET’s witnesses (including attorneys and experts) acknowledged that the references were material, but PET countered that there was no intent to deceive.  However, both PET and its counsel knew of the references and how it applied to the ‘069 so as to infer intent–besides, PET could not come up with a believable explanation as to why it didn’t provide the information to the PTO.

Also withheld from the PTO was evidence, including written statements and a declaration, from the inventor admitting that he was aware of some prior art but didn’t disclose it during the initial examination.  Indeed, one of PET’s owners subsequently told the inventor to "keep his mouth shut" about this art during the reexamination.

Notes and Comments: Is it just us or is "Patent Enforcement Team" a really bad, unsympathetic name?  It is better than "Patent Troll LLC" or "Greedy People, Inc." but it doesn’t really set the right tone to the judge/jury.  How about "Small Inventor In Basement Just Trying To Feed The Orphans And Puppies, LLC?"

More Reading: 

Dickson’s Motion re Inequitable Conduct

Order on Inequitable Conduct

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