Forgery And Litigation Misconduct Doom Patent, Trigger Sanctions

Posted on | February 17, 2010 | No Comments

2010-1149 Applied Materials v. Multimetrixs
ND/CA 06-cv-7372
Judge Marilyn Hall Patel

Defendants appeal from the orders of Judge Patel finding their patent, 6,831,287 unenforceable due to inequitable conduct before the PTO and then sanctioning them under § 285 and inherent powers. The ‘287 patent relates to a dual sensor design for vapor deposition processing of silicon wafers.

Applied develops machines and systems for manufacturing semiconductor wafers and, in 2001, worked with Multimetrixs on an improved sensor and position system for the shutter disks used in its physical vapor deposition process.

Three engineers from Multimetrixs ultimately filed the patent application that became the ‘287 patent. Applied recently filed suit to correct inventorship under 35 U.S.C. § 256, and Multimetrixs counterclaimed for infringement.

During the bench trial on inventorship, Applied elicited testimony from one of the Multimetrixs’ inventors that a signature of the third named inventor had twice been forged in documents submitted to the PTO. Indeed, this third inventor had died in 2002, yet “signed” submissions to the PTO in 2003 and 2004.

Based on this testimony the court sua sponte raised the issue of inequitable conduct. After briefing and additional argument, the court found the patent unenforceable. In its order, the court first found that an inventor’s signature is material, rejecting defendants’ argument that the forgery of a deceased co-inventor is immaterial because they could have proceeded anyway (see, e.g., MPEP Appendix R, § 1.42 ):

Likewise, in this case, the issue is not whether the surviving inventors could have successfully prosecuted the patent without resort to forging the deceased inventor’s signature. The availability of valid alternatives is not the issue. The issue is whether what the surviving inventors in fact chose to do was inequitable conduct. David Margulis died in 2002 and his signatures on both the 2003 and 2004 documents were forgeries. The court concludes that there is clear and convincing evidence of the submission of materially false information that a reasonable examiner would substantially likely consider relevant and important.

Inequitable Conduct Order, p. 9.

The court also found clear and convincing evidence of deceptive intent, based mostly on the remaining inventors’ testimony and litigation tactics. The each tried to testify that the third inventor died in 2004 and, according to court, repeatedly tried to hide the forgeries. Once confronted with the truth, they offered no explanation for the forgeries:

Other than ex post rationalization based on that fact that the surviving inventors could have pursued other valid alternatives, the defendant has offered no explanation for why David Margulis’ signature appeared on documents submitted to the PTO in 2003 and again in 2004, when in fact he died in 2002. Even after the forgeries were revealed at trial, Multimetrixs and its witnesses offered no explanation or excuse for their conduct. Nor has Multimetrixs explained how its witnesses provided the same parallel but false testimony about the (incorrect) date of Margulis’ death. Based on the evidence presented at trial, the court finds clear and convincing evidence that the surviving inventors intentionally submitted documents to the PTO knowing that David Margulis was dead and knowing that his signature was forged. The court concludes that the forged documents were submitted with intent to deceive the PTO.

Inequitable Conduct Order, p. 12-13.

After finding the patent unenforceable and some more maneuvering (including Multimetrixs filing for bankruptcy), the court also found the case exceptional and award fees and costs against Multimetrixs.

Sanctions: Up to this point, the co-inventors were not named defendants to the case, but Applied sought and obtained leave under Fed. R. Civ. P. 15 to amend its complaint and add them. It then asked for an exceptional case finding and award of fees against the individuals, which the court granted to the tune of about $1.4 million.

Most of the individual defendants’ arguments at this point are based on being sanctioned for litigation conduct that occurred when they were not actually parties to the case. The court was unpersuaded, finding that they were afforded notice and opportunity to defend against the § 285 claim. Also, the court found that these individuals controlled Multimetrixs and were therefor responsible for its litigation conduct.

PATracer Note: Multimetrixs’ counsel sought to withdraw (an a sealed motion) after the bench trial, which the court ultimately allowed:

Pursuant to California Rule of Professional Conduct 3-700(C)(1)(c) and (d), an attorney may request permission to withdraw if the client insists that the attorney pursue a course of conduct that is illegal or that is prohibited under the rules of professional conduct, or if the client by his conduct renders it unreasonably difficult for the member to carry out the employment effectively.

California law imposes a duty of candor on all attorneys. Bus. & Prof. Code § 6068; Rule of Professional Conduct 5-200(B). “Counsel should not forget that they are officers of the court, and while it is their duty to protect and defend the interests of their clients, the obligation is equally imperative to aid the court in avoiding error and in determining the cause in accordance with justice and the established rules of practice.” Datig v. Dove Books, Inc., 73 Cal. App .4th 964, 980 (1999). Given the conduct of defendants during the course of trial, the court recognizes the existence of conflicts which may make it impossible or unreasonably difficult for defense counsel to continue representation. Accordingly, the request of defense counsel to withdraw is GRANTED.

Inequitable Conduct Order, p. 14.

2010-1149 Inequitable Conduct Order

2010-1149 Exception Order