THE WHO, WHAT, AND WHY OF INEQUITABLE CONDUCT.

1. THE INTELLECTUAL PROPERTY MINUTE
APRIL 2010: THE WHO, WHAT, AND WHY OF INEQUITABLE CONDUCT
The claim of inequitable conduct has always focused on the “what” (is the prior art material?) and the “why” (was the
prior art not submitted to the PTO with the intent to mislead?). But on April 26th in Avid Identification Systems v. The
Crystal Import Corporation and Datamars (Fed. Cir. 2009-1216, -1254), the Federal Circuit added the “who” factor that
now must be considered in all situations involving inequitable conduct.
To be fair, there has always existed the “who” factor. The duty of candor imposed by 37 C.F.R. §1.56 includes all
individuals associated with the filing and prosecution of a patent application. The regulations specifically name inventors
and patent counsel as such individuals. But Rule 56 also includes individuals who are "substantively involved in the
preparation or prosecution of the application.” The Federal Circuit interpreted "substantively involved" to include any
involvement that relates to the content of the application or decisions related thereto, yet which is not wholly
administrative or secretarial in nature. In Avid, the Federal Circuit discussed the type of individual who might fall into
this category.
The Federal Circuit inferred that an individual (Dr. Stoddard) fell into this category because of the following facts:
• he was the president and founder of Avid, a closely held company;
• although he did not contribute to the patentable features, and so was not an inventor, the functionality of the
patented invention was his idea and the inventors were specifically hired and instructed to reduce his idea to
practice;
• he was involved in all aspects of the company's operation, from marketing and sales to research and
development which inferred that he was also involved in preparing the patent application relating to that
research, especially since Avid’s patent was directed to the system on which the company was founded;
• two communications showed Dr. Stoddard's substantive involvement in patent matters for Avid, giving the
inference that he was similarly involved in the prosecution of the asserted patent;
• his testimony at trial was not credible, his memory of facts was suspiciously selective, and he refused to
acknowledge certain incontrovertible events, casting doubt on his assertion that he did not understand the
technology and was not involved in preparing the patent application. An interesting position given that he
was Avid's main fact witness on the issue of patent validity;
• he was personally responsible for prior art demonstrations;
• he was advised to check with a patent attorney before publicly disclosing Avid's technology; and
• he signed a small entity status declaration filed with the PTO.
As Avid was a case of first impression, we can be sure there will be more discussion by the courts of the “who” factor.
But, in the meantime, when considering inequitable conduct we must ask ourselves: Who, What, and Why?