The opinion of the court was delivered by: Marilyn Hall Patel United States District Court Judge 28
Re: Findings of Fact and Conclusions of Law on Inequitable Conduct; Partial Summary Judgment on Multimetrixs' Counterclaim; Multimetrixs' Counsels' Motion to Withdraw
United States Patent Number 6,831,287 (hereinafter the "'287 patent") claims a method for determining the correct position of a flat object using two sensors located at the edge of the object, one inside the edge of the object when placed in the correct position and one outside the edge. The '287 patent was issued to Boris Kesil, David Margulis, and Elik Gershenzon on December 14, 2004, and the assignee of the patent is defendant Multimetrixs, LLC (hereinafter "Multimetrixs"). Plaintiff Applied Materials, Inc. (hereinafter "Applied") brought this action against Multimetrixs, and among other allegations, asserted that two of its engineers-Allen Lau and Michael Feltsman-conceived the invention claimed in the '287 patent and were the actual inventors. Applied sought correction of inventorship of the '287 patent pursuant to 35 U.S.C. section 256. Multimetrixs asserted, among other counterclaims, that Applied was infringing the '287 patent.
In March 2008, the court conducted a four-day bench trial on the issue of inventorship of the '287 patent. During the bench trial on the inventorship issue, Applied elicited testimony from Boris Kesil, one of Multimetrixs' officers and a listed inventor of the '287 patent, that in the course of prosecuting the '287 patent, he caused Multimetrixs to submit forged documents to the United States Patent and Trademark Office ("PTO"). In light of this testimony, the court sua sponte raised the issue of inequitable conduct before the PTO. The court ordered the parties to brief the issue and oral argument was held on May 21, 2008. Pursuant to Federal Rule of Civil Procedure ("FRCP") Rule 15(b), plaintiff was also deemed to have amended the pleadings to conform to the evidence presented at trial. Now before the court are the parties' submissions and arguments concerning whether defendant Multimetrixs engaged in inequitable conduct before the PTO. Given a finding of inequitable conduct, the '287 patent is unenforceable and Multimetrixs' counterclaim against Applied for infringement of the '287 patent cannot be maintained. Therefore, pursuant to FRCP Rule 54(b), the court may enter partial summary judgment as to that claim. Having considered the written submissions and oral arguments of the parties and based on the evidence presented at trial, the court enters the following findings of fact and conclusions of law regarding inequitable conduct. Also before the court is Multimetrixs' counsels' motion to withdraw as counsel of record.
Applied is the leading developer of the systems and machines used to manufacture semiconductor wafers. Its "Endura" machine is used for physical vapor deposition processing, a method of depositing metals onto silicon wafers. During this process, a silicon wafer is held in place and temperature controlled by an electrostatic chuck while high purity metal material is deposited onto the wafer. When a silicon wafer is not present within the deposition process chamber, a shutter disk is used to cover the electrostatic chuck and protect it from waste deposition. The shutter disk is moved from the garage in which it is housed into the process chamber by way of a shutter disk assembly consisting of the shutter disk, a blade on which it rests, an arm which rotates into and out of the garage, the garage, and a sensor system. The original Endura system used a single reflective sensor placed towards the center of the shutter disk to determine whether the shutter disk was in the garage. Because the sensor could only determine whether the shutter disk was in the garage and not the shutter disk's precise placement, misplaced disks were colliding with the electrostatic chuck resulting in breakage to the wafer and sometimes to the electrostatic chuck. Allen Lau, one of Applied's engineers, was assigned to work on the problem starting in late 1999, but was unable to find a solution. Michael Feltsman, another Applied engineer, was assigned to work with Allan Lau on the Endura shutter disk assembly in February 2001. Through a social connection, Michael Rosenstein, a manager at Applied who was overseeing the Endura shutter disk assembly project, was introduced to Multimetrixs. Multimetrixs had experience in sensor technology and had a machine shop capable of producing a prototype of the new shutter garage that would be required for any new design. Rosenstein arranged a meeting between the Applied engineers Lau and Feltsman and the Multimetrixs personnel including Boris Kesil and David Margulis, two of the named inventors on the '287 patent. Following an initial meeting in March 2001, Applied and Multimetrixs corresponded about the shutter disk assembly. Eventually, the problem of the misplaced shutter disk was solved by substituting the single reflective sensor placed at the center of the disk with two through-beam sensors placed at the edge of the disk. The two sensor design was an improvement over the previous single sensor design because it was able to detect the precise location of the shutter disk. When placed in the correct position, the edge of the shutter disk would be located just between the first sensor placed on the inside edge of the disk and the second sensor placed on the outside edge of the disk. Multimetrixs and its inventors-Boris Kesil, David Margulis, and Elik Gershenzon-filed patent application number 09/976,890 on October 15, 2001. Based on this application, patent number '287 was granted on December 14, 2004. The '287 patent discloses the use of two sensors placed at the edge of an object in order to detect its position. During the course of prosecution of the '287 patent, one of the Multimetrixs inventors, David Margulis, died. The date of his death, as shown on a death certificate, was October 10, 2002. Exh. 87.*fn1 The remaining inventors, Boris Kesil and Elik Gershenzon were aware of Margulis' death.
CT 631:17--25, 595:23--596:1.*fn2 Prosecution of the '287 patent continued notwithstanding the death of David Margulis. Boris Kesil was primarily responsible for corresponding with the PTO regarding prosecution of the '287 patent. CT 628:2--13. His name is listed as the primary contact on most filings, and he spoke directly with the patent examiner in an interview on October 28, 2003. Exh. 82 at 38, 47, 135. On December 20, 2002, the PTO issued an office action regarding application number 09/976,890, the application upon which the '287 patent would eventually issue. Id. at 81--94. The PTO rejected claims 1 through 20 and objected to claims 21 and 22. Id. On June 4, 2003, the inventors responded to the PTO's objections. Id. at 95--120. In the response, what was originally claim 20 in the application became claim 1, and two additional limitations were added. These limitations referred to adjusting the placement of the two sensors to account for increases in the size of the shutter disk as it accumulates waste deposition. Moreover, what was claim 21 in the original application was cancelled, and what was originally claim 22 in the application became claim 2. Id. at 102--104. Even though David Margulis had died the year before, the response was signed by all three purported inventors-Boris Kesil, Elik Gershenzon, and David Margulis. Id. at 110. The two claims as amended in the June 4, 2003 response were accepted by the PTO, Id. at 122--32, and those claims were precisely the claims that eventually issued in the '287 patent. After prosecution on the merits had closed, the PTO mailed on November 3, 2003 a notice of allowance and fees due. Id. at 137. The notice informed the purported Mutlimetrixs inventors that the issue and publication fees must be paid within three months from the mailing date of the notice or the application would be regarded as abandoned. Id. The fee having not been paid in a timely fashion, the PTO mailed on March 8, 2004 a notice of abandonment. Id. at 144-45. The two living inventors, Boris Kesil and Elik Gershenzon, retained counsel, Ilya Zborovsky, to assist in responding to the notice of abandonment. On July 23, 2004, the PTO received a package of materials from Zborovsky including the required fees and a letter requesting that the patent application be revived. Id. at 146--48. The package of materials also included a combined declaration and power of attorney signed 28 by the two living inventors, Kesil and Gershenzon. The declaration and power of attorney asserted, under oath, that Kesil and Gershenzon were the "original, first and joint inventors" of the '287 patent and it also authorized attorney Zborovsky to "accept and follow instructions" on their behalf. Id. at 3 157--59. The PTO raised the question of why the combined declaration and power of attorney was signed by only two inventors, when the original application had three. The PTO queried, Paper #16 [the combined declaration and power of attorney] is a new declaration but on this declaration there are only 2 applicants listed. There were no papers located stating to delete the 3rd applicant 'Margulis.' Please advise on inventorship. Id. at 169. In response to the PTO's directive to "Please advise on inventorship," a supplemental declaration was filed on November 16, 2004. Id. at 170-72. Pursuant to 37 C.F.R. section 1.67, the supplemental declaration purported "to correct any deficiencies or inaccuracies present in the earlier filed oath or declaration." By providing the signatures of all three inventors listed on the original application including Boris Kesil, Elik Gershenzon, and David Margulis, the supplemental declaration "corrected" the inaccuracy in the previously filed combined declaration and power of attorney, i.e. the assertion that Kesil and Gershenzon were the only two inventors. Having received the supplemental declaration, the PTO deemed the record to be "corrected," Id. at 169, and the patent issued on December 14, 2004 with all three inventors listed. David Margulis, however, had died in 2002, and therefore could not have signed the supplemental declaration in 2004. Like the signature on the June 4, 2003 response to the PTO's objections to the patent claims, the signature on the November 16, 2004 response to the PTO's query regarding inventorship was a forgery.*fn3
Inequitable conduct is a judicially created doctrine designed to prevent fraudulent conduct before the PTO. Those who participate in proceedings before the PTO, including purported inventors, have a duty to do so with the "highest degree of candor and good faith." Kingsland v. Dorsey, 338 U.S. 318, 319 (1949); see also 37 C.F.R. § 1.56. The doctrine was "borne out of a series of Supreme Court cases in which the Court refused to enforce patents whereby the patentees had engaged in fraud in order to procure those patents." Digital Control, Inc. v. Charles Machine Works, 437 F.3d 1309, 1315 (Fed. Cir. 2006). As one court explained, No man should be granted a patent where his conduct has been such that any grant to him will be clouded with forgery and perjury or fraud practiced upon the Patent Office; and where it appears, at any stage of the proceedings, that an applicant has been guilty of conduct of this sort, he should be denied all further relief. Mas v. Coca-Cola Co., 163 F.2d 505, 510 (4th Cir. 1947); see also Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 819 (1945) (recognizing "the public policy against the assertion and enforcement of patent claims infected with fraud and perjury"). A patent may be rendered unenforceable for inequitable conduct if an applicant, with intent to mislead or deceive the examiner, fails to disclose material information or submits materially false information to the PTO during prosecution. Digital Control, 437 F.3d at 1313. The party asserting inequitable conduct must prove a threshold level of materiality and intent by clear and convincing evidence. Id. The court must then determine whether the questioned conduct amounts to inequitable conduct by balancing the levels of materiality and intent, with a greater showing of one factor allowing a lesser showing of the other. Id. When, after a trial, the court has made factual findings as to materiality and deceptive intent, those factual findings are reviewed for clear error, and the decision of the ultimate issue of inequitable conduct is reviewed for abuse of discretion. Id. The materiality of information withheld during prosecution may be judged by the "reasonable examiner" standard. McKesson Info. Solutions, Inc. v. Bridge Med., Inc., 487 F.3d 897, 913 (Fed. Cir. 2007). That is, materiality embraces any information that a reasonable examiner would substantially likely consider important in deciding whether to allow an application to issue as a patent. Id. Information concealed from the PTO may be material even though it would not invalidate the patent. Id. However, withheld information that is merely cumulative to the information already considered by the examiner is not material for the purpose of inequitable conduct even if it would be considered material in isolation. Id. In this case, there is no serious question as to the materiality of David Margulis' forged signatures. The first forged signature on the June 2003 response regarding the PTO's objections to the patent claims was material. The June 2003 response was a critical document containing substantive amendments to the claims-amendments which were proposed to overcome the PTO's prior objections, which were eventually accepted by the PTO, and which ultimately became part of the issued claims. That David Margulis purported to sign the June 2003 response and purported to represent to the PTO that he invented the claims as amended are facts that a reasonable examiner would consider relevant and important. The second forged signature on the November 2004 supplemental declaration filed in response to the PTO's query regarding inventorship was also material. It was submitted in direct response to questions by the PTO about Margulis' status as an inventor. The forgery on the supplemental declaration, filed pursuant to 37 C.F.R. section 1.67, was intended to resolve the PTO's concerns and correct any previous error regarding inventorship. The supplemental declaration accomplished what it was designed to do-it induced the PTO to believe that all three individuals were the actual inventors and it induced the PTO to issue the patent with all three inventors listed. That the misrepresentations did not relate to patentability does not change the court's conclusion that the forged signatures are material. Digital Control, 437 F.3d at 1318 ("[u]nder the 'reasonable examiner' standard, a misstatement or omission may be material even if disclosure of that misstatement or omission would not have rendered the invention unpatentable"). Here, the misrepresentations concern inventorship, and while falsehoods regarding inventorship do not ordinarily affect patentability of the claimed subject matter, inventorship is nonetheless a critical requirement for obtaining a patent. An oath of inventorship is a prerequisite for a patent (see 35 U.S.C. § 115; 37 C.F.R. § 1.63(a)(4)) and examiners are required to reject applications on the basis of improper inventorship (see 35 U.S.C. § 102(f)). Accordingly, the Federal Circuit has found that "falsehoods and omissions . . . calculated to 'obfuscate the threshold issue of inventorship'" were material and supported a finding of inequitable conduct. Perseptive Biosystems, Inc. v. Pharmacia Biotech, Inc., 225 F.3d 1315, 1321--22. (Fed. Cir. 2000). Moreover, the Federal Circuit has found that the submission of false affirmative affidavits, even if not related to critical issues such as patentability or inventorship, "may be determined to be 'inherently material.'" Digital Control, 437 F.3d at 1318. For example, in General Electro Music Corp. v. Samick Music Corp., 19 F.3d 1405 (Fed. Cir. 1994), the applicant submitted in support of a "petition to make special" (i.e. a petition to expedite processing by placing an application at the front of the examination queue) a false affidavit claiming that he had conducted "a careful and thorough search of the prior art." Id. at 1407--08. The Federal Circuit held "as a matter of law" that the false affidavit was material because it succeeded in prompting the PTO to expedite consideration of the application. Id. at 1411. Similarly, the Federal Circuit has stated that "there is no serious question . . . as to the materiality" of a false representation of small entity status made for the purpose of obtaining reduced maintenance fees. Ulead Systems, Inc. v. Lex Computer & Management Corp., 351 F.3d 1139, 1146 (Fed. Cir. 2003) (vacating district court's grant of summary judgment on the basis of inequitable conduct because genuine issues of material fact remained as to intent). Such a misrepresentation did not induce issuance of the patent-indeed, the misrepresentation was made years after the patent had issued. Id. at 1146, 1142. Nevertheless, it induced the PTO to accept reduced maintenance fees and thus, contributed to the survival of the patent. Id. at 1146. In finding inequitable conduct on the basis of false affidavits, the Federal Circuit has repeatedly commented that "[i]n contrast to cases where allegations of fraud are based on the withholding of prior art, there is no room to argue that submission of false affidavits is not material." Digital Control, 437 F.3d at 1318; Ulead Systems, 351 F.3d at 1146; Perseptive, 225 F.3d at 1322; 19 General Electro, F.3d at 1411; Rohm & Haas v. Crystal Chemical Co., 722 F.2d 1556, 1571 (Fed. Cir. 1983). Accordingly, whether the false affidavit concerns a procedural advantage such as expediting the processing of an application (General Electro) or obtaining payment of a reduced maintenance fee (Ulead Systems), or whether the false affidavit concerns a more central issue such as inventorship (Perseptive), the false affidavit is material for purposes of inequitable conduct. In this case, the wrongful conduct involved not only the submission of false, forged and perjured affidavits on two different occasions, but the affidavits also made representations about the critical threshold issue of inventorship.
Finally, it is irrelevant that the two surviving inventors could have pursued other valid 28 alternatives in dealing with the unfortunate death of the third inventor David Margulis. It is also irrelevant that David Margulis' signature may not have been required because as claimed by Multimetrixs, the inventors had assigned their rights to Multimetrixs. In General Electro, the patentee argued that rather than state that he had conducted "a careful and thorough search of the prior art" in support of his petition to make special, he could have alternatively stated that he had "good knowledge of the pertinent prior art." General Electro, 19 F.3d at 1410. The patentee argued that because the latter statement would have been truthful, in contrast to the former statement which a jury found to be false, the former statement therefore was not material for purposes of inequitable conduct. Id. at 1408, 1410. The Federal Circuit rejected the patentee's argument, stating "[t]he issue is not whether an alternative statement would have been truthful, but whether Maxwell's actual 10 statement that a prior art search was conducted was false." Id. at 1410. 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. Having found the forged signatures to be material, the court must next consider whether there exists clear and convincing evidence of an intent to deceive. The intent element of the offense is generally proven by inferences drawn from facts, with the collection of inferences permitting a confident judgment that deceit has occurred. McKesson, 487 F.3d at 913. A finding that particular conduct amounts to "gross negligence" does not of itself justify an inference of intent to deceive; the involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive. Id. The submission of documents containing David Margulis' forged signature was not an accident or an honest mistake. Regardless of who in fact forged the signature, the surviving inventors knew David Margulis was dead and they knew his signature was a fake. They submitted the signed documents hoping to deceive the PTO into believing that David Margulis was alive when in fact he was not. The conduct and testimony of the surviving inventors during discovery and at trial in this case provide a wealth of circumstantial evidence to establish that they knew what they had done was deceptive and invented a story to maintain the deception. In interrogatories, Applied asked Multimetrixs to identify any "statement or information . . . in the . . . application that led to the '287 patent [that] is inaccurate or materially incomplete." Although Multimetrixs purported to answer the interrogatory, it continued to hide the forgeries. See Exh. 52 at 8 (interrogatory 8). Multimetrixs served, and Kesil verified under oath, a knowingly false interrogatory response. Moreover, Multimetrixs avoided discovery related to the patent prosecution attorney Zborovsky by claiming that he could not remember anything about the patent prosecution because all of his files were lost in a fire. CT 635:16--18. At their depositions, and again at trial, all three Multimetrixs witnesses-Mark Kesel, Boris Kesil, and Elik Gershenzon-testified to the same incorrect date for Margulis' death. They each testified that Margulis died sometime in late 2003 or 2004, after the first forged signature was submitted to the PTO in June 2003 in response to the office action objecting to the patent claims. CT 482:6--483:2; 595:23--596:1; 631:17--25. The court does not find this testimony credible. First, Margulis' death certificate establishes that he died in October 2002. Second, it defies credulity that all three witnesses would independently recall the same inaccurate dates for Margulis' death. Mark Kesel went so far as to claim under oath that the certified death certificate from the County of Santa Clara was wrong. CT 482:25--483:2. The only reasonable inference is that Kesil, Kesel, and Gershenzon were deliberately trying to cover up the forgeries. When confronted with the forged signatures on the witness stand, Kesil was at first evasive and equivocal. In reviewing the signatures on the June 2003 response to the office action, Kesil immediately recognized Gershenzon's signature, but then refused to confirm Margulis' signature.
Q: That's Mr. Gershenzon's signature?
Q: And that's Mr. Margulis' signature?