2024 Federal Circuit IP Appeals – Luv n’ Care, Ltd. v. Laurain, 98 F.4th 1081 (Fed. Cir. 2024) (Reyna, Hughes, Stark)

The parties are manufacturers of toddler dining mats. Luv n’ Care sued Eazy-PZ for unfair competition, and Eazy-PZ counterclaimed for infringement of a patent on a self-sealing mat.

After granting summary judgment that the patent was invalid, the district court held a bench trial to determine whether Eazy-PZ (i) committed inequitable conduct during patent prosecution by misrepresenting a key prior-art mat as non-self-sealing and withholding from the Patent and Trademark Office a video demonstrating the self-sealing nature of the mat, and (ii) engaged in litigation misconduct rising to the level of unclean hands. The district court found that Eazy-PZ had not committed inequitable conduct but that Eazy-PZ’s litigation conduct amounted to unclean hands.

The Federal Circuit affirmed in part and vacated in part. As to inequitable conduct, the Federal Circuit held that the district court incorrectly analyzed both materiality and deceptive intent. With regard to materiality, the district court failed to determine whether Eazy-PZ’s misrepresentations about the prior art rose to the level of “affirmative egregious misconduct,” which would be “per se material.” The district court also mistakenly held that, because Eazy-PZ had disclosed the relevant prior art mat to the Office, Eazy-PZ’s misrepresentations about the art could not be material. The correct inquiry, the Federal Circuit held, is whether the Office’s decision may have differed if Eazy-PZ had accurately described the prior art as self-sealing.

With regard to deceptive intent, the Federal Circuit held that the district court erred by focusing on the inventor’s and patent agent’s individual acts of misconduct in isolation, without addressing the collective weight of the evidence as a whole. The Federal Circuit additionally found that the district court erred by discounting Eazy-PZ’s misrepresentations about the prior-art as mere “gross negligence” when, in fact, Eazy-PZ’s “purposeful omission or misrepresentation of key teachings of prior art” could indicate a specific intent to deceive the Office. The Federal Circuit thus remanded for the district court to reconsider its findings as to each of these issues.

Turning to unclean hands, the Federal Circuit affirmed the district court’s ruling that Eazy-PZ’s litigation misconduct barred relief. Rooted in equity, the doctrine of unclean hands precludes a party from seeking relief when the party has committed unconscionable acts having an immediate and necessary relation to the relief sought. The district court concluded that Eazy-PZ committed several such acts during the course of litigation, including by failing to disclose during discovery related patent applications relevant to claim construction, attempting to block Luv n’ Care from obtaining the inventor’s prior-art searches relevant to Luv n’ Care’s inequitable conduct defense, and providing evasive and misleading testimony during depositions and at trial. The Federal Circuit agreed that this conduct was “offensive to the integrity of the court” and held that the district court did not clearly err in concluding that the conduct rose to the level of unclean hands.

This article appeared in the 2024 Federal Circuit IP Appeals: Summaries of Key 2024 Decisions report.