Sham Litigation Exception is so clear, it gets resolved in 6 years.

Due to its saga of litigative history, it took 27 pages to dismiss attempted monopolization and Walker Process claims in Sumitomo v. MEMC (N.D. Cal. 8/13/2007).   In 2001, MEMC sued for patent infringement, losing in 2004 on summary judgment of no infringement, which the CAFC reversed in part.  On remand, the patent was held invalid as non-enabling, but not anticipated, and the appeal remains pending.  In between those two appeals, Sumitomo sued in D. Del. claiming MEMC pled a baseless suit in an attempt to monopolize.

Again, I draw upon the visual metaphor of the Spy v. Spy comic strip from Mad Magazine, here to show the necessary relation between claims of invalidity, inequitable conduct, and sham litigation monopolization.  Spy I claims infringement, Spy II counterclaims invalid.  Spy I distinguishes the cited prior art, and argues it is immaterial.  So, Spy II identifies inconsistencies between that and positions that Spy I had argued to the USPTO to get claims allowed, and notes that Spy I knew of some prior art but didn’t cite it or mischaracterized it.  Spy I acknowledges knowing of the art, so Spy II argues inequitable conduct.  Cross-motions for summary judgment are denied.  Spy II counterclaims for attempted monopolization.   Yikes – even if the Spy’s patent is invalid, the collateral litigation will go on for three more years. 

The English language is apparently lacks words to describe the level of proof needed.  To prove inequitable conduct, or invalidity, requires clear and convincing evidence.  Some more stringent level of proof is needed to elevate inequitable conduct up to proving an attempt to monopolize. What, clearly clear and convincingly convincing; crystal clear and totally convincing?  As Judge Armstrong states: “Walker Process fraud requires a much greater showing of materiality and intent than the showing required to establish inequitable conduct.”  The claimant “must have affirmative evidence of fraudulent intent.” Sumitomo lacked that proof, indeed, it could not make out a material factual dispute sufficient (clear enough?) to overcome a summary judgment motion. 

It’s sham litigation theories can be categorized as: (a) litigation positions on prior art that differ from statement to USPTO, (b) technical flaws in prosecution, (c) omitted inventors, (d) anecdotal evidence of early sales never disclosed to examiner, (e) allegedly knowing that patent was obvious or non-enabling.

Judge Armstong dismissed (a) because the alleged differences in position taken were held to be mis-interpretations by Sumitomo’s expert.  That he came “to a different conclusion regarding the correctness or salience of this distinction …does not raise a triable issue.”  The technical flaw as to claims of priority did not raise a material dispute, because Sumitomo’s expert report, instead of supporting that claim, opined that it presented “issues of material fact.”  Apparently, Judge Armstrong did not view that as within the expert’s expertise.  The omitted inventors (c) theory was dismissed because it could not rise to the point of proving that the patent would not have issued ‘but for’ the claimed omissions.  As to non-disclosures related to the on sale bar (d), there was no record of any sales in the U.S., only one witness’ anecdotal recollection. 

Sumitomo’s assertion that the litigation was a sham that fronted MEMC’s knowledge of invalidity was based on its “expert” on patent prosecution.  His opinion did not, per FRE 702, “assist” Judge Armstrong, who noted that the expert had “prosecuted all of one patent during his entire career.” 

In patent cases that involve inequitable conduct and sham litigation counterclaims, what needs to be ground down are the standards of proof, and case management tools for getting rid of unprovable contentions – earlier.  The caselaw varies, needlessly, about whether an infringement case, which gets past a summary judgment motion, can be proven later to be a “baseless” sham suit.  In the Sumitomo ruling, the appeal of the non-infringement ruling included a cross-appeal of a denial of Rule 11 sanctions.  The CAFC found that the patentee’s counsel had done “a good faith, informed comparison of the claim …[vs.] the accused” products, and a finding that the count for inducing infringement could go to a jury.

Even those findings did not provide a ‘free-pass’ that would end the later-pleaded complaint alleging that the infringement suit was baseless.  The “Court’s ruling on the [R. 11] attorneys fee motion does not wholly foreclose” the attempted monopolization claim of baselessness.  Well, why does it not?  Because the law is unclear.  The standards for inequitable conduct need to be clarified by statute, and as well, the elements necessary to prove the sham litigation exception for attempted monopolization claims against a patentee.  Now, it all about interpreting the caselaw, conflating the majority and minority rules, distinguishing what Judge Zigalockoouse did in some unreported case from the District of Whereas, and so on.  That lack of clarity enables cases, like the Sumitomo case, to go on for six years, at which point, only a summary judgment has been entered, then the CAFC gets the case for a third time. 
If there is no hope of statutory repair – real reform, then the Dickensian remedy may be viewed as the next best alternative.