On the importance for U.S. Design Patent Applicants to Comply with their Duty of Disclosure at the USPTO

Plaintiff Yokohama Rubber Company LTD (“Yokohama”) sued Defendant Stamford Tyres (“Stamford”) in the U.S. District Court for the Central District of California (Case No. SACV 07-00010-CJC). Yokohama asserted that Stamford infringed U.S. Design Patent No. D512,014 (the “asserted patent”), directed to the ornamental design for an automobile tire, by selling the Stamford ST-08 tire. As a defense, Stamford alleged that the asserted patent was unenforceable due to Yokohama’s inequitable conduct before the United States Patent and Trademark Office (“USPTO”), for the failure to cite U.S. Patent No. D443,565S (the “prior art reference”) during prosecution of the asserted patent.

To prove inequitable conduct, the accused infringer must present evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the USPTO. Stamford, the accused infringer, showed the non-disclosed prior art reference was material by alleging that the Japanese Patent Office rejected the Japanese counterpart to the asserted patent solely because of its similarity to the prior art reference. Further, Stamford showed intent to deceive by alleging that one of the inventors of the asserted patent was involved with the prosecution of the Japanese counterpart to the asserted patent and knew that the Japanese Patent Office initially rejected that application because of its similarity to the prior art reference, and yet failed to disclose the prior art reference to the USPTO during prosecution of the asserted patent.

The patent owner, Yokohama, filed a motion for judgment on the pleadings (without a trial) and argued that there is no genuine issue of material fact about whether the omitted prior art reference was material to the patentability of the asserted patent because: (1) Japanese patent laws are different than U.S. patent laws, (2) the Japanese counterpart application eventually issued over the omitted reference, (3) Defendants’ own experts did not rely on the omitted reference in asserting the patent invalid, and (4) the USPTO examiner considered the prior art reference but cited other, more relevant prior art.

On May 12, 2010, the Court rejected each of Yokohama’s reasons, stating that even if Japanese patent laws are different and the Japanese counterpart application still issued over the omitted prior art reference, a reasonable U.S. examiner would still consider the prior art reference to be material. Additionally, the Court stated that it is irrelevant whether the Defendants’ experts relied on the omitted prior art reference, as the standard is whether a “reasonable examiner” would have considered the prior art important. Further, the court asserted that Yokohama presented insufficient evidence that the USPTO examiner considered the prior art reference. Instead, the patent owner merely submitted evidence that the same U.S. examiner examined the prior art reference four years earlier. However, there was no evidence that the U.S. examiner even remembered the details of the prior art reference during the prosecution of the asserted patent four years later.

For these reasons, the court denied the patent owner’s motion for judgment on the pleadings. Accordingly, this issue will likely proceed to trial, during which the accused infringer will have a chance to prove its defense of inequitable conduct. This case emphasizes the importance for U.S. design patent applicants to comply with their duty of disclosure. In particular, it is generally considered good practice to submit to the USPTO all references cited as prior art in non-U.S. counterpart applications. The duty of disclosure and the potentially drastic consequences of a failure to comply with this duty are unique features of the U.S. system. Defending against even an unsuccessful charge of inequitable conduct due to failure to disclose material information is expensive at a minimum. At worst, violation of the duty of disclosure can create a fatal trap for U.S. design patent applicants and render a design patent unenforceable.