Unclean Hands and Inequitable Conduct: Dishonesty Is Not the Best Policy

| Matthew J. PetersenDouglas B. Wentzel


Before Reyna, Hughes, and Stark.  Appeal from the Western District of Louisiana.

Summary: The district court correctly found unclean hands, but erred by finding no inequitable conduct without addressing the collective weight of the evidence of prosecution misconduct. 

Luv N’ Care (“LNC”) sued Laurain and Eazy-PZ, LLC (collectively “EZPZ”) seeking a declaratory judgment that LNC did not infringe EZPZ’s patent for self-sealing dining mats for toddlers.  EZPZ counterclaimed for patent and trade dress infringement.  After a bench trial, the district court found that LNC failed to prove EZPZ’s patent was unenforceable for inequitable conduct.  The district court determined EZPZ’s misrepresentations to the USPTO about the self-sealing functionalities of certain prior art references only showed EZPZ’s gross negligence, not deceptive intent.  However, the district court found that unclean hands barred EZPZ’s infringement counterclaims.

The Federal Circuit affirmed the finding of unclean hands.  The Federal Circuit agreed that EZPZ attempted to gain an unfair advantage in the litigation through deceit and reprehensible conduct, including by failing to disclose related patent applications relevant to claim construction until after the close of discovery and motion practice, lying about the existence of responsive documents and prior art searches, and “repeatedly provid[ing] false testimony” during depositions and at trial.

The Federal Circuit vacated and remanded the district court’s determination of no inequitable conduct.  On appeal, LNC argued that the district court erred by failing to consider EZPZ’s overall conduct and finding that EZPZ’s misrepresentations about the self-sealing functionality of a prior art mat did demonstrate a specific intent to deceive the PTO.  The Federal Circuit agreed.  The Federal Circuit found that the district court erred by considering EZPZ’s acts of prosecution misconduct “in isolation,” and that it “failed to address the collective weight of the evidence regarding each person’s misconduct as a whole.”  The Federal Circuit also explained that EZPZ’s selective disclosure and “purposeful omission” of material information may “be indicative of a specific intent to deceive the PTO.”  Thus, the Federal Circuit held that, on remand, the district court should consider whether EZPZ’s prosecution misconduct, collectively with its other acts of misconduct, show that either person involved in the misconduct intended to deceive the PTO.

Editor: Sean Murray