By Thomas Long, J.D.
A supplier of photo-modulated reflectance systems for process control of semiconductor chip manufacturing failed to produce sufficient evidence to support aWalker Process antitrust claim against a competitor, based on the alleged fraudulent procurement of a patent, the federal district court in Austin, Texas, has decided. The supplier failed to raise a factual issue as to whether the patent holder’s attorney made affirmative misrepresentations of material fact, or deliberate omissions, in his statements to the USPTO about prior art (Xitronix Corp. v. KLA-Tencor Corp., August 26, 2016, Sparks, S.).
Patent-in-suit. Xitronix Corp. alleged that KLA-Tencor Corp., after having its previous patent (U.S. Patent No. 7,362,441, "the ’441 patent") declared invalid in a final judgment after a trial on the merits, obtained a new patent (U.S. Patent No. 8,817,260, "the ’260 patent")—allegedly covering the same technology—by making fraudulent statements to the USPTO about the prior art. According to Xitronix, KLA's fraudulent procurement of the ’260 patent was intended to destroy competition in the market for dopant activation metrology. This technology involved a system that provided high resolution, non-destructive evaluation of semiconductor wafers as they passed through various semiconductor manufacturing stages. Xitronix asserted that KLA’s Therma-Probe 680 and Xitronix’s XP700 system were the only two products in the market, and that KLA, by obtaining the ’260 patent, had the power to exclude Xitronix from manufacturing or selling its product.
Walker Process claim. Xitronix first sued KLA in 2008, seeking declaratory judgment of noninfringement on the ’441 patent and its parent patent. A jury found that the majority of claims were invalid on the grounds of anticipation and obviousness. After KLA obtained the ’260 patent, Xitronix filed another lawsuit, asserting a Walker Process antitrust claim based on KLA’s alleged fraudulent procurement of that patent. In a June 25, 2015 decision, the court denied KLA’s motion to dismiss, determining that the pleadings adequately alleged that KLA "enforced" the patent at issue for purposes of a Walker Process claim and failed to disclose all relevant material to the USPTO in prosecuting the patent. In an August 24, 2015 opinion, the court denied KLA’s request to certify the issue for interlocutory appeal.
Motion for summary judgment. KLA then moved for summary judgment, arguing that Xitronix could not establish: (1) that KLA's patent prosecution attorney, Michael Stallman, made affirmative misrepresentations or deliberate omissions in prosecuting the ’260 patent, and (2) that the ’260 patent would not have issued but for Stallman's alleged misrepresentations and omissions. The court granted KLA’s motion as to both elements.
Affirmative misrepresentations. Xitronix argued that Stallman made affirmative misrepresentations as to the state of the prior art in two filings: (1) a proposed amendment to the application that matured into the ’260 patent; and (2) a request for a continued examination (RCE) of the ’260 patent. The court rejected these contentions.
The USPTO’s examiner initially rejected the ’260 patent claims on the ground that they were unpatentable as obvious over two prior art references. In response, Stallman filed a proposed amendment in which he stated that the prior art did not teach a certain specific wavelength range for use in semiconductor samples when performing the modulated optical reflectivity measurements disclosed in the patent claims at issue. According to Xitronix, this was an affirmative misrepresentation of material fact because it directly contradicted the final judgment in the first lawsuit, which invalidated the same claims in the ’441 patent for obviousness. However, the court said, Stallman’s statement was not a misrepresentation, but rather was an accurate description of the two prior art references that served as the basis of the examiner’s initial rejection of the ’260 patent; the statements were not broadly directed to all prior art. Stallman’s remarks in the RCE were substantially similar to his remarks in the proposed amendment, the court noted. Moreover, even if Stallman’s statements about the prior art were inaccurate, the remarks were attorney argument and not factual representations. The examiner was free to examine the prior art and reach his own conclusions, either accepting or rejecting Stallman’s arguments. In addition, the examiner indicated that he considered the final judgment in the first lawsuit prior to reaching his final determination to grant the patent.
Deliberate omissions. Xitronix argued that Stallman had a duty to inform the examiner that KLA did not appeal the final judgment in the first lawsuit and to affirmatively explain the effect of the final judgment on the then-pending ’260 patent claims. The court disagreed. An appeal of the judgment would not have automatically stayed the court’s holding; as such, Stallman had no duty to inform the examiner of the legal truism that the judgment was final and enforceable. It was undisputed that Stallman disclosed the final judgment and all other relevant litigation materials from the first lawsuit, and the examiner considered those materials. There was no evidence that Stallman withheld or concealed information from the examiner.
"But-for" materiality. Even if Stallman’s remarks regarding the prior art references could be considered affirmative misrepresentations, there was no evidence that those misrepresentations qualified as material under the "but-for" standard, the court said. This was especially so, given that the examiner was fully apprised of the final judgment in the first lawsuit. The fact that the examiner reached a different conclusion from the jury regarding the claims at issue did not give rise to a Walker Process fraud claim, the court concluded.
The case is No. 1:14-cv-01113-SS.
Attorneys: Michael S. Truesdale (Law Office of Michael S. Truesdale, PLLC) and Steve Hershberger (Steve Hershberger, Attorney at Law) for Xitronix Corp. Brian K. Erickson (DLA Piper LLP) for KLA-Tencor Corp. d/b/a KLA-Tencor, Inc.
Companies: Xitronix Corp.; KLA-Tencor Corp. d/b/a KLA-Tencor, Inc.
MainStory: TopStory Patent TexasNews
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