schinzing v. Mid-state

Schinzing v. Mid-State
415 F.3d 807 (2005)


 Mid-State Stainless, Inc. (Mid-State), appeals from the rejection of its patent invalidity counterclaim and from the denial of its motion to amend the judgment to include a declaratory judgment of non-infringement and a judgment that it had not breached a patent license agreement. We affirm in part, reverse in part, vacate in part, and remand.
 Mid-State removed the case to federal court, raised ten affirmative defenses, and counterclaimed for a declaratory judgment of patent invalidity and non-infringement.
 The parties consented to a trial before a magistrate judge.
 After a two-day bench trial, the district court concluded that Mid-State had breached the license agreement and that the '375 patent was not invalid.
 Mid-State filed a motion to amend the judgment to include a declaratory judgment of non-infringement and a judgment that Mid-State had not breached the license agreement.
 Mid-State appeals from the district court's denial of its motion and from the district court's conclusion that the '375 patent was not invalid.


Specifically, is the ‘375 patent invalidated due to inequitable conduct on the part of Schinziing as asserted, inter alia, by Mid-State? (NO)


 This is a patent case involving a machine designed to wash wheelchairs, the idea for which was originally conceived by Walter Schinzing (Schinzing) in 1987

 First Application:
o The PTO rejected Schinzing's first application as obvious in December 1988 and rejected amended applications as obvious in January 1989 and July 1989.
o Schinzing made arrangements with Elm Springs Enterprises to manufacture his washer.
o He permitted four students from Dr. Lou Honary's Methodology and Conceptualization class at the University of Northern Iowa to analyze the washer design over the course of a two-semester class project
o The students recommended improvements to the washer
o The students also demonstrated a version of the washer that incorporated their recommended improvements
 Second Application:
o In October 1989, Schinzing filed a second patent application (the '119 application)
o The '119 application incorporated the improvements recommended by the students and included several of the students' drawings
o Schinzing maintained that he was the sole inventor of the modified washer
o the PTO rejected the '119 application
o Schinzing continued to work on further modifications to the washer
 Third Application:
o He and several other members of Elm Springs filed a third patent application in November 1990 (the '757 application)
o The PTO issued patent number 5,133,375 (the '375 patent)

 License Agreement:
o In April 1993, Schinzing, in partnership with a woman named Sue Spaulding, entered into a license agreement with Mid-State.
o Mid-State would develop, manufacture, use, and market the washer.
o Mid-State manufactured and sold 99 washers under the agreement and paid royalties on those washers.
o After S/S Products terminated the agreement in February 1998, Mid-State sold an additional 232 washers but did not pay royalties on them.


 Inequitable Conduct
o Although the practical effect is generally the same, inequitable conduct renders a patent unenforceable rather than invalid.

o To sustain a claim of inequitable conduct, the alleged infringer (Mid-State) must show by clear and convincing evidence that:
(1) the nondisclosed information would have been material to the patent examiner, and
(2) the nondisclosure was intentional

o These two elements must be balanced against each other, and if one is particularly strong, a lesser degree of the other may suffice to show inequitable conduct

The class discussed the issue of inequitable conduct (IC) under the theories of “unenforceability.” PA §282. Inequitable Conduct occurs during prosecution when a patentee intentionally fails to disclose material information to the PTO. The defendant must show w/ clear and convincing evidence that such information was not disclosed.
The patentee must have intended to deceive the PTO determined by his/her actions. For Example, negligent deceit does not meet the threshold level of intent required by the court. However, gross negligence may be sufficient as described in out text book. (page 1129, note 3). In the present case, the court determined that Schinzing did not have requisite intent when he failed to disclose information about the students who assisted in the chair modifications.
Information is material when it is not cumulative, that is, there is not obligation of applicant to disclose information from prior references. Also, the information is material if it establishes a prima facie case of unpatentabiliy by itself or in combination with other material. Finally, the information is material when it refutes the position applicant took during prosecution. In the present case, the material element was satisfied because the position of Schinzing was that he was the “sole inventor of the modified washer” when in fact he was assisted by the students at the University.
The intent and material requirements are determined by a “sliding scale” as described in class. The scale provides that if the level of intent increases the required materiality of the nondisclosed information falls. And, if the intent is very low, the required materiality increases and vice versa. In the current case, the intent was, in essence, zero. Therefore, the materiality requirement would have been finitely high and impossible to establish.


Schinzing did not intentionally withhold “anything” from the PTO. Because none of Schinzing's nondisclosures was intentional, the district court did not err in finding that Schinzing did not engage in inequitable conduct before the PTO. We affirm the district court's ruling that the '375 patent is not unenforceable due to inequitable conduct.

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