Plaintiff McKesson Information Systems, Inc. appealed the final decision of the United States District Court for the Eastern District of California dismissing McKesson’s infringement suit against defendant Bridge Medical, Inc. after the district court found U.S. Patent No. 4,857,716 unenforceable due to inequitable conduct. 
| McKesson asserted the '716 patent against Bridge Medical, Inc. The patent covers "a patient identification system for relating items with patients and ensuring that an identified item corresponds to an identified patient." This involved the use of bar codes and a portable handheld bar code reader wirelessly and securely connected to a base station unit. The system deploys a "three node approach to communications." The patent contains only one independent claim which endured a series of obviousness objections from the U.S.P.T.O. Schumann distinguished the prior art combinations on the grounds that they did not disclose a three-node system. After the last 35 U.S.C. § 103 rejection of December 8, 1987, consisting of the prior art references Blum and Pejas, Examiner Trafton suggested that a dependent claim would be allowable if rewritten as an independent claim. Prosecuting attorney Schumann accepted the offer and submitted an amended independent claim in a continuing application in the manner suggested by the Examiner. The claims were then allowed. Schumann prosecuted in parallel a co-pending application (the "149 application"), which addressed common subject matter. Schumann initially submitted the same body of prior art with the co-pending application as he did with the application that matured into the '716 patent. In a February 26, 1987 office action, Examiner Lev rejected the claims as obvious over inter alia Blum and Pejas. Although Schumann disclosed the existence of the co-pending 149 application to Examiner Trafton, he did not bring Examiner Lev's rejection of the 149 application claims 15 and 16 to Examiner Trafton's attention. Schumann further added claims to the 149 application, one of which included a two-node communication system. Schumann discussed with Examiner Lev on October 23, 1987, Lev's discovery of a prior art patent issued to Baker. Examiner Lev suggested that in light of this reference, Schumann should cancel his added claims. Schumann disagreed. Schumann also failed to disclose the Baker reference to Examiner Trafton. Examiner Lev then rejected all claims in the 149 application as anticipated by Sunstedt or obvious in light of Sunstedt in view of Blum. Sunstedt disclosed a three-node communication system. Examiner Lev also made a Section 103 rejection based on Baker. In response, Schumann narrowed and cancelled claims. Examiner Lev allowed 18 claims to issue in U.S. Patent No. 4,850,009. Examiner Trafton had not considered the final combinations of references asserted against the claims of the 149 application when he examined the claims in the application that matured into the '716 patent. Nor did Schumann disclose any of those rejections to Examiner Trafton. Schumann also never informed Examiner Trafton during the prosecution of the '716 patent that claims in a copending application issued in the '372 patent. McKesson filed suit on December 13, 2002. The district court bifurcated the issues to resolve the inequitable conduct dispute first. After a four-day bench trial, the district court found that McKesson had engaged in inequitable conduct. The decision rested on "Schumann's failures to disclose (1) the existence of the Baker patent, (2) Examiner Lev's rejections of the initially broad claims in the '149 application (which issued as the '009 patent), and (3) the allowance of claims in the '372 patent were material omissions done with an intent to deceive." On appeal, the Federal Circuit affirmed the district court's findings and ultimate conclusion of inequitable conduct. First, the Federal Circuit concluded that the Baker reference was material, as it disclosed a unique identifier and a three-node system. And because the Baker reference described the three-node system in greater detail than any other reference, it was not cumulative. The high materiality of the Baker reference and lack of a credible explanation for the nondisclosure supported the conclusion that the district court did not commit clear error. Second, the Federal Circuit concluded that Examiner Lev's rejection of the three-node communication would have been important to a reasonable examiner in Examiner Trafton's position. This especially holds true considering Schumann's arguments that the three-node communication was crucial to the invention. And for the same reasons as concluding that the Baker reference is not cumulative, Examiner Lev's rejections were similarly not cumulative. Third, the Federal Circuit concluded that the district court did not clearly err when it found that Schumann's failure to disclose to Examiner Trafton the issuance of the '372 patent claims constituted inequitable conduct. The fact that Examiner Trafton was the person who allowed the claims was not sufficient to overcome the finding, as a prosecuting attorney should not assume that an examiner retains details of every pending file in his mind. The allowed claims covering three-node systems were relevant to double patenting rejections. And with respect to intent, Schumann did not even consider the identity of the examiner when he opted to not disclose the allowance of the claims. |