FEDERAL CIRCUIT AFFIRMS INEQUITABLE CONDUCT FOR FAILING TO DISCLOSE PRE-FILING ON-SALE ACTIVITY

ENERGY HEATING, LLC v. HEAT ON-THE-FLY, LLC, Appeal No. 2016-1559, 2016-1893, 2016-1894 (Fed. Cir. May 8, 2018).  Before Moore, Hughes, and Stoll.  Appealed from D.N.D. (Judge Erickson).  (Inequitable Conduct)

Background:

Heat On-The-Fly (HOTF) owns a patent directed to heating water on demand during a hydraulic fracking process and sued its rival, Energy Heating, for infringement of the patent.  Energy Heating raised an inequitable conduct defense alleging that HOTF failed to disclose material information to the Patent Office.  The founder of HOTF and the sole inventor of the patent, Mark Hefley, filed a provisional application on September 18, 2009.  But, more than a year before filing the provisional application, Hefly and his company had provided services on at least 61 fracking jobs using the claimed method and collected over $1.8 million for those services.  It was undisputed that Hefly’s business partner had discussed the on-sale bar requirements with Hefly.  Nonetheless, Hefly and his prosecution attorney did not disclose any of the 61 fracking jobs during prosecution of the patent.  The district court held that the 61 fracking jobs performed before the critical date of the patent were material to patentability, and that Hefly knew of the materiality of the 61 fracking jobs but made a deliberate decision to withhold this information from the Patent Office.  Thus, the district court held that the patent was unenforceable due to inequitable conduct.  HOTF appealed.

Issue/Holding:

Did the district court err in finding inequitable conduct on the part of Hefly? (continue reading)

Summary byAshley Yeum

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