Anticipate This!™ | Patent and Trademark Law Blog

Dippin’ Dots, Inc., et al. v. Mosey, et al. v. Esty, Jr., et al.

Posted in Opinion Commentary by Jake Ward on February 11, 2007

To find a prosecution omission fraudulent for purposes of Walker Process fraud, there must be evidence of intent separable from the simple fact of the omission.

(Fed. Cir. 2007, 05-1330)


Dippin’ Dots, Inc. (“DDI”) appealed from the district court’s claim construction and summary judgment of noninfringement of U.S. Patent No. 5,126,156 (“the ’156 patent”) and from the judgment following jury trial that all claims of the ‘156 patent are obvious, that the patent is unenforceable due to inequitable conduct during prosecution, and that DDI violated the antitrust laws by asserting a patent that had been procured through fraud on the Patent Office.  The CAFC affirmed the findings of noninfringement, obviousness, and unenforceability due to inequitable conduct, and reversed as to the “Walker Process” antitrust counterclaim.

The technology at issue relates to a process for making a form of cryogenically prepared novelty ice cream product (frequently found at your local amusement park).  Specifically, Claim 1 recites:

A method of preparing and storing a free-flowing, frozen alimentary dairy product, comprising the steps of:
     preparing an alimentary composition for freezing;
     dripping said alimentary composition into a freezing chamber;
     freezing said dripping alimentary composition into beads;
     storing said beads at a temperature at least as low as -20° F. so as to maintain said beads free-flowing for an extended period of time;
     bringing said beads to a temperature between substantially -10° F. and -20° F. prior to serving; and
     serving said beads for consumption at a temperature between substantially -10° F. and -20° F. so that said beads are free flowing when served.

During initial prosecution of the application issued as the ‘156 patent, the Examiner had rejected Claim 1 as obvious, but reconsidered in light of evidence submitted on the “commercial success” of the product.  The controversy in this case began when several of DDI’s distributors severed their relationship, found alternative manufacturing sources, and entered into competition against DDI. DDI initiated a series of patent infringement lawsuits against its new competitors, who then counterclaimed (Walker Process claim) for violation of § 2 of the Sherman Act due to DDI’s allegation of patent infringement based on a fraudulently acquired patent.

Claim Construction and Infringement:

DDI’s primary argument was that the district court miscontrued the patent term “beads” to mean “small frozen droplets . . . which have a smooth, spherical (round or ball shaped) appearance.”  This construction excluded processes that produce irregular-shaped particles.  The CAFC affirms this construction, as the written description “specifically describes ‘beads” as having a “smooth, spherical appearance.’”  DDI’s second argument, that the term “comprising” broadened the claim scope to include irregular-shaped particles was also treated with some hostility.  “Comprising’ is not a weasel word with which to abrogate claim limitations.”  The presumption raised by the term “comprising” does not reach into each of the six steps to render every word and phrase therein open-ended—especially where, as here, the patentee has narrowly defined the claim term it now seeks to have broadened.


CAFC precedent requires that the party urging obviousness demonstrate a teaching, suggestion, or motivation to combine references. The test is a flexible one which may find motivation to combine in the knowledge of one skilled in the art or in the nature of the problem to be solved. Secondary indicia of nonobviousness, such as commercial success, long-felt need, or failure of others are also relevant.  The district court focused on sales made at the Festival Market mall in Lexington, Kentucky, (the “Festival Market sales”) more than a year before DDI filed its patent application.  In fact, the defendants argued that the Festival Market results, combined with the prior art known by the Examiner during prosecution, rendered Claim 1 obvious.  The CAFC agreed.  The public sale of goods produced by a process more than one year before a patent is filed places that process in the § 102(b) prior art. The jury could reasonably have found that the secondary factor of commercial success advanced by Jones to obtain the ’156 patent was obviated by the Festival Market sales. Also, DDI’s assertion that the Festival Market sales were experimental were not compelling.  DDI’s testimony showed that the purpose was to determine the marketability of his ice cream product and not to improve it technically.  Thus, the determination of obviousness was affirmed.

Inequitable Conduct:

A patent may be rendered unenforceable for inequitable conduct if an applicant, with intent to mislead or deceive the examiner, fails to disclose material information or submits materially false information to the PTO during prosecution.  The first prong of the inequitable conduct test, materiality, is clearly met here. As discussed supra, the Festival Market sales render the ’156 patent invalid for obviousness. Had those sales been disclosed to the PTO, the patent may or may not have issued. The question of deceptive intent is a more difficult one, but the CAFC found no clear error in the district court’s determination on this point. “‘Smoking gun’ evidence is not required in order to establish an intent to deceive . . . . Rather, this element of inequitable conduct[] must generally be inferred from the facts and circumstances surrounding the applicant’s overall conduct.”  While DDI wholly neglected to disclose the Festival Market sales to the PTO, it enthusiastically touted sales made after the critical date as evidence of the commercial appeal of its process. That combination of action and omission permits an inference of the minimum, threshold level of intent required for inequitable conduct.

Walker Process Antitrust Claim:

Proof that a patentee has obtained the patent by knowingly and willfully misrepresenting facts to the Patent Office is sufficient to strip the patentee of its exemption from the antitrust laws.  Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 177 (1965).  If a patentee asserts a patent claim and the defendant can demonstrate the required fraud on the PTO, as well as show that “the other elements necessary to a § 2 case are present,” the defendant-counterclaimant is entitled to treble damages under the antitrust laws.

To demonstrate Walker Process fraud, a claimant must make higher threshold showings of both materiality and intent than are required to show inequitable conduct.  The heightened standard of materiality in a Walker Process case requires that the patent would not have issued but for the patent examiner’s justifiable reliance on the patentee’s misrepresentation or omission.  Also, while Walker Process intent may be inferred from the facts and circumstances of a case, “[a] mere failure to cite a reference to the PTO will not suffice.”  Omissions, as well as misrepresentations, may in limited circumstances support a finding of Walker Process fraud . . . because a fraudulent omission can be just as reprehensible as a fraudulent misrepresentation.  However, to find a prosecution omission fraudulent there must be evidence of intent separable from the simple fact of the omission.

There is no strong evidence in this case that the omission to cite the Festival Market sales was fraudulent. When Walker Process claimants wield a patentee’s conduct as a “sword” to obtain antitrust damages rather than as a mere “shield” against enforcement of the patent, they must prove deceptive intent independently. The defendants have not done so here to the extent necessary for a reasonable jury to find Walker Process fraud.  The finding of fraud on the PTO is therefore reversed.  Also, as the judgment of antitrust liability reversed, the grant of attorney’s fees under § 4 of the Clayton Act was also vacated.

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