United States Court of Appeals
for the Federal Circuit
__________________________
AVID IDENTIFICATION SYSTEMS, INC.,
Plaintiff-Appellant,
v.
THE CRYSTAL IMPORT CORPORATION,
DATAMARS SA AND DATAMARS, INC.,
Defendants.
__________________________
2009-1216, -1254
__________________________
Appeals from the United States District Court for the
Eastern District of Texas in case no. 2:04-CV-183, Judge
T. John Ward.
ON PETITION FOR PANEL REHEARING
AND REHEARING EN BANC
__________________________
Before RADER, Chief Judge, ∗ NEWMAN, MAYER, ∗∗ LOURIE,
BRYSON, GAJARSA, LINN, DYK, PROST, and MOORE, Circuit
Judges.
PER CURIAM.
∗
Randall R. Rader assumed the position of Chief
Judge on June 1, 2010.
∗∗
Haldane Robert Mayer did not participate in the
poll.
AVID IDENTIFI v. CRYSTAL IMPORT 2
NEWMAN, Circuit Judge, dissents from the denial of
the request for a stay.
______________________
JOHN W. THORNBURGH, Fish & Richardson P.C., of San
Diego, California, filed a combined petition for panel
rehearing and rehearing en banc for plaintiff-appellant.
With him on the petition were JUANITA R. BROOKS, ROGER
A. DENNING, MICHAEL A. AMON, and BRIAN WACTER.
K.T. CHERIAN, Howrey LLP, of San Francisco, Cali-
fornia, for amicus curiae Allflex USA, Inc. With him on
the motion was RICHARD L. STANLEY, of Houston, Texas.
______________________
ORDER
A combined petition for panel rehearing and rehear-
ing en banc was filed by Plaintiff-Appellant, Avid Identi-
fication Systems, Inc. (“Avid”). Separately, Avid filed a
motion to join in the pending en banc review in
Therasense v. Becton Dickinson and Co., 2008-1511, -
1512, -1513, -1514, -1595 or, alternatively, to stay the
mandate of this case pending disposition of Therasense.
The panel denied Avid’s motion. The combined petition
and motion were referred to the circuit judges who are in
regular active service. A poll was requested, taken, and
failed.
Upon consideration thereof,
IT IS ORDERED THAT:
(1) The motion to join in the pending en banc review
in Therasense v. Becton Dickinson and Co., 2008-1511, -
3 AVID IDENTIFI v. CRYSTAL IMPORT
1512, -1513, -1514, -1595 or, alternatively, to stay the
mandate of this case is denied. .
(1) The petition for panel rehearing is denied.
(2) The petition for rehearing en banc is denied.
(3) The mandate of the court will issue on July 23,
2010.
FOR THE COURT
July 16, 2010 /s/ Jan Horbaly
—————————— ——————————
Date Jan Horbaly
Clerk
cc: John W. Thornburgh, Esq.
K.T. Cherian, Esq.
United States Court of Appeals
for the Federal Circuit
__________________________
AVID IDENTIFICATION SYSTEMS, INC.,
Plaintiff-Appellant,
v.
THE CRYSTAL IMPORT CORPORATION,
DATAMARS SA AND DATAMARS, INC.,
Defendants.
__________________________
2009-1216,-1254
__________________________
Appeal from the United States District Court for the
Eastern District of Texas in Case No. 2:04-CV-183, Judge T.
John Ward.
__________________________
NEWMAN, Circuit Judge, dissenting from denial of the
request for a stay.
Avid moves this court to stay its petition for rehearing
en banc until our en banc consideration of Therasense, Inc.
v. Becton, Dickinson & Co., 593 F.3d 1289 (Fed. Cir. 2010),
which bears on the precise issue of Avid’s appeal, that is,
the criteria for “inequitable conduct” during patent prosecu-
tion. I would grant this stay. The law as applied in Avid is
subject to conflicting precedent, a conflict whose resolution
is reasonably likely to alter the result. Thus it is prudent,
and just, to hold Avid’s petition while the law is clarified.
AVID IDENTIFI v. CRYSTAL IMPORT 2
The court today has declined to do so, rendering the subject
patent permanently unenforceable, although the patent was
found valid on the same prior art that is the basis for its
unenforceability.
The practice of staying the finality of related cases while
the law is clarified is not unusual. The Supreme Court
often holds petitions for writ of certiorari in cases involving
the same issue being decided in another case before the
Court. As explained in Lawrence v. Chater, “‘We fulfill our
judicial responsibility by instructing the lower courts to
apply the new rule retroactively to cases not yet final.’” 516
U.S. 163, 167 (1996) (quoting Griffith v. Kentucky, 479 U.S.
314, 323 (1987)). Thus the Supreme Court “regularly
hold[s] cases that involve the same issue as a case on which
certiorari has been granted and plenary review is being
conducted in order that (if appropriate) they may be
[granted, vacated and remanded] when the case is decided.”
Id. at 181 (Scalia, J., dissenting on other grounds). The
Court elaborated that this practice conserves judicial re-
sources while alleviating the potential for unequal treat-
ment of pending cases raising similar issues. Id. at 167.
Such consideration is equally salutary upon en banc re-
view in this court, when the purpose of the review is to
establish consistent national law, and other pending cases
are reasonably likely to be affected. As applied to Avid, it is
grievously unjust to eradicate this patent on grounds that
may soon be changed by the en banc court. Our Order in
Therasense is of broad range, in the context of “inequitable
conduct” in patent prosecution, and includes the following
questions concerning materiality:
Q3. What is the proper standard for materiality?
What role should the United States Patent and
Trademark Office’s rules play in defining material-
3 AVID IDENTIFI v. CRYSTAL IMPORT
ity? Should a finding of materiality require that but
for the alleged misconduct, one or more claims
would not have issued?
Therasense, Inc. v. Becton, Dickinson & Co., Nos. 2008-1511,
-1512,-1513,-1514, -1595, 2010 WL 1655391, at *1 (Fed. Cir.
Apr. 26, 2010) (“Order”). Extensive amicus curiae participa-
tion has ensued, for the burden on the innovation commu-
nity of this court’s inconsistent rulings has achieved
national notoriety. See, e.g., 155 CONG. REC. S2715 (daily
ed. Mar. 3, 2009) (statement of Sen. Hatch) (“The inequita-
ble conduct defense is frequently pled, rarely proven and
always drives up the cost of litigation tremendously.”).
This court held that Dr. Stoddard’s demonstration dur-
ing the Livestock Committee trade show of what the panel
calls “some of Avid’s technology,” and Avid calls a “precursor
product,” was material to patentability and that Dr.
Stoddard was required to assure that the patent examiner
was informed. 1 According to the panel opinion, the district
court “found that the precursor product, while not invalidat-
ing, reflected the closest prior art, and thus was highly
material to patentability.” Avid Identification Sys., Inc. v.
Crystal Import Corp., 603 F.3d 967, 973 (Fed. Cir. 2010)
1 The motion papers describe the demonstration as
two radio frequency components called “the e5500B inte-
grated circuit and the Standard Reader.” These items, and
their demonstration, were presented in the jury trial and
were found not to invalidate the patent in suit. See J.A. 30
(Jury Verdict); Avid Identification Sys., Inc. v. Crystal
Import Corp., No. 2:04-CV-183, 2007 WL 2901415, at *1
(E.D. Tex. Sept. 28, 2007) (“Avid I”) (“The jury upheld the
validity of the asserted claims of the ’326 patent, found the
defendants liable for the willful infringement of claims of
each patent, and found the defendants liable on Avid’s
unfair competition claim.”).
AVID IDENTIFI v. CRYSTAL IMPORT 4
(“Avid II”). While “closest prior art” has been discussed in
the context of whether certain information is cumulative of
that already presented to an examiner, see, e.g., AstraZeneca
Pharms. LP v. Teva Pharms. USA, 583 F.3d 766, 773-75
(Fed. Cir. 2009), it has never been the law that information
is “highly material” simply because it is “closest.” It is not
disputed that whatever was demonstrated was not an
invalidating disclosure of the patented invention, and not a
sale or offer to sell the patented invention, for the jury found
that the demonstration at the Livestock Committee was not
invalidating. See Avid I, 2007 WL 2901415, at *1.
Dr. Stoddard, who is the president of Avid, is a veteri-
narian whose principal occupation is running an animal
hospital; he is not an electronics engineer and not a chip
designer and not an inventor of the patented device and not
a lawyer. See Avid II, 603 F.3d at 970. On the undisputed
fact that the challenged information is not invalidating, the
court’s holding of inequitable conduct is sufficiently ques-
tionable to warrant a stay until this court resolves the
larger issues before us, including the en banc Order’s query:
“Should a finding of materiality require that but for the
alleged misconduct, one or more claims would not have
issued?” Order, 2010 WL 1655391, at *1. It is at least
possible that the court will answer this question in the
affirmative. Although I do not venture to guess how
Therasense will fare overall, it is not unreasonable to expect
that it may affect the Avid decision.
The Avid panel applied the former Rule 56 standard of
materiality as stated in J.P. Stevens & Co. v. Lex Tex Ltd.,
747 F.2d 1553, 1559 (Fed. Cir. 1984), although this standard
was abandoned by the PTO in 1992. The information here
criticized does not appear to violate the current Rule 56
standard, and Dr. Stoddard is not within the cadre upon
whom is placed the obligation of understanding the patent
5 AVID IDENTIFI v. CRYSTAL IMPORT
law, as Judge Linn explained in his dissent. I must, re-
spectfully, dissent from the court’s refusal to stay this
appeal in view of the en banc proceeding in Therasense.