United States Court of Appeals for the Federal Circuit
2006-1275
RESEARCH CORPORATION TECHNOLOGIES, INC.,
Plaintiff-Appellant,
v.
MICROSOFT CORPORATION,
Defendant-Appellee.
Brian E. Ferguson, McDermott Will & Emery LLP, of Washington, DC, argued for
plaintiff-appellant. With him on the brief were Mark G. Davis, John R. Fuisz, Paul E.
Poirot, and Natalia V. Blinkova. Of counsel was Paul Devinsky. Of counsel on the brief
was Michael J. Rusing, Rusing & Lopez, PLLC, of Tucson, Arizona.
John D. Vandenberg, Klarquist Sparkman, LLP, of Portland, Oregon, argued for
defendant-appellee. With him on the brief were Stephen J. Joncus, Todd M. Siegel,
and Garth A. Winn. Of counsel on the brief were Jeffrey Willis and Andrew Jacobs,
Snell & Wilmer, L.L.P., of Tucson, Arizona, and Stephen McGrath, Microsoft
Corporation, of Redmond, Washington.
Appealed from: United States District Court for the District of Arizona
Judge Manuel L. Real
United States Court of Appeals for the Federal Circuit
2006-1275
RESEARCH CORPORATION TECHNOLOGIES, INC.,
Plaintiff-Appellant,
v.
MICROSOFT CORPORATION,
Defendant-Appellee.
Appeal from the United States District Court for the District of Arizona in case no. 01-
CV-00658, Judge Manuel L. Real.
___________________________
DECIDED: August 1, 2008
___________________________
Before NEWMAN, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and RADER, Circuit
Judge.
RADER, Circuit Judge.
The United States District Court for the District of Arizona held Research
Corporation Technologies' (RCT's) patents unenforceable due to inequitable conduct.
The district court also granted the Microsoft Corporation summary judgment of invalidity
and noninfringement. Because the trial court incorrectly held RCT's patents
unenforceable due to inequitable conduct, this court reverses, and, accordingly, vacates
the award of attorney fees based on the exceptional case finding. This court also
vacates the trial court's summary grants of noninfringement and invalidity as well as the
motions in limine orders. Pursuant to 28 U.S.C. § 2106, this court also remands with
instructions to reassign the case.
I
On December 21, 2001, RCT filed suit against Microsoft for infringement of six
patents claiming digital halftoning—U.S. Patent Nos. 5,111,310 ('310); 5,341,228 ('228);
5,477,305 ('305); 5,543,941 ('941); 5,708,518 ('518); and 5,726,772 ('772). Dr. Kevin J.
Parker, from the University of Rochester, and his graduate student at the time, Dr.
Theophano Mista, made these inventions. After a Markman hearing, RCT moved for
partial summary judgment that certain Microsoft products contain infringing halftoning
masks. Microsoft filed a motion for partial summary judgment that the same claims are
invalid for anticipation under 35 U.S.C. § 102(b) and lack of written description under 35
U.S.C. § 112 ¶1.
The trial court granted RCT's infringement motion, and then appointed a special
master, Mr. Bruce Brunda, to consider the additional summary judgment motions. At
that point, the case was transferred to a different trial judge. After the transfer, the
parties filed additional summary judgment motions.
Without opinion, the new district judge reversed the prior judge's grant of RCT’s
summary judgment motion for infringement and also granted, without opinion,
Microsoft’s summary judgment motion for noninfringement. Again without opinion, the
new trial judge also granted Microsoft summary judgment on invalidity. Finally, the
judge who received the transfer granted all of Microsoft’s motions in limine and set a
jury trial to commence August 8, 2005.
2006-1275 2
But then, at Microsoft's request, the new judge cancelled the scheduled jury trial
and ordered a trial on inequitable conduct instead. Microsoft’s argument at this
inequitable conduct trial lasted an hour and featured no witnesses. The new judge
barred RCT from presenting expert testimony on materiality. RCT's case was limited to
testimony from the inventors about candor and good faith. On November 23, 2005, the
trial court ruled from the bench that the RCT patents were unenforceable due to
inequitable conduct. The court entered its cursory final order on January 27, 2006.
After RCT appealed, Microsoft filed motions with the district court seeking
attorney fees, amplification of the court’s findings, and an extension of the effective date
for appeal pending a decision on the first two motions. The trial judge granted the
motions on the deadline and attorney fees but did not amplify its findings of fact or
conclusions of law on any topic.
II
All the patents at issue relate to image halftoning technology used in computers
and printers. A halftone is an image which simulates a continuous tone image, but is
actually an arrangement of individual dots. The particular spacing between the dots
gives the viewer the illusion of a continuous picture consisting of varying shades of gray
in a halftone image. Halftoning may feature one tone (single bit dots) or more than one
tone (multi-bit dots). The prior art of halftoning images at the time of this invention
produced grainy results and contained distracting artifacts.
A black and white image is broken down into 256 shades of gray. Common
usage represents these 256 shades with numbers ranging from 1 to 256. The number 1
2006-1275 3
is black, the number 256 is white. As shades become lighter, their assigned number
ascends.
One method of halftoning is thresholding, a point algorithm technique to generate
digital halftoning images and prints. If a gray level number in the image exceeds a
predetermined number (the threshold), the method initiates the pixel. A grid-like array,
or mask, carries the threshold for any particular pattern. At the time of invention, the
halftoning art used different kinds of masks, including constant threshold masks, varying
threshold masks, random masks, and white noise masks. Due to difficulties with each
of these masks, Dr. Parker and Dr. Mista invented a blue noise mask.
Scientist and author, Dr. Robert Ulichney, published a book in 1987 in which he
analyzed digital halftoning techniques and defined various metrics to measure the
quality of the halftone image. This book chronicled that low frequency dots caused the
graininess and artifacts common in digital halftoning pictures. While studying these
problems, Dr. Ulichney discovered blue noise in halftoning. Dr. Ulicheny discovered
that dot profiles would be more visually pleasing if they contained blue noise properties
(low frequency dots). But, Dr. Ulichney could only generate blue noise halftone using a
complex mathematical process called error diffusion.
Drs. Parker and Mista recognized the drawbacks of Dr. Ulichney’s method,
namely slow speed, intensive computation demands, and missing blue noise results at
the mid-gray level. Drs. Parker and Mista then invented a Blue Noise Mask that was
quick, used very little computer memory, and produced high quality halftone images,
and subsequently applied for patents on their inventions.
2006-1275 4
The Principal Frequency (Fg) represents the desired average spacing between
the dots in a dot profile at each gray level. The Principal Frequency is represented as
follows:
g
Fg = , where g ≤ 0.5
R
1− g
Fg = , where g > 0.5
R
where "R" is the distance between dots and "g" is the gray level.
The "K factor" is a scaling factor and constitutes the number by which the
Principal Frequency equation can be multiplied to change the size of the filter. For
example, where g is > 0.5, K would factor into the Principal Frequency equation in the
1− g
following manner: Fg = . For typical blue noise patterns, K=1.
R
The K factor is not required in the patented invention and not mentioned in the
patent. After the filing of the patent application, and as a part of her continuing doctoral
thesis, Dr. Mista set out to test the strictness of Dr. Ulichney's Principal Frequency
equation by testing it with three different scaling factors. The power spectrum is a two-
dimensional plot that expresses the frequency with which dots appear in any given
direction of the dot profile. Dr. Mista was attempting to manipulate the shape of the
power spectrum and assess the impact on the dot profiles. Dr. Mista concluded that Dr.
Ulichney's equation could indeed be broadened. After this work, Drs. Mista, Parker, and
Ulichney together published an article summarizing these results. T. Mitsa, R. Ulichney,
and K. Parker, The Construction and Evaluation of Halftone Patterns with Manipulated
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Power Spectra, RIDT, The 2nd Int’l Workshop on Raster Imaging and Digital
Typography, Boston, MA, pp. 90-97, Oct. 15-16, 1991.
III
Because inequitable conduct ultimately falls within the discretion of the district
court, this court reviews that determination for an abuse of discretion. Kingsdown Med.
Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (en banc). The
trial court's factual findings on the issues of materiality and intent, however, receive
review for clear error. Id.
Where a court premises its inequitable conduct determination upon clearly
erroneous findings of fact or a misapplication of law, this court must reverse. Id. To find
a patent unenforceable for inequitable conduct, there must be clear and convincing
evidence that the applicant (1) made an affirmative misrepresentation of material fact,
failed to disclose material information, or submitted false material information, and (2)
intended to deceive the PTO. Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1363
(Fed. Cir. 2007). A determination based solely on one part of the test is legally
erroneous. Id. Here, the trial court erroneously found the patent unenforceable based
on only one prong of the two-pronged test for inequitable conduct, intent to deceive the
USPTO. The first prong, materiality, is a required element of the inequitable conduct
analysis.
The trial judge found inequitable conduct because the inventors did not disclose
Dr. Mista's post-filing K factor tests to the USPTO. Because Dr. Mista's work occurred
after she and Dr. Parker had filed the patent application, these K factor experiments
2006-1275 6
were not material to their inventive activity. In the circumstances of this case, therefore,
the inventors had no obligation to report their later tests to the USPTO.
After the patents at issue were filed, Dr. Mista decided to expand on her research
by testing the strictness of Ulichney’s Principal Frequency Equation as the cutoff
frequency. Using one of her algorithms, BIPPSMA, she tested three different K factors
(K=1, K=0.543, and K=0.707). As mentioned above, K=1 is most often used to
generate blue noise patterns. Of the three K factors tested, K=0.707 produced the
best—or the most visually pleasing—images.
Dr. Mista performed the experiment to determine the feasibility of broadening the
cutoff frequency in Ulichney’s Principal Frequency equation to include a scaling factor of
0.707. Dr. Mista had not performed the tests to attempt to generate more pleasing
images, which was the objective of the patents. In sum, the experiments did not
attempt to test the patented invention but instead sought to explore the consequences
of manipulating the power spectrum. The inventors had tested the algorithms in the
patents long before filing their application. These post-filing K factor experiments were
basic scientific research, not a verification of the patented technology. Dr. Mista, as a
final part of her doctoral thesis, was merely conducting studies on broadening Dr.
Ulichney’s Principal Frequency Equation.
Additionally, the patents do not even mention the K factor. The K factor research
is not necessary to practice the patented invention. In fact, most of Dr. Mista’s mask-
generating programs included no K factor at all, including her final program called
makemask. Importantly, Dr. Mista and her coauthors published the K factor tests to the
2006-1275 7
scientific community. Publication is an act inconsistent with an intent to conceal data
from the USPTO.
Because the trial court focused exclusively on candor, its findings and
conclusions improperly excluded and ignored proferred testimony on the immateriality of
the K-factor experiments. Similarly, the court also did not allow any testimony from
qualified experts regarding whether the K factor experiments had any bearing on any
statutory ground for patentability.
Using the language from the RIDT paper discussing the K factor experiments,
Microsoft argues that the patents discussed production of "visually pleasing" images.
Microsoft also contends that the patented technology can instead produce "visually
annoying" images. Further, Microsoft contends that Dr. Mista's K factor experiments
disclosed some limitations of the patented technology. According to Microsoft, the
inventors had an obligation to submit the post-filing tests to the USPTO. The trial court
agreed, concluding that in common English usage "pleasing" is the opposite of
"annoying." Indeed, these words are antonyms, but the distinction between pleasing
and annoying images does not make the K factor experiments material to the patented
technology, which does not refer to or rely upon K factors at all. The post-filing K factor
experiments were not intended to produce the most visually pleasing images but
instead test the strictness of Ulichney’s Principal Frequency Equation as the cutoff
frequency.
In sum, the trial court completely ignored the materiality prong. Indeed the trial
court, in its sparse articulation of reasons for the decision, noted "I am not trying a
patent case I am trying a particular matter that has been presented to me having to do
2006-1275 8
with candor and good faith." Neglecting to consider both prongs of the analysis was
clear error. The K factor tests probed the limits of accepted halftoning principles as part
of a doctoral thesis. In light of the different purposes and disclosures of the patented
technology, these experiments were not material to the patented invention and did not
give rise to any disclosure obligation.
IV
In addition to missing the materiality prong, the district court’s intent analysis was
clearly erroneous. The trial court, for instance, focused improperly on comments that
Dr. Parker made at trial regarding the purposes of the patent system. An inventor's
motives in applying for a patent or his views on the purposes of the patent system are
generally irrelevant to a proper determination of inequitable conduct. Dr. Parker is not
required to know or recite the purposes of the patent system. Moreover, although Dr.
Parker may likely not profit directly from the patent himself, even if he did hope for
remuneration, any financial reward does not alone show an intent to deceive the
USPTO.
The district court also erred in relying on an email exchange a few days after
filing as evidence that Dr. Parker was not in possession of the invention at the time of
filing. In an email to Dr. Ulichney, Dr. Parker indicated that he was thinking about
starting some experiments regarding blue noise masks. Indeed this was not an entirely
truthful statement.
To the contrary, Dr. Parker testified that he wanted to discuss the research with
Dr. Ulichney, but could not discuss confidential research before filing of the patent.
Accordingly, he waited until after filing to initiate the discussion. Indeed, Dr. Parker
2006-1275 9
noted that he had not disclosed the actual status of his research with Dr. Ulichney in an
effort to keep his research confidential. Nonetheless, an email from one scientist to
another scientist in a competitive field that does not disclose the actual status of
research is again hardly dispositive proof that the inventor was not in possession of the
invention at the time of filing. The court misinterpreted the exchange between Dr.
Parker and Dr. Ulichney to mean that Dr. Mista's blue noise mask research that had
been filed with the USPTO was nothing more than a premature "promissory note." It is
equally plausible that Dr. Parker was merely attempting to initiate scientific discussions
with Dr. Ulichney without disclosing the status of his research for reasons of
confidentiality. In the competitive environment of university research with potential
market applications, Dr. Parker's incomplete casual email would hardly indicate that an
invention already disclosed to the USPTO was a promissory note or a lie.
In sum, the trial court erred in ignoring the materiality prong and in misapplying
the intent prong of the inequitable conduct test. This court therefore reverses those
findings and conclusions.
V
The exceptional case determination and attorney fees findings under 35 U.S.C.
§ 285 occur in a two-step process. Enzo Biochem, Inc. v. Calgene, Inc., 188 F.3d 1362,
1370 (Fed. Cir. 1999) ("The district court must first determine whether the case is
exceptional, a factual determination that we review for clear error; if the case is found to
be exceptional, the district court must then determine whether attorney fees should be
awarded, a determination that we review for abuse of discretion."). Because this court
has vacated the trial court's determination of unenforceability due to inequitable conduct
2006-1275 10
for multiple errors, this court also vacates the exceptionality finding and the grant of
attorney fees.
VI
This court reviews grants of summary judgment without deference. Johns
Hopkins Univ. v. Cellpro, Inc., 152 F.3d 1342, 1353 (Fed. Cir. 1998); Conroy v. Reebok
Int’l, 14 F.3d 1570, 1575 (Fed. Cir. 1994). The court must decide for itself "if the
pleadings, depositions, answers to interrogatories, and admissions on file, together with
the affidavits, if any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c);
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In deciding whether a genuine
issue of material fact exists, the court must draw all justifiable inferences in the non-
movant’s favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
The special master determined that several later-filed RCT patents were not
entitled to their ancestor application filing date and were thus invalid over intervening
prior art. The trial court, without explanation or reasoning, adopted the special master's
recommendation that the '310 application did not support the later-filed claims and
therefore was anticipatory prior art to the later-filed claims.
Similarly, the special master determined that Microsoft’s multi-bit images do not
literally infringe the claim at issue. The special master did not enter a recommendation
regarding infringement under the doctrine of equivalents because he was uncertain
about infringement under the doctrine of equivalents. Again without explanation, the
district court adopted the special master’s recommendations for no literal infringement
2006-1275 11
and held—even though the special master did not recommend it—no infringement
under the doctrine of equivalents.
Microsoft's motions for summary judgment were granted without a proper
analysis regarding inequitable conduct. This court therefore lacks findings and
conclusions for adequate review. "For an appellate court to fulfill its role of judicial
review, it must have a clear understanding of the grounds for the decision being
reviewed." Gechter v. Davidson, 116 F.3d 1454, 1457 (Fed. Cir. 1997); see Nazomi
Communs., Inc. v. Arm Holdings, PLC, 403 F.3d 1364, 1371 (Fed. Cir. 2005) (vacating
a district court's grant of summary judgment with the explanation that "this court must be
furnished sufficient findings and reasoning to permit meaningful appellate scrutiny").
Further, the record shows many potential issues of fact that would prevent entry of
summary judgment. Consequently, this court remands both matters for a proper
determination on the merits.
VII
The Federal Circuit applies its own law with respect to issues of substantive
patent law and certain procedural issues pertaining to patent law, but applies the law of
our sister circuits to non-patent issues. In re Cambridge Biotech Corp., 186 F.3d 1356,
1368 (Fed. Cir. 1999); see also Midwest Indus. Inc. v. Karavan Trailers, Inc., 175 F.3d
1356, 1359 (Fed. Cir. 1999) (en banc in relevant part). The United States Court of
Appeals for the Ninth Circuit reviews evidentiary rulings under an abuse of discretion
standard. United States v. Feingold, 454 F.3d 1001, 1006 (9th Cir. 2006). A district
court's decision to preclude expert testimony is such an evidentiary issue. Gen. Elec.
Co. v. Joiner, 522 U.S. 136, 141-43 (1997) ("[A]buse of discretion is the proper standard
2006-1275 12
of review of a district court's evidentiary rulings."); Flex-Rest, LLC v. Steelcase, Inc.,
455 F.3d 1351, 1357 (Fed. Cir. 2006). Again, without an adequate record in light of the
overall procedural status of this case, this court vacates the trial court's decision to grant
Microsoft's motions in limine.
VIII
This court evaluates a request to transfer to a different judge under the law of the
regional circuit. Eolas Techs., Inc. v. Microsoft Corp., 457 F.3d 1279, 1280 (Fed. Cir.
2006). The Ninth Circuit considers the following three factors: (1) whether the original
judge would reasonably be expected upon remand to have substantial difficulty in
putting out of his or her mind previously-expressed views or findings determined to be
erroneous or based on evidence that must be rejected, (2) whether reassignment is
advisable to preserve the appearance of justice, and (3) whether reassignment would
entail waste and duplication out of proportion to any gain in preserving the appearance
of fairness. McCalden v. Cal. Library Ass'n, 955 F.2d 1214, 1224 (9th Cir. 1990)
(quoting Davis & Cox v. Summa Corp., 751 F.2d 1507, 1523 (9th Cir. 1985)).
This court considers a transfer request with great caution, and, in the absence of
personal bias, would grant such a request only in "unusual circumstances." Davis &
Cox v. Summa Corp., 751 F.2d 1507, 1523 (9th Cir. 1985). This court understands that
a transfer may require a new judge to learn material and thus may occasion some
duplicative judicial effort. At the same time, this court must recognize that a pattern of
error based on previously-expressed views or findings may make it difficult for a trial
court to approach a remanded case with an open mind. After a thorough review of all
the evidence, testimony, and facts of this case, this court concludes the strongly
2006-1275 13
expressed convictions of the trial court in this case may not be easily and objectively
reconsidered. Accordingly, this court remands with instructions to reassign this case.
See 28 U.S.C. § 2106; Liteky v. U.S., 510 U.S. 540, 554 (1994). See also Group One,
Ltd. v. Hallmark Cards, Inc., 407 F.3d 1297 (Fed. Cir. 2005); Juicy Whip, Inc. v. Orange
Bang, Inc., 382 F.3d 1367 (Fed. Cir. 2004). Thus, this court remands to the Chief
Judge of the United States District Court for the District of Arizona to determine the
reassignment of this case.
IX
Because the trial court incorrectly held RCT's patents unenforceable due to
inequitable conduct, this court reverses that holding and vacates the award of attorney
fees. We also vacate the trial court's grant of Microsoft's noninfringement and invalidity
motions as well as the grants of Microsoft's motions in limine. Finally, this court
remands with instructions to assign this case to a different judge for a proper
determination of validity and infringement on the merits.
REVERSED, VACATED, AND REMANDED
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