Matsushima v. H.A.

When an interference party alleges inequitable conduct whose materiality issues largely overlap with a pending unpatentability motion, and priority or patentability decisions may moot the allegation, the Board may defer discovery on inequitable conduct and postpone the related preliminary motion until after priority is decided. The additional-discovery motion is dismissed without prejudice to refiling, and the party must raise the issue within the time for requesting reconsideration of the priority decision under 37 CFR § 1.658(b). No prior precedent directly addressed this issue in the text; the Board relies on the general principle that interferences be administered to be just, speedy, and inexpensive under 37 CFR § 1.601, and that efficient administration may warrant taking up an issue out of turn. For the party alleging inequitable conduct, here the junior party Matsushima, discovery on intent is not available during the preliminary motions phase and must wait until priority is resolved, although the issue is preserved. For the opposing party, here H.A., it avoids costly and acrimonious discovery, including foreign-witness discovery, unless the unpatentability and priority decisions leave the issue alive. The Board relied on Federal Circuit authority for the points that inequitable conduct is a "plague" prone to satellite litigation (Multiform Desiccants Inc. v. Medzam, Ltd., 133 F.3d 1473), that it impugns the reputation of counsel or inventors (Burlington Indus., Inc. v. Dayco Corp., 849 F.2d 1418), that materiality and intent are inversely related (Akzo N.V. v. International Trade Comm'n, 808 F.2d 1471), and that interferences may address issues beyond priority (Perkins v. Kwon, 886 F.2d 325). LEGAL TEST OR STANDARD: The Board did not state a numbered test. It reasoned that interferences should be administered to be just, speedy, and inexpensive (37 CFR § 1.601), that efficient administration may warrant taking up an issue out of turn, and that inequitable conduct is rarely central to priority or the scope of the count. It weighed whether most materiality issues overlap with the unpatentability motion, whether intervening decisions may moot the issue, whether intervening decisions and discovery would improve the focus of the arguments and the scope of discovery, and whether discovery cost, especially with foreign witnesses, is substantial. TRIGGERING FACTS: Matsushima's preliminary motion argued H.A.'s invention was unpatentable over a third-party publication and Matsushima's own publications and presentation. Its motion for additional testimony alleged H.A. knew of some of the prior art and may have breached its duty of candor. Most materiality issues overlapped with the unpatentability motion. The parties agreed the inequitable conduct and unpatentability issues were closely related, H.A. did not oppose postponement, and discovery would involve foreign witnesses at substantial cost. KEY QUOTE: "Although the policing of inequitable conduct is important to the integrity of the patent system, inequitable conduct is rarely central to a priority determination." (Paper 45, p. 5) PRIOR PRECEDENT AFFECTED: No prior precedential or informative decision is directly affected. PRACTICE TIP: If you intend to allege inequitable conduct in an interference, flag it to the Board at the outset, ideally through the motions list and initial telephone conference, and propose sequencing with the overlapping unpatentability motion. Do not expect discovery on intent before priority is decided, and calendar the deadline under 37 CFR § 1.658(b) for raising the issue after the priority decision.