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Larson Mfg. Co. of South Dakota, Inc. v. Aluminart Products

This is a patent case. Larson Manufacturing Company of South Dakota, Inc. (“Larson”), appeals the final judgment of the United States District Court for the District of South Dakota dismissing its suit against Aluminart Products Limited and Chamberdoor Industries, Inc. (together, “Aluminart”), for infringement of claims 14 and 21 of Larson’s U.S. Patent No. 6,618,998 (the “’998 patent”). Ex Parte Reexamination Certificate U.S. Patent No. 6,618,998 C1 (the “’998 Reexamination Certificate”). The district court dismissed Larson’s suit after it held, following a bench trial, that the ’998 patent was unenforceable due to inequitable conduct during reexamination proceedings before the U.S. Patent and Trademark Office (“PTO”) relating to the patent. Larson Mfg. Co. v. Aluminart Prods. Ltd., 513 F. Supp. 2d 1102 (D.S.D. 2007) (“Inequitable Conduct Decision”). The court found that Larson failed to disclose to the Reexamination Panel three items of prior art and two office actions issued in the prosecution of a continuation application that grew out of the application that resulted in the ’998 patent. The court rejected Larson’s argument that the three items of prior art were cumulative of prior art which already was before the Reexamination Panel and therefore were not material, as well as its argument that the office actions were not material because all of the critical references noted in them already had been disclosed to the Reexamination Panel. After finding that Larson intended to deceive the Reexamination Panel, the court balanced its findings of materiality and intent and found inequitable conduct.
Aluminart has filed a cross-appeal. In it, Aluminart argues that the district court erred in declining to find the case exceptional under 35 U.S.C. § 285 (1952). Larson Mfg. Co. v. Aluminart Prods. Ltd., 529 F. Supp. 2d 1059 (D.S.D. 2007) (“Fees Decision”).
For the reasons set forth below, we conclude that the district court erred in finding that the three undisclosed items of prior art were material because they were not cumulative of prior art already before the Reexamination Panel. As a result, although we agree with the district court that the two office actions that Larson failed to disclose to the Reexamination Panel were material, we vacate the court’s finding of inequitable conduct and its resulting judgment in favor of Aluminart by reason of unenforceability of the ’998 patent. We do so because the district court did not analyze Larson’s deceptive intent separately for each of the three items of prior art and two office actions. Rather, its determination that Larson intended to deceive the Reexamination Panel was based upon its finding that Larson failed to disclose collectively three items of prior art and two office actions, all of which the court determined were material. We hold today, however, that the three items of prior art which were not disclosed were cumulative of prior art already before the Reexamination Panel. Hence, they were not material. In contrast, we affirm the district court’s determination that the two office actions were material. Under these circumstances, the district court must redetermine the issue of intent and then, if it finds intent, balance anew materiality and intent to arrive at an ultimate conclusion as to whether there was inequitable conduct. We therefore remand the case to the district court for further proceedings. Our decision renders Aluminart’s cross-appeal moot.

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