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Digital Control Inc. v. Charles Machine Works

Plaintiffs-Appellants Digital Control, Inc., and Merlin Technology, Inc. (collectively, DCI) appeal from the decision of the district court for the Western District of Washington finding that United States Patent No. 5,767,678 (the '678 patent), No. 6,008,651 (the '651 patent), and No. 6,232,780 (the '780 patent) (collectively, the patents in suit) are unenforceable for inequitable conduct.1 Digital Control, Inc. v. The Charles Mach. Works, No. C03-0103P (W.D. Wash. June 9, 2004) (Bench Trial).

The district court had previously awarded partial summary judgment to Defendant-Appellee The Charles Machine Works (CMW), finding that there was no genuine issue of material fact that misstatements and omissions made by the inventor, Dr. John Mercer, during prosecution of the patents in suit were material. Digital Control, Inc. v. The Charles Mach. Works, No. C03-0103P (W.D. Wash. Mar. 22, 2004) (Summary Judgment). After a bench trial on the issue of intent, the district court determined that the misstatements and omissions were made with intent to deceive the United States Patent and Trademark Office (PTO) and that the level of materiality and the inference of intent were both high, warranting a finding that the patents were unenforceable for inequitable conduct. Bench Trial, slip op. at 26-27.

For the reasons stated below, we find that although there are no genuine issues of material fact as to the materiality of the misstatements in Dr. Mercer's Rule 131 declaration, there are genuine issues of material fact as to the materiality of Dr. Mercer's failure to disclose prior art. As the district court's determination of inequitable conduct was premised on the materiality of both the misstatements in the Rule 131 declaration and the failure to disclose prior art, we must vacate the district court's determination that the patents were unenforceable for inequitable conduct and remand for further proceedings.

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