Order on Inequitable Conduct and Obviousness

Outside the Box Innovations, LLC (d/b/a Union Rich USA) v. Travel Caddy, Inc. & Rooster Products (d/b/a The Rooster Group), Case No. 1:05-cv-2482 (N.D. Ga. Dec. 19, 2008) (Evans, J.)

Following an evidentiary hearing, Judge Evans held that the patents-in-suit, the ‘992 patent and the ‘104 patent, were unenforceable due to inequitable conduct, that all claims of the ‘992 patent were invalid for obviousness, and that several claims of the ‘104 patent were invalid for obviousness.

The Court’s inequitable conduct rulings were based on two separate acts by Defendant Travel Caddy, the patentee.

Failure to Disclose Litigation Proceedings: First, Travel Caddy failed to disclose the current litigation while the application for the ‘104 patent, a continuation of the ‘992 patent, was pending. Plaintiff Union Rich’s original complaint sought a declaratory judgment of non-infringement of the ‘992 patent. The ‘104 patent, which issued later, was added to the case when Travel Caddy amended its counterclaims. Judge Evans deemed the litigation material to the application for the ‘104 patent and found an intent to deceive the PTO even though at the time the ‘104 patent issued, Union Rich had not yet raised invalidity or unenforceability as a defense. Based on statements made in the parties’ discovery plan and in other pleadings, the Court found that while the application for the ‘104 patent was still pending, it was clear that the issue of validity would likely arise in the litigation. Rejecting Travel Caddy’s explanation that it did not believe the litigation to be material, the Court held that Travel Caddy’s failure to disclose the current litigation rendered the ‘104 patent invalid for inequitable conduct.

False Claim of Small Entity Status: Second, Travel Caddy claimed small entity status on the applications for the ‘992 and ‘104 patents although it had granted a non-exclusive license under the applications to a non-small-entity reseller. The Court held that the non-exclusive license rendered Travel Caddy ineligible for small entity status and the associated reduced fees. The Court held the false claim of small entity status to be “undoubtedly material” and found an intent to deceive despite Travel Caddy’s belief that only an exclusive license would preclude small entity status.

Obviousness: The Court based its obviousness determinations on various combinations of several prior art references that the examiner relied on to reject claims in a related application.