By Eric Schweibenz and Sasha Rao
On April 5, 2017, ALJ MaryJoan McNamara issued the public version of Order No. 9 (dated March 27, 2017) in Certain UV Curable Coatings for Optical Fibers, Coated Optical Fibers, and Products Containing Same (Inv. No. 337-TA-1031).

By way of background, this investigation is based on an October 31, 2016 complaint filed by DSM Desotech, Inc. and DSM IP Assets B.V. (collectively, “Complainants” or “DSM”) alleging that Momentive UV Coatings (Shanghai) Co., Ltd. (“MUV”) and OSS Fitel, LLC unlawfully import into the U.S., sell for importation, and/or sell within the U.S. after importation certain UV curable optical fiber coatings, coated optical fibers, and products containing same that infringe one or more claims of U.S. Patent Nos. 6,961,508 (the ’508 patent), 7,171,103 (the ’103 patent), 7,067,564, and 7,706,659 (collectively, the “asserted patents”). These asserted patents generally relate to coating products for optical fibers. See our November 1, 2016 and December 5, 2016 posts for more details on the complaint and the notice of investigation, respectively.

MUV’s affirmative defense of inequitable conduct was based on purported material misrepresentations made by DSM during inter partes review of the ’508 and ’103 patents instituted by non-party Corning Inc. Specifically, MUV alleged that DMS: (i) misrepresented “how to properly measure the Cure Dose Limitation of a coating” as required by the patents; (ii) submitted “testing data performed on a sample that was approximately twice the thickness of the samples identified” in the patents; and (iii) “misrepresented the procedures used by DSM to properly generate a cure dose curve from the data points required” by the patents. MUV argued that, but for these misrepresentations, the PTAB would not have upheld the patentability of these patents. In response, DSM contended that MUV failed to show “but for materiality” as DSM’s testing was not a material factor in the PTAB’s Final Written Decision and that, accordingly, MUV’s inequitable conduct claim fails as a matter of law. DSM further argued that MUV had not pleaded facts to support the requisite intent element of the claim and thus had not pleaded this affirmative defense with sufficient particularity. The Commission Investigative Staff (“OUII”) raised these same points that MUV’s pleading is “generalized and non-specific” and added that MUV failed to identify the individuals responsible for the alleged misrepresentations.

The parties also disputed the pleading standard. DSM and OUII argued that the “heightened pleading” standard of Fed. R. Civ. P. 9(b) applies to the defense of “inequitable conduct,” citing Exergen Corp. v. Wal-Mart Stores, Inc., which held that the pleading must identify “the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.” 575 F.3d 1312, 1327 (Fed. Cir. 2009). However, both MUV and DSM conceded that certain ALJs at the ITC have been split in their application of Commission Rule 210.13(b) or the heightened Exergen standard to inequitable conduct pleadings in Section 337 investigations.

ALJ McNamara first addressed the pleading issue. She declined to apply the Exergen standard and determined that MUV’s inequitable conduct defense was sufficiently pleaded pursuant to the standard of Commission Rule 210.13(b). Under this standard, she noted, a respondent need not “provide a level of specificity that, in many circumstances, may not be available at the time a pleading is filed.” Accordingly, while MUV’s pleading lacks certain details, it sufficiently identified the actors involved in the alleged mischaracterization if not by name, outlined the scope of the misrepresentation, and provided the when, where, and circumstances under which the alleged misrepresentation allegedly occurred.

While noting that it is “atypical at this stage in a proceeding to make a finding of fact,” ALJ McNamara observed that “all Parties have relied upon the PTAB Final Decision and its factual findings to make their arguments.” Accordingly, the ALJ assessed the facts presented in that decision. She found dispositive the facts that the PTAB did not give weight to DMS’s testing results in its Final Written Decision and that Corning had failed to sustain its burden of proof on unenforceability. Furthermore, ALJ McNamara observed that the “PTAB judges who critically evaluated all of the testing data explicitly found the scientists had acted in good faith.” Thus, “even at this early stage,” the ALJ found “MUV’s ‘materiality’ argument is counter-factual, or unsupported by the very facts from the PTAB testing and Final Decision upon which MUV relies.” Finding that MUV would be unable to prove the “but for materiality” prong of its defense even if it could produce additional evidence of an “intent to deceive” by DSM, ALJ McNamara ordered that MUV’s additional defense of inequitable conduct be stricken.