Wednesday, June 13, 2012

Failure to Disclose Findings of Non-Binding Arbitration Panel Does Not Support Inequitable Conduct Claim

The court denied defendants' motion to amend their counterclaims to include an inequitable conduct claim based on plaintiff's alleged failure to disclose the findings of a non-binding arbitration panel. "[Defendant] argues that, during the [patent-in-suit] reexamination, [plaintiff] engaged in . . . misconduct, by taking positions before the PTO that conflicted with arbitration materials in [plaintiff's] possession, and by failing to disclose certain information, such as the fact that arbitration panels had rejected its contentions. . . . The information that [plaintiff] failed to disclose to the PTO was nothing more than the opinions of third parties, which had no legal or binding effect. We find no basis to conclude that [plaintiff] was obligated to disclose to the PTO the fact that these third parties disagreed with the arguments that [plaintiff] advocated before the PTO. . . . Nor do we agree with [defendants'] assertion that, just as failure to disclose ongoing related litigation is inequitable conduct, so too must [plaintiff's] failure to disclose the arbitration be inequitable conduct. Non-binding arbitration is distinguishable from litigation, on the basis that it lacks binding legal effect."

Kimberly-Clark Worldwide Inc. v. First Quality Products Inc., et. al., 1-09-cv-01685 (PAMD June 11, 2012, Order) (Caldwell, J.).

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