- Vestas has responded to GE’s patent infringement lawsuit with claims that GE engaged in inequitable conduct when obtaining a patent asserted in the lawsuit.
- If proven, inequitable conduct renders a patent unenforceable.
Wind turbine giant Vestas has answered a patent infringement lawsuit brought by General Electric Co. with a counteroffensive, claiming GE committed inequitable conduct when obtaining one of the asserted patents from the U.S. Patent and Trademark Office (USPTO). Vestas additionally sought to have one of its corporate entities removed from the case altogether. (Our post explaining GE’s lawsuit is available here).Inequitable conduct is often referred to as the “atomic bomb” defense because of the enormous consequences it can carry. A successful inequitable conduct defense renders the entire patent unenforceable, potentially renders related patents unenforceable, and can even expose the patent owner to antitrust and unfair competition claims. A single finding of inequitable conduct therefore has the potential to destroy a significant portion of an intellectual property portfolio, and also tarnish the reputation of the companies and individuals involved in the misconduct.
To prevail on a claim of inequitable conduct, a defendant must demonstrate that the patent applicant (A) withheld or misrepresented so-called “material” information, and (B) did so with intent to deceive the USPTO. Material information is a prior art document (or documents) that is so similar to the invention that the USPTO would not have issued a patent to the patent applicant if it had known of the withheld prior art document(s).
In making its case that GE committed inequitable conduct when obtaining one of the asserted patents, Vestas leans heavily on an earlier case: General Electric v. Mitsubishi Heavy Industries. In that case, Mitsubishi alleged – using publically-available documents and GE’s private documents obtained through the litigation discovery process – that GE employees knew of material prior art documents but withheld them from the USPTO. Those GE employees included an inventor named on the patent, engineers who assisted with the patent application, and GE’s Chief Intellectual Property attorney.
Mitsubishi also brought forth evidence that GE’s employees failed to disclose the prior art documents because they specifically intended to deceive the USPTO into believing that their patent application contained new and non-obvious material. (Remember, a patent applicant must demonstrate that an invention is new and non-obvious over existing technology to receive a patent. If GE’s invention was not new and non-obvious it should not have been issued a patent). Such evidence included similarities between figures used in the prior art documents and in the patent application, GE’s alleged use of “selective disclosure” (i.e. disclosing a small portion of prior art documents while withholding more relevant documents), and the “unconvincing and at times contradictory” testimony of GE’s employees.
The court in the Mitsubishi case seems to have agreed with Mitsubishi on most of the facts relating to inequitable conduct. However, the court felt that without “conclusive documentation of a deliberate conspiracy” or a “smoking gun document” it could not find that GE had committed inequitable conduct. Since Mitsubishi was unable to adequately prove inequitable conduct, it lost the case and a jury ordered the payment of $169M in damages to GE.
Vestas alleges many of the same facts as Mitsubishi, namely that GE withheld key prior art documents from the USPTO that would have shown its invention in the asserted patent was not new. Although Mitsubishi’s defense fell short, Vestas is hoping to use the same facts to better effect because it argues that the law of inequitable conduct has changed since the court decided the Mitsubishi case. Vestas reviews several recent cases in this area that found inequitable conduct despite lacking a “smoking gun document.” If Vestas can convince the court that the threshold for finding inequitable conduct has indeed been lowered since the Mitsubishi decision, and that GE’s behavior exceeds the new, lower threshold, then it may defeat GE’s infringement claim on this patent. The threat of an inequitable conduct finding and its outsize consequences are likely to be concerning to GE.
Vestas also moved to dismiss one of its corporate entities from the lawsuit altogether. GE had sued both California-based Vestas-American Wind Technology, Inc. and the Danish company Vestas Wind Systems A/S. Keep in mind that patents are only enforceable within a specific territorial jurisdiction; a U.S. Patent cannot reach infringing products in a foreign country unless and until those products are imported into the United States. Vestas claims that GE has no evidence of infringing activities on the part of its Danish corporation, and Vestas has therefore requested that the court remove Vestas Wind Systems A/S as a party to the case. If the court grants that request, then the case will proceed with only Vestas-American as a defendant.
This case continues to shape up as a battle of titans, as GE and Vestas collectively have more than 80% of the U.S. wind turbine industry.