Free Motion for New Trial - District Court of Arizona - Arizona

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Charles F. Hauff, Jr. (AZ Bar No. 014465) Douglas W. Seitz (AZ Bar No. 004258) SNELL & WILMER L.L.P. One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Telephone: (602) 382-6000 Attorneys for Eberle Design, Inc. and Electronic Devices, Inc. UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Eberle Design, Inc., and Electronic Devices, Inc., Plaintiff/Counterdefendants, v. Reno A&E, Defendant/Counterplaintiff.

CIV 02 2575 PHX DGC (Lead) CIV 03 883 PHX DGC (Consolidated) PLAINTIFFS' MOTION FOR A NEW TRIAL (ORAL ARGUMENT REQUESTED)

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Plaintiffs/Counterdefendants Eberle Design, Inc. and Electronic Devices, Inc. (collectively "Eberle"), move this Court, pursuant to Rule 59 of the Federal Rules of Civil Procedure, for an order granting a new trial on their claims that U.S. Patent No. 6,087,964 ("the '964 Patent") (Trial Exhibit 1, attached as Exhibit 1 to the Judge's copy only) is invalid because the claims of the '964 Patent are anticipated and/or obvious, and are unenforceable due to Defendant/Counterplaintiff Reno A&E's ("Reno") inequitable

conduct in obtaining the '964 Patent. While the asserted claims of the '964 Patent stand invalid because of the on-sale bar as set forth in 35 U.S.C. § 102(b), should Reno seek to overturn the on-sale bar verdict by post-trial motion or appeal and the case be remanded for further proceedings, Eberle believes a new trial on these defenses is warranted. That is, the jury's verdict and judgment entered finding that Eberle had not proven that any of the claims of the `964 Patent are invalid as anticipated or obvious, and that Eberle has not proven that Reno engaged in inequitable conduct are against the clear weight of the evidence.
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Because the Rules of Civil Procedure require a simultaneous filing of post-trial motions, Eberle has filed this Motion to preserve its objections. If Reno stipulates that it will not appeal or otherwise seek to overturn the jury's verdict that the on-sale bar invalidates the '964 Patent, then Eberle will withdraw this Motion. In the absence of such a stipulation, Eberle seeks a conditional order granting a new trial on the issues of anticipation, obviousness, and inequitable conduct in the event the verdict in favor of Eberle on the on-sale bar is reversed or if a new trial on that issue is ordered. This Motion is supported by the following Memorandum of Points and Authorities and the Court's entire file in this matter. RESPECTFULLY SUBMITTED this 15th day of November, 2005. SNELL & WILMER L.L.P.

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES

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By: /s/ Charles F. Hauff, Jr. Charles F. Hauff, Jr. Douglas W. Seitz Attorneys for Plaintiff/Counterdefendants Eberle Design, Inc. and Electronic Devices, Inc.

I.

FACTUAL BACKGROUND This case was tried to a jury beginning on August 30, 2005. On September 12, the

jury returned a verdict in favor of Eberle on one of Eberle's defenses, namely finding that the claims of the '964 Patent are invalid under 35 U.S.C. § 102(b) because Reno violated the on-sale bar. However, the jury also found that Eberle had not proven that the asserted claims of the '964 Patent were invalid for anticipation or obviousness, or that Reno had engaged in inequitable conduct. The jury's verdict was entered on September 21, 2005, and on November 1, 2005 judgment following the verdict was entered. Although Eberle has prevailed in this matter, it is believed that Reno will appeal seeking to overturn the judgment of invalidity either by post-trial motion or appeal. If further proceedings are had in connection with this matter, Eberle believes that a new trial
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is warranted on the defenses not found to have been proven, because the jury's verdict on those issues is against the clear weight of the evidence, as will be described below. II. EBERLE IS ENTITLED TO A NEW TRIAL ON ITS ANTICIPATION AND OBVIOUSNESS CLAIMS A. Standard for a New Trial

Rule 59 provides that a new trial may be granted on part of the issues following a trial by jury "for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States." Among the many reasons that a trial court may, in its discretion, grant a new trial is if a jury verdict contradicts the weight of the evidence. In Murphy v. City of Long Beach, the Ninth Circuit described the role of the district judge in evaluating whether a verdict was contrary to the clear weight of the evidence for purposes of granting a motion for a new trial as follows: It is clear that the district judge had the right, and indeed the duty, to weigh evidence as he saw it, and to set aside the verdict of the jury, even though supported by substantial evidence, where, in his conscientious opinion, the verdict is contrary to the clear weight of the evidence . . . or to prevent, in the sound discretion of the trial judge, a miscarriage of justice. 914 F.2nd 183, 187 (9th Cir. 1990) (citations omitted) (affirming the district court's decision conditionally granting a motion for a new trial, and reversing the district court's entry of judgment notwithstanding the verdict). In weighing the evidence, the court may "assess the credibility of witnesses, and need not view the evidence in the light most favorable to the prevailing party." Computer Access Tech. Corp. v. Catalyst Enter., Inc., 273 F. Supp. 2d 1063, 1066 (N.D. Cal. 2003) (granting the parties' motions for a new trial on all of the trademark, willfulness, unfair competition, trade dress and copyright claims). Courts should be particularly vigilant in assessing the weight of the evidence with respect to obviousness and anticipation claims in patent cases because such claims frequently involve complex technical matters that are peculiarly susceptible to juror confusion and error. See, e.g., Union Carbide Chem. & Plastics Tech. Corp. v. Shell Oil

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Co., 308 F.3d 1167, 1187-89 (Fed. Cir. 2002) (affirming the trial court's decisions to: (1) grant a new trial because the jury's verdict of obviousness was against the weight of the evidence and (2) grant judgment as a matter of law on an anticipation claim because the jury's verdict of invalidity due to anticipation was not supported by sufficient evidence); See also, Computer Access Tech. Corp, 273 F. Supp. 2nd at 1067, 1074 (granting motions for a new trial on trademark infringement, trade dress and copyright claims because the jury's findings were inconsistent and against the weight of the evidence). B. The Jury's Finding and Entry of Judgment on Eberle's Anticipation and Obviousness Claim is Contrary to the Clear Weight of the Evidence

Reno A&E asserted that claims 1-11, 13-15, 17, 21, 24-28, 30-33, 35-42, and 44 of the '964 Patent were infringed. All of these asserted claims are invalid in light of The APD Model G-90 LCD Series Barrier Gate (the "G-90 Device" or "G-90 Manual") and admitted prior art from the Background section of the '964 Patent or other prior art. Independent claims 1 and 31, as well as dependent claims 2-5 and 32-33 and 36, are invalid under 35 U.S.C. 102(b) because each and every element of these claims is disclosed in the G-90. The G-90 Device constitutes a "vehicle detector" which itself includes "function switches" and a "variable display device," both of which are easily accessible by an operator. These elements work in concert in the same manner, using the same features and functions, as recited in the claims of the '964 Patent. The clear weight of the evidence shows that the G-90 Device and Manual meet each and every limitation of the independent claims 1 and 31. (See, Trial Exhibit 74, attached as Exhibit 2 to the Judge's copy only; Testimony of Dennis Foderberg, September 1, 2005). Reno's trial arguments and corresponding evidence really do not dispute what the G-90 Device or Manual show, but rather relate to whether the device meets the claim limitations. Of course, claim construction is a matter of law, Markman v. Westview Instruments, Inc., 517 U.S. 370, 372, 388-91 (1996), and, as such, resolution of the issue does not require resolution of questions of fact. Reno's arguments with respect to the prior art G-90 Device were: 1) that it is a gate
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controller, not a vehicle detector; 2) that it does not itself have a variable display; and 3) that it does not enable operator control of function states. However, the clear weight of the evidence shows that in the context of the properly constructed claims, the G-90 is "itself" a vehicle detector which "itself" includes a display having functionality recited in the `964 claims. Both of the technical experts, Mr. Ferraro on behalf of Reno and Mr. Foderberg on behalf of Eberle, offered significant testimony on the G-90 Device. Mr. Ferraro's

testimony clearly and convincingly established that the G-90 Device included a circuit board which included a microprocessor and oscillator circuit. That is, Mr. Ferraro's testimony unquestionably established that the G-90 at least contained a vehicle detector. Moreover, Mr. Ferraro's testimony established that the circuit board, including the vehicle detector, was attached to a variable display of the G-90 Device. Indeed, Mr. Ferraro's testimony demonstrated that connection of the board to the display in the G-90 Device was in exactly the same way as the board of the Model C device is attached to the variable display of the Model C device. Specifically, Mr. Ferraro testified as follows with respect to the configuration of the G-90 Device: 10 Q Okay. Well, inside this one, the one that's in evidence 11 as Exhibit 72, isn't it true, sir, that the LCD is attached to 12 the board, the circuitry board, by some stand-offs, much in 13 the same way as the Model C is; isn't that true, sir? 14 A Yes, the LCD -15 Q That's fine. Thank you. 16 And, indeed, it's also connected to that board by a 17 ribbon cable, isn't that true, sir? 18 A Yes. Testimony of Richard Ferraro, September 2, 2005). The parties stipulated that the Model C device embodies the claims of the '964 Patent. Mr. Ferraro also admitted in his testimony that the relevant art, at least as shown by

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the background of the invention as set forth in the '964 specification and the art cited by the Examiner, included gate control devices, as well as all types of other vehicle detectors used in restaurant and/or traffic applications. September 2, 2005). While Mr. Ferraro suggested that because the board of the G-90 included other circuitry it should be regarded as a controller board, not a vehicle detector board, the clear weight of Mr. Ferraro's testimony was to the contrary. Specifically, given the nature of the comprising claim language of the '964 Patent claims, Mr. Ferraro's testimony was clear that the inclusion of other circuitry ­ beyond that used for vehicle detection ­ does not avoid infringement. Mr. Ferraro further testified, as the law requires, that the claims must be interpreted the same way for purposes of infringement and validity. The clear weight of the evidence showed that the G-90 Device would infringe claim 1 of the '964 Patent. However, because the G-90 Device was prior art, that is it came before the '964 Patent, it anticipates claim 1. As Mr. Ferraro testified: 8 Q Yet if that same product came before the patent issued and 9 was duly considered as prior art, then it would anticipate or 10 render obvious the claims, depending on if that product 11 included all of the claim elements, correct, sir? 12 A That's correct. 13 Q Now, like with infringement, when we're looking at the 14 issue of anticipation, sir, particularly in a comprising-type 15 claim, isn't it true, sir, that the anticipatory reference or 16 product could include more than what is in the claim so long 17 as it included each of the items that were set forth in the 18 claim? 19 A That's correct. (Testimony of Richard Ferraro, September 2, 2005). (See, Testimony of Richard Ferraro,

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While Mr. Ferraro also disputed that the G-90 included the so-called "function states" required in each of the claims of the '964 Patent, the clear weight of Mr. Ferraro's testimony, however, demonstrates that at a minimum the Loop Back Out Timer or No Loop Back Out Timer feature of the G-90 is equivalent to the End Of Green function state described in the '964 Patent. In the context of the G-90 Device, the Loop Back Out Timer essentially serves as a reset. (See, Trial Exhibit 74, attached as Exhibit 2 to the Judge's copy only). When the G-90 is set in that mode, the gate arm will not be lowered once the vehicle leaves the detection zone until the timer runs down. Id. Mr. Ferraro's arguments that because the Loop Back Out Timer relate to the gate, which is not part of the vehicle detector, and as such it cannot be regarded as a function state, are not credible in light of his acknowledgment that the green light -- which triggers the End of Green function state in the '964 Patent -- is the green light which is also not part of the claimed vehicle detector. As it relates to claim 1, no particular type of function state is required. Thus, the clear weight of Mr. Ferraro's testimony is that this limitation of Claim 1 is also met in the G-90 Device. This comports with Mr. Foderberg's testimony. He testified: 4 Q So going back, if we can to claim 1, Mr. Foderberg -5 A Yes. 6 Q Is it your opinion that the operation [of the G-90 Device which] you just took the 7 jury through meets all of the limitations of claim 1 of the 8 '964 Patent? 9 A Absolutely. Yes, it does. 10 Q Why is that, sir? 11 A It does everything that's listed here. Provides a means 12 for detection, it has two to three loops that it can be 13 connected to, it does have the function switches or the 14 keyboard, and it also has a variable display device. In this
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case an LCD screen. (Testimony of Dennis Foderberg, September 1, 2005). Mr. Foderberg demonstrated the operation and programming of the G-90 Device during the course of his testimony. This demonstration clearly and convincingly showed how the manually actuatable function switches could be used to program function states, like the Loop Back Out Timer, as well as parameters, like sensitivity, to select different values for those parameters. For the timer, Mr. Foderberg showed how the timer could be set from 28 seconds to 38 seconds, and, with respect to sensitivity, Mr. Foderberg demonstrated how the level could be selected from 0-9 ­ the exact same values that can be selected for that parameter in the Model C device. The clear weight of the evidence shows that each and every limitation of claim 1 of the '964 Patent is met in the G-90 Device. Claim 31, as each of the experts testified, is similar to Claim 1 in all material respects, and the clear weight of the evidence supports that the G-90 Device also anticipates Claim 31 as well. In addition, the clear weight of the evidence also shows for the same reasons discussed above, that dependent claims 2-5, which depend from claim 1, and 32-33 and 36, which depend from claim 31, are also anticipated by the G-90 as well.1 Each of these claims, as well as each of the other asserted claims, are also rendered obvious. The clear weight of the evidence shows that the differences between the claimed invention as set forth in asserted claims and the G-90 Device are minute, and that each relates to common, well-known vehicle detection technologies, function states or parameters. As such, the clear weight of the evidence shows that the display of any of these well-known function states, parameters and/or parameter values was obvious, especially in view of the fact that the concept of vehicle detector which itself included a display existed. In the Background section of the '964 Patent, the common detector parameters and
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For example, claim 5 and claim 36 relate to the display of loop frequency, and the G-90 Device unquestionably permits display of loop frequency parameters; claims 4 and 33 relate to the display of sensitivity valves; and claims 2 and 3 relate to the vehicle detector including a microprocessor and liquid crystal display, also unquestionably found in the G-90 Device. Document 235 - 8 -Filed 11/15/2005 Page 8 of 18

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functions states that had been in use for many years in vehicle detectors were described. In doing so, Mr. Potter admitted that those features, namely the various parameters, function states, multiple channel capabilities, etc., were well known. This information thus constitutes admitted prior art. See, e.g., Tyler Refrigeration v. Kysor Indus. Corp., 777 F.2d 687, 690 (Fed. Cir. 1985). Taken by themselves, these parameters and function states do not define any patentable subject matter, and, as such, cannot support patentability of the '964 Patent claims reciting those features. Each of the technical experts presented at trial, Mr. Ferraro on behalf of Reno and Mr. Foderberg on behalf of Eberle, agreed that all of the vehicle detection function states and parameters described and claimed in the patent were well known and that, with respect to those parameters and function states, Mr. Potter did not invent anything new. For example, Mr. Ferraro testified: 15 Q Let me try and ask the question this way. As it relates

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16 to these parameters and function states that can be displayed
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17 on the display of the '964 Patent, were any of them not
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18 previously known?
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19 A Individually, the parameters and the function states that
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20 I've listed here, which I think are exhaustive of those that
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21 are in the asserted claims, individually, those parameters and
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22 function states were known, as was admitted by Mr. Potter in
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23 his affidavit.
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24 Q And that's what I was trying to get at, sir. As it
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25 relates to those -- the identification of those parameters,
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1 Mr. Potter didn't invent anything there, did he?
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2 A As it relates only to a parameter, yes; but not as it
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3 relates to say -28

4 Q I understand that, but as it relates to the parameter, you
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5 would agree, sir, that they weren't new, correct? 6 A Correct. (Testimony of Richard Ferraro, September 2, 2005). The clear weight of the evidence shows that the '964 Patent is a combination of well-known vehicle detection technology with well-known diagnostic and display capabilities. As it relates to the vehicle detection technology, there was nothing new described or claimed in the '964 Patent. All of the modes of operation (function states), parameters, and parameter values were well-known. Mr. Potter did not invent anything new. The evidence also shows that all of the display technologies were well-known and available. Diagnostic tools existed at the time the application was filed that were capable of displaying all of the well-known vehicle detection technology. As the Examiner pointed out in connection with the prosecution of the '964 Patent: With up to date technology to accommodate the claimed display device in the vehicle detector instead of making it a separate unit is doable. Whether or not it is done is merely a matter of design choice based on the cost and marketing reasons of such vehicle detector. (See, Trial Exhibits 21-159, not attached hereto). These positions of the Examiner were never specifically challenged by Reno, and they reflect the level of skill in the art and what would have been obvious to one of skill in the art. With respect to the broadest claims of the '964 Patent, namely claims 1 and 31, while those claims are obvious, inasmuch as the invention set forth therein was an obvious combination of well-known teachings, they are, as set forth above, in fact anticipated. Anticipation requires no suggestion to combine, as there is nothing to combine. As has been observed, "anticipation is the epitome of obviousness." Johns Hopkins Univ. v. Cellpro, Inc., 152 F.3d 1342, 1357, n.21 (Fed. Cir. 1998). That is, when these wellknown technologies are in fact combined, as they were in the prior art G-90 Device, there need not be any suggestion to combine the technologies, because they were already combined. The suggestion -- which is not needed for anticipation -- for the obviousness
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position comes from the fact that it had been done. With respect to the remaining claims that relate simply to the display of wellknown traffic intersection control modes of operation, parameter, parameter values and/or ways of displaying the same (e.g., through use of a bar-graph), the differences are so small that it would have been, as the Examiner suggested during prosecution, merely a matter of design choice -- an obvious modification. The technology existed to display any of those parameters, and the selection of what to display was not itself inventive. In fact, as Mr. Foderberg testified, adding the function states not specifically disclosed was a "minor change in the software." (Testimony of Dennis Foderberg, September 1, 2005). Specifically, dependent claims 8-11, 13, are invalid under 35 U.S.C. 103(a) as being unpatentable over the G-90 in view of the admitted prior art from the Background of the '964 Patent itself. Further, claims 35-42, and 44 (which variously depend from claim 31) are also unpatentable over the G-90 Documents in view of admitted prior art. As it relates to claim 14 and dependent claims 24-28 and 30 (which variously depend from claim 14), the clear weight of the evidence shows that they are unpatentable over the G-90 Documents in view of admitted prior art. As Mr. Foderberg testified: 13 Q So as we look at the remaining claims, if we take claim 1 14 and 31 and 32, we're left with claims 14, 21, and 34; is that 15 correct? 16 A That's correct. 17 Q What do those claims relate to? 18 A They all relate to the bar graph that is referred to. 19 Q And is it your opinion that there was anything new that 20 was described or claimed in the '964 Patent as it relates to 21 use of a bar graph? 22 A Not -- bar graphs, you could pick up almost any 23 electronics -- your home television set if you turn it on, 24 change the volume, you're going to see a bar graph display of
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25 some type. Very common. Car radios. Lots of different 69 1 things. Very common and nothing new invented. 2 One of the devices I did look at was a microwave 3 vehicle detector. It's not an inductive loop. It relies on a 4 radar type, I call it a radar gun. But it is used 5 specifically for the purpose of detecting a vehicle and 6 identifying speed of that vehicle. The speed is then shown on 7 an LCD display -- excuse me, bar graph display that has 8 relative speed of that vehicle. So in the detector world, 9 which is a fairly broad world talking about more than just 10 inductive loops, video imaging, microwave, sonar, there's lots 11 of new technology, this is one specific application where a 12 bar graph was used as vehicle detector. (Testimony of Dennis Foderberg, September 1, 2005). Similarly, the clear weight of the evidence shows that the judgment is against the clear weight of the evidence when proper consideration of the other prior art, the Traficomp manual, the ILT report, the '954 patent is made. Specifically, the clear weight of the evidence shows that: a) the Trafficomp 241 device and Manual discloses a vehicle detector that itself includes a display and which includes each and every other element of claims 1-4, 6-10, 31-33, and 37-41, and, as such, those claims are anticipated; b) claims 15, 14, 17, 21, 31-33, 34, and 36 are obvious in light of the G-90 in view of U.S. Pat. No. 5,226,954; c) claims 1-5, 8-11, 13, 24-28, 30, 31-33, 35-36, 39-42, and 44 are obvious in light of the G-90 and the admitted prior art in the background section of the '964 patent; d) claims 1-5, 6-7, 15, 31-33, 36-38 are obvious in light of the G-90 Device in combination with the ILT tester; and, e) claims 1-5, 6-10, 11-30, 31-33, 34-36, 37-41, and 42-44 are obvious in light of the Traficomp device in combination with the other prior art. In sum, a new trial on Eberle's anticipation and obviousness claims is warranted
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because the jury's verdict and corresponding judgment are against the clear weight of the evidence. III. THE JURY'S FINDING ON EBERLE'S UNENFORCEABILITY CLAIM IS CONTRARY TO THE CLEAR WEIGHT OF THE EVIDENCE Inequitable conduct is a two step process wherein the jury first makes a determination as to whether the withheld reference meets a threshold level of materiality and intent to mislead, and then performs a weighing of the materiality and intent in light of all the circumstances to determine whether the applicant's conduct is so culpable that the patent should be held unenforceable. Dayco Prods., Inc. v. Total Containment, Inc., 329 F.3d 1358, 1362-63 (Fed. Cir. 2003). It is clear that the ultimate question of whether inequitable conduct occurred is truly equitable in nature, and as such, its resolution is ultimately a question reserved for the trial court. Paragon Podiatry Lab., Inc. v. KLM Labs., Inc., 984 F.2d 1182, 1190 (Fed. Cir. 1993); see also, Gardco Mfg., Inc. v. Herst Lighting Co., 820 F.2d 1209, 1212 (Fed Cir. 1987). In this case, the jury has found that the claims of the '964 Patent are invalid because the alleged invention of the '964 Patent was impermissibly on-sale, pursuant to 35 USC § 102(b), more than one year prior to the filing date of the '964 Patent. Information relating to the sale is therefore unquestionably material. This information was solely in the possession of Reno and Mr. Potter, and there is no way that the patent examiner could have uncovered this information. Thus, "[t]he concealment of sales information can be particularly egregious because, unlike the applicant's failure to disclose, for example, a material patent reference, the examiner has no way of securing the information on his own." Id. at 1193. The evidence is undisputed that Mr. Potter did not disclose anything to the Patent Office about the on-sale activities. As such, the only issue was whether his nondisclosure was with the requisite intent to mislead. The clear weight of the evidence shows that the non-disclosure was intentional and with the intent to mislead the Patent Office. In Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 125657, 1260 (Fed. Cir. 1997), the Federal Circuit reversed a district court's ruling finding that
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a patent was enforceable, because the Federal Circuit concluded that the alleged infringer had come forward with enough circumstantial evidence to demonstrate that the patentee and his attorney had sufficient knowledge of the omitted material information to overcome the inventor's denials of an intent to deceive the Patent Office. In discussing the evidentiary burden concerning the inventor's intent, the Critikon court stated: Direct evidence of intent or proof of deliberate scheming is rarely available in instances of inequitable conduct, but intent may be inferred from the surrounding circumstances. For example intent may be inferred where a patent applicant knew, or should have known, that withheld information would be material to the PTO's consideration of the patent application. . . . No single factor or combination of factors can be said always to require an inference of intent to mislead; yet a patentee facing a high level of materiality and clear proof that it knew or should have known of that materiality can expect to find it difficult to establish "good faith" sufficient to prevent the drawing of an intent to mislead. A mere denial of intent to mislead (which would defeat every effort to establish inequitable conduct) will not suffice in such circumstances. 120 F.3d at 1256-57 (internal citations omitted); See also, Isco Int'l, Inc. v. Conductus, Inc., 279 F. Supp. 2d 489, 502 (D. Del. 2003) ("Intent need not be proven by direct evidence; it is most often proven by a showing of acts, the natural consequences of which are presumably intended by the actor. Generally, intent must be inferred from the facts and circumstances surrounding the applicant's conduct.") (quoting Molins PLC v. Textron, Inc., 48 F.2d 1172, 1180-81 (Fed. Cir. 1995).) Intent is evaluated on a sliding scale depending on the level of materiality of the non-disclosure. The more material the omission, the less evidence of intent will be required in order to find that inequitable conduct has occurred. Baxter Int'l Inc. v. McGaw, Inc., 149 F.3d 1321, 1327 (Fed. Cir. 1998). Clearly, the material here withheld, the information relating to the prior sales activity was highly material. In fact, this information was so material that the '964 Patent has been declared invalid in light of it. The clear weight of the evidence shows that the non-disclosure here was intentional. As noted above, information relating to the offers and sales Reno made to Electromega is unquestionably material, and unquestionably the information was not
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disclosed to the Patent Office. Mr. Potter never explained why he did not disclose the information to the Patent Office. Instead, Mr. Potter explained only why he allegedly felt that those activities did not result in the invention of the '964 Patent being "on-sale". Specifically, he argued that the purchase orders were ceremonial, were cancelled, or were filled by other vendors. These arguments clearly demonstrate Mr. Potter's knowledge of the facts, and complete disregard for the obligations imposed on him as a result of that knowledge. Mr. Potter offered no reason for the non-disclosure, and the questionable excuses he gave for why did not regard it as a sale, namely that the orders were ceremonial or were cancelled, were soundly rejected by the jury's verdict that the on-sale bar had been violated. The jury's evaluation of his so-called explanations demonstrate that his positions were incredible. Those incredible positions thus cannot be a basis for any argument that his non-disclosure of the sales information to the Patent Office was somehow in good faith. No credible evidence exists to show anything but his intent to mislead. Stated another way, the inference of intent to mislead which arises due to Mr. Potter's knowing non-disclosure, is nowhere contradicted by Mr. Potter or the other evidence, and thus, the clear weight of the evidence is that Mr. Potter's non-disclosure was with the requisite intent to mislead the Patent Office. As noted in Paragon, evidence of a knowing failure to disclose sales that "bear all the earmarks of commercialization" can support an inference of intent to mislead. Paragon, 984 F.2d at 1193. The inference here is appropriate. Mr. Potter offered no reason for the non-disclosure, but acknowledged that he substituted his own judgment for that of the Patent Examiner as it related to the information he chose to submit to the Patent Office. (See, testimony of Thomas Potter, August 31, 2005). "It is axiomatic that `close cases should be resolved by disclosure, not unilaterally by applicant.'" Critikon, Inc., 120 F.3d at 1257, quoting La Bounty Mfg., Inc. v. United States Int'l Trade Comm'n, 958 F.2d 1066, 1076 (Fed. Cir. 1992) The on-sale bar activities relating to the Model C were contemporaneous with the

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patenting activities resulting in the issuance of the '964 Patent. Indeed, in Mr. Potter's letter to Mr. Lamoureux of May 20, 1996 (Trial Exhibit 34, attached as Exhibit 3 to the Judge's copy only), Mr. Potter referred to both the sales activities and patenting activities. This contemporaneous nature of the facts relating to Mr. Potter's commercial activities and patenting activities, belie any argument that the nondisclosure of the on-sale information was unintentional. As observed by the Federal Circuit in GFI, Inc. v. Franklin Corp. 265 F.3d 1268, 1275 (Fed. Cir. 2001): [A] patentee facing a high level of materiality and clear proof that it knew or should have known of that materiality, can expect to find it difficult to establish "subjective good faith" sufficient to prevent the drawing of an inference of intent to mislead. Critikon Inc. v. Becton Dickinson Vascular Access, Inc. 120 F.3d 1253, 1257 (Fed. Cir. 1997). A mere denial of intent to mislead (which would defeat every effort to establish inequitable conduct) will not suffice. FMC Corp. v. Manitowoc Co. 835 F.2d 1411, 1416 (Fed. Cir. 1987). Reno and Mr. Potter have offered no evidence of good faith and the mere denial of an intent to defraud the Patent Office (See, Testimony of Thomas Potter, August 31, 2005) does not suffice. The clear weight of the evidence also demonstrates Mr. Potter's knowledge of the G-90 Device and Mr. Potter's own patent (the " '108 Patent"), both of which were also highly material and also were intentionally withheld from the Patent Office. In sum, the clear weight of the evidence shows that very material information was intentionally withheld from the Patent Office, and thus a new trial on the issue of unenforceability is warranted. IV. CONCLUSION For any and all of the foregoing reasons, Eberle respectfully requests that the Court enter a conditional order for a new trial on Eberle's anticipation, obviousness and unenforceability defenses, should the verdict in favor of Eberle on the on-sale bar be reversed, or any appeal of the judgment be made.

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DATED this 15th day of November, 2005. SNELL & WILMER L.L.P.

By: /s/ Charles F. Hauff, Jr. Charles F. Hauff, Jr. Douglas W. Seitz Attorneys for Plaintiff/Counterdefendants Eberle Design, Inc. and Electronic Devices, Inc.

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CERTIFICATE OF SERVICE I hereby certify that on November 15, 2005, I electronically transmitted the foregoing Plaintiffs' Motion for a New Trial to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF participants. I have also mailed a copy of the aforementioned Motion, via First Class U.S. Mail to the following participants: Michael D. Rounds, Esq. WATSON & ROUNDS 5371 Kietzke Lane Reno, Nevada 89511 Henry C. Bunsow, Esq. HOWREY, SIMON, ARNOLD & WHITE 525 Market Street Suite 3600 San Francisco, CA 94105 George C. Chen, Esq. BRYAN CAVE Two North Central Avenue, Suite 2200 Phoenix, AZ 85004-4406 I further certify that on November 15, 2005, I served a courtesy copy of the aforementioned documents and transmittal of a Notice of Electronic Filing by mail on the following: The Honorable David G. Campbell United States District Court 401 West Washington Street Phoenix, AZ 85003-2156 DATED this 15th day of November, 2005. SNELL & WILMER L.L.P.

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By: /s/ Charles F. Hauff, Jr. Charles F. Hauff, Jr. Douglas W. Seitz Attorneys for Plaintiff/Counterdefendants Eberle Design, Inc. and Electronic Devices, Inc.
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