## Facts

- Herst Lighting Co. (doing business as Peerless Electric Co.) owned U.S. Patent No. 4,390,930 for an indirect fluorescent lighting fixture intended to control glare by directing most light above the fixture’s horizontal plane.
- After Peerless accused Gardco Manufacturing, Inc. of infringement, Gardco filed a declaratory-judgment action seeking declarations of invalidity, unenforceability, and noninfringement, and requested attorney fees under 35 U.S.C. § 285.
- Gardco asserted the patent was unenforceable due to inequitable conduct based on failure to disclose two prior lighting fixtures allegedly material to patentability.
- Peerless counterclaimed for infringement and demanded a jury trial.
- The district court, under Fed. R. Civ. P. 42(b), bifurcated the case and tried inequitable conduct first in a bench trial, reserving validity and infringement for a jury only if needed.
- After a six-day bench trial, the district court found the two undisclosed fixtures were highly material, found at least gross negligence in the nondisclosure, and held the patent unenforceable for inequitable conduct; it therefore did not reach infringement or validity.
- The district court later denied Gardco’s motion for attorney fees, finding the case not “exceptional” under § 285.

## Issues

1. Whether the district court abused its discretion under Rule 42(b) by ordering a separate, nonjury trial on inequitable conduct and whether the Seventh Amendment required a jury on that issue.
2. Whether the district court clearly erred in finding inequitable conduct (materiality of the undisclosed fixtures and sufficient intent, including gross negligence) and declaring the patent unenforceable.
3. Whether the district court abused its discretion in denying attorney fees under 35 U.S.C. § 285 by declining to find the case exceptional.

## Decision

- The Federal Circuit affirmed the bifurcation and the bench trial on inequitable conduct, holding inequitable conduct is equitable in nature and carries no right to a jury trial.
- The Federal Circuit affirmed the finding of inequitable conduct and the resulting unenforceability determination.
- The Federal Circuit affirmed the denial of attorney fees, holding the district court did not abuse its discretion in finding the case not exceptional.

## Legal Principles

- Inequitable conduct is an equitable issue for the court, not a legal issue for a jury; no Seventh Amendment jury right attaches to its determination.
- A district court may, under Rule 42(b), order separate trials for convenience, to avoid prejudice, or to promote expedition and economy; trying enforceability first may be appropriate where it can moot infringement and validity issues.
- Inequitable conduct requires proof of materiality and intent; at the time of decision, withholding highly material information with at least gross negligence could support unenforceability.
- Bifurcation decisions are reviewed for abuse of discretion; factual findings underlying inequitable conduct (including materiality and intent) are reviewed for clear error.
- Attorney fees under 35 U.S.C. § 285 are discretionary and depend on whether the case is “exceptional” under the totality of circumstances; a finding of inequitable conduct does not require a fee award as a matter of law.

## Conclusion

The Federal Circuit upheld a district court’s use of a separate bench trial to decide inequitable conduct, affirmed unenforceability based on nondisclosure of highly material prior fixtures with at least gross negligence, and affirmed that attorney fees may still be denied where the court reasonably finds the case not exceptional under § 285.


Gardco Mfg., Inc. v. Herst Lighting Co., 820 F.2d 1209 (Fed. Cir. 1987)