1 MEDICAL/SURGICAL LASER UPDATE - American Society for ...

to ADT. The company also has two patent infringement cases against Kreativ Inc. that
are ongoing in Federal District Court in Texas. In one of the cases, certain claims by
ADT were recently dismissed on procedural grounds. "This decision is being appealed
and our attorneys are confident that it will be reversed on appeal. It is important to note
that nothing in the decision affects the validity or enforceability of the patents. Both cases
are proceeding and the company is preparing to file the first of its lawsuits claiming
infringement of its international patents," said Ben J. Gallant, president and CEO.
In an explanation of the reason for dismissing one of the cases noted above, Federal
Filings reported that the reason the court threw out the proceedings was that apparently
ADT paid-off one of the key witnesses on the eve of his testimony. U.S. District Judge
Janis Graham Jack noted in her Dec. 17 opinion that changing the testimony on the fraud
claim is particularly troublesome because, under case law, if American Dental excluded
Rainey from a patent with deceptive intent, then that patent cannot be corrected and is
subject to invalidation. Judge Jack also noted that Rainey's explanations for changing his
testimony from March to July were not plausible and said she must infer that Rainey's
reversal was due to American Dental's "payment on the eve of trial."
In March, Timothy Rainey had testified during his deposition in Kreativ Inc.'s favor
regarding three patents, claiming that American Dental Technologies had defrauded him
by filing for one patent that incorporated his inventions (while telling him that his work
provided no patentable information) and that two other patents incorporated his work but
denied him inventorship. However, in July, Rainey signed an agreement with American
Dental under which he agreed to "cooperate in any and all necessary correction of
inventorship proceedings associated with patents or patent applications."
The court's opinion lays out how Rainey "shopp[ed] for the highest bidder for his
testimony" by approaching both parties for lucrative consulting and royalty deals before
finally signing a contract with American Dental three days before trial. American Dental
argued that because Kreativ also extended a lucrative consulting package to Rainey
shortly before trial, American Dental had a legitimate business purpose in reaching a
deal. Although the court agreed that part of the contract may have had a legitimate
business purpose, it concluded that "the only logical inference from the series of events
is that ADT paid Rainey a substantial sum to reverse his testimony."
In addition to asking for dismissal of the suit as a sanction, Kreativ asked that the court
declare the three patents invalid due to American Dental's deceptive and intentional
failure to name a co-inventor. The court declined to take this additional step, however,
noting that the invalidation of the company's patents is not a proper sanction to be
imposed pursuant to the court's inherent powers. The three patents at issue in this
litigation were issued in 1994 and 1996: patent "5,275,561" on a method for preparing
tooth structure for bonding and patents "5,350,299" and "5,525,058" for dental treatment
systems.
2