Timing is Everything, Especially Now for Patentees and What Constitutes Inequitable Conduct before the PTO
December 13, 2011 By McDole & Williams, P.C.
The Federal Circuit revisited the Inequitable Conduct Doctrine and made changes to the intent and materiality standards. How will these changes affect the patent process?
On May 25, 2011, the Federal Circuit, sitting en banc, issued its opinion in Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc). In the opinion, the Federal Circuit revisited the Inequitable Conduct Doctrine and made significant changes to the then-existing intent and materiality standards applicable to the doctrine. The changes effectively and significantly heightened the threshold standards required to establish that a patentee had committed inequitable conduct during the prosecution of his or her patent application.
The facts of the case and the proceedings below are not particularly significant for the purposes of this BLOG. As the Federal Circuit stated: “Of primary relevance here, the district court held the #551 patent unenforceable for inequitable conduct because Abbott did not disclose to the PTO [U.S. Patent & Trademark Office] its briefs to the EPO [European Patent Office] . . . .” Id. at 1285 (citation omitted). The Federal Circuit chose to hear the case en banc because of “the problems created by the expansion and overuse of the inequitable conduct doctrine.” Id. In its written opinion, the Federal Circuit emphasized how the inequitable conduct doctrine had come to be abused by certain overly zealous trial attorneys as a “litigation tactic” and had inappropriately expanded to the point that it was “casting the shadow of a hangman’s noose” against patentees. Id. at 1288-89. The Court referred its overuse as “an absolute plague” and labeled its resulting remedy of patent unenforceability as “the ‘atomic bomb’ of patent law.” Id. With language as strong as that, it is no surprise that the Federal Circuit undertook such a thorough analysis of the history of the inequitable conduct doctrine and engaged in such a painstakingly detailed and conscientious revision of the doctrine.
The Federal Circuit made it clear that with regards to prior-art-based alleged inequitable conduct, “the accused infringer must prove by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.” Id. at 1290 (emphasis added). No longer would mere negligence or gross negligence suffice. The Court went on to state that even “[p]roving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive.” Id. And as for materiality, the Court stressed that henceforth “the materiality required to establish inequitable conduct is but-for materiality.” Id. at 1291. The Court explained that with respect to the previously relied upon “definition of materiality in PTO Rule 56, . . . this court is not bound by the definition of materiality in PTO Rule 56.” Id. at 1293. Accordingly, the Court departed from Rule 56 and raised the materiality standard, stating: “Tying the materiality standard for inequitable conduct to PTO rules, which understandably change from time to time, has led to uncertainty and inconsistency in the development of the inequitable conduct doctrine.” Id. at 1294. Obviously, it is that recurring “uncertainty” and “inconsistency” that the Federal Circuit means to avoid by raising the materiality standard for the Inequitable Conduct Doctrine.
As for the non-prior-art-based alleged inequitable conduct, the Federal Circuit raised the standards applicable to it even more. In so doing, the Court went back to the genesis of the inequitable conduct doctrine and embraced a standard that requires a stringent showing of “affirmative egregious misconduct.” Id. at 1292. Under the Court’s new standard, providing less than fully accurate information to the PTO initially or passively allowing it to prosecute a patent under arguably false or misleading information may not necessarily rise to the level of inequitable conduct. The Court emphasized that the new standard would focus on patentees who had “deliberately planned and carefully executed scheme[s] to defraud the PTO and the courts.” Id. (citation and internal quotation marks omitted). Various examples of such “affirmative egregious misconduct” were provided, including orchestrated perjury, attorney or client inspired bribery, the manufacture of evidence, tampering with witnesses, and the suppression of evidence. Id. at 1293. It is to these truly egregious acts, done deliberately and knowingly, that the Court wanted “the ‘atomic bomb’ of patent law” or patent unenforceability to apply. The Federal Circuit explained that the previously lower standards for intent and materiality were doing an injustice in certain cases because “‘it is also inequitable to strike down an entire patent where the patentee committed only minor missteps or acted with minimal culpability.’” Id. at 1292 (citation omitted). Focusing on “affirmative egregious misconduct,” the Court hopes to minimize those instances of injustice.
In the end, the new heightened standards will surely help stem “the plague” and remove the “shadow of a hangman’s noose” that the unjustified or overuse of the Inequitable Conduct Doctrine has caused in certain cases. Granted, in possibly a few other cases, some individual patentees who pushed the envelope during the patent-prosecution process, and may have been previously within that “hangman’s noose,” may not be found to have committed inequitable conduct. But as often said in the law: “Better 10 Guilty Men Go Free than to Convict a Single Innocent Man.” The Federal Circuit’s new standards will help ensure that.
ABOUT THE AUTHOR: Kenneth P. Kula
Ken focuses his practice on intellectual property litigation. He also practices in the areas of technology law and general litigation. He has tried both bench and jury trials in state or federal court in Nebraska, Kansas, Missouri, and Texas. Ken has served as an adjunct professor at Washburn University School of Law, where he taught courses on patent law and intellectual property.
Copyright McDole & Williams, P.C.
More information about McDole & Williams, P.C.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
The facts of the case and the proceedings below are not particularly significant for the purposes of this BLOG. As the Federal Circuit stated: “Of primary relevance here, the district court held the #551 patent unenforceable for inequitable conduct because Abbott did not disclose to the PTO [U.S. Patent & Trademark Office] its briefs to the EPO [European Patent Office] . . . .” Id. at 1285 (citation omitted). The Federal Circuit chose to hear the case en banc because of “the problems created by the expansion and overuse of the inequitable conduct doctrine.” Id. In its written opinion, the Federal Circuit emphasized how the inequitable conduct doctrine had come to be abused by certain overly zealous trial attorneys as a “litigation tactic” and had inappropriately expanded to the point that it was “casting the shadow of a hangman’s noose” against patentees. Id. at 1288-89. The Court referred its overuse as “an absolute plague” and labeled its resulting remedy of patent unenforceability as “the ‘atomic bomb’ of patent law.” Id. With language as strong as that, it is no surprise that the Federal Circuit undertook such a thorough analysis of the history of the inequitable conduct doctrine and engaged in such a painstakingly detailed and conscientious revision of the doctrine.
The Federal Circuit made it clear that with regards to prior-art-based alleged inequitable conduct, “the accused infringer must prove by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.” Id. at 1290 (emphasis added). No longer would mere negligence or gross negligence suffice. The Court went on to state that even “[p]roving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive.” Id. And as for materiality, the Court stressed that henceforth “the materiality required to establish inequitable conduct is but-for materiality.” Id. at 1291. The Court explained that with respect to the previously relied upon “definition of materiality in PTO Rule 56, . . . this court is not bound by the definition of materiality in PTO Rule 56.” Id. at 1293. Accordingly, the Court departed from Rule 56 and raised the materiality standard, stating: “Tying the materiality standard for inequitable conduct to PTO rules, which understandably change from time to time, has led to uncertainty and inconsistency in the development of the inequitable conduct doctrine.” Id. at 1294. Obviously, it is that recurring “uncertainty” and “inconsistency” that the Federal Circuit means to avoid by raising the materiality standard for the Inequitable Conduct Doctrine.
As for the non-prior-art-based alleged inequitable conduct, the Federal Circuit raised the standards applicable to it even more. In so doing, the Court went back to the genesis of the inequitable conduct doctrine and embraced a standard that requires a stringent showing of “affirmative egregious misconduct.” Id. at 1292. Under the Court’s new standard, providing less than fully accurate information to the PTO initially or passively allowing it to prosecute a patent under arguably false or misleading information may not necessarily rise to the level of inequitable conduct. The Court emphasized that the new standard would focus on patentees who had “deliberately planned and carefully executed scheme[s] to defraud the PTO and the courts.” Id. (citation and internal quotation marks omitted). Various examples of such “affirmative egregious misconduct” were provided, including orchestrated perjury, attorney or client inspired bribery, the manufacture of evidence, tampering with witnesses, and the suppression of evidence. Id. at 1293. It is to these truly egregious acts, done deliberately and knowingly, that the Court wanted “the ‘atomic bomb’ of patent law” or patent unenforceability to apply. The Federal Circuit explained that the previously lower standards for intent and materiality were doing an injustice in certain cases because “‘it is also inequitable to strike down an entire patent where the patentee committed only minor missteps or acted with minimal culpability.’” Id. at 1292 (citation omitted). Focusing on “affirmative egregious misconduct,” the Court hopes to minimize those instances of injustice.
In the end, the new heightened standards will surely help stem “the plague” and remove the “shadow of a hangman’s noose” that the unjustified or overuse of the Inequitable Conduct Doctrine has caused in certain cases. Granted, in possibly a few other cases, some individual patentees who pushed the envelope during the patent-prosecution process, and may have been previously within that “hangman’s noose,” may not be found to have committed inequitable conduct. But as often said in the law: “Better 10 Guilty Men Go Free than to Convict a Single Innocent Man.” The Federal Circuit’s new standards will help ensure that.
ABOUT THE AUTHOR: Kenneth P. Kula
Ken focuses his practice on intellectual property litigation. He also practices in the areas of technology law and general litigation. He has tried both bench and jury trials in state or federal court in Nebraska, Kansas, Missouri, and Texas. Ken has served as an adjunct professor at Washburn University School of Law, where he taught courses on patent law and intellectual property.
Copyright McDole & Williams, P.C.
More information about McDole & Williams, P.C.
View all articles published by McDole & Williams, P.C.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
