By: Teige P. Sheehan
In May 2011, the Federal Circuit issued an en banc decision in Therasense v Becton-Dickenson (649 F.3d 1276) with major implications for patent prosecution and litigation and whose effects are only beginning to be felt. The court’s intention was to limit the viability of claims of inequitable conduct in patent litigation, which it had long characterized as a plague upon the patent system yet whose contagion it had nevertheless stoked with numerous panel decisions issued over the past several decades.
Not since 1988 had the Federal Circuit issued an en banc decision targeted at corralling the inequitable conduct defense, which, when successful, can render an entire patent unenforceable, possibly taint other members of a patent’s family, and have dire disciplinary consequences for the agent or attorney who prosecuted the patent’s application. In Kingsdown v. Med. Consultants, Ltd. v. Hollister Inc., the court had reiterated that a patent is not found unenforceable for inequitable conduct absent sufficient proof of an intent to deceive the patent office in obtaining the patent. In that regard, mere evidence of gross negligence, such as that a patentee should have known that it was materially misleading the patent office, is insufficient to demonstrate a specific intent to deceive.
In the years since Kingsdown, however, several decisions had cast doubt upon whether this more heightened test for intent was being rigorously applied, with courts sometimes finding that deception had been sufficiently demonstrated by evidence more akin to gross negligence than specific intent. Moreover, the other element of an inequitable conduct claim–that a material misrepresentation was made to the patent office–had come to be liberally interpreted in many cases. In time, the bar and the Federal Circuit came to find that patentees were deluging the patent office with excessive and superfluous references more out of an anxiety to avoid future inequitable conduct claims than out of a desire to advance examination. The attractiveness and relative facility of succeeding on an inequitable conduct claim in civil litigation was clogging court dockets with almost reflexively-asserted inequitable conduct claims, and too many patents were being rendered useless merely because information of only marginal importance to patentability had not been disclosed during examination.
Thus, in Therasense, the court asserted a new, higher standard for materiality. Under this new test, a withheld reference or other misrepresentation is material only if a patent would not have issued “but for” such withholding or misrepresentation, and such “but for” materiality must be demonstrated by a preponderance of the evidence to succeed on an inequitable conduct claim. An alternative to the “but for” standard for materiality is if the patentee engaged in “affirmatively egregious misconduct” such as the filing of an “unmistakably false affidavit.” The court also reiterated that a specific intent to deceive must be shown, and by clear and convincing evidence. And, where circumstantial evidence is adduced, an intent to deceive is not satisfactorily demonstrated unless it is the only reasonable conclusion that can be drawn from all of the circumstances. Finally, the court restated that materiality and intent must each be established, independently of each other, before a final conclusion of inequitable conduct can be made, and that insufficient evidence of materiality or intent defeats a claim of inequitable conduct, no matter how weighty or convincing the evidence supporting the other factor.
Subsequently, the Federal Circuit has applied the heightened standards of Therasense in several cases to hold that a claim of inequitable conduct had not been sufficiently demonstrated, whether because the trial court had conflated the materiality and intent analyses rather than conducted each independently as required (as in Am. Calcar, Inc. v. Am. Honda Motor Co., Inc.), the patentee’s good faith explanation for having failed to more promptly notify the patent office of a reference defeated the argument that it had acted with the specific intent to deceive (as in Cordis Corp. v. Boston Scientific Corp.), or because an alleged misrepresentation was neither material to patentability under the “but for” standard nor constituted affirmatively egregious misconduct (as in Powell v. Home Depot U.S.A., Inc.).
Therasense is also expected to have impact on practices before the patent office. The patent office imposes on patent applicants a duty to disclose material information during examination. Under a previous standard, a reference was deemed material if a “reasonable examiner” would have considered it important to patentability. Finding this articulation too vague and imprecise, the patent office altered its materiality standard after Kingsdown to arrive at the current standard, under which a reference is material if it establishes unpatentability, or if it refutes or is inconsistent with a position the applicant takes in opposing or supporting an argument of unpatentability or patentability, respectively.
Perplexingly, the Federal Circuit has been somewhat inconsistent in whether it applied the older “reasonable examiner” standard only to patents that were prosecuted before the current rule went into effect or, in addition, to patents that were prosecuted after the current duty to disclose was promulgated. However, the Therasense court even explicitly criticized the patent office’s current materiality standard as unacceptably broad and refused to adopt it as the court’s test for materiality. In turn, in July 2011, the USPTO proposed a new materiality standard to define patentees’ duty to disclose which was explicitly premised on the “but for” and “affirmatively egregious conduct” standards enunciated in Therasense (76 FR 43631). Further action on the adoption of this rule appears to have been delayed for the time being, however, as Congress’ passage of the America Invents Act in September 2011 imposed a torrent of other rulemaking mandates on the USPTO. In time, hopefully the patent office may return to the business of harmonizing its duty of disclosure materiality standard with the Federal Circuit’s revised inequitable conduct jurisprudence.