En Banc Federal Circuit "Tightens" Inequitable Conduct Doctrine

The Federal Circuit issued its much anticipated en banc ruling today in Therasense v. Becton Dickinson.


This case presented questions directed to what conduct could constitute inequitable conduct before the patent office and what standards should apply to prove inequitable conduct.  Although the majority did not fundamentally alter the core principals of the inequitable conduct doctrine, in remanding the case to the district court, it did take steps to "tighten" a doctrine it viewed as having "plagued not only the courts but also the entire patent system." Opinion at 23.

The majority stated that “to prevail on the defense of inequitable conduct, the accused infringer must prove that the applicant misrepresented or omitted material information with the specific intent to deceive the PTO.” Opinion at 19. The majority also affirmed that both materiality and intent must be established by clear and convincing evidence.  Id.  Although this does not reflect a significant doctrinal change, there are significant changes made in Therasense as the “court now tightens the standards for finding both intent and materiality in order to redirect a doctrine that has been overused to the detriment of the public.”

Some highlights of this "tightening" include:

With respect to Intent:

• Because an accused infringer must establish a “specific intent to deceive the PTO,…the accused infringer must prove by clear and convincing evidence that the applicant knew of the reference, knew it was material, and made a deliberate decision to withhold it.” Opinion at 24 (emphasis added).
• “A district court should not use a ‘sliding scale,” where a weak showing of intent may be found sufficient based on a strong showing of materiality, and vice versa.” Opinion at 25.
• A district court may still use indirect and circumstantial evidence to establish intent, but “the specific intent to deceive must be ‘the single most reasonable inference able to be drawn from the evidence.’…Hence, where there are multiple reasonable inferences that may be drawn, intent to deceive cannot be found.” Opinion at 26.
• “The absence of a good faith explanation for withholding a material reference does not, by itself, prove intent to deceive.” Id.

With respect to materiality:

 "[T]he materiality required to establish inequitable conduct is but-for materiality. When an applicant fails to disclose prior art to the PTO, that prior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art.” Opinion at 27.

• But, in assessing materiality, the district court should apply the reference the way an examiner would, i.e., “the court should apply the preponderance of the evidence standard and give claims their broadest reasonable construction.” Opinion at 28
• The but-for test has an exception: “When the patentee has engaged in affirmative acts of egregious misconduct, such as the filing of an unmistakably false affidavit, the misconduct is material.” Opinion at 29.
• “This court does not adopt the definition of materiality in PTO Rule 56.” Opinion at 32. Thus a reference is not "material" simply because it may be “inconsistent with a position taken by the applicant” or if it could “compel a conclusion that a claim is unpatentable…before any consideration is given to evidence which may be submitted in an attempt to establish a contrary conclusion of patentability.” Opinion at 33. The but-for materiality standard is narrower than the various incantations of Rule 56 over the years and to be satisfied, a reference must compel a finding of invalidity after all relevant evidence is considered (such as secondary considerations of non-obviousness or arguments why the rejection is improper).

These changes should allow attorneys who engage in patent prosecution to breath a little easier.  Inequitable conduct is far from a dead doctrine following Therasense (as some had hoped), but by raising the standards for both materiality and intent, and eliminating the "sliding scale" whereby intent can be inferred from the omission of a highly material reference, the Federal Circuit has limited the application of this doctrine.

(In future posts, I may discuss the concurring and dissenting opinions, but for the sake of time (mostly mine) I limited this post to the highlights of the 37 pg. majority opinion.)

The 5 W’s (and How) – Not Just for Journalism Anymore

The Federal Circuit Heightens the Pleading Requirement for Inequitable Conduct

Sometime during grade school we learned that good journalistic writing needed to address “the five Ws”- who, what, when, where and why – and sometimes how. This is still true for good journalism. It is now also true for pleading the defense of inequitable conduct.

In Excergen Corp. v. Wal-Mart Stores, Inc. et al. the Federal Circuit recently addressed the requirements for pleading inequitable conduct under the heightened specificity requirements of Fed. R. Civ. P. 9(b). (2006-1491, 2007-1180, August 4, 2009, http://www.cafc.uscourts.gov/opinions/06-1491.pdf). The two elements of inequitable conduct are that (1) an actor within the duty of candor committed a material omission or made a materially false statement to the patent office, and (2) the omission or false statement was made with the specific intent to deceive the patent office. With respect to the first element, materiality, the Excergen court held “that in pleading inequitable conduct in patent cases, Rule 9(b) requires identification of the specific who, what, when, where and how of the material misrepresentation or omission committed before the PTO.” In addition, the Excergen court held that “a pleading of inequitable conduct under Rule 9(b), must include sufficient allegations of underlying facts from which a court may reasonably infer that a specific individual (1) knew of the withheld material information or of the falsity of the material misrepresentation , and (2) withheld or misrepresented this information with a specific intent to deceive the PTO” (emphasis added).

Under this heightened pleading standard, a general allegation against all individuals within the scope of the duty of candor, such as “Excergen, its agents and/or attorneys,” fails to address the “who” element with sufficient specificity and was deemed inadequate. In short, the court wants names (but also noted that these may be redacted from the public filing, if appropriate). For the “what” and “where” requirements, the pleading must now specifically identify not just a withheld reference, but those specific portions of the withheld reference that are considered material. General averments of “materiality” or that a reference is “not cumulative to the information already of record,” are insufficient. For materiality, the pleading now must “identify the particular claims limitations, or combination of claim limitations, that are supposedly absent from the information of record.” This, the court says, is “necessary to explain both ‘why’ the withheld information is material and not cumulative, and ‘how’ an examiner would have used this information in assessing the patentability of the claims.” Finally, the pleading must allege that the specific individual(s) identified “knew of [the] specific information that is alleged to be material [to the asserted patent] and then decided to deliberately withhold it from the relevant examiner.”

It is not news that inequitable conduct is a defense that requires pleading with specificity. Nonetheless, the heightened pleading requirements outlined in Excergen that provide a framework for meeting this requirement will be welcomed by many who view inequitable conduct as a defense that is raised too often, too early, and many times too vaguely. In practice, however, rather than significantly limiting the number of inequitable conduct allegations being made, Excergen is more likely to impact the timing and scope of these allegations. To address the five W’s (and “how”), defendants will require additional fact discovery before filing the amended pleading with the inequitable conduct defense. The allegations will still come, they will likely come later in the case and should be more thoroughly defined.