On May 26, the Federal Circuit issued its long-awaited en banc opinion in Therasense, Inc. v. Becton, Dickinson & Co. dealing with the standard for proving inequitable conduct as a defense to a claim of patent infringement. As expected, the court "now tightens the standards for finding both intent and materiality in order to redirect a doctrine [inequitable conduct] that has been overused to the detriment of the public." (Slip Op. at 24.)
The court held that to prove intent, the accused infringer must prove by clear and convincing evidence that the applicant made a deliberate decision to withhold a known material prior art reference. (Id.) "In other words, 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.) An inference of deceitful intent may be made based on circumstantial evidence, but that inference must be the single most reasonable inference; if there are multiple reasonable inferences that could be drawn from the evidence, intent to deceive cannot be found. (Id. at 25-26.)
The court also tightened the standard for determining materiality when the alleged inequitable conduct is based on prior art withheld from the USPTO examiner. The court held that that the “materiality required to establish inequitable conduct is but-for materiality.” (Id. at 27) That is, withheld prior art is material “if the PTO would not have allowed a claim to issue had it been aware of the undisclosed prior art.” (Id.) In making this determination, a district court must essentially put itself in the shoes of a patent examiner to determine whether the withheld reference was material. The court will give the claim its broadest reasonable construction and decide whether the reference is material to the patentability of that claim based on a preponderance of the evidence. Thus, withheld prior art that might not invalidate a patent claim under the more demanding standard currently applied to determine validity in infringement litigation (clear and convincing evidence) may nonetheless satisfy the but-for materiality requirement of inequitable conduct “if it would have blocked patent issuance under the PTO’s different evidentiary standard.” (Id. at 28.)
Rejecting the PTO’s preferred position, the Federal Circuit majority expressly declined to adopt a definition for materiality from PTO Rule 56, which identifies the types of information that the PTO considers material to the determination whether a claim is patentable. The court refused to adopt the Rule 56 definition because it sets too low a bar for materiality, and so “would inevitably result in patent prosecutors continuing the existing practice of disclosing too much prior art of marginal relevance and patent litigators continuing to charge inequitable conduct in nearly every case as a litigation strategy.” (Id.)
Mindful that the origin of the inequitable conduct defense was rooted in the doctrine of unclean hands, the court held that materiality can also be established when a patent applicant engaged in “affirmative acts of egregious misconduct, such as the filing of an unmistakably false affidavit.” (Id. at 29.) By recognizing this exception to the but-for materiality requirement, the court believed it struck the right balance “between encouraging honesty before the PTO and preventing unfounded accusations of inequitable conduct.” (Id. at 30.)
While the Federal Circuit’s decision was prompted by the perceived “problems created by the expansion and overuse of the inequitable conduct doctrine” in litigation (id. at 15), the case is likely to impact both patent litigation and patent prosecution. In litigation, the defense of inequitable conduct will be considerably more difficult to prove and the assertion of the defense is likely to diminish over time. This is obviously the result the court intended. In the PTO, the effect of the case is less certain. For now, Rule 56 continues to provide a rather expansive requirement of disclosure on a patent applicant and the lawyers representing the applicant. If this standard is maintained, the quantity of materials disclosed to the examiner may diminish somewhat, but probably not dramatically. If, however, the PTO amends Rule 56 to conform to the Federal Circuit’s decision, the quantity of information disclosed by applicants could diminish.