USPTO Post Grant Consideration Precludes “But For” Materiality

The en banc CAFC decision in Therasense has recalibrated inequitable conduct jurisprudence. The decision effectively tightened the standard that is applied in judging materiality of information underlying an inequitable conduct defense. More specifically, the Court replaced the previous “reasonable examiner” standard with a new ”but for” materiality analysis. The “but for” standard defines material information as any non-cumulative information which, had it been disclosed prior to patent issuance, would have prevented the patent from issuing.

As I discussed prior to the issuance of the Therasense decision, a “but for” materiality standard applies in Walker Process antitrust claims. Earlier this year, in U.S. Rubber Recycling, Inc. v. ECORE International Inc., et al.(CDCA), the California District Court considered whether or not prior art materials could satisfy a “but for” materiality standard where the USPTO had considered the very same information in a patent reissue proceeding, and had still reissued the patent. In deciding that this information could not be material as a matter of law, the Court explained that while a USPTO proceeding cannot cure fraudulent conduct, it can be dispositive of a “but for” materiality standard and that ”[b]ecause the PTO reexamines re-issuance applications as if being presented for the first time, the fact that the PTO did re-issue Defendant’s patent even with the prior art precludes Plaintiff from plausibly pleading [Walker Process].[1]

Since the court’s initial ruling on the Walker process claim, the Therasense decision issued.  Last week, the Court considered the applicability of the same art under an inequitable conduct theory. Not surprisingly, the court found that reissuance of the patent precluded a finding of “but for” materiality as a matter of law.

The Court explained (decision here):

Defendant argues that Plaintiff cannot prove “but-for” causation because the Examiner reviewed Plaintiff’s alleged prior art and still allowed the original claims to be reissued. (Mot. 6:7-19.) The Court agrees. Out of judicial economy, the Court refrains from repeating its analysis in its Order Denying Plaintiff’s Motion to Reconsider. In the July 8, 2011, Order, the Court explained that the “PTO undoubtedly considered most, if not all, of the alleged prior art.” (Order, July 8, 2011, at 6.) The Court listed the numerous prior art alleged by Plaintiff in its Complaint and systematically showed how each prior art is listed on the face of the RE41945 or was submitted in an IDS to the PTO. (See id.) Under the Federal Circuit’s recent en banc decision in Therasense, Plaintiff must show that “the PTO would not have allowed [the] claim[s] [of the '723 Patent] had it been aware of the undisclosed prior art.” 2011 WL 2028255, at *11. Because the PTO in the instant action allowed the claims after the disclosure of the alleged prior art, Plaintiff cannot prove “but-for materiality.” (Order, July 8, 2011, at 6-7.)

While the Therasense decision also provided that certain egregious conduct could qualify information as de facto material, such was not the case here.  (The USPTO has since attempted to codify the Therasense decision as proposed Rules 56 and 555 to provide a “but for plus” materiality standard). Going forward, it may be that USPTO post grant proceedings play a more prominent role in assessing the merits of an inequitable conduct charge.