On May 25, 2011, the Federal Circuit issued its en banc opinion in Therasense, Inc. v. Becton, Dickinson & Co. and tightened the standard that courts must use to find a patent unenforceable for inequitable conduct. The majority stated that there was a need to reign in the use of inequitable conduct because “left unfettered, the inequitable conduct doctrine has plagued not only the courts but also the entire patent system.” Therefore, “this 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.” Relying upon Supreme Court precedent and its own, the majority opinion explicitly described the new standards for satisfying the prongs of intent and materiality, which have always been necessary for a finding of inequitable conduct.
For intent, the court explained, “the accused infringer must prove that the patentee acted with the specific intent to deceive the PTO.” Specific intent to deceive the USPTO does not include “a finding that the misrepresentation or omission amounts to gross negligence or negligence.” Rather, the court held, “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.” Prior to the present decision, courts were allowed to infer intent based upon a sliding scale—that is, the more material a reference, the less evidence required to prove intent to deceive. The “sliding scale” standard was explicitly overturned by the majority. The Federal Circuit explained, “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. Moreover, a district court may not infer intent solely from materiality.” Rather than inferring intent or requiring less intent if a reference is more material, “a court must weigh the evidence of intent to deceive independent of its analysis of materiality.”
The court acknowledged that direct evidence of specific intent is rare, and that to meet the clear and convincing standard “the specific intent to deceive must be ‘the single most reasonable inference able to be drawn from the evidence.’” If, however, there are “multiple reasonable inferences” that can be drawn about why specific information was not disclosed, then intent to deceive cannot be found. Additionally, in the past a patentee would have been burdened with providing a good-faith explanation for why material had not been disclosed to the patent office. This burden can no longer be applied to the patentee. The patentee is only required to provide a good-faith explanation if the alleged infringer has satisfied the clear and convincing standard.
In addition to requiring more proof for intent to deceive, the majority also changed the materiality standard. Under prior decisions, information was material if a reasonable examiner would have wanted to know about the information. The Federal Circuit rejected this standard and held that for information to be material, it must satisfy a “but-for” standard. That is, but for the omission of the information, the patent would not have issued. Therefore, in determining whether information is material, a court “must determine whether the PTO would have allowed the claim if it had been aware of the undisclosed” information. The exception to this standard is a case in which an applicant undertakes “affirmative egregious conduct” at the PTO. If there is such conduct, a patent may be found unenforceable due to inequitable conduct even if the affirmative egregious conduct would not have prevented issuance of the patent. An example the court gave of such conduct is an unmistakably false affidavit.
A dissent was also issued; while appearing to agree with the majority on the standard for proving intent, the dissent sharply disagreed over the standard for proving materiality. In contrast to the majority, the dissent would have adopted the PTO’s Rule 56 as the standard. The Rule 56 standard would have been more congruous with the previous standard of what a reasonable examiner would have wanted to know. The majority explicitly rejected this standard.
Patent applicants, owners and practitioners will have to wait to see how this decision is applied by lower courts and future appeals. The new standards required to prove inequitable conduct, however, will likely lessen its use and minimize its impact on patent portfolios. The doctrine now appears to be reserved for extreme situations rather than innocent conduct that, in hindsight, has been found to be deceptive and malicious. We shall see whether the Supreme Court takes the case certiorari, if appealed.
The complete newsletter and description can be found at http://www.cafc.uscourts.gov/images/stories/opinions-orders/08-1511.pdf.