Following years of what has been referred to as a plague on inventors, courts, and the entire patent system, the United States Court of Appeals for the Federal Circuit has issued its long-awaited opinion in Therasense, Inc. v. Becton, Dickinson & Co. (Fed. Cir. May 25, 2011) (en banc), significantly raising the bar for defendants to prove allegations of inequitable conduct as an effort to render a patent unenforceable. As many as eighty percent of patent infringement cases include allegations of inequitable conduct, making it an almost automatic, reflexive counter-attack to charges of patent infringement, oftentimes greatly increasing the costs and time associated with prosecuting infringement litigation. It is hoped that this decision will not only encourage domestic inventors to further their patenting efforts in an ever-increasingly competitive global marketplace, but will also help to alleviate at least a portion of the patent application backlog at the United States Patent and Trademark Office ("PTO") and at least some of the costs associated with litigating patent disputes.
Accused infringers have often used the doctrine of inequitable conduct to challenge the enforceability of a patent, arguing that the applicant acted in such a way as to deceive the United States Patent and Trademark Office (PTO) into issuing the patent in question. These deceptive actions may include withholding information relevant to patentability from the PTO, or providing misleading information to the PTO, before the patent issues. For the past several years, allegations of inequitable conduct have been asserted extensively by accused infringers in an attempt to have patents declared unenforceable. In some instances, such challenges have been based on the patentee's failure to submit to the PTO only marginally relevant references. The Court's decision has made it more difficult for accused infringers to challenge the enforceability of a patent, now requiring that the accused infringer show that 1) the patentee intended to deceive the PTO by failing to submit a reference or provide misleading information, and that 2) the patent would not have been issued if the omitted reference had been provided or the misleading information had been accurate. As a result, patent owners and applicants can rest a bit easier without having to worry as much about whether they may have forgotten to provide the PTO information marginally related to the issuance of their patent or their application.
In this case, the patent owner, Abbot, failed to disclose to the PTO several briefs they had submitted to the European Patent Office (EPO) in order to obtain patent protection in Europe for a different patent, which became a prior art reference in the application giving rise to the patent being challenged. The critical issue was a membrane in a device for measuring glucose levels and whether a membrane disclosed in the prior art reference was optional or required. In the briefs submitted in support of patentability for the prior art reference, Abbot had taken an opposite position from the one they took in trying to secure patent protection in the challenged patent. The briefs in Europe stated that the membrane disclosed in the prior art reference was optional; in the United States, on the other hand, the applicants argued that the membrane disclosed in the prior art reference was required. Based on the representations made by Abbott's experts and patent attorney during prosecution of the challenged patent, the PTO issued the challenged patent. Litigation later ensued and after a trial on the merits, the United States District Court for the Northern District of California found that the failure to disclose the briefs filed in association with the European application constituted inequitable conduct and, thus, the patent was found to be unenforceable. The patent owners appealed the District Court's decision and a three judge panel of the Federal Circuit unanimously affirmed the District Court's finding. The Federal Circuit then granted a petition to review the case en banc.
This case is important for several reasons. First, the case was decided en banc, meaning that the entire Court of Appeals for the Federal Circuit participated; typically, cases are only decided by three judge panels as originally occurred in this case. An en banc review is intended to settle important issues by the majority of the judges in the entire Court. While the decision arrived at by the Court was not unanimous, the en banc panel's review connotes the import of the decision.
Second, and more significantly, the decision sets forth a dramatic change in the way in which trial courts should analyze inequitable conduct allegations. The underlying principle of inequitable conduct remains unchanged: the accused infringer must prove that the applicant misrepresented or omitted material information with the specific intent to deceive the PTO. However, the opinion changes how that principle should be applied. Under the standard adopted by the Court, an infringer must first prove that a patent owner acted with a "specific intent to deceive" the PTO. The infringer must show that the applicant or patentee deliberately withheld a material fact that he or she knew was material with an intent to deceive the PTO, so mere negligence or even gross negligence is not sufficient. Second, the infringer must show that the PTO would not have issued the patent but for the patent applicant's deception. In cases where the applicant actually provided misleading or false information it may be possible to give lesser weight to the fact that the patent would not have issued but for the action or omissions of the applicant, but the infringer still has to show that such actions were intended to deceive the PTO.
The inequitable conduct doctrine has developed over the years to become one of the most common grounds to challenge the enforceability of a patent by accused infringers. Under the doctrine, failure to supply information to the PTO can result in invalidation of an entire patent (as opposed to just a single or multiple claims). Such omission may even lead to invalidation of other patents related to the patent being challenged, even if the information was properly provided during evaluation of those other applications before they were granted by the PTO. In patent litigation, alleged infringers have used the inequitable conduct doctrine to challenge patents at the slightest hint that a document was not submitted to the PTO. When successful, the infringer has been free to take advantage of the patentee's invention and in some cases has even been entitled to attorney's fees in association with the suit.
The increase in allegations of inequitable conduct has led to patent attorneys advising clients to submit every single piece of information, even if only marginally relevant, to the PTO in order to avoid a charge of inequitable conduct. The practice has resulted in PTO examiners being buried in a multitude of prior art references, which they do not have the time to carefully consider. This practice has contributed to the increasing backlog of patent applications awaiting review by the patent office as examiners need to spend more time reviewing the multitude of references cited by applicants.
In order to address the consequences of inequitable conduct challenges that go beyond the intended doctrine, the majority of the Court adopted the two step test described above. The approach adopted by the majority appears to be sufficiently flexible to allow legitimate challenges to wrongful conduct, while not giving credence to every allegation that marginally relevant prior art was not disclosed. However, five of the eleven judges in the Court disagreed. One judge argued that the majority's "but for" test is too stringent and proposed a more flexible approach in which a court may find inequitable conduct if 1) but for the conduct of the applicant the patent would not have issued, 2) the conduct is a false misrepresentation or misleading representation of fact, or 3) the behavior is so offensive that the court believes the integrity of the process before the PTO would be compromised if such conduct were to be condoned.
The four other dissenting judges argued that the majority went too far in addressing both the intent and materiality elements of the inequitable conduct principle. The dissenters agreed with the PTO's position "that a tightening of the intent element of the inequitable conduct doctrine should be sufficient to address the problem and that drastic modification of the materiality element not only is not required, but would be contrary to the PTO's interest in efficient examinations." The dissenting judges argued, however, that the PTO's rule requiring disclosure is the appropriate test of materiality. That rule provides that information is material if it is not cumulative or already on the record and
- It establishes, by itself, or in combination with other information, a prima facie case of unpatentability of a claim; or
- It refutes, or is inconsistent with, a position the applicant takes in:
- (i). Opposing an argument of unpatentability relied on by the Office, or
- (ii). Asserting an argument of patentability.
37 C.F.R. 56(b). In the dissenting judges' view, the majority's "but for" test will leave the door open for unscrupulous applicants to withhold information from the PTO because the likelihood of a serious repercussion is minimal.
One interesting open question is the extent to which entire patents or patent families may be deemed unenforceable as a result of inequitable conduct applicable to only one claim or in the prosecution of one application in a particular family. The majority and the concurrence seem to indicate that a rule that invalidates entire patents and even related patents may be too harsh; they seemed open to the idea of limiting unenforceability to specific claims instead. Patent owners may be able to explore this possibility in the event that they are found to have committed inequitable conduct under the new test formulated in this opinion. However, with the stronger test in which deliberate intent to deceive is required, it may be more difficult for such a patent owner to convince the courts to grant any leniency for what would have been proven to be willful and deliberate wrongful conduct.
The new test espoused by the Court will hopefully rein in the abuse of inequitable conduct claims and limit them to only those claims with a legitimate basis. Inventors and patent owners will hopefully reap the benefits to which they are entitled without being subjected to protracted litigation on why references that are only marginally related to their applications were not disclosed to the PTO. At the same time, applicants must continue to be mindful of their duty of candor towards the PTO and the courts and ensure that they are not misleading or withholding information that indeed is material to their applications. We now wait to see whether the parties will appeal to the Supreme Court and, if so, whether the high court decides to get involved.
The full opinion can be found at Therasense, Inc. v. Becton, Dickinson & Co. (Fed. Cir. 2011) (en banc)