A district court held a patent unenforceable for inequitable conduct for two reasons. First, the prosecuting attorney failed to disclose to the Patent and Trademark Office (“PTO”) that the parent patent was in litigation. Second, the prosecuting attorney had falsely claimed small entity status and failed to pay the appropriate fees. The Federal Circuit reversed on appeal.

Applying the Therasense standard, “[t]o establish unenforceability based on inequitable conduct in the PTO, it must be shown that information material to patentability was withheld from the PTO . . . with the intent to deceive or mislead the patent examiner into granting a patent.” Materiality and deceptive intent are separate requirements, and each must be independently established by clear and convincing evidence.

The court held the failure to disclose litigation involving the parent patent was not material because only noninfringement, and not invalidity or unpatentability, had been alleged in the litigation. The district court had found materiality because the prosecuting attorney’s significant involvement in the litigation and the prospect “that validity could arise as an issue” in the litigation made the litigation not “irrelevant.” The Federal Circuit rejected this reasoning explaining that materiality, not “relevance” was the standard.

The Federal Circuit also disagreed with the district court’s finding of intent based on the failure to disclose. Absolutely no evidence existed to support deceptive intent given that validity had not yet been raised in the undisclosed litigation.

Although the Federal Circuit declined to hold that an erroneous assertion of small entity status was per se material, inequitable conduct was not established because there was no deceptive intent behind the assertion of small entity status. Despite noting that filing a false declaration of small entity status “appears” to fall within the definition of an “unmistakably false affidavit,” which is per se material under Therasense, the court did not decide whether the erroneous small entity status was material. Instead, the court found no deceptive intent. As an initial matter, the patentee was indeed a small entity under the patent laws. The patentee’s entitlement to pay small entity fees, however, was vitiated by its license to a large entity. The record showed “no evidence that anyone involved in the patent prosecution knew that a patent license had been granted to a large entity and deliberately withheld that information in order to pay small entity fees.” Thus, no deceptive intent existed.

A copy of the opinion can be found here.