Signaling that courts are uncertain as to how to deal with the inequitable conduct conundrum – i.e., the balance between intent and materiality – the Federal Circuit has agreed to re-hear en banc arguments in Therasense, Inc. v. Beckton, Dickinson & Co. At stake is whether the balancing analysis for determination of inequitable conduct should be modified or replaced.
In Therasense, Inc. v. Beckton, Dickinson & Co., 565 F.Supp.2d 1088 (N.D. Cal. 2008), the court determined U.S. Patent No. 5,820,551 was unenforceable due to inequitable conduct. The Federal Circuit affirmed, Therasense, 593 F.3d 1289 (Fed. Cir. 2010), holding the submission of contradictory statements and inconsistent records to the European Patent Office (“EPO”) and U.S. Patent Office (“USPTO”) constitutes inequitable conduct. Specifically, the Court held an applicant’s characterization of its own prior art reference in proceedings before the EPO that directly contradicts statements later made to the USPTO regarding the same reference is material to patentability. This holding conflicts with previous decisions that have held the statements concerning prior art made by an applicant’s attorney are merely argument and are thus is not material. The Federal Circuit also held an intent to deceive exists where the applicant withholds from the USPTO documents prepared by the applicant and submitted to the EPO. The Court found the documents contained statements made by the applicant that significantly contradicted representations made to the USPTO.
Judge Linn dissented in part, disagreeing with the majority’s decision as to both materiality and intent. As to materiality, Judge Linn stated the applicant’s statements to the EPO and USPTO were “susceptible of multiple reasonable inferences and, depending on the inference drawn, may or may not be material.” The majority had adopted one inference over “an equally reasonable favorable inference” and had erred in doing so. As to intent, Judge Linn stated knowledge was a component of the requisite specific intent. In this case, because the applicant’s representatives were not aware of certain prior art, there was no specific intent to deceive.
The Federal Circuit granted Therasense’s petition for rehearing en banc. The en banc order listed six issues to be addressed by the parties:
- Should the materiality-intent-balancing framework for inequitable conduct be modified or replaced?
- If so, how? In particular, should the standard be tied directly to fraud or unclean hands? If so, what is the appropriate standard for fraud or unclean hands?
- What is the proper standard for materiality? What role should the United States Patent and Trademark Office’s rules play in defining materiality? Should a finding of materiality require that but for the alleged misconduct, one or more claims would not have issued?
- Under what circumstances is it proper to infer intent from materiality?
- Should the balancing inquiry (balancing materiality and intent) be abandoned?
- Whether the standards for materiality and intent in other federal agency contexts or at common law shed light on the appropriate standards to be applied in the patent context.
The Federal Circuit is poised to clarify the inequitable conduct analysis, the materiality and intent elements of this analysis, and the balance between the objective materiality prong and the subjective intent prong. This clarification should serve to solve the dilemma of whether to over-disclose to the USPTO (and foreign patent offices) to protect against any claims of inequitable conduct.