On May 25, 2011, the Court of Appeals for the Federal Circuit issued its much-anticipated decision in Therasense, Inc. v. Becton, Dickinson and Co., which significantly increased the difficulty of proving that a patent is unenforceable due to inequitable conduct, a doctrine once described by Chief Judge Rader as one that has "plagued not only the courts but also the entire patent system."
In its opinion, the Federal Circuit determined that, considering the significant penalty of holding an entire patent unenforceable, and possibly all other patents relating to that patent, in order to prove inequitable conduct, a defendant must show with clear and convincing evidence that (1) the withheld prior art or act is material to patentability, and (2) the patentee acted with a specific intent to deceive the USPTO. Under the new standard, the Federal Circuit adopted a "but-for" test for proving materiality, requiring the defendant to prove, "but-for" the alleged act, the USPTO would not have allowed the patent had it been aware of the act. This "but-for" standard goes beyond the old "reasonable examiner" test, which questioned whether a reasonable examiner would have believed a withheld reference would have been important to assess the patentability of a patent. However, an exception to this general "but-for" rule still exists "when the patentee has engaged in affirmative acts of egregious misconduct, such as the filing of an unmistakably false affidavit." This type of misconduct is material regardless of the "but-for" analysis, on the premise that when a patentee engages in an affirmative act of deception, it is always material.
With respect to the second element of proving inequitable conduct ? intent - the Federal Circuit held that an alleged 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." (emphasis added). The Federal Circuit articulated that "[p]roving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive." In other words, the Federal Circuit negated the prior negligence or gross negligence showing, and now requires that the patentee acted with an actual specific intent to deceive the USPTO. The Federal Circuit recognized, however, that because direct evidence of intent is rare, specific intent may be inferred from indirect and circumstantial evidence, but only so long as the specific intent to deceive is "the single most reasonable inference able to be drawn from the evidence."
Under this heightened standard adopted by the Federal Circuit, courts can no longer use the "sliding scale" approach to assess inequitable conduct, which comparatively measured materiality against intent. In other words, if a withheld prior art reference was very material, then the requisite showing of intent was lessened, and vice versa. Instead, the accused infringer must now independently prove both elements? materiality and intent?by clear and convincing evidence."
The Federal Circuit's new inequitable conduct standard should lessen the number of patent infringement lawsuits involving allegations of inequitable conduct, which often significantly raises the complexity and costs of already complex and costly litigation.