On May 25, 2011, in an en banc decision in Therasense, Inc. v. Becton, Dickinson and Co., the Court of Appeals for the Federal Circuit (“CAFC”) significantly elevated the standard for proving inequitable conduct by a patentee before the United States Patent and Trademark Office (the “PTO”) during prosecution of a patent. Although the purpose of inequitable conduct was to encourage full disclosure by applicants, the CAFC has previously described inequitable conduct as overused and a “plague.” In our view, it will now be very difficult to prevail on an inequitable conduct defense without direct evidence of intentional misconduct that impacted the issuance of a patent.
To establish inequitable conduct, an accused infringer must prove by clear and convincing evidence that a patent applicant misrepresented to or withheld from the PTO material information with the specific intent to deceive the PTO. Before the Therasense decision, the standards for intent to deceive and materiality fluctuated over time, but remained relatively low. An intent to deceive once could be satisfied by gross negligence or even negligence of the applicant under a “should have known” standard. The CAFC also had adopted a broad view of materiality, using a “reasonable examiner” standard based on the PTO’s 1977 amendment to 37 C.F.R. 1.56 (commonly known as Rule 56) — i.e., if a “reasonable examiner” would have considered the information or prior art “important” in deciding whether to allow the application. In addition, intent and materiality were considered together on a “sliding scale” — a patent could be held unenforceable based on a reduced showing of intent if the record contained a strong showing of materiality, and vice versa. Moreover, the remedy for inequitable conduct was severe — not only did inequitable conduct regarding any single claim render the entire patent unenforceable, the taint of inequitable conduct could spread from a single patent to render unenforceable other related patents and applications in the same technology family, endangering a substantial portion of a company’s patent portfolio.
In Therasense, the en banc CAFC completely reset the inequitable conduct standards. For the element of intent to deceive the PTO, the CAFC now requires evidence of a “deliberate decision” to deceive. Focusing on the failure to submit material prior art, the court held that the intent element requires “clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it. . . . Proving 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.” When circumstantial evidence is used, intent to deceive must be the only reasonable inference — “when there are multiple reasonable inferences that may be drawn, intent to deceive cannot be found.” For the element of materiality, the CAFC now requires evidence of “but-for materiality.” A district court must find that, but for the deception, the PTO would not have allowed the claim. “In making this patentability determination, the court should apply the preponderance of the evidence standard and give claims their broadest reasonable construction.” The CAFC also rejected the sliding scale approach in considering intent and materiality — a district court now must weigh the evidence of intent to deceive independent of its analysis of materiality. The CAFC did, however, recognize an exception that in cases of affirmative egregious misconduct, but-for materiality need not be proven.
Finally, the CAFC held that a finding of inequitable conduct should not immediately render a patent unenforceable — “as a general rule, this doctrine should only be applied in instances where the patentee’s misconduct resulted in the unfair benefit of receiving an unwarranted claim.” In other words, a district court must also “weigh the equities” to determine whether the inequitable conduct warrants the unenforceability remedy.