Federal Circuit Hands Down Decision Re: Inequitable Conduct
Keith J. Barkaus - 6/10/2011
In a long awaited decision, the Federal Circuit, sitting en banc, has raised the bar for showing inequitable conduct. As reported by Ostrolenk Faber in November of 2010, in Therasense, Inc. v. Becton, Dickinson and Company (Fed. Cir. 2011) (en banc) (“Therasense”), representations were made to the European Patent Office that were in contradiction to representations made to the United States Patent and Trademark Office (“PTO”), in a related patent application. The contradictory statements were not disclosed to the PTO, and the contradictions and lack of disclosure led to a finding of inequitable conduct, which invalidated the patent. Therasense appealed.
During patent prosecution, applicants and their attorneys are under a duty to disclose to the Examiner any prior art which (1) either alone or in combination with other information, establishes a prima facie case of unpatentability, or (2) is inconsistent with any of the applicant's arguments in favor of patentability.
In Therasense, the Federal Circuit held that in order to prevail on a claim of inequitable conduct, a defendant must separately prove that any alleged bad act of a patentee was material to patentability, and that it was done with intent to deceive the PTO. The Federal Circuit’s ruling substantially raises the bar for defendants by requiring them to prove both of these elements.
With respect to the intent to deceive element, the Federal Circuit required evidence of a “deliberate decision” to deceive. Specifically, the court noted 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, s h o u l d h a v e k n o w n of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive” (emphasis added). In addition, in the event that a defendant attempts to prove intent via circumstantial evidence, the Federal Circuit held that any conclusion that the patentee intended to deceive the PTO must be the “most reasonable inference” to be drawn from the patentee’s conduct. The Federal Circuit explicitly rejected the previous “sliding scale” approach in which a defendant could prevail on inequitable conduct, even when there was weak evidence of intent but strong evidence of materiality, and vice-versa.
With respect to the relative materiality of a reference, Therasense established a “but for” test. The Federal Circuit held that the defendant must establish that, but for the patentee’s deception, the PTO would not have allowed the claim. The court also recognized exceptions to the “but for” standard, such as cases involving affirmative egregious misconduct, including the filing of false affidavits.
As a sign of what appears to be the judiciary’s general distaste for inequitable conduct claims, the Federal Circuit in Therasense also held that even if a defendant meets these burdens, the district court must also “weigh the equities” to determine whether the inequitable conduct warrants “rendering the entire patent unenforceable.” The court further elaborated that a patent should only be rendered unenforceable due to inequitable conduct “where the patentee’s misconduct resulted in the unfair benefit of receiving an unwarranted claim.”
The Federal Circuit’s decision appears to provide a bit more guidance to district courts on issues of inequitable conduct and clearly raises additional hurdles for defendants attempting to counter an infringement lawsuit with an inequitable conduct defense.