IP Law Alert : Intellectual Property Lawyers & Attorneys : Gibbons Law Firm : Copyrights, Patent Infringement, Unfair Competition

Travel Caddy countered that because the validity of the ’992 patent had not been included in the complaint involving the ‘992 parent patent, and no prior art or other information had been presented, there was nothing material in the litigation to disclose to the PTO. The CAFC agreed, concluding that the District Court’s ruling was in error. The CAFC held that there was not clear and convincing evidence that information material to patentability of the claims in the ’104 patent application was withheld, regardless of what might have been asserted as “relevant” to the application. Similarly, the CAFC ruled there was no clear and convincing evidence of any deceptive intent by Travel Caddy.

This decision further establishes that materiality and deceptive intent are separate requirements for which the burden for each must be met to prove inequitable conduct in a post-Therasense world. However, this heightened standard should not give practitioners a false sense of believing that inequitable conduct is dead. Rather, a fact specific inquiry regarding materiality, by omission or commission, is required.

Charles H. Chevalier is an Associate in the Gibbons Intellectual Property Department. Ralph A. Dengler, Counsel to the Gibbons Intellectual Property Department, co-authored this post.

Inequitable conduct also has the potential to act as a poison pill. Once it was committed during the original examination, the patent applicant could not cure the deception, for instance by submitting withheld information through a subsequent reexamination or reissue application. The effect of such a finding could also spread to other patents within the same family rendering the entire family unenforceable.

Applying this standard, courts have found patents unenforceable for a variety of reasons, such as withholding prior art, failing to disclose relevant translations, submitting false affidavits, and not disclosing the best mode of practicing the invention.

But, in 2011, both the Federal Circuit and the Congress made significant changes to the law as it relates to inequitable conduct.

First, on May 25, 2011, the Federal Circuit issued an en banc opinion in Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) reforming and tightening the materiality and intent standards. As to materiality, the Court rejected the reasonable examiner approach and established a “but-for” standard. “When an applicant fails to disclose prior art to the PTO, that prior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art.” As to intent, the court recognized that direct evidence is not always available and indirect evidence may be relied upon. However, a finding of intent based on indirect evidence must be “the single most reasonable inference able to be drawn from the evidence.” Also, the Court held that the sliding scale approach was no longer appropriate.

Second, on September 16, 2011, President Obama signed the America Invents Act into law. Included in this Act is the creation of a Supplemental Examination option that will enable a patent owner to “cure” previous transgressions. A Supplemental Examination will permit a patent owner to “request supplemental examination of a patent in the Office to consider, reconsider, or correct information believed to be relevant to the patent.” Once the patent owner submits information to the USPTO through this procedure, the information cannot be used as a basis for finding the patent unenforceable. However, the “cure” provision will not apply if the allegation is first pled with particularity in a civil action or first set forth with particularity in an ANDA notification letter.

Taken together, it is believed that these reforms will significantly reduce the number of patents found to be unenforceable and the number of inequitable conduct defenses raised.

One question that may arise is whether the Federal Circuit is willing to reconsider its opinion in Therasense in view of the fact that Congress has provided an avenue through which a patent owner may cure discrepancies that arose during the original prosecution. In its opinion, the court expressed that its motivation for changing the law stemmed in part from the number of inequitable conduct defenses raised in pleadings, the fact that inequitable conduct is the “atomic bomb” of patent law and that it could not be cured through reissue or reexamination. However, now that Congress has provided patent owners with the opportunity to come clean, will the Federal Circuit be willing to find patents unenforceable in view of a lower showing of materiality or intent based on the rationale of its prior holdings?

Christopher H. Strate is an Associate in the Gibbons Intellectual Property Department.