Inequitable Conduct Lives: Patent Practitioners Beware

“Complacency with respect to the duty of candor is a very dangerous thing. Like feeding a gremlin after midnight, it seems innocent enough, but you just can’t do it!” conduct is practically the stuff of ghost stories among patent practitioners. You must satisfy your duty of candor to the U.S. Patent and Trademark Office (USPTO) or the patent – all the claims – will be worthless. Since Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc) ushered in the “but-for” materiality standard, some patent practitioners may have become too complacent and willing to take a chance. Who will find out? A recent decision in Deep Fix, LLC v. Marine Well Containment Co. LLC (S.D.Tx. Feb. 18, 2020) may have patent prosecutors reviewing their files and even filing a request for supplemental examination or two.

A Familiar Federal Circuit Story

Once upon a time the threat of succumbing to inequitable conduct was not very great. The Federal Circuit had settled the law en banc in Kingsdown Medical Consultants v. Hollister, 863 F.2d 867 (Fed. Cir. 1988). Gross negligence could not qualify as inequitable conduct, and the applicant’s conduct in its entirety had to manifest a sufficiently culpable state of mind to warrant a determination of the ultimate penalty of inequitable conduct, which renders all claims to a patent unenforceable.

Then, as the Federal Circuit has been known to do, that which has been settled becomes decidedly unsettled as panel after panel chips away and erodes the very fabric of a consensus ruling that is supposed to bind the Court. This drifting phenomenon occurred rather famously with respect to inequitable conduct, and to the point where the doctrine bore little resemblance to the en banc law announced by the entire Court.

Along the way to the Federal Circuit’s decision in Therasense, the requirements of what it meant to fully comply with the duty of candor set forth in 37 C.F.R. 1.56 had become so muddled and uncertain that patent practitioners would err on the side of disclosing any reference. And disclose they did! No matter how tangentially related a reference was, it was disclosed. Virtual dump trucks worth of information were sent into the USPTO, to the point that for the patent examiner to review it became ridiculously comical. Clearly, this couldn’t be what Rule 56 required, but with the penalty being so severe and the Federal Circuit refusing to offer clarity, it became the norm of the practice; however, patent attorneys grumbled about it at every event and conference.


Restoring Sense with Therasense

Then, in 2011, the Federal Circuit decided to correct matters by adopting a “but-for” standard for materiality, one of the two prongs of the inequitable conduct test. Thus, in order to prove inequitable conduct under the materiality prong, Therasense ruled that it would have to be demonstrated that the information withheld made a difference, not just that it was interesting to the examiner.

In addition to proving materiality, “the accused infringer must prove that the patentee acted with the specific intent to deceive the PTO.” Therasense, 649 F.3d at 1290. “[A] court must weigh the evidence of intent to deceive independent of its analysis of materiality. 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.” Id. “In a case involving nondisclosure of information, clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference.” Id.

Deep Fix v. Marine Well Containment Co.

Since Therasense, inequitable conduct cases have not been dead, but they have been rare; or at least much rarer than they once were. Inequitable conduct cases based on the withholding of a reference have been even rarer. In fact, the Deep Fix, LLC case from last week marks the first in recent memory. The topic is not one that patent practitioners fear the way they once did, and it certainly does not take up the amount of oxygen at conferences or ink as practitioners and academics pontificate, lament and grumble as they did a decade or more ago.

Complacency with respect to the duty of candor is a very dangerous thing. Like feeding a gremlin after midnight, it seems innocent enough, but you just can’t do it!

In Deep Fix, the patent attorney charged with committing inequitable conduct was prosecuting an application that had received an International Search Report (ISR) after the filing of a Patent Cooperation Treaty (PCT) application. The ISR identified 10 Y references. The accompanying Written Opinion explained that none of the claims submitted were patentable in view of the Y references because the proposed claims all lacked an inventive step. Notwithstanding, the attorney did not disclose the Y references to the U.S. patent examiner.

The U.S. patent attorney had a practice in 200 other cases involving an ISR with Y references of submitting all Y references. In this case, however, she didn’t submit any of the Y references, which was not only out of character, but which was something that she really could not explain, although during her deposition she admitted to the extent she had any recollection about why she didn’t submit the Y references it was because she wanted the examiner to search for other prior art and not be biased based on these particular references.

At trial, the patent attorney explained that she did not disclose particular Y references for specific reasons, saying for example the O’Neill document (a Y reference) operated by a solenoid (which was different). The problem, however, was that she did disclose another reference that had those features she distinguished, but which was not used in the oil and gas industry, thereby undermining her own argument that these Y references weren’t relevant.

As fate would have it, Judge Nancy Atlas determined that the claims were invalid based on a combination of two references, both of which were Y references from the ISR, neither of which were submitted and which the patent examiner did not find.

With respect to intent, the court easily found a specific intent to withhold and that the most likely inference that could be drawn from all the evidence was that there was a specific intent to deceive the USPTO, which was not merely due to her lack of credibility, but based on her pattern of prior conduct, because she claimed familiarity with Rule 56 and all the MPEP examples relating to what constitutes compliance with the duty of candor and still withheld invalidating prior art.

“It is important for practitioners to know that Therasense did not eliminate inequitable conduct and they need to practice in good faith before the office,” Robert Stoll told IPWatchdog. Stoll, a former Commissioner for Patents and current partner with Faegre Drinker Biddle & Reath, was instrumental in the monumental task of bringing to bear the rules packages to implement the America Invents Act (AIA) while still at the USPTO, and was the expert witness on behalf of the defendant who raised inequitable conduct as a defense in the Deep Fix case.

Even Post-Therasense – Don’t Be Cute

While Judge Atlas specifically questioned the credibility of the patent attorney who violated Rule 56, Atlas did include a footnote to say: “The Court finds Stoll’s testimony credible and persuasive.” Judge Atlas also pointed out that even the patent owner’s expert opined that he would have disclosed the Y references cited in the ISR.

“I am pleased that the judge found my testimony credible and persuasive,” Stoll said. And who wouldn’t be? Credibility is the name of the game when it comes to experts. And being too cute when it comes to failure to disclose, even in the age of Therasense, will get you into trouble.

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Copyright: alphaspirit 


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Join the Discussion

4 comments so far.

  • [Avatar for Night Writer]
    Night Writer
    March 5, 2020 08:51 am

    >>disclosed the Y references cited in the ISR.

    Sheesh. Any search worth more than a peppercorn should include searches performed by other patent offices.

  • [Avatar for TFCFM]
    February 27, 2020 10:05 am

    LIN: “Therasense makes it very difficult to get dinged for inequitable conduct…

    I would add

    … except in circumstances when it really SHOULD be applied.

    This is, of course, as it should be. When one knowingly and intentionally defrauds the patent office to get an application allowed, the patent SHOULD be held unenforceable. Of course, with so severe a remedy, it’s important to hold the feet of one who alleges inequitable conduct to the fire by requiring proof of every element (‘but-for’ materiality and scienter). But when the facts are there and sufficiently proven, the penalty should follow.

    The article correctly applauds Therasense for correcting the drift away from these principles that courts have promoted (as they are wont to sometimes do).

  • [Avatar for Claire Laporte]
    Claire Laporte
    February 27, 2020 09:10 am

    Surprised that you didn’t discuss the Regeneron case, which I think is a counterexample to the statement that “Since Therasense, inequitable conduct cases … based on the withholding of a reference have been even rarer. In fact, the Deep Fix, LLC case from last week marks the first in recent memory.”

  • [Avatar for Lost In Norway]
    Lost In Norway
    February 27, 2020 05:43 am

    Thank you for the article, Gene. Therasense makes it very difficult to get dinged for inequitable conduct.