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Inequitable Conduct

Posted Monday, March 12, 2012 by Mike Cicero

Inequitable conduct is a judge made doctrine that can render an entire patent or even a family of patents unenforceable, and it is commonly asserted as a defense in a patent infringement lawsuit. For example, if entity X sues entity Y for infringing on the claims of patent P, then entity Y may assert the defense of inequitable conduct in an attempt to render the claims of patent P unenforceable. To prevail on this defense entity Y would be required to prove, by clear and convincing evidence, that entity X “misrepresented or omitted material information with the specific intent to deceive the PTO.” Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011). If entity Y was able to meet that burden the court may then render the entire patent unenforceable.

Over the many decades of the doctrine’s existence, the standards for proving materiality and an intent to deceive have fluctuated. In order to foster full disclosure to the PTO the courts embraced reduced standards of proving those elements. For example, courts adopted standards for which the intent requirement could be satisfied by proving gross negligence or negligence. Id. This is perplexing because the actual standard of negligence, as applied in other areas of law, does not inquire into the actor’s state of mind. So even though intent is not required to prove negligence courts allowed a finding of negligence to prove intent; stated alternatively, court were inferring intent even when the defendant could not directly prove its existence. Courts also adopted a low standard of materiality that deemed a reference material if it is likely that a reasonable examiner would have considered the reference important in deciding whether to allow the patent. Id. Lastly, courts further weakened the showing required to prove inequitable conduct by utilizing a so called sliding scale which allowed a strong showing of one element to lessen the required showing of the other. The effect of this sliding scale was to conflate the two elements into one. Id.

While the courts intentions, to foster full and honest disclosures to the PTO, may have been sound, the practical consequences of its decisions were highly undesirable. One such consequence was that claims of inequitable conduct began to show up in nearly all, roughly eighty percent, of patent infringement lawsuit. Id. Obviously there could not have been real and substantial grounds for asserting this defense in eighty percent of cases, it simply became the rule rather than the exception because the standards were low and it alone could win the case. Additionally, because patent prosecutors were fearful of the doctrine they began submitting every reference remotely related to a patents technology. In some instances practitioners would submit hundreds of insignificant references and left the examiner to sift through the mess.

In recent years courts have attempted to mitigate the consequences of previous decisions by raising the standards to prove each element and additionally ceasing to use the sliding scale. In Kingsdown Med. Consultants, Ltd. v. Hollister Inc., the court held that gross negligence was insufficient to create an inference of intent to deceive. 863 F.2d 867 (Fed. Cir. 1988). That court held that in order to prove the intent element the conduct had to indicate sufficient culpability to require a finding of intent to deceive. This standard is substantially higher than the previous standard of gross negligence. Later, the Therasense court rejected the aforementioned standard of materiality for a reference, whether a reasonable examiner would find it important, and held that but-for materiality was required. 649 F.3d at 1291. Under this standard, a prior art reference is but-for material only if the PTO would not have allowed a claim of the patent had it been aware of the undisclosed reference. Id. Finally, the required showing to establish inequitable conduct has further been heightened because courts now refuse to apply the sliding scale and each element must stand or fall on its own.

Ruttler Mills PLLC
One Union Square, 1730, 600 University Street, Seattle, Washington 98101 US
Phone: (206) 838-6400

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