Inequitable Conduct: Therasense, Inc. v. Becton, Dickinson & Co. INTELLECTUAL PROPERTY

On May 25, 2011, in an opinion by Chief Judge Rader upon rehearing en banc, the US Court of Appeals for the Federal Circuit restricted the doctrine of inequitable conduct by changing the standard for materiality and clarifying the requirements for finding intent to deceive. Therasense, Inc. v. Becton, Dickinson & Co., No. 2008-1511 (Fed. Cir. 2011).

The court vacated the January 25, 2010 panel decision holding U.S. Patent No. 5,820,551 unenforceable due to inequitable conduct. The Federal Circuit panel applied the traditional law of materiality and intent in upholding the district court’s finding of inequitable conduct. The patentee did not disclose to the U.S. Patent Office arguments it made to the European Patent Office during revocation proceedings for the European counterpart to U.S. Patent No. 4,545,382. The ‘382 patent was cited by the USPTO as prior art during prosecution of the ‘551 patent. The panel considered materiality in view of the USPTO’s disclosure rule, 37 C.F.R. §1.56, and agreed with the district court that the patentee’s statements to the EPO about the ‘382 patent were highly material. These statements to the EPO were found to contradict representations the patentee made to the USPTO during prosecution of the ‘551 patent to overcome the ‘382 patent as prior art. The panel also found that the district court did not clearly err in finding deceptive intent based on the importance of the statements to the USPTO in overcoming the ‘382 patent as prior art, the contradictory nature of the statements to the EPO, and the patentee’s representatives’ knowledge of the EPO statements and failure to provide a credible explanation for not providing them to the USPTO.

In the May 25, 2011 decision, the en banc Federal Circuit vacated the district court’s findings of materiality and intent, and remanded the case to determine these issues with respect to the court’s new materiality and intent standards. To find inequitable conduct, the court held that the party alleging unenforceability must prove a specific intent to deceive the USPTO by clear and convincing evidence. Moreover, the decision to deceive the USPTO must be knowing and deliberate. The court also clarified that lower courts may not use a "sliding scale” to find intent. In other words, the Federal Circuit held it improper to find a weak showing of intent sufficient based on a strong showing of materiality, or a weak showing of materiality sufficient based on a strong showing of intent. While intent can be inferred to meet the clear and convincing evidence standard, specific intent to deceive must be "the single most reasonable inference able to be drawn from the evidence.” (Slip op., 25).

Regarding materiality, the court employed a "but-for materiality” standard. (Slip op., 27). In other words, the standard for materiality now requires that but for the alleged deception, the USPTO would not have allowed the claim. Further, "[i]n making this patentability determination, the court should apply the preponderance of the evidence standard and give claims their broadest reasonable construction.” (Slip op., 28). The court also recognized an exception to the requirement for but-for materiality, finding that "[w]hen the patentee has engaged in affirmative acts of egregious misconduct, such as the filing of an unmistakably false affidavit, the misconduct is material.” (Slip op., 29.)

Judge O’Malley concurred in part, but dissented with respect to the test for materiality and the decision to vacate and remand the district court’s finding of materiality. She stated that both the majority and the dissent "strain too hard to impose hard and fast rules.” (Slip op., 3)(O’Malley, J., concurring-in-part, dissenting-in-part). Judge O’Malley opined that the materiality test should be for guidance purposes only, and that the district court should be permitted to use discretion whether to find inequitable conduct. According to Judge O’Malley, the court should adopt a test similar to that reached by the majority, but allow the district court flexibility to find materiality for behavior "so offensive that the court is left with a firm conviction that the integrity of the USPTO process as to the application at issue was wholly undermined.” (Slip op., 9).

Judge Bryson dissented in an opinion joined by Judges Gajarsa, Dyk, and Prost. Judge Bryson stated that he would have affirmed the district court’s finding of inequitable conduct. Although Judge Bryson concurred with the majority that specific intent to deceive is required and no sliding scale should be used to prove intent or materiality, he stated that there was "sharp disagreement” regarding the proper standard for determining materiality. (Slip op., 3)(Bryson, J., dissenting). The dissent would adhere to the USPTO’s materiality standard as set forth in 37 C.F.R. § 1.56 for two reasons: (1) "the PTO is in the best position to know … what information is material to the examination process” and (2) "the higher standard of materiality adopted by the majority will not provide appropriate incentives for patent applicants to comply with the disclosure obligations the PTO places upon them.” (Id. at 3). According to the dissent, the majority’s but-for materiality test "is not a tweak to the doctrine of inequitable conduct; it is a fundamental change” that "does not merely reform the doctrine of inequitable conduct, but comes close to abolishing it altogether.” (Id. at 5, 8).

Federal Circuit Opinions and Orders

Federal Circuit Briefs

Parties' Briefs

Amicus Briefs in Support of Therasense

Amicus Briefs in Support of Neither Party

District Court Opinion

Patents In Suit

Representative Recent Federal Circuit Opinions on Inequitable Conduct

On May 25, 2011, in an opinion by Chief Judge Rader upon rehearing en banc, the US Court of Appeals for the Federal Circuit restricted the doctrine of inequitable conduct by changing the standard for materiality and clarifying the requirements for finding intent to deceive. Therasense, Inc. v. Becton, Dickinson & Co., No. 2008-1511 (Fed. Cir. 2011).

The court vacated the January 25, 2010 panel decision holding U.S. Patent No. 5,820,551 unenforceable due to inequitable conduct. The Federal Circuit panel applied the traditional law of materiality and intent in upholding the district court’s finding of inequitable conduct. The patentee did not disclose to the U.S. Patent Office arguments it made to the European Patent Office during revocation proceedings for the European counterpart to U.S. Patent No. 4,545,382. The ‘382 patent was cited by the USPTO as prior art during prosecution of the ‘551 patent. The panel considered materiality in view of the USPTO’s disclosure rule, 37 C.F.R. §1.56, and agreed with the district court that the patentee’s statements to the EPO about the ‘382 patent were highly material. These statements to the EPO were found to contradict representations the patentee made to the USPTO during prosecution of the ‘551 patent to overcome the ‘382 patent as prior art. The panel also found that the district court did not clearly err in finding deceptive intent based on the importance of the statements to the USPTO in overcoming the ‘382 patent as prior art, the contradictory nature of the statements to the EPO, and the patentee’s representatives’ knowledge of the EPO statements and failure to provide a credible explanation for not providing them to the USPTO.

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