The U.S. Court of Appeals for the Federal Circuit agreed yesterday to rehear en banc the appeal of a district court decision finding a patent unenforceable due to inequitable conduct.

 

The order granting the petition for rehearing en banc also vacated the panel opinion issued in Therasense, Inc. v. Becton Dickinson & Co. on January 25, 2010, which affirmed the district court’s finding of inequitable conduct based on the applicant’s failure to disclose statements made to the European Patent Office about the European counterpart to the U.S. patent.

 

In granting the petition, the Federal Circuit signaled a willingness to revisit the foundations of the inequitable conduct doctrine. As a result, the en banc decision most certainly will affect both the prosecution of patent applications and the requirements for proving inequitable conduct in litigation.

 

Defendants often plead inequitable conduct as an affirmative defense when sued for patent infringement. Rule 56 imposes an affirmative duty upon patent applicants to disclose to the U.S. Patent and Trademark Office all information that is material to patentability. A patent applicant may commit inequitable conduct by withholding material information, submitting false information, or making an affirmative misrepresentation, coupled with the intent to deceive the USPTO. If both materiality and intent to deceive are proven by clear and convincing evidence, the entire patent is unenforceable.

 

Although the doctrine is intended to promote candor and penalize the intentional withholding of material references, many patent prosecution attorneys and agents believe the doctrine increases costs and floods the USPTO with information that is often only tangentially relevant. Patent owners decry the expense of defending charges of inequitable conduct in every patent infringement case, while accused infringers proclaim that the doctrine protects the public and exposes perpetrators of fraud.

 

Many in the patent bar understood the Federal Circuit’s January ruling in Therasense to create a duty to submit all information relating to foreign patent applications, a significant burden, especially for multinational companies with worldwide patent portfolios.

 

Six Major Questions

 

The Federal Circuit invited the parties to address six broad questions concerning the inequitable conduct doctrine:

1. Should the framework for balancing materiality and intent be modified or replaced?

 

2. If so, how or by what? In particular, should the standard for inequitable conduct be tied directly to fraud or unclean hands? 

 

3. What is the proper standard for materiality?

 

4. Under what circumstances is it proper to infer intent from materiality?  

 

5. Should the inquiry balancing materiality and intent be abandoned?

 

6. Do the standards for materiality and intent in other federal agency contexts or in common law shed light on the application of these standards in the patent context?

 

Whether the en banc decision fundamentally changes the doctrine or merely clarifies how the current standard should be applied, both the prosecution of patent applications and the requirements of proving inequitable conduct in litigation will be affected.   

 


 

 

 

 

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