Inequitable Conduct Equalized

June 02, 2011, 05:57 PM

In almost every patent infringement case, defendants reflexively sling back a counterclaim charge that the patentees patent is unenforceable because the patentee or his or her lawyer deceived the United States Patent and Trademark Office by failing to disclose material information. Some courts have referred to this practice as a scourge or plague and the United States Court of Appeals for the Federal Circuit (the Federal Circuit) (the appellate court charged with ruling on patent law disputes) has steadily heightened the requirements for making such claims by, for example, requiring a detailed factual pleading to support such claims. On May 25, 2011, the Federal Circuit, in the en banc decision of Therasense, Inc. v. Becton, Dickinson & Co., Nos. 20081511, 20081512, 20081513, 20081514, 20081595, 2011 WL 2028255 (Fed. Cir. May 25, 2011), totally rewrote the two pronged standard that governs this defense. In doing so, the Court implemented a totally new standard for the first prong of materiality and clarified the seemingly contradictory precedent surrounding the second prong of intent to deceive. In short, it just got a whole lot harder to defend against a claim of patent infringement through a charge of inequitable conduct. At bottom, inequitable conduct is a charge that the patentee or his or her lawyer fraudulently obtained the patent at issue by withholding material prior art from the PTO in a purposeful attempt to deceive. Thus, even if infringement is proven, the patent should be held unenforceable because it was wrongly obtained. The allegations are quite serious and their casual assertion can cause severe harm to the patent and to the reputation of the prosecuting patent attorney. Because of this potential harm, the Federal Circuits new two pronged test is much harder to meet. The first prong requires that the withheld prior art be material. Previously, if the prior art was relevant and noncumulative, it was material. The Courts new test holds that information is material only when the claim would not have been allowed by the PTO if it had known of this material. The Court did make one exception by holding that a deliberately planned and carefully executed scheme to defraud the PTO would make the prior art material. Even with this narrow exception, this but for test significantly heightens the proof required for materiality. The Court clarified its holdings surrounding the second prong, the intent to deceive requirement. The Court made clear that the moving party must prove under the heightened clear and convincing burden of proof standard that the patentee or his or her agent made a deliberate decision to withhold a known material reference. The intent prong is independent of the materiality standard (no more sliding scale analysis that allowed less proof of intent the more material the reference) and the intent to deceive must be the single most reasonable inference to be drawn from the evidence. The patentee or his or her agent need not offer good faith explanations until the moving party meets a threshold level of intent to deceive by clear and convincing evidence. The Federal Circuits message is clear: inequitable conduct should not be casually asserted. It is a serious charge and must be proven under the highest burden of proof with close attention to both the clear materiality of the prior art in question and the independent, requisite intent to deceive. At bottom, the inequitable conduct defense should be reserved for those clear instances where a fraud has been perpetrated on the PTO. Stephen E. Noona is the head of Kaufman & Canoles Trial Section and Co-chair of its Intellectual Property Law and Franchising Practice Group. He has been counsel in over ninety (90) patent cases in the Eastern District, is Fellow in the American College of Trial Lawyers and has appeared before the judges in all four Divisions of the Eastern District on patent matters. Stephen E. Noona