2 What is Inequitable Conduct? A patent applicant fails to disclose material information or submits materially false information to the U.S. Patent & Trademark Office. With intent to mislead or deceive the examiner. A court balances such evidence, and may hold a patent unenforceable.
3 What is Material Information? The Patent Examiners shoes. Would a reasonable examiner be substantially likely to consider the information important in deciding whether to allow an application to issue as a patent?
4 What Constitutes Deceptive Intent? Direct evidence of intent is rare. An inference of deceptive intent is sufficient. That inference is drawn from the facts and circumstances surrounding the patent applicants conduct.
5 As The Law Developed, Inequitable Conduct Proved More Bark Than Bite It was routinely asserted, but rarely succeeded. The habit of charging inequitable conduct in almost every major patent case has become an absolute plague. A summary judgment that a reputable attorney has been guilty of inequitable conduct, over his denials, ought to be, and can properly be, rare indeed. Burlington Indus., Inc. v. Dayco Corp., 849 F.2d 1418, 1422 (Fed. Cir. 1988)
6 Why Should Anyone Care About This Sleepy Defense That Rarely Succeeds? If successful, all of an asserted patents claims are unenforceable, including those not at issue in the case. If successful, other patents in the same patent family may also be unenforceable. If successful, innocent assignees, inventors and purchasers of affected IP are not protected. Evolutions in the law of inequitable conduct have enhanced its likelihood of success.
7 A Notable And Recent Shift Federal Circuit affirmed summary judgment of inequitable conduct. While our precedent urges caution in the grant of summary judgment respecting a defense of inequitable conduct, summary judgment is not foreclosed. A declarants prior relationships with the patent applicant were material and not disclosed. Dissent worried the scourge of inequitable conduct has returned. Ferring B.V. v. Barr Labs, 437 F.3d 1181 (Fed. Cir. 2006)
8 Material Information Broad As Ever 35 CFR 1.56 limits material information to that which is not cumulative of other information supplied to the PTO, and that establishes a prima facie case of unpatentability of a patent claim, or where it refutes, or is inconsistent with, a position the applicant takes in asserting patentability or opposing an argument by the PTO against patentability. But: The Office believes that most applicants will wish to submit the information, however, even though they may not be required to do so, to strengthen the patent and avoid the risks of an incorrect judgment on their part on materiality or that it may be held that there was an intent to deceive the Office. Manual of Patent Examining Procedure § 2001.05 (8 th ed. Aug. 2006)
9 Material Information Broad As Ever Indeed, the narrowly defined standard on materiality set forth in 37 C.F.R. 1.56 (amended in 1992) does not replace the broader, catch-all reasonable examiner standard. Digital Control Inc. v. The Charles Machine Works, 437 F.3d 1309 (Fed. Cir. 2006) And its not just prior art … Sales activity Litigation materials A business or economic relationship Office actions
10 One Need Not Practice To Deceive Deceptive Intent is now inferred from … What you should have known The lack of a credible explanation (A mere denial is insufficient) Studied ignorance
11 The Federal Circuit Is Sending Messages Reconsidering a prior reversal of a finding of inequitable conduct. Bayer AG v. Housey Pharmas. Inc., 2006 U.S. App. LEXIS 20051 (Fed. Cir. Aug. 4, 2006) Greater support of a trial courts credibility determinations. Agfa Corp. v. Creo Prods. Inc., 451 F.3d 1366 (Fed. Cir. 2006) Notable impatience with sloppy practice, no matter when it happened. Dayco Prods. v. Total Containment, Inc., 329 F.3d 1358 (Fed. Cir. 2003)
12 Now That We Have Your Attention... The Same Concept Evaporates Rights In Soft IP Trademarks: it is a defense to trademark infringement that the registration or the incontestable right to use the mark was obtained fraudulently. 15 U.S.C. § 115(b)(1). Copyrights: inadvertent mistakes on registration certificates do not invalidate a copy-right and thus do not bar infringement actions, unless... the claimant intended to defraud the Copyright Office by making the misstatement. Lamps Plus, Inc. v. Seattle Lighting Fixture Co., 345 F.3d 1140, 1145 (9th Cir. 2003).
13 McKesson v. Bridge Medical, Inc. Patent infringement action filed December 2002 U.S. Patent No. 4,857,716, Patient Identification and Verification System and Method Patent prosecuted by Merchant & Gould in the 1980s
14 McKesson v. Bridge Medical, Inc. The '716 patent claims a patient identification and verification system
15 McKesson v. Bridge Medical, Inc. A patent in force for 17 years declared unenforceable based on three acts of inequitable conduct: (1) Applicant intentionally withheld a prior art patent to Baker et al., which relates to a wireless communication system. (2) Applicant intentionally withheld rejections made in a co- pending application. (3) Applicant intentionally withheld allowance of another co- pending application.
16 McKesson v. Bridge Medical, Inc. Finding Baker was material and intentionally withheld The prosecuting attorney could not remember why Baker patent was not disclosed – hindsight not credible. The prosecuting attorney disclosed 38 other prior art references, including several he asserted contained Bakers teachings – but Baker found not cumulative. The prosecuting attorney made arguments in the '716 case the Court found inconsistent with withholding Baker.
17 McKesson v. Bridge Medical, Inc. Finding rejections were material and intentionally withheld The prosecuting attorney had disclosed the co- pending application, and the '716 examiner would find the rejections in those disclosed files. The prosecuting attorney argued no one disclosed rejections in the 1980s, and disclosure inconsistent with his law firms policy. The 2003 Dayco holding was applied to acts occurring almost 20 years before.
18 McKesson v. Bridge Medical, Inc. Finding notice of allowance was material and intentionally withheld The allowance was received in a co-pending case before the same examiner. The prosecuting attorney disclosed the co-pending applications, and those files included the notice of allowance. The prosecuting attorney argued no one disclosed allowances at the time, and that he was just following law firm policy – not credible.
19 McKesson v. Bridge Medical, Inc. Impact A patent owned by McKesson, which it tried to enforce in costly patent litigation, is unenforceable even though McKesson purchased the patent 10 years after the misconduct occurred. The PTOs Office of Enrollment and Discipline is investigating the prosecuting attorneys conduct, even though it happened in the 1980s.
20 Lessons For Patent Prosecutors Err on the side of disclosure (new PTO rules may complicate this approach). Treat disclosures in related co-pending cases identically, and avoid cutting fine lines. If one examiner suggests information is important, assume it would be important to another examiner. If disclosure requires further investigation by the PTO, it is likely insufficient. Take responsibility. Take all allegations of inequitable conduct seriously.
21 Lessons for Patent Litigators PLAINTIFFS Dont hesitate to acknowledge the possibility of a mistake in prosecution. Get the story right, stick to it, and make sure it does not conflict with your witnesses testimony. DEFENDANTS Obtain file histories from co-pending applications and any related patent families in searching for evidence of inequitable conduct. Depose the patent prosecutor and inventors early.
22 Issues for Patent-Related Due Diligence Secure file histories for the entire patent family, including foreign prosecutions, and compare the respective disclosures. Attention to office actions, declarations before the PTO and litigation. Are there any notes or other documentation explaining decisions to withhold or selectively disclose arguably important information – prosecuting attorney working files should be requested and inspected. Interviews of inventors and prosecution counsel may be warranted.
23 New PTO Rules On The Horizon May Complicate Matters The PTO has proposed new rules regarding Information Disclosure Statements. Goal is to reduce the number of references cited, and get the references in front of the Examiner before the first Office Action. If enacted, the rules would create tension with the case law that encourages one to over comply with the duty of disclosure. The PTOs summary of the rules can be located at http://www.uspto.gov/web/offices/pac/dapp/opla/present ation/idsnprslides.html. http://www.uspto.gov/web/offices/pac/dapp/opla/present ation/idsnprslides.html