D UTY OF C ANDOR IN P ATENT P ROSECUTION 37 C.F.R. Section 1.56 (“Rule 56”) (a)... Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability as defined in this section. The duty to disclose information exists with respect to each pending claim until the claim is cancelled or withdrawn from consideration, or the application becomes abandoned.... Accused patent infringers scour records to look for any failures to comply with Rule 56. When those failures rise to intentional and material misconduct, a court has the equitable power to hold the patent (and its patent family) unenforceable due to inequitable conduct in the prosecution of the application.
Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc) Therasense redefined the standard for Inequitable Conduct: Inequitable conduct now requires a party to separately prove specific intent and but-for materiality. Materiality: New “but ‐ for" test: PTO would not have allowed a claim had it been aware of the undisclosed prior art. Intent to deceive: Intent requires knowledge and deliberate action. Intent and materiality are separate requirements. No sliding scale. Intent may not be inferred solely from materiality. Specific intent to deceive must be "the single most reasonable inference able to be drawn from the evidence.” – Thus, when multiple reasonable inferences may be drawn, intent to deceive cannot be found. Gross negligence or negligence under a “should have known” standard does not satisfy the intent requirement.
Post-Therasense Federal Circuit Reversal of Inequitable Conduct 1st Media, LLC v. Electronic Arts, Inc. (Fed. Cir. 2012) Pre ‐ Therasense, D. Ct. found inequitable conduct: Inventor and patent attorney: withheld material references. knew references were material. failed to provide a credible good faith explanation for nondisclosure of the references. Therefore, D.Ct. found inference of intent to deceive was appropriate. Fed. Cir. reversed: lack of evidence of deliberate decision to withhold. D.Ct. did not address whether there was a deliberate decision to withhold. Knowledge of reference and its materiality alone are insufficient after Therasense to show an intent to deceive. “[I]t is not enough to argue carelessness, lack of attention, poor docketing or cross ‐ referencing, or anything else that might be considered negligent or even grossly negligent.”
Post-Therasense Federal Circuit Vacate Finding of Intent for Inequitable Conduct Am. Calcar, Inc. v. Am. Honda Motor Co., 651 F.3d 1318 (Fed. Cir. 2011) Inventors withheld knowledge and information regarding prior art Honda system installed in the Acura 96RL. Pre-Therasense, the D. Ct. found inequitable conduct. District Court’s circumstantial evidence of deceptive intent: Inventors had operated the 96RL navigation system and developed car manuals in prior business. Patent specifications included description and figure from 96RL manual. Applied sliding scale for intent. Federal Circuit vacated finding of intent: District Court used sliding scale. No holding that any of the inventors knew withheld information was in fact material and made a deliberate decision to withhold it.
Post-Therasense Finding of Intent: Intellect Wireless v. HTC (Fed. Cir. 2013) A rare instance of post-Therasense finding of inequitable conduct. Facts: During the prosecution of the patent family, the inventor submitted a false declaration asserting that he had reduced to practice the claimed invention prior to the date of a prior art reference. During prosecution of the patent family, Mr. Henderson submitted a misleading press release to the PTO stating that the Smithsonian acquired “prototypes” of the invention when the “prototype” was an imitation smartphone made of wood and plastic that was not capable of performing the claimed functions. Intent: The Fed. Cir. affirmed finding of specific intent to deceive. In addition to the false statements made during prosecution, the inventor also made false statements about actual reduction to practice during the prosecution of other patents in the family. The court emphasized a “pattern” of false and misleading statements combined with the submission of a false declaration containing fabricated examples of actual reduction to practice was sufficient to establish intent to deceive.
Proving Intent of Inequitable Conduct Proving the requisite intent for inequitable conduct is much harder in a post-Therasense world. It appears easier to prove an intent to deceive when an individual declares an incorrect statement to be true (i.e., false affidavit/declaration) to the PTO. Inequitable conduct as it relates to the non ‐ submission of prior art is difficult to prove and may only be available in the most egregious of scenarios.
Decline in Inequitable Conduct Pleadings Post Therasense As a result, inequitable conduct pleadings have declined: Crouch, Dennis and Jason Rantanen. “Patent Law Analysis by Professors Dennis Crouch and Jason Rantanen.” 20 September
April 11, 2014 Presented by Lisa Kobialka
Areas Involving Intent Willful Infringement A finding of willful infringement is a prerequisite to the award of enhanced damages. Standard changed in 2007 Today it is a two prong test Inducement Specific intent necessary – accused inducer must have knowledge that the induced acts constitute patent infringement
Willful Infringement – Before Seagate Due Care Standard Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (Fed. Cir. 1983) If a potential infringer had actual notice of another’s patent rights, they had the “affirmative duty to exercise due care” to determine whether or not they were infringing Measured by totality of circumstances Totality of circumstances test was meant to indicate the state of mind of the accused
Willful Infringement – Seagate Standard Two Prong Inquiry In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007) The duty of care in Underwater Devices set a lower threshold for willful infringement more akin to negligence Abandon the duty of care and established a two prong inquiry
Willful Infringement – Seagate Standard Objective prong Patentee must show infringer acted despite a high likelihood that actions infringed a valid patent State of mind is not relevant Subjective prong Either knew or so obvious that it should have been known “We leave it to future cases to further develop the application of this standard.” In re Seagate, 497 F.3d at 1371 (August 20, 2007).
Evidence of Willful Infringement at Trial Software and hardware patent case Specific references to the patent holder’s company in defendant’s source code Example: “[Company] Buster” or “[Company Killer”] Testing patent holder’s product which embodied the claimed invention Showing the asserted patents were used as a roadmap to develop accused products
Subsequent Decisions Articulate Standard Judge decides objective prong Issue is whether conduct was objectively reckless, such as reliance on particular defense, opinion of counsel Subjective prong Acted within standards of commerce for industry Intentionally copied product covered by patent Reasonable basis for non infringement or defense to infringement Good faith effort to avoid infringement An attempt to cover-up infringement Opinion of counsel
Not Sufficient Evidence For Objective Prong Inflammatory comments in documents or testimony “FU SON” Name calling in deposition Dislike of competitor was not enough to suggest objectively reckless
Inducing Infringement Must have knowledge that the induced acts constitute patent infringement Knowledge that actions induce others to infringe Knowledge of patent Can be shown with willful blindness Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct (2011) Subjective belief that there is a high probability that patent exists and the defendant’s acts infringe patent Took deliberate actions to avoid learning about those facts Standard is stricter than deliberate indifference
In the Pharmaceutical Context File New Drug Application (NDA) with FDA Undergo a rigorous FDA approval process FDA approves the drug which sets forth the parameters for how the drug is to marketed, prescribed and used
Inducing Infringement Example Patent claims “a method to treat a patient for asthma with a particular compound…” Doctor or nurse completes the method If there is knowledge of the asserted patent, one can use the FDA’s requirements to prove intent to induce doctor or nurse