1. Inequitable Conduct-Therasense, Inc. v. Beckton, Dickinson & Co. J. Gibson Lanier, Ph.D. Patent Attorney Ballard Spahr LLP 678-420-9300 lanierg@ballardspahr.com April 14, 2011 University of Rochester For Inventors, Researchers, and Entrepreneurs Series

2. 2 Agenda Inequitable conduct state of the law Dayco and McKesson review New case law – Larson and Therasense But wait – here comes Therasense en banc! Summary and considerations Best practices

3. 3 Inequitable Conduct Law Affirmative misrepresentations of a material fact, failure to disclose material information, or submission of false material information, coupled with intent to mislead or deceive Materiality and intent are questions of fact Proven by clear and convincing evidence

4. 4 Inequitable Conduct Law Two step analysis: First, a determination of whether the withheld reference meets a threshold level of materiality and intent to mislead Second, a weighing of the materiality and intent in light of all of the circumstances to determine whether the applicant’s conduct is so culpable that the patent should be unenforceable

5. 5 Inequitable Conduct Law Materiality: Materiality embraces any information that a reasonable examiner would substantially likely consider important in deciding whether to allow the application to issue as a patent. Digital Control Inc. v. Charles Mach. Works, 437 F.3d 1309 (Fed. Cir. 2006) Can be material even though it would not invalidate the patent Not material if cumulative to the art of record

6. 6 Inequitable Conduct Law Intent: Not intent to withhold, but intent to deceive Intent mainly proven by circumstantial evidence and inferences drawn from facts Inference of intent appropriate -Highly material information withheld -Applicant knew of the information -Applicant knew or should have known of the materiality -Applicant has not provided a credible explanation for the withholding

7. 7 Inequitable Conduct Law Intent (cont’d): The inference of deceptive intent must be the single most reasonable inference able to be drawn from the evidence to meet the clear and convincing standard. Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357 (Fed. Cir. 2008) Where only evidence of intent is absence of a credible good faith explanation for non disclosure ─ not enough to meet burden Gross negligence alone not enough to infer intent to deceive

8. 8 Inequitable Conduct Law A rare case but a plague Penalty is entire patent rendered unenforceable

9. 9 Chronology of Case Law May 2003 Dayco Products, Inc. v. Total Containment, Inc., 329 F.3d 1358 (Fed. Cir. 2003) May 2007 McKesson Information Solutions, Inc. v. Bridge Medical, Inc., 487 F.3d 897 (Fed. Cir. 2007) March 2009 Larson Manufacturing Co. of South Dakota, Inc. v. Aluminart Products, Ltd., 559 F.3d 1317 (Fed. Cir. 2009) January 2010 Therasense, Inc. v. Becton, Dickinson & Co., 593 F.3d 1325 (Fed. Cir. 2010), vacated and rehearing en banc granted, 2010 U.S. App. LEXIS 9549, April 26, 2010

10. 10 Dayco Products Facts: Four patents-in-suit (“A” patents) Related family of three copending applications (“B” applications) B1 claims “substantially similar” and “in some respects substantially identical” to A claims A and B assigned different examiners A and B had same prosecuting attorney

11. 11 Dayco Products Facts (cont’d): B specifications referenced members of the A family A examiner not made aware of B applications A examiner not made aware of B1’s three §103 rejections over Wilson i.v.o. Oetiker A examiner not made aware of Wilson reference cited in B1

12. 12 Dayco Products District Court: Summary Judgment of unenforceability for inequitable conduct All four A patents Reasons 1. Failure to disclose to A the existence of copending B 2. Failure to cite Wilson to A from B 3. Failure to cite to A office action rejections in B

13. 13 Dayco Products Federal Circuit: 1. Failure to disclose to A the existence of copending B -Cross-citation of related cases required (MPEP § 2001.06(b)) -B is highly material to A because B could have served as a basis for an obviousness double patenting rejection -Meets materiality -Does not meet threshold intent -A disclosed to B -Even though B not disclosed to A -Similar facts to Akron Polymer -Summary Judgment overturned

14. 14 Dayco Products 2. Failure to cite Wilson to A from B -Cannot decide materiality on SJ -Intent not met (cannot be inferred) -Prosecuting attorney provided plausible, unrebutted reason for not submitting Wilson -Wilson “far afield” from A claims -Summary Judgment overturned

15. 15 Dayco Products 3. Failure to cite to A office action rejections in B -Issue of first impression at CAFC -Meets materiality test -“We hold that a contrary decision of another examiner reviewing a substantially similar claim meets the... threshold materiality test of ‘any information that a reasonable examiner would substantially likely consider important in deciding whether to allow an application to issue as a patent.’” (Underlining added.)

16. 16 Dayco Products 3. Failure to cite to A office action rejections in B (cont’d) -Policy “Patent disclosures are often very complicated, and different examiners with different technical backgrounds and levels of understanding may often differ when interpreting such documents. Although examiners are not bound to follow other examiners’ interpretations, knowledge of a potentially different interpretation is clearly information that an examiner could consider important when examining an application.” -District court did not address intent – remanded for trial

17. 17 McKesson Facts: “A” patent-in-suit Related family of copending “B” application “C” continuation-in-part off of and copending with “A” B claims substantially similar to/substantially overlapped with A claims A and B assigned different examiners A and C assigned the same examiner

18. 18 McKesson Facts (cont’d): A, B, and C had same prosecuting attorney Existence of B application disclosed to A examiner Existence of C application disclosed to A examiner A examiner not made aware of Baker reference cited in B A examiner not made aware of B’s various §103 rejections A examiner not made aware of notice of allowance in C

19. 19 McKesson District Court: Bench trial ruling of unenforceability for inequitable conduct for A patent Reasons 1.Failure to cite Baker to A from B 2.Failure to disclose to A the office action rejections in copending B 3.Failure to cite to A the notice of allowance in C

20. 20 McKesson Federal Circuit: 1. Failure to cite Baker to A from B -Highly material and not cumulative -A and B were so similar that attorney initially disclosed the same body of prior art to both cases -Cancelled a claim in the B case in response to Baker -No memo to file (MPEP § 2004(18)) -17 days after arguing to A examiner, examiner B brought Baker to attorney’s attention -Speculative reasons at trial found incredible -Inequitable conduct found

21. 21 McKesson 2. Failure to disclose to A the office action rejections in copending B -Reaffirms Dayco -If the rejected claims in B are substantially similar to the claims in A, then rejection is material -But substantial similarity not necessary to prove materiality! -Found materiality Claims in B amended in response to rejection and then claims in A were amended

22. 22 McKesson 2. Failure to disclose to A the office action rejections in copending B (cont’d) -Found intent to deceive Dayco applied to 1989 cases MPEP defines information broadly – “all,” “any” MPEP applies this to copending applications A and B closely related Art commonly cited to both A and B but rejection was not cited to A Applicant made statements to examiner A directly contrary to examiner B’s findings Citation of case B to case A not enough – must cite the rejection itself -Inequitable conduct found

23. 23 McKesson 3. Failure to cite to A the notice of allowance in C -Material to a possible obvious double patenting rejection -Even though same examiner on A and C Not cumulative -Intent found even though citation of existence of case C made in case A -Inequitable conduct found

24. 24 McKesson Not a case of mistake or negligence Prosecuting attorney testified he would do the same thing again Prosecuting attorney testified his practice was to be “over inclusive” in submissions Weighing found pattern of material nondisclosures

25. 25 Larson Dayco/McKesson in the reexamination context Larson failed to submit copies of two office actions from a co-pending continuation application to a PTO reexamination proceeding

26. 26 Larson Filing scenario: A application issues A put into reexamination by Aluminart (“B”) C continuation filed before A issues B reexamination and C continuation are copending

27. 27 Larson Facts: Continuation application had “similar” claims to B reexam claims Same patent attorney on B reexam and C continuation prosecution Aluminart cites to reexam -C Continuation 1 st OA

28. 28 Larson Facts (cont’d): Larson cites to reexam: -IDS with 200 references -District Court pleadings -C continuation application -C continuation application 2 nd OA -3 references cited in C continuation application prosecution

29. 29 Larson Larson does not cite to reexam: -C continuation application 3 rd and 4 th OAs -One reference cited in C continuation application 4 th OA -Two other references Note that 4 th OA was after intent to issue a reexam certificate but before issuance of R.C.

30. 30 Larson Larson argues: Third and fourth office actions cumulative to first and second OAs; and All material prior art from OAs submitted

31. 31 Larson Materiality: Non-submitted 3rd and 4th OAs material Each OA had new information in their rejections Even though 3rd OA discussed same reference in the submitted 1st and 2nd OAs 3rd OA material even though the rejections were factually wrong

32. 32 Larson Materiality (cont’d): 3rd OA material even though the rejections were later withdrawn 4th OA material because of new, contrary reasoning over newly cited art even though that art already considered by the B reexam Non-submitted prior art cumulative

33. 33 Larson Intent: Original inference of deceptive intent based on five material items District Court on remand must redo intent analysis and balancing analysis

34. 34 Larson Intent (cont’d): District Court must consider evidence of good faith -Citation to B reexam of C continuation Compare to McKesson and Dayco -Citation of litigation pleadings -Citation of 2nd OA Seems to hint at no deceptive intent

35. 35 Therasense Dayco/McKesson based upon a foreign opposition Therasense (now Abbott) failed to submit to application A copies of statements made to the EPO during an opposition proceeding of the EP counterpart to patent B (“EP-B”) (filed by one of Abbott’s predecessors)

36. 36 Therasense The district court found that statements made by Abbott's predecessor to the EPO in B-EP were highly material to the prosecution of A Statements in A contradicted representations Abbott made to the EPO regarding the membraneless sensor disclosed in the B-EP

37. 37 Therasense The Statement: Abbott’s predecessor argued in an affidavit by Abbott’s Director of R&D in application A that patent B’s use of the language “optionally, but preferably contained a protective membrane” must be interpreted to mean necessarily included such a protective membrane. In an earlier opposition hearing in the EPO, Abbott had stated the exact opposite regarding the teaching of B-EP. It had stated that the protective membrane was optional.

38. 38 Therasense CAFC Materiality: Attorney argument statements are clearly relevant for materiality Not even a close case here

39. 39 Therasense Intent to deceive: In concluding that Abbott's representatives ─ Pope and Dr. Sanghera ─ intended to deceive the PTO by withholding the EPO documents, the district court made five findings: 1)that the statements made to the PTO concerning the prior art B were absolutely critical in overcoming the examiner's earlier rejections of the claims in A; 2)that the EPO statements would have been very important to an examiner because they contradicted the representations made to the PTO;

40. 40 Therasense Intent to deceive (cont’d): 3)that Pope and Dr. Sanghera both knew of the EPO statements and consciously withheld them from the PTO; 4)that neither Pope nor Dr. Sanghera provided a credible explanation for failing to submit the EPO documents to the PTO; and 5)that Pope's and Dr. Sanghera's explanations for withholding the EPO documents were so incredible that they suggested intent to deceive.

41. 41 Therasense Intent to deceive (cont’d): CAFC agrees with District Court on all five points. In fact, an Abbott inventor common to both application A and patent B disagreed with the statements in the affidavit.

42. 42 Therasense CAFC concludes: -EPO submissions were highly material -Intent to deceive the USPTO by the withholding of those submissions -Patent unenforceable due to inequitable conduct

43. 43 Therasense – Round Two at the CAFC En banc Order’s six questions: 1)Should the materiality-intent-balancing framework for inequitable conduct be modified or replaced? 2)If so, how? In particular, should the standard be tied directly to fraud or unclean hands? See Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 (1945); Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238 (1944), overruled on other grounds by Standard Oil Co. v. United States, 429 U.S. 17 (1976); Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240 (1933). If so, what is the appropriate standard for fraud or unclean hands?

44. 44 Therasense – Round Two at the CAFC En banc Order’s six questions (cont’d): 3)What is the proper standard for materiality? What role should the United States Patent and Trademark Office’s rules play in defining materiality? Should a finding of materiality require that but for the alleged misconduct, one or more claims would not have issued? 4)Under what circumstances is it proper to infer intent from materiality? See Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988) (en banc).

45. 45 Therasense – Round Two at the CAFC En banc Order’s six questions (cont’d): 5)Should the balancing inquiry (balancing materiality and intent) be abandoned? 6)Whether the standards for materiality and intent in other federal agency contexts or at common law shed light on the appropriate standards to be applied in the patent context.

46. 46 Examples of Submission Requirements Assuming material and non-cumulative Identification of related US applications Prior art cited in related US applications Office Actions from related US applications Applicant’s own responses in related US applications US litigation documents from related US patents

47. 47 Examples of Submission Requirements Prior art cited in counterpart and related foreign applications and oppositions Search reports and office actions from counterpart and related foreign applications and oppositions (MPEP §§ 2001.04 and 2001.06 and McKesson @ 923) Applicant’s own responses in counterpart and related foreign applications Foreign litigation documents

48. 48 Do We Really Have To Do This? Negligence, even gross negligence, cannot lead to a finding of deceptive intent. Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988) (en banc in relevant part) “There is no need for an attorney to pursue a fishing expedition to obtain information.” Brasseler v. Stryker Sales Corp., 267 F.3d 1370 (Fed. Cir. 2001) However, where counsel knows of information and may readily determine the materiality of that information, he/she cannot intentionally avoid learning of its materiality. FMC Corp. v. Hennessy Indus., Inc., 835 F.2d 1411 (Fed. Cir. 1987)

49. 49 Do We Really Have To Do This? For example, upon receiving notice that potential material information exists, one under the duty of candor and good faith is obligated to conduct an investigation and to disclose any information reasonably believed to be material. Brasseler v. Stryker Sales Corp., 267 F.3d 1370 (Fed. Cir. 2001). CAFC does not consider the burden on the applicant to comply with these requirements CAFC does not consider the cost to comply with such tasks

50. 50 Considerations Issued portfolios Due diligence on third party patent portfolios Current pending applications What else do we have to cite? Best practices 1161539