Therasense Makes Sense of Inequitable Conduct Defense

On May 25th, the Federal Circuit, sitting en banc, issued a decision reversing and remanded the district court's holding that the patent-in-suit was invalid due to inequitable conduct. The patent remained invalid as anticipated, but the bar has been substantially raised for accused infringers attempting to prove the inequitable conduct defense – the "atomic bomb" of patent law, as Chief Judge Rader described it. With respect to the element of intent, the accused infringer must prove by clear and convincing evidence that the patentee acted with specific intent to deceive the PTO.

"The accused infringer must prove...that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it." Intent can still be established by circumstantial evidence, but a high level of materiality cannot satisfy the burden to prove intent. Also, the evidence "must be sufficient to require a finding of deceitful intent in the light of all the circumstances….The absence of a good faith explanation for withholding a material reference does not, by itself, prove intent to deceive.”

The materiality element of inequitable conduct was adjusted by the majority as well. The court held that, except for a narrow exception for truly egregious acts of misconduct, like false Rule 132 affidavits, the materiality required is now but-for materiality. This but-for materiality is a stricter standard than that imposed by current Rule 56 and the accused infringer must now show that the claim would not have issued but for the omitted information. The court declined to give any deference to current Rule 56, finding that part 1 was deficient in not giving weight to rebuttal evidence of the prima facie case of obviousness established by the omitted art and that part 2 was deficient because, well, it was just too broad.

Interestingly, though not addressing the issue head-on, the court made it clear that inequitable conduct cannot be proven based on acts by patentee relating to claims they did not ultimately obtain:

"Because inequitable conduct renders an entire patent (or event a patent family) unenforceable, as a general rule, this doctrine should only be applied in instances where the patentee's misconduct resulted in the unfair benefit of receiving an unwarranted claim... After all, the patentee obtains no advantage from misconduct if the patent would have issued anyway....enforcement of an otherwise valid patent does not injure the public merely because of misconduct, lurking somewhere in patent prosecution, that was immaterial to the patent's issuance."

Not just pretty words! Still, it is hard to see how this decision will deter applicants from sending in paper snow drifts of prior art. The minority made it clear that they felt that, even under these standards, the patent should be found unenforceable. Hal Wegner has noted that, for the disclosure burden to lighten on both applicants and the PTO, the PTO must respond proactively to this decision.