After a week away, we will be discussing the Therasense case and its impact on inequitable conduct in our weekly SoCal IP Institute meeting on Monday, June 6, 2011. A brief synopsis of the case is presented below.
Therasense, Inc. v. Becton, Dickinson and Co., 2008-1511, -1512, -1513, -1514, -1595 (Fed. Cir. May 25, 2011) (attached). Becton brought suit against Abbott seeking a declaratory judgment that it did not infringe two Abbott patents. In response, Abbott countersued alleging infringement of the two patents and a third patent. At the district court, all claims of two of the patents were found not to be infringed. In addition, all claims of one of those patents was found to be anticipated. Claims 1-4 of the third patent were found to be obvious in view of two prior art references. Finally, the third patent was also found to be invalid due to inequitable conduct. In particular, Abbott had made directly conflicting arguments to the USPTO and the EPO during prosecution of the patent and its European counterpart, but not disclosed the EPO arguments during prosecution of the U.S. application. The Northern District of California found this sufficient basis to support the inequitable conduct defense and invalidated the patent on that basis.
In an en banc decision on appeal, the majority opinion by Chief Judge Rader and joined by Judges Newman, Lourie, Bryson, Gajarsa, Linn, Dyk, Prost, Moore, O’Malley and Reyna set forth a new standard for inequitable conduct determinations. The impetus for this new test was based on (1) the propensity of patent defendants to allege inequitable conduct on the “slenderist grounds” and to thereby overtax limited judicial resources with unlikely-to-succeed claims and (2) the large volume of largely-irrelevant prior art submitted to the PTO during prosecution in view of the specter of inequitable conduct claims in the future. In view of these two facts, the majority opinion tightened both the intent and materiality prongs of the inequitable conduct test. First, to prevail on an inequitable conduct claim, the accused infringer must prove by clear and convincing evidence that the patentee acted with specific intent to deceive the PTO. This requires a knowing and deliberate decision to withhold a known material reference. Second, the allegedly-withheld reference must be “but for” material to the patent application process. This means that at least one claim would not not been allowed if the patentee had disclosed the reference to the PTO. A single exception to the materiality standard exists in cases of “affirmative egregious” misconduct, such as falsifying affidavits submitted to the PTO or to court.
In view of the changes to the standards on both prongs of the inequitable conduct test, the Federal Circuit vacated the district court’s opinion and requested further proceedings consistent with the opinion.
Judge O’Malley’s concurrence-in-part and dissent-in-part essentially agreed with the majority opinion, but wished to express the belief that the so-called “tests” of the majority opinion and dissenting opinion both fail to provide district court judges with sufficient flexibility in a matter of equity to conform to the flexibility that relief in equity should embody. Judge O’Malley proposed a more flexible test based upon “guidance” to a district court, not a rigid test.
The dissenting opinion by Judges Bryson, Gajarsa, Dyk and Prost argued that the “but for” materiality test was too inflexible and provided too much room for potentially small-scale fraud with no effect. As an example, the dissenting opinion offered the scenario in which a patentee fails to submit a reference that was material. The patent may issue, but the potential invalidity of the patent for inequitable conduct is the same result as the patentee would have if the reference were submitted and the patent found to be anticipated. The dissent also was concerned about the majority opinion’s refusal to base the inequitable conduct standard on the PTO’s Rule 56 disclosure requirements. It pointed out, most notably, that the PTO itself did not agree with the change to the materiality standard. The dissent would essentially retain the prior test and make reference to the PTO’s own Rule 56.
The Amicus Brief submitted in this case by Steven C. Sereboff, Mark A. Goldstein and M. Kala Sarvaiya of SoCal IP Law Group on behalf of the Conejo Valley Bar Association may be found here.
All are invited to join us in our discussion of this case during the SoCal IP Institute meeting on Monday, June 6, 2011 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Amanda Jones by 9 am Monday morning.