Dickson Industries: Inequitable Conduct Holding Vacated

Dickson Industries, Inc. v. Patent Enforcement Team, L.L.Cpic-34.jpg . (Fed. Cir. 2009) (nonprecedential) 08-1372.pdf

Application of inequitable conduct jurisprudence continues to divide the Federal Circuit. Judge Rader has perhaps been the most outspoken critic of the current over-use of inequitable conduct allegations. In this case, Judge Rader was joined by Judges Mayer and Posner (by designation) in vacating a lower court finding of inequitable conduct.

The PET patent covers an apparatus for making drainage grooves at the edge of a roadway. Prior to litigation, PET had argued that the machines for making rumble strips at the side of the road also violate the patent rights. Subsequently, Dickson sued for declaratory relief.

The jury found the patent invalid and found the patent holder liable for $1.5 million for tortiously interfering with with Dickson’s business relationships. The court then also (1) found the patent unenforceable due to inequitable conduct during reexamination for failure to disclose material information and (2) awarded attorney fees to Dickson.

On appeal, the Federal Circuit affirmed the anticipation decision, but vacated the decision on inequitable conduct.

The case largely centered around one prior art reference – “Spangler” – which discloses an apparatus to make rumble strips. PET knew about Spangler during reexamination of its patent, but did not disclose that reference to the PTO.

Agreeing with the Jury, the Federal Circuit found substantial evidence indicating that Spangler discloses all the elements of PET’s patent – rendering the patent invalid.

Ordinarily, after finding the patent invalid, the court would not need to decide issues of inequitable conduct. Here, however, the appellate panel addressed inequitable conduct because that conduct served as the basis for the lower court’s award of exceptional case attorney fees.

Amending Pleadings to Add Inequitable Conduct Charges: Allegations of inequitable conduct are parallel to charges of fraud and ordinarily must be pled with specificity. Thus, in most cases the accused infringer does not have sufficient evidence to allege inequitable conduct in the initial filing of defenses. Here, the court initially denied Dickson’s motion to amend its complaint to add IC charges. However, at trial the court changed its mind and allowed the issue to be presented.

On appeal, the Federal Circuit found that PET was “prejudiced” by the inconsistent orders and was thus denied “the opportunity to adequately defend against the allegation of inequitable conduct at trial. For instance, PET was denied the opportunity to introduce evidence of good faith, which militates against a finding of deceptive intent.”

The district court’s contradicting positions undermine the legitimacy of its ruling on inequitable conduct. This court cannot say with confidence that the record regarding inequitable conduct is not incomplete. Thus, this court vacates the district’s decision on the issue of inequitable conduct and remands to provide an opportunity to fully develop the record regarding inequitable conduct. Further, this Court vacates the award of attorney fees premised on inequitable conduct as premature.

In a warning to the lower court, Judge Rader again raised the notion that inequitable conduct litigation “has become an absolute plague.”

Given the severe consequences of unenforceability when it is imposed on a patent, it is paramount that the district court exercise necessary caution to ensure that the patent owner met its burden of proof with respect to both the materiality and deceptive intent.

Vacated-in-part.

Notes:

  • Judges Mayer and Posner (sitting by designation) participated in the panel.
  • Update: I have fixed an important typographical error. Judge Rader indicated that inequitable conduct litigation is the problem (not inequitable conduct itself).

72 thoughts on “Dickson Industries: Inequitable Conduct Holding Vacated

  1. Mary: “I doubt if their mens rea reaches an inequitable conduct standard.”

    That’s nice, Mary. Now go back to playing in the sunshine with your pet fawn and picking candy off the lollipop tree.

  2. Oh and Noise, that’s a really fine thank you for me taking the time out of my day to explain to you several nuances of patent law.

    I think a sammy is in order, and it’s lunch time.

  3. Does anyone know what happens in a litigation where the applicant (with different inventorship) has 102a’d himself, but this wasn’t discovered until the litigation?

  4. I can think of at least one other G8 jurisdiction where there is a statutory requirement. I can think of another where the “requirement” is non-statutory, one I feel bearing down on me, in order to put my client the Applicant in the best position later to see off post-issue validity attacks. But I shouldn’t comment, should I, as I’m not a US prosecutor.

  5. Noise Above Law:
    “Unless you have a typo, you are arguing twice for materiality and assuming intent from the materiality. They are separate prongs for a reason. You cannot satisfy the materiality prong and then satisfy the intent prong based on materiality.”

    Interesting. Isn’t this exactly the dispute between the Rader/Newman faction and the Prost/Moore faction on the Fedeal Circuit? I seem to recall reading more than one case within the last year (with 2-1 panel splits) where the majority upheld a judgment of IE and the dissent accused the majority of precisely this business of conflating the materiality and intent prongs. IIRC part of the problem is contained in previous Federal Circuit opinions that may be read to blur the two prongs, along the line of: withheld reference/document + greater materiality => higher likelihood of intent to deceive (whereas lesser materiality => lower likelihood of intent to deceive).

    Disclaimer: I’m not agreeing this should be the test, just suggesting the Federal Circuit has muddied the waters.

  6. “…I deal with the issues on a frequent basis, in the US and in other jurisdictions where a requirement exists to keep the patent office informed as to the existance of ‘relevant art.’”

    What are these other jurisdictions?

  7. “I also note that you did not say that you are a prosecutor but rather you said that you ‘deal with the issues on a frequent basis.’ Maybe you are a litigator, or maybe you are a paralegal portfolio manager.”

    My guess is Mooney is the latter. More likely though he is the guy who empties the waste baskets at some firm or company and is just a very good parrot. What is clear is that he’s not a practitioner.

  8. Malcolm, I don’t know from what body cavity you are retrieving these 10% and 7% inequitable conduct numbers. 10% or 7% may not be careful or current, but I doubt if their mens rea reaches an inequitable conduct standard.

    I also note that you did not say that you are a prosecutor but rather you said that you “deal with the issues on a frequent basis.” Maybe you are a litigator, or maybe you are a paralegal portfolio manager.

    You have some biotech background, probably a masters and not a PhD. My guess is that you are also from the Bay Area someplace.

    There, I have fed your ego with my interest in your background.

  9. Mary: “Malcolm doesn’t understand it because he is not a prosecutor.”

    On the contrary, I deal with the issues on a frequent basis, in the US and in other jurisdictions where a requirement exists to keep the patent office informed as to the existance of “relevant art.” Above a certain size, the proper management of a prosecution docket may require the employment of skilled, careful folks dedicated to keeping up with what was known, disclosed and/or cited, and when, and where.

    But what percent of all applications filed at the PTO are given such attention? Fifty percent? Maybe in certain art units. Overall? I’d guess it’s closer to 30%. So we have 70% slacking off, to put it kindly. Of those, what percent to do you suppose are sitting on info? Just for laughs, let’s say it’s as low as 10%. That’s 7% of all applications. How many applications is that per week?

  10. You make a good point, JTS. Malcolm doesn’t understand it because he is not a prosecutor.

  11. “The allegations are against “defendant, the named inventors, their patent attorney(s), and/or other persons involved in the prosecution of the ’XXX application.” It all seems so impersonal.”

    And it is. If anybody really gave a crap about this “plague”, there’d by proceedings at the PTO aimed at stripping practitioners of their reg numbers on at least a weekly basis.

  12. JTS wrote: “Litigators, next time you plead the I.C. defense, think about how you might feel if a client wrongly accused you of legal malpractice and sued you.”

    Speaking just as one guy who primarily does litigation, the stark reality is that empathy for another human being has rarely impacted my drafting of a pleading in a patent case. Maybe if I did family law or employment law, that wouldn’t be the case. The allegations are against “defendant, the named inventors, their patent attorney(s), and/or other persons involved in the prosecution of the ’XXX application.” It all seems so impersonal.

  13. Just read the words “inequitable conduct” (by the prosecuting attorney). Imagine you’re just a plain old bill-paying client that relies on your attorney to get your patents. You’re not an attorney. You get a letter from your trial counsel explaining that part part of the estimated cost for trial will be for defending an allegation of “inequitable conduct before the Patent Office”. Now what’s your gut reaction? It’s not a good one.

    A former mentor of mine, as concientious and honest attorney as you can find, had a case he had prosecuted enter litigation. The defense of “inequitable conduct” was made. The basis was weak. I don’t think the issue even survived to trial. The prosecuting attorney was embarassed. He spent a lot of time being deposed. It took a lot of work to salvage his reputation with the client and to keep their trust and work. Litigators, next time you plead the I.C. defense, think about how you might feel if a client wrongly accused you of legal malpractice and sued you.

  14. TJ,

    Your arguments seemed flawed, to wit:

    A) “IE requires: (1) knowledge of reference, (2) materiality of reference, and (3) culpable intent to deceive.”

    B) “I take it everyone agrees that intentionally withholding a reference that you know to be material satisfies the intent requirement.”

    C) “The question is whether (a) knowledge of the reference, (b) its high objective materiality, and (c) the fact of withholding, create the inference of subjective knowledge of its materiality.”

    In A) you stretch a two prong IC standard into three prongs.

    In B) you take as given the most difficult prong as an assumed matter-of-fact. It is the very crux of the matter that what you take as given is the very item that MUST be proven by the adversary. Both the intention and knowing to be material cannot be so simply assumed as givens.

    In C) you pose as THE question a relatively easy strawman question. But you get to C) by assuming the heart of the matter in B). Further, your C) seems to convolute what is objective and what is subjective. You posit that the objective materiality as high (b), yet pose as subjective and something that must be inferred (c) the knowledge of the (highly objective – (b)) materiality.

    Unless you have a typo, you are arguing twice for materiality and assuming intent from the materiality. They are separate prongs for a reason. You cannot satisfy the materiality prong and then satisfy the intent prong based on materiality.

  15. Just visiting,

    We are quickly reaching the point of diminishing returns here. To answer you, yes, under current law (Seagate) willfulness is essentially proved by only reckless disregard, because there is an inference of intent from the fact of reckless disregard.

    But that doesn’t answer whether it is less than the intent required for IE, given the Ferring line of cases (which seem to adopt a reckless disregard standard); nor whether it should be. You are making a positive assertion (that IE has a higher standard of intent) that is not clear; and a normative assertion (that IE should have a higher standard) that is purely conclusory.

    Also, I find your current position irreconcilable with your initial answer to my hypo. You answered that there could be no inference of the intent required for willfulness (call it reckless disregard, whatever, as long as you concede there is a mens rea requirement) based on infringement being really really obvious. But finding the required mens rea when the natural and probable consequence is obvious is precisely what reckless disregard entails.

  16. “new and useful to make a living for me, my family and our employees.”

    You already have a more than comfy living if the descriptors I’ve read about you have any merit to them.

    I still have to wonder why you’re so concerned about the term troll when you’re technically probably not even one. I thought you guys were practicing your inventions. You’re not exactly like Odom or Eugene.

    Turning from that we see that to you, someone, such as mark chandler mistakingly believing that a blog is an “independent” source of information as opposed to an “interested” source of information is relevant to formulating a rational reason as to why it matters who is behind providing information. This even while you don’t dispute the information provided being accurate and insightful.

    I wish I hadn’t gotten PTT outted :( It was rather fun to look at all the docs he turned up. On the other hand, would it not be the righteous thing to do to out his opposite, JAOI? Problem is, there likely wouldn’t be much backlash to him, like there was to PTT, so what’s the point? Telling the world he’d been speaking anon about stuff he speaks about irl would hardly come as a surprise to anyone.

  17. TJ –
    “Perhaps our disagreement stems from your position that the mens rea required for willfulness should be less than IE.”

    My position is that the required mens rea *is* different under current law. Willfulness requires only reckless disregard. Reckless disregard is way short of specific intent.

  18. Dear Lionel,

    Please see my comment above to Mr. Fixed Your Claim and Mischiefish Malcolm.

    Also, please see this article and the excerpt below from the article:

    link to businessweek.com

    “Cisco General Counsel Mark Chandler even cited the blog as a good independent source of information while in Washington lobbying for changes to patent law that would rein in trolls, unaware he was plugging the work of a Cisco employee.”

    Re:
    “I still have not heard you provide any rational reason why it matters who is behind a blog.”

    I trust this provides some further “rational reason” why it matters to know who is advancing CISCO’s anti-patent agenda as opposed to a blog presenting “a good independent source of information”; I’d be happy to comment further if you’d like.

    So much to do, so little time…

  19. Dear Fixed Your Claim,

    Firstly, I apologize for my harsh criticism of your comment. In retrospect, given the full context of the point you were making, you were, of course, entitled to avail yourself of dramatic inflammatory poetic license. Please accept my apology.

    Re:
    “I’ve represented both trolls–and I do mean out-and-out-patent-not-worth-the-paper-its-printed-on-but-God-bless-the-presumption-of-validity trolls–as well as the evil corporate ne’er-do-well IP-stealing thieves you believe hide under your bed, or perhaps in your closet. I’ve seen things on both sides that make me both sad and angry.”

    Secondly, may I say I admire professionalism, sincerity and biases — I sympathize and identify with you in these regards.

    Re:
    “That you completely ignored one facet of my comment and focused entirely on the other is simply indicative of your own irrational bias.”

    You are correct in that I only focused on “patent wielding extortionists.”
    But that is not indicative of my “irrational” bias.
    My bias is entirely rational. I freely admit that my bias is to make money in any lawful way I can with my creative ability to invent and patent my inventions — and I could care less whether my patent is considered crappy or ingenious — all my patents’ purposes are to invent something new and useful to make a living for me, my family and our employees.

    Regarding inequitable conduct, I agree that any person who gets a patent by (unlawful) inequitable conduct could rightfully be called an extortionist, and importantly, should be held fully accountable.

    My last patent infringement case experience with inequitable conduct was handled brilliantly by the judge: At the hearing after the inequitable conduct allegation, and our defense thereto, were briefed up, the judge looked at the infringer-defendant and said to the effect, “you may want to reconsider and drop the charge.” He did.

    Extortion, outwresting, or exaction is a criminal offense which occurs when a person unlawfully obtains either money, property or services from a person, entity, or institution, through coercion.
    link to en.wikipedia.org

  20. Dear Malcolm,

    Re:
    “Cisco’s anonymous blog was anything but objective, while my comments were always subjective”
    and anybody who read them knew that up front.

    I don’t mind your comments criticizing my opinions — in fact I feel flattered. However, quoting only part of the sentence and not the remaining part that puts the first part in context is poor gamesmanship, a bastardization, a misquote.

    I’m particularly sensitive to this kind of “misquote” because one of this blog’s favorite Federal Circuit judges bent over backwards to contrive just such a misquote from the file history to tank one of my patents — this particular judge, as well as other judges, were adversely influenced by myriad anti-patent asswholes like you, CISCO’s henchmen and other international-conglomerate in-house lawyers and reporters of all sorts looking to sell advertising space by fanning the “watch out for the terrible troll” propaganda.

  21. “I made it pretty clear that I was offering a critique of both patentees who file weak, but not sanctionable, infringement claims as well as defendants who apparently believe that every patent that issues out of the PTO–except their own, of course–resulted from inequitable conduct”

    Perhaps those companies know that their apps are issued because of IC, and thus have good reason to suspect all other apps of the same?

  22. Now before I return to my regularly scheduled lurking, has anyone ever seen a study examining the frequency with which inequitable conduct claims end up being tried (accounting, of course, for the rarity with which the underlying infringement claim ends up being tried)?

  23. Erratum: In line 1 of the post dated May 21, 2009 at 10:17 PM, please delete “infringers” and insert therefor –patentees–.

  24. @JAOI:

    I made it pretty clear that I was offering a critique of both patentees who file weak, but not sanctionable, infringement claims as well as defendants who apparently believe that every patent that issues out of the PTO–except their own, of course–resulted from inequitable conduct. That you completely ignored one facet of my comment and focused entirely on the other is simply indicative of your own irrational bias.

    Are you really crying about me calling them “patent-wielding extortionists?” I was admittedly being inflamatory, and deliberately so. I wish I could have found stronger words to level at the unreasonable defendants as well, but “scorched earth kitchen sink” is the best I could muster.

    I’ve represented both trolls–and I do mean out-and-out-patent-not-worth-the-paper-its-printed-on-but-God-bless-the-presumption-of-validity trolls–as well as the evil corporate ne’er-do-well IP-stealing thieves you believe hide under your bed, or perhaps in your closet. I’ve seen things on both sides that make me both sad and angry.

    I’ve also seen small companies grow bigger because their *products* were profitable, not their patent portfolio. And then after having grown bigger they had the resources to protect their patent assets. If anything, those are the guys for whom I have a bias.

    If you really care about a strong patent system, you ought to care first about the patents themselves being strong, i.e., well-examined and indisputably useful, novel, and non-obvious. Only then will focusing on the strength of the post-issuance patent system that will protect those patents be well-served. To bring this back closer to the topic at hand, post-issuance strength includes curtailing unwarranted charges of inequitable conduct that unfairly increase the expense to the patent holder of defending his property.

  25. “Cisco’s anonymous blog was anything but objective, while my comments were always subjective”

    The only difference, I guess, is that Cisco’s blog was filled with interesting facts while your comments are filled with crap.

  26. Just visiting, I don’t understand what you are saying.

    IE requires: (1) knowledge of reference, (2) materiality of reference, and (3) culpable intent to deceive. I take it everyone agrees that intentionally withholding a reference that you know to be material satisfies the intent requirement. The question is whether (a) knowledge of the reference, (b) its high objective materiality, and (c) the fact of withholding, create the inference of subjective knowledge of its materiality.

    Willfulness requires: (1) knowledge of the patent, (2) objectively high risk of infringement, and (3) intent to infringe. Seagate holds that (a) knowledge of the patent, (b) objectively obvious infringement from the accused conduct, and (c) the fact of infringement, do create an inference of subjective intent to infringe.

    Perhaps our disagreement stems from your position that the mens rea required for willfulness should be less than IE. Given that the doctrine is “willful” infringement, and the fact that both are sufficient for exceptional case findings, I don’t see a basis for the distinction.

  27. “the patentee must also demonstrate that this objectively-defined risk . . . was either known or so obvious that it should have been known to the accused infringer”

    TJ, you quote only a portion of the Seagate standard. You have to demonstrate more than knowing or should have known. Willfulness requires knowledge and then a required degree culpablility once you know.

    Further the required culpability for willfulness fails somewhat short of intent, while IC requires a specific intent not just to withhold, but to deceive the PTO.

  28. Dear Lionel,

    I am an independent inventor, and I have always expressed my jingoistic, pro-American strong patent-system bias well ahead of my extreme opinions.

    Cisco’s “troll tracker” anti- American strong patent-system was not revealed till the basstards were outed.

    It has nothing to do with having balls — Cisco’s balls and my balls are both as big as balls get.

    My balls are jingoistic American balls, while Cisco’s balls could give a gosh-darn less.

    My subjective agenda has been open and up front, while Cisco’s “troll tracker” agenda was “anonymous”, secretive, in order to give the false impression of being “objective.”

    Cisco’s anonymous blog was anything but objective, while my comments were always subjective and anybody who read them knew that up front.

    I’m sure you can appreciate the difference. So what’s your gripe?, i.e., wherein that, do you find “irrationality”?

    Notwithstanding all that, I do appreciate and thank you for your comments.

  29. Dear Lionel,

    I am an independent inventor, and I have always expressed my jingoistic, pro-American strong patent-system bias well ahead of my extreme opinions.

    Cisco’s “troll tracker” anti- American strong patent-system was not revealed till the bastards were outed.

    It has nothing to do with having balls — Cisco’s balls and my balls are both as big as balls get.

    My balls are jingoistic American balls and Cisco’s balls could give a sshit less.

    My subjective agenda has been open and up front, while Cisco’s “troll tracker” agenda was “anonymous”, secretive, in order to give the false impression of being “objective.”

    Cisco’s anonymous blog was anything but objective, while my comments were always subjective and anybody who read them knew that up front.

    I’m sure you can appreciate the difference. So what’s your gripe?, i.e., wherein that, do you find “irrationality”?

  30. Arguably they should have incompetent conduct, wherein failure to submit 102′s, PCT searches, statutory double patenting and previous court history always yields incompetency regardless of intent or volition.

  31. JAOI wrote

    “When a lawyer in Rick’s position at CISCO runs the ruse of an “anonymous” blog against independent inventors — well that deserves moral outrage.”

    and then wrote to another poster

    Thank you for your thoughts, but, with all due respect, with such a prejudicial chip on your shoulder, any views you express are suspect.”

    “People in glass houses…” JAOI.

    I still have not heard you provide any rational reason why it matters who is behind a blog. I just read your irrational posts. And then to have the balls to comment on someone else’s apparent bias.

  32. Just visiting, tell that to the Federal Circuit. In defining the proof of intent to willfully infringe:

    “the patentee must also demonstrate that this objectively-defined risk . . . was either known or so obvious that it should have been known to the accused infringer.”

    In re Seagate, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc). I am still waiting for the day that Judges Newman and Radar create an equally lax intent standard (“so obvious it should have be known”) for inequitable conduct.

  33. “If you make a showing that the infringement was really, really obvious, can the court infer willful intent to infringe?”

    Nope. But you knew that right?

  34. Leopold,

    Yes, Judge Radar is speaking about the intent prong, but the key question is whether you can infer intent from knowledge and materiality. If the answer is no, then IE becomes basically impossible to prove Let me place an analogy for the pro-patent/anti-IE folks:

    1. Willful infringement requires proving knowledge, objective recklessness, and intent. If you make a showing that the infringement was really, really obvious, can the court infer willful intent to infringe?

    2. If materiality is really, really obvious, can the court infer intent to withhold for IE?

    If your answer to (1) and (2) are different, why?

  35. “When a lawyer in Rick’s position at CISCO runs the ruse of an “anonymous” blog against independent inventors — well that deserves moral outrage.”

    What about when an anonymous blog commentator runs a series of comments against big business? What then? Moral outrage?

    I’m outragin’ on all of you.

    What about when an anonymous blog commentator runs a series of comments against big business and independent inventors? What then? Moral outrage?

    I’m outragin on mahself.

    I’m morally outraged!

    I would ragequit morality if I could.

    Hey broje, get this, I told you I’d have something awesome for this weekend and I’m delivering. Saturday, raising a fence in Richmond. That’s right, a whole day’s worth of hard labor, unpaid, probably in the hot sun. If you’d like to come along we’ll probably be cooking out afterwards and maybe we won’t have the girls working quite as hard. If you’re board, you know how to reach me. Oh, and there might be horse rides.

  36. Anonymous | May 21, 2009 at 07:59 AM

    —————-

    First, please put a little more effort into a user name.

    Second, I think you’re right about what rankles folks with respect to IC. It makes the job of patnet prosecution much more annoying (but only if you try to avoid it — many companies whose objective is primarily to secure patents regardless of validity are shrewd enough not to waste their money trying to present relevant art to the PTO).

    The solutions you propose with respect to your “exponential scale” are interesting but it’s really the sort of thing that judges should be doing anyway. And that gets close to the heart of the complaints from the judiciary: most judges are so clueless about patent law that the prospect of determining whether someone intentially subverted the law is simply above their pay scale.

  37. “Arguably, USPTO examiners ignore applicant-submitted references, and as 6 urges, are quite capable of finding references to support their claim rejections.”

    It is true that we are. None the less, I do have to give credit where credit is due. IDS’s have given me a substantial amount of perfect art that I likely would not have found.

    I cannot advocate the elimination of IDS’s. I would however settle for the implementation of the standards in 56. Imo, if they aren’t going to go whole hog with AQS, we may as well let them not waste my time with worthless crp.

    Then again, you never know when some little tidbit about the chemical composition of something etc. etc. will be crucial to the examiner’s case and it might be tucked into an otherwise totally unrelated piece of art. It’s that little snag that does support the current regime.

  38. “Given the severe consequences of unenforceability when it is imposed on a patent, it is paramount that the district court exercise necessary caution to ensure that the patent owner met its burden of proof with respect to both the materiality and deceptive intent.”

    Is this a typo, or am I confused about something this fundemental? Isn’t it the alleged infringer’s burden to show materiality and deceptive intent? The patent owner certainly doesn’t want to show that. Rather, the patent owner wants to rebutt them, which then doesn’t fit the sentence.

  39. I would have enjoyed the opinion more if Rader, instead of citing to Starr (“In a case involving nondisclosure of information, clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference.”) for the the intent prong, had instead altered the phraseology to state that the intent prong requires clear and convincing evidence to show that the applicant made a deliberate decision to withhold a reference knowing that the reference was material (i.e., not merely at best cumulative to the information already in front of the Examiner).

  40. My repeat of a comment for putting the “plague” where it belongs (rarely, if ever, alleged):

    1. The “materiality” prong can be proven only if it is shown that one or more patent claims (or the entire patent itself if we’re talking an issue like improper inventorship) would not have issued “but for” the deliberate omission or misrepresentation of the alleged “mateial” information.

    2. The “intent to deceive” prong requires proof of specific intent or “wanton or reckless disregard” as to the omitted/misrepresented information. So-called “gross negligence” shouldn’t be the standard.

    3. Completely dump the “sliding scale test.” This conflates the “materiality” and “intent to deceive” prongs in a way that’s not helpful.

    4. Each of the “materiality” and “intent to deceive” prongs must be proven “beyond a reasonable doubt.” That will leave inequitable conduct to address only the truly “egregious” instances.

    5. Inequitable conduct must be alleged with the particularity required for fraud under FRCP 9.

    6. 35 USC 285 and FRCP 11 should be liberally applied to “frivolous” allegations of inequitable conduct.

    If you can’t remove the “plague” entirely (the best solution which would “harmonize” us with the rest of the world), the above 6 points will at least put it in its appropriate place, and get us back to judging patents on the merits.

  41. Dear Fixed Your Claim,

    Re: “… judges don’t use Rule 11 to spank non-practicing patent-wielding extortionists”

    Thank you for your thoughts, but, with all due respect, with such a prejudicial chip on your shoulder, any views you express are suspect.

    Frankly, if I may be so bold, I’d suggest you consider analysis and/or retirement. No one needs to hear your jaded views, so shoo Mr. Fixed Your Claim, shoo.

  42. As Australia has done recently, why not eliminate the duty of disclosure and eradicate the plague?

    Arguably, USPTO examiners ignore applicant-submitted references, and as 6 urges, are quite capable of finding references to support their claim rejections.

    Discovery should turn-up any stat-bar activities or solely applicant-known killer references, just as it typically must now to prove IC.

    Rip away.

  43. “[T]hey don’t use [Rule 11] to spank defendants for scorched earth kitchen sink pleading of inequitable conduct in every other counterclaim.”

    Waiver is a powerful incentive to raise any defense you may want to use. This case illustrates the problems that arise when a court waffles on allowing IC pleading.

    There are sound reasons to allow IC to be pled, even without all relevant facts. Most of the time, you can’t know what all the IC facts are at the time of pleading. Ratcheting up the standards to 9(b) levels makes you do some homework before pleading IC, but unless you are allowed to plead it, you can’t get discovery and if you can’t get discovery, IC will go unnoticed and unchecked.

    Let’s not kid ourselves; IC happens. It’s an unpleasant truth.

    But I think the quandary with IC claims is less about IC arising as much as it does in litigation, and more about the implications of having an ex post facto review of a prosecutor’s dealings with the PTO. It’s hard to know what references are most relevant at the time the app/claims are drafted. Though inventions are supposed to have constant meanings, the truth is that the prosecutor often has a very different idea about what the patent means at the time it was filed than the patent owner/litigators/court have at the time the patent comes to court. (Hence: claim construction.) But to gauge the relevance of a reference using two different standards at two different times seems unfair. (Perhaps that’s why the failure to disclose a plainly relevant reference — like a 102 reference — is intuitively more satisfying?) I don’t profess to have a complete answer for that.

    The other problem is that IC jurisprudence incentivizes prosecutors to spam the PTO with references. There’s a universe of prior art out there – much of it relevant, much of it in the hands of the prosecutor. In a cost-benefit analysis, it seems that the smart thing to do is to send the PTO every possible reference. In a bizarre twist, however, there are claims alleging IC for doing exactly that.

    So what’s the answer? The law balances materiality (i.e., 102 art > 103 art > everything else) with intent. Perhaps it should be less of a balancing act and more of an exponential scale. For example, failing to disclose a known 102 reference could be IC per se. Failing to disclose a known 103 reference could be IC, but only if the 103 reference conflicts directly with applicant’s arguments made in prosecution. (Otherwise, it’s cumulative.) Failing to disclose known relevant art that neither anticipates nor bears on prosecution history could be not IC per se.

    This scale lets prosecutors know that *truly* relevant art should be disclosed, that peripheral references should be disclosed as they become relevant and not cumulative, and that general references need not be disclosed.

    Just one man’s thoughts. Enjoy tearing them to shreds.

  44. “So lets make fraud almost impossible to prove by ratcheting up the burden, and then they will allege fraud less often.
    Unless I am much mistaken, that is exactly what Radar is saying about inequitable conduct.”

    TJ, I don’t know if you’re “much mistaken,” but perhaps a little mistaken? I simply hear Judge Rader saying that we have to take the “intent” prong seriously.

    I’m certainly not advocating eliminating inequitable conduct doctrine. But I am advocating that judges use the tools they already have to keep the often very expensive and too often baseless inequitable conduct sideshows under control

  45. In answer to question (assuming it is asked in good faith), that answer is generally no. You usually get absolute immunity against defamation for statements made in court.

  46. If you plead without any good basis inequitable conduct by the patent owner’s patent attorney, have you libeled the patent attorney?

  47. JAOI wrote: “Haven’t merit-less allegations always been sanctionable under one rule or another (depending on the court)?

    Am I missing something?”

    Yes. You’re missing the fact that “meritless” is a pretty high threshold to reach to sanction someone, for instance, under Rule 11. Showing that the claims, defenses, or other legal contentions were not warranted by existing law is not enough. You have to show that there was no nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law, which is hard to prove. As for factual contentions, you have to show either that they had *no* evidentiary support whatsoever or that they weren’t even *likely* to have evidentiary support after further evidentiary discovery or discovery. Just because the evidence would not in the end carry the day does not mean that it was completely absent. And you don’t even necessarily have to show that you had evidence in hand, as long as you can come up with some straight-faced explanation of how the evidence is likely to be developed.

    So in the real world judges are hard pressed to conclude that allegations in a complaint or counterclaim were completely without merit. So for the same reasons that judges don’t use Rule 11 to spank non-practicing patent-wielding extortionists, they don’t use it to spank defendants for scorched earth kitchen sink pleading of inequitable conduct in every other counterclaim.

  48. One way to make IC work is to require the “charger” to show why the omitted information is more material and thus NOT CUMULATIVE compared ton EACH reference already cited. (Of course, there must still be a showing of intent.) I think a required showing of non-cumulativeness would weed out a majority of IC charges. Another way might be to have the OED/Ethics Bar go after chargers who have made IC charges without sufficient basis.

  49. Haven’t merit-less allegations always been sanctionable under one rule or another (depending on the court)?

    Am I missing something?

  50. Dear Malcolm,

    I should not dignify your comment other than to suggest that the parody to which you refer apparently is that of Mother Superior’s, when she admonished Sister Mary saying, “you don’t have to say, “phuck-off phuck-off” to scare the birds away — just say “shoo birds, shoo birds”, and they’ll phuck-off.”

    Shoo Malcolm, shoo — and I hope you Just phuck-off (©¿®)™.

  51. I heard a rumor that blog commenter salaries are dropping back down to 2001 levels. This will probably have a big impact on the number of comments.

  52. You know, I thought the same thing about Rush Limbaugh the first time I saw him. I found the apparent parody of a right-wing loudmouth to be hilarious. I’m still not entirely convinced that he didn’t start out that way and then find there was more money to be made by continuing the ruse.

    Sometimes I have similar thoughts about you.

  53. “When a lawyer in Rick’s position at CISCO runs the ruse of an “anonymous” blog against independent inventors — well that deserves moral outrage.”

    I still think that JAOI is some sort of subtle parody, although I’m told that Aspen can be very boring in the off-season.

  54. I haven’t been following this thread, so my thought may have been previously expressed.

    If an attorney alleges inequitable conduct, and it turns out his allegation is meritless, why not sanction his ass.

    Wouldn’t that tend to solve the problem?

  55. Dear Leo,

    Re:
    “That opprobrium is generally absent from infringement, the moral outrage sincerely felt by JAOI and others notwithstanding.”

    Thank you for your observation. By way of further clarification, may I add that “non-willful” infringement, like non-willful trespass on one’s estate, doesn’t deserve moral outrage.

    As an aside, it reminds me of a story about Sister Mary at the Nunnery. She was planting seeds in the garden when birds swooped in to eat the seeds. As she said “phuck-off phuck-off” to scare the birds away, Mother Superior was passing.

    Mother Superior said to her, you don’t have to say, “phuck-off phuck-off” to scare the birds away — just say “shoo birds, shoo birds”, and they’ll phuck-off.

    But I digress:
    When big businesses willfully infringe and effectively suggests you, an independent inventor, “phuck-off” because you don’t have the wherewithal or the resources to enforce your “exclusive Right” — will that deserves moral outrage.

    When a lawyer in Rick’s position at CISCO runs the ruse of an “anonymous” blog against independent inventors — well that deserves moral outrage.

    When District Court judges, Federal Circuit judges and Supreme Court judges kowtow to politically correct inflammatory “propaganda” and deliver result-oriented decisions contrary to their sworn Oath’s of Office, well that deserves moral outrage.

  56. Leopold,

    Yes, we require heightened pleading for fraud because it has an “up close and personal” aspect to it. And that is normally the remedy for the problem. What we don’t ever see judges saying is this:

    We have a lot of people being charged with fraud, a small but not insignificant number proven correct. The fact that there are so many fraud allegations (again, including some correct allegations) is an absolute plague on the system. So lets make fraud almost impossible to prove by ratcheting up the burden, and then they will allege fraud less often.

    Unless I am much mistaken, that is exactly what Radar is saying about inequitable conduct.

  57. “But we don’t hear Newman and Radar screaming that charges of willful infringement are ‘an absolute plague.’ In fact, inequitable conduct is the least problematic of all these because you at least need heightened pleading for it.”

    I disagree, TJ. We require heightened pleading for exactly the same reason that Rader is concerned about the “plague.” That is because you’re alleging fraud, by real people. That’s certainly different than an ordinary charge of infringement, because of the moral opprobrium that attaches to a fraud allegation. That opprobrium is generally absent from infringement, the moral outrage sincerely felt by JAOI and others notwithstanding. I think that such an allegation of fraud is also fundamentally different than a charge that a faceless corporation “willfully” infringed as well, although perhaps to a lesser degree.

  58. @veryanon, who said “I’m confused. If as noted above ‘Spangler discloses all the elements of PET’s patent – rendering the patent invalid’, how is it not inequitable conduct?”

    I think it is because the ones charged with inequitable conduct were not given sufficient chance to show lack of intent or volition. So it is not enough to show that they knew of the reference and that the reference taught every element of the claims. They must be given a chance to show that they misunderstood the reference, or that they intended to submit it and forgot, or that they tried to submit it but were hit by a bus.

  59. TJ “I have never understood why judges are so upset that inequitable conduct is *charged* in every patent case.”

    Allegedly there is some “concern” that the current overwhelmingly positive public perception of patent lawyers will be tarnished by the charges.

  60. I have never understood why judges are so upset that inequitable conduct is *charged* in every patent case. Lots of things are charged in every patent case, like infringement, willful infringement, and invalidity. A good amount of the time, they don’t pan out. In the case of willful infringement, it regularly doesn’t pan out, at a rate no different to inequitable conduct. But we don’t hear Newman and Radar screaming that charges of willful infringement are “an absolute plague.” In fact, inequitable conduct is the least problematic of all these because you at least need heightened pleading for it.

  61. “the habit of charging inequitable conduct in almost every major patent case has [been] an absolute plague.” Burlington Indus., Inc. v. Dayco Corp., 849 F.2d 1418, 1422, 7 U.S.P.Q.2d 1158, 1161 (Fed. Cir. 1988).
    The more things change …

  62. My prediction here is that the District Court doubles down and reams the plaintiff. “You need more evidence on the record? Here you go.”

    The district court here did *exactly* the right thing. Sanctions and fees are the only way to keep the greedy bstrds in line because money is the only thing they understand and care about.

  63. “In a warning to the lower court, Judge Rader again raised the notion that inequitable conduct ‘has become an absolute plague.’”

    In fact, Judge Rader said no such thing. I suppose that his actual statement wasn’t helpful to your thesis?

  64. I’m confused. If as noted above “Spangler discloses all the elements of PET’s patent – rendering the patent invalid”, how is it not inequitable conduct?

    Please call off the hounds for crappy 103 refs not in the IDS, but a single known reference that teaches all the elements should get you in trouble!

  65. “In a warning to the lower court, Judge Rader again raised the notion that inequitable conduct “has become an absolute plague.”

    Inequitable conduct is a plague. But Rader has already let us know that it’s crazy to believe that anyone — especially a “respected” scientist — would risk a patent’s validity by failing to disclose material information to the PTO.

  66. Judge Rader again raised the notion that inequitable conduct “has become an absolute plague.”

    He is absolutely correct.

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