Therasense v. BD: En Banc Federal Circuit Raises Bar for Proving Inequitable Conduct and Unenforceability

Therasense, Inc. v. Becton, Dickinson and Company (Fed. Cir. 2011) (en banc)

File Attachment: TherasenseFromPatentlyo.pdf (285 KB)

In a 6–1–4 decision, an en banc Federal Circuit has attempted to cure the “plague” of inequitable conduct pleadings by raising the standards for proving that the alleged bad act was material to patentability and that the patentee undertook the alleged bad act with intent to deceive the USPTO.  The court has also rejected the sliding scale approach that previously allowed strong evidence of materiality to compensate for weak evidence of intent to deceive (and vice-versa).  Finally, the the court held that a finding of inequitable conduct should not immediately render a patent unenforceable. Rather, the court must also “weigh the equities” to determine whether the inequitable conduct warrants the unenforceability remedy.

To prevail on the defense of inequitable conduct, the accused infringer must prove that the applicant misrepresented or omitted material information with the specific intent to deceive the PTO. The accused infringer must prove both elements—intent and materiality—by clear and convincing evidence. If the accused infringer meets its burden, then the district court must weigh the equities to determine whether the applicant’s conduct before the PTO warrants rendering the entire patent unenforceable.

Intent: For the element of intent to deceive the USPTO, the Federal Circuit now demands evidence of a “deliberate decision” to deceive.  Focusing on the failure to submit material prior art, the court held that the intent element requires “clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it. . . . Proving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive.” When circumstantial evidence is used, intent to deceive must be the “most reasonable inference.”

Materiality: For the element of materiality, the Federal Circuit now demands evidence of “but-for materiality.”  In other words, the court must find that, but for the deception, the PTO would not [should not] have allowed the claim.  “In making this patentability determination, the court should apply the preponderance of the evidence standard and give claims their broadest reasonable construction.” 

Exceptions: As a major exception, the court here held that in cases involving affirmative egregious misconduct, but-for material need not be proven. 

Unenforceable: [UPDATED] Even when material and intent are proven, the court held that a patent should only be rendered unenforceable due to inequitable conduct “where the patentee’s misconduct resulted in the unfair benefit of receiving an unwarranted claim.”  As in eBay v. MercExchange, this equitable analysis is intended to serve as a substantial requirement that limits the discretion of district courts.

302 thoughts on “Therasense v. BD: En Banc Federal Circuit Raises Bar for Proving Inequitable Conduct and Unenforceability

  1. Agreed. The Feds would have been better advised to limit IC to active fraud involving suppression of evidence or outrageous conduct as occurred in the cononical cases.

  2. BTW, what is the actual position of the PTO today?

    Same as it was prior to the Therasense decision Ned. The only I have seen from the Office was an announcement that they were going to look into things. They actually haven’t changed anything yet.

  3. BTW, what is the actual position of the PTO today? Will they deny a reexamination or reissue to the patent owner if a reference was known to the applicant but was not disclosed and the issues is whether the reference was material?

    The patent reform bill fixes the problem to some degree by removing deceptive intent from the statutes.

    link to patentdocs.org

  4. Ned,

    You are deep in the weeds, now conflating the materiality prong of the defense of IC with some notion that the patentee must (for some unknown reason) prove the validity of his patent in court over this reference which is being used for the IC defense.

    You need to calm yourself down and take each step slowly and logically so that you stop confusing yourself. A reference may serve as both a reference in trying to establish the defense of IC and as a defense of invalidity – but those are two separate defenses. You will be well advised to take each on its own merits and segragate your thinking (and posting) accordingly.

  5. Any thoughts on whether the “but-for” test eliminates best mode nondisclosure as grounds for inequitable conduct?

  6. If all this inequitable conduct controversy did not exist and it was simply a matter of novelty or obviousness over the pleaded prior art, how would the outcome for the parties have been the slightest bit different?

    Oh yes! the outcome would have been the same because the critical documents establishing invalidity were in the public domain. But the legal fees would have been less.

    I have said before, and it bears repeating, that some studies on cost-effectiveness would be useful.

  7. Malcolm, the conduct you reference is quite a bit different than intentially withold in a reference or not disclosing a prior statement that inconsistent. If the claims are still patentable regardless of the reference or regardless of the prior statement, the patent owner still wins because the reference was not material under the but for standard.

  8. regardless of specific intent to deceive, the defendant must still show materiality.

    Not if the conduct is affirmative and egregious.

    But there’s no “sliding scale”. LOL.

  9. Hardworking, assume the reference was intentionally withheld. The proof here is unmistakeable. But lets further assume that the issue of materiality is in contest. The patent owner’s position is that the claims are patentable over the withheld reference and the infringer’s postion is that they are not.

    A jury verdict of validity does not decide the issue. (But it should, for Christ’s sake.)

    So, rather than decide hypothetical cases, we actually have a vehicle to decide the matter for real: reexamination or reissue. If the examiner confirms the claims over the reference, can the court decide the reference was material using the but for standard?

    NO!

  10. bad joke, regardless of specific intent to deceive, the defendant must still show materiality. Now if a jury verdict of validity does not decide that issue (materiality, that is), I would hope the courts would agree that if the claims are actually confirmed by the PTO over the withheld reference, the courts would not be in a comfortable position to hold that the reference was material nevertheless.

  11. I take it Ned, that you no longer wish to carry on this conversation, that the actual case of Therasense does not fit your fancy of the day, that you now realize that you were way offtrack…

    …or did you just lose your way?

  12. You’re missing the point.

    The change requires the accuser to provide clear and convincing evidence of ACTUAL INTENT (not longer strict liability), or the defense fails.

    Reissue would determine materiality, sure. But what the litigators are howling about is that it is no longer a strict liability defense. The but-for materiality test is a secondary consideration to them. That’s a much easier argument because the facts are already there. With the intent change, they have to have a fact other than “the prosecutor didn’t cite the reference”.

  13. the only way to fully rebut the case

    Ned, do you mean if the case is fully decided on those grounds, or just if one is charged?

    Let’s try to stay precise so we do not get lost in the weeds.

  14. Actually, I think the answer is no, because as you allude to with your choice of wording Ned, the prior decisions are not actually over-ruled, and thus they still stand as they were.

    Lacking the magic words of “Expressly Overrule Those Cases,” those cases stand.

    And Cy – equity is just as much part of a “legal status” in an ajudication on the merits. Decisions in equity carry the force of law, do they not?

  15. Indeed I was. There are a large number of prior cases where the lesser materiality standard was used.

    The patentee should be allowed to bring the non disclosed art before the PTO to have the claims confirmed/or reissued with clarifying amendments.

  16. In the future, if one is charged with IC for failure to disclose a reference, the only way to fully rebut the case would be to file for a reissue or for a reexamination and have the claims confirmed over the reference.

    If such a reexamination were still pending when the issue of IC had to be decided by the court, I would be amazed if the the court would not grant a stay pending the results of reexamination.

  17. Yes, you’re right, of course. I assumed Ned was talking about a case where the claims were still valid – I should have been clearer.

  18. Cy, in the Therasense case the claims were found invalid, by both the district court and the CAFC.

  19. I don’t see why that would be necessary. The claims were not declared invalid (a legal adjudication). Instead, the patent was declared unenforceable (an equitable one). The legal status of the patent under Title 35 never changed.

  20. Question: the majority said it was “tightening” the standard for materiality, merely noting that it standards in prior cases was “looser,” not that they were wrong. The majority does not therefore expressly overrule prior case law (or do they).

    So what does this mean to a patent owner whose patent has been held unenforceable using a standard of materiality that is “no longer” the law? Can that patent owner now again assert his patent against others?

  21. It is as if you are trying to say that the entire CAFC says that there is not a problem with overuse of this defense.

    Again, the solution to “overuse” of the defense is to sanction those who frivolously raise the defense. This applies to all counterclaims, and to all claims brought by plaintiffs as well. Unfortunately, our legal culture has devolved to the point to where the toxic behavior (e.g., bald faced lying; ignoring critical facts) of litigators (like politicians, celebrity pundits and corporations) is excused (or even praised for its “boldness” or “bravery”). Meanwhile, the same behavior will get an ordinary person fired from their job in two seconds.

  22. I understood what you wrote perfectly, bja. I even stopped beating my wife to read it carefully before commenting.

  23. Near as I can tell, neither of those two defenses have the same integrity lessoning effects or impugning characteristics of “inequitable conduct.”

    Litigators routinely ask judges to pay their attorney fees for claims that were brought without a basis in fact. Any litigator who has a problem with “impugning the integrity” of the other side should get out of the business a.s.a.p. because at least 50% of “the other sides” out there will do and say anything to win the case.

    Likewise, if you suspect the attorney or agent prosecuting your patents is the sort of person who will sweat profusely or throw up on the stand when he/she is asked hard questions about why he/she submitted or did not submit an affidavit or reference, then you should probably find a new one.

    Rader’s (and others) endless whining about the “plague” of a perfectly legal counterclaim flows from his childish, imaginary view of the world where only one in a million “professionals” ever behaves dishonestly.

    Almost invariably, the other complainers are those “innocent” prosecutors and/or declarants who found themselves caught in the crossfire and were dissatisfied with the result. Boo hoo hoo hoo. They had to leave their job and find another one where they continue to earn more than 95% of most Americans. Must be rough.

  24. I think the answer is yes. And how many times have you been face to face with an inventor, explaining a clearly anticipatory reference, only to listen to them suggest that you should still file the patent because nobody ever thought of making it in different colors (or some other such ill-informed counterpoint). I think we have all encountered inventors so invested with their own genius that they just cannot accept that the guy who clearly invented the same thing twenty years ago actually invented the same thing twenty years ago. Paying a patent attorney to file an application while withholding that prior art from the patent attorney is now completely protected.

  25. We have cured one problem by imposing another.

    Actually, if we’re keeping track, the Court has reigned in a supposed solution to a problem, the solution having apparently caused at least as many problems as it solved. The “another” problem you propose (the “license to commit fraud”) is actually the original problem, is it not?

  26. Every thing you say is correct. But I think you can address the over-use of IC as a defense without making it nearly impossible to prove. We have cured one problem by imposing another. The license to allege fraud could have been cured without granting a license to commit fraud, couldn’t it? Your issue of later adjudication of materiality is one thing, but when the inventor is the author of the critical prior art, or the PCT indicates a reference as an X reference (that is, they were told about the materiality of the reference), the deliberate intent standard seems to high. The opinion states that circumstantial evidence can be used to prove intent, but it seems to put both your scenario and mine on same side of the line. Failure to cite a reference that should have been perceived as material should not be IC, but failure to cite a reference that you were told was material should be. I would prefer a policy, and an opinion to match, that supports this divide. After several readings of Therasense, I think it makes no distinction, and immunizes all failures to cite material references from consequence. So, if you are still game, can you envision a failure to cite that would support a finding of IC without a written record of a deliberate decision to withhold, or an outright admission in a deposition?

  27. Time to re-think non-infringement and obviousness, too. These defenses have been a plague on the system for far too long.

    Near as I can tell, neither of those two defenses have the same integrity lessoning effects or impugning characteristics of “inequitable conduct.” Clearly, not all defenses are equal and not all defenses can be so implicitly placed on equal ground.

    Ignoring this basic difference is like sticking your head in the sand. It is as if you are trying to say that the entire CAFC says that there is not a problem with overuse of this defense.

    There is no credibility in such a view.

  28. “Equity” – the bastion of judicial activism since long before Lochner.

    Uh, yes, since 1500 or so.

    It’s nice to have a principle that allows a judge to decide whatever based on the singular particularities of that particular case.

    I agree completely. That’s why those smart people in England came up with it, and why our founding fathers adopted it.

  29. The fact that IC is pled in a majority of infringement suit defenses shows that it was broken.

    Time to re-think non-infringement and obviousness, too. These defenses have been a plague on the system for far too long.

  30. O’Malley’s opinion falls to the open-mind warning:

    It’s nice to have an open mind, but be careful that your mind is not so open as to fall out.

    Following her “equity = discretion” line of thought would lead to a complete lack of direction and guidance, not guidance as has been needed, let alone “firm guidance.” Her open mind of equity would directly lead to brains all over the floor.

    “Equity” – the bastion of judicial activism since long before Lochner. It’s nice to have a principle that allows a judge to decide whatever based on the singular particularities of that particular case. At least in the O’Malley flavor.

  31. The fact that IC is pled in a majority of infringement suit defenses shows that it was broken. Around the turn of the millennium, IC was pled about 80% of the time, and I’m sure in recent times is nearly as high.

  32. It’s okay that you don’t understand what I wrote. But trying to confuse my point with your misunderstanding is not very nice.

  33. If you read the court’s description again, you’ll see that the statements in the EPO and US are not actually contradicting.

    The statements are only consistent if you believe all the ridiculous post-hoc baloney that they came up with after the fact. What was “clear” and “unequivocal” (and broad) in the EP suddenly (and conveniently) became baroque and limited in the US.

    These people were given a lot of opportunity to explain themselves in court and they failed miserably. That wasn’t because Judge Alsup misunderstood the technology.

  34. simply ignore the reality that the fixes they proscibe have been available and have not worked.

    Agreed, and surprised no one else seems to notice.

  35. I do not understand this response from IANAE. If Lionel Hutz’s solution is implemented, then there is nothing for “their ilk” to break. That’s the point – we can have nice things regardless of the “ilk.”

  36. If you read the court’s description again, you’ll see that the statements in the EPO and US are not actually contradicting.

    In the EPO, they said that the old sensor did not require a membrame limiting glucose permeability. In the US, they said that the old sensor required a membrane that prevented fouling of the old sensor by filtering out larger particles like red blood cells, but that the ’551 sensor didn’t require that particle filtering membrane at all.

    The ’382 statement is inartful in implying that no membrane at all may be necessary, but when you read the whole description, it becomes clear that they were referencing a more complicated TYPE of membrane not being necessary, not that no membrane at all would be needed.

    I wish they actually were contrary statements, because that might change it to affirmative egregious conduct. This is a ruling for prosecutors who have to cite art. It’s not that helpful for contrary statements. I’d say that’s yet to be decided.

  37. There’s no need for examination or presumption of validity in a registration system such as your propose.

  38. The easiest solution is to amend the law so that no disclosure is required.

    We can’t have nice things if Therasense/Abbott and their ilk keep trying to break them.

  39. The easiest solution is to amend the law so that no disclosure is required. You know, like EVERY other patent system in the world (OK, probably not every, but probably all the palces you want to file in).

  40. Just not sure whether “tension” is the right word Whip. Suppose long-prior publication D1 is applied under both 102 and 103. For novelty, you construe it as of its own date of publication but for obviousness you construe it as of the date of the claim, right. Suppose the common general knowledge changed substantially, in that interval of time, affecting the obviousness judgement but not the novelty attack. I can see that might make some difficulty for the court but does it create any “tension”?

  41. Obviously, each of these aspects of the “but for” analysis create tension with patent infringement analysis

    There is no tension – see David Boundy’s remark. Court’s apply different sets of rules all of the time.

  42. One of the problems here is the flood of documents being filed at the USPTO.

    Can anybody say what documents that an attorney was considering filing at the USPTO prior to the decision now could be confidently advised are not needed?

    The flood of documents will not go away with this decision – we still have the C & C in the Micro$oft v i4i case.

    Further, the “flood” is merely a result – not a cause. The Office wants all possible information and thus cannot complain when it receives what it asks for. After all, it is the examiner and not the applicant who determines what is material to his examination and that is the point of Rule 56. Everything is supposed to be shoved in front of the examiner.

  43. Hardworking Answerer,

    First, yes, it is broadest reasonable interpretation. Nonetheless, please explain why there is any meaningful difference between “interpretation” and “construction.” I’d be interested to hear one.

    Second, you misunderstood my point about the broadest reasonable construction or interpretation. No court will construe a claim broader than the broadest reasonable construction or interpretation. That’s what I meant by the outer limits. Perhaps outer boundary, farthest limit, etc. would have been a phrase you’d have preferred? In any event, your attempts at criticism simply prove my point.

    Third, you also misunderstand what the “but for” analysis requires, namely, that a court MUST put itself in the place of an examiner in determining that, “but for” the omission of the reference from the prosecution record, the PTO would not have issued the patent. You contend that “Court’s [sic] are not suppposed [sic] to be examiners as you seem to suggest.” I wholeheartedly agree. But that’s exactly what the “but for” test requires, on its face.

    Against this backdrop, it is clear that you have basic misunderstandings about the “but for” test, as well as the roles of the PTO and the courts. That is, the “but for” test requires the district court to put on the examiner hat, take a look at the reference in question, and then decide whether the PTO would have issued the patent. That means: (1) using the broadest reasonable construction/interpretation; (2) NOT presuming validity; and (3) using a preponderance/prima facie standard for determining whether the patent would have been rejected over the reference or whether it would have issued.

    Obviously, each of these aspects of the “but for” analysis create tension with patent infringement analysis, which employs (1) the district court’s own construction (probably within the smaller universe, to use your term, but certainly no broader than broadest reasonable construction or interpretation); (2) a presumption of validity under 35 USC 282; and (3) a clear/convincing evidentiary standard.

    All I said was that this is a very difficult analysis to ask a court to do as a practical matter and probably even a substantive matter. The “but for” test requires use of a different construction, a different presumption of validity and a different standard of proof than patent infringement.

    Furthermore, the fact that under the “but for” test the court cannot consider the patent presumptively valid directly conflicts with 35 USC 282. The “but for” test asks the court to NOT presume the patent is valid; section 282 requires the court to do so. That is why I queried whether the “but for” test is consistent with 35 USC 282. I don’t believe that it is.

    Now, after you’ve read, and hopefully thought about, these points, feel free to respond. If you’ve got a civil, reasoned disagreement with any of these points, I’d be interested in hearing them.

  44. One of the problems here is the flood of documents being filed at the USPTO.

    Can anybody say what documents that an attorney was considering filing at the USPTO prior to the decision now could be confidently advised are not needed?

    The substance of the objection is that the patentees were arguing that X=black before the EPO and X=white in the us where both cannot be true. The accidents of the objection were that this came to light in the papers filed before the EPO. But the wrong was not the failure to file the EPO documents but the apparent factual misrepresetation to the USPTO. If what Dr Sanghera said to the USPTO was true, then the mistake in the EPO file record should have been explicable. If what he said was wrong, and knowingly so, then how are the present facts materially different from the false affidavit in Keystone Driller?

    And was this the best case to consider en banc bearing in mind the unanimity that there was a case of inequitable conduct that deserved investigation here? Mr Pope and Dr Sanghera both had their day in court and it seems that neither of them favorably impressed the trial judge (“an unconvincing trial demeanour”).

    And since the district court’s judgment of obviousness, noninfringement and anticipation was affirmed and the relevant facts came to light by inspection of relevant publically available documents, why was this all necessary?

  45. It’s even worse than what you said about subsequent panels ignoring previous reported panel opinions. In the specific case of IC, IIRC the whole point of Kingsdown (which was en banc if I’m not mistaken) was to rationalize the law of IC and remove such inconsistencies, but subsequent panels apparently ignore en banc decisions.

  46. the problem of burdensome IDSs

    That’s not even close to the issue under consideration in the Therasense case or in our current discussion.

    What kind of reply is that? Are you that unable to face the music?

  47. Hardly, I hope the Kappos recognizes the vice he puts practitioners in to the extent he requires stricter standard of materiality than the courts require. The very purpose of the Federal Circuit decision is to affect conduct that is adversely affecting everything from prosecution to litigation. But unless the Director changes Rule 56, the problem of burdensome IDSs is not going to go away unless a practitioner is content to deliberately violate the PTO rules of candor and risk discipline and perhaps disbarment for his client.

    For example, suppose a reference becomes available after the payment of the issue few that is more material than any before the office. Assume further that the attorney has good reason to believe that the claims are valid over it.

    Now, if the PTO required such references be disclosed regardless of the private belief of the attorney, he would violate the PTOs duty of disclosure if he failed to file a RCE and submit the reference. However, the resulting patent could be both valid and enforeable if he decided to deliberately violate the PTOs duty, and his duty to his client may actually require him to violate the duty.

    What does he do?

  48. It is not even possible to keep litigators consistent from one motion to the next in the same case, or even from one section of a brief to the next.

  49. Actually, I believe under Federal Circuit case law, the first panel is binding on future panels–unless overruled in an en banc decision. (If there are conflicting panel decisions, the earlier is binding–basically the later one messed up.)

    But that seems to be my major problem with many recent Federal Circuit decisions. The judges simply ignore this and do what they want. That was pretty much the case with IC opinions before this en banc decision. Hopefully, that won’t continue with IC and the law will become settled.

  50. Mr. Non-Oblivious,

    It is interesting to note that the declaration one signs when submitting a patent application merely states:

    I hereby declare that all statements made herein of my own knowledge are true and that all statements made on information and belief are believed to be true; and further that these statements were made with the knowledge that willful false statements and the like so made are punishable by fine or imprisonment, or both, under 18 U.S.C. 1001 and that such willful false statements may jeopardize the validity of the application or any patent issued thereon.

    and that the particualr statement being declared earlier on the form is:

    I acknowledge the duty to disclose information which is material to patentability as defined in 37 CFR 1.56, including for continuation-in-part applications, material information which became available between the filing date of the prior application and the national or PCT international filing date of the continuation-in-part application.

    I believe the operative words of “may jeopardize” (rather than “shall jeopardize”) and “my own knowledge” are of import. Further, the declaration is one only of acknowledging the duty to disclose information which is material to patentability as defined in 37 CFR 1.56 and actually says nothing of the penalty for violating that duty. Of course, we still have punishment under 18 U.S.C. 1001 even if the courts have now been directed to apply the now redefined inequitable conduct standard.

    Interestingly enough, 18 U.S.C. 1001(b) states: “Subsection (a) does not apply to a party to a judicial proceeding, or that party’s counsel, for statements, representations, writings or documents submitted by such party or counsel to a judge or magistrate in that proceeding.

  51. To be precise, Malcolm, you said “statement,” rather than “fact.”

    Statement covers the legal argument about facts.

    My point stands as correct.

    If you wish to change your statement to be more accurate, please do so.

  52. Ned, are you being an obtuse goose on purpose?

    the “duty” to disclose “material” information, other than fraud, began with Rule 1.56.

    But that’s clearly not the point of the Therasense case Ned – inequitable conduct was what was being discussed in the case – not duty to disclose. So first off, your confusion over what actually happened is breathtaking.

    The problems we have today are directly attributable to Rule 1.56, particularly to is 1977 editition. That version so lowered the threshold of materiality that practioners had no idea what had to be disclosed and what did not. That standard prevailed until this decision expressly overruled it.

    You do realize that the decision in Therasense actually had to do with the COURT created doctrine of inequitable conduct – and NOT the OFFICE “doctrine” of “duty to disclose, do you not? You do realize the very real difference between the two, do you not? You can actually read the decision, can you not? You then realize that Rule 1.56 has NOT been expressly overruled, do you not? The USE of that rule as a starting point for the COURT’s materiality standard has been overruled. This is a far cry different than the actual rule being overruled. As David Boundy attempted to tell you above: “Two different jurisdictions (the PTO vs. Article III court), two different substantive standards (Rule 56 vs. “but for”), two different penalties”– two DIFFERENT regimes here Ned. Is there a reason why you refuse to understand this?

    So, in overruling it, where does that leave us?

    It doesn’t – see herein.

    What role does the PTO have in specifiying what information it needs to conduct a proper examination.

    That role still exists. Rule 1.56 still exists.

    We just had a discussion of a Rule 105 request for the applicant to provide a Background section for his application. What this proper?

    It is proper.

    If not why not?

    I said, it is proper.

    When the PTO lays down by rule that which it requires for examination, and the applicant willfuly breaks the rule, what is the remedy?

    Now there is the question – But I already asked this question – see my post above at 8:01 AM.

    Who is in control of the PTO, the executive or the courts?

    This is not a proper question. The decision in Therasense was about the COURT’s doctrine. It was about control of something the COURT created, and as I have said – something the COURT has always maintained control over.

    What is a court to do if the applicant violates a mandatory rule of the PTO for information it regards as material to patentability but that does not render the patent invalid?

    Now there is the question – But I already asked this question – see my post above at 8:01 AM.

    This case did not directly decide that issue. We are left between a rock and a hard place unless the Feds flatly tell the PTO that it must revoke rule 56 and cannot promulugate such a rule in the future.

    The Feds need not tell the PTO any such thing, as I mentioned – the Feds are concerned with THEIR doctrine, they are not concerned with the Office doctrine. In fact the Feds quite clearly stated such. Please pay attention, and please try to keep up with questions I have already asked and the points I have already made.

  53. Would filing a patent on something you have been selling for five years be egregious affirmative misconduct? Or is egregious affirmative misconduct limited to filing false declarations and similar things mentioned by Rader.

  54. Imagine a world in which chemical patents are issued when Applicant presents comparative data that shows a surprising or unexpected result. Not that difficult, is it, because that’s how it is, all over the world, even today.

    Now imagine a world without the discovery process. Not so difficult, because that is the reality today, in all except the English legal sphere. What might be the effect on the level of creativity, in putting together the evidence of surprising effects?

    Now imagine a world in which the enforceability of the patent in the USA is important to the Applicant. Might that not put a damper on that creativity?

    Thus, I find the English law discovery process, and the pre-eminence of the US market, important for upholding standards of probity amongst patent applicants.

    I still think that replacing the C+C standard with a preponderance level is the best way to keep hands clean. Will SCOTUS soon help me with that, I wonder.

  55. I’m not talking about “pleading in the alternative.”

    I’m talking about a party stating that a fact is true on the record in one case, and stating the opposite in another case.

    In one of those two cases, the party is lying to the court.

  56. Malcolm,

    That is complete hornswaggle. Pleading in the alternative is a fully accepted practice. The IC in prosecution would be analagous to not only outlawing such a common practice but penalizing and penalizing severly for doing so.

  57. Malcolm, I have noted above that Rule 56 is independent of IC. The PTO can demand of its practitioners a standard of conduct more demanding than the courts would require to render a patent unenforceable. They can require complete candor, while the courts would not demand such.

    Take the Corona Cord case. There a false affidavit was submitted. While the patent was not held unenforceable, IMHO, the attorney submitting the false affidavit should be severely disciplined.

    Circling back, if the client tells the patent attorney not to submit a reference which the attorney knows is important patentability, I think the patent attorney has no choice but to withdraw rather than violate a mandatory PTO rule regardless of whether the patent is eventually held valid over the reference.

    So, I think the PTO can still regulate what it requires of attornets and applicants to disclose, and can still impose higher standards of conduct, honestly and candor than the doctrine of unclean hands would require.

  58. David, I think that any case that found IC based on the “important to a reasonable examiner” test to be overruled. However, that does not answer fully the question you asked, now does it?

    The Feds did not directly address rule 56. The PTO can still, it seems, require disclosure of information which it defines as material. If you violate the rule, you yourself can be disciplined even if your client’s patent is not otherwise affected.

  59. Well I don’t see why we don’t have IC for litigation, so that litigators are required to disclose to the court any brief, filing, publication, etc. in which they take a position inconsistent with the positions they are taking in the current litigation, and if they miss anything, a default judgment is entered against their client.

    If someone is sueing me outside of the patent context and their case against me relies on a particular fact and I discover that they are making a wholly contradictory statement in a case against another defendant, they are surely going to lose one of those two cases and it is very likely (far more likely than an IC finding) that they are going to be sanctioned in that case, or at least they are going to be paying attorney fees.

    Not sure how this is any different from IC, at least not in a way that is favorable to your argument

  60. Agreed. If a claim is invalid and it was obtained using deceptive intent, by statute, the balance of the claims are unenforceable. That is a fair reading of the statutory framework.

    The clear implication of the statutory framework as well is that if no claim is held invalid, all claims can be enforced regardless of deceptive intent unless the deceptive intent amounts to fraud on the PTO as described in the Supreme Court precedents.

    This is exactly why I condemn the majority opinion for allowing IC to render unenforceable any claim outside of fraud on the PTO without a preliminary finding that a claim is invalid.

  61. I love how all these litigators are demanding tougher IC rules, as if all patent prosecutors are always trying to find ways to commit fraud. Well I don’t see why we don’t have IC for litigation, so that litigators are required to disclose to the court any brief, filing, publication, etc. in which they take a position inconsistent with the positions they are taking in the current litigation, and if they miss anything, a default judgment is entered against their client. Think about that, litigators how absurd that would be, and then realize that is what patent prosecutors face, but on a worse scale because patent prosecutors have far more outstanding cases and filings than litigators.

    For patent prosecutors, this is the first decision showing some understanding of the realities of patent prosecution, and how the current case law was creating an impossible situation.

  62. Never try to teach a pig to sing. It wastes your time and it annoys the pig.

    – R. Heinlein

  63. Hardly working, your understanding of the history of IC is not quite accurate. While the doctrine of unclean hands at the Supreme Court level, particularly the Precision Insrtruments case, began the doctrine, the “duty” to disclose “material” information, other than fraud, began with Rule 1.56.

    The problems we have today are directly attributable to Rule 1.56, particularly to is 1977 editition. That version so lowered the threshold of materiality that practioners had no idea what had to be disclosed and what did not. That standard prevailed until this decision expressly overruled it.

    So, in overruling it, where does that leave us? What role does the PTO have in specifiying what information it needs to conduct a proper examination. We just had a discussion of a Rule 105 request for the applicant to provide a Background section for his application. What this proper? If not why not? — because, in essence, the examiner was asking for information he needed to examine the application.

    When the PTO lays down by rule that which it requires for examination, and the applicant willfuly breaks the rule, what is the remedy?

    Now we come full circle do we not? Who is in control of the PTO, the executive or the courts? What is a court to do if the applicant violates a mandatory rule of the PTO for information it regards as material to patentability but that does not render the patent invalid?

    This case did not directly decide that issue. We are left between a rock and a hard place unless the Feds flatly tell the PTO that it must revoke rule 56 and cannot promulugate such a rule in the future.

  64. Are you implying that somebody other than the patent owner can appeal this? Are you with the ACLU?

    Uh, actually nobody can appeal it.

  65. Rader: A district court should not use a “sliding scale,” where a weak showing of intent may be found sufficient based on a strong showing of materiality, and vice versa.

    A little bit later: When the patentee has engaged in affirmative acts of egregious misconduct, such as the filing of an unmistakably false affidavit, the misconduct is material.

    Am I missing something, or is there a clear contradiction here?

    Also, I’m still confused about the distinction between “affirmative acts” and “withholding information.” What if an Examiner expressly asks the Applicant to provide any information about, say, failed experiments that are material to the validity of the claim or admit that there is no such information. And the Applicant states that there is no such information. Later, during litigation, it turns out that there were many experiments which showed that ten species falling within the scope of the broadest claim lacked utility (the only two working species were chosen as Examples in the spec).

    Is that “egregious affirmative misconduct”? Because it’s objectively disgusting and I don’t see any reason why a defendant should accept the loss of millions of dollars to invalidate a patent as non-enabled in court when such deception has occurred.

    Of course, on Rader’s planet this never happens so why worry about it?

  66. “What do you know that we don’t?”

    Lots of stuff. And I’m pretty much “in cahoots” with everyone :)

  67. David,

    We are in agreement – thank you for the restatement.

    And look what I have done with the tags

  68. without such egregious facts, all this does is permit a court to nullify any jury verdict tthe court does not agree with by saying the PTO would not have issued the claim.

    Actually, the reverse – facts would be clearly needed to go down that path.

    The sky is not falling.

    and needs to be appealed by the patent owner as much as anyone

    Are you implying that somebody other than the patent owner can appeal this? Are you with the ACLU?

    Please settle down, let the froth dissipate and clearly state your concerns.

  69. With the operative word being “control,” this is decidedly not a question of government allocation of powers.

    This is a court created doctrine and all along it is the court that has maintained control. Even reading the dissent, the language is clear – the court has decided, for itself, to use (or not use) the Office’s materiality standard.

    Since the court always maintained that control and here merely changed what it decided, you are on a wild goose chase here Ned.

  70. Ned: This decision is a travesty, and needs to be appealed by the patent owner as much as anyone, to the Supreme Court.

    To be clear, Ned: there is no longer a patent.

    Seeing as to how the names of the scientists and prosecutors involved in this debacle are (at least temporarily) “cleared” (at least in terms of the legal findings of the various courts, if not public opinion), it seems highly unlikely that the patentee will take any voluntary step to jeopardize the status quo.

    In the USPTO’s brief in this case, did they provide any analysis of the factual record? i.e., did they conclude that the applicants had violated Rule 56 and could be subject to disciplinary action by the PTO? Or did they just ignore the issue? I assume the latter. Sad, isn’t it?

  71. DC Do you need IC to establish an exceptional case? Do you think this opinion forecloses arguing that the attempt to commit IC (not quite consummated because the PTO insisted on some additional claim element, or not quite deliberate enough under this case) supports a finding of exceptional case?

    Good question. I think this probably varies from judge to judge but I’m pretty sure there are four or five CAFC judges who would reflexively overturn any exceptional case finding without IC, as long as there was a reasonable infringement argument.

  72. An interesting question on appeal is whether it is the Feds or the PTO who actually control the definition of materiality. This is a question of goverment allocation of powers, and it might interest the Supremes.

  73. Juicy, see my response to Boundy above at 12:15.

    I fundamentally agree that the test for materiality here is not only wrong in the abstract sense, but will cause chaos in practice.

  74. David, think for a moment. The Feds have here held that a court can hold unenforceable a claim held valid over a withheld reference or false statement. While this may be permissible using the “exception” that calls for a plan, etc., without such egregious facts, all this does is permit a court to nullify any jury verdict tthe court does not agree with by saying the PTO would not have issued the claim.

    That is plain wrong, my friend. It also is fundamentally inconsistent with Corona Cord Tire, the very case the Feds relied upon to create the but for rule. Remember, the Supremes refused to hold unenforceable an otherwise valid claim even where there was a willful mistatement that did not affect the validity.

    Validity is the cornerstone, not patentability.

    Further, as one litigator has noted above, introducing BRI into the court system is an invitation to chaos. As anyone knows, BRI is not claim construction, but an ad hoc construction that permits the examiner to read the claims on the reference just because he can. That “rule” is designed to clairfy claims in the PTO. It has nothing to do with misrepresentations or materiality of references in the sense of validity.

    But now let the court decide materiality based on BRI, and we have wild and wholly running amock in the court system.

    The patent owner may have won here, but the system has lost big time. This decision is a travesty, and needs to be appealed by the patent owner as much as anyone, to the Supreme Court.

  75. It would all be so much easier if there were simply no duty of candor. There could still be a cause of action based on actual fraud on the PTO during prosecution, but removing the duty to disclose would really clear this inequitable conduct problem up.

  76. In fact, if the examiner rejects on the basis of some reference the applicant provides, the applicant should be able to withdraw that reference, get allowance, and take his chances in court as to that reference. Some rejections are so poor and so obviously bogus that it would be easier to save the issue for a court fight rather than spend the money responding to and appealing the rejection.

    This is easily the most ridiculous thing I’ve read here in a few weeks.

  77. Although I am sympathetic to your concern that it can be very difficult to establish actual knowledge of materiality and deceptive intent, I think it is unfair to characterize this decision as “a license to commit fraud”. At some level, your argument boils down to: it is really difficult to establish deceptive intent, so we should be able to presume deceptive intent based on a “should have known” standard. This decision is not a license to commit fraud so much as it withdraws a license to allege fraud that was previously embraced by many defendants, and now requires that any allegation of fraud be supported by evidence of an actual intent to deceive.

    Maybe it is desirable to be able to invalidate or render unenforceable claims of a patent based on negligence during prosecution, but you have to recognize that this is a policy decision. If this is the case, then it should be codified or articulated as such.

    In the mean time, it makes little sense to presume deceptive intent because, for example, it is later adjudged that an applicant should have known of the materiality of a reference. If a reference is judged material, then there will almost always be an argument that an applicant should have known of its materiality.

    It feels like this conversation loses track of the bigger picture. Specifically, it seems like allegations of inequitable conduct have become such a staple in patent litigation that requiring the actual establishment of deceptive intent now feels to some to be unduly burdensome.

    However, negligence, or even gross negligence, simply isn’t inequitable conduct. There is an entity responsible for searching for prior art and examining claims, but that entity is the USPTO, not the applicant. Incompetence, absent deceptive intent, is simply not a defense to patent infringement, no matter how convenient it would be if it was.

  78. if Congress would amend Title 35 so that applications are examined only on the basis of PA provided by the applicant, and validity is presumed only with respect to PA the applicant cites

    Is that all? Well, let’s just hop on it.

    IDS determines breadth of the presumption of validity and no searching by the PTO.

    How do I put entire art units on my IDS submission…? And this will speed up examination, how exactly?

    In fact, if the examiner rejects on the basis of some reference the applicant provides, the applicant should be able to withdraw that reference, get allowance

    Huh what…?

  79. Max, that calculus is for the unscrupulous applicant/attorney, who would rather have some patent than no patent at all.

    I’m not making a normative statement, but a positive prediction – yes, I think the adoption of the but-for standard means that there will be more withholding of references that are potentially damaging. The reason is that the but-for standard means that you don’t increase the risk of unenforceability by withholding. Until yesterday, it was possible to have a completely valid claim held unenforceable for IC. Now, that possibility has been greatly diminished. What’s the extra harm in having a claim both invalid AND unenforceable for IC?

    I’m certainly not advocating that you run your practice this way.

    I agree completely with the strategy you describe for mainland Europe – good practitioners subscribe to that philosophy here as well. But it does presuppose you’ve actually got an invention somewhere in that application.

  80. The whole IC problem goes away and Microsoft/i4i goes away if Congress would amend Title 35 so that applications are examined only on the basis of PA provided by the applicant, and validity is presumed only with respect to PA the applicant cites; i.e., IDS determines breadth of the presumption of validity and no searching by the PTO.

    Not revealing art would not be dishonest, it would merely be a strategic decision that could undermine the ultimate value of the patent. There would be no IC issues until the patent gets to court and the patentee withholds references when asked for by interrogs. — that would be a normal discovery issue. Patentees would not enforce patents they received by w/holding references, knowing those references will come out in discovery.

    Yea, yea, yea, I hear you. But there are lots of easy ways to get around the problem of the applicant swamping the PTO with PA.

    This plan would clear the application and appeals backlogs in about a day, dispense with all the IC cxp, and put the onus on the applicant to disclose as much as is necessary to insure a strong patent.

    In fact, if the examiner rejects on the basis of some reference the applicant provides, the applicant should be able to withdraw that reference, get allowance, and take his chances in court as to that reference. Some rejections are so poor and so obviously bogus that it would be easier to save the issue for a court fight rather than spend the money responding to and appealing the rejection.

  81. Alleging constructive knowledge (e.g. an Applicant “should have known”) is not the same as establishing actual knowledge. The Fed. Cir. has made it clear that “[a] finding that [a] misrepresentation or omission amounts to gross negligence or negligence under a ‘should have known’ standard does not satisfy this intent requirement.”

  82. Scott,

    You are completely off. Prior to and after this decision, the courts still have the same discretion after the two prong analysis.

    The same.

    What this decision does is explicitly remove the conflation and sliding scale that courts used to manipulate and apply their discretion during the two prong part of the analysis.

    There is clearly a change here in the court’s discretion, and it is not a change for more discretion.

  83. Mr Boundy thanks for your thoughts. I have a question. Is the ostensible reason for losing a case always the “real” reason. What I am driving at is that if a jury has made its mind up who ought to prevail, then it needs a reason why the other side must lose. If it is not bullish enough for a finding of “claim invalid” or “claim not infringed” it can get more softly softly to the desired result by using, instead, IC, and then go home with a clear conscience.

    In another case, where the same behaviour is said to be IC, but was on the side that is the clear “winner” on infringement and validity, might the same conduct get dismissed as not IC?

    You see, I’m desperately trying to reconcile your warnings with the blandishments of those who tell us that as long as we are reasonable in our dealings with the PTO we will be safe from findings that our client’s patent died because of our “inequitable” conduct.

  84. If nothing else, getting rid of the sliding scale is a positive development.

  85. Too bad the USPTO doesn’t have a database of art that was cited in the parent application to mitigate that problem, huh?

    Oh, wait, it does.

    Nevermind.

  86. Too bad the USPTO doesn’t have a database of art that was cited in the parent application to mitigate that problem, huh?

  87. At 10.04 this morning, Cy Nical wrote:

    “The calculus is pretty simple now, at least for highly material references – If I disclose this reference, the patent won’t get issued. If I withhold it, it very well might, and the worst case is not much worse (for the client) than if I had disclosed.”

    Cy, do you mean that the routine judgement would be to withhold, the more so if the reference is really, really relevant?

    This fascinates me, because the USA is the jurisdiction which makes the biggest song and dance about the imperative of showing everything material to the USPTO (and has the discovery stick with which to beat those who don’t).

    In mainland Europe, there is no discovery, no notion of equity, and no duty of candor, but the fact is that the sooner the claim is examined in the context of the most relevant prior art, the better are your chances of getting useful claims to issue, and of being able to withstand validity attacks after the patent issues.

    It’s the wrong way round, isn’t it?

  88. Due to the higher bar to find intent, my thought is that one could merely inform the Examiner of the appl’n serial numbers of siblings, cousins, etc., in the IDS transmittal letter, or even jam it in in the SB08. As a desktop jockey, I just find it hard that there would be a finding of specific intent when the Applicant discloses the related applications to the Examiner in an IDS, not to mention the related information at the beginning of the spec and application transmittal.

  89. “As in eBay v. MercExchange, this equitable analysis is intended to serve as a substantial requirement that limits the discretion of district courts.”

    It’s just the opposite of eBay. Under prior case law, the courts weren’t exercising any discretion. If inequitable conduct was found, the remedy was unenforceability no matter the facts and circumstances. The courts are being given far greater discretion than they had before and being told to use it.

  90. Inequitable conduct remains judged on “broadest reasonable interpretation” construction, while jury evaluates validity on “in light of specification and file history” construction.

  91. Two different jurisdictions (the PTO vs. Article III court), two different substantive standards (Rule 56 vs. “but for”), two different penalties.

    Just as New York and Massachusetts law differ on many issues, and we comfortably live with both, and we have fairly clean rules to decide which one applies at which context, so may PTO and Article III courts have different rules.

  92. I don’t think this makes all that big a difference to a prosecutor (it’s a game changer for litigation, but not all that much for prosecution). Remember that inequitable conduct is proven by the paper record and ambush at deposition, not your subjective intent. I’ve seen two very honest, very competent patent attorneys (and one good heart but totally empty headed attorney) lose because of inferences drawn from the paper record. If a reference crosses your desk and leaves any record that you ever knew of it, then unless you READ every word of a reference, and you and KNOW there’s nothing in it that will EVER be material to any claim that you add in the FUTURE, you still have to IDS it.

    There seems to be one change, at pages 33-34? By adopting “but for” and discarding Rule 56 “inconsistent with a position the applicant takes,” but not commenting directly on “reasonable examiner,” is the Federal Circuit overruling McKesson Information Solutions, Inc. v. Bridge Medical, Inc., 487 F.3d 897, 82 USPQ2d 1865 (Fed. Cir. 2007) (relying on “reasonable examiner” standard) and Dayco Products, Inc. v. Total Containment Inc., 329 F.3d 1358, 66 USPQ2d 1801 (Fed. Cir. 2003), so that we can stop IDS’ing Office Actions and and Replies to OA’s? What do others think?

  93. Um, what? Did you read the opinion or the law?

    35 U.S.C. 288 Action for infringement of a patent containing an invalid claim. – Patent Laws

    35 U.S.C. 288 Action for infringement of a patent containing an invalid claim.
    Whenever, without deceptive intention, a claim of a patent is invalid, an action may be maintained for the infringement of a claim of the patent which may be valid. The patentee shall recover no costs unless a disclaimer of the invalid claim has been entered at the Patent and Trademark Office before the commencement of the suit.

  94. I also predict that this case will have exactly no effect on patent prosecution.

    At the risk of undermining public confidence in the integrity of my pseudonym, I hope it will have some effect – I hope it will reassure honest practitioners, of which I know many, that there is a large and meaningful gap between good-faith prosecution and actionable inequitable conduct. I’ve always felt that many lawyer’s fears were overblown in this area, but it’s a fact that many had come to feel that the public humiliation of a proceeding on inequitable conduct was only a tiny oversight away.

    Back to character, I suspect that Malcolm is at least partly right. The calculus is pretty simple now, at least for highly material references – If I disclose this reference, the patent won’t get issued. If I withhold it, it very well might, and the worst case is not much worse (for the client) than if I had disclosed.

    I’m OK with taking the teeth out of the duty to disclosure, but we need a cheaper and more efficient solution for challenging a bad patent – one that focuses on the merits and not on the personalities.

  95. Thanks for the very thoughtful response, IBP.

    I’m certainly not a Supreme Court scholar – I have a hard enough time tracking the nuances of this patent law niche.

    My analysis is similar to yours, except that I disagree that “the flexibility requirements of equity” are limited by this opinion, and I’m not particularly uncomfortable with the policy making. As you seem to acknowledge, this policy is theirs to make. Further, laying down strict rules for one particular type of IC allegation, the withholding of material information, seems quite appropriate here. We have lots of experience with this now, so we know what the allegations and the evidence typically look like. We don’t need a tremendous amount of “flexibility” in this area – we need clear rules. As long as there is still a remedy for the really outrageous stuff, which the majority assures us there is, then I can’t see this piquing the Supreme Court’s interest at all.

  96. I was amazed there is nothing — not one word — about the statutory language. Where we are now is that if a claim is invalid through deceptive intent, then the whole patent is unenforceable. That is PRECISELY what Section 288 was amended to do at the same time that “unenforceability” was added as a defense. (288 was amended so that if there was no deceptive intent, each claim was valid or not on its own, and so now reads: “Whenever, without deceptive intention, a claim of a patent is invalid, an action may be maintained for the infringement of a claim of the patent which may be valid. The patentee shall recover no costs unless a disclaimer of the invalid claim has been entered at the Patent and Trademark Office before the commencement of the suit.”)

    So, where we are now is that if a claim is invalid through deceptive intent, all claims are barred under 288… and the word “unenforceability” adds nothing. This renders “unenforceability,” or section 288, superfluous.

    Someone tell them this is not common law doctrine.

  97. Such calls for “chipping away”

    He wasn’t calling for it, he was predicting that it would happen. I tend to agree with him, in case that surprises anybody. IC will still be pleaded in every case, for the same reason obviousness is pleaded in every case – because if it succeeds, you win.

    I also predict that this case will have exactly no effect on patent prosecution. Disclosing every possible reference is still the cheapest and safest approach for the applicant and his agent.

  98. Sensible decision, makes fraud on the patent office actual fraud and not just a guessing game, in line with fraud in other areas of law.

  99. And judges will find IC and the CAFC will start to chip away at Rader’s crxppy opinion.

    Wow, talk about judicial activism – Malcolm Mooney needs to be reminded that this is an en banc opinion and that future panels are to be tightly held to this ruling.

    Part of the problem (as noted in other comments below) is that the previous ruling was by a panel decision (even a 5-member panel is still a panel decision) and other mixed panels were not constrained to that ruling.

    ALL future panels are now constrained.

    Such calls for “chipping away” simply smack of the wrong approach for judges to take. Discretion is fine – where such discretion is allowed. En banc decisions just do not allow that type of discretion.

    The call here by Mooney is that judicial activism is fine as long as it is activism in the area that he wants. Such subjectism is simply wrong.

  100. Thanks for that comment, Whip. I had been pondering along similar lines.

    Suppose the Supreme Court now abolishes the C+C standard, to ease the burden on those asserting that the issued claim is invalid. Suppose there is a steady narrowing of the gap between PTO BRC and the meaning put on the issued claim by the court. Then the evidence required to show invalidity, and that required to show IC under the “but for” standard, will be ever more substantially, the same.

    Instead of ploughing all legal resources into IC attacks, it might make more sense to direct the focus on validity Y/N, If the validity attacks succeed, any IC would kick in then, on remedies.

    There never was a litigant with perfectly clean hands. The public interest is to uphold issued patents that are not invalid, to strike down duly issued but invalid claims, and to distinguish the one from the other, as quickly and cleanly as possible. Obsessing instead about which litigant has dirtier hands than the other strikes me as unhealthy, and a case of the equitable tail wagging the much more important milk cow in dispute. It is also a case of measuring what parameter you can measure, even if it is irrelevant, instead of doing what one should be doing, namely, determining what is the variable which is of decisive importance, and then figuring out ways to measure that variable accurately.

    I’m reading Rader like this. I’m hoping for cancellation of the C+C standard (and I do not understand the statement in the USPTO Amicus Brief, see Bryson, para bridging pp7-8, that C+C Plus will manage IC best).

  101. Juicy,

    As an examiner (which I presume you are from the contents of your posts), I would expect you to know that the term of art is BRI: Broadest Reasonable Interpretation.

    And precisly because as you note the district court is required to presume the patent valid, it is not fair to say that BRI represents the outer limits of a district court’s construction. The dc’s are constrained to a smaller universe of possible constructions – that is the essence of BRI – BRI is intended to be larger than any subsequent (court) view. Court’s are not suppposed to be examiners as you seem to suggest.

    Further your suggestions show some basic misunderstandings about the courts. Your statement “the presumption of validity apparently can’t apply in the IC analysis” is simply misplaced – you are not understanding the distinction between what the courts do and what examiners do. Your question concerning 35 USC 282 is also quite meaningless.

  102. This is actually a very interesting question.

    What the court said was that the court was not bound by what the Office dictated in Rule 56. A nuanced reading is that the court did not say that the applicant is not bound by Rule 56. The applicant still is bound. The nuance is that there is still one requirement for disclosure, but there are two levels of penalty for not meeting that one requirement: IC and Scott-Free.

    The problem the Office has is that violations of the still-applicable Rule 56 may or may not rise to the level of inequitable conduct. The killer-consequences of that defense, and the over-abundance of that defense being raised made the reality of that doctrine unpalatable for most of the actual instances of its being raised.

    The court’s decision in a very real sense left the answer incomplete. They solidified quite solidly one doctrine, but left a gaping hole between that doctrine and the still-in-force Rule.

    The real question now is what penalty should be created for those that break the rule, but are not acting inequitably about that breakage. The analogy of IC as an atom bomb is very apt. The bomb has been available since the forties and this country has had plenty of military confrontations since then – but have not used that weapon. This ruling acknowledges that IC is an atom bomb, but does not provide any other smaller response solutions for the Office. The Office is left with a “don’t do that or else” with no “or else.”

  103. The main problems with the “but for” test are practical, based on different claim constructions and different standards of proof of invalidity.

    The PTO has to consider a reference using the broadest reasonable construction (BRC) of the pending claims. The BRC is not necessarily what a district court will use in considering whether a reference invalidates the patent, but it’s probably fair to say that the BRC represents the outer limits of a district court’s construction.

    The PTO does not presume the patent is valid. A district court is required to.

    The PTO does not have a clear and convincing evidentiary standard for patentability determinations. A district court obviously does.

    In practice, it will be very difficult for courts to put themselves in the positions of examiners. The claim constructions that they have worked so hard on may have to be abandoned in favor of BRC. And the presumption of validity apparently can’t apply in the IC analysis, right? Is the standard under “but for” a presumption, or clear and convincing? Is the “but for” test consistent with 35 USC 282?

  104. Agreed, although this is perhaps unsurprising, given that she previously served as a district judge. I was impressed that she has the courage to stand alone, even though she’s one of the most junior judges on the circuit.

  105. Actually, O’Malley’s view would have further cemented judicial activism solidly in a “Discretion Rules” environment of letting each judge choose their own standard – If that view prevailed – the forum shopping incentive would have been fully actualized.

  106. if the panels would comply.

    That, I think, is the biggest problem with the dissent’s view – they simply ignore the reality that the fixes they proscibe have been available and have not worked. Some of their argument is rather persuasive, but they keep harkening back to “Well, the old way should do the trick.” Problem was, as Prosecuted noted, the trick just didn’t work.

    The other problem with the dissent is that it is full of the very conflation and sliding scale errors between intent and materiality that drove us to this decision. The dissent tries to preserve half of the sliding scale in not so subtle fashion. From a few other very sound principles, an entirely unworkable view is presented because of the desire to keep the error prone principles.

  107. I think this opinion will ultimately fail because of the incoherent “but for” test. The federal circuit has held that a reference can be material even if a jury has found a claim valid over the reference. I think this is not consistent with the very Supreme Court authority the court relied on for its but for standard.

  108. What do you know that we don’t? Are you in cahoots with the generic drug companies, who are surely going to try to have this decision legislatively overturned in the pending patent deform bills?

  109. IBP A “doctrine” should not be tailored according to how frequently the court thinks it ought to be invoked–that, to me, is an improper basis upon which to articulate so-called “doctrinal” elements.

    No doubt. On top of that, Rader’s majority was also surely motivated by their misplaced empathy for those poor, poor souls who get badgered on the witness stand and accused of terrible things like intentionally misrepresenting facts. “We” all know that brilliant inventors and scientists, like all “important” people in any field, never do unseemly things because they value their shiny reputations above all. The egos of such people never, ever get the best of them.

  110. I don’t mean that it will lead to more claims than there are now (although that may happen simply as a result of more patent litigation generally). I mean that as long as the courts allow inequitable conduct as a defense and as long as courts continue to treat Rule 11 like a nuclear bomb, then defendants are going to continue to bring IC counterclaims. Likewise, if prosecutors start slacking off on their duty to disclose now, and feel more free engage in dirty dealing with the patent office (which some will surely do), then we’ll see even more examples of bad behavior that begs to punished.

    And judges will find IC and the CAFC will start to chip away at Rader’s crxppy opinion.

  111. I think the real motivation behind the stricter standard is that not submitting material art is actually not “inequitable” behavior unless you really intended to be inequitable about it, which would be really rare.

    It’s so incredibly rare, yet this case is a quintessential example of it. The distinction that the majority attempts to make between withholding material information and affirmatively deceiving the PTO is completely worthless.

  112. The only inequitable conduct should come from actively deceiving the PTO with a forged affidavit, declaration, etc. It’s time to get rid of the arcane rule that practitioners should have to submit art to the Examiners.

    I think the real motivation behind the stricter standard is that not submitting material art is actually not “inequitable” behavior unless you really intended to be inequitable about it, which would be really rare. No practitioner has the time to consider every reference he/she comes across to determine whether it has but-for materiality in another case.

  113. The elephant in the room is the cost that has been generated in complying with the requirements of such cases as McKesson. An attorney sees that an office action has issued in a related case — should she postpone issuance and file an RCE in an allowed case to disclose this? Another 100 references were generated in a related case. Should they be submitted in the current case? Dockets and IDS sizes have grown uncontrollably, which has increased the cost of compliance. Something had to happen to cabin this madness.

    Kingsdown should have been sufficient to do this, if the panels would comply. They did not. Another warning shot was needed.

  114. Now the fun begins.

    All the prck defendants’ lawyers who scream “IC — patent invalid!!!” every time a reference surfaces that was not considered by the examiner are going to get slammed with Rule 11 sanctions motions unless they can show hard evidence of a “deliberate decision” to withhold.

    Ha, ha, ha, ha, . . . what comes around, goes around.

  115. And now for something completely illogical…

    decision isn’t going to do make much of a dent. If anything, it’ll…to … more IC counterclaims.

    Soooo, a standard that makes it virtually impossible to prove IC will lead to more claims of IC….

  116. “too many” means too many.

    As in, Malcolm moves the goalposts too many times.

  117. My glean:

    The PTO does not have substantive rule making authority and cannot legislated a materialty standard.

    So, what does this mean about current rule 56 when this case goes final. Is it revoked — in whole? In part?

    The PTO has to act so that the pratitioners are not given two inconsistent requirements for disclosure.

    What would you do if you were the Director?

  118. Hardworking Cherry Picker, please read what O’Malley said about the “plague.”

    Also, I think there is quite a bit of daylight between “too many claims of IC being brought” and a “plague.”

    If there is a plague of IC counterclaims, then there is an apocalyptic firestorm of obviousness counterclaims. The better question is: if so many counterclaims are being improperly brought, then why don’t judges do anything about it? They surely have the power to do so.

    You can rest assured that this decision isn’t going to do make much of a dent. If anything, it’ll just encourage more shenanigans by applicants, which will lead to … more IC counterclaims.

  119. Having already been smacked down for attmepting to move the goalposts, Malcolm Mooney now asks to refresh his memory.

    How about – look above to this very thread:

    Well, it’s a crying shame that Rader and the majority swallowed the “plague” nonsense

    Newsflash: BOTH the majority and the dissent stated that “[claims] of inequitable conduct have been raised in too many cases.”

    Moving those goal posts must cause memory loss.

  120. Also, although there was a majority opinion, there was a concurrence-in-part and a strong dissent (although I haven’t read it yet).

  121. Good point, Cy.

    First, regarding circuit split: patent issues that make it from the CAFC to the USSC do not do so because of any circuit split, the resolution of which is the job of the CAFC–yet the DO make it to the USSC.

    Second, no, there is no apparent conflict with statute, and I assume without further research that it was in fact the CAFC that was largely responsible for the “creation” of the IC jurisprudence, as you put it. As the court opines, the IC doctrine “evolved from” the unclean hands doctrine expressed in the cited trio of USSC cases.

    What the CAFC has essentially done has been to substitute the old unclean hands doctrine for the current IC doctrine. Whether they got it right or not is one issue. Another issue is whether they properly developed their own equitable jurisprudence. I believe that the CAFC has inherent equitable jurisdiction, and I don’t know that it could be readily reviewable by the USSC on anything other than constitutional grounds–but ultimately I think it would be framed as an issue of the CAFC having exceeded its jurisdiction, or something similar.

    I do think that such an argument may be successfully made, as equity considers the public interest, described by the majority as “injury to the public”. I don’t think the flexibility requirements of equity, as mentioned by the court, are adequately preserved in the majority opinion. The majority endorsed the principle behind the sliding scale, but arbitrarily limited its application–which does not completely, or optimally, serve the public interest at stake.

    Lastly, the goal of the court, as stated by the majority, was to “address the proliferation of inequitable conduct charges”, rather than to resolve the dispute among the parties to the litigation. This is explicit policy-making, not judicial decision-making–again, a jurisdictional issue.

    The court’s focus should instead have been on resolving the issue presented by the parties by developing a coherent body of jurisprudence. A “doctrine” should not be tailored according to how frequently the court thinks it ought to be invoked–that, to me, is an improper basis upon which to articulate so-called “doctrinal” elements.

    USSC scholars will of course have a better understanding of all this than do I, and you may be one of them.

    If it were me, I would appeal–I think there are issues that would be sufficiently interesting for the USSC to take up.

    What do you think?

  122. Why would “the Supremes” be interested in this case, or any case on inequitable conduct, especially if it tends towards fewer unenforceability holdings? There’s no circuit split and there’s no conflict with statute. Instead, the CAFC is simply reigning in the equitable jurisprudence that it created.

  123. Do you need IC to establish an exceptional case? Do you think this opinion forecloses arguing that the attempt to commit IC (not quite consummated because the PTO insisted on some additional claim element, or not quite deliberate enough under this case) supports a finding of exceptional case? If exceptional case can be proven with litigation conduct (conduct that necessarily failed, else you would not be asking for fees), can’t it also be proven with prosecution conduct short of perfectly provable IC?

  124. I don’t understand that comment. After defense counsel does his job, finds relevant art and then establishes it came out of the mind of the inventor and prosecuting patent attorney, and matches that up with the claim language, he is stymied by a stringent standard that he can only meet if the prosecuting attorney hands him a smoking gun.
    And how can defense counsel avoid litigation by finding relevant art? Defense counsel’s job does not start until the fraud is complete. Better to avoid it by discouraging fraud than granting a license to commit fraud.

  125. Going on just the summary provided above, my feeling is that the court is headed in the right direction without understanding why.

    See my comments on the issue at link to patentlyo.com and link to patentlyo.com

    I stand by every single thing I said in those posts.

    Materiality/Unenforceability: If the court can be said to have limited unenforceability to those situations involving otherwise-invalid claims, the court would have appropriately addressed one end of the spectrum of IC, and only in one dimension. That is a start, but is a terribly unimpressive place to leave the discussion.

    The court should have considered attorney vs applicant conduct, IC situations leading to something less than invalidity, and the proper characterization of the interested parties in any IC affair.

    The court failed to discuss the very foundation of IC and the distinction between law and equity. Without that, no meaningful discussion of IC is possible.

    We may only hope for something better from the Supremes.

    All based on only the summary, of course! Off to read the decision…

  126. Excellent suggestion re: discovery from DC. Seems exactly the solution. Unfortunately, this decision will wrongly and prematurely end several counterclaims against a patentee who is surely a rotten apple.

    And, (Over)protection of patentees seems misplaced in this era.

  127. Further judicial activism was unavoidable.

    Fixed.

    Only O’Malley seemed able to even attempt to steer away from judicial activism.

  128. In addition, now we get to litigate whether an intentionally withheld reference invalidates one or more claims under the PTO’s broadest reasonable interpretation standard. Sure, this will be a foregone conclusion if the jury finds the claim invalid over the same art, but that won’t always be the case. I wonder if the high-volume districts (i.e. where inequitable conduct is always tried during a separate bench trial) this issue will go to the jury. In any event, all I see is more issues to litigate.

    Exergen put the brakes on inequitable conduct. “But-for” materiality will not kill any of the IC claims at issue in the cases on my current docket. Further judicial activism was not necessary.

  129. Malcolm,

    With respect to this issue, I note that the opinion sets forth that “when there are multiple reasonable inferences that may be drawn, intent to deceive cannot be found”, although it asserts this as a conclusion that does not necessarily follow from its statement that “to meet the clear and convincing evidence standard, the specific intent to deceive must be ‘the single most reasonable inference able to be drawn from the evidence’”.

    Where does that leave the issue? I have no idea. It is impossible to predict whether this assertion will be followed in the future, i.e. whether establishing multiple reasonable inferences (where, presumably, one did not include intentional deception) would be sufficient to preclude an inference of intent to deceive.

  130. This is too stringent. How do you prove “a deliberate decision to withhold?” How many patent attorneys, having decided on a prosecution strategy that entails a deliberate decision to withhold, will place a memo to that effect in the file? Almost any failure to cite a reference can be explained away by the pressures of a typical patent practice, and a deliberate decision to withhold can easily be hidden in that rush.

    A better approach would be to require litigants to get approval from the district court judge before pursuing IC discovery. They should have to establish a strong suspicion before imposing the burden of discovery on the plaintiff. This would avoid the plague without essentially eliminating the defense.

    Perhaps reexam procedures should be modified to allow the PTO to consider IC in the original prosecution as a basis for reexam.

  131. Ping would have been proud – page after page of his “observations” are mirrored in the majority’s missive.

    Someone should harp on the Hawk to pass to Ping the opinion-observation.

  132. All I remember predicting was that there was no way that the CAFC would find that Therasense did not commit IC.

    I don’t think I was wrong about that.

    But go ahead and refresh my memory.

  133. you would prove what the applicant “subjectively felt” about the art by through his testimony that “i didn’t think it was relevant.”

    it just seems like an almost impossible hurdle to cross when you have a deceptive applicant who knows of art, is informed of its materiality, but testifies under oath that he disagreed with his patent searcher as to its materiality.

    what if you have a situation where a patent searcher who informs the applicant of the materiality is not the same person as the attorney who files the application. if you have no evidence other than the applicant who says he gave the irrelevant prior art to the prosecuting attorney (but there is no evidence to back this up) and they both agreed that it was not material, how do you prove that specific intent?

  134. Right, bja. Because it doesn’t cost anything to defend onself against patents that shouldn’t have issued.

    At least, it doesn’t cost Judge Rader anything. And now he can sleep easy knowing that he will never hear one patent lawyer accuse another of doing anything unfair. It’s must seem like a paradise on earth. Better than being raptured, even.

  135. The issue here is solely the aspect of the prediction.

    Let’s move the goal posts back, shall we?

    Malcolm’s Carnac is still on the losers’ side.

    Next.

  136. Well, I’m sure Therasense/Abbott is happy to have the original decision on IC vacated. I’m not sure if I’d call them “winners”. As I recall, their patents were held invalid, not just unenforceable. The inequitable conduct issue relates to whether the case is “exceptional” for the purpose of administering sanctions (e.g., payment of the defendant’s attorney fees etc).

    Game on.

  137. Well, maybe you can just do your job and find the relevant art? That’s one solution.

  138. So, if a patent attorney submits patent today with a claim that clearly covers devices disclosed in several patents he himself filed a few years ago (so that materiality is a given), his client gets off the hook unless the defendant somehow finds proof of a deliberate decision to do that without citing the prior patents?
    And no matter how well a deliberate fraud is established, it does not matter if the PTO only allows a narrower claim that avoids the but for test?
    “We tried really hard to defraud the PTO, your honor, but the PTO stuck us with that extra limitation” is now a good defense.
    This case is a license to commit fraud. Thanks Judge Rader, but I don’t have much interest in that. What I do have an interest in is avoiding litigation on claims that were clearly the result of fraud but lack a memo in the attorney’s files documenting his deceit.

  139. Actually I see now that the actual Star Scientific holding is less strict (and unchanged by this en banc opinion) than the one I remembered …. seems my memory is tainted by Judge Linn’s dissent in the original CAFC opinion where he wrote:

    By adopting one inference ….over an equally reasonable favorable inference … the district court again, in my view, clearly erred.

    Of course, that’s not what the District Court did at all. Only Judge Linn believed that there were two “equally reasonable references” and he wasn’t exactly persuasive on that score. Now we have five CAFC judges disagreeing with Judge Linn’s conclusion, even when they apply the new stricter rules. I wonder why Judge Linn didn’t write separately here to re-state his “version” of the facts?

  140. “Ok, exactly how does:
    “Proving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO”

    not meet the intent requirement of:

    “clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it”

    The person in question did not necessarily understand the materiality.

  141. while five judges are crystal clear about the rat smell and what to do about it.

    That would be the losers then, – OK, Malcolms’s Carnac goes to the losers’ side.

    Next.

  142. What happens where an Applicant files a new application that is not a continuation of, but is the same technology, as a previously filed application that was filed by the Applicant. At the time the new application was filed, the previous application had issued and Applicant filed an IDS that disclosed the patent issued to the Applicant but DID NOT DISCLOSE ANY OF THE PRIOR ART CITED DURING PROSECUTION OF THE PATENT ISSUED TO THE APPLICANT. The Applicant clearly knew of the references, should have known of their materiality, and decided not to submit it to the PTO but, under Therasense, this does not prove specific intent to deceive. Now, if the same prosecution counsel was used for both applications, you clearly can’t say that it was something that fell through the cracks.

  143. Ok, exactly how does:
    “Proving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO”

    not meet the intent requirement of:

    “clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it”

  144. So what if you can prove the patentee knew of the prior art, was told why it was material, but subjectively felt that it was irrelevant?

    I’m not sure how it is possible to “prove” what an applicant “subjectively felt”. But certainly defendants will argue that there was an intent to deceive and will present circumstantial evidence to support that conclusion. Such circumstantial evidence must convince the trier of fact that an intent to deceive is the “most reasonable inference,” i.e., more reasonable than other conclusion presented by either party (obviously the alternative inference will most likely be presented by the patentee).

    Unless I’m mistaken (and I’m just working off DC’s summary upthread at the moment), this would appear to be a diminished standard relative to the Star Scientific standard which held that a finding of intent to deceive the PTO was only proper when it was the only reasonable inference based on the evidence.

  145. So what if you can prove the patentee knew of the prior art, was told why it was material, but subjectively felt that it was irrelevant?

    Does an ill-informed and unreasonable patentee excuse himself of inequitable conduct if he honestly believes the prior art was not material, but no reasonable POSITA or PTO examiner would agree with him?

  146. Enjoy the brief sigh of relief, my fellow prosecutors, until the Supremes take the case and muck it up with some “materiality and intent are determined case-by-case with no standards” bullpoo.

  147. To be sure, I hope this goes to the supremes. I just don’t see good coming of this. Now the IC analysis requires you to do a mini-obviousness/anticipation analysis? That’s a big double u tee eff.

    Not to even mention that we now we have an equitable matter depending on a matter of lawl. I’m not sure as to how prevalent that is, but ordinarily I had thought that you tended to take different issues to different courts back when. Matters of lawl went to a court of lawl and matters of equity went to a completely different court. Just because our courts handle both types of issues now doesn’t mean we should feel free to mix and match the genres of issues.

    While I do hope to see the promised policy benefits from this decision I doubt we’ll ever see them.

  148. Well, it’s a crying shame that Rader and the majority swallowed the “plague” nonsense (and regurgitated the rhetoric whole in their opinion). Congrats to O’Malley and the rest of the dissenters for not taking the bait (I also prefer O’Malley’s proposed “but for PLUS” test).

    On the other hand, there’s little indication that anyone in the majority is remotely interested in defending the behavior of the patentee and their experts/witnesses during prosecution or the trial, while five judges are crystal clear about the rat smell and what to do about it.

  149. Someone refresh me of the site’s residents Carnacs the Magnificent’s previous predictions…

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