Therasense: Encouraging Intentional Deception?

Patent2011053Powell v. Home Depot (Fed. Cir. 2011).

Michael Powell’s invention is fairly simple –  it covers a guard for a circular saw on an arm.  In 2004, Mr. Powell developed the guard and provided several prototypes to Home Depot for the company to use in its in-store saws for cutting raw lumber to customer specifications.  Rather than having Powell manufacture the guards, Home Depot turned to another company for its 2,000 stores.  Powell obtained a patent then sued Home Depot.  After a three-week trial, a Florida jury awarded Powell $15 million in damages.  The district court also awarded enhanced damages, attorney fees, and pre-judgment interest — bringing the total to $24 million.

On appeal, the Federal Circuit affirmed claim construction, infringement, willfulness, inequitable conduct, and damages. Dissenting-in-part, Judge Dyk argued only that the finding of willful infringement was incorrect because Powell did not prove that Home Depot’s non-infringement defense was objectively unreasonable as is required under the objective prong of the willfulness inquiry.

Inequitable Conduct: One interesting element of the appeal involved inequitable conduct.  During prosecution, Powell had filed a Petition to Make Special on grounds that he was obligated to manufacture and supply devices embodying the claims sought. MPEP 708.02.  That original petition was roughly correct based upon ongoing manufacturing negotiations with Home Depot. Although negotiations with Home Depot fell-through before the PTO granted the petition, Powell never informed the PTO that he no longer qualified for the Special designation under the prospective manufacture prong and actively encouraged the PTO to decide the petition.

In a pre-Therasense decision, the district court held that the failure to inform the  PTO was done with intent to deceive the PTO, but that the intentional omission was not material because (1) the timing was not related to patentability and (2) Powell could have instead filed a petition to make special based upon ongoing infringement of the applied-for claims.  Under Therasense, inequitable conduct will not normally be found based upon an applicant’s improper omission unless the omission is the but-for cause of the patent being issued.

On appeal, the Federal Circuit affirmed — holding that:

Where, as here, the patent applicant fails to update the record to inform the PTO that the circumstances which support a Petition to Make Special no longer exist—that conduct does not constitute inequitable conduct. That is so because Mr. Powell’s conduct obviously fails the but-for materiality standard [of Therasense] and is not the type of unequivocal act, “such as the filing of an unmistakably false affidavit,” that would rise to the level of “affirmative egregious misconduct. Id.

This case creates further difficulty for patent attorneys by giving a free-pass to patent applicants who intentionally deceive the PTO in order to benefit their case.  Although participating in such activity violates the rules of conduct for patent law professionals under 37 C.F.R. 10.22, patent owners apparently will not face consequences.  Adding to the incentive for bad behaviour is the PTO’s lax enforcement through the Office of Enrollment and Discipline; the new statute of limitations on attorney misconduct charges; and the new supplemental examination procedures that allows patentees to whitewash patents obtained through inequitable conduct.  For some this may not be intuitive, but the primary solution is not increased enforcement but instead for the PTO to avoid relying upon attorney statements.

34 thoughts on “Therasense: Encouraging Intentional Deception?

  1. Max, many would think it is the law today — save for the bit about the repeal of 112, p.6.

    We had many debates on this topic when I chaired the AIPLA patent law committee. Most in the end wanted to clarify 112, p. 6 by requiring the claim be given full scope, just like Malcolm advocates, and then let the cards regarding validity fall where they may.

    I think this, then, is the AIPLA patent law committee recommendation, in slightly different form. But it very much like what you guys do in Europe.

  2. Ned, the system I would like is one where the claim is taken to mean what it says to the PHOSITA.

    I am apprehensive about a claim whose meaning can be ascertained only after importing a definition from elsewhere. Elsewhere might be the specification, or the file wrapper, or the file wrapper of a related patent application, in the USPTO or in some other Patent Office. If a word in the claim has some meaning at variance with its normal meaning, that special definition should be included in the claim. I think it is an imposition and a scam, to deny the public any sense of what a claim will mean to a court or a jury until the entire wrapper of all related PTO files has been read, from start to finish.

    But subject to that caveat, I like your scheme. When can we expect it to enter into force and effect?

  3. What if we repealed 112, p. 6 and we amended 112, p. 2 along the lines of the following:

    Claim terms shall be given their ordinary meaning unless they are defined in the specification. A claim is indefinite if

    1) one cannot reasonably understand what is within the scope of the claim in light of the specification;

    2) if the claimed subject matter is not described in the specification; or

    3) if the claimed subject matter is not enabled to its full scope by the description.

  4. Thanks Paul. Down here, there is interest in the recent demise of the Earth Closet order (and much amusement about its name).

  5. I find it charming that the claim is in Jepson form. I had supposed that no self-respecting US patent attorney writes Jepson claims any more. This one did the business though. Didn’t it just.

  6. Best line in the decision is on page 5, IRRC. Starts out “When all the dust settled…”

    Love it when the little play on words gets in a case.

  7. Assuming that intentionally deceiving the PTO cannot qualify as affirmative aggregious misconduct is a HUGE leap.

    Who made this assumption?

    The assertion that therasense is a free pass really degrades the quality of commentary on this blog.

    Where was that assertion made?

  8. I am reminded of the logic of the European Patent Convention from 1973. Article 84 requires the claims to be “clear” but, deliberately, lack of clarity is no ground of invalidity, post-issue. Back in 1973, there were many English Chickens Little, proclaiming that the sky was going to fall. It didn’t.

    Was there ever a patent that issued with claims clear enough to be impossible to attack on the ground that they are not “clear”. Was there ever an issued US patent impossible to attack as the product of inequitable conduct. Should the EPC be revised, to admit lack of clarity as a validity attack? Should the inequitable conduct blade be made more sweeping? I think not. The important thing is to have a swift and effective way to get bad patents, ie those with invalid claims, swept aside from the vital path of technological progress. No progress, no economy. Lengthy investigation into standards of “conduct” slows down the work of clearing the path forwards.

  9. Assuming that intentionally deceiving the PTO cannot qualify as affirmative aggregious misconduct is a HUGE leap.

    No. It is not. Remember that all instances of “intentional deception” were removed in the America Invents Act.

    Still, have never seen a plausible reasoning for this.

  10. What’s all the excitement about? One of the problems with American society today is that there is always a witchhunt to find somebody to be evil or below par. No harm, no foul. Don’t try to paint somebody as pernicious when nobody got hurt. Leave it alone, folks.

  11. Assuming that intentionally deceiving the PTO cannot qualify as affirmative aggregious misconduct is a HUGE leap.

    The assertion that therasense is a free pass really degrades the quality of commentary on this blog. That is a TOTALLY unsupported position.

  12. Reliance on “statements” is what sets English common law fact-finding apart from the great unwashed rest of the world. So can Dennis possibly be right in his assertion that “the primary solution is…..to avoid relying on….statements”

  13. If I had my druthers in terms of ways that applicants can annoy examiners, I’d much rather work on a special case than go through a 10-page IDS filled with nonsense.

  14. I object to all of these posts by MM. Each has obviously stolen my initials and wish to impugn my good character by posting ludicrous crrp.

  15. Agreed. But Dennis seems to think that the lack of remedies against the issue patent’s enforceability essentially authorizes the filing of false declarations with impunity. I think not.

  16. “What’s the statute of limitations for criminal prosecution for false declarations?”

    At the time it was executed, the declaration wasn’t false. I don’t know if there is an affirmative requirement to update the USPTO.

  17. This patent is obviously invalid. It must have been designed using a computer, and as we all known, anything involving a computer cannot be patented.

    “brush bristles disposed in said opening”?
    Obvious in view of a toothbrush …

    “cutting box interior in fluid communication with a dust collection system”
    Fluid communication? What is it doing, swapping spit???

  18. Mr. Powell’s conduct obviously fails the but-for materiality standard [of Therasense] and is not the type of unequivocal act, “such as the filing of an unmistakably false affidavit,” that would rise to the level of “affirmative egregious misconduct. Id.

    As opposed to the “unmistakably written so as to deceive an Examiner and the public, and yet not be found unmistakably false by a court of Court of Appeals judge who will bend over backward to find a post-hoc non-deceptive explanation for the bizarre seemingly contradictory language in the affidavit.”

    So awesome.

  19. that the applicant believed in good faith <"

    Sure - wink wink nudge nudge.

  20. a free-pass to patent applicants who intentionally deceive the PTO in order to benefit their case.

    Nobody could have predicted ….

  21. Dennis, I agree that the easing of the ability to whitewash inequitable conduct is one of many bad parts of the amended patent statute, although doesn’t the supplemental examination only enable a patentee to get prior art considered? In any event, it’s still illegal to make willful false statements to a federal body such as the PTO. As a practitioner, the new situation is going to push me to support petitions to make special or petitions to revive with an affidavit from the applicant/assignee, so that they (and their patent) is at risk along with me.

  22. This case creates further difficulty for patent attorneys by giving a free-pass to patent applicants who intentionally deceive the PTO in order to benefit their case.

    I see it more as the PTO granting a request that the applicant believed in good faith that he was entitled to at the time he requested it, and that does not materially affect the rights of third parties.

    I think I’m warming to this new materiality standard.

  23. This case creates further difficulty for patent attorneys by giving a free-pass to patent applicants who intentionally deceive the PTO in order to benefit their case.

    MM knickers just got even more knotty

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