Unenforceable Patents

By Jason Rantanen
Although the en banc Federal Circuit raised the bar for establishing inequitable conduct in Therasense v. Becton Dickinson, findings of inequitable conduct are still possible as illustrated by the district court's decision on remand in that case last week.  Given that the harsh consequence of a finding of inequitable conduct remain unchanged by Therasense, it remains a very real risk for patent holders asserting their patents in litigation.  What, then, are the characteristics of patents that historically have been the subject of an inequitable conduct finding? 

In a recently released draft paper, Lee Petherbridge, Polk Wagner, and I discuss the results of a study in which we empirically examined patents that were determined to be unenforceable due to inequitable conduct and compared them to litigated patents.  We report evidence that unenforceable patents are different from litigated patents.  Unenforceable patents have significantly longer pendency, more parent applications, and contain more claims.  Unenforceable patents also cite fewer U.S. patent references.  Surprisingly, we found no evidence that patents with foreign inventors are more likely to be unenforceable and no evidence that the subject matter of a patent associates with an inequitable conduct determination.  Using these observations, we hypothesize about why inequitable conduct happens, how inequitable conduct relates to patent policy, and what – if anything – practitioners who are concerned about an inequitable conduct determination might take as potential warning signs.

We are still grappling with what our results might teach about why inequitable conduct happens. As this is a working draft, we welcome any comments about that or any other aspects of the study.  The paper can be downloaded here: http://papers.ssrn.com/abstract=2031173.

25 thoughts on “Unenforceable Patents

  1. The survey brings up an important point. When I worked for a large firm that had one older attorney whose main job was just locating related apps and filing something which I think they called ‘related application statements’, which may not have met IDS standards, but which were intended to head off inequitable conduct defences.

    Guess who we have to do this task? That’s right. No-one. If we did I’m not sure we’d be turning a profit.

    In any other country it would be up to the patent office to find the art. It should be here too. I guess we’ll have to wait for the next round of patent reform in, say, 2020, LOL!

  2. There are a lot of common law countries where equity is well understood, but IMHO none of them have anything comparable to US IDS practice or inequitable conduct precedents. So, although they may account for a minority of foreign origin US apps, I would say your comment is a bit off track. That is, it is not the lack of an understanding of equity, but the lack of understanding of other factors that are unique to the US.

    That foreign origin patents don’t predominate in unenforceable patents despite this is probably due to the lower likelihood of being able to tell that something is missing.

  3. “To bring up a sore point, which also affects reader-credibility in this profession: why do you consistently use the term “agents” for PTO practitioners in this paper, when most [especially supervisors] are also fully licensed attorneys, entitled to be addressed as such, and obviously having more to lose professionally and life-investment-wise than patent agents, who are not attorneys, by a finding of inequitable conduct?”

    More to lose? I doubt it. Higher wages to lose, maybe. Law school tuition to pay off, no doubt. But essentially we all risk far more than we could ever benefit by deliberately witholding info from the PTO.

    OK, I get it, you are miffed at not being called an attorney, but there’s no need to turn that around and insult us instead.

    Dennis, try referring to patent counsel, it’s less typing than patent practitioners, and both are used interchangeably in 37 CFR when referring to all of us collectively.

  4. Thanks, and to try to better explain my comment, statistical studies that do not consider important variability factors may miss the real root causes of the measured variability, and may even confuse cause and effect. For example, in this case, it might even be possible that the key finding of a measured statistical correlation [to some degree] between inequitable conduct [final decisions?] and long prosecutions was not due to the length of prosecution but rather that long prosecutions happen to coincide with greater use of affidavits or declarations, to which the Fed. Cir. has applied a stricter inequitable conduct test? That may or may not be the case here, but if that factor is not considered in a study where that might be a significant factor, it raises the question.
    Another vital issue not addressed is how many final decisons of inequitable conduct are due to the inventors not disclosing facts to the patent attorney, rather than anything the patent attorney did or did not do?

    There is an assumption that long prosecution correlates to the invention being considered important or valuable by the patent owner. But even if that is a correct assumption [and there are many cases where it is not], I did not see any factual basis for the further assumption that this correlates with a greater incentive and tendency for the PTO practitioner to engage in inequitable conduct and more patent owner pressure on the practitioner to do so. That may or may not be true, but there is no proof of it here. And of course there are many cases in which the presumed importance of an invention can actually cause greater prosecution care to be taken to avoid inequitable conduct accusations, due to the logical presumption that a presumably important invention may be more likely to need to be successfully litigated.

    In spite of Therasense, PTO practitioners who have extensive prior art file collections from prior studies or related applications that they are aware of are still stuck with making decisions as to whether or not to still make large “reference dumps” in IDS forms to protect themselves from later inequitable conduct accusations. Especially since we have seen many cases over the years of Fed. Cir. “panel-recidivism” after prior en banc Fed. Cir. decisions, including this very subject.

  5. Writing from outside the USA, I am mildly surprised that no correlation was found, between foreign inventors and conduct that was found to be inequitable. The way I see it, foreigners have no familiarity, appreciation or understanding of the English law concept of equity. Not even watching out for that particular banana skin, they are more likely to slip over on it and break their neck, I should have thought.

    But Jason, perhaps if there is a correlation, it is not with the nationality of any named inventor but, rather, with that of owners of USPTO filings?

    Any such correlation would be hard to find though. Foreign owners of dodgy US patents are hardly likely to have the confidence to litigate them, which brings us to Harwood’s point.

  6. “We report evidence that unenforceable patents are different from litigated patents.”

    Doesn’t a patent have to be first litigated for it to be found unenforceable due to IC?

    “Surprisingly, we found no evidence that patents with foreign inventors are more likely to be unenforceable and no evidence that the subject matter of a patent associates with an inequitable conduct determination.”

    Not sure why either of these findings is surprising.

  7. DC, the very few instances I ever personally experienced of noting and correcting potential inequitable conduct issues in applications before the patent issued were either NOT by particulary well informed or careful patent attorneys, or were honest oversights by competent attorneys, including unknown or overlooked technically-related applications of the same large company with different prior art citations, as described by David Lewis below. I doubt if there is any way to quantify such differing experiences.
    I also agree that Therasense should eliminate many of the previously attempted professional crucifications of patent attorneys or inventors for honest oversights. But readers should resent the subject paper’s conclusory insinuation with no factual basis that practioners are changing their practices adversely to patent quality because of Therasence.

  8. I would expect to see a high rate of inequitable conduct cases when you have multiple related applications that are copending, but that are not necessarily continuations of one another, because (1) I suspect that many practitioners overlook the need to cite such IDSs, (2) large corporation are likely not to know of that they have multiple related copending applications if the applications are not being handled by the same practitioner (but yet I believe they are nonetheless held responsible), and (3) it can be onerous to keep up with filing an IDS in every related application every time a new Office Action comes in – sometimes it seems to be never ending.

  9. I don’t get this. How is any one application worth a possible disciplinary action to an attorney?

    This is how I know you’re not an attorney.

  10. I have had this multiple times. Examiners will offer you a deal one day — combine dependent claim 2 with independent claim 1 and I’ll allow the case — but if you don’t take it that day, then a week later want to, suddenly that resulting claim is no longer patentable. (and yes, same examiner).

  11. Hard to put stock in this article when the authors can’t discern the difference between patent agents and patent attorneys. It suggests that they are not very familiar with the subject matter. If they can’t get that straight, how much of the subtle stuff they present is well-founded? They opine as to the work-a-day pressure on patent agents, but don’t understand that most applications are filed by patent attorneys?

    The corollary of Patent “Agent” Incompetency seems at odds with the findings of inequitable conduct, which often involve apparently super-competent patent lawyers. Do the many sampled cases show that any inequitable conduct stems from incompetence? Or do they reflect the super-competence necessary to engage in successful inequitable conduct (at least until they get caught by equally competent patent litigators). My experience is as limited as everyone else, but the few instances of inequitable conduct I have encountered have been perpetrated by very savvy and respectable patent attorneys.

    The article should address why it is relevant after Therasense. Very few of the old inequitable conduct cases would survive Therasense, so what do we learn?

  12. Excellent post Paul.

    Even Dennis is getting in on this game. What’s with all of the IP professors trying to tear down patents and practicioners lately? Isn’t there anyone who remembers that patents serve an important function in our economy? I guess I’m just not cool enough to understand.

  13. “(Sounds like it could even be a patentable invention. :-) )”

    Not under recent rulings allegedly related to 35 USC 101 but really based on 35 USC 103 it don’t.

    Although I agree it should be patentable subject matter under 101 at least. :-P

  14. – the current trend seems to be in the opposite direction – more cost-cutting and bargain-hunting for both application and prosecution expenditures. — I agree

  15. good posting, Les

    (In fact, maybe the PTO needs a computer program which automatically brings to the examiner’s attention references cited in related applications. (Sounds like it could even be a patentable invention. :-) )

  16. Thanks for this research. Your finding that long prosecutions with plural continuations or divisionals are more suspect for inequitable conduct investigations confirms common practitioner suspicions.
    However, I wonder if you may be under-appreciating the significance of using declarations or affidavits to obtain patents, since such affirmative averments greatly increase the dangers of inequitable conduct, far more than non-disclosures, as demonstrated in a number of Fed. Cir. decisions. Furthermore, the greatly added litigation costs and delays of an aggressively pursued inequitable conduct allegation are a significant burden to patent enforcement that should be considered in your paper even though not often successful.
    To bring up a sore point, which also affects reader-credibility in this profession: why do you consistently use the term “agents” for PTO practitioners in this paper, when most [especially supervisors] are also fully licensed attorneys, entitled to be addressed as such, and obviously having more to lose professionally and life-investment-wise than patent agents, who are not attorneys, by a finding of inequitable conduct? Especially since you admit that “there may be very significant adverse professional consequences to [even] patent agents found to have engaged in inequitable behavior.” Most attorneys also have MCLE ethics course obligations. These two different qualifications are not validly interchangeable.
    Since foreign origin patents are largely prosecuted by U.S. patent attorneys who have far more at stake personally than any client’s application, that also explains your finding that “we did not find evidence that foreign inventors are especially likely to have invented unenforceable patents.” [Difficulties in getting effective depositions with any realistic perjury enforcement threat from employees of patent owners in some foreign countries may also be a factor.]
    Particularly useful is you statement that “evidence of the real-world nexus between the [inequitable conduct] doctrine and the policy purpose it seeks to serve has been largely elusive.”
    Also, your excellent recommendation that “best practices might include ensuring that an agent is permitted to bill more time to a case when the agent is addressing an application with the characteristics of a nascent unenforceable patent.” [Or to get a second opinion from another experienced practitioner, and/or to use the new “Supplemental Examination” system that starts this September.] However, I fear the current trend seems to be in the opposite direction – more cost-cutting and bargain-hunting for both application and prosecution expenditures.

  17. You say “inequitable conduct happens” quite a lot in those 3 paragraphs, at points where I hope you mean –accusations of inequitable conduct happen–.

    As you draft your paper, please consider whether or not I am correct.

    If what you say about the correlations is true, then I would suggest that what is accused to be inequitable conduct is more likely a clerical oversight.

    When an application has “more” parent applications or siblings, the burden of cross citation rapidly becomes enormous. I’m guessing what you or courts are labeling as inequitable conduct is a failure of someone to cite in application E a document that was cited by the examiner in the third office action in divisional 2 of parent application B.

    In a system that is based on the presumption that the patent office can and will find material art, and where the patent office can be even more aware of related applications than a particular attorney might be (e.g., where other attorneys or firms are prosecuting the related applications), this burden of cross citation is unnecessary and inappropriate.

  18. “We are still grappling with what our results might teach about why inequitable conduct is determined.”

    If you ask the question differently, it gets easier to answer.

  19. While you little factoids are interesting, you never address the quality of this stuff. Not to slam the examiners, but they are under a tremendous pressure to perform. but the patent factory approach isn’t good for anyone.

    My clients get “let’s make a deal” calls where the examiner says something like, “if you let me combine independent claim 1 with dependent claim 2 I’ll make a favorable decision, if you want to keep the claims the way they are you’ll get a new office action disallowing the claims.” It’s like selling cars – the calls come at the end of the month/quarter.

    So what happens? The client gets a crummy patent because they are exhausted by the process and don’t want to spend anymore money and the examiner can make his/her numbers but really hasn’t acted in the best interest of the inventor and then you come along and celebrate it. Not helpful Dennis.

    More isn’t necessarily better. It just muddies the water.

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