Interesting Article Providing Data Analyzing Exergen/Therasense’s Impact

The article by Robert Swanson, published in the Stanford Law Review, is here.  The abstract:

This Comment empirically investigates the doctrine of inequitable conduct in patent law. Inequitable conduct is a defense to patent infringement that accuses the patent holder of committing fraud on the U.S. Patent and Trademark Office to secure the patent. Before the Federal Circuit’s recent Exergen and Therasense decisions, the defense was seen as chronically overused. As a result, patent applicants cited more prior art in their applications to avoid later being charged, during litigation with fraudulent omissions. The Federal Circuit responded with Exergen and Therasense, which heightened the pleading standard and raised the legal proof required for inequitable conduct, respectively.

Many commentators, and especially members of the patent defense bar, now feel that the Federal Circuit has gone too far in restricting the inequitable conduct defense, to the point that it is essentially a dead doctrine. This Comment informs the debate by adding comprehensive data. To better comprehend the effects of the Exergen and Therasense cases, this Comment calculates the rates at which accused infringers plead and prove inequitable conduct—for every patent case over the periods in question. The results show that the inequitable conduct defense is used significantly less often than many assume, contradicting assertions by the Federal Circuit’s Therasense majority. Moreover, the data indicate that Exergen and Therasense have both contributed to an even further decline in accused infringers’ use of the inequitable conduct defense. Based on a full exploration of the data, the Comment concludes that the Federal Circuit went too far in Therasense (but not in Exergen). A better formulation of inequitable conduct doctrine would be the test advocated by the dissent in Therasense, which embraced the U.S. Patent and Trademark Office’s lower standard of materiality.

About David

Professor of Law, Mercer University School of Law. Formerly Of Counsel, Taylor English Duma, LLP and in 2012-13, judicial clerk to Chief Judge Rader.

8 thoughts on “Interesting Article Providing Data Analyzing Exergen/Therasense’s Impact

  1. 3

    Mr. Swanson seems to be advocating that Therasense be overturned, “Because the inequitable conduct doctrine is needed to enforce the duty of candor before the PTO, its materiality standard should be identical to Rule 56.”

    “Duty of candor?” One might almost think that the PTO actually has the power to determine by rule substantive law that affects the validity of an issued patent.

    Mr. Swanson’s got it backwards obviously. The PTO cannot set a duty of candor or a definition of materiality that is different from the court standard. It needs to repeal rule 56 because it confuses.

    Moreover, there is in the United States a doctrine known as the rule of law. How can there be a rule of law if the courts for no good, and substantial reason overrule prior cases rather than following them?

    Obviously in the case of rule 56, Swanson has everything backwards, because he assumes that the patent office has a right to enact rule 56 the first place, when it never did. That rule was ultra vires ab initio to the extent that it was trying to set the standards for inequitable conduct for the courts, and I believe the Federal Circuit and TheraSense held that the be the case. That it continues to exist is the problem here.

    It is also to be observed that the United States is alone in the world and having something akin to rule 56. The patent office really needs to understand that rule 56 is not only not necessary, but a problem in itself.

    I believe a rule should be enacted substituting for rule 56 that simply limits the number disclosures and applicant can submit through an IDS to 10. The reason I say this is that the applicant has a continuing duty not to file and prosecute claims that it knows not to be valid over references is aware of. It is not the failure to disclose a reference to the patent office that is the material violation. It is the prosecution of claims that one knows or should know are invalid over references not disclosed that is the problem.

    If a reference invalidates a patent claim, it will be found and asserted by the defendant in court, or in a re-examination. And if it turns out that the patent owner knew about the reference but continue to prosecute claims, this will raise an inference of inequitable conduct. Rule 56 is entirely unnecessary, and again is a problem.

    1. 3.1

      Ned, I think you’re conflating some things.

      Can the PTO set standards for unenforceability? No. And it hasn’t. Rule 56 deals with candor to the tribunal and discipline.

      The PTO could say “you can lie to us and we won’t do anything about it,” or it could say “if you even misrepresent a minor thing, we’ll come take your registration away.” 35 USC 2(d) I think pretty much deals with that.

      1. 3.1.1

        No doubt one could write THOSE kind of rules in the professional conduct clauses. But Rule 56 has always existed for one purpose, to set the legal standard for IE in courts so that the penalty was on the patent, not on the practitioner.

  2. 2

    I’ve seen some pretty awful things done by patent lawyers, and I’ve seen nonsensical accusations leveled at them. I think a system that assumes fraud doesn’t occur goes too far, and we’re awful close to that with the Exergen/Therasense combo.

    1. 2.1

      system that assumes fraud doesn’t occur goes too far, and we’re awful close

      Not sure this is an adequate answer to the question of “What is the ‘right’ distance?”

      Is the answer to move an entire system of something akin to notice-pleading to a system of the pleading for sounding in fraud heightened standard?

      No one seeing any problems in such a move?

      1. 2.1.1

        Here’s what is about to happen: the federal rules advisory board is proposing to limit discovery to claims and defenses — not even with good cause can you get discovery into matters relevant to the subject matter.

        Combine that with Exergen and the nature of inequitable conduct (you’re not likely to know enough to plead it particularly without discovery), and you have the effective, unintentional, elimination of the defense (and a lot of other defenses if the rules’ committee proposal goes through).


          Well, bully, bully, bully!!! In spades. The only question then is whether the patent is valid or not!!!

          How refreshing.

  3. 1

    has gone too far

    A question (to be begged?): how far is too far? What is the ‘right’ distance? Is accusing someone of fraud (basically) something that should be done only at a higher (read that as lower frequency) level?

    This would appear to be the generally accepted notion, given that pleadings in fraud typically do require a higher level than general notice pleading.

    So at first blush (I have not read the article yet), my suspicion is raised by the author’s conclusion and I will be keen to seeing if the author establishes what the ‘right’ level is or merely makes a(n unsupported) assumption of what that level should be.

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