Ferring v. Barr (on petition for certiorari).
In February 2006, the CAFC affirmed a lower court ruling that Ferring’s patent was unenforceable due to inequitable conduct. During prosecution some 15 years earlier, Ferring had submitted several non-inventor declarations to support patentability, but did not disclose to the PTO that the some of the declarants had been paid consultants for the patentee in the past. Of course, this information was not requested by the PTO. Nonetheless, the CAFC found that the patentee’s non-disclosure created a material potential for bias because the “witness’s interest is always pertinent to his credibility” and that the intent could be inferred from the negligence in failing to disclose.
Judge Newman penned a strong dissent in the case, arguing that the decision revives “reviving the culture of attack on inventor rights and attorney reputations based on inference and innuendo.”
My colleagues, endorsing several novel and unsupportable presumptions of wrongdoing, do injury to the reasonable practice of patent solicitation, even as they defy the rules of summary judgment.
Now, Ferring (along with its co-plaintiff Aventis) has filed a petition for certiorari, requesting that the Supreme Court hear the case — asking whether the CAFC improperly lowered the standards for materiality and intent in its finding of inequitable conduct.
Inequitable conduct jurisprudence is interesting because it is virtually all judge-made law coupled with the rules of Patent Office practice (37 C.F.R. xxx), and the only Supreme Court case on the topic is the 1945 Precision Instrument decision that found inequitable conduct based on a joint-effort of fraud on the PTO and on the courts. (It was an interference and both parties wanted to make sure that somebody got rights to the patent). The facts in Precision Instrument involved some seemingly extreme conduct, although the court ruled generally that the doctrine of unclean hands “gives wide range to the equity court's use of discretion in refusing to aid the unclean litigant.” (finding that the lower court is not bound by any formula in exercising its discretion).
If we fast-forward to today, many if not most patent cases involve charges of inequitable conduct. (1998 AIPLA study showed that 80% of cases included such charges). The charges are thrown in almost every responsive pleading because they just might stick. In its petition for certiorari, Ferring argues that this permissive environment has been created by the CAFC’s “aggressive use of inherent judicial power.”
Ferring point to a number of failures of the CAFC’s methodology and suggests as an alternative that the test that return to the PTO’s rules under 37 C.F.R. 56 and simply ensure that those rules are followed. A 2004 report by the National Academies of Science (NAS) came to a similar conclusion:
In view of its cost and limited deterrent value the committee recommends the elimination of the inequitable conduct doctrine or changes in its implementation. The latter might include ending the inference of intent from the materiality of the information that was withheld, de novo review by the Federal Circuit of district court findings of inequitable conduct, award of attorney’s fees to a prevailing patentee, or referral to the USPTO for re-examination and disciplinary action. Any of these changes would have the effect of discouraging resort to the inequitable conduct defense and therefore reducing its cost.
I agree that it is time for a change — evidence of fraud should certainly be considered by the courts. Fraud, however, comes with a higher standard of pleading. Failure to follow PTO rules should be considered by the PTO in post-grant reviews.