Burden of Proof Buffers Patent Owner Misconduct in Patent Revival Case

by Dennis Crouch

A jury in Judge Albright’s W.D.Tex. court sided with Amazon – finding no infringement. On appeal, the Federal Circuit has affirmed — particularly affirming Judge Albright rejection of Freshub’s post-verdict motions. Freshub, Inc. v. Amazon.com, Inc., 22-1391 (Fed. Cir. Feb 26, 2024).  In a cross-appeal, Amazon argues that the district court should have found the patent unenforceable due to inequitable conduct. That appeal was also rejected. Freshub v Amazon.

No Reversible Error in Denying Inequitable Conduct

I want to use this blog post to focus on the finding of no inequitable conduct.

The parent patent application (APN 11/301,291) received an office action back in 2011 and the case went abandoned six months later.  Five years later, in 2017, Freshub’s predecessor-in-interest, Ikan Holdings LLC, submitted a petition to revive that included a statement that the “entire delay in filing the required reply . . . was unintentional.”  Ikan did not provide any reasoning or justification for the delay, and the USPTO did not ask for any evidence or further proof.  Instead the USPTO simply granted the revival.  Throughout this time, the same patent attorney (Mr. Weiss) represented Ikan and Amazon presented evidence that both Mr. Weiss and Ikan’s CEO had knowledge of the abandonment back in 2012.

Improper revival is not an invalidity defense. Rather, improper revival is raised only in the context of inequitable conduct. Under Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc), the Federal Circuit created a two step test that makes it quite difficult to find the claims unenforceable. Here, Judge Albright walked through the two two-prong Therasense standard: (1) misrepresentation or omission of material information, and (2) specific intent to deceive the Patent Office; both of which require clear and convincing evidence.  Albright particularly concluded that the extended amount of time and knowledge of the abandonment were not sufficient to prove that Ikan or its attorney intended to deceive the Patent Office in its unintentional claim.

While Amazon showed Ikan’s attorney was aware of the abandonment, knew his statement to the Patent Office was material, and almost certainly should have known it was likely false, this evidence fell short of the “single most reasonable inference” standard for deceptive intent established in Therasense for finding inequitable conduct. Namely, that the attorney making the statement to revive the application specifically intended to deceive the Patent Office in doing so. As the Federal Circuit noted, it could not disturb the district court’s factual findings and credibility determinations regarding intent without having a “definite and firm conviction that a mistake has been committed” by the district court.

Shielded by Attorney Client Privilege: One important feature here is that we have the communications between Weiss and his client because the client continued to invoke attorney client privilege.  Thus, “the record of what actually occurred at relevant times was thin.”  This protecting of privilege then allowed the patentee to call into question whether the client intentionally abandoned the application – or was even on direct notice of the abandonment.

Of course, the absence of such an account, due to unavailability of witnesses or invocations of attorney-client privilege or other reasons, might well lead a factfinder to find false, or even knowingly false, the assertion that the abandonment was unintentional on Ikan’s part. But that hardly means that the absence of such an account always compels such a finding.

Here, it is important that the party arguing for unenforceability has a strong burden of proof — that allowed the absence of evidence to support the district court’s finding in favor of the patentee.  Although an inference from the gap and knowledge of the patent attorney might be enough to infer intentionality, the court found that it does not necessarily lead to an adverse inference that the abandonment was intentional.

Amazon’s arguments for drawing the necessary adverse inferences leave gaps. Amazon points to deposition testimony from Ikan’s counsel that he was aware of the PTO-sent notices in 2011–12, including the January 2012 Notice of Abandonment, and that it was his typical practice to communicate such developments to clients. That testimony need not be taken to establish that the relevant Ikan decisionmaker received and understood the communications and knowingly authorized the abandonment—or that Ikan’s counsel knew that the relevant decisionmaker had done so. Amazon also notes that, in December 2012, the Ikan principal signed an assignment agreement, prepared
by the prosecuting attorney, that lists the ’291 application as “Inactive/Abandoned/Expired.” But the ’291 application was just one of several patent interests listed in a document merely making a general assignment from one Ikan entity to another, with no apparent decision to be made about the PTO status of the ’291 application, and even the triple-alternative category does not declare that application abandoned. Amazon further points to several entries in a privilege log indicating that the prosecuting attorney communicated with Ikan regarding the ’291 application immediately after the final office action to which Ikan did not respond. But those entries do not say that the key Ikan principal received the communications.

Id. Of interest here, the court concluded that the Weiss’s statement about unintentional abandonment was not about Weiss’s intent, but instead was his belief about his client’s actions.  Regardless of the general legal merit of the correct interpretation of the statement made to the USPTO, the intent element of inequitable conduct is based upon subjective intent — and here the appellate court found that the substantial evidence supported Weiss’s statement that there was no subjective intent to deceive the USPTO.

The revival here occurred back in 2017. More recently, the USPTO has stated that it now requires additional explanations in situations where the petition for revival “is filed more than two years after the date the application became abandoned.”  In particular, the applicant must provide “explanation of the circumstances surrounding the delay that establishes the entire delay was unintentional. This requirement is in addition to the requirement to provide a statement that the entire delay was unintentional.” See Clarification of the Practice for Requiring Additional Information in Petitions Filed in Patent Applications and Patents Based on Unintentional Delay, 85 FR 12222 (March 2, 2020).

The PTO form PTO/SB/64 also includes a number of statements of situations that are not unintentional abandonment:

Petitioner is reminded that a delay resulting from a deliberately chosen course of action on the part of the applicant does not become an “unintentional” delay within the meaning of 37 CFR 1.137 because:

  • the applicant does not consider the claims to be patentable over the references relied upon in an outstanding Office action;
  • the applicant does not consider the allowed or patentable claims to be of sufficient breadth or scope to justify the financial expense of obtaining a patent;
  • the applicant does not consider any patent to be of sufficient value to justify the financial expense of obtaining the patent; or
  • the applicant remains interested in eventually obtaining a patent, but simply seeks to defer patent fees and patent prosecution expenses.

Petitioner is further reminded that an intentional delay resulting from a deliberate course of action chosen by the applicant is not affected by:

  • the correctness of the applicant’s (or applicant’s representative’s) decision to abandon the application or not to seek or persist in seeking revival of the application;
  • the correctness or propriety of a rejection, or other objection, requirement, or decision by the Office; or
  • the discovery of new information or evidence, or other change in circumstances subsequent to the abandonment or decision not to seek or persist in seeking revival.

PTO Revival Form.  Under this new standard, the USPTO indicates that it is only granting about 65% of petitions to revive based upon unintentional delay.

The high burden of proving deceptive intent imposed by Therasense made it difficult for Amazon to succeed on its inequitable conduct defense, even with fairly compelling circumstantial evidence of Ikan’s knowledge and actions regarding the abandoned patent application. This case illustrates that, absent a smoking gun showing specific intent to deceive the Patent Office, courts today are reluctant to render patent rights unenforceable due to prosecution misconduct under the doctrine of inequitable conduct. However, the USPTO’s stricter scrutiny of revival petitions and detailed inquiries into abandonment timelines signal that the Patent Office itself may now be better equipped to root out abuses in the revival process.  Time will tell whether the USPTO’s tightened revival rules meaningfully deter abusive conduct that otherwise slips through the system.

5 thoughts on “Burden of Proof Buffers Patent Owner Misconduct in Patent Revival Case

  1. 3

    Shielded by Attorney Client Privilege: One important feature here is that we have the communications between Weiss and his client because the client continued to invoke attorney client privilege. Thus, “the record of what actually occurred at relevant times was thin.”

    One thing many practitioners do not realize is that the standard to pierce the privilege through the crime-fraud exception is much lower than to prevail on a fraud claim, or here an inequitable conduct claim. (In some Circuits, shockingly low.) So a good strategy in cases like this is to try to pierce the privilege during discovery, which will then potentially give more evidence to support the claim.

  2. 2

    Why is leaving an application abandoned for 5 years, allegedly unintentionally yet without any status inquiry, not logically PTO OED investigateable for potential attorney disciplinary action?

    1. 2.1

      >yet without any status inquiry,

      Why ask? Mysterious USPTO delay is in your client’s best interest.

      1. 2.1.1

        OC – consider the source.

        Paul is known as the IPR cheerleader – he is certainly aiming ONLY at possible malfeasance of patent holders.

  3. 1

    If memory serves, it was circumstances similar to this one which led the PTO to tighten up its policies regarding revival of abandoned applications.

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