Tag Archives: Inequitable Conduct

Cancer Research Technology v. Barr Laboratories: Prosecution Laches and Inequitable Conduct

Inequitable Conduct, Infringement, Ownership, Patent, Patent Cases 2010, Patent Prosecution, Pharma, , ,

By Jason Rantanen

Cancer Research Technology Ltd. v. Barr Laboratories, Inc. (Fed. Cir. 2010)
Panel: Newman, Lourie (author), Prost (dissenting)

Although overshadowed by the en banc Federal Circuit arguments in TheraSense v. Becton Dickinson this morning, Cancer Research Technology v. Barr Laboratories may provide a preview of what the opinions in TheraSense could look like – although it doesn't necessarily indicate which view of inequitable conduct will ultimately prevail.  In Cancer Research, Judges Lourie and Newman reversed a district court finding of prosecution laches and inequitable conduct, while dissenting Judge Prost would have reached the opposite result.

The patent at issue (the '291 patent) involved a set of thirteen tetrazine derivatives that the original 1982 specification identified as possessing anticancer activities based on animal studies.  During the first nine years of prosecution, the examiner repeatedly rejected the claims due to lack of utility; rather than file a response to the office actions, the applicant instead filed continuation after continuation.  In 1991, Cancer Research obtained ownership of the patent application and shortly thereafter responded to the examiner's arguments.  The patent issued in 1993 and expires in 2014. 

Following Cancer Research's clinical testing, the FDA approved one of the compounds covered by the '291 patent (marketed as TEMODAR) for the treatment of one type of cancer in 1999 and a second in 2005.  In 2007, Barr Laboratories filed an Abbreviated New Drug Application ("ANDA") for a generic form of TEMODAR.  Cancer Research sued Barr for infringement four months later.  During the district court proceedings, the parties stipulated to validity and infringement and, after a bench trial, the court found that the patent was unenforceable due to prosecution laches and inequitable conduct. 

Prosecution Laches
Given the nearly ten-year delay before any meaningful response to the examiner's rejection was filed, Barr contended that the patent was unenforceable due to prosecution laches.  The district agreed, concluding that the delay in prosecution was unreasonable and unexplained.

On appeal, the majority reversed the finding of prosecution laches, holding that the doctrine requires not just unreasonable delay, but also a showing of prejudice.  The majority further held that "to establish prejudice, an accused infringer must show evidence of intervening rights, i.e., that either the accused infringer or others invested in, worked on, or used the claimed technology during the period of delay."  (Slip Op. at 9).  Here, there was no evidence of intervening rights during the prosecution period, such as evidence showing that someone other than the patent holder attempted to develop the claimed compounds.  Even Barr itself waited until 2007 – four years later than required – before filing its ANDA.  The majority also noted that there was no public harm: in the absence of the patent, Cancer Research likely would not have been incentivized to develop TEMODAR at all. 

Writing in dissent, Judge Prost rejected the notion that prosecution laches requires prejudice, let alone intervening rights; rather, under her reading of the precedent such a requirement is not part of the laches determination.  Furthermore, in her opinion, both Barr and the public were harmed by Barr's inability to market a generic version of TEMODOR.

Comment: I'm unconvinced by Judge Prost's argument on this point.  If she is correct, then the '291 patent was never enforceable – be it in 2007, when Barr filed its ANDA, or 1993, when it issued.  Yet without an enforceable patent, Cancer Research would never have developed TEMODOR, let alone engaged in the expensive Phase III clinical studies necessary to demonstrate its safety and efficacy.  Thus, the "harm" to the public would been greater in the absence of the '291 patent, not less.

Inequitable Conduct
The majority also rejected the district court's finding of inequitable conduct, while the dissent reached the opposite conclusion.  Both opinions focused on the subject of intent to deceive. 

The inequitable conduct issue in this case revolved around an extensive series of articles by an inventor on the '291 patent that presented data from post-application clinical trials of the claimed compounds.  These articles included conclusions indicating that some of the claimed compounds demonstrated high toxicity and low anticancer activity, which the district court found to be highly material to the patent claims because it directly contradicted statements in the '291 patent regarding the compounds' utility in treating cancers, as well as the patentability of a broadly written claim.

The majority, following the "intent cannot be inferred from materiality" line of thought, concluded that the district court's only basis for finding intent was its determination that the withheld articles were highly material.  "Because the district court did not rely on any other evidence to support its finding of deceptive intent beyond that used to find the withheld data material, the court in effect relied solely on its materiality finding to infer intent to deceive."  Slip Op. at 17.  The majority also concluded that the inference of deceptive drawn by the district court about the inventor's publication of data was not the only reasonable inference; rather, the broad publication of this data in multiple articles is inconsistent with an inference of intent to deceive.  Thus, an equally reasonable inference is that the inventor did not appreciate the potential importance of the published data to the patentability of the patent claims.

Judge Prost, again writing in dissent, would have affirmed the district court's determinations.  In contrast to the majority, which required independent evidence of intent, her view of inequitable conduct is that it does not require separate evidentiary bases for materiality and intent; rather it is appropriate to cite to the same evidence for materiality and intent.  Furthermore, here there was additional evidence of intent in the form of the district court's credibility findings, "which are virtually unreviewable by this court."  Thus, under her approach to intent in inequitable conduct, "[w]e should not draw inference that the district court has already excluded based on its own credibility findings."

Comment: The majority and dissent's views on intent can be partially reconciled under the position that, although an intent to deceive may be partially based on evidence of materiality, materiality cannot be the sole basis for the finding of intent to deceive.  Here, in the majority's opinion, the finding of materiality was the sole basis for the intent to deceive determination, because the only additional factor – the credibility determination – was based on an erroneous inference.  On the other hand, in the dissent's view credibility determinations are unreviewable and are sufficient to provide the "beyond the materiality" support for an intent to deceive finding.

The Federal Circuit and Inequitable Conduct: Part III

CAFC, Inequitable Conduct, Patent, Rantanen, , ,

By Jason Rantanen

Yesterday, I discussed our conclusion that the Federal Circuit applies a stricter standard than the lower tribunals it reviews and that this preference for patentee success manifests through the intent to deceive component of the inequitable conduct analysis.   In this post, I raise some broad ideas about inequitable conduct jurisprudence.  The paper raises others as well, but the ones that follow offer a good perspective into what we believe may be going on. 

The first idea is that the Federal Circuit might be applying a standard for intent to deceive that is higher than that required by its own caselaw.  In other words, the Federal Circuit’s articulated standard – intent greater than gross negligence – might be lower then the court’s normative perspectives on inequitable conduct.  At least some circuit judges might be applying a requirement more akin to knowledge or purpose.  This idea finds some support in the empirical evidence.  Our data indicate that patentee win rates can vary dramatically (from 40% to 100%) depending on the judge authoring the opinion, as the below graph of 14 judges who sat on the bench during the past decade illustrates. 

Fig 11Following closely from this first idea, and also suggested by the Figure, is the notion that when it comes to inequitable conduct the Federal Circuit might be having trouble communicating its standard – particularly with respect to intent – because it is not speaking with one voice.  If the mental state standard applied at the appellate level differs between judges, lower tribunals might have a difficult time “locking on” to the Federal Circuit’s standard.  This problem could be amplified by the fact that, as we have shown, the Federal Circuit does not seem to have balancing jurisprudence, which theoretically would address mental state standards above the threshold.  Thus, rather than having a single standard for intent to deceive that is further refined through the balancing inquiry, Federal Circuit jurisprudence might have at least two distinct (and somewhat bipolar) mental state requirements, one higher than the other.  This state of affairs might produce jurisprudential variation (and perhaps confusion among district courts), and might concentrate (as we have observed) inequitable conduct’s focus on intent to deceive.

Another idea the paper raises is that uncertainty around the standard might reflect jurisprudential design (albeit, probably unintentional jurisprudential design).  For example, perhaps the Federal Circuit believes inequitable conduct doctrine is necessary to protect the integrity of the patent system, but is strongly biased against successful (for the patent challenger) inequitable conduct claims.  Thus, the court might desire to maintain the threat of inequitable conduct so as to encourage patent applicants to take appropriate care in dealing with the public.  Yet allowing too many findings of inequitable conduct might be equally bad, as it could lead the public to question the validity of the patent system altogether, and moreover might invite the “plague” of overasserting inequitable conduct so frequently warned about.  An obfuscated standard for intent to deceive might be just right for balancing these concerns, because it provides a structural context that allows the Federal Circuit to maintain the threat of inequitable conduct – and keep the patent bar in line – but rarely find inequitable conduct.  In effect, this structure encourages patentees to police themselves, and also creates a mechanism by which private parties are responsible for ensuring that patent applicants do not misbehave towards the government, i.e., the law sets up a system that mostly enforces itself. 

The entire paper, which also includes additional observations, ideas, and recommendations, can be downloaded here, and we welcome all comments.  In addition to responding below, comments can be sent to us directly at prm.icpaper@gmail.com.  If the download link does not work for you, and you would like a copy of the paper, please email the above address and I will be happy to send you a PDF.

The Federal Circuit and Inequitable Conduct: Part II

CAFC, Inequitable Conduct, Patent, Rantanen,

By Jason Rantanen

Part II of this series describes the methodology used in our working paper The Federal Circuit and Inequitable Conduct: An Empirical Analysis, and summarizes some of the key findings.  You can download the entire paper here.  In addition to responding below, comments can be sent either directly to us or to prm.icpaper@gmail.com.

Methodology
The study uses the technique of “content analysis,” which permits researchers to systematically read and empirically analyze the text of judicial opinions.  In broad terms, we first screened all Federal Circuit opinions that contained the term “inequitable conduct” to identify cases that analyzed the issue.  We read all of these cases, coding pertinent information from each independent analysis of inequitable conduct.1  Overall, we coded information from 361 inequitable conduct analyses between the years 1983 and 2010.  The coded information constitutes the empirical data, and the paper reports these data using a variety of statistical presentations and arguments. 

Results
We first examined patent applicants’ success before the Federal Circuit as opposed to lower tribunals.   Our analysis reveals that patentees are quite likely to succeed before the Federal Circuit, winning 76% of the time, a rate of success higher than that observed in the lower tribunal judgments the court is analyzing.  Overall, the Federal Circuit affirms lower tribunal findings of no inequitable conduct 91% of the time, but affirms findings of inequitable conduct only 45% of the time, as illustrated by the below graphs.  This suggests to us that the Federal Circuit is applying a stricter standard than in the lower tribunal opinions it reviews.

Fig 3
Fig 4
 
We next looked at the analytical structure of the inequitable conduct doctrine, which consists of three components: a materiality inquiry, an intent to deceive inquiry, and a discretionary judicial balancing of materiality and intent undertaken with a view toward deciding whether a patent applicant acted inequitably toward the public. 

Examining the data in this light revealed two key findings.  First, when the Federal Circuit gives a single reason for patentee success, that reason is nearly two and a half times more likely to be lack of intent to deceive than it is to be lack of materiality.  Second, balancing is expressly discussed only 8% of the time and forms the basis for a reversal only 2% of the time.  We think this means that the balancing inquiry does not play much of a substantive role in Federal Circuit inequitable conduct jurisprudence.  To be clear, while it looks like lower tribunals need to engage in this step of the analysis, the Federal Circuit does not seem to have any jurisprudence that guides or constrains how lower tribunals actually apply this step.  Instead, balancing at the Federal Circuit looks like a formality, such as checking a box or touching a base, as opposed to a meaningful guide to determining whether a patent applicant engaged in equitable conduct.

* * *

1In other words, if a case involved a claim that four patents were procured by inequitable conduct and the court’s analysis addressed all of the patents in a single textual analysis or rationale, then a single record entry was made in the dataset.  By contrast, if the court used one textual analysis or rationale to find, perhaps, that one of the patents was procured inequitably, and then used a single textual analysis or rationale to find that the other three were not, then two record entries were made in the dataset.

The Federal Circuit and Inequitable Conduct: Part I

CAFC, Inequitable Conduct, Patent, Rantanen,

By Jason Rantanen

Professor Lee Petherbridge, Ali Mojibi and myself are circulating a draft of our paper Inequitable Conduct and the Federal Circuit: An Empirical Analysis for comment.  The underlying study examines the content of the entire body of Federal Circuit inequitable conduct jurisprudence, and the paper offers several interpretations of the reported data.

Among the most interesting are: that the Federal Circuit seems to apply a stricter standard for inequitable conduct than a substantial number of the tribunals it reviews; that the Federal Circuit’s inequitable conduct standard is applied primarily through the intent to deceive component of the analysis; and that while the apparent lack of clarity in the inequitable conduct standard may be a result of judicial variation on the court, it may also represent a preference by the Federal Circuit to effect a jurisprudential design, the purpose of which is to encourage good faith behavior on the part of patent applicants while only rarely finding inequitable conduct. 

The abstract reads as follows:

Inequitable conduct is unique judicially created doctrine designed to punish patent applicants who behave inequitably toward the public in the course of patent acquisition.  Its name alone strikes fear into the hearts of patent prosecutors, and justly so – for when successfully asserted, inequitable conduct can have devastating consequences that reach far beyond a patentee’s case.  The need for a systematic empirical study of inequitable conduct jurisprudence has become especially pressing now that the Federal Circuit is reviewing inequitable conduct en banc – in terms so broad as to be unprecedented in the history of the doctrine.  This Article reports such a study. 

The study reported here provides evidence, inter alia, that the Federal Circuit applies an inequitable conduct standard stricter than that applied by a substantial number of the tribunals it reviews.  The Federal Circuit’s stricter standard manifests primarily through the intent to deceive component of inequitable conduct doctrine.  For all intents and purposes the Federal Circuit has no substantive jurisprudence around the balancing component, and the materiality component is comparatively less impactful then intent to deceive.  The court appears to have trouble communicating its stricter standard to lower tribunals.  We offer some explanations for why this might be so, and offer some modest suggestions that might advance inequitable conduct doctrine.

The complete Article can be downloaded here.   As this is a work in progress, we are particularly interested in any comments, including alternate explanations for the results we discuss.  In addition to responding below, comments can be sent to us directly or to prm.icpaper@gmail.com.

Law Review Case Note Topics for 2010-2011

Academic Studies, Articles and Publications, Law School, Patent, , , , , , , ,

Dear Law Review Editors: Please send me a note (dcrouch@patentlyo.com) to let me know about patent law focused articles that you publish in your journal so that I can highlight them on Patently-O.

Student Note Topics: Here are some suggestions for patent law focused law review topics for 2010-11 that I would like to see for my own edification. Please send me an e-mail if you choose one of these.

Tags:

Examiners Ignore Applicant-Submitted Prior Art

Inequitable Conduct, Patent, Patent Applications, Prior Art,

Professors Mark Lemley, Chris Cotropia, and Bhaven Sampat recently released a draft of their new article titled “Do Applicant Patent Citations Matter? Implications for the Presumption of Validity.” [Download Here.]

For the article, the trio analyzed the file histories of 1,500+ utility patents issued in 2007 and compared references used in office action rejections with the list of references cited on the patent cover-pages.  The objective was to figure-out the role of applicant-cited prior-art in the examination process.

Findings: Patent examiners rarely rely on applicant-submitted prior-art when making rejections.  Only 13% of the prior art used in office action rejections was applicant-submitted (despite the fact that 74% of cited references are applicant-submitted). Generally, the study found that examiners “effectively ignored” applicant-submitted prior art regardless of how few or how many references were cited; regardless of the timing of the IDS filing; and regardless of whether the submission included an EPO search reports identifying the references as “X-references.”

Implications: The authors suggest several implications of their findings: (1) That it likely does not make sense to find inequitable conduct when an applicant withholds prior art (since the art would not have been used in a rejection anyway); (2) That the presumption of validity associated with patents may be too strong; and (3) That studies based on patent citations likely lack merit.

Notes: I have privately e-mailed Professor Lemley with several comments on the article. Patent prosecutors will not likely be surprised that US examiners tend to rely on their own search results. However, I was surprised at the extent to which they found that this occurs.  As a matter of patent office policy, I would think that some minor changes could alter these results. For instance, examiners should be given a tool for performing text-searches that are limited to submitted (and identified) prior art references.  The office may also want to educate examiners on how to read European search/examination reports.

There are several rational reasons for examiners to cite their own prior art. Because of the backlog, PCTs, and provisional applications, US examination often begins several years after the application was originally filed.  During that interim, many references become available that were not known at filing.  Thus, it is not surprising that applicants rarely cite 102(e) prior art, but examiners cite loads of it.  There is some reason to think that this “newer” prior art is probably better because of technological developments.  It may also be true that the applicant and examiner references are cited for different purposes — namely, applicants cite references that are generally relevant to the invention while examiners are looking for references that teach each particular element in the filed claims.  A third issue is that applicants tend to modify their claims during prosecution. That modification may make their originally cited art less relevant. 

In the words of Lawrence Solum: Download it while its hot.

NO JOINT INFRINGEMENT despite Strategic Partnership, Joint Distribution Agreement, and Packaged Sales

Inequitable Conduct, Infringement, Patent, Patent Cases 2010,

PatentLawPic1052By Dennis Crouch

Golden Hour Data Systems, Inc. v. emsCharts, Inc. and Softtech (Fed. Cir. 2010)

Opinion by Judge Dyk and joined by Judge Friedman. Dissent by Judge Newman.

After trial, Judge Ward (E.D.Tx.) rejected the jury verdict of infringement and granted JMOL for the defendants — holding that no single party had infringed each element of the asserted claims.  The lower court also held the asserted patent unenforceable due to inequitable conduct during prosecution.

Joint Infringement: EMS delivers web-based medical charting.  Softtech’s software coordinates air-flight information.  The two companies formed a “strategic partnership” and signed a distribution agreement that would allow their two products to combine as a package.  The products were then sold as a package.

Patent law doctrine allows a finding of direct infringement only when a single entity is responsible for practicing each element (or step) of a claimed invention. Federal Circuit law holds that two or more entities can avoid liability for infringement so long as (1) each entity is responsible for practicing only a subset of the claimed elements and (2) no single entity exercises “control or direction” over the entire infringing process. Here, as in other Federal Circuit cases, such as Muniauction v. Thomson and BMC v. Paymentech, the Federal Circuit continued this doctrinal line — holding that the claim against emsCharts must fail because the plaintiff presented insufficient evidence for the “jury to infer control or direction.”

In BMC, Judge Rader acknowledged that strict adherence to the “control or direction” requirement highlighted an easy avenue for avoiding infringement. “This court acknowledges that the standard requiring control or  direction for a finding of joint infringement may in some circumstances allow parties to enter into arms-length agreements to avoid infringement. Nonetheless, this concern does not outweigh concerns over expanding the rules governing direct infringement.”

Dissenting from this opinion, Judge Newman argued that, despite Muniauction and BMC, the law of joint infringement does not strictly require that a single entity have control of the operation. Rather, a “collaborative effort as here . . . is not immune from infringement simply because the participating entities have a separate corporate status.”  Here, the two companies “combined their procedures into an integrated system that met all of the limitations of claims 1, 6-8, and 15-22, thus finding joint infringement and inducement to infringe these claims. The panel majority acknowledges that the defendants in collaboration infringed the claims, but without discussion overturns the jury verdict.”

Inequitable Conduct: The court also addressed inequitable conduct. Golden Hour had failed to submit an un-dated brochure that included undisclosed information that contradicted statements made by the applicant regarding a prior art AeroMed system.

Golden Hour first suggested that it had no duty to disclose the brochure because it was not clearly prior art. The Federal Circuit rejected that argument because the duty of disclosure is not limited to prior art. As stated in the MPEP, “[t]here is no requirement that the [submitted] information must be prior art references in order to be considered by the examiner.” MPEP § 609 (2008).

On materiality, the court held that the brochure was clearly material because it contradicted a statement made by the applicant in the specification. In finding the contradiction, the court looked to English grammar.  The specification stated that the AeroMed system “does not” provide comprehensive integration. According to the court, the present-tense representation indicates the applicant’s contention that the AeroMed system will not provide comprehensive integration at any time “throughout the pendency of the application.”  (DDC Says: What is Judge Dyk thinking?).

On intent to deceive the PTO, the court held that intent could be inferred if there was evidence that either of the prosecuting attorneys actually read the brochure (but if they did not read the reference then they would only be guilty of gross negligence).  Here, the court did not find evidence that the attorneys actually read the reference and therefore vacated the inequitable conduct decision for lack of intent to deceive.  (The appellate court suggests that inequitable conduct will likely be found again on remand.).

In Dissent, Judge Newman wrote:

As for materiality, I do not share the conclusion that the undated AeroMed brochure, obtained at a trade show (the Association of Aeromedical Services) a few weeks after this patent application was filed, and found not to be invalidating prior art, was so clearly and convincingly “material to patentability” that failure to provide a copy of the brochure while quoting its front page, invalidates the patent that was found valid over the entire content of the brochure. The record does not show that the brochure was published before the Golden Hour patent application was filed. The defendants provided no documentary evidence of any publication date, and the district court did not find the brochure to be prior art; their only evidence was the “uh-huh’s” of the brochure’s author, quoted at footnote 1 of the majority opinion. 

The record showed that when the brochure came into Golden Hour’s possession at the trade show, it was given to Golden Hour’s patent attorney, who referred to it in the Invention Disclosure Statement filed with the PTO, including quotation of the cover page but not the inner page. At the trial, the full brochure was in evidence, and stressed by the defendants, and the jury found that it was not invalidating. In view of the majority’s ruling that deceptive intent was not established in the district court, and the jury’s verdict of validity despite the brochure, the charge of inequitable conduct should be laid to rest.  

 

TheraSense v. BD: Briefs on the Merits

En Banc, Inequitable Conduct, Patent, Patent Cases 2010,

By Dennis Crouch

Briefing continues in the en banc appeal of TheraSense (Abbott) v. BD and Bayer. That case stems from a district court finding that the TheraSense patent was unenforceable due to inequitable conduct during prosecution of the patent. The Federal Circuit is taking the case as a vehicle for re-evaluating the judge-made-law of inequitable conduct. I have collected the majority of merits briefs filed thus far in the en banc rehearing.  Becton Dickinson & Bayer’s opposing brief is due October 8, 2010.  Amici-briefs in support of BD/Bayer are due the following week. Oral arguments are scheduled for November 9, 2010 in Washington DC.  (This post merely provides briefs. Analysis to follow.)

Court Decisions:

Party Briefs:

Amicus Brief filed in Support of TheraSense

Amici Briefs filed in Support of Neither Party

Ring Plus v. Cingular Wireless

Claim Construction, Inequitable Conduct, Patent, Patent Cases 2010, Prior Art, Rantanen, Software, , ,

By Jason Rantanen

Although the court ultimately reversed the determination of inequitable conduct based on a lack of intent, its discussion of materiality is significant because the misrepresentation at issue occurred in the patent itself, in the form of statements about a prior art reference.  Prosecutors may want to take special note of this opinion in crafting their Background of the Invention sections. 

Ring Plus, Inc. v. Cingular Wireless Corp. (Fed. Cir., August 6, 2010)
Panel: Lourie, Gajarsa and Moore (author)

Ring Plus is the assignee of Patent No. 7,006,608 (the '608 patent), which relates to a software based algorithm and method for generating and delivering messages over a phone line that replace or overlay a ring-back signal.

After granting summary judgment of noninfringement, the district court held a bench trial on the unenforceability of the '608 patent.  Following the bench trial, the district court concluded that the '608 patent was unenforceable due to inequitable conduct.  Ring Plus appealed both determinations, along with the denial of its motion to disqualify Cingular's counsel. 

Inequitable conduct: Materiality but no Intent
The district court's inequitable conduct determination was based on two alleged misrepresentations concerning the substance of two prior art references, Strietzel and Sleevi.  The district court found that the first misrepresentation was in the Background of the Invention section of the '608 patent, which asserted that both references proposed hardware based systems but no software to operate those systems.  Contrary to this assertion, the district court found, one of skill in the art would have understood the references to disclose software-based algorithms.1 

The panel agreed that this was a material misrepresentation.  Although neither reference explicitly disclosed software, the panel could not say that the district court clearly erred in finding that a person of ordinary skill in the art would have understood the references to disclose software-based algorithms. 

In arriving at the conclusion that the statement about the contents of the prior art constituted a misrepresentation, the panel rejected the contention that it was merely attorney argument.  The court did not address this issue in any depth, merely stating that because the statement was a misrepresentation, it "was outside the boundas of permissible attorney argument."  Slip Op. at 9.

Comment: I am a troubled by the court's cursory statement on this point because of the ambiguity it creates.  These types of sweeping assertions, made without addressing the substance of the argument or citing relevant authorities, are the kinds of things that are likely to tie attorneys and judges in knots.  Indeed, the court's quotation from Rothman is particularly perplexing, as Rothman reached the opposite conclusion on similar facts.  At a minimum, one would expect the court to explain why Rothman does not apply.

Ultimately, however, the panel concluded that Cingular had failed to present clear and convincing evidence of intent to deceive.  In arriving at this conclusion the court noted that the references were ambiguous as to operating software, and the prosecuting attorney's testimony gave rise to the inference that the applicants believed that the two references did not disclose software for operating a telephone system.  Because this inference was as reasonable as the district court's inference of deceptive intent, the district erred in its finding of deceptive intent.

Other holdings
The panel also addressed Ring Plus's challenge to the district court's construction of two claim terms, which formed the basis of the noninfringement ruling.  The court affirmed the district court's construction, relating to the sequence of steps in the '608 patent.  In addition, the court rejected Ring Plus's argument that Cingular's counsel should have been disqualified for ex parte contact with a Ring Plus director and officer.  The court concluded that there was no evidence of impropriety under Fifth Circuit law.

1The district court also found that the applicants made a misrepresentation about these references during prosecution; the panel concluded that this statement was not a misrepresentation.

Changing the Law of Inequitable Conduct: Abbot Briefs its Case

Amicus Brief, En Banc, Inequitable Conduct, Patent,

TheraSense, Inc. (Abbott Labs.) v. Becton, Dickinson and Co. (Fed. Cir. 2010)(En Banc Rehearing)

In TheraSense v. BD, an en banc Federal Circuit is reconsidering the doctrinal structure that it has created to handle allegations of inequitable conduct. Abbott (the patent holder) has filed its opening merits brief arguing that the current law of inequitable conduct over-extends its proper bounds.  In an eloquent opening statement, Abbott writes:

The question in this case is not whether to reform the doctrine of inequitable conduct, but whether to restore it—to its origins in Supreme Court precedent; to the confines Congress intended in the 1952 Patent Act; to the standards this Court articulated en banc in Kingsdown Medical Consultants v. Hollister, Inc., 863 F.2d 867 (Fed. Cir. 1988); and to the standards that govern in other areas of law. This Court has expanded the inequitable conduct doctrine well beyond those boundaries, and the result has been an “ongoing pandemic” of inequitable conduct charges. Taltech Ltd. v. Esquel Enters. Ltd., 604 F.3d 1324, 1335 (Fed. Cir. 2010) (Gajarsa, J., dissenting). The expansion has rendered valuable patents unenforceable based on minor omissions far afield from the doctrine’s purposes. And it has converted the federal courts into roving commissions to enforce standards of conduct before the PTO without regard to whether the alleged infractions had any impact. . . .

Supreme Court precedent and the legal principles embodied in the Patent Act reserve those extreme consequences for the most egregious circumstances—cases where a party “obtained its patent by fraud.” Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 175, 176 (1965). As this Court has recognized, the Supreme Court has held patents unenforceable “only in cases of ‘fraud on the Patent Office.’” Star Scientific, 537 F.3d at 1365-66 (quoting Hazel–Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 250-51 (1944)); see Larson Mfg. Co. of S.D., Inc. v. Aluminart Prods. Ltd., 559 F.3d 1317, 1343 (Fed. Cir. 2009) (Linn, J., concurring). A party seeking to invalidate a trademark or copyright based on misconduct before the agency must prove it was the product of fraud. The standard should be no less stringent here.

Briefs Filed Thus Far:

PSA For TheraSense Amici: Filing Permission Must Be Requested

Amicus Brief, Patent,

The TheraSense en banc order states that “amicus briefs may be filed without leave of court but otherwise must comply with Federal Rule of Appellate Procedure 29 and Federal Circuit Rule 29.”  Although I would have guessed that this statement relieved amicus filers from the requirement of seeking permission of the parties or filing a motion, the Federal Circuit clerk is apparently requiring that amici either (1) obtain consent from all parties, or (2) if fewer than all parties consent, submit a motion to the court for permission to file the brief.  Several amicus briefs filed in the case have apparently been rejected for failure to comply with these requirements.

This information comes from Professor Christian Mammen (visiting at Hastings). Mammen is drafting a brief in TheraSense that argues three primary points: (1) that materiality should focus on patentability issues, and should defer to the PTO's Rule 56; (2) that there should be an increased focus on the clear and convincing standard of proof for intent (with corollaries that "should have known" and "gross negligence" should be abolished, and the Star Scientific "single most reasonable inference" test is a good starting point); and (3) if there is a sufficient increase in the required thresholds for both materiality and intent, the balancing step (which is often ignored in any event) may be abandoned.  Legal academics or others potentially interested joining his brief should contact him at mammenc@uchastings.edu.

Avid ID v. Crystal Import: En Banc Request Denied On Issue of Inequitable Conduct by Non-Inventor CEO

En Banc, Inequitable Conduct, Patent, Prior Art, statutory bar,

By Dennis Crouch

In Avid ID, the Federal Circuit denied Avid's motion for en banc rehearing on the issue of whether inequitable conduct exists when the non-inventor, non-attorney CEO of a company applying for a patent failed to submit information to the USPTO about pre-filing but non-invalidating trade-show exhibit of a prior version of the patented product. Judge Newman dissented.   

* * *

Avid Identification Systems v. Crystal Import Corp. (Fed. Cir. 2010).

In its original decision in this case, the Federal Circuit held that the president of Avid ID Systems was "substantially involved" with the prosecution of the asserted patent and therefore was subject to the duty of disclosure. The court went on to find that the president had failed that duty by failing to advise the PTO of a trade-show demonstration that occurred more than one-year before the patent application was filed. The inequitable conduct decision was important to the case because the trade-show demonstration of a prior product did not leave the patent invalid under the statutory bar of 102(b)/103(a).   

Avid requested rehearing en banc and that its case join with the pending TheraSense en banc case or, in the alternative, to stay the rehearing decision until after Therasense is decided. The Federal Circuit has denied Avid's motion for rehearing en banc.

Judge Newman dissented from the rehearing denial and would have stayed the case to await changes in the law of inequitable conduct:

The law as applied in Avid is subject to conflicting precedent, a conflict whose resolution is reasonably likely to alter the result. Thus it is prudent, and just, to hold Avid’s petition while the law is clarified. The court today has declined to do so, rendering the subject patent permanently unenforceable, although the patent was found valid on the same prior art that is the basis for its unenforceability.

. . .

This court held that Dr. Stoddard’s demonstration during the Livestock Committee trade show of what the panel calls “some of Avid’s technology,” and Avid calls a “precursor product,” was material to patentability and that Dr. Stoddard was required to assure that the patent examiner was informed. According to the panel opinion, the district court “found that the precursor product, while not invalidating, reflected the closest prior art, and thus was highly material to patentability.” Avid Identification Sys., Inc. v. Crystal Import Corp., 603 F.3d 967, 973 (Fed. Cir. 2010)(“Avid II”). While “closest prior art” has been discussed in the context of whether certain information is cumulative of that already presented to an examiner, see, e.g., AstraZeneca Pharms. LP v. Teva Pharms. USA, 583 F.3d 766, 773-75 (Fed. Cir. 2009), it has never been the law that information is “highly material” simply because it is “closest.” It is not disputed that whatever was demonstrated was not an invalidating disclosure of the patented invention, and not a sale or offer to sell the patented invention, for the jury found that the demonstration at the Livestock Committee was not invalidating. See Avid I, 2007 WL 2901415, at *1.

Dr. Stoddard, who is the president of Avid, is a veterinarian whose principal occupation is running an animal hospital; he is not an electronics engineer and not a chip designer and not an inventor of the patented device and not a lawyer. See Avid II, 603 F.3d at 970. On the undisputed fact that the challenged information is not invalidating, the court’s holding of inequitable conduct is sufficiently questionable to warrant a stay until this court resolves the larger issues before us, including the en banc Order’s query: “Should a finding of materiality require that but for the alleged misconduct, one or more claims would not have issued?” Order, 2010 WL 1655391, at *1. It is at least possible that the court will answer this question in the affirmative. Although I do not venture to guess how Therasense will fare overall, it is not unreasonable to expect that it may affect the Avid decision.

The Avid panel applied the former Rule 56 standard of materiality as stated in J.P. Stevens & Co. v. Lex Tex Ltd., 747 F.2d 1553, 1559 (Fed. Cir. 1984), although this standard was abandoned by the PTO in 1992. The information here criticized does not appear to violate the current Rule 56 standard, and Dr. Stoddard is not within the cadre upon whom is placed the obligation of understanding the patent law, as Judge Linn explained in his dissent. I must, respectfully, dissent from the court’s refusal to stay this appeal in view of the en banc proceeding in Therasense.

Documents:

Advanced Magnetic Closures v. Rome Fastener

Guest Post, Inequitable Conduct, Patent, Rantanen, ,

By Jason Rantanen

Early this week, I wrote about Leviton, former Chief Judge Michel's last opinion on inequitable conduct before leaving the bench.  Advanced Magnetic Closures brings another perspective on the issue – this time in the form of a comment from the new Chief Judge about issuing inequitable conduct opinions while Therasense v. Becton, Dickinson is pending en banc.

* * * *

Fastener Advanced Magnetic Closures, Inc. v. Rome Fastener Corp. (Fed. Cir., June 11, 2010)

In Advanced Magnetic Closures, the court reviewed a district court determination that U.S. Patent No. 5,572,773 is unenforceable due to inequitable conduct by the alleged inventor.  The panel also reviewed the district court’s entry of attorney fees against both the patent holder (AMC) and its attorney. 

Inequitable conduct: The focus of the inequitable conduct determination was on the district court’s finding that the alleged inventor falsely claimed to the PTO that he was the inventor of the claimed magnetic fastener when, in fact, he was not.  Applying the Star Scientific standard, the panel concluded that the district court did not err by finding that “the single most reasonable inference able to be drawn from the evidence is that [the alleged inventor] intended to deceive the PTO.”  Slip Op. at 19 (internal quotations omitted). 

Attorney’s Fees: After concluding that the exceptional case determination was appropriate on the basis of both inequitable conduct and litigation misconduct (an issue that the appellant waived by failing to include it in its briefs), the court addressed the attorney sanctions entered against AMC’s attorney under 28 US.C. § 1927.  Applying Second Circuit law, the Federal Circuit concluded that the district court abused its discretion by sanctioning the attorney.  The court noted that attorney sanctions under 28 U.S.C. § 1927 require a finding of bad faith, as opposed to objective unreasonableness, and concluded that the district court’s single statement that the attorney “should have been aware” of the deficiency of AMC’s patent infringement claim was insufficient to rise to this level.  

Chief Judge Rader’s Concurrence: The most notable aspect of the opinion comes at the end, in the form of the new Chief Judge’s concurrence.  While Judge Rader agreed with the outcome of the appeal, he wrote separately to stress that “absent extreme facts such as those found in the present case, this court should refrain from resolving inequitable conduct cases until it addresses the issue en banc.”  He also provided the following interesting comment regarding Therasense:

“In Therasense, this court has been asked to address the transformation of inequitable conduct from the rare exceptional cases of egregious fraud that results in the grant of a patent that would not otherwise issue to a rather automatic assertion in every infringement case. The exception has become the rule. Generally, I would hold inequitable conduct cases until after this court reexamines whether to put the doctrine back into the exception category.”

Although no Federal Circuit decisions involving inequitable conduct have issued since Advanced Magnetic Closures, only a short time has passed.  It remains to be seen whether the Chief Judge’s proposed policy on inequitable conduct determinations will be followed for the coming months.

* * * *

For the sake of full disclosure, I note that I previously represented Abbott Laboratories in connection with the Therasense litigation.  I no longer represent clients, including Abbott.

Patently-O Bits and Bytes

Bits and Bytes, Patent
  • PatentlyO068Todays Posts:
  • New Contributing Author: Jason Rantanen
    • My friend Jason Rantanen has agreed to become a contributing author on Patently-O for the next few months. He’ll be posting case reviews and other notes about once each week.  Jason and I were classmates at the University of Chicago School of Law. Before law school, Jason earned degrees in both Biology (Brown) and History (Brown, Chicago).  He clerked for Judge Bryson on the Federal Circuit and litigated IP disputes at the Munger Tolles firm in San Francisco.  This summer, Jason started on an academic path as a Visiting Scholar at UC Hastings School of Law. He may not want this shared, but Jason is also married to a patent attorney.
    • Posts written by Jason will bear his name.
  • Media Queue v. Netflix:
    • I recently posted on the push by Netflix for a legal shift that would allow successful defendants greater access to recover attorney fees. [Link] Nick Gross, the inventor and patent attorney at the heart of the lawsuit has now posted an article on his blog where he addreses “certain false statements and mischaracterizations raised by Netflix.” [Link] Nick Gross’s post provides an interesting history — especially regarding pre-litigation activities between the companies.

Patently-O Bits and Bytes

Bits and Bytes, Patent
  • PatentlyO068Todays Posts:
  • New Contributing Author: Jason Rantanen
    • My friend Jason Rantanen has agreed to become a contributing author on Patently-O for the next few months. He’ll be posting case reviews and other notes about once each week.  Jason and I were classmates at the University of Chicago School of Law. Before law school, Jason earned degrees in both Biology (Brown) and History (Brown, Chicago).  He clerked for Judge Bryson on the Federal Circuit and litigated IP disputes at the Munger Tolles firm in San Francisco.  This summer, Jason started on an academic path as a Visiting Scholar at UC Hastings School of Law. He may not want this shared, but Jason is also married to a patent attorney.
    • Posts written by Jason will bear his name.
  • Media Queue v. Netflix:
    • I recently posted on the push by Netflix for a legal shift that would allow successful defendants greater access to recover attorney fees. [Link] Nick Gross, the inventor and patent attorney at the heart of the lawsuit has now posted an article on his blog where he addreses “certain false statements and mischaracterizations raised by Netflix.” [Link] Nick Gross’s post provides an interesting history — especially regarding pre-litigation activities between the companies.

Leviton Manufacturing v. Universal Security Instruments

Inequitable Conduct, Patent

By Jason Rantanen

In Leviton, Chief Judge Michel issued his last words as a judge on the subject of inequitable conduct, while Judge Prost provided some hints as to her views on the questions pending before the court in Therasense v. Becton Dickinson.

* * * * *

Leviton Manufacturing Company, Inc. v. Universal Security Instruments, Inc. (Fed. Cir. 2010) (Case No. 2009-1421)

The district court's inequitable conduct determination in this case arose from two patent applications Leviton filed in 2003 and 2004.  The applications contained virtually identical claims, but listed completely different inventors.  The first application (the "Germain application") was filed in October 2003 and claimed priority to a February 2003 provisional application; the second, which led to the '766 patent (the patent in suit), was filed in 2004 as a continuation of an application filed on August 20, 1999.  The prosecuting attorneys did not disclose the Germain application during the prosecution of the '766 patent.

After granting Leviton's mid-litigation motion to dismiss, the district court concluded that the case was exceptional based on inequitable conduct and vexatious litigation, resulting in an award of attorneys' fees.

  • Note: The majority treated the district court's inequitable conduct finding as a summary judgment, as there was no evidentiary hearing.  The dissent would have reviewed the factual findings under the clear error standard because they arose in the context of an exceptional case determination. 

Majority: Factual Issues Relating to Intent Precluded Summary Judgment of Inequitable Conduct
The majority, written by then Chief Judge Michel and joined by Judge Moore, concluded that summary judgment of inequitable conduct should be reversed.  With respect to materiality, they agreed with the district court that the Germain application constituted undisclosed material information.  Although the copying of the claims was not per se material under 37 C.F.R. § 10.23(c)(7) (which relates to the interference context), it was relevant to double patenting and inventorship.  They also agreed that the failure to disclose litigation involving the '766 patent's parents was material. 

On intent, however, the majority concluded that the district court's inference of deceptive intent was not the only reasonable one based on the record.  In particular, they noted that the explanation given by Leviton's litigation counsel was not unreasonable as a matter of law, thus precluding a grant of summary judgment.  Rather, it could only be found implausible following an evidentiary hearing.

Dissent: Summary Judgment Should Be Affirmed

In her lengthy dissent, Judge Prost indicated that she would reach the opposite conclusion on intent.  Particularly informative are her views on inferring intent.  First, she explicitly adopted the Larson Manufacturing requirement that an inference of intent "must be the single most reasonable inference able to be drawn from the evidence."  Dissent at 11.  Second, she gave her thoughts on plausible explanations, reasoning that the prosecuting attorney's explanation (that he did not believe the Germain application was material because it was not prior art) was implausible because a veteran patent prosecutor would know that prior art is not the only type of information that is material to the examiner.  Thus, she would "allow the district court to reject [the explanation] as "unreasonable" and "implausible" and therefore insufficient to create a genuine issue of material fact."  Dissent at 17.

  • Comment: Judge Prost's logic would appear to be applicable to any situation in which the prosecuting attorney's explanation was incorrect – which generally necessarily follows once materiality has been found.  All one needs to do is to point out that the attorney must necessarily have known better, and the explanation would be rendered implausible.

About Jason: After spending several years in practice as a patent litigator, Jason is now looking at law from the academic side and is currently a Visiting Researcher at UC Hastings. Although he does not currently represent clients, for the sake of full disclosure he notes that he has represented clients on both sides of inequitable conduct issues, including Abbott Laboratories in connection with the Therasense litigation.

Attorney Fees and Equal Treatment for Plaintiffs and Defendants

Attorney Fees, Infringement, Patent, Patent Cases 2010,

Media Queue v. Netflix (Fed. Cir. 2010)

This case involves a classic “improvement patent” scenario. Nick Gross was a longtime Netflix user when he came-up with the idea that the service should provide additional user notifications — such as when the movie queue runs dry. Just before filing suit, Gross and partners formed Media Queue as a holding company. Media Queue then sued Netflix, Blockbuster, and others for patent infringement. Nick is also a patent attorney and a nice guy. We met at a conference last spring.

After construing the claims, the district court dismissed the case based on its summary judgment finding of non-infringement.  The court, however, refused to award attorney-fees to the defendants because the case was not entirely frivolous or filed in bad faith.  Media Queue has appealed the summary judgment.  However, the more interesting aspect of the case is the counter-appeal by Netflix asking the Federal Circuit for an en banc hearing to on the issue of when a court may find an “exceptional case” and award attorney fees to the prevailing party. In particular, Netflix argues that the current law of attorney-fee awards is imbalanced in favor of the plaintiff-patentee.

35 USC 285 simply states that “The court in exceptional cases may award reasonable attorney fees to the prevailing party.”  Several decisions have held that a prevailing-patentee may obtain attorney fees based on a finding of willful infringement — i.e., that the accused infringer was aware of an objectively high likelihood that the patentee would prevail.  Willfulness can be found even when the defendant has a non-frivolous non-infringement of invalidity argument. On the flip-side, however, a prevailing-defendant (accused infringer) seeking attorney fees must show a seemingly higher standard of litigation misconduct or inequitable conduct.

The appeal asks the Federal Circuit to apply the Supreme Court precedent of Fogerty v. Fontasy, Inc. (1994) in holding that plaintiffs and defendants in patent cases are entitled to equal treatment in obtaining attorneys' fees.

The appeal is filed by Mark Lemley’s team at Durie Tangri. Amazon, Facebook, Microsoft, Oracle, Toyota, and others “frequent defendants” have filed briefs supporting en banc hearing.

Documents:

Statutory Guidelines for Inequitable Conduct

Amicus Brief, En Banc, Inequitable Conduct, Patent,

In TheraSense, the en banc Federal Circuit is looking to rewrite the rules of inequitable conduct. By both its name and historic precedent, inequitable conduct appears to stem from non-statutory doctrines of equity. However, as with other equitable doctrines (such as injunctive relief), inequitable conduct could be somewhat tamed by the language of the Patent Act. In his TheraSense amicus brief, Professor Hricik is taking a useful approach by focusing on the statutory basis for holding claims unenforceable.

Two provisions of the Patent Act come to mind. One is general and the other specific. The general statute is 35 USC 282(1). That portion of Section 282 identifies "unenforceability" as a defense to patent infringement. In TheraSense, the court's first goal should be to interpret the meaning of unenforceability as found in that statute.

The more specific provision is Section 288. It is Section 288 that allows a patentee to assert infringement of remaining claims even after some of the claims are found invalid. Section 288 sets a specific limit on this separability principle. Namely, separability of claims does not apply when an invalidated claim was obtained through deceptive intent.

Whenever, without deceptive intention, a claim of a patent is invalid, an action may be maintained for the infringement of a claim of the patent which may be valid. 35 U.S.C. §288.

Section 288 is not exhaustive in its approach. Rather, the statute is only explicit that the remaining claims of a patent can be asserted even after one of the claims was found invalid, so long as that invalid claim was not obtained with deceptive intent. The statute does not explicitly indicate the result when an invalid claim was obtained with deceptive intent or, for that matter, when a valid claim was obtained with deceptive intent. In his brief, however, Professor Hricik concludes that these statutes should be read to – at times – limit the Court’s ability to automatically render all claims of a patent unenforceable after a finding of inequitable conduct.

Contact Professor Hricik if you (or your firm / company) are interested in joining the brief.

Multi-Track Examination: Enhanced Examination Timing Control Initiative

Patent,

The USPTO has published a request for comments that provides more detail on the potential multi-track examination timing initiative. (75 FR 31763). A public meeting will be held on July 20, 2010, 1:30 pm at the USPTO. Written comments must be submitted by August 20, 2010. Written comments, requests to attend the meeting, and requests to present at the meeting should all be sent to 3trackscomments@uspto.gov.

The potentially greatest impact of the proposal is directed toward applicants that claim foreign priority. In all such cases, the PTO is proposing that the office delay examination until the PTO receives a copy of the first office action and applicant reply from the foreign prosecution.

Under the initiative, for applications filed in the USPTO that are not based on a prior foreign-filed application (e.g., that do not claim foreign priority benefit), applicant would be able to: (1) Request prioritized examination (Track I); (2) for non-continuing applications, request a delay lasting up to 30 months in docketing for examination (Track III); or (3) obtain processing under the current procedure (Track II) by not requesting either (1) or (2). For applications filed in the USPTO that are based on a prior foreign-filed application, no action would be taken by the USPTO until the USPTO receives a copy of the search report, if any, and first office action from the foreign office and an appropriate reply to the foreign office action as if the foreign office action was made in the application filed in the USPTO. Following or concurrent with the submission of the foreign office action and reply, applicant may request prioritized examination or obtain processing under the current procedure.

….

While it is believed that most applicants will continue to file applications first in their national or regional office based on business needs or costs of translation, comment is also requested on whether the USPTO should anticipate a larger number of applications being filed at the USPTO first rather than an applicant’s national office. Additionally, would this filing pattern change if (as proposed in various patent law reform bills) a foreign filing date could be used as a prior art date under US law?

…

The instant proposal permits deferral of certain fees if Track III examination is requested. … [C]omments to this notice are requested on whether PTA should be limited by a request by applicant for deferred examination in the office of first filing. Similarly, comments are also requested on whether PTA should be limited if the applicant does not request accelerated examination in the office of first filing.

Prioritized Examination (Track I): For some applicants with a currently financed plan to commercialize or exploit their innovation or a need to have more timely examination results to seek additional funding, more rapid examination is necessary. While some programs are currently available to prioritize applications (e.g., the accelerated examination program and the petition to make special program), some applicants neither want to perform the search and analysis required by the accelerated examination program nor can they seek special status based on the conditions set forth in 37 CFR 1.102. For such applicants, the USPTO is proposing optional prioritized examination upon applicant’s request and payment of a cost recovery fee. A request for prioritized examination may be made in a USPTO first-filed application at any time and may be made in any other application only after receipt of a copy of the search report, if any, and first action on the merits from the intellectual property office in which the relied-upon application was filed and an appropriate reply to that action in the application filed in the USPTO. On granting of prioritized status, the application would be placed in the queue for prioritized examination.

The fee would be set at a level to provide the resources necessary to increase the work output of the USPTO so that the aggregate pendency of non-prioritized applications would not increase due to work being done on the prioritized application. The fee would also be set to recover any other additional costs associated with processing the prioritized application. For example, if work output is to be increased by hiring new examiners, then the fee for prioritized examination would include the cost of hiring and training a sufficient number of new employees to offset the production work used to examine prioritized applications. Under the USPTO’s current statutory authority, the USPTO is not permitted to discount the fee for small entity applicants. Should the USPTO’s authority to set fees be enhanced, it is anticipated that the USPTO would discount this fee for small and micro entity applicants, given the substantial fee that would need to be charged to recover all of the costs associated with the contemplated service.

The USPTO is also considering limiting the number of claims in a prioritized application to four independent and thirty total claims. In addition, the USPTO is considering requiring early publication of prioritized applications so that applications would be published shortly after a request for prioritization is granted, or eighteen months from the earliest filing date claimed, whichever is earlier.

All applications prioritized on payment of a fee, or accelerated or advanced out-of-turn under existing programs, would be placed in a single queue for examination on the merits and *31766 would be taken up out-of-turn relative to other new or amended applications. The goals for handling applications in this queue would be to provide a first Office action on the merits within four months and a final disposition within twelve months of prioritized status being granted. If this process is implemented, the USPTO anticipates that it would provide statistics on its progress in meeting these goals on its Internet Web site.

To maximize the benefit of this track, applicant should consider one or more of the following: (1) Acquiring a good knowledge of the state of the prior art to be able to file the application with a clear specification having a complete schedule of claims from the broadest that the applicant believes he is entitled in view of the state of the prior art to the narrowest that the applicant is willing to accept; (2) filing replies that are completely responsive to the prior Office action and within the reply period (shortened) set in the Office action; and (3) being prepared to conduct interviews with the examiner.

…

An applicant-controlled up to 30-month queue prior to docketing (Track III): Some applicants file an application just prior to the statutory bar date but before a commercially viable plan for exploitation of the innovation has been developed or financed. To better provide for the timing of examination that such applicants desire and to provide a similar time period to that provided internationally, the USPTO is considering permitting any applicant in an application that does not claim benefit of a prior-filed foreign application or prior non-provisional application to select, on filing or in reply to a notice to file missing parts, an applicant-controlled up to 30-month queue prior to docketing for examination. In order to avoid delays in notice to the public, any application requesting Track III must also be published as an 18- month patent application publication. An application granted this status would be placed in a queue for applicant to request examination and pay the examination fee with the surcharge (if not already paid) within thirty months of the actual filing date of the application or any relied-upon provisional application (i.e., to which benefit is claimed under 35 U.S.C. 119(e)). Failure to request examination within the 30-month period would result in abandonment of the application. The request for examination and examination fee (and surcharge) would be due on the 30-month date but could be submitted early (e.g., on filing of the application) with a request that the application remain in the pre-examination queue for a period of time (e.g., up to 30 months from filing). On expiration of the time period, the application would be placed in the queue for examination.

On receipt of the request for this queue, the USPTO would determine if the application was ready for publication as a patent application publication (except for the receipt of the examination fee) and determine if any request for nonpublication made on filing had been rescinded. If both conditions were met, the application would be placed in a queue to await a request for examination and payment of the examination fee. If the application was not ready for publication, a requirement to place the application in condition for publication would be made and, once satisfied, the application would be placed in the 30-month queue. The request for examination and payment may be made at any time during the 30-month period. If no request is made within the 30-month period, the application would be held abandoned. The examination fee and the surcharge may be paid within the 30-month period or may be submitted after a timely request for examination is filed on notice of non-payment by the USPTO, along with any required extension of time fees.

Upon receipt of the examination request and fee, the application would be placed in the queue for examination, but the receipt date of the examination request would be used as the “date in queue.” Thus, the application will be taken up for examination as if the request date was the application’s actual filing date. If applicants determine that more rapid examination is desirable, then they may request (and pay the required fee) for prioritized examination while the application is in the queue for examination.

PTA Offset: Currently, the USPTO is considering a rule to offset any positive PTA accrued in a Track III application when applicant requests that the application be examined after the aggregate average period to issue a first Office action on the merits. For example, if the aggregate average time to issue a first Office action is 20 months and applicant requests that the application be examined at month 30, the proposed PTA reduction would be 10 months beginning on the expiration of the 20-month period and ending on the date on which applicant requested examination to begin. The overlap with the aggregate average period when the USPTO would not be able to have issued a first Office action on the merits would not be treated as an offsetting reduction.

PTA Offset for Foreign Delay: Similarly, for an application in any of the three tracks that claims foreign priority, the USPTO is considering a rule to offset positive PTA accrued in the application when applicant files the required documents (that include a copy of the search report, if any, and first office action from the foreign office and an appropriate reply to the foreign office action as if the foreign office action was made in the application filed at the USPTO) after the aggregate average period to issue a first Office action on the merits. For example, if the aggregate average time to issue a first Office action is 20 months and applicant submits the required documents 30 months after the filing of the application, then the proposed PTA reduction would be 10 months beginning on the expiration of the 20-month period and ending on the date of the filing of the required documents. Thus, delays by foreign offices beyond the aggregate average time for the USPTO to issue a first Office action on the merits would be an offsetting reduction against any positive PTA accrued by the delay in issuing a first Office action while the USPTO awaits the preparation of a search report and first action by the office of first filing.

In Tracks I and II, if the U.S. application claims the benefit of a prior-filed foreign application, and the relied-upon foreign application is abandoned prior to an action on the merits being made available, applicant must notify the USPTO and request that the application be treated for examination queuing purposes as if the foreign priority claim had not been made. The USPTO is considering making the failure to notify the USPTO within three months of the abandonment in the foreign office trigger a PTA offset as the USPTO would not appreciate the need to treat the application as if first-filed in the USPTO until such notice is given. Similarly, if the office of first filing has a practice of not producing actions on the merits, applicant would need to notify the USPTO that the application should be treated for examination queuing purposes as if the foreign priority claim had not been made.

Comments on one or more of the following questions would be helpful:

  1. Should the USPTO proceed with any efforts to enhance applicant control of the timing of examination?
  2. Are the three tracks above the most important tracks for innovators?
  3. Taking into account possible efficiency concerns associated with providing too many examination tracks, should more than three tracks be provided?
  4. Do you support the USPTO creating a single queue for examination of all applications accelerated or prioritized (e.g., any application granted special status or any prioritized application under this proposal)? This would place applications made special under the “green” technology initiative, the accelerated examination procedure and this proposal in a single queue. For this question assume that a harmonized track would permit the USPTO to provide more refined and up-to-date statistics on performance within this track. This would allow users to have a good estimate on when an application would be examined if the applicant requested prioritized examination.
  5. Should an applicant who requested prioritized examination of an application prior to filing of a request for continued examination (RCE) be required to request prioritized examination and pay the required fee again on filing of an RCE? For this question assume that the fee for prioritized examination would need to be increased above the current RCE fee to make sure that sufficient resources are available to avoid pendency increases of the non-prioritized applications.
  6. Should prioritized examination be available at any time during examination or appeal to the Board of Patent Appeals and Interferences (BPAI)?
  7. Should the number of claims permitted in a prioritized application be limited? What should the limit be?
  8. Should other requirements for use of the prioritized track be considered, such as limiting the use of extensions of time?
  9. Should prioritized applications be published as patent application publications shortly after the request for prioritization is granted? How often would this option be chosen?
  10. Should the USPTO provide an applicant-controlled up to 30-month queue prior to docketing for examination as an option for non-continuing applications? How often would this option be chosen?
  11. Should eighteen-month patent application publication be required for any application in which the 30-month queue is requested?
  12. Should the patent term adjustment (PTA) offset applied to applicant-requested delay be limited to the delay beyond the aggregate USPTO pendency to a first Office action on the merits?
  13. Should the USPTO suspend prosecution of non-continuing, non-USPTO first-filed applications to await submission of the search report and first action on the merits by the foreign office and reply in USPTO format?
  14. Should the PTA accrued during a suspension of prosecution to await the foreign action and reply be offset? If so, should that offset be linked to the period beyond average current backlogs to first Office action on the merits in the traditional queue?
  15. Should a reply to the office of first filing office action, filed in the counterpart application filed at the USPTO as if it were a reply to a USPTO Office action, be required prior to USPTO examination of the counterpart application?
  16. Should the requirement to delay USPTO examination pending the provision of a copy of the search report, first action from the office of first filing and an appropriate reply to the office of first filing office action be limited to where the office of first filing has qualified as an International Searching Authority?
  17. Should the requirement to provide a copy of the search report, first action from the office of first filing and an appropriate reply to the office of first filing office action in the USPTO application be limited to where the USPTO application will be published as a patent application publication?
  18. Should there be a concern that many applicants that currently file first in another office would file first at the USPTO to avoid the delay and requirements proposed by this notice? How often would this occur?
  19. How often do applicants abandon foreign filed applications prior to an action on the merits in the foreign filed application when the foreign filed application is relied upon for foreign priority in a U.S. application? Would applicants expect to increase that number, if the three track proposal is adopted?
  20. Should the national stage of an international application that designated more than the United States be treated as a USPTO first-filed application or a non-USPTO first-filed application, or should it be treated as a continuing application?
  21. Should the USPTO offer supplemental searches by IPGOs as an optional service?
  22. Should the USPTO facilitate the supplemental search system by receiving the request for supplemental search and fee and transmitting the application and fee to the IPGO? Should the USPTO merely provide criteria for the applicant to seek supplemental searches directly from the IPGO?
  23. Would supplemental searches be more likely to be requested in certain technologies? If so, which ones and how often?
  24. Which IPGO should be expected to be in high demand for providing the service, and by how much? Does this depend on technology?
  25. Is there a range of fees that would be appropriate to charge for supplemental searches?
  26. What level of quality should be expected? Should the USPTO enter into agreements that would require quality assurances of the work performed by the other IPGO?
  27. Should the search be required to be conducted based on the U.S. prior art standards?
  28. Should the scope of the search be recorded and transmitted?
  29. What language should the search report be transmitted in?
  30. Should the search report be required in a short period after filing, e.g., within six months of filing?
  31. How best should access to the application be provided to the IPGO?
  32. How should any inequitable conduct issues be minimized in providing this service?
  33. Should the USPTO provide a time period for applicants to review and make any appropriate comments or amendments to their application after the supplemental search has been transmitted before preparing the first Office action on the merits?

Measuring the Plague of Inequitable Conduct

Patent,

In Therasense, the en banc Federal Circuit is poised to consider fundamental questions of the law of inequitable conduct.  Some members of the court have called the doctrine’s current state a “scourge” and a “plague” on the patent system because inequitable conduct is alleged in so many patent cases. 

I searched LexisNexis for federal district court and appellate decisions that mention the term “inequitable conduct” and used those results to create the time-series charts below. As the charts demonstrate, the number of decisions discussing inequitable conduct has continued to dramatically rise even after the Federal Circuit’s 1988 Kingsdown decision.

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In his recent article, Professor Mammen analyzed the prevalence inequitable conduct by looking at federal court complaints (inter alia).  [Read Mammen’s article] I compiled his data into the following chart that shows the dramatic rise in the percentage of patent lawsuits where inequitable conduct is pled (typically in the answer as a defense to charges of patent infringement.)  Mammen article suggests that the chart below is a conservative calculation (because pleadings are difficult to find and search) and that the actual frequency of inequitable conduct allegations may reach to 60% of patent lawsuits.

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