May 26, 2011
On May 25, 2011, the Court of Appeals for the Federal Circuit issued a decision in Therasense, Inc. v. Becton, Dickinson & Co. that dramatically changed the law of inequitable conduct. The court held that, in most cases, inequitable conduct must be determined under the so-called “but for” standard. This decision has wide-ranging implications both in patent prosecution and in patent litigation.
In Therasense, the lower court found that Abbott Laboratories had committed inequitable conduct before the U.S. Patent and Trademark Office (USPTO) by failing to disclose its foreign patent counsel’s comments and arguments submitted to the European Patent Office (EPO) during prosecution of a related patent. These comments were argued to have taken a position contrary to the one Abbott was advancing in the U.S. prosecution. Under the existing law, the so-called “sliding scale” balancing of materiality and intent, the district court held that failing to submit the EPO comments constituted inequitable conduct. The district court found the requisite materiality based upon the USPTO’s Rule 56 materiality standard. This standard provides that information is material if it is not cumulative and (1) it establishes a prima facie case of unpatentability (either alone or in combination with other information), or (2) is inconsistent with a position the applicant takes before the USPTO with respect to patentability.
A panel of the Federal Circuit affirmed. The court then granted Abbott’s petition for en banc rehearing.
Specific Intent to Deceive: Must Be “Knowing and Deliberate”
The entire court reaffirmed that there must be clear and convincing evidence of a specific intent to deceive the USPTO by misrepresenting or omitting material information to the USPTO, and that even a showing of gross negligence will not suffice. In the case of omitted information, the accused infringer must prove that (1) the applicant knew of the reference, (2) knew that it was material, and (3) made the deliberate decision to withhold it. A “should have known” standard may no longer be used to prove intent. Also, the majority reiterated the standard set forth in an earlier decision, Star Scientific, that a specific intent to deceive the USPTO must be “the single most reasonable inference able to be drawn from the evidence.” In other words, if multiple reasonable inferences may be drawn, intent to deceive cannot be found.
Materiality: Must Meet a “But-For” Test
The majority (and concurrence) explicitly declined to adopt the USPTO’s definition of materiality and instead set forth a “but-for” test. Stating it in terms of withheld prior art references, the majority held: “When an applicant fails to disclose prior art to the PTO, that prior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art.” In making this determination, claims should be given their broadest reasonable construction and the reference applied under a preponderance of the evidence standard. The court held that this test ensures that the inequitable conduct doctrine is only applied where the patentee’s misconduct “resulted in the unfair benefit of receiving an unwarranted claim.” The majority did recognize a limited exception for cases of “affirmative egregious misconduct, such as the filing of an unmistakably false affidavit.” Federal Circuit Judge O’Malley concurred in part and dissented in part. A dissenting opinion was filed by Circuit Judge Bryson, joined by Circuit Judges Gajarsa, Dyk, and Prost.
No More Sliding Scale
The entire court also agreed that use of a “sliding scale” is improper. Under the sliding scale approach, a district court could accept a lesser showing of intent in cases with a high degree of materiality, and vice versa. The court resoundingly agreed that this approach ultimately resulted in an impermissible relaxation of the required proof and a conflation of materiality and intent, when both must separately be proven by clear and convincing evidence.
Going forward, the split among the judges of the Federal Circuit—accompanied by a strong contingency of supporters that remain on both sides of the issue, as shown by the wide spectrum of amicus briefs submitted prior to argument—suggests the next appeal will be a petition to the Supreme Court.
If you have any questions about the Therasense decision, please contact Nicole Little, the author of this alert.