May 27, 2011

Therasense’s Stringent Inequitable Conduct Test

Therasense, Inc. v. Becton, Dickinson and Co., Nos.

2008-1511, -1512, -1513, -1514, -1595  (Fed. Cir. May 25, 2011).

Determined to end overuse of inequitable conduct charges, the en banc Therasense court tightened the doctrine, abolishing the “sliding scale” rule and requiring an accused infringer to prove both materiality and intent by clear and convincing evidence.  To meet this standard, specific intent to deceive the PTO must be “the single most reasonable inference able to be drawn from the evidence,” slip op. at 25; if any other reasonable inference can be drawn, “intent to deceive cannot be found,” slip op. at 26.  But-for materiality is required: “the PTO would not have allowed a claim had it been aware of the undisclosed prior art.”  Slip op. at 27.  The court allowed an exception in cases of affirmative egregious misconduct (“the misconduct is material” itself), such as the patentees’ conduct in three unclean hands Supreme Court cases from which the inequitable conduct doctrine evolved.  Slip op. at 29.  The court details the egregious misconduct of each of those cases, which included “perjury, the manufacture of false evidence, and the suppression of evidence,” slip op. at 18-19.

The court found basis for the “but-for” standard in Supreme Court precedent as well, citing a case in which the patentee had submitted knowingly false affidavits, but, when the affidavit information was held not to have been “indispensible to the granting of the patent,” the Supreme Court held that the reasonable presumption of patent validity remained intact.  Slip op. at 27 (quoting Corona Cord Tire Co. v. Dovan Chemical Corp., 276 U.S. 358, 373-74 (1928)). 

Specifically, misrepresentation or omission that “amounts to gross negligence or negligence under a ‘should have known’ standard does not satisfy [the] intent standard. . . .  In other words, the accused infringer must prove by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.”  Sip op. at 24. The court repeated it for emphasis: “Proving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive.”   Sip op. at 25.  And, should a disgruntled future panel contemplate an end run based on the “egregious conduct” exception: “Because neither mere nondisclosure of prior art references to the PTO nor failure to mention prior art references in an affidavit constitutes affirmative egregious misconduct, claims of inequitable conduct that are based on such omissions require proof of but-for materiality.”  Slip op. at 29-30.

The district court had found inequitable conduct because the patentee had submitted a declaration and made an argument that appeared to conflict with an argument made by the company’s European attorney in a corresponding European application a couple years before.  The court vacated and remanded on three grounds: (1) the district court found statements made in the EPO material under the PTO’s Rule 56 materiality standard, not under the new but-for materiality standard; (2) the district court found intent to deceive based on the absence of a good faith explanation for failing to disclose the EPO argument, but such explanation is not needed unless the accused infringer first proves intent to deceive by clear and convincing evidence; and (3) the district court used a “should have known” negligence standard instead of a “knowing and deliberate” intent standard.

Moreover, because “[a]s an equitable doctrine, inequitable conduct hinges on basic fairness,” no harm, no foul: “After all, the patentee obtains no advantage from misconduct if the patent would have issued anyway.”  Slip op. at 28-29.

Chief Judge Rader wrote the majority opinion of six judges; Judge O’Malley concurred in part and dissented in part; Judge Bryson wrote for the dissenting four judges.


  • Unless information is truly redundant or one has a good faith explanation handy for why it need not be submitted, it remains prudent to submit everything that could be relevant to patentability, both as an inequitable conduct defense and to  strengthen the presumption of validity.  But one good faith explanation that may obviate the most ridiculous practice McKesson v. Bridge Medical, 487 F.3d 897 (Fed. Cir. 2007) spawned of submitting copies of office actions and amendments made in other, pending applications is that the advising the examiner that an application is relevant is enough.  McKesson found the patentee’s failure to give the examiner a copy of rejections in a co-pending application, to provide a reference cited in a co-pending application, and to inform the examiner of allowance of a co-pending application were each inequitable conduct.  It is reasonable, however, for an applicant to rely on the established PTO procedure of considering art in a parent application in MPEP §§ 609.02 (The examiner of the continuing application will consider information which has been considered by the Office in the parent application.”) and 2001.06(b) (“Accordingly, no separate citation of the same prior art need be made in the later application.”).  Disclosure of the existence of a related, co-pending US application should also be sufficient to demonstrate lack of an intent to conceal claims, arguments, and art in the co-pending application when all are easily accessed by the examiner electronically. But bring any subsequent additions to the record during prosecution to the examiner’s attention.


  • A reference may be material enough to find a claim invalid, but the intent element still remains to be proven by clear and convincing evidence.  The person charged with knowing of the reference may have believed the reference to be redundant, may have misunderstood its disclosure or application to the patent claims, or may have underestimated its importance for another reason.  In short, he or she may have a good faith explanation of why the reference was not brought to the PTO’s attention.  The Federal Circuit specifically said, more than once, that misrepresentation or omission is not shown by gross negligence or negligence under a ‘should have known’ standard.  And, should a disgruntled future panel contemplate an end run based on the “egregious conduct” exception: “Because neither mere nondisclosure of prior art references to the PTO nor failure to mention prior art references in an affidavit constitutes affirmative egregious misconduct, claims of inequitable conduct that are based on such omissions require proof of but-for materiality.”  Slip op. at 29-30.


  • It remains to be seen what proving by a clear and convincing evidence of materiality will look like. The materiality will be judged under the preponderance of the evidence standard used by the PTO in examination.  Slip op. at 28.  This proof will, moreover, entail a separate claim construction exercise under the broadest reasonable interpretation standard used in examination:  “In making this patentability determination, the court should apply the preponderance of the evidence standard and give claims their broadest reasonable construction.” Id.


  • The court devoted over two pages of its analysis to why Rule 56’s two-prong test sets too low of a standard for materiality in the inequitable conduct context, calling into question the vitality of this rule. After noting that the PTO has no substantive rulemaking authority, the court finds materiality based on establishing prima facie unpatentability too broad because the information may turn out to be irrelevant in light of evidence or argument.  The second prong, information refuting or inconsistent with a position taken by the applicant, is too broad because it “encompasses anything that could be considered marginally relevant to patentability. If an applicant were to assert that his invention would have been non-obvious, for example, anything bearing any relation to obviousness could be found material under the second prong of Rule 56.”  Slip op. at 33.  If an undisclosed reference is material under Rule 56, but not under Therasense, what happens?  Nothing, if Therasense is followed. 


  • Finally, leave the “egregious misconduct” to the banks and Wall Street. 

The Federal Circuit intends inequitable conduct holdings after Therasense to be few and far between, and, with a little forethought, we patent attorneys can make it happen.