March 2, 2020

Federal Circuit Finds Lawyers Chose Advocacy over Candor

In GS Cleantech Corp. v. Adkins Energy LLC [2016-2231, 2017-1838] (March 2, 2020), the Federal Circuit affirmed the district court’s determination that U.S. Patent Nos. 7,601,858, 8,008,516, 8,008,517, and 8,283,484, directed to the recovery of oil from a dry mill ethanol plant’s byproduct, were unenforceable due to inequitable conduct. The inequitable conduct claim related to whether the patentee failed to disclose information that would have implicated the on-sale bar under 35 U.S.C. § 102(b).

To prevail on a claim of inequitable conduct in a patent case, the accused infringer must prove by clear and convincing evidence that the patentee: (1) knew of the reference or prior commercial sale; (2) knew that it was material; and (3) made a deliberate decision to withhold it.

After a bench trial, the District Court concluded that CleanTech and its attorneys engaged in inequitable conduct in obtaining the Patents-in-Suit, rendering the patents unenforceable.

The Federal Circuit found that the district court did not abuse its discretion in determining that the claimed invention was the subject of an offer for sale, and was ready for patenting in the summer of 2003, before the critical date. The federal circuit further found that the district court did not abuse its discretion in concluding that CleanTech and its lawyers made a deliberate decision to withhold material information with the specific intent to deceive the USPTO.

The Federal Circuit said in addition to knowledge and materiality, inequitable conduct requires a clear and convincing showing that CleanTech “made a deliberate decision to withhold” the material information.  Further, the specific intent to deceive must be the single most reasonable inference drawn from the evidence. The Federal Circuit found substantial evidence supported the district court’s finding that CleanTech took affirmative steps to hide the offer for sale from their lawyers and then the USPTO when they learned that it would prevent them from profiting from the patents.

The Federal Circuit also found support for the district court’s determination that Cleantech and its attorneys withheld evidence of successful testing before the critical date and made false representations by implying that the invention was not reduced to practice until after the critical date. In particular, the Federal Circuit noted the submission of information to antedate a reference without disclosure of the earlier information. The Federal Circuit also noted that it appeared that CleanTech and its lawyers “threatened” a third party to support its view of the facts “spoke” to CleanTech and its attorneys’ intent to deceive the USPTO.

It was also important to the district court and the Federal Circuit that a detailed Information Disclosure Statement had been prepared and not filed, for which the district court concluded, and the Federal Circuit apparently agreed, that the lawyers “chose advocacy over candor.

Finally, the Federal Circuit agreed with the district court that failure to correct the false declaration originally filed was the “strong evidence of intentional deceit.”

It has been argued that the Federal Circuit has put attorneys in a difficult position in dealing with their clients. However, this is more a function of 37 CFR 1.56, which provides:

A patent by its very nature is affected with a public interest. The public interest is best served, and the most effective patent examination occurs when, at the time an application is being examined, the Office is aware of and evaluates the teachings of all information material to patentability. Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability as defined in this section.    

37 CFR 1.56

There is a role for advocacy in patent prosecution, but perhaps not in the selection of information to disclose, but in explaining the significance of the information that is disclosed.