Important Decision Attempts to Address Plague of Inequitable Conduct Accusations in Patent Litigation
Today the CAFC decided Therasense Inc. v. Becton Dickinson and Co. In this landmark decision, the CAFC reconsidered the doctrine of inequitable conduct, deciding that:
While honesty at the PTO is essential, low standards for intent and materiality have inadvertently led to many unintended consequences, among them, increased adjudication cost and complexity, reduced likelihood of settlement, burdened courts, strained PTO resources, increased PTO backlog, and impaired patent quality. This court now tightens the standards for finding both intent and materiality in order to redirect a doctrine that has been overused to the detriment of the public. (Decision at 24) (full decision here)
As previously discussed, this decision will have an important impact on patent reexamination practice, as well as application prosecution in relation to the duty of disclosure, good faith, and candor. With the tightening of the materiality standard, (described below) monstrous IDS filings may now be a remnant of the past.
Interestingly, the CAFC has now adopted a “but for” standard of materiality, such as employed in a Walker Process claim (antitrust).
The CAFC explains:
This court holds that, as a general matter, the materiality required to establish inequitable conduct is but for materiality. 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. Hence, in assessing the materiality of a withheld reference, the court must determine whether the PTO would have allowed the claim if it had been aware of the undisclosed reference. In making this patentability determination, the court should apply the preponderance of the evidence standard and give claims their broadest reasonable construction. § 706, 2111 (8th ed. Rev. 8, July 2010). Often the patentability of a claim will be congruent with the validity determination—if a claim is properly invalidated in district court based on the deliberately withheld reference, then that reference is necessarily material because a finding of invalidity in a district court requires clear and convincing evidence, a higher evidentiary burden than that used in prosecution at the PTO. However, even if a district court does not invalidate a claim based on a deliberately withheld reference, the reference may be material if it would have blocked patent issuance under the PTO’s different evidentiary standards. See MPEP §§ 706 (preponderance of the evidence), 2111 (broadest reasonable construction). (emphasis added) (Decision at pages 27-28).
As I pointed out previously, with the USPTO being in the best position to prove materiality, and with a more liberal standard, it may be that this decision creates yet another compelling reason to pursue patent reexamination. For example, it may be that a defendant pleads inequitable conduct and encourages the courts to stay the case pending the outcome of this crucial “but for” determination.
In any event, the recalibration of inequitable conduct is long, long overdue.