The Federal Circuit reversed a finding of inequitable conduct in Larson Manufacturing v. Aluminart Products, finding that the allegedly withheld prior art was cumulative of prior art already of record during a reexamination proceeding at the PTO.
Judge Richard Linn filed a concurring opinion where he suggested that “the time has come for the court to review the [standard for inequitable conduct] en banc.” He also noted that the Federal Circuit’s precedent
has significantly diverged from the Supreme Court’s treatment of inequitable conduct and perpetuates what was once referred to as a “plague.”
Although the Federal Circuit sought to correct this “plague” in Kingsdown Medical Consultants v. Hollister, 863 F.3d 867 (Fed. Cir. 1988) (en banc), Judge Linn argued that recent cases have diverged significantly from the rules set forth in that case. In Kingsdown, the court set forth the standard that both materiality and intent to deceive the PTO had to be proven by clear and convincing evidence. Something more than “gross negligence” was required to prove intent to deceive.
He argues that a lower standard than gross negligence seems to be the law. Deceptive intent can now be inferred when
(1) highly material information is withheld; (2) “the applicant know of the information [and] . . . knew or should have known of the materiality of the information; and (3) the applicant has not provided a credible explanation for the withholding.”
Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306 (Fed. Cir. 2008).
Judge Linn is highly critical of this test. He argues in his concurrence that the first prong simply repeats the materiality requirement and the second prong’s “should have known” element requires less than gross negligence, maybe just simple negligence. The third prong shifts the burden of proving no intent to deceive to the patentee, forcing him to prove a negative.
Aventis v. Amphastar
Inequitable conduct is also at issue in Aventis Pharma v. Amphastar Pharmaceuticals, which is currently in the briefing stages on a petition for certioriari at the Supreme Court. The question presented in Aventis is:
Whether a court may refuse to enforce an otherwise valid patent on the basis of an inequitable conduct determination premised on a sliding scale between intent and materiality, effectively permitting a finding of fraudulent intent to be predicated on gross negligence.
In Aventis, the Federal Circuit held a patent to be unenforceable due to inequitable conduct. The behavior in question was the failure to include material information in a declaration submitted to the Patent Office, but the intent of the patentee to deceive the Patent Office was shown only circumstantially at best. Judge Rader dissented, suggesting that the court take a closer look at the intent necessary to find inequitable conduct, noting that “inequitable conduct has taken on a new life as a litigation tactic” and that it should be limited to “only the most extreme cases of fraud and deception.” The court declined to hear Aventis en banc.
While the issue of inequitable conduct has been featured in the patent reform bills in Congress, perhaps the Federal Circuit will fix the issue itself and remove this issue from the congressional debate. At least two judges on the Federal Circuit seem to believe that it is time to reign in the “plague” of inequitable conduct.