Inequitable Conduct Defense Requires That Specific Facts Regarding Circumstances and Intent to Deceive Must Be Included in Pleadings

Yesterday, in Exergen Corp. v. Wal-Mart Stores, Inc., the Federal Circuit held that allegations of inequitable conduct must be pled with particularity.  The court affirmed the district court’s denial of a motion by the defendant to add inequitable conduct as an affirmative defense and counterclaim.  The court held that the proposed pleading by the defendant was inadequate under Federal Rule of Civil Procedure 9(b).  That rule requires that allegations of fraud or mistake be pled with particularity, i.e., the circumstances surrounding the fraud or mistake must be included.

Judge Linn, writing for the court, wrote that specific facts regarding the substantive elements of inequitable conduct, namely that (1) an individual associated with prosecution of the application made a misrepresentation, failed to disclose material information, or submitted false information, and (2) that it was done with a specific intent to deceive the PTO, must be included in the pleading.

The two elements of inequitable conduct can be broken into the specific facts surrounding the allegation and the mindframe or intent element.  Regarding the specific facts, the court held that:

in pleading inequitable conduct in patent cases, Rule 9(b) requires identification of the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.

The mindframe or intent element requires that inequitable conduct include (1) knowledge of the withheld material information or the falsity of the material information, and (2) specific intent to deceive the PTO.

In sum, to plead the “circumstances” of inequitable conduct with the requisite “particularity” under Rule 9(b), the pleading must identify the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO. Moreover, although “knowledge” and “intent” may be averred generally, a pleading of inequitable conduct under Rule 9(b) must include sufficient allegations of underlying facts from which a court may reasonably infer that a specific individual (1) knew of the withheld material information or of the falsity of the material misrepresentation, and (2) withheld or misrepresented this information with a specific intent to deceive the PTO.

LinnIt is rare the the Federal Circuit provides such explicit guidance on an issue of law like this.  Exergen continues Judge Linn’s campaign to reform or reduce the “plague” of inequitable conduct on the patent system.  He had earlier called for the court to revisit the standard for proving intent to deceive.

Thanks to Hal Wegner for bringing this case to my attention.

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One Response to “Inequitable Conduct Defense Requires That Specific Facts Regarding Circumstances and Intent to Deceive Must Be Included in Pleadings”

  1. False Marking Must be Pled with Particularity « INVENTIVE STEP Says:

    [...] court to dismiss a false marking case in In re BP Lubricants USA Inc.  The court held that, like inequitable conduct, particular facts relating to allegations of false marking must appear in the initial [...]

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