Federal Circuit to Hear Inequitable Conduct Case En Banc

Today, the Federal Circuit issued an order in Theresense, Inc. v. Becton Dickinson and Co. granting the plaintiffs’ petition for rehearing en banc.  Specifically, the court asked the parties to consider six issues:

1.  Should the materiality-intent-balancing framework for inequitable conduct be modified or replaced?

2.  If so, how? In particular, should the standard be tied directly to fraud or unclean hands? See Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 (1945); Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238 (1944), overruled on other grounds by Standard Oil Co. v. United States, 429 U.S. 17 (1976); Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240 (1933). If so, what is the appropriate standard for fraud or unclean hands?

3.  What is the proper standard for materiality? What role should the United States Patent and Trademark Office’s rules play in defining materiality? Should a finding of materiality require that but for the alleged misconduct, one or more claims would not have issued?

4.  Under what circumstances is it proper to infer intent from materiality? See Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988) (en banc).

5.  Should the balancing inquiry (balancing materiality and intent) be abandoned?

6.  Whether the standards for materiality and intent in other federal agency contexts or at common law shed light on the appropriate standards to be applied in the patent context.

Background

The plaintiffs have not had much luck in this case.  They sued the defendants for infringement of a number of patents.  The district court and the jury found the patents to be invalid for anticipation, obviousness, and violating the written description requirements.  The court also held that U.S. Patent No. 5,820,551 was unenforceable due to inequitable conduct based on failure to disclose statements made to the European Patent Office in a revocation proceeding for a European patent.  The court held that these statements were directly contradictory to statements made to the PTO in prosecution of the ’551 patent.  A Federal Circuit panel affirmed.

 Judge Linn issued a lengthy dissent where he argued that the district court erred in its factual determinations in this case.  The plaintiffs had an adequate explanation for how the statements were not contradictory and why they were not disclosed to the PTO.  He also argued that there was no intent to deceive on the part of the plaintiffs because they did not recognize that the statements were material.  The trial court simply disagreed with the plaintiffs’ interpretation and explanation of the facts.

Inequitable Conduct

Inequitable conduct is a finding by the court that the patent applicant violated the duty of disclosure to the PTO during prosecution of the application.  The applicant and other related parties may have directly misled the PTO or they may have withheld information that was considered material to the patentability of the patent.  If this is done with an intent to deceive the PTO into granting the patent, the penalty is that the entire patent is unenforceable.

This case is not the first time that Judge Linn has called for the court to revisit the standard for inequitable conduct.  He also made such a request last year in Larson Manufacturing v. Aluminart Products.  In Therasense, he notes that “[o]ur circuit already entertains five different standards for materiality.”  The majority seemed to want to add another standard that heightens the disclosure requirement for close cases.

Hopefully, this case will give the court the opportunity to fix an issue that has been called “a plague.”  Surprisingly, although this is an important issue to Sen. Orrin Hatch, it was not a part of the bill that the Senate Judiciary Committee passed last year.

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2 Responses to “Federal Circuit to Hear Inequitable Conduct Case En Banc”

  1. Two En Banc Arguments at Federal Circuit this Week « INVENTIVE STEP Says:

    [...] could significantly alter the court’s jurisprudence on inequitable conduct.  The en banc order laid out six questions regarding materiality and the balancing inquiry with intent to deceive the [...]

  2. Federal Circuit Tightens Inequitable Conduct Standards « INVENTIVE STEP Says:

    [...] in Therasense, Inc. v. Becton, Dickinson & Co.  The facts of the case were discussed in a previous post.  Briefly, the district court held a patent unenforceable for inequitable conduct because the [...]

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