The “plague” of inequitable conduct being argued by every accused patent infringer may indeed be over. After the Federal Circuit’s decision in Therasense, it seems that it will be extremely difficult to prove the defense. The court showed that again yesterday in 1st Media, LLC v. Electronic Arts, Inc.
In 1st Media, the patent applicant received a PCT search report on an application that was identical to a pending US application that had been allowed by the examiner, but the Issue Fee had not yet been paid. The search report included a prior art reference that was cited as “particularly relevant” to the application; it was not submitted in the US application.
Similarly, the patent applicant had filed a second US application on the same day as the application for the patent-at-issue in the case (the ’946 patent). The second application was very similar to the ’946 patent. The claims of the second application were rejected over another prior art reference. In response to the rejection, the applicant canceled the rejected claims and allowed the others to issue. The prior art reference from the second application was also not submitted to the PTO with respect to the ’946 patent.
Finally, the applicant filed a continuation-in-part (CIP) application of the second US application. The claims of this application were also rejected over a third prior art reference. The applicant amended the claims to distinguish this reference as well, which was also not submitted to the PTO with respect to the ’946 patent.
Under the duty of disclosure, the patent applicant had to submit the new reference (and the search report) to the PTO, right?
During an infringement suit, the defendants defended on the basis that the ’946 patent was unenforceable due to inequitable conduct, specifically arguing the failure to submit these references to the PTO. The patent attorney and inventor testified that they did not think of submitting the references to the examiner and considered the inventions to be distinct enough that it was not required.
Although the district court found this testimony not credible, there was no evidence of the specific intent of either to withhold the references. The district court held that the inventor and patent attorney knew the references were material and did not provide a good explanation for not submitting them to the PTO.
The Federal Circuit, citing Therasense, reversed. Inequitable conduct requires the “separate requirements” of (1) “the patentee acted with the specific intent to deceive the PTO”; and (2) the non-disclosed reference was but-for material.
To prove the first prong, the defendant must prove “that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.” (emphasis in original). The court can no longer infer the specific intent to deceive merely because the applicant knew of the reference and knew that it was material. The patent owner need not provide a good faith explanation of its conduct until the defendant has met its burden of proving the specific intent.
The defendants in 1st Media admitted that they had no direct evidence of an intent to deceive. Instead, they argued (the pre-Therasense standard) that based on the circumstances, the patent owner must have intended to deceive the PTO (it can be inferred). It is this fact that is fatal to the inequitable conduct defense in this case.
Ultimately, for all of the references, the evidence supports only that [the inventor and patent attorney] (1) knew of the references, (2) may have known they were material (which this court does not reach), and (3) did not inform the PTO of them. But that is not enough. As Therasense made clear, a defendant must prove that an applicant (1) “knew of the reference,” (2) “knew it was material,” and (3) “made a deliberate decision to withhold it.” . . . It is the last requirement that is missing from the record developed in this case.