Pitfalls and Strategies
to Avoid Charges of
Inequitable Conduct
November 30, 2010
721831
“Why care about IC?”
• “[T]he habit of charging
inequitable conduct in
almost every major
patent case has become
an absolute plague.”
http://www.patentlyo.com/patent/2010/06/measuring-the-plague-of-inequitable-conduct.html
“Why care about IC?”
Overview
• The Prosecutor’s Duty
• Current Rule/Law for IC
• The Prosecutor’s Role: A Case study
• Areas of Interest for IC
• Select Federal Circuit cases
• Practice Tips
• Questions
Duty of Candor and Good Faith – 37 CFR 1.56
• Ongoing obligation throughout prosecution
– Duty ≠ what you are paid/told to do
• Includes Duty to Disclose All Information
Material to Patentability
• Material
– Non-cumulative, and
– Either
 Establishes prima facie invalidity (alone or in combination with
other information), or
 Inconsistent with asserted position
– E.g., would “reasonable examiner” find it important
Duty: Do The Next Right Thing
• Something Occurs
– Active: something submitted
– Passive: some information received
• Consider your Duty to Disclose
– Anything now “Material to Patentability”?
 Did the issues change?
• Inform Client
• Take Appropriate Action
 File IDS per 37 CFR 1.97 and 1.98
- Presumption of validity?
Inequitable Conduct
• Defense to Patent Infringement
• Evolved from “Fraud” on the Patent office
• Consequences if found
– Unenforceability of entire patent
– “Exceptional case” liability for attorney fees?
– Professional discipline?
Current IC Test: Easy to Describe
• Breach of Duty (Materiality)
– Failure to Disclose Material Information, or
– Submission of Materially False Information
• Intent to Deceive the PTO
• If threshold levels of both, then (and only then)
balance the equities
– Do overall circumstances justify rendering the
entire patent unenforceable?
– High materiality, less intent
– High intent, less materiality
Current IC Test: Hard to do
• Materiality is a legal determination
• Intent to deceive, factual
– More than Gross Negligence
 Kingsdown (en banc, 1988)
– But Circumstantial Evidence can be sufficient
 “highly material” information
 Knew (or should have known) of materiality
 No credible explanation
• Nailing Jellyfish to the Wall
Typical Timeline of Events
• Prosecution of Patent Application
– Prosecutor + Inventor + PTO
• …Years go by…
• Patent Infringement Trial
– Intense scrutiny
– Different Interests?
• Bench Trial on IC
– Materiality
– Intent
• Appeal to Federal Circuit
– Deference to “facts” found below
An Illustrative Case: Praxair v ATMI (2008)
• 2 Patents (where IC was alleged)
– The ’115 and ’609 patents
• Three Pieces of Uncited Art:
– Zheng patent (anticipatory?)
– Restricted flow orifice (RFO)
– Max Light (not material)
Praxair v ATMI (2008)
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Dec 1997-April 2000: 3 patents prosecuted
Nov 2002: Assigned to Praxair
Dec 2003: Praxair sues ATMI
Nov 2005: SJ that 1 patent invalid
Dec 2005: Jury verdict for Praxair on other 2
– ATMI: “practicing the prior art” based on Zheng
(sintered metal filters = capillaries?)
– Praxair: Zheng cumulative, presumption of validity
• Dec 2005: Bench trial on IC
• Aug 2006: Initial ruling on IC
– Decided Zheng and RFO were material, deferred
ruling on intent
• June 2007: Final ruling on IC
Praxair: Bench trial IC
• Zheng patent: Clearly material
– ATMI had argued anticipatory
– Praxair had argued cumulativeness
– Prosecuting atty testified that, while he was aware of Zheng
patent, he believed Zheng was not material
• Restricted flow orifice (RFO) devices: Not Material
by Themselves
– Material in view of statements made during prosecution
 Assertions could not have been made “had the RFO art been before the PTO”
– Prosecuting atty admitted to awareness of RFO devices but said that he
believed that the examiner would have had prior art that showed the
information
– But when asked to point to a cited reference…
– “I asked if he wanted me to go through the file history. I would have to do
that, I think. The references that were disclosed in all fairness could be
looked at as showing that.”
– No specific argument of cumulativeness
Praxair: What Happened?
• No IC for failure to cite Zheng patent
• IC for failure to cite RFO art for both ‘115 and ‘609
patents
– Sufficiently high level of materiality plus lack of any
testimony explaining failure to disclose RFO art
– Hindsight constructions of reasons not a credible
explanation of why, at the time, reference not disclosed
• Fed Circuit affirms as to ‘115 patent
– Cumulativeness argument waived
– Majority: Prosecuting atty was aware of “obvious
materiality [of the RFO art] in light of the four statements
… made by him to the examiner.”
 Dissent: Was this finding actually made?
Conduct Potentially Giving Rise to IC Allegation
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“Burying” a Reference
Co-pending Applications (US and foreign)
Translations
Applicant’s Own Prior Art
Related Litigation
Declarant Interest/Affidavits
Inventorship
Public Use/Sale
Contrary Argument in other Forum
Concealment of Best Mode
Other
– Small entity status
– to be determined by litigator’s imagination
Burying Reference
• Relevant reference “buried” in large IDS
• How many is too many?
– 94 references (Molins, 1995)
• Large IDS: Examiner may ask for help
– Must comply (37 CFR 1.105, MPEP 704)
Co-Pending Prosecutions
•
McKesson v. Bridge Medical (2007)
–
Intent to Deceive Inferred from 3 References in
McKesson’s Possession and Not cited during
Prosecution of Patent-in-suit
1. Patent cited by PTO in other Copending, Non-family
Application of McKesson
2. Office Action from other Copending, Non-family Application
of McKesson
- OA contradicted position McKesson took during
prosecution of patent-in-suit
3. Notice of Allowance in Copending Family-Member
Application of McKesson
- Conceivable Double Patenting Issues
- Same Examiner
Translations/Applicant’s Own Prior Art
• Taltech v. Esquel (2010)
– Intent to Deceive found, in part, due to:
 Inadequacy of German Patent Translation
submitted during prosecution
- Inadequacy determined after Translation
compared to other translation offered during
litigation
- Examiner misled
 Nondisclosure of Inventor’s
“Inspiration” for Invention
- Drawing made by inventor in
deposition during litigation
- Determined to be prior art
Related Litigation
• Nilssen v. Osram (2007)
– 8 patents unenforceable for IC
– Existence of Litigation related to
application not disclosed
– Court cited MPEP 2001.06(c)
 Existence of litigation itself is material and
information Examiner needs to have
 Note: MPEP 2001.06(c) also gives specific
examples:
- Evidence of possible prior public use or sales
- Prior art
- Allegations of fraud or IC
- Contradictory assertions
Declarant Interest
• Ferring v. Barr (2006)
– Intent to Deceive inferred when patentee did not
disclose Declarant interest in the assignee.
 Submitted declarations to overcome references.
- Declaration not requested by PTO.
- Declaration material.
 Did not disclose to Examiner that 4 out of 5
declarations written by scientists who had been
employed or received research funds from
assignee.
 No “credible explanation” for non-disclosure.
Inventorship
• Advanced Magnetic Closures (2010)
– Intent to Deceive found when named inventor deliberately concealed true
inventor's involvement
 Patent unenforceable even as to innocent (concealed) inventor.
 Generally, misdeeds of inventors, patent attorneys and others
“substantively” involved with the application can affect property rights
of innocent individual.
 “… this court should refrain from resolving inequitable conduct cases
until it addresses the issue en banc. (citation omitted). In Therasense,
this court has been asked to address the transformation of
inequitable conduct from the rare exceptional cases of egregious
fraud that results in the grant of a patent that would not otherwise
issue to a rather automatic assertion in every infringement case. The
exception has become the rule...” Concurrence by C.J. Rader
Public Use
• Avid I.D. v. Crystal Import (2010)
 Materiality found when:
- Trade show demo of prior product occurred
more than 1 year before application filed –
not disclosed.
· Did not leave patent invalid under
102(b)/103(a).
· But, demo was closest prior art, thus highly
material.
 Intent to Deceive by actions of Non-inventor,
Non-attorney President of Avid.
- “Substantively Involved” with prosecution of
patent, subject to duty of disclosure. 37 CFR
1.56(c)
Contrary Argument in Foreign Forum
• Therasense (Abbott) v. Becton, Dickinson (2010)
– Unrelated applications but similar subject matter
 EP Application
- Therasense: “Membrane Optional”
· Lawyer argument
 US Application
- US equivalent to EP Application cited by USPTO
- Therasense: “Membrane Required”
· Affidavit
- “Optional” statement to EPO Not disclosed to
USPTO.
Therasense cont’d:
• “Applicant’s earlier statements about prior art, especially one’s
own prior art, are material to the PTO when those statements
directly contradict the applicant’s position regarding that prior art
in the PTO. 37 CFR 1.56(b)(2) In any event, the representations
to the PTO were not merely lawyer argument; they were factual
assertions… of those skilled in the art provided in affidavit form.”
• Although the court affirmed the finding of inequitable conduct, it
noted that such a finding should be rare.
• Therasense en banc review
– Argument held on November 9, 2010
– Recording available at:
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20081511_1192010.MP3
En Banc Review of Therasense
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? 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?
En Banc Review of Therasense
4. Under what circumstances is it proper to infer intent
from materiality?
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?
Can Inequitable Conduct be Cured?
• Reissue or Reexam - No
– Once IC is committed, it is done
 MPEP 2012, 2012.01, 2014
• During prosecution - Maybe
– Rohm & Haas v. Crystal Chem. (1983)
 Unintentional breach
- Advise PTO of misrepresentation & actual facts.
- Establish patentability on actual facts.
 Voluntary efforts to cure must be clear, unequivocal
& convincing.
Large Patent Portfolio Considerations
• Establish procedures for citing references
from related cases.
• Don’t rely on the procedure to avoid citing art.
• Only file patent applications in countries of
value.
IDS Procedure Considerations
1. Cite Everything
– Cite all references from related cases
– State which case the references came from
– Benefits
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Low risk of not citing a reference
Low attorney time/cost
– Potential Disadvantages
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Pull cases out of Allowance when OA mailed in
related case – creates IDS loop
Increased IDS fees
Accusations of Burying References
Examiner may ask for help – must comply
IDS Procedure Considerations
2. Evaluate Everything
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Analyze all references from related cases
Cite if material and noncumulative
Annotate file (MPEP 2004)
Benefits
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Thorough
May avoid IDS loop after allowance
– Potential Disadvantages
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High attorney time
Noncited reference later ruled material – may
appear more deceptive
IDS Procedure Considerations
3. Hybrid
– Before allowance – Cite everything
– After allowance – Evaluate everything
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Annotate file
– Benefits

May avoid IDS loop after allowance
– Potential Disadvantages
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Varying rules may appear inconsistent – only
evaluating references when convenient
Practice Tips
• Track cases claiming similar subject matter
– Not limited to family members
– US and foreign counterparts
– Do not take inconsistent positions in different
countries
• Consider more than references
– Office Actions, Notices of Allowance
• Identify source of cited reference
– I.e., “Reference(s) cited herein have been cited
in patent application(s) xx/xxx,xxx”
Practice Tips (cont’d)
• Ensure Examiner initials all references
• Resubmit IDS in CON/DIV/CIP
• When in doubt, cite the information
• Place rationale for not citing in file
– MPEP 2004
• Submit translations of material references
– Consider independent (3rd party) translators
• Disclose related litigation
• Be vigilant when submitting affidavits
Practice Tips (cont’d)
• Ask questions about inventorship
– At time of filing application and allowance
• Inquire about possible public uses/sales, prior
art
– Consider submitting to PTO
• Describe best mode in application
Practice Tips (cont’d)
• Inform all individuals who may be subject to
duty (not just you and the inventor!)
– All inventors
– Each attorney or agent
– Plus those “Substantively Involved & Associated”
 “Every other person who is substantively involved
in the preparation or prosecution of the
application and who is associated with the
inventor, with the assignee or with anyone to whom
there is an obligation to assign the application.”
Review
• IC Balances Materiality & Intent
– Threshold levels of each required
• Fact sensitive – difficult to predict
• No straightforward answers
• Pay attention
• Future developments - Therasense
Questions
John Bradshaw
jbradshaw@uspatent.com
317-634-3456 x4950