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May 6, 2010Client Alert

Federal Circuit Agrees To Review Standard For Inequitable Conduct

The Federal Circuit has characterized the habit of claiming inequitable conduct to defend against patent infringement claims as a plague on the system. Yet decisions by that Court in the 20 years since it last addressed the doctrine of inequitable conduct en banc have contributed to the doctrine’s expansion. Last week, in Therasense, Inc. v. Becton, Dickinson & Co., 2008-1511 (Fed. Cir. 2010), the Federal Circuit granted a petition for rehearing en banc to revisit key aspects of the doctrine.

Issues Presented By The Court

In granting the petition for rehearing en banc, the Federal Circuit asked the parties to file new briefs addressing six issues.

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

  2. If so, how should the standard be modified or replaced. In particular, should it be tied directly to fraud or unclean hands and, if so, what should be the appropriate standard for fraud or unclean hands.

  3. Materiality: (a) what is the proper standard, (b) what role should the PTO’s rules play in defining materiality, and (c) 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.

  5. Should the balancing of materiality and intent be abandoned.

  6. Do the standards for materiality and intent under the common law or in the context of actions before other federal agencies shed light on the appropriate standards in the patent context.

Amici Curiae Invited

In its order, the Federal Circuit stated that briefs of amici curiae will be entertained. Any such amicus briefs may be filed without leave of court, but otherwise must comply with Federal Rule of Appellate Procedure 29 and Federal Circuit Rule 29. Accordingly, interested third parties may file an amicus curiae brief to address anyone of the six issues presented by the Federal Circuit. Abbott’s brief is due by June 10, 2010, and respondents’ brief are due within 30 days of service of petitioners’ brief. Briefs of amici curiae must be filed within seven days of the filing of the principle brief of the party being supported. If the amicus curiae does not support either party then the brief must be filed within seven days of the petitioners’ principal brief.

Legal counsel can help your business evaluate whether to file an amicus curiae brief to address any one of the six issues presented by the Federal Circuit.

Summary of the Case

In a two to one decision, the panel of the Federal Circuit affirmed the district court’s finding that Abbott Laboratories’ (“Abbott”) U.S. Patent No. 5,820,551 (“the ’551 patent”) was unenforceable due to inequitable conduct. The finding of inequitable conduct was based on the failure to disclose to the United States Patent and Trademark Office (“PTO”) arguments made by Abbott’s European counsel during an opposition proceeding before the European Patent Office (“EPO”) regarding a prior art patent. The majority panel agreed with the district court that Abbott’s arguments to the EPO were highly material because they directly contradicted Abbott’s arguments to the PTO, rejected Abbott’s position that mere attorney argument cannot be material, and agreed that Abbott intended to deceive the PTO.

The ‘551 patent is directed to disposable blood glucose test strips. Claim 1 of the ‘551 patent requires, among other things, that “said active electrode [strip] [be] configured to be exposed to said whole blood sample without an intervening membrane or other whole blood filtering member.” U.S. Patent No. 4,545,382 (“the ’382 patent”), which is prior art to the ‘551 patent and includes two inventors in common with the ‘551 patent, discloses and broadly claims such membraneless strips. Specifically, the ‘382 patent specification discloses: “[o]ptionally, but preferably when being used on live blood, a protective membrane surrounds both the enzyme and the mediator layers, permeable to water and glucose molecules.” (‘382 patent at col.4 ll. 63–66.)

Abbott’s patent counsel, Mr. Pope, argued to the PTO examiner that the ‘551 specification taught that a protective membrane was not necessary when testing whole blood while the prior art ‘382 patent teaches that active electrodes designed for use with whole blood require a protective membrane. Mr. Pope filed an affidavit by Dr. Sanghera, Abbott’s Director of Research and Development, in which he concluded that one skilled in the art would not read the ‘382 patent to teach that the use of a protective membrane with a whole blood sample is optionally or merely preferred. Mr. Pope further argued that one skilled in the art would not, especially in view of the working examples, have read the “optionally, but preferably” language of the ‘382 patent as a technical teaching but rather mere patent phraseology.

Prior to this, Mr. Pope and Dr. Sanghera had met and discussed whether they had to disclose to the PTO information Abbott had submitted to the EPO during opposition and appeal proceedings regarding European Patent EP 0 078 636 (“the ’636 patent”). The ‘636 patent is the European counterpart to the ’382 patent, with substantially the same disclosure, and was owned by Abbott during the relevant times. In the European proceedings, Abbott had filed several briefs seeking to distinguish the ‘636 patent over the prior art by arguing that the phrase “optionally, but preferably” is unequivocally clear; namely, the protective membrane is optional, however, it is preferred when used on live blood. Dr. Sanghera had helped to develop the arguments and attended the oral argument at the EPO. At trial, Dr. Sanghera and Mr. Pope testified they decided not to disclose the information to the PTO because they did not believe it was material to patentability.

The district court found that Abbott’s statements to the EPO were highly material to the prosecution of the ’551 patent because they contradicted representations Abbott made to the PTO regarding the membraneless sensor disclosed in the ’382 patent. The district court noted that “[a]lthough the key sentence itself was indeed before Examiner Shay, the inquiry had shifted to a point of extrinsic evidence,” namely Dr. Sanghera’s affidavit.

The district court found that Mr. Pope and Dr. Sanghera intended to deceive the PTO because they consciously withheld the arguments to the EPO from the PTO. Indeed, the district court had no doubt that Mr. Pope “knew or should have known that the withheld information would have been highly material to the examiner.” On balancing the level of materiality and intent, the district court found that “the withheld extrinsic evidence here was richly material.”

Judge Linn dissented on the issue of inequitable conduct. In Judge Linn’s view, the submissions made by Abbott to the EPO are susceptible of multiple reasonable inferences and, depending on the inference drawn, may or may not have been material. Thus, under the rule of Scanner Technologies Corp. v. ICOS Vision Systems Corp., 528 F.3d 1365 (Fed. Cir. 2008), “[w]henever evidence proffered to show either materiality or intent is susceptible of multiple reasonable inferences, a district court clearly errs in overlooking one inference in favor of another equally reasonable inference.” Id. at 1376. As to intent, Judge Linn determined that Mr. Pope and Dr. Sanghera’s “good faith explanations are entirely consistent with the alternative reasonable interpretation of the EPO submissions that renders them immaterial.” Therefore, they lacked the requisite intent to deceive.

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