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‘Inequitable Conduct’ is Now a More Difficult Defense to Prove

In the recent decision of Therasense, Inc. v. Becton, Dickinson & Co. (Fed. Cir. 2011) (en banc), the Federal Circuit court raised the standards for proving an ‘inequitable conduct’ defense. The court seems to hope that this decision will discourage widespread use of this very serious accusation; whether the court’s decision actually accomplishes this goal should become apparent within the next few months.

The ‘inequitable conduct’ defense requires a defendant to prove that the patentee did not fulfill their “duty of candor and good faith” during prosecution. A patent applicant can violate this duty by submitting false facts, misstating inventorship, withholding prior art, or failing to explain and/or translate references in a foreign language. This defense makes use of 37 C.F.R. § 1.56(a) as below:

That “[e]ach individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability as defined in this section.”

Before Therasense, a successful inequitable conduct defense would result in the permanent unenforceability of the patent in question, excepting the reversal of this decision by a higher court. The court therefore considered the inequitable conduct defense to be a very serious matter. Further, since the defense has been raised in almost every patent case, it has been considered to be a kind of ‘plague’ on the system in general.

The Therasense decision, reached by an en banc Federal Circuit court, revised the standards used to determine inequitable conduct in the following ways:

  1. The defendant must prove that the patent applicant had “specific intent to deceive” the USPTO.
  2. Evidence shall only be considered material under a “but-for materiality,” wherein the court decides that the patent office would not have granted the patent, but for the deception. Cases which prove egregious misconduct may be exceptions to this rule.

The court also found that inequitable conduct need not always result in the permanent unenforceability of a patent. Even after inequitable conduct is proven, the court suggests that unenforceability should be applied only when the applicant’s deception clearly resulted in the “unfair benefit of receiving an unwarranted claim.”

Post-Therasense cases will find the ‘inequitable conduct’ defense much tougher to prove—and even in the event that inequitable conduct is proven, the court now has a certain amount of leeway in determining the consequences. This may make the ‘inequitable conduct’ defense slightly less appealing in the near-future, if the District Court’s decision has the effect that it is clearly hoping for.

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