No deliberate decision to withhold material information

Posted On :October 15th, 2012 By James Yang

Background on inequitable conduct

Charges of inequitable conduct used to be favored by accused patent infringers even though these types of charges had a very low success rate because charges of inequitable conduct allowed the accused infringer to portray the patent owner as bad and undeserving of a favorable judgement.  The Federal Circuit disfavored claims of inequitable conduct because it diverted the court’s attention away from the real substance of the matter such as validity, infringement and damages.

In response, the Federal Circuit rendered the Therasense opinion which in a way reset the landscape for asserting charges of inequitable conduct by significantly raising the bar to successful win on inequitable conduct.  Congress also responded by promulgating the provisions related to Supplemental Examination under the America Invents Act.

Inequitable conduct under Therasense standard

“Under the Therasense standard, absent affirmative egregious misconduct, a defendant must prove by clear and convincing evidence both of the ‘separate requirements’ that: (1) ‘the patentee acted with the specific intent to the deceive the PTO’; and (2) the non-disclosed reference was but-for material.”  The specific intent is established by showing that “the applicant knew of the reference, knew that it was material and made a deliberate decision to withhold it.” (emphasis in original).  “[T]o meet the clear and convincing standard, the specific intent to deceive must be ‘the single most reasonable inference able to be drawn from the evidence.’”  “Moreover, a patentee need not offer any good faith explanation for his conduct unless and until an accused infringer has met his burden to prove an intent to deceive by clear and convincing evidence.

Facts of 1st Media v. Electronic Arts

In 1st Media v. Electronic Arts (Fed. Cir. 2012), the district court found that the patent owner and the patent attorney who prosecuted the patent application knew of the references and may have known that the references were material.  During litigation, the patent owner and the patent attorney failed to give any credible testimony as to why they failed to submit the material references.  They had blamed the non-disclosure on the attorney’s “very active” law practice and said that such failure was “an oversight that got lost in the cracks at that time and wasn’t a conscious decision not to report the [references].”  Nonetheless, based on the standard stated in Therasense, the Federal Circuit held that the accused infringers failed to establish the patent owner made a “deliberate decision” to withhold the material references as required under Therasense.

Compared to selective and careful manipulation

The Federal Circuit compared the instant case with Aventis Pharma S.A. v. Hospira, Inc., 675 F.3d 1324, 1335-36 (Fed. Cir. 2012) in which the court affirmed the district court’s inequitable conduct determination because affirmative conduct was shown that the patent owner was aware of the materiality of the reference and the patent owner selectively and carefully manipulated where, when and how much of the most material information was to be disclosed.

Charges are still being litigated

Even though this case makes it more difficult to be successful on charges of inequitable conduct, nonetheless, patent owners appear to still be making these charges in order to have the opportunity to paint the accused infringer in a bad light and unworthy of a favorable judgement.  It is yet to be seen whether making the standard to find inequitable conduct higher has dissuaded litigators from making the charge.
I invite you to contact me with your patent questions at (949) 433-0900 or James@OCPatentLawyer.com. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.

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Posted in: Inequitable conduct

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