The patent office provides due dates for various matters. Some of the due dates can be extended with payment of an extension fee. Responses or payment of maintenance fees can be paid even after all of the extensions have passed upon petition to the Patent Office. There are two types of petitions. (PTO Forms). One is based on an assertion that non-payment or non-response was unintentional. The petition based on the unintentional standard is a check the box form provided by the Patent Office. The second petition requires that the failure to respond or pay a fee be based on an unavoidable standard. This petition requires the submitter to prove up the facts to show that the failure to respond or pay a fee was truly unavoidable.
In Network Signatures v. State Farm (Fed. Cir. 2013), the patent owner allowed a patent to lapse for failure to pay a maintenance fee. Two weeks after the final due date to pay the maintenance fee, the patent owner received an offer to license the patent that had just expired. The patent owner filed a petition to late pay the maintenance fee based on an assertion that the failure to pay was unintentional. The district court held that the patent owner committed inequitable conduct and invalidated or rendered the patent unenforceable.
On appeal, the Federal Circuit reviewed current law regarding inequitable conduct held in the Therasense case. Therasense was a major case in that it reset and significantly raised the requirements to prove up inequitable conduct. Prior to Therasense, inventors and patent attorneys were frequently accused of committing some sort of inequitable conduct even though these claims were seldom successful. The practice of charging someone with behaving inappropriately was a litigation strategy meant to cast the patent owner in a bad light so that the jury would rule in favor of the defendant regardless of infringement and the acts of the defendant. As a result, charges of inequitable conduct would over shadow the patent infringement issues. However, inequitable conduct is a serious charge since it is a direct attack against a person’s character.
To reduce the number of inequitable conduct charges during litigation, the court raised the requirement for inequitable conduct. To prove inequitable conduct, the challenger must show by clear and convincing evidence that the patent applicant (1) misrepresented or omitted information material to patentability and (2) did so with specific intent to mislead or deceive the PTO.
In Network Signatures, the Federal Circuit focused on the fact that the patent owner merely used the form supplied by the Patent Office to late pay the maintenance fee. The patent office form did not require the patent owner to supply evidence or a statement of facts as to why he/she believed that the failure to timely pay the maintenance fee was unintentional. Simply put, the patent office never asked and the patent owner never supplied reasons for the so called ‘unintentional’ late pay of the maintenance fee. The petition was not based on the unavoidable standard, and thus did not require an explanation by the patent owner.
Based on the circumstances, had the patent office known the circumstances of the late pay, it appears more likely than not that the patent office would have rejected the petition late pay the maintenance fee. Accordingly, the right decision would have been to render the patent unforceable or invalid. However, Network Solutions v. State Farm, in my opinion, also stands for the greater purpose as a notice to defendants that charges of inequitable conduct will most likely fail unless the conduct of the patent owner is especially egregious. Hence, the Federal Circuit is indicating a distaste for charges of inequitable conduct in line with the Therasense case. From a cynic’s point of view, this case also could mean that a little inequitable conduct is tolerable.
Should you have a situation where you need to revive a patent application or late pay a fee, please do not hesitate to contact us for more information.
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