Pitfalls and Strategies to Avoid Charges of Inequitable Conduct

1. Pitfalls and Strategiesto Avoid Charges of Inequitable Conduct November 30, 2010 721831

2. “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

3. “Why care about IC?”

4. 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

5. 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

6. 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?

7. 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?

8. 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

9. 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

10. 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

11. 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)

12. Praxair v ATMI (2008) • 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

13. 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

14. 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?

15. Conduct Potentially Giving Rise to IC Allegation • “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

16. 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)

17. 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 • Patent cited by PTO in other Copending, Non-family Application of McKesson • Office Action from other Copending, Non-family Application of McKesson • OA contradicted position McKesson took during prosecution of patent-in-suit • Notice of Allowance in Copending Family-Member Application of McKesson • Conceivable Double Patenting Issues • Same Examiner

18. 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

19. 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

20. 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.

21. 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

22. 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)

23. 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.

24. 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. • Therasenseen banc review • Argument held on November 9, 2010 • Recording available at: http://oralarguments.cafc.uscourts.gov/default.aspx?fl=2008-1511_1192010.MP3

25. En Banc Review of Therasense • Should the materiality-intent-balancing framework for inequitable conduct be modified or replaced? • 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? • 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?

26. En Banc Review of Therasense • Under what circumstances is it proper to infer intent from materiality? • Should the balancing inquiry (balancing materiality and intent) be abandoned? • 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?

27. 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.

28. 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.

29. IDS Procedure Considerations • Cite Everything • Cite all references from related cases • State which case the references came from • Benefits • Low risk of not citing a reference • Low attorney time/cost • Potential Disadvantages • 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

30. IDS Procedure Considerations • Evaluate Everything • Analyze all references from related cases • Cite if material and noncumulative • Annotate file (MPEP 2004) • Benefits • Thorough • May avoid IDS loop after allowance • Potential Disadvantages • High attorney time • Noncited reference later ruled material – may appear more deceptive

31. IDS Procedure Considerations • Hybrid • Before allowance – Cite everything • After allowance – Evaluate everything • Annotate file • Benefits • May avoid IDS loop after allowance • Potential Disadvantages • Varying rules may appear inconsistent – only evaluating references when convenient

32. 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”

33. 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

34. 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

35. 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.”

36. Review • IC Balances Materiality & Intent • Threshold levels of each required • Fact sensitive – difficult to predict • No straightforward answers • Pay attention • Future developments - Therasense

37. Questions John Bradshaw jbradshaw@uspatent.com 317-634-3456 x4950