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In Therasense, Federal Circuit Makes Inequitable Conduct Harder to Prove

The specter of inequitable conduct has increased the costs of patent prosecution and the costs of patent litigation.  A recent en banc decision by the Federal Circuit in Therasense Inc. v. Becton has made it more difficult for a defendant to successfully mount a defense on the grounds of inequitable conduct for failure to cite a reference to the USPTO. 

 To prevail on such a claim,  the party alleging inequitable conduct must prove by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.  In other words, the two separate requirements for inequitable conduct are 1) specific intent to deceive and 2) materiality.    

The party alleging inequitable conduct must prove with clear and convincing evidence that the patentee acted with the specific intent to deceive the USPTO.  The Federal Circuit noted that although intent can be inferred from indirect and circumstantial evidence, if multiple reasonable inferences can be drawn from the evidence, specific intent is absent.  The Federal Circuit also noted that lack of a good faith explanation for failing to submit a reference to the USPTO does not prove specific intent to deceive.  The Federal Circuit will review the factual findings of the district court regarding the reasonable inferences that can be drawn from the evidence for clear error.

For the element of materiality, the Federal Circuit rejected using PTO Rule 56 to determine materiality and instead adopted a “but-for materiality” test.  In other words, a withheld reference is but-for material if the USPTO would not have allowed the claim if it knew about the withheld reference.  For this element, the court is to use a preponderance of the evidence standard and give the claims their broadest reasonable construction, like an Examiner does during patent prosecution.  The Federal Circuit noted that if a claim is invalidated with the withheld reference, the reference is necessarily material. 

An exception to the requirement of but-for materiality is when the patentee has engaged in affirmative acts of egregious misconduct.  One non-limiting example of an affirmative act of egregious misconduct is the filing an unmistakenly false affidavit.  In contrast, “mere nondisclosure” of a reference or “failure to mention prior art references in an affidavit” do not constitute affirmative egregious conduct and require proof of but-for materiality.

In conclusion, it is possible that the more stringent requirements to prove an allegation of inequitable conduct could decrease the number of inequitable conduct allegations presented in patent infringement cases, thereby decreasing the costs of patent litigation.  However, it does not appear that the decision in Therasense will decrease the cost of patent prosecution because patent prosecutors are still required to observe PTO Rule 56, described by the Federal Circuit as being a “low bar for materiality.”

This update was prepared by Jennifer Buss. Jennifer is an intellectual property lawyer at Vidas, Arrett & Steinkraus. For more information about this update, please contact Jennifer at 952-563-3018 or via email.

This update should not be considered legal advice. Your receipt of this update does not establish an Attorney-Client Relationship. We do, however, invite you to contact us if you would like us to represent you.


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