This week the Federal Circuit heard oral arguments in its en banc rehearing of Therasense, Inc. v. Becton, Dickinson & Co. As reflected in the en banc order, the court took this case en banc in order to reconsider—and hopefully reform—the law of inequitable conduct. The court’s decision could solve the McKesson problem and rein in the threat of inequitable conduct charges that drives practitioners to submit references even when they are not believed to be relevant to patentability.
The En Banc Order
The en banc order asked the parties to address the following questions:
- 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?
- 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.
The Source of the McKesson Problem
McKesson was decided under the “reasonable examiner” standard. Under that standard, the threshold requirement for materiality is met by
any information that a reasonable examiner would substantially likely consider important in deciding whether to allow an application to issue as a patent.
In McKesson, the Federal Circuit applied this standard as encompassing Office Actions rejecting “substantially similar claims.” The court also stated that “a showing of substantial similarity is sufficient [but not necessary] to prove materiality.”
That decision and the earlier decision in Dayco Products, Inc. v. Total Containment, Inc. have led many patent applicants to adopt a practice of cross-citing Office Actions and references in any applications that might be deemed to be “substantially similar,” even if the same examiner is reviewing the applications. The practice has led to a flood of Information Disclosure Statement (IDS) filings that cite references of dubious relevance to the claims under examination, and even has spawned a new cottage industry of IDS preparation services.
I have proposed three ways that the USPTO could solve much of the McKesson problem, but addressing McKesson did not make it on Director Kappos’ list of accomplishments for his first year as Director of the USPTO. From the tenor of the Therasense en banc oral hearing, however, I am hopeful that the court will do away with the “reasonable examiner” standard that lies at the heart of McKesson
The Proffered Materiality Standards
During the oral hearing, the parties suggested the following materiality standards:
- “But For” materiality: information is material if it defeats the validity of the patent
(but for it being withheld, the patent would not have granted).
A variation of this standard is the “direct relationship” test: information is material if it has a direct relationship to the grant of the patent, such as a false statement that resulted in allowance.
- The Rule 56(b)(1) standard (based on 37 CFR § 56(b)(1)): information is material if
it establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim.
[a] prima facie case of unpatentability is established when the information compels a conclusion that a claim is unpatentable under the preponderance of evidence, burden-of-proof standard, giving each term in the claim its broadest reasonable construction consistent with the specification, and before any consideration is given to evidence which may be submitted in an attempt to establish a contrary conclusion of patentability.
- The Rule 56(b)(2) standard (based on 37 CFR § 56(b)(2)): information is material if
it refutes, or is inconsistent with, a position the applicant takes in: (i) Opposing an argument of unpatentability relied on by the Office, or (ii) Asserting an argument of patentability.
The court seemed open to Abbott’s argument that a Rule 56(b)(2) standard would swallow a Rule 56 (b)(1) standard and not be any different from the “reasonable examiner” standard.
Bayer argued that a Rule 56(b)(2) standard would be workable if it were interpreted to apply only to information inconsistent with specific positions taken by the applicant, rather than information arguably inconsistent with the general position of patentability held by all applicants.
- The USPTO’s definition of materiality: information is material if it falls under the USPTO definition of materiality in effect at the time of the non-disclosure.
The court seemed most interested in a standard akin to Rule 56(b)(1) (information that establishes a prima facie case of unpatentability), but may not be willing to limit inequitable conduct to information that impacts patentability per se, to the exclusion of other pertinent information, such as information that may affect the weight given to submitted evidence.
The Requirement for Specific Intent
All parties agreed at oral hearing that inequitable conduct should require a showing of specific intent to deceive the USPTO. But, the parties parted ways on whether materiality should be able to color the intent inquiry. While Abbott argued that intent should be determined independently of materiality (and perhaps as the first step in an inequitable conduct analysis), Becton, Dickinson seemed to favor the current sliding scale of materiality and intent, as long as there is some independent evidence of intent.
The Court’s Decision Could Save Time, Money and Trees
I am optimistic that the court will take this opportunity to rein in inequitable conduct to its original purpose—a check on true "fraud on the Patent Office." If practitioners regain confidence in their ability to select references based on patentability considerations without risking trumped up inequitable conduct charges, it will be easier for examiners to identify the most important references, and the time, money and trees currently sacrificed for IDS filings will be spared—or at least available for more important uses.