- But Prosecutors don’t rush to change your disclosure practice just yet since even though a piece of prior art may not satisfy the but-for materiality test of Therasense, that piece of pior art may still need to be disclosed under 37 CFR 1.56 or other USPTO disclosure requirement;
- Litigators just wait it out. Federal Circuit’s new, inflexible “But-For Materiality With an Exception for Affirmative Egregious Misconduct” mechanical test is in the mold of Bilski and likely to be next patent case on the Supreme Court docket
Therasense has set the materiality bar for inequitable conduct so high that it may serve to disincentivize disclosure by companies except in cases involving egregious conduct; arguably all but taking away the Supreme Court sanctioned inequitable conduct as a viable patent defense. However, despite the high bar set for proving inequitable conduct in court, Therasense does not change Rule 56 or whatever other rule the USPTO promulgates with respect to disclosure of prior art to the USPTO and which still requires compliance. Hence, even though a piece of prior art does not satisfy the but-for materiality test of Therasense, that piece of prior art may still need to be disclosed under Rule 56 or other USPTO disclosure rule.
In Therasense v. Becton Dickenson, a decision rendered by the Court of Appeals for the Federal Circuit on May 25, 2011, the Federal Circuit vacated the district court’s findings of materiality and remanded to the district court for it to determine whether the PTO would not have granted the patent but for Abbott’s (the successor company to Therasense) failure to disclose briefs in a counterpart European patent. Therasense, Inc. v. Beckton, Dickinson & Co., Slip Op. at 36 (Fed. Cir. 2011) (en banc). The court also remanded to the district court for a determination on whether there is clear and convincing evidence demonstrating that Abbott in-house Attorney Lawrence Pope or Dr. Sanghera, Abbott’s technical expert, knew of the briefs, knew of their materiality, and made the conscious decision not to disclose them to the PTO in order to deceive the patent office. Ibid.
In this action involving charges of inequitable conduct during prosecution of a patent application, the court held that “as a general matter, the materiality required to establish inequitable conduct is but-for materiality.” Id., at 27 As the court explained, when an applicant fails to disclose prior art to the PTO, that prior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art. Ibid. Hence, in assessing the materiality of a withheld reference, the court must determine whether the PTO would have allowed the claim if it had been aware of the undisclosed reference. Ibid.
The court observed that the but-for materiality test does not require proof of the invalidity of the patent in view of the prior art since invalidity is judged by the clear and convincing standard. The but-for standard for materiality requires proof only that the PTO would not have allowed a claim had it been aware of the undisclosed prior art. As the court pointed out, this proof is based on a lesser evidentiary standard used in prosecution at the PTO, which is by a preponderance of the evidence giving the claims their broadest reasonable construction under MPEP §§ 706, 2111. Id., at 28
But the court did not stop there. The court recognized that the but-for materiality test may not work in cases involving affirmative egregious misconduct, which is a problem given that the early unclean hands cases before the Supreme Court dealt with “deliberately planned and carefully executed scheme[s]” to defraud the PTO and the courts. Id., at 29 Examples of egregious conduct include filing of an unmistakable false affidavit, perjury, suppression of evidence, bribery, egregious acts, other extraordinary circumstances consistent with the early unclean hands cases. Id., at 30. To square the but-for test with the Supreme Court unclean hands precedent, the court “tacked” onto the but-for test an alternative test it calls the “exception for egregious misconduct” test that can also be used to establish the materiality of the conduct of an applicant. The result is the “But-For Materiality With an Exception for Affirmative Egregious Misconduct” test which the court articulated as the new law for determining the materiality of a withheld reference required to establish inequitable conduct.
In so holding the court expressly rejected the definition of materiality in PTO Rule 56, Id., at. 32, 33, which at first glance appears to have muddied the waters about what to disclose to the USPTO to secure a patent; even though Therasense affects the determination of materiality in an inequitable conduct challenge made in court and does not change Rule 56 or whatever other rule the USPTO promulgates with respect to disclosure of prior art to the USPTO and which still requires compliance.
As to “intent”, the court held that “specific intent to deceive” is a separate element and so cannot be inferred solely from materiality. Id., at 25 Gone is the “sliding scale,” where a weak showing of intent may be found sufficient based on a strong showing of materiality, and vice versa. Instead, a court must weigh the evidence of intent to deceive independent of its analysis of materiality. It is no longer enough to prove that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO. Ibid Specific intent to deceive is required and established only where it is the single most reasonable evidence to be drawn from the evidence. Id., at 26 When there are multiple reasonable inferences that may be drawn, intent to deceive cannot be found. Finally, the element of intent must be proven by clear and convincing evidence. Ibid.
Therasense follows in the wake of Federal Circuit precedent like Bilski which seek to define inflexible mechanical rules of the kind eschewed by the Supreme Court most recently in Bilski in an attempt to provide bright-line rules for practitioners. Moreover Therasense has set the materiality bar for inequitable conduct so high that it may serve to disincentivize disclosure by companies except in cases involving egregious conduct; arguably all but taking away the Supreme Court sanctioned inequitable conduct as a viable patent defense. However, despite the high bar set for proving inequitable conduct in court, Therasense does not change Rule 56 or whatever other rule the USPTO promulgates with respect to disclosure of prior art to the USPTO and which still requires compliance. As Judge O’Malley of the federal circuit points out in her dissenting opinion, the majority’s but-for materiality test fails to provide district courts with flexibility, a “result [that] is contrary to the very nature of equity and centuries of Supreme Court precedent.” O’Malley Dissent at 4 For a host of reasons, Therasense is ripe for Supreme Court reversal and may just be the next patent case the Supreme Court puts on its docket. Until that happens, for now at least, Therasense is the law of the land.
The Juhasz Law Firm can help you to better understand the effect of Therasense on your patents. For more information regarding Therasense, including how this may impact your practice and specific practice pointers prosecutors should consider in order to comply with the duty of disclosure to avoid inequitable conduct in the wake of the Therasense decision, please contact The Juhasz Law Firm.
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For more on Therasense, including a comprehensive overview of the fact pattern and issues as well as specific practice pointers on what steps prosecutors should do to comply with the duty of disclosure to avoid inequitable conduct in the wake of the Therasense decision, go to the May 2011 Juhasz Law Advisory.