US Appeals Court sets new test for ‘inequitable’ patent prosecution

Authors: Robert M. Kunstadt⇓ and Ilaria Maggioni (R. Kunstadt, P.C.)

Therasense v Becton, Dickinson & Co., WL 2028255, Fed. Cir., 25 May 2011

Journal of Intellectual Property Law & Practice (2011) doi: 10.1093/jiplp/jpr129, first published online: July 29, 2011

Accused conduct must have been the ‘but-for’ cause of issuance of a patent, or the patent will not be found unenforceable for ‘inequitable conduct’.

Legal context

In the USA, patents can be held unenforceable if the applicant did not deal candidly with the patent examiner. This is a doctrine similar to the principle of ‘unclean hands’.


In its new Therasense decision, the Court of Appeals for the Federal Circuit (‘CAFC’) tightened the standard for establishing ‘inequitable conduct’ to make a patent unenforceable. It declined to enforce the US Patent Office's disclosure rule and now requires in most instances that the accused conduct have been the ‘but-for’ cause of the patent's issuance—or there will be no remedy of unenforceability.

The CAFC's explicit motivation for a more stringent standard was to reduce the number of charges of inequitable conduct:
In the past, this court has tried to address the proliferation of inequitable conduct charges by raising the intent standard alone. … 
This higher intent standard, standing alone, did not reduce the number of inequitable conduct cases before the courts and did not cure the problem of overdisclosure of marginally relevant prior art to the PTO. To address these concerns, this court adjusts as well the standard for materiality’ [Therasense, 2011 WL 2028255 at *11].

The trial court's recitation of the misconduct committed by the patent applicant lead to its finding of inequitable conduct:
The court found that Mr. Pope and Dr. Sanghera were aware of the contrary representations made to the EPO and consciously chose to withhold them from the PTO. The court carefully considered their explanations for their failure to disclose the references and found each witness's explanation to be lacking’ [Therasense, 2011 WL 2028255 at *37].
The majority opinion in Therasense departed from reasoning in Supreme Court precedent and the Federal Rules regarding the assessment of witness credibility by a trier of fact. The Supreme Court established that those with matters pending before the USPTO have an ‘uncompromising duty to report to it all facts concerning possible fraud or inequitableness’ underlying pending applications [Precision Instruments Manufacturing Co. v Automotive Maintenance Machinery Co, 324 US 806, 818 (1945) (emphasis added)].

The Panel's rejection of the trial judge's detailed findings is inconsistent with a universal rule of appellate review. ‘Findings of fact … shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of witnesses’ [Rule 52(a), Fed. R. Civ. P.]. This ‘[r]ule means what it says’—that findings of fact, even ‘those described as “ultimate facts” because they may determine the outcome of litigation’, are to be reviewed deferentially on appeal [Bose Corp. v Consumers Union of United States, 466 US 485, 498 (1984)]. An appellate court is bound to respect credibility determinations of the trial judge, according to Federal Rule 52(a). Rather than having the authority to compel the trial judge to credit any reasonable inference argued by the applicant, it is the CAFC itself that is compelled to respect the trial judge's factual choice between two permissible views of the evidence, which cannot be overturned as a ‘clearly erroneous’ choice.

With its Therasense decision, the CAFC effectively elevated the fact patterns of older Supreme Court cases to the status of the controlling test for inequitable conduct of any and all types, in disregard of the Supreme Court's most recent statements to the contrary in Precision Instruments. The Therasense ruling would permit ‘working-around’ the uncompromising standard of fully candid disclosure to the Patent Office that was established in Precision Instruments. If the Therasense ruling remains in place, district courts will be impeded from their duty to detect and deter misleading statements to the USPTO.

Practical significance

US patent practitioners are breathing a collective sigh of relief—for now—since inequitable conduct has become harder to allege and prove. However, at least one of the losing parties is petitioning the US Supreme Court for review, so this decision may not yet be the last word on unenforceability of patents for inequitable conduct.

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