Reining in the Inequitable Conduct Defense

Responding to views from the U.S. Patent and Trademark Office (“PTO”) and elsewhere about the unintended consequences of the current inequitable conduct doctrine, a divided en banc Federal Circuit decision issued on May 25, 2011 adjusted the standard of the materiality element to make this defense harder to establish. Writing for the majority in Therasense, Inc. v. Becton, Dickinson & Co., 2011 U.S. App. LEXIS 10590 (Fed. Cir. May 25, 2011), Chief Judge Randall Ray Rader lamented that the inequitable conduct doctrine had been overused to the detriment of the courts and “the entire patent system,” and that the harsh consequences of a finding of inequitable conduct ' unenforceability of the entire patent or patent family ' warrant a more sparing application of the doctrine. The Therasense court then held: 1) “as a general matter, the materiality required to establish inequitable conduct is but-for materiality” where “prior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art”; 2) an exception to the general rule exits “in cases of affirmative egregious misconduct,” such as filing an unmistakably false affidavit; 3) “the accused infringer must prove that the patentee acted with the specific intent to deceive the PTO,” that is, “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”; and 4) a “district court should not use a 'sliding scale,' where a weak showing of intent may be found sufficient based on a strong showing of materiality, and vice versa.”