Patent Spring

Therasense, Inc. v. Becton

Regime change has come to the patent defense of inequitable conduct. Protesting the plague-like effect the doctrine has had on courts and the entire patent system, a 6-1-4 en banc Federal Circuit has brought a sweeping reformation to the standards for challenging a patent on inequitable conduct grounds. In an overthrow of the current system, the majority in Therasense v. Becton decreed that heightened, specific standards of proof for intent and materiality now apply to a claim of inequitable conduct. The court rejected a previously used sliding scale approach that allowed a strong showing of intent to make up for a weak showing of materiality, or vice versa.  And, revolutionarily, inequitable conduct no longer automatically renders a patent unenforceable. Rather, the Therasense court held equity requires that the doctrine should only be applied if "the patentee's misconduct resulted in the unfair benefit of receiving an unwarranted claim."

Welcome to patent law's new world order.

In Therasense the patent at issue-the ‘551 patent-involved disposable blood glucose test strips for diabetes management. The patent claimed as a key innovation the ability to transmit blood glucose levels without the need for an intervening membrane. The patent holder (now known as Abbott) received repeated application rejections. The PTO denied patentability on anticipation and obviousness grounds, in part citing another Abbott-owned glucose monitoring patent. That patent's claims included use of a protective membrane that was "optional but preferable." To overcome PTO objections, Abbott submitted an affidavit from its Director of Research and Development stating that the "optional but preferable" language constituted patent phraseology rather than a technical teaching. Following submission of the affidavit, the ‘551 patent issued.

But Abbott had taken a contrary position several years earlier while prosecuting the European version of the patent with the "optional but preferable" language.  When Abbott brought suit for infringement of the ‘551 patent, the district court held the patent unenforceable for inequitable conduct because of Abbott's failure to disclose its European briefing papers to the PTO. A panel of the Federal Circuit upheld the district court's ruling and the en banc rehearing ensued.

Writing for the majority, Judge Rader said rehearing had been granted to address the problems created by the expansion and overuse of the inequitable conduct doctrine.  According to Judge Radar, reduced standards of proof for intent and materiality have inadvertently led to "increased adjudication cost and complexity, reduced likelihood of settlement, burdened courts, strained PTO resources, increased PTO backlog and impaired patent quality." Seeking to redirect the doctrine and fix the problems its current standards of proof have caused,  the court's opinion promulgates the following reforms:

1.         Proof of Intent

Intent now requires proof by clear and convincing evidence of a deliberate decision to deceive.  In a case involving a non-disclosure, the accused infringer must show that the applicant knew of the reference, knew it was material and "made a deliberate decision to withhold [it.]" Intent may be inferred from indirect and circumstantial evidence, but the evidence must be sufficient to require a finding of deceitful intent in light of all the circumstances. Accused infringers bear the burden of proof and patentee's do not have to offer a good faith explanation for their behavior until that burden is met.  

2.         Materiality

Materiality is a separate element that requires clear and convincing evidence that "but for" the claimed deception the PTO would not have allowed the claim. Courts making a patentability determination are instructed to use the PTO's preponderance of evidence standard and give claims their broadest possible constructions. Note: An exception from the but-for standard of review exists for affirmative, egregious misconduct like manufacturing evidence.

3.         Invalidity for Inequitable Conduct

Proof of  inequitable conduct no longer results in automatic patent invalidation.  Instead, Therasense  instructs courts to weigh the equities to determine whether the wrongful conduct is sufficiently egregious to render the entire patent unenforceable.

What do Therasense's changes mean for the patent proletariat?  Inequitable conduct appears to be practically subsumed by anticipation.  One has to wonder what value there is in asserting  inequitable conduct if a reference is only material if the Patent Office would have rejected the claim based on it-unless of course the accused infringer can identify sufficiently egregious conduct to gain an exception from Therasense's newly enunciated standards.  As a result, depending on which side of a current (or prospective) inequitable conduct battle you sit, Therasense could either herald the-soon-to-occur toppling of a favored defense or the new beginning of a very bright patent summer.

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