Jun 1, 2011

Therasense v. Becton (Fed. Cir. 25th May 2011 en banc): Reconsidering the 'Duty of Candor'

The United States Court of Appeals for the Federal Circuit, on 25th May 2011, pronounced its decision in the case of Therasense v. Becton. And the same has already brought the United States Patent Office into motion.

The case pertains to the contours of 'duty of candor' and the standards for establishing the inequitable conduct defense. Few of the observations made by the Court may be eyebrow-raising and it would be interesting to see their impact on the USPTO practices and procedures.

The course charted by the majority is contrary to the Supreme Court decisions that gave rise to the doctrine of inequitable conduct, to a long line of the said Court's own precedent and to the principles of materiality that courts have applied in other contexts. Under the said Court's new rule, an applicant who conceals information with the intent to deceive the PTO will be free to enforce his patent unless it can be proved by clear and convincing evidence that the patent would not have issued "but for" the fraud.

Even though the majority justifies its new rule in part that it will improve the prosecution of patents before the PTO, however the new rule may have an adverse impact on the PTO and the public at large. The PTO itself also significantly shared this concern and announced that it expects to soon issue guidelines to applicants related to the prior art and information that they must disclose to the Patent Office under their duty of disclosure.

The guidelines for the test to be adopted for ascertaining 'inequitable conduct', in this case, are rather vague and much lenient. Whichever test is adopted should provide as much guidelines for the district courts and patent applicants as possible, but in doing so, it must not disregard the equitable nature of the inquiry at hand. This case has tried to encompass many forms of conducts which are sufficient to warrant a finding of inequitable conduct, it is conceded that it leaves open a possibility that some form of intentional misconduct that it "currently could not envision could warrant equitable relief".

The remedy for inequitable conduct is the "atomic bomb" of patent law, such that its claim even in respect of a single claim can render the entire patent unenforceable. In the light of this, one of the important guidelines which the US Court of Appeals proposed is that to prevail on a claim of inequitable conduct, the accused infringer must prove that the patentee acted with the specific intent to deceive the PTO. A finding that the misrepresentation or omission amounts to gross negligence or negligence under a "should have known" standard does not satisfy this intent requirement.

The facts of this case, which had driven the Court into these guidelines were that a central issue during the examination that led to the issuance of the ’551 patent was whether the prior art had taught that glucose sensors could be used to test whole blood without a protective membrane. On its face, the ’382 patent seemed to teach that sensors could be used without membranes when testing whole blood.

Abbott (the inventor) submitted a declaration in which he stated that even though the ’382 patent referred

to the use of a protective membrane surrounding the enzyme and mediator layers of the glucose meter as “optionally, but preferably” present, “one skilled in the art would have felt that an active electrode comprising an enzyme and a mediator would require a protective membrane if it were to be used with a whole blood sample.” For that reason, he stated, he was “sure that one skilled in the art would not read [the ’382 patent] to teach that the use of a protective membrane with a whole blood sample is optionally or merely preferred.”

The district court found that Abbott’s representations to the EPO contradicted its representations to the PTO. The district court also found that Abbott’s failure to disclose to the examiner that it had made inconsistent statements to the EPO regarding the teaching of the ’382 patent was highly material. In particular, the court found that the failure to disclose the inconsistency in those statements was the kind of nondisclosure covered by PTO Rule 56, as being nondisclosure of information “inconsistent with a position the applicant takes in . . . asserting an argument of patentability.” Turning to the issue of intent, the district court found that Abbott’s failure to disclose material information was intentional, i.e., it was made with the specific intent to deceive the PTO.

The Court of Appeals, however, held that a patentee need not offer any good faith explanation unless the accused infringer first proves a threshold level of intent to deceive by clear and convincing evidence.

The Court has thus, vacated the District Court's finding on inequitable conduct remanded the case for further proceedings in the light of its decision (refer to http://www.patexia.com/blog/5).

The USPTO is now expected to issue clear and unambiguous guidelines in light of the above. Till then, under consideration lies the 'duty of candor'.