Ethical Issues for Patent Prosecution Attorneys and Patent Litigators Related to the Duty of Candor and Inequitable Conduct April 22, 2008 Presentation

Ethical Issues for Patent Prosecution Attorneys and Patent Litigators Related to

the Duty of Candor and Inequitable Conduct

April 22, 2008



April 22, 2008

Presentation to the

Austin Intellectual Property Association

Darryl J. Adams

2

The Duty of Candor and Inequitable Conduct

3


Ethical Issues Related to the Duty of Candor and Inequitable Conduct

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5



6


the Duty of Candor and Inequitable ConductMore Pitfalls for the Unwary Patent Prosecutor.



More Pitfalls for the Unwary Patent Prosecutor.

The Return of the Inequitable Conduct Scourge.



More Pitfalls for the Unwary Patent Prosecutor.

The Return of the Inequitable Conduct Scourge.

New and Innovative Ways to Screw the Patentee.

9

Duty of Candor and Inequitable Conduct Duty of Candor and Inequitable Conduct

· Duty to prosecute patents before the PTO with candor, good faith and honesty

· Inequitable Conduct is the breach of that duty

· Two prongs

Material omission or misrepresentation

Intent to deceive

10

Significant Developments in Inequitable Conduct Law Significant Developments in Inequitable Conduct Law

· Materiality Clarification of the Materiality

Standard

Disclosure of Related Prosecutions

Attorney Argument

· Intent Evolving Standard for Proving

Deceptive Intent?

· Standing to Intervene

· Proposed Legislation

11


· Materiality Clarification of the Materiality

Standard

Disclosure of Related Prosecutions

Attorney Argument

· Intent Evolving Standard for Proving

Deceptive Intent?



12

Materiality – Clarification of StandardMateriality – Clarification of Standard

· Digital Control Inc. v. The Charles Machine Works, 437 F.3d 1309 (Fed. Cir. 2006).

Clarifies the interaction between the “old” and “new” Patent Office Rule 56 (37 C.F.R. 1.56).

Holding: New Rule 56 does not supplant or replace the “reasonable examiner” standard established under the old rule.

13


· Old Rule 56 (“Reasonable Examiner” standard): Information is material “where there is a

substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow the application at issue as a patent.” 37 C.F.R. 1.56 (1977).

· New Rule 56 (1992): Information is material when:

“(1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim; or

(2) It refutes, or is inconsistent with, a position the applicant takes in: (i) Opposing an argument of

unpatentability relied on by the Office, or (ii) Asserting an argument of

patentability

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· Digital Control Inc. v. The Charles Machine Works, 437 F.3d 1309 (Fed. Cir. 2006)

New Rule 56 does not supplant or replace “reasonable examiner” standard New Rule 56 is simply an “additional test”

Reasonable Examiner standard applies to patents prosecuted after the 1992 change in PTO rules

Standard for inequitable conduct governed by case law not PTO rules Rules may provide guidance


15


· Materiality Clarification of the materiality

standard

Disclosure of related prosecution

Attorney argument

· Intent Evolving standard for proving

deceptive intent?



16

· McKesson Information Solutions, Inc. v. Bridge Medical, Inc., 487 F.3d 897 (Fed. Cir. 2007)

Disclosing related applications to the Patent Office may be not sufficient

Must disclose details of prosecution material to patentability

Materiality – Related ProsecutionMateriality – Related Prosecution

PATENT APPLICATION

’195

PATENT APPLICATION

’149

PATENT APPLICATION

’278

'278 Application – Patient Identification System


3 node communication


3 node communication

Programmable unique identifier

No Familial Relationship To '278 Application

Examiner Lev

'149Application

Continuation of '278 Application

Examiner Trafton

'195Application

Patent At Issue

Disclosed Co-Pending'149 Appl.

Examiner Trafton

'278Application

OA - R

ejec

ting

3 n

ode

clai

ms

4/87


Examiner Lev

'149Application


Examiner Trafton

'195Application

Patent At Issue


Examiner Trafton

'278Application

OA - R

ejec

ting

3 n

ode

clai

ms

4/87


Examiner Lev

'149Application


Examiner Trafton

'195Application

Patent At Issue


Examiner Trafton

'278Application

OA R

esp – A

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10/6/87

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Examiner Lev

'149Application


Examiner Trafton

'195Application

Patent At Issue


Examiner Trafton

'278Application

OA R

esp – A

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f dis

clos

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3 no

de

10/6/87

OA - A

llow

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pro

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mm

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iden

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12/8/87

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4/87

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iden

tifier

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Examiner Lev

'149Application


Examiner Trafton

'195Application

Patent At Issue


Examiner Trafton

'278Application

OA - R

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ting

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4/87

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Examiner Lev

'149Application


Examiner Trafton

'195Application

Patent At Issue


Examiner Trafton

'278Application

OA - R

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ting

3 n

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4/87

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Examiner Lev

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8/87


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'195Application

Patent At Issue


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4/87

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Examiner Lev

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Inte

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Bak

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10/23/87


Examiner Trafton

'195Application

Patent At Issue


Examiner Trafton

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Examiner Lev

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Inte

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Examiner Trafton

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'278Application

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Examiner Lev

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Inte

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4/87

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'278Application

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'195Application

'195

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Patent At Issue


Examiner Trafton

'278Application

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'278Application

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Patent At Issue


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'278Application

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'195Application

'195

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led

7/87

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12/16/88

Patent At Issue


Examiner Trafton

'278Application

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ting

3 n

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4/87

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Examiner Trafton

'195Application

'195

Appl. fi

led

7/87

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wan

ce

12/16/88

Patent At Issue


Examiner Trafton

'278Application

36

· McKesson’s arguments rejected: Baker patent was not cited for three-node approach,

therefore applicant was likely unaware of its relevance

Federal Circuit “Although McKesson’s argument might have some merit if examiner Lev had cited one small section of a much larger work, citation to the eighteen-column Baker patent put [applicant] on notice of the content of the whole document.”

Alleged failure to disclose Baker patent was before Baker patent was cited by the second examiner

Duty of Candor remained in effect

“Mere seventeen-day gap” until Baker Patent was cited indicates that applicant “knew or should have known of Baker’s materiality.”


37

· McKesson’s arguments rejected:

Not until Dayco decision could applicants have been on notice to disclose rejections of co-pending applications

MPEP 2001.06(b) provided notice

Dayco decision itself concerned activities prior to Dayco

Disclosure of co-pending application shows good faith

Holding: MPEP 2001.06(b) and case law “plainly impose a duty of disclosure beyond a citation of the co-pending application.”

Disclosure of co-pending application is some evidence of good faith or lack of intent, but not sufficient.


38

· McKesson’s arguments rejected:

The same examiner allowed the claims of the ‘372 Application. Do not assume the Examiner recalls details of

other applications

The prosecuting attorney testified that he did not consider the identity of the examiner.


39

· How did patentee get in the mess?

Shifting requirements

Made excuses for not disclosing Not recall details

Multiple arguments why references were not material

Lost credibility

If conceded materiality and relied on ignorance or innocent mistake, result may have been different Difficult to admit error

High standard of review Materiality and Intent – Clear Error

Balancing – Abuse of Discretion

McKesson – Practice TipsMcKesson – Practice Tips

40

· Rethink disclosure procedures

Disclose material events in related applications

Same examiner

Determine materiality?

· Consider disclosing all OA and Responses in related applications

Existing practice for references?

Problematic when some are disclosed but not others

· What is next?

Foreign counterparts

Establish best practices?

McKesson – Practice TipsMcKesson – Practice Tips

41



standard


Attorney Argument


deceptive intent?



42

Attorney Argument Attorney Argument

· Disclosed prior art references from PCT application.

· “the references do not relate to the invention and, therefore, further discussion of the same is not necessary”

· Attorney never examined the prior art.

Boilerplate language.

· Deemed closest prior art in the PCT application and the claims were amended to overcome.

· Holding: Not a material misrepresentation – mere attorney argument.

Examiner had prior art and was free to accept or reject.

Innogenetics v. Abbott Labs., 512 F.3d 1363 (Fed. Cir. 2008)

43



standard


Attorney Argument


deceptive intent?



44

Intent Intent

· Threshold levels of intent and materiality must be proven by clear and convincing evidence Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed.

Cir. 1995)

· Intent can be shown by direct or circumstantial evidence Most often inferred from circumstantial evidence. Id.

at 1180.

· “Gross negligence” alone is not sufficient to infer intent Kingsdown Medical Consultants v. Hollister, Inc., 863 F.2d 867 (Fed.

Cir. 1988) (en banc) Must prove deceitful intent

45

Intent – Inferred from Materiality?Intent – Inferred from Materiality?

· Can Intent Be Inferred Solely From Nondisclosure Of Material Information? Hebert v. Lisle Corp., 99 F.3d 1109, 1116

(Fed. Cir. 1996) “Intent to deceive can not [sic] be inferred solely from

the fact that information was not disclosed; there must be a factual basis for a finding of deceptive intent.”

Braun, Inc. v. Dynamics Corp., 975 F.2d 815, 822 (Fed. Cir. 1992) Defendant argued that “intent to deceive may be

inferred solely from [applicant’s] failure to present to the PTO material prior art of which it was aware.”

“[M]ateriality does not presume intent, which is a separate and essential component of inequitable conduct.”

46

Trivia QuestionTrivia Question

Who is this devious looking villain?

47



Answer: Snidely Whiplash

48




Bonus Question: What 1970’s cartoon featured Snidely Whiplash?

49




Bonus Question: What 1970’s cartoon featured Snidely Whiplash?

Answer: The Dudley Do-Right Show

50


· Can Intent Be Inferred Solely From Nondisclosure Of Material Information? Hebert v. Lisle Corp., 99 F.3d 1109, 1116 (Fed.

Cir. 1996). “Intent to deceive can not [sic] be inferred solely from

the fact that information was not disclosed; there must be a factual basis for a finding of deceptive intent.”

Braun, Inc. v. Dynamics Corp., 975 F.2d 815, 822 (Fed. Cir. 1992). Defendant argued that “intent to deceive may be

inferred solely from [applicant’s] failure to present to the PTO material prior art of which it was aware.”

“[M]ateriality does not presume intent, which is a separate and essential component of inequitable conduct.”

51


· Recent cases permit inference of intent based on materiality

Ferring B.V. v. Barr Labs, Inc., 437 F.3d 1181 (Fed. Cir. 2006)

Dippin’ Dots, Inc. v. Mosey, 476 F.3d 1337 (Fed. Cir. 2007)

Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359 (Fed. Cir. 2007)

52


· Recent cases permit inference of intent based solely on materiality

Ferring B.V. v. Barr Labs, Inc., 437 F.3d 1181 (Fed. Cir. 2006)

Dippin’ Dots, Inc. v. Mosey, 476 F.3d 1337 (Fed. Cir. 2007)

Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359 (Fed. Cir. 2007)

53

· Ferring B.V. v. Barr Labs, Inc., 437 F.3d 1181 (Fed. Cir. 2006)

Examiner repeatedly rejected application based upon interpretation of term “preoral” in a prior art reference.

Examiner requested “non-inventor” declarations as to the meaning of “preoral.”

Applicant submitted several affidavits from “non-inventors.”

Applicant did not disclose that most of the declarants had past or present business or consulting relationships with Ferring.


54


· Ferring, 437 F.3d 1181 (Fed. Cir. 2006)

No direct evidence that applicant intended to deceive Patent Office by not disclosing affiliations with the declarants

Many affiliations were tenuous

Federal Circuit affirmed a summary judgment of inequitable conduct

55



Summary judgment on the issue of intent is appropriate if:

Information is highly material

Applicant knew of the information

Applicant knew or should have known of the materiality, and

Applicant did not provide a credible explanation for not disclosing

Creates an inference of deceptive intent, and shifts burden to patentee to prove good faith

56


Infer intent because applicant “should have known” of the materiality.

Negligence?

Kingsdown – “gross negligence” not sufficient

Summary judgment of inequitable conduct with no evidence of deceptive intent beyond failure to disclose highly material reference.


57

· Dissent – Judge Newman Break from precedent on intent.

“Heretofore, no case has found inequitable conduct based on omitted information when there was no evidence of intentional omission and not even circumstantial evidence of deceptive intent.”

Majority “impose[s] a positive inference of wrongdoing, replacing the need for evidence with a ‘should have known’ standard of materiality, from which intent is inferred, even in the total absence of evidence.

Distinguished cases majority relied upon for the “should have known” standard: Paragon: Involved affirmative misrepresentation, not an omission Bruno: Was not summary judgment; evidence presented that applicant

deliberately avoided learning of high materiality of undisclosed contacts Critikon: Not a “mere failure to disclose;” in a reissue proceeding, Applicant

knowingly failed to disclose assertions of invalidity and inequitable conduct against the same patent in concurrent litigation

Ferring B.V. v. Barr LabsFerring B.V. v. Barr Labs

58



standard


Attorney Argument


deceptive intent?



59

Standing To Intervene Standing To Intervene

· Nisus Corp. v. Perma-Chink Sys., Inc., 497 F.3d 1316 (Fed. Cir. 2007)

Patent attorney personally named as having committed the inequitable conduct.

Patent Attorney attempted to intervene, but was rejected by the District Court.

Federal Circuit found no standing to appeal.

Court states that while an attorney who is formally reprimanded may appeal, “judicial criticisms of lawyers’ actions are not reviewable.”

Contrary holding would result in a multiplicity of appeals from witnesses who are not parties to the suit.

Cannot be treated as final opinions in collateral proceedings.

60



standard


Attorney Argument


deceptive intent?



61

Proposed LegislationProposed Legislation

· HR 1908 (Passed Sept. 7, 2007)

· Materiality - Similar to New Rule 56 “(i) a reasonable examiner would have made a prima facie finding of

unpatentability, or maintained a finding of unpatentability, of one or more of the patent claims based on the information, and the information is not cumulative to information already of record or previously considered by the Office; or

(ii) information that is otherwise material refutes or is inconsistent with a position the applicant takes in opposing a rejection of the claim or in asserting an argument of patentability.”

· Intent - “specific facts beyond materiality of the information misrepresented or not disclosed must be proven that establish the intent of the person to mislead or deceive the examiner by the actions of the person.”

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· HR 1908 (Passed Sept. 7, 2007)

· Remedies - Court can choose appropriate remedy (A) Denying equitable relief to the patent holder and

limiting the remedy for infringement to reasonable royalties.

(B) Holding the claims-in-suit, or the claims in which inequitable conduct occurred, unenforceable.

(C) Holding the patent unenforceable.

(D) Holding the claims of a related patent unenforceable.


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· S. 1145 (Pending vote of the full Senate)

· Materiality - Similar to Old Rule 56

· Intent - Cannot infer intent solely from gross negligence or materiality

· Remedies - Court can chose appropriate remedy (A) Denying equitable relief to the patent holder and

limiting the remedy for infringement to reasonable royalties.

(B) Holding the claims-in-suit, or the claims in which inequitable conduct occurred, unenforceable.

(C) Holding the patent unenforceable.


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· Patent Prosecutors

Consider Ambien

Rethink disclosure procedures

Do not get caught up in language

Legislative reform may provide some relief

· Patent Litigators

Open season

Scour related applications and foreign applications

Patentee must put forth evidence of good faith

Summary on Recent DevelopmentsSummary on Recent Developments

Thank You

Darryl J. Adams D E W E Y & L e B O E U F L L [email protected]

Documents

Ethical Issues for Patent Prosecution Attorneys and Patent Litigators Related to the Duty of Candor and Inequitable Conduct April 22, 2008 Presentation