Federal CircuitIf a patent applicant tricks the PTO into issuing a patent, then the courts will refuse to enforce the resulting fraudulent patent under the doctrine of ‘inequitable conduct.’  Sounds fair enough, right?  Over several years, court decisions have tipped this principal until virtually any error relating to a patent application, no matter how minor or how innocent, would make the resulting patent unenforceable and hence worthless.   As a result, almost all patent infringement defendants allege ‘inequitable conduct’ and the courts spend inordinate amounts of time determining whether a patent is or is not rendered worthless due to inequitable conduct.

All of that is changed by the Federal Circuit Court of Appeals decision in Therasense v Becton Dickinson on May 25, 2011. The en banc decision (a decision by all of the court’s judges sitting together) restores balance to ‘inequitable conduct.’

The Federal Circuit made clear that an action or failure to act of the applicant must be both ‘material’ (that is, important) and also demonstrate a ‘specific intent to deceive’ the PTO to amount to inequitable conduct barring enforcement of a patent.  The Federal Circuit adopted a ‘but for’ test for materiality. If the patent would not have been issued by the PTO ‘but for’ the act of the applicant, then the act is ‘material.’  This is a high standard and will avoid situations where a trivial, unimportant mistake by an applicant renders the patent unenforceable.

The Federal Circuit also considered how much bad intent the patent applicant must have to invalidate a patent.  The Court overruled its own precedent that mere negligence can amount to intent to deceive the PTO.  Where an applicant did not inform the PTO of a prior art reference, which is the usual situation, there must be ‘clear and convincing’ evidence of a ‘specific intent to deceive.’  The ‘specific intent’ can be inferred from all of the facts.  This intent requirement presents a high burden to infringement defendants.

If the trial courts and the panels of the Federal Circuit actually follow this decision, which from past practice is not assured, then ‘inequitable conduct’ as a routine litigation strategy is a thing of the past.   That is a good thing for inventors and patent owners.

— Robert Yarbrough, Esq.