Inequitable Conduct is often alleged and asserted by any Defendant that is sued for patent infringement. Hey, why not? If you can get the patent declared unenforceable, then it doesn’t matter if the Defendant infringed the patent. But, the recent ruling from the Federal Circuit may have just made this a more difficult affirmative defense to establish.
In First Media LLC v. Sony, the Federal Circuit clarified to demonstrate Inequitable Conduct, you need to establish the following: 1) the Patentee acted with the specific intent to deceive the United States Patent and Trademark Office (USPTO); and 2) the non-disclosed reference was material to the examination of the patent. The Defendant must establish that the Plaintiff or the Patentee had the specific intent to deceive the USPTO and that the non-disclosed reference was material by a clear and convincing standard of evidence.
The Federal Circuit stated that showing that the Patentee knew of the reference and failed to disclose it is not enough. The Patentee must have known of the reference, known that it was material to the examination of the patent and must have deliberately withheld the reference from the USPTO. The Patentee is not required to offer a good faith explanation for the failure to disclose the reference, until the Defendant has established by clear and convincing evidence a specific intent to withhold a material reference from the USPTO.
In First Media, the Federal Circuit considered that the prosecuting attorney testified as follows: a) that the Bush reference did not spark an idea that it needed to be disclosed during the prosecution of the ‘946 patent; b) that he only considered patentability issues during the active prosecution phase (time between notice of allowance and office actions); and c) for two other references the technology was considered to be too different from the ‘946 patent. Based on this evidence, the Federal Circuit overturned the lower court’s find of Inequitable Conduct.
The Federal Circuit held that the lower court did not consider whether the Patentee deliberately withheld the references from the USPTO. It is not enough for the lower court to consider if the reference was material and whether the Patentee was aware of it. The lower court cannot merely infer that there was a specific intent to deceive from these two matters, instead there must be evidence establishing that the Patentee deliberately withheld the reference.
The Federal Circuit reversed and remanded to consider if there was any probative evidence that established a deliberate effort to hide any of the references. Once, this is established the lower court should consider the Patentee’s good faith explanation for withholding the reference. The lower court cannot jump to the Patentee’s good faith explanation and declare that it is not credible.
Since the lower court did not point to any evidence that led it to explicitly find a deliberate intent to withhold the reference and immediately stated that the Patentee’s explanation was not credible, it applied the wrong analysis. Under these circumstances, the Federal Circuit went to hold that the lower Court’s Ruling was clearly erroneous.
So, what is needed to establish inequitable conduct? Well it is more than knowledge of a material reference and negligence in disclosing the material reference. This is where you need an email from the Patentee stating that the reference is material and we should not provide it to the USPTO. We will see how this standard is applied and how often it is met by Defendants asserting inequitable conduct in patent infringement cases.