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 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

4 The Duty of Candor and Inequitable Conduct Ethical Issues for Patent Prosecution Attorneys and Patent Litigators Related to the Duty of Candor and Inequitable Conduct

6 More Pitfalls for the Unwary Patent Prosecutor.

Ethical Issues for Patent Prosecution Attorneys and Patent Litigators Related to the Duty of Candor and Inequitable Conduct More Pitfalls for the Unwary Patent Prosecutor. The Return of the Inequitable Conduct Scourge.

Ethical Issues for Patent Prosecution Attorneys and Patent Litigators Related to the Duty of Candor and Inequitable Conduct 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 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  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 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

12 Materiality – 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 Materiality – Clarification of Standard  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

14  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 Materiality – Clarification of Standard

15 Significant Developments in Inequitable Conduct Law  Materiality  Clarification of the materiality standard  Disclosure of related prosecution  Attorney argument  Intent  Evolving standard for proving deceptive intent?  Standing to Intervene  Proposed Legislation

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 Prosecution PATENT APPLICATION ’195 PATENT APPLICATION ’149 PATENT APPLICATION ’278

'278 Application – Patient Identification System

 3 node communication

'278 Application – Patient Identification System  3 node communication  Programmable unique identifier

No Familial Relationship To '278 Application Examiner Lev '149 Application Continuation of '278 Application Examiner Trafton '195 Application Patent At Issue Disclosed Co-Pending '149 Appl. Examiner Trafton '278 Application

OA - Rejecting 3 node claims 4/87 No Familial Relationship To '278 Application Examiner Lev '149 Application Continuation of '278 Application Examiner Trafton '195 Application Patent At Issue Disclosed Co-Pending '149 Appl. Examiner Trafton '278 Application

OA - Rejecting 3 node claims 4/87 No Familial Relationship To '278 Application Examiner Lev '149 Application Continuation of '278 Application Examiner Trafton '195 Application Patent At Issue Disclosed Co-Pending '149 Appl. Examiner Trafton '278 Application OA Resp – Arguing no ref disclose 3 node 10/6/87

OA - Rejecting 3 node claims 4/87 No Familial Relationship To '278 Application Examiner Lev '149 Application Continuation of '278 Application Examiner Trafton '195 Application Patent At Issue Disclosed Co-Pending '149 Appl. Examiner Trafton '278 Application OA Resp – Arguing no ref disclose 3 node 10/6/87 OA - Allowed if include programmable identifier 12/8/87

OA - Rejecting 3 node claims 4/87 OA Resp – Arguing no ref disclose 3 node 10/6/87 Allowance 2/89 OA - Allowed if include programmable identifier 12/8/87 No Familial Relationship To '278 Application Examiner Lev '149 Application Continuation of '278 Application Examiner Trafton '195 Application Patent At Issue Disclosed Co-Pending '149 Appl. Examiner Trafton '278 Application

OA - Rejecting 3 node claims 4/87 OA Resp – Arguing no ref disclose 3 node 10/6/87 Allowance 2/89 OA - Allowed if include programmable identifier 12/8/87 OA - Rejecting 3 node claims 2/87 No Familial Relationship To '278 Application Examiner Lev '149 Application Continuation of '278 Application Examiner Trafton '195 Application Patent At Issue Disclosed Co-Pending '149 Appl. Examiner Trafton '278 Application

OA - Rejecting 3 node claims 4/87 OA Resp – Arguing no ref disclose 3 node 10/6/87 Allowance 2/89 OA - Allowed if include programmable identifier 12/8/87 OA - Rejecting 3 node claims 2/87 No Familial Relationship To '278 Application Examiner Lev '149 Application OA Resp – Narrowed claims to cover “real time communication” 8/87 Continuation of '278 Application Examiner Trafton '195 Application Patent At Issue Disclosed Co-Pending '149 Appl. Examiner Trafton '278 Application

OA - Rejecting 3 node claims 4/87 OA Resp – Arguing no ref disclose 3 node 10/6/87 Allowance 2/89 OA - Allowed if include programmable identifier 12/8/87 OA - Rejecting 3 node claims 2/87 No Familial Relationship To '278 Application Examiner Lev '149 Application OA Resp – Narrowed claims to cover “real time communication” 8/87 Interview to discuss Baker ref. 10/23/87 Continuation of '278 Application Examiner Trafton '195 Application Patent At Issue Disclosed Co-Pending '149 Appl. Examiner Trafton '278 Application

OA - Rejecting 3 node claims 4/87 OA Resp – Arguing no ref disclose 3 node 10/6/87 Allowance 2/89 OA - Allowed if include programmable identifier 12/8/87 OA - Rejecting 3 node claims 2/87 No Familial Relationship To '278 Application Examiner Lev '149 Application OA Resp – Narrowed claims to cover “real time communication” 8/87 Interview to discuss Baker ref. 10/23/87 OA - Rejecting claims incl. 3 node and programmable identifier 12/1/87 Continuation of '278 Application Examiner Trafton '195 Application Patent At Issue Disclosed Co-Pending '149 Appl. Examiner Trafton '278 Application

OA - Rejecting 3 node claims 4/87 OA Resp – Arguing no ref disclose 3 node 10/6/87 Allowance 2/89 OA - Allowed if include programmable identifier 12/8/87 OA - Rejecting 3 node claims 2/87 No Familial Relationship To '278 Application Examiner Lev '149 Application OA Resp – Narrowed claims to cover “real time communication” 8/87 Interview to discuss Baker ref. 10/23/87 OA - Rejecting claims incl. 3 node and programmable identifier 12/1/87 OA Resp – Narrowed claims to exclude polling 6/88 Continuation of '278 Application Examiner Trafton '195 Application Patent At Issue Disclosed Co-Pending '149 Appl. Examiner Trafton '278 Application

OA - Rejecting 3 node claims 4/87 OA Resp – Arguing no ref disclose 3 node 10/6/87 Allowance 2/89 OA - Allowed if include programmable identifier 12/8/87 OA - Rejecting 3 node claims 2/87 No Familial Relationship To '278 Application Examiner Lev '149 Application OA Resp – Narrowed claims to cover “real time communication” 8/87 Interview to discuss Baker ref. 10/23/87 OA - Rejecting claims incl. 3 node and programmable identifier 12/1/87 OA Resp – Narrowed claims to exclude polling 6/88 Allowance 12/19/88 Continuation of '278 Application Examiner Trafton '195 Application Patent At Issue Disclosed Co-Pending '149 Appl. Examiner Trafton '278 Application

OA - Rejecting 3 node claims 4/87 OA Resp – Arguing no ref disclose 3 node 10/6/87 Allowance 2/89 OA - Allowed if include programmable identifier 12/8/87 OA - Rejecting 3 node claims 2/87 No Familial Relationship To '278 Application Examiner Lev '149 Application OA Resp – Narrowed claims to cover “real time communication” 8/87 Interview to discuss Baker ref. 10/23/87 OA - Rejecting claims incl. 3 node and programmable identifier 12/1/87 OA Resp – Narrowed claims to exclude polling 6/88 Allowance 12/19/88 Continuation of '278 Application Examiner Trafton '195 Application '195 Appl. filed 7/87 Patent At Issue Disclosed Co-Pending '149 Appl. Examiner Trafton '278 Application

OA - Rejecting 3 node claims 4/87 OA Resp – Arguing no ref disclose 3 node 10/6/87 Allowance 2/89 OA - Allowed if include programmable identifier 12/8/87 OA - Rejecting 3 node claims 2/87 No Familial Relationship To '278 Application Examiner Lev '149 Application OA Resp – Narrowed claims to cover “real time communication” 8/87 Interview to discuss Baker ref. 10/23/87 OA - Rejecting claims incl. 3 node and programmable identifier 12/1/87 OA Resp – Narrowed claims to exclude polling 6/88 Allowance 12/19/88 Continuation of '278 Application Examiner Trafton '195 Application '195 Appl. filed 7/87 Allowance 12/16/88 Patent At Issue Disclosed Co-Pending '149 Appl. Examiner Trafton '278 Application

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.” Materiality – Related Prosecution

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. Materiality – Related Prosecution

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. Materiality – Related Prosecution

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 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 Tips

41 Significant Developments in Inequitable Conduct Law  Materiality  Clarification of the materiality standard  Disclosure of related prosecution  Attorney Argument  Intent  Evolving standard for proving deceptive intent?  Standing to Intervene  Proposed Legislation

42 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)

44 IntentIntent  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?  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 Question Who is this devious looking villain?

47 Trivia Question Who is this devious looking villain? Answer: Snidely Whiplash

48 Trivia Question Who is this devious looking villain? Answer: Snidely Whiplash Bonus Question: What 1970’s cartoon featured Snidely Whiplash?

49 Trivia Question Who is this devious looking villain? Answer: Snidely Whiplash Bonus Question: What 1970’s cartoon featured Snidely Whiplash? Answer: The Dudley Do-Right Show

50 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.”

51 Intent – Inferred from Materiality?  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 Intent – Inferred from Materiality?  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. Intent – Inferred from Materiality?

54 Intent – Inferred from Materiality?  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 Intent – Inferred from Materiality?  Ferring, 437 F.3d 1181 (Fed. Cir. 2006)  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  Ferring, 437 F.3d 1181 (Fed. Cir. 2006)  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. Intent – Inferred from Materiality?

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 Labs

59 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.

61 Proposed 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.”

62  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. Proposed Legislation

63  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. Proposed Legislation

64  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 Developments

Thank You Darryl J. Adams D E W E Y & L e B O E U F L L P dadams@dl.com

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

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

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Presentation on theme: "Ethical Issues for Patent Prosecution Attorneys and Patent Litigators Related to the Duty of Candor and Inequitable Conduct April 22, 2008 Presentation."— Presentation transcript:

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