By Gino Cheng, Orrick, Herrington & Sutcliffe LLP
In the United States, patent applicants and their counsel owe a duty of candor and good faith to the Patent Office.1 This duty is breached when the applicant or its counsel knowingly fails to disclose material prior art references prior to issuance. Where threshold levels of materiality of the reference and intent to conceal are found, a holding that inequitable conduct has occurred renders every claim in the offending patent unenforceable, a consequence that has often been characterized as “the ‘atomic bomb’ of patent law.”2
Prior to the landmark Therasense holding in 2011, courts had used a sliding scale to determine whether the requisite factual showing of materiality and intent had both been met, whereby a reduced showing of intent nonetheless could be salvaged by a strong showing of materiality, and vice versa.3
Therasense established that “accused infringer must prove both elements—intent and materiality—by clear and convincing evidence”4 and that “the specific intent to deceive must be ‘the single most reasonable inference able to be drawn from the evidence.’ ”5 The inequitable conduct doctrine has developed rapidly since the Federal Circuit's en banc decision in Therasense overhauled the substantive requirements to prove unenforceability, separating them into two independent inquiries.6 In rapid succession, the Federal Circuit in 1st Media,7Powell v. Home Depot,8 and Outside the Box Innovations9 applied the new Therasense test for the materiality and the intent prongs of inequitable conduct.10
However, Therasense did not address whether the “specific intent to deceive” standard applies equally to reissue of a patent under 35 U.S.C. §251 (1999). The Federal Circuit's latest decision in In re Rosuvastatin Calcium Patent Litigation, 703 F.3d 511, 105 U.S.P.Q.2d 1437 (Fed. Cir. 2012) (hereinafter “Astrazeneca”) (10 PLIR 1587, 12/21/12), resolves this question. The post-Therasense heightened threshold showing of deceptive intent that would breach the applicant's duty of candor under 37 C.F.R. §1.56 is the same as that for showing “deceptive intention” that would bar reissue under the pre-Leahy-Smith America Invents Act version of Section 251.
In Astrazeneca, the asserted patent (U.S. Patent No. RE37,314) was a reissue of an earlier patent (5,260,440) whose application was first filed in June 1992.11 Prior to the filing, however, the applicant's in-house patent staff, Tomoko Kitamura, became aware of prior art that the court called “the Sandoz application” through various prior art search reports received in June and November of 1991.12 Kitamura subsequently drafted claims broad enough to cover the prior art disclosures and filed the ‘440 patent application, but left the assignee company shortly thereafter.13 Her successor in the in-house patent department, Takashi Shibata, similarly never filed an information disclosure statement to disclose any prior art, including the Sandoz application,14 despite having received additional search reports in October 1992 and January 1993, each identifying the Sandoz application prior to the ’440 patent's issuance on Nov. 9, 1993.15
Roughly four years thereafter, the patentee initiated reissue proceedings to narrow the claims and to disclose the previously omitted prior art. The reissue applicant asserted that the statutory error arose from having allegedly “claimed more than [it] had a right to claim by reason of the disclosure of [the Sandoz application].”16 The reissue applicant disclosed the Sandoz application along with other material prior art, including a “Bayer”reference.17
After the examiner rejected Claim 1 as obvious in view of the previously undisclosed Bayer reference, the applicant canceled all of the existing claims in favor of narrower claims that were distinguishable from both the Bayer reference and the Sandoz application.18,19 The narrowed claims were subsequently allowed.
When the patentee brought suit over the reissued ’314 patent, the defendants argued that (i) reissue could not rescue the ’440 patent20 under the well-settled principle that reissue cannot rehabilitate inequitable conduct that occurred during the prosecution of the original patent; and (ii) the ’314 patent was improperly reissued because the statutory reissue requirement of error without deceptive intention had not been met.21
The Astrazeneca court thus confronted the issue of whether the “without deceptive intention” standard presented in the reissue statute22 should be evaluated under the Therasense standard requiring specific intent. As the majority noted, no precedent was squarely on all fours with the presented facts to compel the court to invalidate the ’314 patent for improper reissue.23
The Astrazeneca majority concluded that there was “no sound basis” for requiring “less rigorous proof”to meet the “deceptive intention” standard under the reissue statute compared to the “deceptive intent” prong for unenforceability in ordinary litigation.24 The majority's reasoning appears to be purely policy-based, citing Therasense and its previous criticism that inequitable conduct accusations were overplayed and prone to mischief.25The majority ultimately held that the ’314 patent was valid26 and infringed, choosing to credit the district court's finding that the “actions suggestive of malfeasance [were] no more than a string of mishaps, mistakes, misapprehensions and misjudgments on the part of inexperienced and overworked individuals,”27 rather than clear and convincing evidence of the practice of deception during the ’440 patent's prosecution.
In contrast, Judge Haldane Robert Mayer's dissent sidestepped the question of the patentee's deceptive intent, choosing to argue that the reissue had been improper due to the lack of “error.”28 Instead, he credited the theory that Kitamura had deliberately drafted Claim 1 to cover the compounds disclosed in the Sandoz application, in part based on her considerable prosecution experience and academic background.29 Mayer also emphasized the fact that neither Kitamura nor her successor testified to misapprehending the Sandoz application30 and thus inferred that they knew precisely the scope of Claim 1.
Although Mayer stopped short of saying that the patentee had the requisite deceptive intent to satisfy the Therasense standard, he was highly critical of the patentee's actions, which he was convinced would have constituted “fraud” under the pre-Therasense framework.31 In addition, although he had a chance to open a side door for future panels to capitalize on—and came close to doing so32—he did not actually propose that “deceptive intention” in the reissue statute could be proved by a lesser showing than that for “specific intent to deceive” in a claim of unenforceability.
In sum, unless other panels distinguish Astrazeneca or it is reheard en banc, the case settles the question of whether the same, high bar for proving deceptive intent under Therasense applies to determining whether a patentee has forfeited its ability to seek reissue under the reissue statute due to its “deceptive intention.” The same standard for proving deceptive intent applies to both 37 C.F.R. §1.56 and 35 U.S.C. §251. In other words, Astrazeneca calls for symmetry, streamlining the court's treatments of these respective defenses. Accordingly, a defendant who cannot prove unenforceability under Rule 56 and its jurisprudence will have no better luck proving that the reissued patent was improper under Section 251 due to “deceptive intention” associated with the prosecution of the original patent.
As noted above, the Astrazeneca holding is applicable to patents whose reissue proceedings commenced before Sept. 16, 2012. Astrazeneca does not penalize (by maintaining a lower standard of proof for their opponents) patentees who, in an effort to pursue remedial action to raise a previously omitted reference, sought reissue of their patents prior to the effective date of the amended Section 251. Lest Therasense be applied retrospectively to this language in the reissue statute, patentees who had undertaken reissue proceedings pre-AIA would be disadvantaged, and at risk of litigating the propriety of those reissues, under the pre-Therasense sliding scale standard.33
So what effect does the AIA's removal of the “without any deceptive intention” phrase from Section 251 have on the same defense against patents reissued after Sept. 16, 2012, and against those going forward?34 Removal of that language certainly forecloses the risk of applying different standards to proving deceptive intent. Defendants facing newly reissued patents will have but one route to challenge the reissued patent on inequitable conduct grounds, i.e., to prove such misconduct by the Therasense test35 rather than to mount a collateral attack based on any deception-related deficiency in satisfying the statute's prerequisites, which is no longer available.36 But one could argue that the new statute permits a patentee to wash its hands of past misconduct, if by chance it could initiate reissue proceedings based on some unrelated error and then opportunely identify all previously known but deliberately omitted prior art.37 Indeed, from the standpoint of statutory interpretation, it would be difficult to reach the conclusion that the removal of the statutory language has absolutely no effect.
Nonetheless, while it is clear that patents reissued before the AIA effective date will have their fair shake under Astrazeneca, it is not certain how courts will treat those reissued after the effective date. The next (and first) district court to hear the well settled rule prohibiting the use of reissue to rehabilitate misconduct in the original prosecution invoked by a litigant defending against a patent whose reissue proceedings were commenced after Sept. 16, 2012, will have a choice.
The court may continue to apply the long-standing rule foreclosing rehabilitation, reiterated as recently as Therasense and Aventis.38 Alternatively, and lacking any reliable legislative history on the point, a court may rely on the AIA's express amendment to Section 251 and absolve the reissue patent holder from any breach of candor that occurred during the prosecution of the original patent, thereby limiting the defendant to challenge enforceability based on any misconduct that occurred during the reissue proceedings only.39 It will be an interesting test case to see, even more so if other district courts subsequently decline to follow suit.
In closing, looking further ahead, because it is not yet clear whether courts will continue to prohibit the use of reissue to cure the failure to disclose known prior art, patentees less confident about their chances of prevailing against a prospective claim of inequitable conduct may perhaps consider the route of requesting supplemental examination,40 which is agnostic to past withholding of references and retroactively immunizes the examined patent against future inequitable conduct claims.41
Gino Cheng is managing associate in Orrick's Orange County office and has experience in federal court litigation, patent prosecution, and trademark registration proceedings. He wishes to express thanks to his Orange County colleague Kurt T. Mulville and William H. Wright of Orrick's Los Angeles office for their well-reasoned advice and comments.
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