ALERT - Federal Circuit Court Restricts Inequitable Conduct Claims

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June 2, 2011

Therasense, Inc. v. Becton, Dickinson and Company (Fed. Cir. 2011)

In a May 25, 2011 en banc decision, the Federal Circuit significantly tightened the standards for proving inequitable conduct. Inequitable conduct now requires clear and convincing evidence of a “deliberate decision” to deceive. To prevail on a claim material prior art was withheld, the alleged infringer must now have “clear and convincing evidence that the [patentee] knew of the reference, knew that it was material, and made a deliberate decision to withhold it.” 

An alleged infringer also is now required to establish 'but-for materiality,' and going forward, an alleged infringer must prove that, but for the deception, the Patent Office would not have allowed the claim(s).

The court expressly rejected the “sliding scale” approach that previously allowed strong evidence of an intent to deceive to compensate for weak evidence of materiality (and vice-versa). Finally, in addition to tightening the standards for establishing inequitable conduct, the court tempered the remedy - holding that a finding of inequitable conduct does not automatically render a patent unenforceable. Rather, a court must “weigh the equities” to determine whether the unenforceability remedy is warranted.

A finding of inequitable conduct can have severe consequences. In addition to rendering the subject patent unenforceable, it also can taint related patents, lead to antitrust and unfair competition claims and result in attorney fee awards in favor of an alleged infringer. An inequitable conduct assertion also is costly for the patentee to defend. As a result, allegations of inequitable conduct have become the rule rather than the exception in patent litigation. Judge Rader commented that "[l]eft unfettered, the inequitable conduct doctrine has plagued not only the courts but also the entire patent system." The Therasense decision appears to be the Federal Circuit’s attempt to cure the 'plague' of inequitable conduct claims.

The heightened inequitable conduct standards will force litigators to more carefully evaluate whether a good faith basis exists to assert an inequitable conduct defense. The decision also may impact patent prosecutors disclosure policies and practices.

For more information please contact your Briggs and Morgan attorney or a member of the Intellectual Property Practice Group.