Prosecution Delay Laches and Inequitable Conduct

Prof Merges

11/22/2011

Jerome Lemelson, 1923-1997

http://www.masslawblog.com/?page_id=29

Mr. Lemelson, who died in 1997, was granted more than 500 U.S. patents, making him (from a patent-count standpoint, anyway), one of the most prolific inventors in U.S. history. Some have compared him with Edison (that patent count again), but unlike Edison, most people would have difficulty recognizing his name or what any of his inventions were. Ask the dozens of companies he sued over the years for alleged patent infringement, and observers of developments in patent law, and they may tell you that Lemelson’s most significant (and lucrative) invention was how to game the U.S. patent system.

United States Patent 5,351,078 Lemelson * September 27, 1994 Apparatus and methods for automated observation of objects

Apparatus and methods are disclosed for automatically inspecting two- or three-dimensional objects or subjects. A detector and the object are moved relative to each other. In one form, a detector, such as a camera or radiation receiver, moves around an object, which is supported to be rotatable such that the detector may receive electromagnetic energy signals from the object from a variety of angles. The energy may be directed as a beam at and reflected from the object, as for visible light, or passed through the object, as for x-ray radiation.

The detector generates analog image signals resulting from the detected radiation, and an electronic computer process and analyzes the analog signals and generates digital codes, which may be stored or employed to control a display.

Inventors: Lemelson; Jerome H. (Incline Village, NV) Assignee: Lemelson Medical, Education & Research Foundation Limited Partnership (Incline Village, NV) Filed: September 16, 1993

“Continuation Abuse”

MAJOR controversy over stringent PTO rules limiting number of continuations that patentee is allowed to file

Supreme Court of the United States.

WOODBRIDGE et al.v.

UNITED STATES.Decided Nov. 12, 1923.

Justice Taft

In this case we have a delay of 9 1/2 years in securing a patent that might have been had at any time in that period for the asking, and this for the admitted purpose of making the term of the monopoly square with the period when the commercial profit from it would be highest. Not until war or fear of war came was there likely to be a strong demand for rifled cannon and their improvement.

Hence the inventor, having put his order for the issue of a patent into the secret archives of the Patent Office in 1852, sat down and waited until after the Civil War came on in 1861 before seeking to avail himself of the patent, thus postponing the time when the public could freely enjoy it for nearly 10 years.

Meantime other inventors had been at work in the same field and had obtained patents without knowledge of the situation with respect to Woodbridge's invention.

This is not a case where evidence has to be weighed as to the purpose of the inventor. He avows his deliberate intention. This is not a case of abandonment. It is a case of forfeiting the right to a patent by designed delay.

Defenses: Antitrust/Misuse

• Patents confer market power

• Market power can be abused

• When it has been, this may provide a defense for an infringer

Updating Lemelson

• Cancer Research Tech Ltd. V. Barr Labs, Fed. Cir. Nov. 9, 2010

• Original app filed Aug 23, 1982; 1st office action, Nov. 1983; continuation filed; followed by 10 more continuations, with finally a substantive response, patent issued in Nov. 1993

Cancer Res. Cont’d

• Federal Circuit held, no prosecution delay laches because no one invested in, worked on, or otherwise used the claimed technology while it was lying dormant

• No “prejudice,” no “intervening rights”

• Judge Prost dissented: delay is per se prejudicial

Inequitable Conduct

• Common law-type defense

• Very powerful weapon for accused infringers

• Finding of inequitable conduct renders patent unenforceable

Technically, not invalid, but effectively ends litigation

Supreme Court Caselaw

(1) Keystone Driller Co. v. General Excavator Co., 290 U.S. 240 (1933); (2) Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238 (1944), overruled on other grounds by Standard Oil Co. v. United States, 429 U.S. 17 (1976), and (3) Precision Instruments Manufacturing Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806 (1945).

Supreme Court caselaw

+ Manufacture and suppression of evidence+ The Supreme Court often uses the terminology

‘fraud on the Patent Office.’+ Closely connected to patent misuse/antitrust

rationale (illicit patent as conspiracy to monopolize product market)

See eg, Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 175, 176 (1965).

Federal Circuit cases

Kingsdown properly requires powerful proof of scienter: “[T]he involved conduct, in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive.” 863 F.2d at 876

Materiality requirement

“[I]f the Patent Office had been aware of the complete or true facts, the challenged claims would not have been allowed.” Norton v. Curtiss, 433 F.2d 779, 794 (C.C.P.A. 1971).

Materiality (cont’d)

• Not all omissions or deceptive statements are “material”

• Some are essentially “harmless”

Therasense

• Involves status of arguments made before the European Patent Office in an opposition hearing

• Statements involved a prior patent on the same technology claimed in the patent at issue in the Federal Circuit case

Claim 1, ‘551 Patent

Prior patent: 4,545,382

• Specification included statement that version lacking membrane was a preferred embodiment

• No mention of fact that one skilled in the art would believe lack of membrane to be an inventive feature of the invention

District court

• Failure to inform PTO of this argument at the European Patent Office constituted inequitable conduct

• Patent held unenforceable

Federal Circuit opinion

• Affirmed trial court

• Raised proper standard for Inequitable conduct as an issue for en banc appeal

Expansion

In line with this wider scope and stronger remedy, inequitable conduct came to require a finding of both intent to deceive and materiality. Star Scientific Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1365 (Fed. Cir. 2008).

Burden

• Accused infringer required to show both (1) materiality and (2) intent by a “clear and convincing evidence” standard

Intent and Materiality

• “Intent” under case law a misnomer: gross negligence in failing to disclose reference could be enough

• Materiality defined loosely, e.g., PTO Rule 56: A reference is material if “there is a substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent”.

Therasense holding

[T]he accused infringer must prove by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it. – p. 70

Therasense

[A] court must weigh the evidence of intent to deceive independent of its analysis of materiality. Proving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive.

[A] district court may infer intent from indirect and circumstantial evidence. Larson Mfg. Co. of S.D., Inc. v. Aluminart Prods. Ltd., 559 F.3d 1317, 1340 (Fed. Cir. 2009). However, to meet the clear and convincing evidence standard, the specific intent to deceive must be “the single most reasonable inference able to be drawn from the evidence.” Star, 537 F.3d at 1366.

Materiality

This court holds that, as a general matter, the materiality required to establish inequitable conduct is but-for materiality. When an applicant fails to disclose prior art to the PTO, that prior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art.

Back to facts of this case …

On remand, the district court should determine whether the PTO would not have granted the patent but for Abbott’s failure to disclose the EPO briefs. In particular, the district court must determine whether the PTO would have found Sanghera’s declaration and Pope’s accompanying submission unpersuasive in overcoming the obviousness rejection over the ‘382 patent if Abbott had disclosed the EPO briefs.

Because the district court did not find intent to deceive under the knowing and deliberate standard set forth in this opinion, this court vacates the district court’s findings of intent. Id. at 1113-16. On remand, the district court should determine whether there is clear and convincing evidence demonstrating that Sanghera or Pope knew of the EPO briefs, knew of their materiality, and made the conscious decision not to disclose them in order to deceive the PTO.