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Duty of Disclosure / Inequitable Conduct Proposed Rule Changes

Contents

New Proposals for the Duty of Disclosure 1-3

Pop Quiz 3

Selected IP Precedent 3-4

Recently the US Patent & Trademark Office re-published

proposed rule revisions for the duty of disclosure and

inequitable conduct standards for patent proceedings in front of the Office. Revision of the Duty to Disclose Information in

Patent Applications and Reexamination Proceedings published October 28, 2016. 81 Fed. Reg. 74,987-997. The

proposed changes affect 37 CFR §1.56 (as it pertains to pre-grant prosecution) and 37 CFR §1.555 (as it pertains to

reexaminations). These standards require those dealing with

the Patent Office to disclose all information known to them that is material to patentability (e.g., the closest known prior

art references). The changes are being made to accommodate the Federal Circuit’s 2011 en banc decision on

the duty of disclosure – Therasense v. Becton, 649 F.3d 1276

(2011). The inequitable conduct excuse to infringement requires

a showing of an intentional withholding of information that is

December 2016

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material to patentability. Therasense changed

the law on inequitable conduct/duty of disclosure in two primary regards. First, intent

and materiality are no longer on an interdependent sliding scale in that a lesser

quantum of proof would be required to show

materiality where intent was well-established and vice versa. Second, and most relevant to

the Office’s recent proposed rule changes, materiality is no longer adjudged by whether

the information assists in establishing a prima facie case of unpatentability. Instead but-for

materiality is required to invoke the duty of

disclosure. One will recall that the majority opinion in Therasense explicitly rebuked the

prima-facie-case-of-unpatentability standard as being overly broad.

The first prong of Rule 56 is overly broad because information is considered material even if the information would be rendered irrelevant in light of subsequent argument or explanation by the patentee. Under this standard, inequitable conduct could be found based on an applicant's failure to disclose information that a patent examiner would readily agree was not relevant to the prosecution after considering the patentee's argument. Likewise, the second prong of Rule 56 broadly encompasses anything that could be considered marginally relevant to patentability. If an applicant were to assert that his invention would have been non-obvious, for example, anything bearing any relation to obviousness could be found material under the second prong of Rule 56. Because Rule 56 sets such a low bar for materiality, adopting this

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standard would inevitably result in patent prosecutors continuing the existing practice of disclosing too much prior art of marginal relevance and patent litigators continuing to charge inequitable conduct in nearly every case as a litigation strategy.

Former Chief J. Rader at 1294-95. Therasense

also indicated that materiality might be

satisfied by incidents of what the court referred to as “affirmative egregious

misconduct” or in other words “ ’deliberately planned and carefully executed scheme[s]’ to

defraud the PTO and the courts.” at 1292.

The Office’s new proposed rules replace the prima-facie-case-of-unpatentability

standard with the but-for materiality standard and insert affirmative egregious misconduct. A

partial, redline version of new Rule 1.56 is shown below for illustrative purposes.

§ 1.56 Duty to disclose information material to patentability. (a) …Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability under the but-for materiality standard as defined in paragraph (b) of this section. ... However, no patent will be granted on an application in connection with which affirmative egregious misconduct was engaged in, fraud on the Office was practiced or attempted, or the duty of disclosure was violated through bad faith or intentional misconduct. The Office encourages applicants to carefully examine:

Duty of Disclosure Rule Changes cont.

(1) Prior art cited in search reports of a foreign patent office in a counterpart application, and (2) The closest information over which individuals associated with the filing or prosecution of a patent application believe any pending claim patentably defines, to make sure that any material information contained therein is disclosed to the Office. (b) InformationUnder this section, information is but-for material to patentability ifwhen it is not cumulative to information already of record or being made of record in the application, and (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 would not allow a claim if the Office were aware, or (ii) Asserting an argument of patentability. A prima facie case of unpatentability is established when the information, applying compels a conclusion that a claim is unpatentable under the preponderance of the evidence, burden-of-proof standard and, giving each term in the claim its broadest reasonable construction consistent with the specification., and before any consideration is given to evidence which may be submitted in an attempt to establish a contrary conclusion of patentability.

The big question to all and any Just Intellectual out there

is: do we, as patent stakeholders, find the proposed language on par with Therasense or not? The Office is accepting

comments through December 27th, 2016.

Pop Quiz

This December marks the

sixty eighth anniversary of

Universal Human Rights

Month; on what day was

the Universal Declaration

of Human Rights signed?

Answer to the last quiz:

November is National

Family Literacy Month.

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Duty of Disclosure Rule Changes cont. cont.

Perfect Surgical Techniques, Inc. v. Olympus America, Inc., et al., Case No.: 2015-2043 (Fed. Cir. Nov. 15, 2016)(the PTAB’s invalidity findings et al. in an IPR were reversed and vacated; the case was remanded to determine whether the inventor’s evidence

Selected IP Precedent

Selected IP Precedent cont.

Authored by

Kristy J. Downing, Esq.

Send comments to kdowning@justintellectuals.com

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corroborates “reasonably continuous diligence” in reduction to practice. “A patent owner need not prove the inventor continuously exercised reasonable diligence throughout the critical period; it must show there was reasonably continuous diligence…”)(J. Schall dissented in part with respect to the diligence findings – no “gaps” in time (or unexplained intervals of time during the critical period with respect to diligence) should exist to meet the diligence standard). REG Synthetic Fuels, LLC v. Neste Oil Oyj, Case No.: 2015-

1773 (Fed. Cir. Nov. 8, 2016)(the PTAB’s anticipation findings with respect to the subject patents were reversed in part and affirmed in part. As to the first reference, though the disclosure in the prior art had debatable ranges, the Board’s finding that the relevant teaching was present in the art was supported by substantial evidence: no “hard and fast rule” as to an inherency argument was raised or relied upon by the Board. As to the second reference, which was attempted to be antedated, much of the corroboration evidence was improperly excluded as hearsay and the case was remanded to evaluate diligence and reduction to practice.).

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