Inequitable Conduct

October 2011 Newsletter

November 4, 2011


A Summary of the America Invents Act

 On September 16, 2011, President Obama signed into law the “America Invents Act”which makes sweeping changes to the U. S. patent system. Congress’s primary goals were to further enhance opportunities for innovation and entrepreneurial investment, to better harmonize U. S. patent laws with those of other countries, and to streamline patent office procedures.

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  Supreme Court Clarifies Patent Ownership Under Bayh-Dole Act

As a result of Leland Stanford Junior University  v. Roche Molecular Systems, Inc., No. 09-1159, organizations and universities subject to the Bayh-Dole Act should construct more effective assignment agreements with their employees instead of relying on the Bayh-Dole Act to automatically vest title. 

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  Another Reason to Keep Lab Notebooks—Tax Credits Upwards of 7-10%

 Law firms and in-house attorneys are always asking inventors to keep lab notebooks.  There are a number of reasons to keep such documentation, including seeking patent protection, but there is another reason that is often overlooked, substantial tax credits.

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  Trademarks and Copyrights

ICANN Approves New Generic Top-Level Domain Names, Including The XXX  Domain

 ICANN’s Board of Directors has approved a plan to allow an increase in the number of internet address endings, otherwise known as generic top-level domain names (gTLDs).  Currently 22 gTLDs exist, with .com being the most utilized.  However, internet address names will soon be able to end with almost any word in any language, offering organizations around the world the opportunity to market their brand, products, community or cause in new and innovative ways.

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Do you work with copyrights? If so, do not forget about an author’s rights to terminate transfers and licenses.

The copyright act provides the authors of transferred or licensed works the opportunity to recapture his or her rights.  This means that after waiting a specific period of time, an author, or an author’s estate, can terminate a prior transfer or license.  Such terminations can have a dramatic impact on a company’s rights to use certain intellectual property or the rights to revenue from certain copyrighted works.

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A Tougher Standard for Proving Inequitable Conduct?

 In a 6–1–4 decision, an en banc Federal Circuit in Therasense, Inc. v. Becton, Dickinson and Company tries to cure the “plague” of inequitable conduct pleadings by raising the bar for proving that alleged bad acts were material to patentability and that the patentee undertook the alleged bad acts with intent to deceive the Patent and Trademark Office.

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 Other Announcements

2011 Midwest Intellectual Property Summit

 The 2011 Midwest Intellectual Property Summit, organized by Woodard, Emhardt attorney, Holiday W. Banta, will be held November 17th and will showcase presentations on the latest research and topics of concern in the field of intellectual property.  Woodard, Emhardt attorneys presenting at the Summit include T.J. Cole, Michael Morris and Spiro Bereveskos

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  Bill McKenna Selected for Indianapolis Bar Association’s Bar Leader Series 

Woodard, Emhardt associate Bill McKenna was selected for the Indianapolis Bar Association’s Bar Leader Series.  The Indy Bar’s Bar Leader Series is designed to develop lawyers for future opportunities in leadership roles in business and legal communities.  Through the series, selected lawyers will learn how to communicate, motivate, inspire, and succeed not only in their law career, but also in service to professional, political, judicial, civic, and community organizations.

Congratulations, Bill!




Woodard, Emhardt Attorneys to Participate in Indiana State Bar Association’s Annual Meeting

October 1, 2010

Woodard, Emhardt patent attorneys Marta Paul, Douglas Gallagher, and Elizabeth Shuster will participate in the Indiana State Bar Association’s 2010 Annual Meeting taking place October 13-15 in Indianapolis.  As outgoing Chair of the Intellectual Property Section, Marta Paul will preside over the  Section’s annual business meeting and will be handing over the reins to a new slate of officers, including Woodard, Emhardt attorney Elizabeth Shuster as incoming Secretary / Treasurer.  Immediately preceding the Intellectual Property Section’s business meeting, Douglas Gallagher and Elizabeth Shuster will present a one hour CLE on Inequitable Conduct.  The seminar will focus on the duty of disclosure owed to the Patent Office, including a review of relevant case law and an analysis of the current landscape of Rule 56, which informs practitioners of the scope of their duties in patent cases.  For more information on the CLE and the Indiana State Bar Association’s Annual Meeting, click here.

Tips for Mitigating Claims of Inequitable Conduct

September 21, 2010

Recent decisions by the Federal Circuit have affirmed findings of inequitable conduct based on a failure of the applicant to cite material references that were in the applicant’s possession and not cumulative of other previously-cited references.  The result of the inequitable conduct findings were that the patents-in-suit were rendered unenforceable.  In some instances, the material reference was cited (or created) by the United States Patent and Trademark Office (USPTO), during prosecution of another applications also owned by the patentee and copending with the application that issued as the patent-in-suit.  Additionally, the “other” application was not always a family member (related through common priority) of the application that issued as the patent-in suit.  References created by the USPTO, such as Office Actions (which may include positions opposite to those the applicant is currently taking) and Notices of Allowance (which may pertain to double-patenting issues), have also been considered sufficiently material and noncumulative to support a finding of inequitable conduct.  See McKesson Information Solutions, Inc. v. Bridge Medical, Inc., 47 F3d 897, 82 USPQ2d 1865, Fed Cir. 2007

To mitigate the risk of one of its patents being rendered unenforceable for failing to cite a material reference, businesses (especially those with large patent portfolios) may want to consider establishing procedures to determine whether a reference cited during prosecution in one application should be cited in another application, i.e., whether the reference is material to the claim in another application and noncumulative of previously-cited references.  One manner of doing this is to actively track pending applications and group them based on claimed subject matter.  The grouping should not necessarily be restricted to family members  and should include both U.S. and foreign applications.  When a references (including Office Actions and Notices of Allowance) is cited in one case within a group, consideration can be given to whether that reference should be cited in other cases in that group.  The applicant should also consider how a material reference is being characterized, since taking inconsistent positions with respect to material references whether made during U.S. or foreign prosecution has been used to support a finding of inequitable conduct.  See Therasense, Inc. v. Becton, Dickinson & Co., 593 F3d 1289, 93 USPQ2d 1489, Fed. Cir. 2010

Inequitable Conduct Law Continues to Evolve

May 5, 2010

Avid Identification Sys. v. Crystal Import Corp., No. 09-1216 (April 27, 2010)

In Avid, Dr. Hannis Stoddard, who was the founder and president of the company, hired three engineers to develop a product based on his idea of identifying and processing recovered animals.  Dr. Stoddard was not an inventor on the patent that ultimately issued, but he did demonstrate an early version of the technology at a trade show more than a year prior to the filing date of the issued patent.  This demonstration was not disclosed to the PTO during prosecution of the patent, and Dr. Stoddard did not dispute that this information was withheld with specific intent to deceive the PTO for the purposes of obtaining a patent.  He argued that he was neither an inventor nor an attorney and therefore owed no duty of candor to the PTO; however, the district court disagreed and found Avid’s patent unenforceable for inequitable conduct committed by Dr. Stoddard

The regulations governing inequitable conduct are provided by 37 C.F.R. §1.56 (Rule 56), which imposes a duty to disclose information to the PTO when an individual is (1) associated with the filing and prosecution of a patent application, and (2) knows that the information in question is material.  For purposes of identifying who owes a duty of candor to the PTO, Rule 56 defines “individual(s) associated with the filing or prosecution of a patent application” as (1) each named inventor, (2) each attorney or agent that prepares or prosecutes the application, and (3) every other person who is substantively involved in the preparation or prosecution of the application and who is associated with the inventor or assignee.  37 C.F.R §1.56(c).

Dr. Stoddard is neither an inventor nor an attorney or agent involved in the preparation or prosecution of the patent, so the issue of whether or not he owed a duty to candor to the PTO involved an analysis of whether or not he was “substantially involved” in the preparation or prosecution of the patent, and whether or not the prior demonstration was material to patentability.

With respect to “substantially involved,” the CAFC identified a number of factors in affirming the ruling of the district court that Dr. Stoddard met this requirement.  Some of these factors included his position and responsibilities in the company, his involvement in hiring the engineers/inventors to develop the product, and his communication with the inventors during prosecution of the patent in Europe.

With respect to materiality, the CAFC dismissed Avid’s argument that the demonstration was not material to the patentability of the claims even though it would not have lead to a proper §102(b) rejection by the PTO.  Indeed, the demonstration involved a preliminary product that failed to contain all of the elements of the issued patent claims.  Moreover, an infringement jury was given information regarding the demonstration and still found the patent valid.  However, the court reasoned that the demonstration, while not invalidating, was the closest prior art and was thus material.  By doing so, the court relied on the “reasonable examiner” standard, which was written out of the old Rule 56 (i.e., prior to the 1992 amendments).  The current Rule 56 is much more objective and likely would have found this demonstration non-material to patentability.

The CAFC thus affirmed the lower court’s ruling that Avid’s patent was unenforceable for inequitable conduct committed by Dr. Stoddard.  This case seems to be a close call, and it certainly didn’t help that Dr. Stoddard purposefully withheld the information knowing that it would likely have some impact during prosecution.  If anything, this case serves as a reminder to submit any relevant information to the PTO even if the person aware of this information is only remotely involved in the preparation and prosecution of a patent application.

CAFC Upholds Finding of Inequitable Conduct For Failure to Disclose Contradictory Statements Regarding Prior Art

February 11, 2010

The Federal Circuit has recently affirmed a Northern District of California decision finding, among other things, U.S. Patent No. 5,820,551 (the ‘551 patent) unenforceable due to inequitable conduct. Therasense, Inc. v. Becton, Dickinson and Co., Case No. 2009-1511 (Fed. Cir. 2010). During prosecution before the U.S. Patent and Trademark Office (USPTO), the ‘551 patent was rejected on prior art grounds. In order to avoid the rejection, the Applicant submitted a declaration attesting that the cited prior art’s disclosure of an element being “optionally, but preferably” present in the disclosed device would be interpreted by one of ordinary skill as being “required”. The Applicant then failed to disclose to the USPTO statements made by the Applicant to the European Patent Office (EPO) in a related European application. During a proceeding before the EPO, the Applicant argued that the identical prior art language was “unequivocally clear” that the particular element was “optionally utilized” in the disclosed device. The Federal Circuit found that the Applicant violated its duty of disclosure for failing to make the USPTO aware of the contrary position presented to the EPO.

As a result of the Therasense decision, inventors and their patent attorneys should be mindful of the assertions made to the USPTO and patent offices abroad. In the event contrary representations are made to another forum, an Applicant should consider whether the USPTO should be made aware of the statements.

To download a copy of the Therasense decision, please click here.