Dubbing the defense of “inequitable conduct” (which renders an entire patent unenforceable) a “plague” on the patent system, the Federal Circuit, in its 2011 en banc opinion in Therasense Inc. v. Becton, tightened the legal standards for proving the defense to require clear and convincing evidence that:

  1. An individual associated with the prosecution of a patent application made an affirmative misrepresentation of a material fact, failed to disclose material information or submitted false material information to the patent office
  2. The individual did so with a specific intent to deceive the patent examiner into granting the patent.

The court held that the materiality of the information must be “but for” —i.e., had the information been disclosed, the patent would not have been allowed. After Therasense, some in the patent community proclaimed that the demise of the defense was inevitable.

And, to be sure, there has been a general decline in the prevalence and success of inequitable conduct defenses since the decision. The district courts also have increasingly been willing to grant motions to dismiss or strike inequitable conduct defenses at the pleadings stage.

Yet, despite the overall decline of inequitable conduct, some courts have still upheld the defense, leaving a bitter reminder that the doctrine tenaciously clings to life.

For example, as recently as July 18, Judge Kronstadt of the Central District of California, following a bench trial, accepted the defense and held the patent unenforceable. The court’s decision highlights some of the landmines that still exist for inequitable conduct defenses that survive the pleadings stage.

The court’s ruling is particularly troubling from a patent owner’s perspective because certain claims of the patent had already been found invalid and not infringed. On this point, the court explained that “[t]he question of inequitable conduct in the procurement of the patent is relevant even after a patent is found invalid, because it bears on the question whether the case is ‘exceptional’ for purposes of attorney fees under 35 U.S.C. § 285.” 

The court then ordered the defendant to submit an application for the portion of its attorney fees that related to the alleged misconduct during patent prosecution. For defendants that are hesitant to plead inequitable conduct post-Therasense, the chance to succeed on an exceptional case claim and the court’s invitation to the defendant to apply for attorney fees as a result of inequitable conduct is just the type of motivation that could encourage more defendants to take on the uphill battle of this defense.

The Laube decision also demonstrates the continued importance of witness performance in connection with responding to an inequitable conduct defense. The court focused much of its analysis on the testimony provided by the inventor, critiquing both the substance and the believability of that testimony. The court concluded, “based on the content of Laube’s testimony as well as his demeanor and the tone and manner in which it was presented,” that “Laube deliberately withheld the [undisclosed prior art] from [the prosecuting attorney.]”  As to materiality, the court found that the undisclosed prior art demonstrated the very feature that Laube had argued was missing from the prior art, and that it was this missing feature that led the examiner to allow the claims of the asserted patent.

Inequitable conduct has also gotten the attention of the Supreme Court, where there is currently a petition for certiorari pending in Sony Computer Entm’t Am. LLC v. 1st Media, LLC. The question presented is whether the Federal Circuit erred in “restricting district courts’ equitable discretion in evaluating unenforceability,” with the Petitioner complaining that the current test is too “rigid.” The Supreme Court has invited the Solicitor General to file a brief expressing the views of the U.S., so this case remains one to watch.

The bottom line is that the defense of inequitable conduct, while significantly restricted, remains very much a reality. Patentees should continue to consider the potential for this defense both in pre-litigation diligence and as litigation unfolds. In this way, the patentee can avoid the situation where a surprised witness makes unfortunate or even incorrect statements during deposition that are difficult to explain later, or raise credibility problems when the witness does try to explain. For accused infringers, the defense remains in their armamentarium to be launched in appropriate circumstances. Given the strict legal standards, however, to be successful the accused infringer will need to build the defense carefully and persuasively.