Finding of Inequitable Conduct Renders Patent Unenforceable
Posted on Mar 23, 2016 in Articles
This article originally appeared in The Legal Intelligencer on March 19, 2016.
Any person associated with the filing and prosecution of a patent application has a “duty of candor and good faith” toward the U.S. Patent and Trademark Office (USPTO). Failure to satisfy this duty can have dire consequences—a court may determine that “inequitable conduct” has occurred and a patent may therefore be found to be unenforceable. Proving that a party has engaged in inequitable conduct, however, has become very difficult over the past few years. So when recently, in Ohio Willow Wood v. Alps South LLC, 2015-1132 (Fed. Cir. Feb. 19, 2016), the U.S. Court of Appeals for the Federal Circuit reached an opinion that inequitable conduct had occurred, many IP attorneys took notice.
For years, inequitable conduct was often argued as a very powerful defense to an accusation of patent infringement. Any error, incorrect statement, or withheld information could form a basis for arguing inequitable conduct. Then, in 2011, the Federal Circuit ruled in Therasense v. Becton, Dickinson & Co., 649 F. 3d 1276 (Fed. Cir. 2011) (en banc). Therasense was a game changer. The Federal Circuit noted that claims for inequitable conduct were being asserted “on the slenderest grounds” and therefore the court “now tightens the standards for finding both intent and materiality in order to redirect a doctrine that has been overused to the detriment of the public.” Therasense established standards for proving inequitable conduct. Intent must be shown by proving that a patent applicant knew of information that they withheld, knew that the withheld information was material, and intentionally withheld the information. Materiality must be shown by determining that the USPTO would not have issued the patent had it known of the withheld information.
After Therasense, a ruling of inequitable conduct was the exception rather than the rule. For example, the Federal Circuit affirmed a ruling of inequitable conduct in Kim Laube & Co. v. Wahl Clipper, No. 14-1111 (Fed. Cir. 2015). Such a result, however, is rare. Ohio Willow Wood also stands out as unusual.
Ohio Willow Wood Co. (OWW) designs and manufactures prosthetic products. Its intellectual property includes patents relating to technology that makes prosthetics more comfortable to wear. One patent in particular claims a cushioning device that includes a gel on only one side of the prosthetic.
When OWW sued Alps South LLC (its competitor) for patent infringement, Alps challenged the validity of the patent in a series of re-examination proceedings. Re-examination, like the name implies, allows the USPTO to “re-examine” the validity of a patent. Alps brought to the USPTO’s attention an advertisement in a trade magazine for the Silipos Single Socket Gel Liner (SSGL), a prosthetic liner with allegedly a gel on only one surface. The advertisement had appeared prior to Ohio Willow Wood filing the patent application from which issued the patent in suit. Alps argued that because the Silipos SSGL ad discloses gel on only one side of the prosthetic, had a USPTO examiner seen the ad while he was examining the patent application, the patent would have never been issued.
The parties disagreed as to whether the ad truly disclosed a product with gel on only one side, or whether the gel bled through the product to the opposite side (and hence would not meet the patent’s requirement of gel on “only” one side). OWW, however, as explained below, was hiding important information that should have been presented to the USPTO.
Alps presented a declaration and deposition testimony from a former Silipos employee who stated that the Silipos SSGL used a fabric that prevented bleed-through. Hence, Alps argued that the Silipos SSGL ad invalidated OWW’s patent. OWW argued, however, that the content of declaration and deposition testimony was not corroborated, and hence could not be used as a basis for invalidating OWW’s patent. The USPTO agreed and concluded the re-examination with a finding that OWW’s patent was not invalid.
What the USPTO was not aware was that an attorney for Silipos had written to OWW, and in several letters confirmed that (a) the Silipos SSGL had gel on only one side of the product; and (b) the product was for sale more than one year before OWW’s patent application filing date. The OWW employee who was directing the infringement suit and the re-examination, James Colvin, never turned those letters over to OWW’s re-examination counsel. The USPTO never had an opportunity to review those letters before it decided to uphold the validity of OWW’s patent and rule in favor of OWW. Alps argued the unenforceability of OWW’s patent based on OWW’s inequitable conduct. After a lower court decision, the case went before the Federal Circuit.
In its opinion, the Federal Circuit explained:
“A party seeking to prove inequitable conduct must show by clear and convincing evidence that the patent applicant made misrepresentations or omissions material to patentability, that he did so with the specific intent to mislead or deceive the PTO, and that deceptive intent was the single most reasonable inference to be drawn from the evidence.”
Furthermore, to prove materiality, the appeals court said it must be shown that a patentee “withheld or misrepresented information that, in the absence of the withholding or misrepresentation, would have prevented a patent claim from issuing.”
For a finding of inequitable conduct there must be “specific intent” to commit acts that constitute inequitable conduct. Furthermore, the appeals court stated that deceptive intent must be “the single most reasonable inference drawn from the evidence,” citing Therasense.
The lower court had determined that Colvin knew not only about the letters, but more importantly, that OWW had in its possession corroborating evidence relating to the declaration and deposition testimony. The lower court also determined that Colvin understood the USPTO’s duty of candor. He also had an opportunity to “correct the representations that OWW made to the board regarding [the declarant’s] testimony; and that he took no action to correct those misrepresentations.”
The Federal Circuit stated:
“Mr. Colvin’s testimony also reflects that he understood that he could have given his re-examination counsel the … letters at any point but that he chose not to do so.”
In addition, the court stated that Colvin had “no explanation for his failure to present [the letters]” to his re-examination counsel or the PTO.
Because Colvin knew of the corroborating information that was material (i.e., if not withheld would have prevented the patent from issuing), and intentionally withheld the information from the USPTO with deceptive intent (which was the single most reasonable inference), the Federal Circuit concluded that inequitable conduct had occurred.
The lesson of Ohio Willow Wood is clear. Intentionally withholding information material to the patentability of an invention can destroy a company’s patent. Any person associated with a USPTO proceeding should always comply with the duty of candor.
– by Lawrence Ashery