INEQUITABLE CONDUCT

RESEARCH METHODOLOGY

AIM AND OBJECTIVEThe Aim of the topic is to study the law of Inequitable Conduct. The author also wishes to examine the impact of Inequitable Conduct on the American patent law system. The objective of the research are as follows1. To study the American Patent law system. 2. The patent system completely relies on the applicant A Duty of Candor. The non observance of the duty leads to Inequitable Conduct. By the present topic, the Researcher seeks to analyse the essentials that person must fulfil in order to get his invention patented in respect of the Duty of Disclosure. 3. The Project shall make a brief study of the law and the impact that it has upon the inventor and all person connected therewith and above all the Public Interest as a whole. SCOPE AND LIMITATIONThe field of patent prosecution is wide, but the present research shall be dealing with and

focuses on only the Inequitable Conduct in context with American patent system. The scope of the present research extends to the analysis of the impact of the Inequitable Conduct only on the American patent law system, i.e. the examination of Rule 56 of the United States patent law. The research shall be limited to the extent of the duty that is owed by the inventor towards the patent office, the breach of the duty and the consequence of the same and finally as the topic suggests the Impact of the abovementioned on the U.S Patent System

RESEARCH QUESTION1. What is the Patent Examiner Perspective in reaching the conclusion of the Inequitable Conduct keeping in mind the test laid down and the pre-requisite essential for the claim of the Inequitable Conduct?
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INEQUITABLE CONDUCT

2. What changes are made out after the THERASENSE CASE and the concept of materiality modify?

3. What modification shall be necessary for removing the Plague of Inequitable Conduct?

HYPOTHESISAny failure to disclose a fact that is material to the subject matter of the patent, leads to the Inequitable Conduct provided it balances it self in equilibrium of the test laid out.

RESEARCH METHODOLOGYThe researcher in project has relied on Doctrinal Method of research. This method was

considered apt as it is a theory based topic

MODE OF CITATIONA uniform system of citation as per the NLS guide compiled with uniform legal citation, has been adopted by the researcher for the particular paper.

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INEQUITABLE CONDUCT IMPACT OF INEQUITABLE CONDUCT OF PATENT VALIDITY STUDY OF UNITED STATES PATENT LAW. 1.1WHAT ISINEQUITABLE CONDUCT? The law requires that he who comes to equity must come with clean hands. The principle of Inequitable Conduct is based on the same theory. The patent right is actually given to exclude the others from practicing the invention that is claims. This basically deals with the duty that the inventor owes towards the patent officer. Ultimately the public is the real beneficiary of what is patented and can receive the fruits of the same only when inventor has dealt honestly with the patent office.1.It is an act of breach of standards in the transaction of business with the patent

office. Neither the congress nor the commissioner of the patent and the trademarks mentions Inequitable Conduct1. On the contrary it promulgates the standard of conduct that needs to be adopted by the attorneys and there respective agents before the patent office 2. It requires that the infringer with the intent of getting the patent did not disclose all the information that is material and submitted false information. It is sometimes been termed as Atomic Bomb3 . The courts are basically guided by the rules framed but ultimately they are governed by the federal circuit and supreme court precedents. That ultimately led to the PTO to promulgate 37 C.F.R ( Rule 56). Though the examiners in there examination in the patent search for the prior art, but the search are not at all times conclusive because of the tremendous work load. What the law requires is not that the applicant should know every detailed specification of the patent. On the other hand the inventors duty of candor requires him to disclose those facts that might Impact on his patent rights. Thus the deliberate failure to not to disclose the material fact is what forms the basis of Inequitable Conduct. Rule 56 lays a Duty of Candor and good faith that needs to be observed by someone who seeks for patent before the patent office that includes the attorney or the agent as well4.

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1. 2. 3. 4. United States v. B/ell Tel. Co., 128 U.S 315,370 (1888); see also Hon. Simon Rifkind., TheRomance Discoverable in Patent Cases. 37 C.F.R 1.5.6(1996) purports to set out Standard for doing business with the PTO Aventis Pharma S.A v. Amphastar Pharm, Inc., 525F.3D, 1334, 1349 (FED. CIR. 2008) Patent agents are licensed to prosecute patents before the PTO. They must have passed the bar exam given by the PTO

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INEQUITABLE CONDUCT The rule becomes important because if it is proved that the act of Inequitable Conduct is done that might render the complete patent invalid. The duty remains intact even in the case of pending claims until it is withdrawn. There is rather no duty to disclose that fact which is not material to the patent. The unpatentibilty of a invention is made out when there is sufficient evidence for the same coupled with the burden of proof standard and by giving broader construction to the inventions specification.

1.2 HISTORICAL BACKGROUND.

The present doctrine is judicially created. It evolved from the three Supreme Court decisions that supplemented the unclean hand maxim5. Since the patent act of 1790, the legislature has recognized the Inequitable Conduct6. It provided for a private action when the patent was obtained improperly within one year from the date of issuance. The patent act of 1793 extended the same period of one year to three year7. In the year 1836, the congress removed the same cause of action8. The consolidated patent act of 1870 made it quite broader and was applicable to the patent already issued by means of deception9. It was in the year of 1945 that the supreme court realized that the public interest is damaged due to the patent obtained through fraud10. . In the 70s and 80s, the standard for Inequitable Conduct was gross negligence The federal court was created in the year of 1982 to deal with the issues pertaining to the patent11

1.3POLICY BEHIND INEQUITABLE CONDUCT.

There are various policy considerations behind the approach to Inequitable Conduct. ________________________________________________________________
5 Precision Instrument Mfg. Co .v. Auto Motive Mark. Co.,324 U.S 806 (1945) (Finding unclean hands where the Patentee had suppressed Evidence of Perjury at the PTO and attempted to enforce the Perjury Tainted) ; Hazel Atlas Glass Co v. Hartford Empire Co., 322 US 238(1944) ; Keystone Driller Co v . Gen Excavator Co., 290 U.S 240 (1933). 6 7 8 9 10 11 Act of April 10,1770, CH.7 S1 STAT. 109-112 (1770). Act of February 21,1793, CH. 11, S 10 1 STAT, 318,323(1793). Patent Act of 1836, CH. 357S STAT. 117 (1836). Consolidated Patent Act of 1870, CH/23016 STAT 198-209. Precision Instrument Mfg. Co .v. Auto Motive Mark. Co., 324 U.S 806, 815 (1945). Considered Decision of C.C.P.A and Court of Claims as Presumptively Controlling Standard.

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INEQUITABLE CONDUCT 1.3.1 To Prevent FraudIt is based on the principle that The
12

far reaching social

and economic

consequences of the patent give the public a strong incentive to ensure the patents some from backgrounds free from fraud . So naturally the inventor should not

be allowed to obtain the patent by fraud itself. To deter people from committing such act it provides for penalty that includes that the complete patent is held unenforceable.

1.3.2To Ensure Quality Patents-

The full disclosure to the PTO is necessary that the examiner has all essential information during the course of examination and could therefore enhance the quality of the invention.

But due to the fear of violating the Inequitable Conduct, the attorney and the applicants do not disclose all the information13. 1.3.3Reduction of litigation and the prosecution cost.

A study in 2003 of National Academy of Sciences held that the rate of assertion of the doctrine is excessive. Moreover high cost to comply with the requirements of disclosure preclude the inventors from protecting there inventions and the ideas14.

1.4ESSENTIALS OF THE INEQUITABLE CONDUCT-

In order to establish that there has been an breach to the Duty of Candor the courts looks into the essentials that are
12 13 14

There must be an Intent to Deceive

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Nicole M. Murphy, Doctrine of Reform. Lisa Dolak, Inequitable Conduct: A Flawed Doctrine Worth Saving. Aventis Pharma S.A v. Amphastar Pharmaceuticals Inc., 525 F.3D 1334,1349-50.

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INEQUITABLE CONDUCT The Information that is suppressed must be material.

1.4.1INTENT TO DECEIVEThe Intent of deception is necessary so as to prove a fraud claim. The federal circuit has allowed the indirect and circumstantial evidence because the direct evidence is rarely available. But the court have been asserting that Materiality does not include Intent15.On the contrary the nondisclosure also doesnt satisfy the element of intent as it is dictated by the good faith. It requires that the omission were intentional. Though some courts have lowered intent material and some have rather inferred bad faith principle. The case law of the federal court have varied and have been sometimes inconsistent. In, Burlington Industries Inc. v Dayco Corp.16 it was stated by the federal court that the fact which a person got to know, makes an inference to mislead by intent. On the contrary in, Kings down Medical Consultants Ltd v. Hollister,17it was held that if a conduct amounts to Gross Negligence it shall not conclude the intent itself. Both the cases advocated different aspect. The Kingsdown was widely accepted up till the Therasense case. Kingsdown intent is based on the ground of (a)- gross negligence and (b) acts indicating an intent to deceive

1.4.2MATERIALITY The circuit court have arrived at three different standards to reach to the materiality The Subjective but for test The Objective but for test. But it might have been test

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15 16 17 Larson Mfg. Co. Of South Dakota, 559 F 3d at 1340; Star Scientific 849 F.2D 1418, 1421 (FED. CIR. 1988). 863 F.2D 867,876 (FED.CIR. 1988).

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INEQUITABLE CONDUCT Under the subjective but for test, because of no finding of Inequitable Conduct, the patent would be granted irrespective of the misrepresentation made. The reason is that the person alleging the fraud must also prove that the representation is rather material18. Under the objective but for test, if the applicant was aware of the prior art and a ordinary man of prudence could also say that the invention was not original, he shall be guilty of fraud. The courts are not obliged to take in to consideration the effect of misrepresentation19. Under the but it might have been test, the courts seeks as if the misstatement shall have may effect on the examiner. In Glass works v. Anchor Hocking glass Corp. the court found that the misstatement were not material to the fact.20 The present rule is substantiated by PTOS Rule 56. It is also called the rule of disclosure . First promulgated in 1949, it straight away said to strike of the application where the fraud is committed. Up to the federal circuit 2006 decision on Purdue Pharma L.P V. Endo

pharmaceuticals, The test for reasonable examiner continued. The rule in plain words simply meant what the examiner would think in a particular case that comes before him. Information is Material when the examiner would consider as to allow the application or not to allow. If the information is not Important as considered by the examiner the information in not material. Information work includes All information material to the patent. The materiality word is defined in 37C.F.R 1.56(b). apart from publication and prior art, it includes sales, Inventorship conflicts, derived knowledge and the prior publication user. A person might get aware from various sources like the trade shows, workers or the third party, from the foreign application, preliminary examination searches.

1.5 IMPACT OF INEQUITABLE CONDUCTA patent obtained through such conduct is completely unenforceable. It not only extends to the claims but to the complete patent itself. Consequently, an Attorney shall put his clients business in complete Jeopardy21. ___________________________________________________________________________
18 19 20 21 Waterman Big Pen Corp v. W.A Sheaffer Pen Co,267 SUPP. 849, 856 (D.DEL.1967). Admiral Corp. v. Zenith Radio. Corp,, 296 F.2D 708, 716-17(10TH CIR. 1961). 253 F. SUPP AT 471. The Courts said that the plaintiff should conduct the experiments more Kevin R. Kasey, Infectious Unenforceability. The extent or reach of Associated conduct on Associated Patents

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INEQUITABLE CONDUCT In some cases theInequitable Conduct may affect the other patent in suit22. In some cases the court may go beyond declaring a patent unenforceable and award Rule 11 sanctions against the party. Other consequences are the liability in the antitrust suit. Reportedly, it has resulted in loss of attorney client. Practically most of the disputes do not reach the trial court as the parties go for a stellement23. Apart from the above sated, this conduct may result in disciplinary actions against the attorney enrolled at the PTO24 . The same was stated in Jaskiewicz v. Mossinghoff25 but the action shall be the same as the disciplinary action before the bar and accordingly it will occur after a long duration. In Lear v. Adkins26, The court held that a person who holds a invalid patent makes the license also unenforceable against the licensee as well. Its now a matter to be debated as to a licensee can bring the patent owner to books for the misrepresentation of the patent.

1.6 SHIFT IN THE STANDARD ! ( THE THERASENSE CASE) Therasense issue involved a patent for the blood glucose strip for diabetes (The551 patent). A protective membrane was required to cover the strip as a part of prior art. Even after the reminder the patentee kept on filing claims for a strip that did not require membrane. In the meanwhile the prior art describing the test strips patent no ( The 382 patent) which consequently belonged to the patentee himself required for optionally, but preferably for the protective membrane. The examiner asked for the affidavit so as to prove that a ordinary man of prudence would understand Optionally, but preferably. It was discovered that the patentee has already declared the Optionally, but Preferablynotion to the European patent office and the same was suppressed to the American Patent office. During the 551 prosecution. Later on Becton, Dickinson and co. sued Therasense 1.7 INEQUITABLE DOCTRINE AFTER THE THERASENSE CASE The federal court held that On the withholding of the material information, absence of good faith does not proves intent to deceive. _______________________________________________________________________
22 23 Casey Note 24. In the year 1996, 95% of the Civil cases filed before the trial court were withdrawn. and approximately 85% of civil cases from the district forum. see, Judicial Business of the United States Courts 1996 Report of the Director 165. 24 25 26 See, CHISUM, supra note 3019.03 822 F.2d 1053 (Fed. Cir. 1987) Lear Inc. v. Adkins, 395 U.S. 653,671-74 (1969)

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INEQUITABLE CONDUCT

As far as the materiality is concerned the court held that the conduct may be found on the intent alone and the materiality is the But for materiality. What is meant is that information is but for material if the examiner would not have allowed the patent if he was aware of the Information. Moreover the PTO proposed for the revision of the Rule 56 which adopted for the But for materiality test. After the judgment the patent owner may cure Inequitable Conduct post issuance27.

1.8 PROBLEM WITH THE CURRENT LAWThe doctrine defies the principle of Audi alteram partem. It ex parte proceeding. The basic problem attorneys face is that they are to work on their own instinct as to what information to provide. What is material, is the judgment of the attorney28. Even the courts are perplexed due to the lack of uniform precedent . The federal court often reverses its order and the order of the district court also29. As discussed before, the problem is the licensee issue. Invalid patent yields to invalid Licensee. Mostly it involves multiple patents and at last yields to renegotiation of

contracts. The biggest of all is the non -availability of cure even where there was no intent to deceive in cases where reference is discovered during the prosecution30. 1.9 CURE FOR PLAGUE A member of (AIPLA)31 suggests the complete elimination of the doctrine because it has resulted in crippling the patent litigation and has become a form of liability . It requires a complete

change in law. There should be post issuance cure. A range of possible outcomes should be made once the matter is before the court. One cure is to give a statement of relevancy, the applicants over burden the information because of the harsh penalties and to curb the same they should only provide information that is material. Possible cure is a third party intervention (arbitration) that might reduce the burden on the courts.

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27 28 29 30 31 U.S.C 257(C).(e) Examples of the these Judgment are set in the Patricia Brantleys article on Ethical issue facing patent attorney. see Goldman , supra note 7, at 85-87, see Magnivision Inc. Bonneau co., 115F.3d 956 (Fed. Cir. 1977). see.e.g. Mollins PLC v Texton , 48 F.3d 1172, 1182 (Fed.Cir. 1995) . American Intellectual Property Law Association

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INEQUITABLE CONDUCT CONCLUSION

Duty of Candor is surely a feature that requires a full disclosure and that is

in the interest of

the public. The complete research focused on the what the thing are in the actual scenario. With the great power of invalidating the patent on the grounds of Inequitable Conduct the examiners need to be cautioned. The court has significantly revaluated the same in the Therasense case by raising the standard of both the intent and materiality. The implementation of the but for test is remarkable together with the abolishment of the should have known test and the sliding scale step. It was surely a cure for the Plague. It has also provided a guideline for the attorneys and the agents. Every law has certain shortcomings but definitely it is to curb the malpractices. The

shortcomings can be cured by the ideas reflected in the research itself. And ultimately the Public Interest will be served

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INEQUITABLE CONDUCT ANNOTED BIBLOIGRAPHY

PRIMARY SOURCES STATUE

1. UNITED STATES CODE TITLE 35 PATENTS

CASE LAWS

United States v Bell Tel. Co. 128 U.S 315,370 (1888) In the present case-- the United States are plaintiffs, brought suit against the defendant bell tel co. to set aside patents on the ground that they were obtained by fraud and it was held that the public is the real beneficiary of what is patented and can receive the fruits of the same only when inventor has dealt honestly with the patent office

Aventis Pharma S.A v. Amphastar Pharma, Inc.525f.3d, 1334, 1349 (fed. Cir. 2008) It was a case where the plaintiffAventis had the patent and the reissue patent in relation to the low molecular weight heparins which was marketed in U.S. The patent examiner rejected it under section 35 U.S.C for the prior art references.In this case it was promulgated the standard of conduct that needs to be adopted by the attorneys and there respective agents before the patent office

Precision Mfg. Co. V. Automotive Maintenance Mark. .co. 324 U.S 806, 815 (1945). This case related to infringement of the patents and the breach of the contract. The theory of the maxim he who comes into equity must come with clean hands was propounded in this case. In context that the doors of the courts closes where the person hands are tainted with the Inequitable Conduct

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INEQUITABLE CONDUCT Burlington Industries Inc. v Dayco Corp849 f.2d 1418, 1421 (fed. Cir. 1988 This case relates to the Inequitable Conduct of the attorney who applied for it. If the facts were fully disclosed then it would have come under prior art. invention itself,. it was stated by the federal court that the fact which a person got to know, makes an inference to mislead by intent.

Kings down Medical Consultants Ltd v. Hollister). 863 F.2d 867,876 (Fed.Cir. 1988). Patent prosecution took many years and included amendments prior art etc. the Kingsdown attorney finally filed a new set of claims. The patent was issued even after error was made in the petition. Thereafter Hollister alleged that Kingsdown obtained the patent by Inequitable Conduct and the concept of the negligence in the Patent Prosecution was evolved

Glass Works v. Anchor Hocking Glass Corp253 f. Supp. at 471

Corning Glass Works sued, Anchor Hocking Glass Corporation, for the infringement of product and process claims of its Stoked patent. In answer, defendant denied the infringement charge on the ground that the claims were not patentable over the prior art. Corning glass works also charged unenforceability by reason of fraud on the Patent Office and included a declaratory judgment counterclaim..The court found that the misstatement were not material to the fact.

Admiral Corp. V. Zenith Radio. Corp, 296 f.2d 708, 716-17(10th Cir. 1961). Zenith Radio Corporation, sued Admiral Corporation, relating to various features of a remote-control system for television receivers and relating to certain television circuits. Admiral asserted infringement of covering a spindle used in automatic record changers. The trial court found that all the Zenith patents were valid. On the counterclaim the court ruled that Zenith had not infringed the Admiral patent

Jaskiewicz v. Mossinghoff 822 F.2d 1053 (Fed. Cir. 1987) Appellant had committed misconduct before the PTO. It involved misconduct by filing of a patent application in the name of Pierre Baronnet. Under 37 C.F.R. Sec. 1.57 (Rule 57) it is requires for the signing of oath in person recognising the specification.The PTO charged that submission of a patent

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INEQUITABLE CONDUCT application as declaration of the inventor was improper under both Rule 57 and 35 U.S.C. Sec. 111.

Lear, Inc. v Adkins395 U.S. 653,671-74 (1969 The court held that a person who holds a invalid patent makes the license also unenforceable against the licensee as well. Its now a matter to be debated as to a licensee can bring the patent owner to books for the misrepresentation of the patent.

Therasense v Becton &Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc). Therasense issue involved a patent for the blood glucose strip for diabetes (The551 patent). A protective membrane was required to cover the strip as a part of prior art. Even after the reminder the patentee kept on filing claims for a strip that did not require membrane. It was discovered that the patentee has already declared the Optionally, but Preferably notion to the European patent office and the same was suppressed to the American Patent office. During the 551 prosecution. Later on Becton, Dickinson and co. sued Therasense

Mollins PLC. v Bexton.48 F.3d 1172, 1182 (Fed.Cir. 1995) .

In this case the prior art reference was not cited. Prior art reference was later on submitted but only after the patent issued as one among many. Prior was later on cited in the re-examination. It was held that failure to cite material information was Inequitable Conduct. Disclosure among various other documents does not amounts to Inequitable Conduct.

SECONDARY SOURCES

ARTICLES

Rebecca C.E Mcfadyen and Katrina M. Quicker, Rule 56 After TheTherasense- Are We Bound For Change?Intellectual Property Today 3, December ,(2011).

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INEQUITABLE CONDUCT Alan J. Kasper, Managing TheInequitable ConductBy Legislation And Regulation. (Article presented at 12th annual Richard C. Sughrue symposium on Intellectual Property law and policy. The University of Akron School of Law March 8, 2010.)5, Akron Intellectual Property 95, (2011).

Robert J. Goldman,EvolutionOfInequitable Conduct Defense InPatent Litigation,7HarvardJ.L &Tech 37, (1993-1994).

Priscilla G Taylor, Bringing Equity Back To TheInequitable ConductDoctrine,27Berkley Tech. L.J 349, (2012)

Von Tersch and Glenn E, Curing TheInequitable Conduct Plague In Patent, L.J 20 Hastings Comm.&Ent. 421, (1997).

Bullwinkel and Allan, Specifically Fighting TheInequitable Conduct,48 Houston Law Review. 349, (2011)

Angie M. Hankins and Juliana Tanase, Inequitable Conduct, IP Law 360. 1,(2011)

David J. Henry, Ethics in United States Patent Practice, 62 American Bar Association Journal. 465, (April, 1976).

BOOKS REFERRED Jerome Rosenstock,Patent Interference Practice handbook,2.91 to 2-100(2002). It leads to step by step procedures at every stage of Interference Process

Martin J. Adelman et al., Cases and material on patent , 735. It specifically the case laws and various aspects of patent prosecution.

Janice M. Muller,Patent Law, 431 (3rd Edn.) . It specifically deals with the various aspects and requirements for the Inequitable Conduct

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INEQUITABLE CONDUCT Manual of Patent Examining Procedures, (7th Edn.,2000). This deals with the procedural aspects specially for the attorneys, applicants agents and the representative it also contains the instruction for the examiners as well from pg2000-1 to 2000-12. Donald s Chisums,Chisum onPatents Vol. 4, 11.03[4] to 11.03 [4][b][v].

WEBSITES.

www.heinonline.com. Jstor.com Lexisnexis.com

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