In Freshub, Inc. v. Amazon.com, Inc., [2022-1391, 2022-1425] (February 26, 2024), the Federal Circuit affirmed the jury verdict that Amazon did not infringe U.S. Patent No. 9,908,153, and the district court’s finding that it failed to prove inequitable conduct in reviving a patent application five years after it abandoned.  The ’153 patent claims a voice-processing system that receives “user spoken words” and adds items to lists based on those words.

The district court found that, while the parties did not dispute the materiality of the representation that the application had been unintentionally abandoned, Amazon had not offered clear and convincing evidence that the representation was actually false—i.e., that Ikan had in fact intentionally abandoned the ’291 application. Id. at 9–10. The district court also found that, even if the representation had actually been false (i.e., even if Ikan had intentionally abandoned the application), Amazon had not offered clear and convincing evidence that the “single most reasonable inference” from the evidence, as required by Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276, 1290 (Fed. Cir. 2011) (en banc), was that either Ikan or its attorney had specifically intended to deceive the PTO with the STATEMENT in the petition to revive the application in 2017.

To prevail on the defense of inequitable conduct, the accused infringer must prove that the applicant misrepresented or omitted material information with the specific intent to deceive the PTO.  The proof must be by clear and convincing evidence.  Amazon asserted that the false and material statement was the denial by Ikan’s counsel that  Ikan abandoned the ’291 application intentionally during the 2012–17 non-response period.  The district court also found, however, that Amazon did not prove, by clear and convincing evidence, that the statement was a misrepresentation made with the required deceptive intent.

The Federal Circuit noted that it cannot disturb the district court’s rejection of the inequitable-conduct defense unless we have the definite and firm conviction that the evidence required the district court to find that Amazon proved, clearly and convincingly, that the “single most reasonable inference” from the record, was that Ikan’s counsel, when making his 2017 statement to the PTO, in fact believed that Ikan had intentionally abandoned the ’291 application for the 2012–17 period of nonresponse to the PTO. The Federal Circuit did not so find.

The Federal Circuit noted that for various reasons, including the passage of time and the limited testimonial and documentary evidence available—the latter due in part to invocations of attorney-client privilege not challenged on appeal—the record of what actually occurred at relevant times was thin. On that record, the district court found that Amazon did not clearly and convincingly prove Ikan’s intentional abandonment.

The Federal Circuit said that counsel’s statement itself can weigh in the evidentiary calculus even when it is not backed up affirmatively with a more granular and concrete account of how the five-year non-response to the PTO occurred— an account that might detail, for example, whether communications from counsel in 2012 failed to reach or inform the relevant decisionmaker at Ikan and whether years of inattention to this particular matter ensued because the attention of the company and counsel was elsewhere. Of course, the absence of such an account, due to unavailability of witnesses or invocations of attorney-client privilege or other reasons, might well lead a factfinder to find false, or even knowingly false, the assertion that the abandonment was unintentional on Ikan’s part. The Federal Circuit said the evidence clearly shows that Ikan’s counsel knew that the application had been abandoned, as he testified, but whether he made his statement with deceptive intent depends on what he believed about the subject of his statement, namely, the intent behind the abandonment.  The district court could find that counsel genuinely so believed, whether or not the belief was legally correct, and that counsel did not think that Ikan had the intent to abandon during the 2012–17 non-response period.  The Federal Circuit said that finding was not clearly erroneous, in light of the facts, and the district court could therefore reasonably hold deceptive intent not proven under the governing legal standard.

In Belcher Pharmaceuticals, LLC v. Hospira, Inc., [2020-1799] (September 1, 2021), the Federal Circuit affirmed the district court’s determination that Belcher’s Chief Science Officer engaged in inequitable conduct by withholding material information from the USPTO during prosecution of U.S. Patent No. 9,283,197.

During prosecution, Belcher argued that the prior art’s 2.2 to 5.0 pH range failed to render obvious the claimed range of 2.8 to 3.3 because the claimed range “was unexpectedly found to be critical . . . to reduce the racemization of l-epinephrine.”  The application was eventually discussing the reasons for allowance, the examiner explained that the cited art failed to render the claims unpatentable “in view of Applicant’s demonstration of criticality of a pH range between 2.8 and 3.3.”  The district court the found that the’197 patent was unenforceable for inequitable conduct. Regarding materiality, the district court found that Rubin withheld three items that were but-for material to patentability because they disclosed two aspects of the asserted claims: the pH range and the impurity levels.  The district court also found that Mr. Rubin acted with requisite intent to deceive the PTO, noting that Rubin knew that Belcher described the claimed pH range of 2.8 to 3.3 to the FDA as “old,” and described references in this range.  The district court found that when dealing with the PTO, the district court explained, Mr. Rubin did not merely withhold this information but also used emphatic language to argue that the claimed pH range of 2.8 to 3.3 was a “critical” innovation that “unexpectedly” reduced racemization.

On review the Federal Circuit noted that in view of the obviousness determination, the withheld information was “necessarily material to patentability.”  The Federal Circuit rejected the argument that these references were merely cumulative, in view of the inconsistent argument that the range disclosed in the withheld references was critical.   On the issue of intent, the Federal Circuit said that the district court found that although there was no direct evidence of deceptive intent, the evidence of record persuaded it clearly and convincingly that this is the only reasonable inference that can be drawn.  The Federal Circuit agreed that the reasons for withholding the references were “implausible and not credible.”

In GS Cleantech Corp. v. Adkins Energy LLC [2016-2231, 2017-1838] (March 2, 2020), the Federal Circuit affirmed the district court’s determination that U.S. Patent Nos. 7,601,858, 8,008,516, 8,008,517, and 8,283,484,  directed to the recovery of oil from a dry mill ethanol plant’s byproduct, was unenforceable due to inequitable conduct.  The inequitable conduct claim related to whether the patentee failed to disclose information that would have implicated the on-sale bar under 35 U.S.C. § 102(b).

To prevail on a claim of inequitable conduct in a patent case, the accused infringer must prove by clear and convincing evidence that the patentee: (1) knew of the reference or prior commercial sale; (2) knew that it was material; and (3) made a deliberate decision to withhold it.  After a bench trial, the District Court concluded that CleanTech and its attorneys engaged in inequitable conduct in obtaining the Patents-in-Suit, rendering the patents unenforceable.

The Federal Circuit found that the district court did not abuse its discretion in determining that the claimed invention was the subject of an offer for sale, and was ready for patenting in the summer of 2003, before the critical date.  The federal circuit further found that the district court did not abuse its discretion in concluding that CleanTech and its lawyers made a deliberate decision to withhold material information with the specific intent to deceive the USPTO.

The Federal Circuit said that in addition to knowledge and materiality, inequitable conduct requires a clear and convincing showing that CleanTech “made a deliberate decision to withhold” the material information.  Further, the specific intent to deceive must be the single most reasonable inference drawn from the evidence.  The Federal Circuit found substantial evidence supported the district court’s finding that CleanTech took affirmative steps to hide the offer for sale from their lawyers, then, later the USPTO when they learned that it would prevent them from profiting from the patents.  The Federal Circuit also found support for the district court’s determination that Cleantech and its attorneys withheld evidence of successful testing before the critical date and made false representations by implying that the invention was not reduced to practice until after the critical date.  In particular the Federal Circuit noted the submission of information to antedate a reference without disclosure of the earlier information  The Federal Circuit also noted that it appeared that CleanTech and its lawyers “threatened” a third party to support its view of the facts “spoke” to CleanTech and its attorneys intent to deceive the USPTO.  It was also important to the district court and the Federal Circuit that a detailed Information Disclosure Statement had been prepared and not filed, the district court concluding, and the Federal Circuit apparently agreeing, the lawyers “chose advocacy over candor.” Finally, the Federal Circuit agreed with the district court that failure to correct the false declaration originally filed was the “strong evidence of intentional deceit.”

It has been argued that the Federal Circuit has put attorneys in a difficult position in dealing with their clients.  However, this is more a function of 37 CFR 1.56 which provides:

A patent by its very nature is affected with a public interest. The public interest is best served, and the most effective patent examination occurs when, at the time an application is being examined, the Office is aware of and evaluates the teachings of all information material to patentability. 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 as defined in this section.    

37 CFR 1.56

There is a role for advocacy in patent prosecution, but perhaps not in the selection of information to disclose, but in explaining the significance of the information that is disclosed.

In Regeneron Pharmaceuticals v, Merus N.V., [16-1346] the Federal Circuit denied rehearing and rehearing en banc of the July panel decision previously discussed here, that litigation misconduct warranted a finding of inequitable conduct in patent prosecution.

Judge Newman, who is usually spot-on in her analysis, again dissented, voicing her concern that inequitable conduct in patent prosecution can be retrospectively imposed by “adverse inference” arising from later misconduct in litigation, without a showing of deceptive intent, which she called “a disservice to the patent practitioner, the patentee, and the public.”

While it would be disturbing if the subsequent unrelated conduct of a litigator could retroactively change the nature of the conduct of the patent prosecutors, this is not the case in Regeneron.  The litigation conduct complained of related to resisting disclosures about the alleged inequitable conduct.  If a party is not forthcoming about accused conduct, it seems reasonable to assume that there was something wrong with that conduct.

If Regeneron is used to transmute litigation misconduct into prosecution misconduct, then Judge Newman is right this is a disservice to patentee and their prosecutors.  However, if Regeneron simply means that if you try to hide prosecution conduct, then the courts will presume you had something to hide, the rule should not be a threat to patent owners and their counsel.

In Regeneron Pharmaceuticals, Inc. v. Merus N.V., [2016-1346] (July 27, 2017), the Federal Circuit affirmed final judgment that  U.S. Patent No. 8,502,018 (which related to using large DNA vectors to target and modify endogenous genes and chromosomal loci in eukaryotic cells) unenforceable because of Regeneron’s inequitable conduct during prosecution.

Merus argued that Regeneron’s patent prosecutors withheld four references from the USPTO during prosecution.  The references were cited in a third-party submission in related U.S. patent prosecution and in
European opposition briefs, were but-for material, and were withheld by Regeneron with the specific intent to deceive the PTO.  Regeneron argues, however, that the references were not but-for material, that they were cumulative of references the PTO actually relied on during prosecution, and that Regeneron did not have any specific intent to deceive the PTO.

During prosecution, Regeneron asserted that it had developed a commercial embodiment of the claimed mouse with surprising
results.  However, it was undisputed that that assertion was false; Regeneron had not developed any such mouse at the time.  Regeneron’s application was allowed.  However, just before allowance, a third party made a submission of prior art in the parent case. This prior art was not disclosed in the ‘018 patent, but once the ’018 patent had been allowed, the art was disclosed in every related application having the same specification and similar claims.

The Federal Circuit acknowledged that the materiality required to establish inequitable conduct is but-for materiality, and said that In determining the materiality of a reference, the court applies the preponderance of the evidence standard and gives claims their broadest reasonable construction.  The Federal Circuit added that a reference is not but-for material, however, if it is merely cumulative, i.e., when it “teaches no more than what a reasonable examiner would consider to be taught by the prior art already before the PTO.”

In addition to proving the materiality of the withheld references, a challenger must prove that the patentee acted with the specific intent to deceive the PTO.  Evidence of intent to deceive should be weighed independently of the materiality analysis. Proving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive, rather clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference.

Direct evidence of intent is not required, and an inference of intent to deceive can be made where the applicant engages in “a pattern of lack of candor,” such as repeatedly makes factual representations “contrary to the true information he had in his possession.”

Applying the broadest reasonable interpretation to the claims, the Federal Circuit concluded that the district court properly found that the withheld references were but-for material separately and in combination.  As to specific intent to withhold, the Federal Circuit approved the district court’s drawing an adverse inference of specific intent from Regeneron’s litigation conduct, which the Federal Circuit described as “beset with troubling misconduct.”  This misconduct included:

• Failure to provide adequate infringement contentions
• Failure to product conception and reduction to practice documents in discovery
• Taking the position that no claim terms required construction
• Arguing that a disclosure of a memo from outside counsel did not work a waiver of attorney-client privilege and failure to identify relevant documents for the Court’s in camera review
• Failure to recall in a deposition communications with the patent examiner
• Maintaining claims of privilege regarding the knowledge and thoughts about the withheld references.

The Federal Circuit was careful to point out that this was not a case of punishing a party’s post prosecution misconduct by declaring the patent unenforceable, because Regeneron was accused of misconduct during prosecution as well.  Regeneron’s litigation misconduct, however, obfuscated its prosecution misconduct.

The Federal Circuit concluded that In light of Regeneron’s widespread litigation misconduct, including the use of sword and shield tactics
to protect its deliberations over the disclosure of the withheld references to the PTO, that the district court did not abuse its discretion by drawing an adverse inference of specific intent to deceive the PTO.

In American Calcar, Inc. v. American Honda Motor Co., Inc., 2013-1061 (Fed. Cir. 2014), the Federal Circuit affirmed a finding of inequitable conduct for failing a disclose a reference, even though the patent was found valid over that reference.  The Federal Circuit explained that district courts and the PTO employ different evidentiary standards and rules for claim construction. Therefore, “even if a district court does not invalidate a claim based on a deliberately withheld reference, the reference may be material if it would have blocked patent issuance under the PTO’s different evidentiary standards.” citing Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc).  Thus the Federal Circuit concluded that the jury’s verdict finding the patents at issue non-obvious thus does not weigh on the determination of materiality for inequitable conduct.”

Although the stringent “but for” test of materiality of Therasense has made it difficult to show inequitable conduct, in Apotex, Inc. v. UCB, Inc., 2013-1674 (Fed. Cir. 2014) the Federal Circuit affirmed a finding of inequitable conduct.  After finding materilaity, i.e., that thepatent would not have been allowed but for misconduct, the Federal Circuit went out of its way to point out that there is no duty to disclose suspicions or beliefs regarding the prior art.  The Federal Circuit said that there is nothing wrong with advocating, in good faith, a reasonable interpretation of the teachings of the prior art.  However the Federal Circuit found that the misconduct at issue, however, goes beyond failing to disclose a personal belief or alternative interpretations of the prior art; but consisted of affirmatively and knowingly misrepresenting material facts regarding the prior art.  In fact, the Federal Circuit found that the case comes close to the type of affirmative misconduct that in Therasense we held could justify finding inequitable conduct without showing but-for materiality.  The Federal Circuit found the conduct conduct evidences a pattern of lack of candor, and agreed with the district court that deceptive intent was the single most reasonable inference that can be drawn from the evidence.