Inequitable conduct is asserted as a defense in the vast majority of patent infringement suits and generally involves an allegation that the patentee failed to disclose material information (i.e., prior art) to or intentionally misled the Examiner during the prosecution of the patent application.

Therasense v. Becton Dickinson addresses inequitable conduct during patent prosecution.  In Therasense, the patentee was accused of making conflicting statements concerning certain prior art to the United States Patent & Trademark Office (PTO) and the European Patent Office (EPO).  The patentee told the PTO that a certain element was required but had told the EPO that the same element was optional.  The district court ruled that the conflicting statements were material and found that there was intent to deceive the PTO in not disclosing the prior statement made to the EPO.  The Court of Appeals for the Federal Circuit agreed, finding no clear errors in the district court’s ruling regarding materiality and intent.  Therasense then petitioned for an en banc rehearing, which was granted by the Federal Circuit.

The last time the Federal Circuit addressed inequitable conduct en banc was in Kingsdown v. Hollister, 863 F.2d 867 (Fed. Cir. 1988).  The court there held that inequitable conduct requires that materiality and deceptive intent be separately proven under a clear and convincing standard.  Over the last twenty plus years district courts and the Federal Circuit have been criticized for inconsistent application of Kingsdown, leading to what has been characterized as a "plague" of inequitable conduct allegations in almost all patent infringement suits.  Burlington Industries, Inc. v. Dayco Corporation, 849 F.29 1418, 1422 (Fed. Cir. 1988).

Most agree that a clear, firm rule that can be applied consistently should replace the current standard.  To that end, the parties in Therasense and amici curiae have been asked by the court in the Order granting a rehearing en banc to brief the following issues:

• Should the materiality/intent test be modified or replaced?
• If so, should the test be tied more directly to fraud or unclean hands?
• What is the proper standard for materiality – must alleged misconduct negate one or more claims – and, what role should PTO rules have in defining materiality?
• Can intent be inferred from materiality?
• Should the materiality/intent test be abandoned?
• Can inequitable conduct materiality/intent standards in other federal agency contexts be applied in the patent context?

Many contend that confusion arises when intent is inferred from materiality.  Indeed, Judge Linn penned a vigorous dissent in the vacated panel opinion in Therasense in which he argued that the majority erred by failing to recognize that intent to deceive is a subjective standard rather than an objective standard.

Another major question that is yet to be settled is whether the alleged misconduct actually affects the validity of the patent.  In other words, is the alleged misconduct only material if it would have changed the outcome of the PTO’s decision to grant the patent?  Inequitable conduct is grounded in equity.  Perhaps not all inequitable conduct, even if proven, should render a patent unenforceable.

Many would also like to see enhanced provisions for attorney fees when inequitable conduct claims are unsuccessful, especially because a charge of inequitable conduct carries an implication of wrongdoing.

The case is scheduled to be heard later this summer.

Discussion of the case can be found at PatentlyO and PatentDocs (with a link to the briefing schedule).

At long last, the Supreme Court has issued its decision in the closely watched Bilski case. While shattering the record for longest time from argument to decision in a Supreme Court patent case (over 200 days!), the Bilski decision reads like a middle episode of a movie series or television program, staying internally consistent with prior episodes while not providing significant closure to the central issues (i.e., business method and software patentability).  In the near term, business methods are not categorically excluded from patent protection.  Further, there is now no hard line rule that a claimed inventive process must meet the "machine or transformation" test laid down by the Court of Appeals for the Federal Circuit in order to qualify for patent protection.  These takeaway points will keep the flow of new software and business method patent applications coming into the PTO (which has already issued an "interim guidance" memorandum to the examining corps) and issued patents litigated in the courts, and we can expect the battle lines to be drawn between unpatentable abstract ideas and mathematical algorithms on the one hand, and potentially patentable "applications of laws of nature and algorithms" on the other.  It's Benson and Flook versus Diehr for the time being.

In his concurring opinion, Justice Stevens notes that the Court essentially reaches the conclusion that the Bilski claims pertain to an abstract idea and are therefore not patentable, while never really providing a satisfactory account of what actually constitutes an unpatentable abstract idea.  Perhaps the Court is saying it did not need to, because the caselaw guidance is already there.  Judge Rader apparently had it right in his dissent in the Federal Circuit's opinion, where he summarizes what the Federal Circuit could have said in 2008 with the single sentence, "[b]ecause Bilski claims merely an abstract idea, this court affirms the Board's rejection."  Indeed, that is more or less all we get from the Supreme Court here.

What we have then is a "middle episode" in the form of Bilski that accurately recaptures prior decisions and leaves the courts, practitioners, and the PTO to interpret.  We also have the KSR obviousness decision and a much larger body of patent and non-patent prior art that may help defuse the "business method" patentability fears on the basis that many are simply not novel or non-obvious.

We will stay tuned...

Dennis Crouch has an interesting post from yesterday at PatentlyO on conflicting statutory provisions providing for appeals of rejections by the BPAI in ex parte reexamination proceedings, namely whether the patentee can appeal to the District of DC, or whether the Federal Circuit has exclusive jurisdiction over such appeals.   Addressing this issue in Sigram Schindler v. Kappos, 2009 WL 4981473 (E.D. Va. Dec. 18, 2009), the Eastern District of Virginia agreed with the PTO's interpretation (found in 37 C.F.R. § 1.303 and in MPEP § 2279) that section 141 controls, and that appeals lie only at the Federal Circuit. 

The Reexamination Center also has a good discussion of this issue here. 

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In the wake of the Federal Circuit’s decision in Wyeth v. Kappos, the USPTO recently announced an interim procedure for patentees to request patent term adjustment recalculations.  In Wyeth, the Federal Circuit affirmed Wyeth and Elan Pharma International Ltd.’s request to extend patent term adjustments under 35 U.S.C. 154(b), due to the USPTO’s delay in prosecuting their patent applications.   Commissioner for Patents Robert Stoll stated that “the USPTO is working to modify its computer program to comply with the Federal Circuit’s decision as soon as possible. Until then, this interim procedure will enable patentees to request a recalculation quickly and at no charge.”   The USPTO expects that the software modification needed to comply with the Wyeth decision will be completed by March 2, 2010.  In the interim, the USPTO is providing patentees with the ability to request a recalculation of their patent term adjustment without a fee or petition as is normally required pending completion of necessary modifications to the USPTO’s computer program.

 

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Everyone is anxiously awaiting the Supreme Court's decision in In re Bilski, but until then, AwakenIP has collected here an extremely comprehensive collection of resources on the Bilski case.  It has everything from commentary, to blog posts, to transcripts and briefs, including amicus briefs at the Federal Circuit.  Definitely a website to visit for anyone interested in the Bilski case.

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The clock is ticking for U.S. Patent Application No. 10/962,357, which is currently pending before the USPTO.  The patent application is generally directed toward a pharmaceutical composition comprising arsenite for the treatment of malignancy, and will go abandoned as of December 3, 2009, absent intervention of the Eastern District of Virginia. 

 

Komipharm International Co., Ltd. claims ownership and has attempted to pursue the prosecution of this patent application; however, the USPTO has denied its attempts to do so.  The USPTO has determined that Komipharm does not own all rights in the patent application because one of the named inventors, Dr. Sang Bong Lee, retained his rights.  This is significant because it means that Dr. Lee’s consent is needed to continue prosecution of the patent application.  In an effort to circumvent the USPTO’s decision, Komipharm filed a complaint on November 30, 2009, in the Eastern District of Virginia against David Kappos, Director of the USPTO.  Komipharm seeks a ruling that the USPTO’s decision that Komipharm is not the owner of a pending patent application, despite U.S. assignments of the pending patent application to Komipharm, is arbitrary, capricious and contrary to law.  Komipharm also seeks a preliminary injunction to suspend all prosecution of the pending patent application until ownership of the patent application is determined by the EDVA, or in the alternative, requests that the USPTO withdraw the pending Office Action so as to preserve the status quo while the matter is pending.

 

The dispute has arisen over various documents recorded at the USPTO.  The USPTO determined that one of the named inventors, Dr. Lee, had not assigned all of his rights in the patent application to Komipharm.  As a result of the decision, Komipharm has alleged that it cannot prosecute the patent application, as Dr. Lee has refused to file a joint response to the outstanding Office Action.  The patent application currently stands to go abandoned on December 3, 2009, if no action is taken, and Komipharm alleges that it would be irreparably harmed if it was allowed to go abandoned.

 

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In a surprising decision in Tafas v. Kappos on November 13, 2009, the Federal Circuit granted the parties' joint motion to dismiss the appeal as moot, but denied the parties' joint motion to vacate the judgment of the Eastern District of Virginia.  The court reasoned that dismissal of the appeal was proper as moot because the USPTO had rescinded the rules that formed the basis for the litigation.  However, the court also reasoned that vacatur of the Eastern District of Virginia's judgment was not proper because the mootness arose due to a unilateral act of the USPTO in rescinding the rules.  In contrast, vacatur of the EDVA's decision would have been proper if the mootness had arisen from an external cause over which the parties had no control - that was not the case.  Accordingly, the EDVA's decision stands.

The Tafas v. Doll decision has been previously reported on the blog here. 

 

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The blog Inventive Step has this post on the recent Virginia State Bar Intellectual Property Section 21st Annual Fall Weekend.  The new director of the PTO David Kappos was one of the speakers, and he addressed a number of his proposals for change at the PTO.  He quipped that when previously asked whether he planned to hit the ground running in his new position, he had responded no.  Instead, he planned to “drop out of a chopper shooting” to begin work before he hit the ground. 

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The USPTO Director David Kappos signed a new final rule rescinding the 2007 Patent Regulations Package previously proposed by the Bush Administration.  The USPTO also announced that it would be filing a motion to dismiss the currently pending Tafas v. Doll lawsuit, which was initially brought in the Eastern District of Virginia by inventor Triantafyllos Tafas and GlaxoSmithKline to prevent the rules from taking effect. In justifying the reasons for withdrawing the highly unpopular regulations, Kappos stated that “the USPTO should incentivize innovation, develop rules that are responsive to its applicants’ needs and help bring their products and services to market.”  Kappos further noted that “this course of action represents the most efficient way to formally and permanently move on from these regulations and work with the IP community on new ways to take on the challenges these regulations were originally designed to address.”

 

The Tafas v. Doll decision has been previously reported on the blog here. 

 

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PatentlyO links to the briefs filed with the US Supreme Court in In Re Bilski in this post.  Amicus briefing is extensive, with over 35 briefs filed so far supporting either Bilski or neither party.  The government's opposition is due September 25, and amicus briefs in support of the opposition are due within seven days of the government's filing. 

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Gene Quinn at IP Watchdog has a great post here on his rating of the Top 50 Patent Blogs, with Patently O taking the top award.  As he explains, patent law blogs rank very high in popularity, in comparison with other blogs and websites generally.  For example, five of the top rated patent blogs were in the top 2% of all websites according to Alexa traffic data, which has approximately 16 million websites indexed.  (IPWatchdog, Promote the Progress, Invent Blog, PatentlyO, Spicy IP)

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The Federal Circuit has granted the parties’ joint motion to stay the proceedings in Tafas v. Doll.   The case docket is available on PACER (see page 1, Entry 222).  Under the parties’ motion, the Appellants’ opening brief to the en banc court, if still necessary, would be due sixty days after the confirmation of the new Director of the USPTO. 

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On Friday, the U.S. Patent and Trademark Office (USPTO) and the appellees in the Tafas case asked the Federal Circuit to stay the proceedings until sixty days after the new PTO Director is confirmed by the U.S. Senate. Joint Consent Motion for a Stay of En Banc Proceedings.  If granted, the joint motion would postpone for several months the due date for the parties’ en banc briefs, which are currently scheduled for submission in August and early September.  The parties contend that a stay is justified because the new Director may revise the USPTO’s position in the case and thereby change or moot the issues that are presently before the Federal Circuit.  See our previous posts about this case here and here.

At issue in Tafas are several new rules the USPTO is proposing to implement. The rules would limit prosecution practices concerning continued examination (continuation applications and requests for continued examination) and would require an examination support document for applications exceeding certain numbers of independent claims or total claims.  After the Eastern District of Virginia struck down the rules on summary judgment in 2008, that decision was reversed in part in March 2009, but the Federal Circuit has since taken the case en banc.

In June, President Obama nominated David Kappos as Under Secretary of Commerce for Intellectual Property and Director of the USPTO. The confirmation hearing for Mr. Kappos before the Senate Judiciary Committee is scheduled for this Wednesday, July 29, 2009.  The parties in Tafas argue that the proposed stay period will give the new Director “an opportunity to examine the rules at issue…and determine what course the USPTO should take in the future with respect to those rules, including whether to rescind the rules.” Under the parties’ proposal, the Appellants’ opening en banc brief, if still necessary, would be due thirty days after the expiration of the stay. The Appellees’ responsive brief would be due twenty days after the opening brief was filed and be followed by the Appellants’ reply brief within seven days thereafter.

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The United States Court of Appeals for the Federal Circuit has agreed to rehear en banc the highly anticipated appeal in Tafas v. Doll.  The case initiated in the Eastern District of Virginia, in which the Court enjoined the implementation of new rules relating to patent application continuations and claims.  The Court's March 20, 2009, opinion was expressly vacated and the appeal was reinstated in the Court's July 6, 2009, Order. 

The PTO is appealing a decision by the Eastern District of Virginia overturning the PTO’s denial of patent-term extension for a pharmaceutical patent. PhotoCure ASA v. Dudas, No 1:08cv718-LO-JFA, 2009 U.S. Dist. LEXIS 27543 (E.D. Va. Mar. 31, 2009), appeal docketed, No. 2009-1393 (Fed. Cir. June 11, 2009). In its ruling, the Eastern District of Virginia determined that a 1990 decision from the Federal Circuit interpreting the patent-term extension statute conflicted with a later panel decision. The Court held that the earlier decision is controlling and compels extension of the patent’s term.

Plaintiff PhotoCure ASA (“PhotoCure”) filed an application with the PTO to extend the term of a patent it holds on its drug product Metvixia™. PhotoCure based its application for additional patent term on the loss of marketing opportunities due to the regulatory-approval process for the drug. PhotoCure did not obtain approval until more than four years after the issuance of its patent, and believed it was entitled to a term extension under 35 U.S.C. § 156.

The PTO denied the application, however, because it determined that Metvixia was not the “first permitted commercial marketing or use of the product,” 35 U.S.C. § 156(a)(5)(A), covered by the patent. This determination was reached this because an earlier drug, Levulan™, has a key ingredient having the same “active moiety” as that of Metvixia’s key ingredient.

Key Ingredient in Metvixia	Key Ingredient in Levulan	Common Active Moiety

The PTO relied on 35 U.S.C. § 156(f)(1)(A), which defines “product” to be a “drug product,” defined by 35 U.S.C. § 156(f)(2) to mean “the active ingredient of a new drug...including any salt or ester of the active ingredient.” Taking the position that the active moiety is the “active ingredient” of both Metvixia and Levulan, the PTO decided that extending the term of PhotoCure’s patent would be improper. Photocure challenged the PTO’s decision by suing in the Eastern District of Virginia and moved for summary judgment.

In deciding the motion, the Court compared Glaxo Operations UK Ltd. v. Quigg, 894 F.2d 392 (Fed. Cir. 1990), and Pfizer, Inc. v. Dr. Reddy’s Laboratories, Ltd., 359 F.3d 1361 (Fed. Cir. 2004). The Court determined that the Pfizer panel had adopted an “active moiety approach” that the Glaxo panel had previously determined was not consistent with the plain language of the statute. Finding Pfizer and Glaxo to be “clearly in conflict,” the Court applied Newell Cos. v. Kenney Mfg. Co., 864 F.2d 757, 765 (Fed. Cir. 1988), to follow Glaxo and grant summary judgment in favor of PhotoCure. The PTO’s appeal will give the Federal Circuit an opportunity to analyze Pfizer and Glaxo and determine whether they are indeed in conflict and, if so, how that conflict should be resolved.

On March 20, 2009, the Federal Circuit issued its decision in Tafas v. Doll, an appeal by the PTO from the Eastern District of Virginia's decision to enjoin the PTO from implementing the Claims and Continuation Final Rules.  The opinion can be found here:  Tafas v Doll.pdf.  The Claims and Continuation Final Rules limit the number of requests for continued examination (Final Rule 114), require submission of a new "examination support document" when filing a certain number of claims (Final Rules 75 and 265), and limit the number of continuation applications that can be filed (Final Rule 78).  With Judge Prost writing for the majority, the Court upheld Final Rules 75, 114 and 265, finding them to be procedural rather than substantive, and therefore within the rulemaking authority of the PTO.  The Court struck down Rule 78, however, as inconsistent with 35 USC § 120, which states that any continuation or continuation-in-part application "shall" be granted priority to the patent application upon satisfaction of certain requirements. 

Judge Bryson wrote a concurrence in striking down Rule 78, which left open the possibility that it could be redrafted in a way that would save it, and Judge Rader dissented with respect to Final Rules 75, 114, and 265, concluding that all of them were substantive and therefore beyond the PTO's rulemaking authority.  The Court ultimately remanded the case to the Eastern District of Virginia to address: "whether any of the Final Rules, either on their face or as applied in any specific circumstances, are arbitrary and capricious; whether any of the Final Rules conflict with the Patent Act in ways not specifically addressed in this opinion; whether all USPTO rulemaking is subject to notice and comment rulemaking under 5 U.S.C. § 553; whether any of the Final Rules are impermissibly vague; and whether the Final Rules are impermissibly retroactive."