Applying Therasense Court Denies Defense Motion of Inequitable Conduct

June 20, 2011

In the first district court case applying the Federal Circuit's new standard for proving inequitable conduct, the United States District Court for the Eastern District of Texas concluded that defendants had failed to prove by clear and convincing evidence that the patents-in-suit were unenforceable due to inequitable conduct.

The case was tried to a jury and the jury returned a verdict finding, among other things, that the asserted claims were invalid. After that finding, the defendants filed a motion arguing that the first inventor committed fraud on the Patent Office by withholding material prior art with an intent to deceive.

The district court began its analysis by noting the new standard for inequitable conduct set out in Therasense, Inc. v. Becton, No. 2008-1511 (Fed. Cir. May 25, 2011), stating that "[t]o 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 Patent Office. . . . The accused infringer must prove both elements-intent and materiality-by clear and convincing evidence. The Federal Circuit has recently 'tightened' the standard for finding both intent and materiality."

With respect to materiality, the district court noted that the standard is "but-for materiality." As stated by the Federal Circuit it occurs "[w]hen an applicant fails to disclose prior art to the PTO, that prior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art." With respect to intent, the accused infringer must prove that the patentee acted with the specific intent to deceive the PTO.

Turning to the facts of this case, the district court noted that the jury had used the prior art to invalidate the patents-in-suit. Accordingly, the district court found that the references withheld from the patent office met the but-for materiality standard. "Thus, considering that the jury found the claims to be invalid both as anticipated by the prior art and for obviousness, the court concludes that the Withheld References meet the but-for materiality standard."

Nonetheless, the district court concluded that the defendants had failed to prove by clear and convincing evidence that the inventor withheld the references with the specific intent to deceive the PTO. In reaching this conclusion, the district court relied on the testimony of the inventor, who had testified that he believed there was nothing like his invention prior to the filing of his patent application. The district court found that the inventor was at no time inconsistent in stating his belief that there was no material prior to his invention and that he had uncovered a break through invention.

Thus, the district court concluded that the intent prong of the inequitable conduct test was not met.

* * *

The district court's analysis highlights just how difficult it will be to establish inequitable conduct after Therasense. Under the Federal Circuit's ruling, the materiality of the prior art cannot be used to infer intent so that satisfying the intent prong of the test will be extremely difficult and may well require obtaining evidence from the inventor equivalent to having the inventor admit to perjury when he or she filed the patent application. As such evidence will be very difficult to obtain, it is highly likely that the inequitable conduct defense will only be successful on very rare occasions.

Ameranth, Inc. v. Menusoft Systems Corp., et al., Case No. 2:07-CV-271 (E.D. Tex. May 26, 2011)

______________________________

The authors of www.PatentLawyerBlog.com are patent litigation lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.