In this case, the defendant asserted a defense of inequitable conduct on the grounds that the inventors of the patent-in-suit were aware of prior art when they prosecuted the patent but failed to disclose that prior art.. On a motion to dismiss the inequitable conduct defense, the United States District Court for the Eastern District of Virginia held that the defendant had plead insufficient factual allegations to support an inequitable conduct defense.
The plaintiff asserted that the defendant had failed to sufficiently plead inequitable conduct because it had not plead that material prior art was withheld, sufficient knowledge of the prior art, and that such prior art was withheld with an intent to deceive the Patent and Trademark Office ("PTO"). The district court started its analysis by noting that inequitable conduct is akin to a claim for fraud and therefore must meet the particularity requirements of Federal Rule of Civil Procedure 9(b) ("In alleging fraud or mistake, a party must sate with particularity the circumstances constituting fraud or mistake.").
In its inequitable conduct defense, the defendant alleged that the inventors failed to disclose material prior art publications and that the inventors were familiar with the prior art and their materiality. The district court found these cursory allegations insufficient to establish that the inventors were aware of the material aspects of the prior art based on citations to those works in unrelated publications. Rather, the district court found that "[i]n order to satisfy this standard, the pleading must set forth 'which claims, and which limitations in those claims, the withheld references are relevant to, and where in those references the material information is found' as well as 'the particular claim limitations, or combination of claim limitations, that are supposedly absent from the information of record.'" The district court found that defendant's allegations failed to meet either showing.
The district court also analyzed, under the Federal Circuit's recent decision in Therasense, Inc. v. Becton, 2011 WL 2028255, at *9-10 (Fed. Cir. May 25, 2011), whether the defendant had alleged that the inventors knew of the withheld material information and withheld the information with a specific intent to deceive the PTO. The defendant plead the specific intent on "information and belief" and cited no specific facts as to satisfy the specific intent element for the inequitable conduct. Based on this pleading, the district court found that the defendant had failed to plead specific intent with the required specificity, stating "these allegations merely invite speculation about specific intent rather than alleging any facts pertaining to knowledge of the reference and its materiality along with the deliberate decision to withhold it."
Accordingly, the district court dismissed the defendant's inequitable conduct defense.
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The district court's opinion is yet another demonstration of just how difficult it will be to plead and successfully prove an inequitable conduct defense after the Federal Circuit's decision in Therasense. We are likely to see plaintiff's challenge the defense at the pleading stage where it will be difficult for defendants to provide evidence of specific intent without the benefit of any discovery. It is likely to be insufficient to plead specific on "information and belief" or based on the alleged materiality of the prior art as the Federal Circuit has stated that there is no sliding scale between intent and materiality. Accordingly, it is likely that the inequitable conduct defense will be knocked out early and often at the pleading stage without the benefit of discovery.
Fred Hutchinson Cancer Research v. BioPet Vet Lab, Inc., Case No. 2:10cv616 (E.D. Va. June 27, 2011).
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