Another Inequitable Counterclaim Dismissed after Therasense

September 19, 2011

Plaintiff filed a patent infringement action against the defendant alleging that certain of defendant's T-shirt transfer products infringed plaintiff's patent. Defendant filed an answer and counterclaim which accused the plaintiff of inequitable conduct in amending its patent during a reissuance of the patent. Defendant claimed that plaintiff deliberately pursued a broadened reissue patent based on her learning of material faults in the patent after having had an opportunity to analyze defendant's products and technology. Defendant's primary contention was that the amendments made during the reissuance proceeding added new material to the patent.

As the district court wrote, "[a] reissue patent that enlarges the scope of the claims contained in an original patent shall not be granted unless it is applied for within two years of the grant of the original patent." The reissue application for the patent-in-suit was filed more than two years after the issuance of the patent. Plaintiff moved to dismiss the inequitable conduct defense on the grounds that the facts alleged did not support a plausible inference that the plaintiff (1) made an affirmative misrepresentation of material fact or failed to disclose material information to the PTO during the reissue examination and (2) intended to deceive the PTO.

The district court noted that "[t]he high standards for pleading, as well as proving, inequitable conduct are designed to curb overuse of the doctrine, thereby protecting the reputations of those who would be harmed by such charges; preventing use of inequitable conduct as a litigation tactic; and shielding the courts, patent system, and public from the burden created when such claims are brought on slender grounds."

According to the district court, the threshold issue to determine was whether plaintiff's representation that the reissuance was correcting defects and typographical errors without broadening claims was a material misrepresentation of fact or, instead merely an argument advocating for patentability. The district court then noted that a "misrepresentation of material fact may give rise to a claim for inequitable conduct, however, an applicant's legal or interpretive arguments in favor of patentability are not actionable." But, "if an applicant's legal or interpretive argument is based on distorted facts or is contrary to what a person of skill in the art would understand a reference to disclose, the interpretation exceeds the bounds of acceptable argument and may be subject to a claim for inequitable conduct."

The district court then concluded that plaintiff's interpretation of the text was not unreasonable or demonstrably false because "[t]he examiner was able to compare the requested amendments to the original text and drawings and reach an independent conclusion as to whether the grammatical construction of the sentence at issue supported the amendment or, instead, introduced new matter."

The district court also found that the allegation did not allow a reasonable inference that the plaintiff "knew her representation . . . was false. The truth or falsity of [plaintiff's] representation was not objectively ascertainable, because such claims had not been subjected to claim construction." The plaintiff may have known that the scope of her patent was disputed but it was not reasonable to infer that she knew her interpretation was false.

Accordingly, the motion to dismiss was granted.

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The majority of district courts continue to dismiss inequitable conduct claims after Therasense on both grounds of failing to allege "but-for" materiality and specific intent to deceive the PTO. As more decisions come out, it will likely become more and more difficult to establish an inequitable conduct defense or counterclaim -- exactly what the Federal Circuit intended with its Therasense decision.

Schwendimann v. Arkwright Advanced Coating, Inc., Case No. 11-820 ADM/JSM (D. Minn. Sept. 8, 2011)

The authors of www.PatentLawyerBlog.com are patent trial 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.