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Thereasense Round Two: Even After “Seismic Shift” in the Law of Inequitable Conduct, District Court Applies Federal Circuit’s New Standard and Still Finds Patent Invalid Due to Inequitable Conduct

On remand to the district court after the Federal Circuit’s en banc decision in Therasense v. Becton, Dickinson and Co., the district court reviewed the procedural posture of the case and the landmark Therasense decision. The district court noted that “Therasense worked a seismic shift in the law of inequitable conduct,” and particularly that “materiality would henceforth use a but-for definition, meaning that submission of the withheld item would have led to a rejection.” The district court also analyzed the decision including the closeness of the vote on the new standard, stating that “[d]espite the closeness of the decision and the importance of the question to our patent system and national economy, no petition for certiorari was filed in the Supreme Court.”

Before applying the facts to the new standard articulated by the Federal Circuit, the district court noted the Federal Circuit’s instructions on remand (1) that the “district court should determine whether there is clear an convincing evidence demonstrating that Sanghera or Pope knew of the EPO brief, knew of their materiality, and made the conscious decision not to disclose them in order to deceive the PTO” and (2) the “district court should determine whether the PTO would have granted the patent but for Abbott’s failure to disclose the EPO briefs. …”

After a hearing and multiple briefs, the district court addressed the questions presented on remand by first analyzing whether the withheld EPO briefs were material under the new but-for test. After reviewing the evidence, the district court concluded that there was clear and convincing evidence that the EPO briefs were material under the new but-for standard. “This order again makes the finding under the clear and convincing standard and further finds that the omission of the EPO briefs was but-for material, leading to the allowance of the ‘551 patent, that is, the examiner would not have finally allowed the ‘551 patent had the EPO briefs been submitted.”

In reaching this conclusion, the district court focused on Abbott’s argument to the PTO (made by an attorney and an expert through declaration) that the words “optionally, but preferably” in a prior art patent really meant given the state of the art “necessary.” The district court found that Abbott had made an argument directly contrary to this representation in the EPO briefs filed several years earlier in reference to the European counterpart to the prior art patent. In the EPO briefs, in order to distinguish different prior art, Abbott urged that the words “optionally, but preferably” unequivocally meant “optional.” The district court then found that had the PTO examiner been provided the withheld EPO briefs, he would not have allowed the ‘551 patent to issue because the EPO briefs would have reinforced the examiner’s expressed concerns regarding the “optionally, but preferably” language.

Turning to the second question on remand, knowledge off but-for materiality, the district court found that both the attorney and the expert knew of the EPO briefs and made a conscious decision not to disclose them. The district court then stated that “the key question is: Did they know that disclosure of the EPO briefs would lead to a rejection?” The district court answered this question by finding that the lawyer and the expert “knew that if they had included the actual EPO briefs along with their actual PTO submissions, the examiner would have rejected the claims. . . . [they knew] the content of the EPO briefs and knew that the EPO briefs, standing alone, would so seriously undermine their submission that the examiner would have revered to unpatentability.”

The district court next examined the issue of specific intent to deceive. The district court found that clear and convincing evidence supported that the lawyer and expert had actual knowledge of the withheld EPO briefs, that they had actual knowledge of the materiality of the briefs and that they made a deliberate decision to withhold the evidence. The district court found that these three elements together were sufficient by themselves to establish a threshold case of specific intent to defraud. The district court then went on to find that based on the overall evidence “intent to deceive is the single most reasonable inference.” The district court found particularly important that “[a]t trial, Abbott chose affirmatively to introduce an explanation, going so far as to revoke its earlier promise and to insist that Attorney Pope be allowed to testify and to offer explanation beyond those in his deposition. This was allowed. This is not a case, therefore, where the patentee gave no explanation and its silence was held against it. Here, the patentee demanded to testify and the district court found (and finds again) that its story is not credible and the witness demeanor and was not favorable.”

Accordingly, the patent was declared invalid once again based on inequitable conduct.

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This will likely be a closely reviewed decision given the significance of the Therasense decision to change in the standard for proving inequitable conduct. It is particularly noteworthy because even with the change in the standard, the district court still concluded that there was clear and convincing evidence of inequitable conduct.

Therasense, Inc. v. Becton, Dickinson and Company, Case No. C 04-02123 WHA (N.D. Cal. March 27, 2012)

The authors of 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