CAFC (Really) Tightens Pleading Requirements for Inequitable Conduct
Inequitable Conduct Ruling Gives Pleading Rules Real Teeth
Particular Inequitable Conduct
A COMMENTER to the patenthawk blog DID state of footnote 2:
Exergen’s patent counsel may have dodged the IC bullet, but Exergen still lost big-time and Exergen's trial counsel still got her bottom smacked for her trial techniques. See footnote 2. IMHO Linn’s microscopic examination of Ms. Harvey’s closing arguments was borderline draconian.
Of the theme of inequitable conduct, one should note that inequitable conduct came up in THIS case in the following context:
SAAT further appeals the denial of its motion for leave to amend its answer to
allege that the ’813 and ’685 patents are unenforceable due to inequitable conduct.
The CAFC, in its decision, concluded that no claim of the '813 or '685 was infringed:
Furthermore, we conclude that Exergen failed to introduce substantial evidence to support the jury’s finding that the
’813 and ’685 patents are infringed.
The CAFC began its discussion of inequitable conduct:
The district court denied SAAT’s motion to add inequitable conduct as an
affirmative defense and counterclaim against the ’813 and ’685 patents, holding that
SAAT’s proposed pleading failed to allege inequitable conduct with particularity under
Rule 9(b). On appeal, SAAT focuses only on its allegations concerning the ’685 patent.
APART from the legal inequitable conduct issues, one notes that SAAT brought up material
on Exergen's website as prior art which should have been cited to the patent examiner.
Think about that for a moment. From the CAFC decision:
44. In addition, during the prosecution of the ’685 patent application,
Exergen made a number of arguments to the PTO to overcome rejections
of the pending claims based upon various prior art references related to
tympanic temperature detectors. For example, in an Amendment filed on
July 31, 2000, the following statements were made to the PTO:
What was nonobvious . . . was that reliable temperature
measurements could be obtained from the forehead by
extending techniques initially developed for the tympanic
membrane. What had not been generally appreciated by
those skilled in the art of temperature measurement was that
the superficial temporal artery . . . provides an exceptionally
reliable temperature reading.
45. These arguments made to the PTO were contradicted by
statements from Exergen’s own website, such as the following statement
which appeared on the website at the time of the July 31, 2000
The temporal artery area has a long history of temperature
measurement, dating back to the early centuries before
Christ with the first recorded references to palpation of the
head for fever assessment.
46. Thus, while Exergen acknowledged on its website that the
temporal artery has a long history of temperature measurement, Exergen
misrepresented to the PTO that no such history existed and omitted any
reference to the website. The misrepresentation and omission were
material to the patentability of the ’685 patent because the information was
not cumulative to the information already of record in the prosecution
history of the ’685 patent, and it refutes, or is inconsistent with, a position
taken by Exergen in asserting an argument of patentability. SAAT is
informed and believes, and therefore alleges, that the misrepresentation
and omission were made with the intent to deceive the PTO to issue the
SAAT made its first mistake in citing the law of the First Circuit, rather
then Federal Circuit law. SAAT cited McGinty v. Beranger
Volkswagen, Inc., 633 F.2d 226, 228 (1st Cir. 1980). The CAFC noted a different
CA1 case and noted the irrelevance of CA1 to the CAFC on this matter:
But see Alternative Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23, 29 (1st Cir. 2004) (requiring identification
of “the who, what, where, and when of the allegedly false or fraudulent representation”).
Contrary to SAAT’s suggestion, however, we apply our own law, not the law of the
regional circuit, to the question of whether inequitable conduct has been pleaded with
particularity under Rule 9(b).
However, there are potential problems with the CAFC analysis. Of SAAT's first failure:
First, the pleading refers generally to “Exergen, its agents and/or attorneys,”
Answer ¶¶ 40, 43, but fails to name the specific individual associated with the filing or
prosecution of the application issuing as the ’685 patent, who both knew of the material
information and deliberately withheld or misrepresented it. The pleading thus fails to
identify the “who” of the material omissions and misrepresentation. See 37 C.F.R.
§ 1.56(a) (“Each individual associated with the filing and prosecution of a patent
application has a duty of candor and good faith in dealing with the [PTO] . . . .”
(emphasis added)); id. at § 1.56(c) (identifying classes of individuals); Manual of Patent
Examining Procedures (“MPEP”) § 2001.01 (8th ed., rev.2, May 2004) (explaining that
“the duty applies only to individuals, not to organizations”).6
The CAFC's citation to the Rules and to the MPEP about the existence of a duty are
NOT citations to authority for the proposition that specific individuals must be named in a
pleading. IRONICALLY, the CAFC implicitly seems to be reaching back to REGIONAL circuit law:
**Alternative Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23, 29 (1st Cir. 2004)
(requiring identification of “the who, what, where, and when of the allegedly false
or fraudulent representation”).
**As the Seventh Circuit has held, the “circumstances” in Rule 9(b) must be set forth with
“particularity,” i.e., they “must be pleaded in detail”—“[t]his means the who, what,
when, where, and how” of the alleged fraud. DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990).
That the CAFC was not relying on CAFC law is made clear in the text:
Based on the foregoing, and following the lead of the Seventh Circuit in fraud cases, we hold that in
pleading inequitable conduct in patent cases, Rule 9(b) requires identification of the
specific who, what, when, where, and how of the material misrepresentation or omission
committed before the PTO.
This might be an appropriate topic for en banc review.
Of the website business, one might wish to ask Jack Webb of Dragnet about the
No facts are alleged from which one can reasonably infer that, at the
time of the allegedly false statement, the individual who made this statement to the PTO
was aware of an allegedly contradictory statement on Exergen’s website. See
Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 267 F.3d 1370, 1382 (Fed. Cir. 2001)
(“The mere possibility that material information may exist will not suffice to give rise to a
duty to inquire; sufficient information must be presented to the attorney to suggest the
existence of specific information[,] the materiality of which may be ascertained with
reasonable inquiry.” (emphases added)); Am. Hoist & Derrick Co. v. Sowa & Sons, Inc.,
725 F.2d 1350, 1362 (Fed. Cir. 1984) (“Nor does an applicant for patent, who has no
duty to conduct a prior art search, have an obligation to disclose any art of which, in the
[district] court’s words, he ‘reasonably should be aware.’”).
One understands the lack of a duty to inquire about the work of OTHER people, but does one get
a walk on what the corporate entity itself says?
A problem with the gestalt of Exergen is that it tends to give incentive to purposeful ignorance.
To avoid IC problems, set up things so that this guy certainly knew X, but that guy didn't. We don't remember who did the
website (or who read it), and there is no way you, as a third party, can know these things. This approach make Torvalds
look like a genius.
The problem is that this is NOT the way a patent system is supposed to work. We want people
to read things.
Of course, we don't want everyone filing pleadings of inequitable conduct either. Maybe there is a better approach
**UPDATE. 12 Feb 2010.
271Blog on Sabasta v. Buckaroos, Inc., No. 4:06-cv-180 (S.D. Iowa, February 3, 2010) :
The Federal Circuit has squarely held that “a trial court may infer deceptive intent based on a showing that a patentee withheld references with which it was intimately familiar and which were inconsistent with its own patentability arguments to the PTO.” Agfa Corp., 451 F.3d at 1378.
IPBiz notes that finds of inequitable conduct on summary judgment are rare.