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US Patent Office Proposes Adopting Therasense Standard


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: July 21, 2011 @ 10:32 am
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Earlier today the United States Patent and Trademark Office published a Federal Register Notice proposing amendments to Rule 56 and Rule 555, and requesting public comment.  Titled Revision of the Materiality to Patentability Standard for the Duty to Disclose Information in Patent Applications, the Notice pertains to the recent Federal Circuit decision in Therasense v. Becton and the USPTO intention to adopt the standard for materiality required to establish inequitable conduct as defined in Therasense. 

In view of Therasense, the Patent Office is proposing to revise the materiality standard for the duty to disclose information to the Office in patent applications and reexamination proceedings.  It is the belief of the Patent Office that the Therasense standard will reduce the frequency with which applicants and practitioners are being charged with inequitable conduct, thereby reducing the incentive for applicants to submit marginally relevant information to the Office.  Thus, the Therasense standard should curtail the practice of filing Information Disclosure Statements that refer to boxes full of prior art that is of marginal significance, allowing patent examiners to focus on that prior art that is most relevant.  The USPTO adopting the Therasense standard could, as a result, lead to improved patent quality and even a streamlining of prosecution in at least some cases.

The Therasense decision concerns the standards for inequitable conduct, including the materiality and intent prongs.  In a nutshell, inequitable conduct is found when there has been abusive activity in obtaining a patent; when found any patent obtained is rendered unenforceable.  The Therasense decision significantly altered both the materiality and intent prongs of the inequitable conduct analysis, which has lead the Patent Office to seek a change in the duty of candor owed to the USPTO by those substantively involved in a patent application.  The USPTO seems poised to adopt the Therasense standard, thereby modifying Rule 56 and Rule 555 so that there is but one single standard.

Chief Judge Rader, who delivered the opinion of the Federal Circuit in Therasense, explained that when determining whether inequitable conduct has been committed the materiality prong is a “but-for” test. He also breathed real life into the intent requirement, saying: “Proving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive.” Importantly, the Federal Circuit declined to adopt the USPTO version of the duty of candor outlined in Rule 56, instead opting for a more patentee friendly standard that says that only that prior art that would lead to a good rejection is material and needs to be disclosed.

With respect to materiality Chief Judge Rader explained:

This court holds that, as a general matter, the materiality required to establish inequitable conduct is but-for materiality. When 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. Hence, in assessing the materiality of a withheld reference, the court must determine whether the PTO would have allowed the claim if it had been aware of the undisclosed reference. In making this patentability determination, the court should apply the preponderance of the evidence standard and give claims their broadest reasonable construction.

The Federal Circuit did, however, recognize that in particularly egregious situations where there is a carefully coordinated scheme to defraud but-for materiality is not necessary. Rader explained:

Although but-for materiality generally must be proved to satisfy the materiality prong of inequitable conduct, this court recognizes an exception in cases of affirmative egregious misconduct. This exception to the general rule requiring but-for proof incorporates elements of the early unclean hands cases before the Supreme Court, which dealt with deliberately planned and carefully executed schemes to defraud the PTO and the courts. When the patentee has engaged in affirmative acts of egregious misconduct, such as the filing of an unmistakably false affidavit, the misconduct is material.

(citations and quotations omitted).

The caveat for particularly egregious situations has lead some to characterize the Therasense standard for materiality as a “but-for-plus” standard.  The standard is “but for” materiality except in egregious cases of affirmative misconduct, which is where the “plus” comes into play.

As pro-patentee as the ruling in Therasense was, the decision did leave the USPTO in a difficult position.  Rule 56 was still on the books, which meant that the duty of candor demanded by the Patent Office was different than the duty the Federal Circuit explained applicants and representatives owed the Patent Office in order to avoid inequitable conduct.  As a result, the day after the Federal Circuit decision in Therasense the USPTO announced that it would be carefully studying the important en banc decision in Therasense to assess how it may impact agency practices and procedures.

The Patent Office is now taking that first step toward reconciling USPTO rules with the Federal Circuit decision in Therasense.  The USPTO proposal would do the following:

  • Relative to 37 C.F.R s 1.56(b).  The proposed to be amended would provide that information is material to patentability if it is material under the standard set forth in Therasense, and that information is material to patentability under Therasense if:  (1) the Office would not allow a claim if it were aware of the information, applying the preponderance of the evidence standard and giving the claim its broadest reasonable construction; or (2) the applicant engages in affirmative egregious misconduct before the Office as to the information.
  • Relative to 37 C.F.R. s 1.555(b). The proposed to be amended would provide that information is material to patentability if it is material under the standard set forth in Therasense, and that information is material to patentability under Therasense if:  (1) the Office would not find a claim patentable if it were aware of the information, applying the preponderance of the evidence standard and giving the claim its broadest reasonable construction; or (2) the patent owner engages in affirmative egregious misconduct before the Office as to the information.

Under the proposed amendments to the rules the Patent Office makes clear in the notice that mere nondisclosure of information to the Office nor failure to mention information in an affidavit, declaration, or other statement to the Office constitutes affirmative egregious misconduct.

The Notice further explains that the Patent Office recognizes the tension inherent in a disclosure standard based on unpatentability.  The concern here is that given the definition of materiality some might presume that since we only need to disclose prior art that would form the basis of a good rejection some might believe that submitting any prior art could be deemed an admission that one or more claims as submitted are unapatentable.  To alleviate those potential concerns the Notice makes clear that: “While applicants should avoid drafting claims that are unpatentable in the face of the prior art they disclose, the Office will not regard information disclosures as admissions of unpatentability for any claims in the application.” (emphasis added)

Indeed, there has long been a requirement that patent attorneys and applicants only seek claims that they believe they are entitled to receive. Now that the standard for materiality has changed and the intent prong means actual intent to deceive, it would be possible for applicants to simply not submit any prior art as long as they truthfully believe that the prior art that they know about could not be used to form the basis of a valid rejection. Perhaps taking this into consideration the PTO Notice explains:

The Office… appreciates and expects that patent applicants are inclined to be forthcoming and submit information beyond that required by proposed Rule 56, in an effort to assist examiners in performing their duties. The Office wishes to facilitate and encourage such efforts by applicants.

Additionally, the Office is considering further actions that may provide an incentive for applicants to assist the Office by explaining/clarifying the relationship of prior art to the claimed invention.  While this form of information would not implicate the standard of materiality as that term has been defined in Therasense, and therefore would not be required under the proposed changes to Rule 56, the Office believes it is worthwhile to explore ways to encourage applicants to submit information beyond what is required under the Therasense materiality standard and which would be helpful and useful in advancing examination.

All in all the PTO Notice looks to be good news for patent practitioners and applicants.  The PTO seems ready to adopt the Therasense standard and to preemptively admit that any prior art that is submitted will carry no admission relating to unpatentability.  The thought that the USPTO may consider ways to incentivize the submission of prior art seems hardly shocking given all of the various pilot programs ushered in by Director Kappos.  While I could speculate on what those might look like, I will hold off for the moment because it would be pure speculation.  I do anticipate that in keeping with the Kappos theme, prior to any efforts to provide incentive to disclose prior art there will be some kind of Round-table discussions or list of questions sent out to elicit comment from stakeholders.

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Posted in: Gene Quinn, IP News, IPWatchdog.com Articles, Patents, USPTO

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

 


17 comments
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  1. While I do agree with the reduction of the amount of paperwork (“boxes full of prior art “) examiners deal with, but, an important question remains. The question is a simple one of whom has the *last-word* on prior art — as the determination of, what is relevant prior art and the amount of it to be submitted.

    Such a determination cannot be one limiting the scope of what a defendant in litigation can apply to a defense to allegations of patent infringement. While a defendant bears the burden but a real danger in the law would be one where one is unable to find – submit relevant prior art because of any pre-determination *last-word*. So, I end here, it is to the best understanding I have I ask questions to avoid my own making pre-determinations whenever I can.

    It is my hope that the patent office will following the law retain a balance that will be the best measure of the quality of patents from the USPTO.

    Thanks.

  2. @New… great question… I thought the article was great, but maybe that all-important question needs to be addressed.

  3. I think we need a conversation about whether the administrative standard of conduct and the judicial standard of materiality really need to be the same. The two standards serve different purposes and they’re not affected by the same interests. By conforming its existing reasonably clear rule to the Federal Circuit’s mush, the PTO would allow the scope and meaning of Rule 56 to be controlled and developed in private litigation to which it is not a party. How can it be in the Office’s interest if the contours of its rule are really defined by infringers who don’t give a hoot about what works for the Office and what doesn’t?

  4. Better yet, the proposed standard by the Office is inherently unworkable.

    We are talking about a duty to disclose that is invoked at all times – including the time prior to any indication whatsoever from the Office as to what the Office understands the application and claims mean.

    The Office is basically defaulting a materiality standard of supplying art to the Office based on whether the Office would allow a claim, applying a preponderance of the evidence standard and giving the claim its broadest reasonable construction.

    This is logically circular, as applicants cannot know what the Office will do, does not (and cannot) determine what a claim’s broadest reasonable construction will be given and thus the proposed rule creates a duty for applicants that cannot be met.

  5. “I think we need a conversation about whether the administrative standard of conduct and the judicial standard of materiality really need to be the same.”

    Moocow,

    Having different “materiality” standards now between the USPTO (per current Rule 56) and the courts is a major problem. In fact, in the 2006 case of Digital Control v. Charles Machine Works, the Federal Circuit identified at least 4 different standards for “materiality,” including that in Rule 56; that tells you there’s a huge problem. Having different standards simply causes confusion, uncertainty, and inconsistency; that offsets any potential contervailing benefit in having the standard different between the USPTO and the courts.

  6. The bigger issue with the new “materiality” standard of Therasense if it’s adopted by the USPTO is whether SCOTUS will accept the Therasense standard, or like they’ve been want to do recently in the patent law area, go off on a “frolic and detour” of their own, including espousing (again) the inane (and Impossible) “uncompromising duty” standard of Precision Automotive. I frankly “cringe” if SCOTUS ever accepts a “materiality” case for review.

  7. EG,

    Wasn’t the issue you speak of concerening different standards the application of the different standards in the courts?

    What the poster says here is not the same.

    I agree with the poster.

    The purpose of Therasense was explicit – and was not geared to the Duty of Candor. The Court was explicitly looking only at the “atomic bomb” end of the scale of applicant actions. The Duty of Candor should deal with the full range of applicant actions. By desiring only a single standard, the Office conflates all actions brought under the Duty with the level of inequitable conduct.

    I think it noteworthy that the Office itself notes that in the past it had rejected the “but for” standard. I also think that the mention of “plus” as a reason to accept that standard is extremely weak, if only because that “plus” always had been a crime.

    I think it also noteworthy that the Office in more than one location waffles with this rule. By this, I mean they desire to place a rule governing conduct, while simultaneously they desire those affected by the rule to act above the rule. The doublespeak involved here shows that the Office has not fully thought out its role here and has confused the court-made doctrine with the pre-court governance of conduct before the administrative office.

  8. “Wasn’t the issue you speak of concerening different standards the application of the different standards in the courts?”

    Anon,

    With all due respect, Digital Controls talked about the court-made standards in conjunction with the USPTO 56 standards. Having different standards for “materiality” between the USPTO and the courts on an issue as incendiary as inequitable conduct/duty of candor is just asking for trouble, including placing patent applicants in the Catch-22 of complying with USPTO standard, only to be told by the courts they’ve not complied with the court-made standard. If the USPTO can’t effect substantive rule-making (which the standard for “materiality” is in my opinion), it would be better if Rule 56 were harmonized with the Therasense standard to, again, avoid confusion, inconsistency, etc. Frankly, I wish we would ditch inequitable conduct altogether (how about harmonizing with the ROW?), except for the most egregious instances where the applicant knowingly and deliberately violated the “duty of candor and good faith” which is what the SCOTUS cases on this issue addressed and which have now morphed into the current unrealistic standard for “materiality.” What we have now too often punishes the ignorant and the innocent in litigation.

  9. With all due respect, Digital Controls talked about the court-made standards in conjunction with the USPTO 56 standards.

    With all due respects, Eric, the context of tht discussion was still in the courts, was it not?

    You have not answered my question yet.

  10. EG,
    indeed, Digital Control exemplifies the impossible situation where conduct that’s permissible under Rule 56 is later found unlawful in the courts. That flat-out interferes with the agency’s ability (and authority) to govern the conduct of its own proceedings.
    But, you see, this problem occurs only if the judicial rule is harsher than the agency rule. Therasense now, arguably, creates a constellation where some instances of noncompliance with Rule 56 could nevertheless fall short of triggering uenenforceability in the courts – it sets a “floor” for acceptable behavior that the agency can supplement with particular requirements to meet its administrative needs. I see nothing wrong with that principle.
    Now, the proposed new rule 56 strikes me as worse than no rule at all: If all the Agency wants is Therasense, and nothing but Therasense, then why have a rule? It’s already the law – so why not move on, get rid of Rule 56 altogether, and replace it with an incentive-based system that provides prosecution benefits in return for meaningful disclosure?

  11. Anon,

    I’m not sure what question you’re asking me to address. The Federal Circuit was addressing in Digital Control what the correct standard for “materiality” was in the courts, but was also addressing whether compliance with the USPTO Rule 56 standard was sufficient. See, for example, the following passages from Digital Control:

    Although we have affirmed findings of materiality based upon the new Rule 56 standard, see, e.g., Purdue Pharma L.P. v. Endo Pharms. Inc., No. 04-1189, slip op. at 8 (Fed. Cir. Feb. 1, 2006), and Bruno Indep. Living Aids, Inc. v. Acorn Mobility Servs., Ltd., 394 F.3d 1348, 1352 (Fed. Cir. 2005), we have declined to address whether the new Rule 56 standard replaced the old “reasonable examiner” standard, see Dayco, 329 F.3d at 1363-64. That is, we have not yet determined whether the new Rule 56 is the same as the “reasonable examiner” standard of the old Rule 56, or, if the new standard is narrower, whether a misstatement that is material under the “reasonable examiner” standard, but arguably not material under the new Rule 56 standard, still meets the threshold level of materiality required for a finding of inequitable conduct.

    However, this is not the first time that this court has been faced with applying more than one standard of materiality. The inequitable conduct doctrine, a judicially created doctrine, was borne out of a series of Supreme Court cases in which the Court refused to enforce patents whereby the patentees had engaged in fraud in order to procure those patents. See Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 (1945); Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238 (1944); Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240 (1933). Although the Supreme Court did not articulate precisely what rendered a patent unenforceable, the courts generally tended to apply a doctrine somewhat akin to that of common law fraud, albeit broader. See Digital Equip. Corp. v. Diamond, 653 F.2d 701, 709 (1st Cir. 1981); Norton v. Curtiss, 433 F.2d 779, 793 (C.C.P.A. 1970). That is, the courts required a showing that the information that was misrepresented to or withheld from the PTO was material and a showing of wrongfulness, such as deceptive intent, willful misconduct, or gross negligence. In 1949, the PTO created its first version of Rule 56, prohibiting fraud before the PTO. 37 C.F.R. §1.56 (1951).

    However, neither the Supreme Court nor the PTO articulated exactly what constituted a material misrepresentation. Thus, several different standards of materiality emerged from the courts. These standards included: the objective “but for” standard, where the misrepresentation was so material that the patent should not have issued; the subjective “but for” test, where the misrepresentation actually caused the examiner to approve the patent application when he would not otherwise have done so; and the “but it may have” standard, where the misrepresentation may have influenced the patent examiner in the course of prosecution. See Am. Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1362 (Fed. Cir. 1984) (citing Plastic Container Corp. v. Cont’l Plastics of Okla., Inc., 607 F.2d 885, 899 (10th Cir. 1979); Gemveto Jewelry Co. v. Lambert Bros., Inc., 542 F. Supp. 933, 939-40 (S.D.N.Y. 1982)).

    These passages address my concern, namely have multiple standards for “materiality” be it the courts and/or the USPTO. Before en banc Therasense and the USPTO’s willingness to harmonize with the Therasense, what you have is chaos. That just fuels the continued “plague” of allegations of inequitable conduct in almost every patent litigation.

  12. Eric,

    The gist of my question is quite simple. The standard in the courts does not have to be the same standard in the Office. This was one of the key tenants of the Therasens case.

    You seem to become confused as to the application of different standards in the courts and for the courts. This has more to do with the courts not following the precedential standard for the courts and engaging in their frolics under the guise of “court discretion.”

    If you can hold in your mind the concept of the Office still having control of how to govern conduct in proceddings before that Office and the concept of the courts addressing their own created doctrines, if you can do this and then go back and read moocow’s posts, they will make much better sense.

    Moocow – I understand and concur with you.

  13. If it helps, Eric, any time you write a sentence and you are talking abou the courts, write “in the courts” after every instance of “standard”, and then when you are talking about conduct during patent prosecution that the Office has a right to control, write “before the Office.”

    It is easy to become confused with ‘standard’ when multiple standards are in play.

  14. Anon and Moocow,

    OK, we’re on the same page now, I see where you’re coming from. Believe me, I would be most happy to see Rule 56 dumped altogether, but I doubt it’s going to happen. What might be better, and like when SCOTUS came out with Bilski, the USPTO could simply issue guidelines that show they plan to “harmonize” with the en banc Therasense decision, and dump Rule 56 entirely (or streamline it greatly). That would be much easier and more straightforward.

  15. Anon and Moocow,

    Following up on my thought above, the USPTO could simply dump Rule 56 and subsume it in the IDS provisions (1.97-1.98) as the way to get the Examiner what’s needed to comply with the Therasense “but for” standard. Just a thought.

  16. Doesn’t the Therasense decision eliminate any legitimate reason for the America Invents Act’s removal of language that guards against “intent to deceive?” For anyone not familiar with this part of America Invents, see Section 20. There are seven places where phrases like “intent to deceive” have been removed from the law. This removal was over-reaching to begin with, but in light of Therasense, isn’t the only real benefit now for the person who really does intend to deceive?

  17. [...] On July 21, 2011 the United States Patent and Trademark Office published proposed changes to rules 1.56 and 1.555 in a Federal Register Notice that would effectively adopt the ”but for” materiality standard [...]

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