News Item
No inequitable conduct under Therasense Standard(12/5/11)
We previously reported here that the United States Court of Appeals for the Federal Circuit had ruled in the Therasense case that “but-for” materiality is required to establish inequitable conduct. The court stated “[w]hen 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.” The Therasense court also recognized that conduct may be material in the case of affirmative acts of egregious misconduct, such as the filing of an unmistakably false affidavit. In Powell v. Home Depot, the accused infringer argued that the patentee had committed inequitable conduct because he had failed to update a petition to make special. The accused infringer lost on appeal because the conduct was neither material nor egregious misconduct.
In the more usual case involving inequitable conduct, the accused infringer argues that the patentee committed inequitable conduct because the patentee or his representatives intentionally failed to disclose material prior art to the patent examiner. A “petition to make special,” however, is a procedure for putting a patent application on a fast docket for examination due to some special circumstance that justifies taking the patent application out of the usual queue for examination. It is also referred to as “accelerated examination.”
In Mr. Powell’s case, the basis of the petition to make special was his belief that he was obliged to manufacture and supply to Home Depot saw guards for radial arm saws. The saw guards embodied the claims sought in his patent application. Home Depot, however, decided to buy the saw guards from another manufacturer, Industriaplex, after Mr. Powell filed the petition to make special but before the petition was granted. Mr. Powell did not tell the Office that he was no longer obliged to manufacture the saw guards and therefore the petition should be withdrawn. The trial court decided that this omission was intentional and material but that a balance of the equities prevented a finding of inequitable conduct.
The Federal Circuit applied the new Therasense standard for inequitable conduct and held, without any further explanation, that “Mr. Powell’s conduct obviously fails the but-for materiality standard and is not the type of unequivocal act, ‘such as the filing of an unmistakably false affidavit,’ that would rise to the level of ‘affirmative egregious misconduct.’”
This sort of misconduct by a patent applicant therefore may not be punished by the blunt weapon of making the patent unenforceable. It may be punished in other ways. The Patent and Trademark Office has the power to discipline attorneys and agents who make false statements. In addition, criminal penalties may be applicable to both attorneys/agents and their clients.
Mr. Powell was successful in more than defeating the inequitable conduct affirmative defense. The Federal Circuit affirmed other decisions in favor of Mr. Powell, such as a verdict of damages for infringement and a finding of willful infringement against Home Depot and the judge’s award of enhanced damages and attorney’s fees to Mr. Powell.