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Federal Circuit to consider overhaul of inequitable conduct standards en banc
April 26, 2010

In an order today, the Federal Circuit granted rehearing en banc in Therasense, Inc. v. Becton, Dickinson & Co. The order indicates the court will be reconsidering its precedent on virtually the entire gamut of issues relating to inequitable conduct. Specifically, the questions presented are:

  1. Should the materiality-intent-balancing framework for inequitable conduct be modified or replaced?
  2. If so, how? In particular, should the standard be tied directly to fraud or unclean hands? 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), overruled on other grounds by Standard Oil Co. v. United States, 429 U.S. 17 (1976); Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240 (1933). If so, what is the appropriate standard for fraud or unclean hands?
  3. What is the proper standard for materiality? What role should the United States Patent and Trademark Office's rules play in defining materiality? Should a finding of materiality require that but for the alleged misconduct, one or more claims would not have issued?
  4. Under what circumstances is it proper to infer intent from materiality? See Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988) (en banc).
  5. Should the balancing inquiry (balancing materiality and intent) be abandoned?
  6. Whether the standards for materiality and intent in other federal agency contexts or at common law shed light on the appropriate standards to be applied in the patent context.

The court explicitly allows for the filing of amicus briefs without leave of court, and also specifically invites the USPTO to file such a brief.

For the order granting rehearing en banc, click here.

For the original panel opinion (affirming the district court's finding of inequitable conduct), click here.

Therasense owns a patent relating to diabetes testing strips. Claim 1 of the patent is representative (emphasis added):

1. A single use disposable electrode strip for attachment to the signal readout circuitry of a sensor to detect a current representative of the concentration of a compound in a drop of a whole blood sample comprising: a) an elongated support having a substantially flat, planar surface, adapted for releasable attachment to said readout circuitry; b) a first conductor extending along said surface and comprising a conductive element for connection to said readout circuitry; c) an active electrode on said strip in electrical contact with said first conductor and positioned to contact said whole blood sample; d) a second conductor extending along said surface comprising a conductive element for connection to said read out circuitry; and e) a reference counterelectrode in electrical contact with said second conductor and positioned to contact said whole blood sample, wherein said active electrode is configured to be exposed to said whole blood sample without an intervening membrane or other whole blood filtering member and is formed by coating a portion of the first conductor with a mixture of or layers of an enzyme which catalyzes a redox reaction with said compound in whole blood and a mediator compound which transfers electrons from said redox reaction to said first conductor to create a current representative of the concentration of said compound in said whole blood sample; and wherein said active electrode which is formed on a portion of said conductor is not in electrical contact with said reference counterelectrode but these electrodes are so dimensioned and positioned that they can be simultaneously completely covered by a single drop of whole blood such that this drop provides an electrical path between these electrodes to support said current representative of the concentration of said compound in said whole blood sample.

During prosecution of the applications that led to the patent, Therasense had difficulty overcoming a prior art patent. After 13 years of prosecution, Therasense advanced the argument that the reference did not teach use of a non-membranous strip because the reference stated such a membrane was "optionally, but preferably" present in its disclosure. In an interview, the examiner took the position that if Therasense provided "an affidavit or other evidentiary showing that at the time of the invention such a membrane was considered essential [for whole blood, it] would overcome [the '382 patent's] teaching." After this interview, Therasense submitted a declaration and affidavit along these lines. The declaration stated (emphases added):

[B]ased on his historical knowledge he is confiednt [sic] that on the filing date of the earlist [sic] application leading to the present application on June 6, 1983 and for a considerable time thereafter one skilled in the art would have felt that an active electrode comprising an enzyme and a mediator would require a protective membrane if it were to be used with a whole blood sample. Therefore, he is sure that one skilled in the art would not read lines 63 to 65 of column 4 of U.S. Patent No. 4,545,382 to teach that the use of a protective membrane with a whole blood sample is optionally or merely preferred.

The affidavit stated (emphases added):

The art continued to believe [following the '382 patent] that a barrier layer for whole blood sample was necessary for a considerable period. . . .
One skilled in the art would not have read the disclosure of the Higgins patent (U.S. 4,545,382) as teaching that the use of a protective membrane with whole blood samples was optional. He would not, especially in view of the working examples, have read the "optionally, but preferably" language at line 63 of column [4] as a technical teaching but rather mere patent phraseology
. This is supported by the Declaration under 37 C.F.R. 1.132 of Gordon Sanghera which accompanies the present amendment.
. . . .
. . . The applicants have established that a new claim limitation supported by the present application provides a patentable distinction over U.S. Patent No. 4,545,382, the key reference in the prosecution of the present application and its predecessors. There is no teaching or suggestion of unprotected active electrodes for use with whole blood specimens in this patent or the other prior art of record in this application.

On their face, these declarations are not problematic. However, in 1994, during a revocation proceeding involving the related European patent with a virtually identical specification, Therasense made the following statements in a brief (emphases added):

Contrary to the semipermeable membrane of D1, the protective membrane optionally utilized with the glucose sensor of the patent is [sic] suit is not controlling the permeability of the substrate (as set forth above under IV.2., in the membrane of D1 the permeability for the substrate must be kept on a low value to achieve a linear relationship between the measures [sic] currency and the substrate concentration in the test solution). Rather, in accordance with column 5, lines 30 to 33 of the patent in suit:

"Optionally, but preferably when being used on live blood, a protective membrane surrounds both the enzyme and the mediator layers, permeable to water and glucose molecules."

See also claim 10 of the patent in suit as granted according to which the sensor electrode has an outermost protective membrane (11) permeable to water and glucose molecules. Finally, see Example 7 in column 10, lines 19 to 26 reporting that by using such a protective membrane the response time did not increase but from 24 to 60 sec. (without membrane) to 36 - 76 sec. (with membrane). Accordingly, the purpose of the protective membrane of the patent in suit, preferably to be used with in vivo measurements, is a safety measurement to prevent any course [sic] particles coming off during use but not a permeability control for the substrate.

In 1995, Therasense submitted another brief in the same proceeding, stating (emphases added):

"Optionally, but preferably when being used on live blood, a protective membrane surrounds both the enzyme and the mediator layers, permeable to water and glucose molecules."

It is submitted that this disclosure is unequivocally clear. The protective membrane is optional, however, it is preferred when used on live blood in order to prevent the larger constituents of the blood, in particular erythrocytes from interfering with the electrode sensor. Furthermore it is said, that said protective membrane should not prevent the glucose molecules from penetration, the membrane is "permeable" to glucose molecules.

The district court held these statements regarding the "optionally, but preferably" language in Therasense's disclosure contradicted the arguments made in the 1997 declaration and affidavit, a finding the Federal Circuit noted was "not clearly erroneous," and also "manifestly correct." The briefs including these statements were not disclosed to the USPTO during the prosecution of the U.S. patent.

The Federal Circuit rejected the contention that lawyer statements regarding prior art are not material to patentability. While some cases have made statements to that effect, "[n]one of these cases involved a situation in which contradictory arguments made in another forum were withheld from the PTO. They do not speak to the applicant's obligation to advise the PTO of contrary representations made in another forum. . . . An applicant's earlier statements about prior art, especially one's own prior art, are material to the PTO when those statements directly contradict the applicant's position regarding that prior art in the PTO."

After finding the nondisclosure of the EPO arguments material, the court then moved to the question of intent. The district court made five relevant findings:

(1) that the statements made to the PTO concerning the prior art '382 patent were absolutely critical in overcoming the examiner's earlier rejections of the claims of the '551 patent; (2) that the EPO statements would have been very important to an examiner because they contradicted the representations made to the PTO; (3) that Pope and Dr. Sanghera both knew of the EPO statements and consciously withheld them from the PTO; (4) that neither Pope nor Dr. Sanghera provided a credible explanation for failing to submit the EPO documents to the PTO; and (5) that Pope’s and Dr. Sanghera’s explanations for withholding the EPO documents were so incredible that they suggested intent to deceive.

The Federal Circuit noted that first and third are undisputed, and the second is not clearly erroneous for the reasons discussed previously. As to the fourth and fifth, the district court's findings are based on the credibility of the witnesses, which are "virtually unreviewable" at the appellate level. Based on these findings, the Federal Circuit affirmed the district court's inequitable conduct finding.

Judge Linn dissented. In his opinion, a good faith basis for the nondisclosure was provided, and such an explanation "will defeat a charge of inequitable conduct if it is 'plausible.'" Here, in his review of the record, Judge Linn believed the individuals with the duty to disclose had the subjective belief that the information was not material when it was withheld, and that should have been sufficient to defeat the inequitable conduct claim.

To read the full panel opinion in Therasense, Inc. v. Becton, Dickinson & Co., click here.

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