Last Month at the Federal Circuit - June 2011

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In this issue: Reissue Claims Rejected for Impermissibly Recapturing Subject Matter Surrendered During Prosecution of Original Patent Application; Evidence of Secondary Considerations Can Be Commensurate with the Scope of the Claims Without Testing or Selling Every Conceivable Embodiment of the Claims, but There Must Be a Nexus to the Novel Aspects of the Claimed Invention; A Supplier Has Standing to Bring a DJ Action When the Patentee’s Actions Imply That the Supplier Contributorily Infringes; A Combination of Ingredients from Two Separate Solutions Previously Used Together as Part of an Overall Treatment Regimen Is Not Necessarily Obvious; Failure to Pay Royalties Does Not Convert Authorized Sale of Licensed Product into Unauthorized Sale Under Exhaustion Doctrine; Standing Under California’s Unfair Competition Laws Only Requires an Allegation of an Injury in Fact That Was Caused by Defendants’ Unfair Competition; and Federal Circuit En Banc Tightens the Standards for Inequitable Conduct for Both Intent and Materiality.

In Therasense, Inc. v. Becton, Dickinson & Co., Nos. 08-1511, -1512, -1513, -1514, -1595 (Fed. Cir. May 25, 2011) (en banc), the Federal Circuit, sitting en banc, vacated the district court’s finding of unenforceability due to inequitable conduct and announced tightened standards for both the intent and materiality prongs of the inequitable conduct analysis. The Court outlined the historical divergence of inequitable conduct from the doctrine of unclean hands and the fluctuations of the standards for intent and materiality. Citing numerous issues of unintended consequences, the majority chose to “now tighten[] the standards for finding both intent and materiality in order to redirect a doctrine that has been overused to the detriment of the public.” Slip op. at 24. First, as to intent, the Court held that an accused infringer must prove by clear and convincing evidence that the patentee acted with the specific intent to deceive the PTO, noting that the gross negligence and “should have known” standards are insufficient. Moreover, the Court dismissed the “sliding scale” to infer intent from materiality, instead holding that the district court should weigh the evidence of intent to deceive independent of its analysis of materiality. Second, with respect to materiality, the Court held that, as a general matter, the materiality required to establish inequitable conduct is but-for materiality such that the district court must determine whether the PTO would have allowed the claim if it had been aware of the undisclosed reference. Finally, the Court carved out an exception to the but-for materiality test for affirmative egregious misconduct, such as filing an unmistakably false affidavit. Accordingly, the Court vacated the district court’s opinion and remanded for proceedings consistent with the new standard for inequitable conduct. See the full summary in this issue.

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