The Duty Of Candor: Letting The Truth Shine

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 “Three things cannot hide for long: the Moon, the Sun, and the Truth.”1 The Patent Trial and Appeal Board (“PTAB”) relies on the truth coming to light to resolve disputes in post-grant proceedings in a “just, speedy, and inexpensive manner.”2 Beyond a mere requirement to tell the truth, parties involved in a Patent and Trademark Office (“PTO”) proceeding have a duty of candor and good faith.3 This “duty of candor and good faith to the Office as honesty before the Office is essential to the integrity of the proceedings.”4 Although the duty of candor may appear to be a simple concept, some practitioners have failed to appreciate the all-encompassing nature of this ethical duty. While the PTAB has not written many opinions specifically addressing ethical issues in post-grant proceedings, guidance has been provided regarding a party’s duty of candor in three seemingly routine aspects in a post-grant proceeding: (1) filings; (2) discovery; and (3) notifications. In turn, the party’s duty of candor allows the PTAB to assume the truthfulness of the party’s representations for these routine procedures.

This duty of candor applies to any arguments or evidence submitted by a party during a post-grant proceeding and continues to exist (even to former arguments and evidence) as the proceeding progresses.5 Although the PTAB has not addressed the standard for a party’s duty of candor, the Board of Patent Appeals and Interference (“BPAI”) decision in Bayer Cropscience S.A. v. Syngenta Ltd. suggests that the PTAB will likely presume parties have acted in good faith.6 In an interference proceeding, one of the parties requested that the opposing party produce unredacted versions of produced documents.7 The BPAI recognized that underlying this request was an unstated premise that Bayer breached their duty of candor by redacting relevant information.8 Rather than determine whether the redactions to the produced documents were appropriate, the BPAI emphasized that the PTO must be able to rely on attorneys to act in an “honest and forthright manner in their dealings with the PTO” during discovery.9 The BPAI, accordingly, did not require production of the unredacted documents based on the presumption that the parties in making arguments and submitting evidence acted in accordance with the duty of candor.10 Similar to the BPAI’s presumption that parties have acted in good faith, the PTAB is likely to presume that parties are acting in good faith when submitting arguments and evidence.

Filings

The PTAB may also presume that a party’s former arguments or filings remain accurate during the entirety of the proceeding. The PTAB recognizes that practitioners are under a continuing duty of candor to update any changes in their pre-existing arguments and filings. In Innolux Corp. v. Semiconductor Energy Lab. Co., the PTAB relied on this continuing duty in denying a patentee’s motion for additional discovery regarding the real party in interest.11 The patentee argued for additional discovery to determine whether the petitioner was the sole real party-in-interest representing the petitioner.12 Because the petitioner made several representations that it was the only real party in interest, the PTAB determined that the patentee had not met its burden to show additional discovery was necessary.13

The PTAB further requires that practioners exhibit a duty of good faith by following proper procedure in each of its filings with the court. In CBS Interactive Inc. v. Helferich Patent Licensing, the patentee requested a rehearing of an order expunging filed non-compliant papers.14 The patentee essentially argued that it acted “in good faith” when it “mistakenly” filed papers that did not follow proper procedure.15 Rejecting the motion, the Board noted that the patentee had previously filed three other papers that were in violation of the rules.16 Given the totality of the circumstances, the Board was not convinced that the patentee acted “in good faith” when submitting the non-compliant papers.17

Discovery

In responding to discovery requests, a party must serve all relevant information–including information inconsistent with a party’s position advanced at the proceeding.18 The producing party, however, is not required to specify the relevance of the inconsistent information.19 This requirement extends to inventors, corporate officers, and even persons involved in the preparation or filing of relevant, responsive information.20

Underlying these responsive productions is an expectation that the parties are exercising their duty of candor in complying with discovery obligations. This expectation allows the PTAB to assume a party’s responsive production includes all relevant information. For example, in Corning Inc. v. DSM IP Assets, the petitioner filed a motion requesting that the patentee produce the following additional discovery: (1) documents related to testing and (2) results from testing performed on products that the petition asserted as prior art.21 22 In response, the patentee contended that it previously produced any responsive information under these two categories. Because the patentee confirmed that no other relevant information existed, the PTAB denied the petitioner’s request for additional discovery.

Notifications

The regulations governing post-grant proceedings require that parties identify any other judicial or administrative matter that would either affect or be affected by the PTAB proceeding.23 In the common scenario that a party files an inter partes review (“IPR”) during the pendency of a district court litigation over the asserted patents, the party must notify the PTAB about this concurrent district court litigation.24

According to the district court in Virginia Innovation Sciences, Inc. v. Samsung Elecs. Co., a party’s duty of candor also extends to notifying the district court of a related post-grant proceeding. In this case, neither the plaintiff nor defendant notified the district court of an IPR petition that defendants submitted after filing a summary judgment motion seeking invalidity of the asserted patents.25 While the IPR petition was pending, the district court issued a ruling on the patent’s validity without knowledge that the exact same issues were before the PTAB.26 The district court eventually became apprised of the IPR proceeding when the plaintiffs filed a motion for reconsideration on the ruling based on the PTAB’s analysis of the asserted patents in the IPR proceeding.27 The district court denied the motion for reconsideration and focused on a party’s duty of candor.28 The court emphasized that a party’s duty of candor also encompasses a duty to advise a district court of any development that may affect a litigation’s outcome.29 According to the court, the parties must be truthful on matters material to their disposition for the court to properly dispense justice.30 “Even the slightest accommodation of deceit or lack of candor in any material respect quickly erodes the validity of the [judicial] process.”31 Here, both parties failed to comply with this general duty of candor because the IPR proceeding was clearly a “development which may conceivably affect the outcome of the litigation.”32

Although seemingly simple, a party’s representation during a PTAB proceeding is intertwined with a strong duty of candor. This duty of candor allows the PTAB to appropriately assume that a party’s representation is truthful. Even the most routine procedures–such as filings, discovery, and notifications–stand firmly on this interplay. Unlike the Sun and the Moon which can hide behind the PTAB’s courtroom walls, the party’s strong ethical duty of candor must come to light during the proceedings inside the courtroom walls. To do otherwise would detract from the post-grant proceeding’s primary virtue: to determine a patent’s validity in a just, speedy, and inexpensive manner.

1ANNA VOIGT AND NEVILL DRURY, A WAY FORWARD: SPIRITUAL GUIDANCE FOR OUR TROUBLED TIMES (2003), 110 (quoting Buddha).
237 C.F.R. § 42.1(b) (2013) (“Construction. This part shall be construed to secure the just, speedy, and inexpensive resolution of every proceeding.”).
337 C.F.R. § 42.11.
4Rules of Practice for Trials before the Patent Trial and Appeal Board and Judicial Review of Patent Trial and Appeal Board, 77 Fed. Reg. 157, 48618, § 42.11 (Aug. 14, 2012).
5Innolux Corp. v. Semiconductor Energy Lab. Co., IPR2013-00028, 2013 WL 5970147, at *2 (Patent Tr. & App. Bd. May 21, 2013) (“[T]hose same practioners . . . understand that they are under a continuing duty of candor to update any changes in the representations that they have made.”).
6See Bayer Cropscience S.A., Pat. Int. No. 105255, 2005 WL 3121463, at *4 (B.P.A.I. Aug. 16, 2005) (“[L]itigants and their counsel always have a duty of candor toward the tribunal before which they appear. The PTO relies, and should be able to rely, upon attorneys registered to practice before it to act in an honest and forthright manner in their dealings with the PTO. . . . Because of this very strong duty to be candid and act in good faith before the PTO, there is, in effect, a presumption that the parties in making arguments and submitting evidence to the PTO have acted in good faith and in accordance with the duty of candor.”) (citations omitted).
7Id. at *2.
8Id. at *4 (“There is an unstated premise underlying Syngenta’s request for the unredacted documents. The premise is that Bayer, in redacting the reports, may have acted in bad faith and in breach of the duty of candor by redacting relevant information, particularly information which contradicts or is inconsistent with positions previously asserted by Bayer.”).
9Id.
10Id. (“[L]itigants and their counsel always have a duty of candor toward the tribunal before which they appear. The PTO relies, and should be able to rely, upon attorneys registered to practice before it to act in an honest and forthright manner in their dealings with the PTO. . . . Because of this very strong duty to be candid and act in good faith before the PTO, there is, in effect, a presumption that the parties in making arguments and submitting evidence to the PTO have acted in good faith and in accordance with the duty of candor.”) (citations omitted).
11Innolux Corp., 2013 WL 5970147, at *2 (“[T]hose same practioners . . . understand that they are under a continuing duty of candor to update any changes in the representations that they have made.”).
12Id. at *1 (“SEL seeks additional discovery relating to whether Innolux identified all of the real parties-in-interest in connection with the filing of the petition.”).
13Id. at *2 (“As Innolux points out in its opposition, the record includes representations from its registered practioners . . . that the real party-in-interest information is correct and has not changed, and that those same practioners . . . understand that they are under a continuing duty of candor to update any changes in the representations that they have made.”).
14CBS Interactive Inc., IPR2013-00033, 2013 WL 5970154, at *1 (Patent Tr. & App. Bd. Aug. 30, 2013). The party requested a rehearing of two expunged non-compliant papers. Id. at *2. The first-filed non-compliant paper contained single-spaced footnotes, rather than double-spaced footnotes as required by the PTAB Trial Practice and Procedure. Id. The PTAB indicated that one of the footnotes in the paper filled “almost half of the page.” Id. The second-filed non-compliant paper was filed untimely, and the party failed to seek an extension of time to file the paper. Id.
15Id. (“Rather, Helferich in essence argued that it ‘mistakenly,’ but ‘in good faith,’ believed that it was following the proper procedure when it was filing each of the papers.”).
16Id. at *1-*2.
17Id. at *3 (“We are not persuaded by Helferich’s arguments in view of the totality of the circumstances. At best, Helferich’s arguments possibly could have merit if each noncompliant paper was viewed individually as a first improper filing.”).
1837 C.F.R. § 42.51(b)(1)(iii) (“Unless previously served, a party must serve relevant information that is inconsistent with a position advanced by the party during the proceeding concurrent with the filing of the documents or things that contains the inconsistency.”).
1977 Fed. Reg. 157, 48639 (“§42.51(b)(1)(iii) as adopted, limits the scope by: . . . (3) eliminating the requirement that a party specify the relevance of the information[.]”).
2037 C.F.R. § 42.51(b)(1)(iii) (“Unless previously served, a party must serve relevant information that is inconsistent with a position advanced by the party during the proceeding concurrent with the filing of the documents or things that contains the inconsistency. . . . This requirement extends to inventors, corporate officers, and persons involved in the preparation or filing of the documents or things.”).
21Corning Inc., 2013 WL 6327766, at *1 (Patent Tr. & App. Bd. Oct. 16, 2013) (“Corning’s motion requests that the Board require DSM to produce three categories of discovery: (1) documents related to the testing discussed in the declarations relied upon in DSM’s patent owner response, described more specifically in Appendix A (‘Category 1’) (Mot. 1-3); (2) results from testing DSM performed on coatings that are owned by DSM and are used as prior art in these proceedings (‘Category III’) (Mot. 3-4); and (3) an employee-witness with personal or supervisory knowledge.”).
22The parties also requested a third category of discovery requesting an employee-witness with personal or supervisory knowledge. Id. at *1. Due to the burden, threat to schedule, and the argument going towards the weight and credibility of the evidence rather than discovery, the Board did not require the patentee to provide an employee-witness. Id. at *2.
2337 C.F.R. § 42.8(b)(2) (“Related matters. Identify any other judicial or administrative matter that would affect, or be affected by, a decision in the proceeding.”).
24See 37 C.F.R. § 42.8(b)(2).
25Virginia Innovation Sciences, Inc., 983 F.Supp.2d 713, 751 (E.D. Va. May 2, 2014) (“Although the parties to this litigation notified the PTAB of the August 13, 2013 summary judgment motion pending before this Court, neither party advised this Court of the concurrent IPR petitions or requested a stay of Court proceedings pending a decision from the PTAB.”) (emphasis in original).
26Id. (“Thus, on January 8, 2014, this Court issued its 72 page Opinion and Order ruling on the validity of the patents-in-suit without any knowledge that the exact same issues were the subject of an IPR petition pending before a three judge panel of the PTAB.”).
27Id. (“Approximately one week later, the Court was finally apprised of the IPR proceedings when Plaintiff filed its motion for reconsideration of the Court’s summary judgment ruling. Plaintiff’s brief in support of its motion highlights the substantive analysis including within the PTAB’s decisions and argues that such rulings constitute ‘new evidence that was not available prior to this Court’s Summary Judgment order.’”) (citations omitted).
28See id. at 751-62, 767.
29Id. at 760 (“By not notifying the Court, counsel have, at the very least, failed to comply with their general duty of candor and good faith to this Court because the IPR proceeding was clearly a ‘development which may conceivably affect the outcome of the litigation’–a fact best demonstrated by Plaintiff’s filing of the motion for reconsideration.”) (citations omitted).
30Id. at 755 (“Our adversary system for the resolution of disputes rests on the unshakable foundation that truth is the object of the system’s process which is designed for the purpose of dispensing justice. However, because no one has an exclusive insight into truth, the process depends on the adversarial presentation of evidence, precedent, and custom, and argument to reasoned conclusions–all directed with unwavering effort to what, in good faith, is believed to be true on matters material to the disposition.”).
31Id.
32Id. (citations omitted).

 

Topics:  Duty of Candor, Ethics, Good Faith, Patent Trial and Appeal Board, Patents, Post-Grant Review, USPTO

Published In: Civil Procedure Updates, Intellectual Property Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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