US Court Of Appeals Takes Inequitable Conduct To The Next Level In Therasense v. BD

US Court Of Appeals Takes Inequitable Conduct To The Next Level In Therasense v. BD

Danny Titolo is a JD candidate at Osgoode Hall Law School.

An en banc US Federal Circuit court recently delivered its opinion on inequitable conduct in Therasense, Inc. v Becton, Dickinson & Co. The majority opinion raised the standard for demonstrating an inequitable conduct defence. The new standard now requires an intention to deceive and that an omitted reference is a material reference only if "but for" its nondisclosure, the claim or patent would not have been approved.

The case involved the ‘551 patent which is a patent on disposable blood glucose test strips for measuring blood glucose levels for diabetics. An issue arose during the prosecution of the patent; Therasense failed to disclose information to the US Patent and Trademark Office (USPTO) that could potentially have negated arguments made that the patent was non-obvious in light of patent ‘382. "Non-obviousness" is the term used in US patent law to describe one of the requirements that an invention must meet to qualify for patentability.

The USPTO challenged Therasense stating that the ‘551 patent was obvious in light of the ‘382 patent. Therasense argued that the ‘382 patent was different in that it required the tested blood to contain protective membranes while the ‘551 patent did not. Therasense further argued that your average person could not reasonably infer from the ‘382 patent that blood can actually be tested without protective membranes.

The court took issue with the fact that Therasense failed to disclose briefs that were filed during the ‘382 patent prosecution that state that the use of protective membranes was optional. Since there was no explanation as to why the brief was omitted, the district court ruled that there was inequitable conduct. The Federal Circuit remanded the case asking the district court to re-evaluate whether or not inequitable conduct had taken place according to the new test.

The court established a new three-part test for inequitable conduct:

1)    The applicant must demonstrate a clear intention to deceive the USPTO. Negligence is not enough to satisfy this element.

2)    Materiality and intent are separate tests and one cannot compensate for the other.

3)    The test for materiality involves a “but-for” test of causation. In a sense, but for the omission, the USPTO would not have issued the claim or patent.

The majority ruled that since the penalty for inequitable conduct is quite severe, it should only be applied in cases where applicants received some benefit from their actions.

The dissenting judges would have affirmed the district court’s finding of inequitable conduct and felt that the materiality standard should not be so high. Justice O’Malley proposed a more flexible materiality standard that allows district courts to invalidate claims instead of entire patents. Justice Bryson suggested that if an omission is inconsistent with an applicant’s case during prosecution of the patent, it should be considered material. This is clearly stated in rule 1.56 of the USPTO guidelines.

The ruling in this case is relevant as it establishes a new standard for determining inequitable conduct and will effect litigation in the US in this area. It is clear that the courts have established a stricter test, which will reduce the amount of litigation, conserve resources, and reduce the burden on the judicial system. Whether or not it was the right decision remains to be determined.