Materiality-Intent Framework for Inequitable Conduct Allegations in Patent Infringement Cases Under Review by U.S. Court of Appeals for the Federal Circuit

On April 26, 2010, the U.S. Court of Appeals for the Federal Circuit issued an order granting a petition for rehearing en banc of a patent infringement case that involves issues relating to inequitable conduct.

Various Abbott entities (Abbott Diabetes Care, Inc., its predecessor, Therasense, Inc., and its parent, Abbott Laboratories – collectively, “Abbott”) were involved in a suit against medical technology company Becton, Dickinson and Co., and its supplier, Nova Biomedical Corp., in which Abbott alleged infringement of U.S. Patent No. 5,820,551 (the ‘551 patent). Following a bench trial, the district court held that the ‘551 patent was unenforceable for inequitable conduct based on Abbott’s failure to disclose to the U.S. Patent & Trademark Office (PTO) statements about prior art Abbott made to the European Patent Office (EPO) that the district court found to be contradictory to statements Abbott made to the PTO. A panel of the Federal Circuit affirmed the district court’s judgment that the ‘551 patent was unenforceable for inequitable conduct. However, the en banc court granted Abbott’s petition for rehearing.

In its Order, the Federal Circuit requested that the parties file new briefs addressing the following issues:

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.
   

Those involved in the procurement and/or enforcement of patents should be aware of the issues being addressed by the Federal Circuit with regard to inequitable conduct, as the Federal Circuit’s resolution of these issues may have a significant impact on patent practice at the PTO and in litigation.

For more information about the issues raised in this Alert, please contact Sharon A. Israel at +1 713 238 2630, Brian W. Nolan at +1 212 506 2517, or Trenton L. Menning at +1 713 238 2621.

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