Inequitable conduct

In the 1933 Keystone case, the patentee manufactured and suppressed evidence in a patent application and its subsequent defense in two different infringement actions: the patentee paid the prior art user to perjure himself by signing a false affidavit that his use was an abandoned experiment, and bought the prior art user's agreement to keep secret the prior use details and to suppress that evidence. Unsurprisingly, the patentee also did not disclose those facts to the PTO or to co-litigants in the infringement actions. The defendants in the second action discovered and presented evidence of the malfeasance, and while the trial court refused dismissal on that ground, on appeal the Sixth Circuit reversed the trial court and remanded for dismissal, and the Supreme Court affirmed.[3]

In the 1944 Hazel-Atlas case, a patentee's attorneys also manufactured and suppressed evidence in support of a patent application by hiring an expert to publish an article in a trade journal under his own name praising the invention as a remarkable advance in the art. After the patent was approved and issued on that basis, the patentee brought an infringement action against Hazel-Atlas but was unsuccessful in the trial court, so the patentee then appealed the matter to the Third Circuit where the patentee introduced the procured trade journal article. That appellate court reversed the trial court and ruled for the patentee, after which Hazel-Atlas settled on the infringement claim, and the patentee then paid the expert more money. The patentee's lies were discovered, however, in US v. Hartford-Empire,[4] whereupon Hazel-Atlas petitioned the Third Circuit to reconsider its prior decision, and although it refused, the Supreme Court didn't and reversed, vacating the appellate court's decision and the judgment against Hazel-Atlas, and reinstating the trial court's original judgment dismissing the patentee's case.[5]

In the 1945 Precision case, the patentee suppressed evidence of perjury before the PTO and attempted to enforce the perjury-tainted patent. In the application to the PTO the patentee claimed false dates of conception, disclosure, drawing, description, and reduction to practice, and then testified to the veracity of the same lies in an interference proceeding. The competing patentee discovered the truth, but procured rights to the patent by private settlement, complicit in the scheme, and then sought to enforce the patent against others. In a later enforcement action, a trial court learned of the facts and ruled against the patentee based on the patentee having unclean hands, but the Seventh Circuit appellate court reversed, and on further appeal, the Supreme Court reversed, reinstating the trial court's decision.[6]

In the 2007 case McKesson v. Bridge Medical,[7] the Federal Circuit Court of Appeals found inequitable conduct because a patent attorney failed to provide to patent examiners information from an office action in a related case. McKesson is a cautionary tale for patent applicants: be overly inclusive with patent submissions to ensure no omission will jeopardize a patent.[8]

However, a subsequent CAFC decision seems to directly contradict the standard used in McKesson. In the 2009 case Exergen Corp. v. Wal-Mart Stores Inc. and S.A.A.T. Systems,[9] SAAT attempted to defend with a claim of inequitable conduct, alleging Exergen was aware of two earlier patents that it did not cite to the examiner during prosecution. The district court denied SAAT's motion for inequitable conduct as a defense, however, holding that SAAT's allegations were not specific enough to meet the particularity requirement of FRCP 9(b). The Federal Circuit Court of Appeals upheld this ruling, and ruled that such allegations must specify who engaged in inequitable conduct, what precisely that person knowingly withheld or misstated to the PTO, and how the omission or misstatement affected the patentability of individual claims. The court opined that inequitable conduct is not a "magic incantation to be asserted against every patentee" by a "mere showing that art or information having some degree of materiality was not disclosed".[8]

In a further development, in the 2011 case of Therasense, Inc. v. Becton, Dickinson and Co,[2] the same Federal Circuit Court of Appeals sitting en banc limited this defense to (a) occasions when patent-holders' acts are related directly to the patent, and (b) when it can be proved that patent holders engaged in deceitful intent.[10]