Chapter §19.04 Unenforceability

• Jurisdiction: United States

§19.04 Unenforceability

[A] Introduction

The defense of unenforceability, asserted under 35 U.S.C. §282(b)(1), has its roots in the equitable doctrine of "unclean hands."³⁶⁴ In cases where ongoing infringement is alleged and the patent in suit is still in force, the patent owner will seek relief that typically includes an injunction against any further infringement. Because an injunction is an equitable remedy, however, courts will not grant the patentee an injunction if it has come to the court with unclean hands.³⁶⁵ The unclean hands doctrine is not patent-specific, but has special applicability to patent cases as examined in the remainder of this subsection.³⁶⁶

The Federal Circuit views the defense of unenforceability as encompassing several different equity-based theories: (1) inequitable conduct, (2) patent misuse, (3) prosecution history laches, or (4) unclean hands independent of inequitable conduct in patent procurement. Each is discussed separately below.

If an equitable defense is successfully established, the result is that a federal district court will enter a judgment of unenforceability, which should be distinguished from a judgment of invalidity. If a patent is held unenforceable, every claim of the patent is considered unenforceable.³⁶⁷ Invalidity, by contrast, is determined on a claim-by-claim basis; some claims of a patent may be held invalid while others are sustained and may still be asserted as the basis for infringement.³⁶⁸

Another distinction between unenforceability and invalidity is that the patent misuse form of unenforceability may be purged in some instances, such that the patent may again be enforced once the misuse has been alleviated.³⁶⁹ In contrast, a judgment of patent invalidity (once affirmed on appeal) is final and cannot be lifted.³⁷⁰

[B] Inequitable Conduct

The defense of inequitable conduct asserts that a court should refuse to enforce a patent if it was procured through improper conduct before the USPTO. The ex parte, confidential nature of patent prosecution before the USPTO drives the inequitable conduct defense. The USPTO rules require that all persons substantively involved in the patent application process owe a duty of candor to the agency, which includes a duty to disclose to the agency all known information that is material to patentability.³⁷¹ These rules mandate that patent applicants owe the agency a duty of candor and good faith, including a duty to disclose to the USPTO information known to applicants that is material to patentability.³⁷² The USPTO's definition of materiality has changed over time.³⁷³

Rigorous compliance with the duty of disclosure may appear contrary to the self-interests of patent applicants, and the USPTO has limited resources with which to police that compliance. Thus a severe penalty is set for violations of the duty that come to light in subsequent litigation of a patent: if the defense of inequitable conduct is proved, the entire patent (i.e., all claims, regardless of their validity) is rendered unenforceable—a result that courts have termed the "atomic bomb" of patent law.³⁷⁴

Because many foreign patent systems have robust opposition procedures allowing challenges to recently granted patents on any statutorily recognized ground of invalidity,³⁷⁵ the U.S.-based notions of a strict duty of disclosure during prosecution and an inequitable conduct defense during litigation are not considered necessary there.³⁷⁶ In the United States, however, the availability of the inequitable conduct defense is an essential method of ensuring that patent applicants "play by the rules." As a leading U.S. patent scholar observes, "[t]he most cogent practical argument for retaining the inequitable conduct defense is that unless a severe penalty exists for withholding information, practitioners and their clients will not be motivated to help the PTO in its job of examining applications thoroughly and allowing only valid claims."³⁷⁷

As with the invalidity defenses discussed below,³⁷⁸ the quantum of evidence required to satisfy a challenger's burden of establishing inequitable conduct is clear and convincing evidence.³⁷⁹ More particularly, the proponent of the inequitable conduct defense must prove by clear and convincing evidence each of two underlying factual elements: (1) materiality and (2) intent to deceive the USPTO.³⁸⁰ Each element of inequitable conduct is separately discussed below.

With respect to appellate standard of review (as opposed to burden of proof at the trial level), the Federal Circuit reviews a district court's ultimate determination regarding inequitable conduct for abuse of discretion. However, a court's findings on the underlying factors of materiality and intent are reviewed for clear error (assuming the typical bench trial on inequitable conduct).³⁸¹

[1] Acts or Omissions

To constitute inequitable conduct, a patent applicant's conduct before the USPTO must involve the nondisclosure or wrongful submission of information that is material to patentability.³⁸² Such nondisclosure or wrongful submission typically occurs in one of the following three scenarios:

1. failure to disclose to the USPTO information known to the applicant ³⁸³ that is material to patentability;

2. submission to the USPTO of false information that is material to patentability; or

3. affirmative misrepresentations made to the USPTO that are material to patentability.

Thus, inequitable conduct can be based on either a patent applicant's omission (i.e., a failure to act) or commission (i.e., an affirmative act of submitting false information or making a misrepresentation).

The facts of Critikon, Inc. v. Becton Dickinson Vascular Access, Inc.³⁸⁴ illustrate the important principle that the act of failing to disclose "information material to patentability" is not limited to failures to disclose material prior art. Rather, the obligation to disclose includes all information known to the applicant that is material to patentability. Critikon sued Becton Dickinson for infringement of Critikon's patents on intravenous (IV) catheters (including the Lemieux patent). During the course of the litigation, the Lemieux patent was reissued; Critikon amended its complaint to assert infringement of certain claims of the reissue patent.

Reversing a district court's conclusion of no inequitable conduct, the Federal Circuit found fault not only with Critikon's nondisclosure of a prior art reference (the McDonald patent) that was material to the original and reissue Lemieux patents³⁸⁵ but also with Critikon's failure to inform the USPTO reissue examiner that the original Lemieux patent was the subject of concurrent federal court litigation in which Becton Dickinson was challenging its validity and enforceability. The appellate court had "little doubt" that the concurrent litigation involving the Lemieux patent also would be relevant to its reissue proceeding.³⁸⁶ Given the materiality of the information withheld, together with Critikon's "failure at any point to offer a good faith explanation of the pattern of nondisclosure,"³⁸⁷ the Federal Circuit was able to infer the patentee's requisite intent to deceive the USPTO. Accordingly, the court held Critikon's patents unenforceable.

A fine line sometimes separates a failure to disclose material information and "advantages advocacy" during patent prosecution, as demonstrated in Purdue Pharma L.P. v. Endo Pharms. Inc.³⁸⁸ Purdue's three patents in suit were directed to controlled-release oxycodone medications for pain treatment, sold by Purdue as OxyContin®. In the written description of its patent applications and during prosecution thereof, Purdue repeatedly referred to its "surprising discovery" that its oxycodone formulations controlled pain over a fourfold range of dosages for 90 percent of patients, compared to an eightfold range for prior art opioids such as morphine. The patents also referred to the "clinical significance" of the fourfold dosage range as a more efficient titration process (by which a patient's dosage is adjusted to provide acceptable pain relief without unacceptable side effects). At no time prior to issuance of the patents did Purdue have clinical data to support these assertions, however. While Purdue never stated during prosecution that its discovery had been clinically tested, it discussed the fourfold dosage range under headings containing the phrases "Surprisingly Improved Results" and "Results Obtained."

Based on this evidence, a federal district court found that Purdue had failed to disclose material information to the USPTO because it did not inform the agency that its discovery was based merely on the inventor's "insight," without scientific proof. Moreover, the district court determined, the record as a whole reflected a clear pattern of intentional misrepresentation.³⁸⁹

The Federal Circuit affirmed the district court's judgment that Purdue's patents were unenforceable due to inequitable conduct. Although Purdue admittedly had never stated that its discovery of the fourfold dosage range was based on the results of clinical studies, "that conclusion was clearly to be inferred from the language used by Purdue in both the patents and prosecution history,"³⁹⁰ the appellate court observed. "In the absence of any statements indicating the true origin of its 'surprising discovery,' Purdue's arguments to the PTO provide enough of a suggestion that clinical trials had been performed that failure to tell the PTO the discovery was based on [co-inventor] Dr. Kaiko's insight and not scientific proof was a failure to disclose material information."³⁹¹

The Federal Circuit rejected Purdue's argument that the fourfold dosage range was not material because it was simply a benefit of the claimed invention to which the examiner would have given little weight. The appellate court contrasted CFMT, Inc. v. Yieldup Int'l Corp.,³⁹² in which it had held that a patentee did not commit inequitable conduct by setting forth during...