Inequitable Conduct, Willfulness, and Inducement under the AIA

Inequitable Conduct, Willfulness, and Inducement under the AIA

In this Analysis, Anthony W. Shaw discusses the role of inequitable conduct, supplemental examinations, reissue, inventorship, foreign filings without a license, disclaimers, best mode, and willful infringements and inducement to infringe in the post America Invents Act world. Mr. Shaw writes:

Reducing the Role of Intent in Patent Litigation

     During the long public debate on patent reform culminating in the America Invents Act ("AIA"), there were suggestions from several quarters to simplify patent litigation by removing intent-based issues from play. Notable in this regard was the National Academy of Sciences, which stated:

     Three provisions of patent law that are frequently raised by plaintiffs or defendants (rarely by the courts) in infringement litigation depend on determining a party's state of mind, and therefore generate high discovery costs. These provisions are (1) 'willful infringement,' which if proven, exposes an infringer to possible triple damages; (2) the doctrine of 'best mode,' which addresses whether an inventor disclosed in an application what the inventor considered to be the best implementation of the invention; and (3) the doctrine of 'inequitable conduct,' concerning whether the applicant's attorney intentionally misled the USPTO in prosecuting the original patent. To reduce the cost and increase the predictability of patent infringement litigation outcomes, and to avoid other unintended consequences, these provisions should be modified or removed.

     Intent-based issues in this context were thus issues that went into this state of mind of the patent applicant, such as inequitable conduct, or the accused infringer, such as willfulness. Although not mentioned by the NAS, induced infringement also falls into this category. As stated, the motivation for removing these issues from litigation was to make it less costly and complex. In particular connection with inequitable conduct, the Federal Circuit and the bar at large had come to the conclusion that the defense was being used too often and without sufficient justification. With respect to willfulness and inducement, the issue of when it was proper to infer that conduct was willful, when the accused infringer either had not procured an exculpatory opinion or had procured an opinion on which it had chosen not to rely, had become troublesome.

     The AIA manifests the desire to eliminate these intent-based issues in several ways. One reform directed to this end, abolition of an applicant's failure to comply with the best mode disclosure requirement of 35 U.S.C. § 112 as a basis for asserting invalidity or unenforceability. Another change proposed early in the reform process were various measures curtailing the assertion of the inequitable conduct defense. However, as discussed below, the need for this reform greatly diminished with the Federal Circuit en banc opinion in Therasense [enhanced version available to subscribers / unenhanced version available from lexisONE Free Case Law]. Still, the AIA even further limits the potential applicability of the inequitable conduct defense. The AIA also reduces the role of intent in patent litigation by adding a new § 298, entitled "Advice of Counsel," which precludes the use of an accused infringer's failure to procure or present an opinion of counsel to prove willful infringement or inducement. These reforms have the potential to streamline patent litigation significantly; whether they in fact do so will depend on how successfully litigants find other ways to inject intent issues into their cases. That litigants will attempt to do so can be taken as a given. These issues can provide emotional impact that far outweighs their actual probative value.

Inequitable Conduct


     Placing limits on the assertion of the inequitable conduct defense was a goal of patent reformers even before the Federal Circuit's first attempts at doing so in its 1988 Kingsdown decision [enhanced version]. It had long been the case that proof of inequitable conduct involved proof of both materiality and intent. In Kingsdown, the Federal Circuit attempted to confine the inequitable conduct defense by tightening standards for proving intent. Kingsdown however, proved inadequate to curb what many saw as continued abuse of the defense. Therefore, prior attempts at legislative patent reform included proposals to even further the inequitable conduct defense. The drive to reform inequitable conduct lost momentum, however, with the Federal Circuit's decision in Therasense and the imposition of a "but-for" standard of materiality.

     Unlike some prior proposals, the AIA does not eliminate or even directly address the inequitable conduct defense. The AIA nevertheless makes it more difficult for an accused infringer to prevail on the defense. Most significantly, the AIA creates a procedure called supplemental examination that provides a patent owner with the ability to purge inequitable conduct so that the likelihood that a patent will be held unenforceable due to inequitable conduct is even more greatly reduced. The AIA also eliminates the requirement that certain correctable errors must have occurred without deceptive intent.

(footnotes omitted)

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