Therasense, Inc. v. Becton, Dickinson & Co.

864 F. Supp. 2d 856, 102 U.S.P.Q. 2d (BNA) 1510, 2012 WL 1038715, 2012 U.S. Dist. LEXIS 42100
CourtDistrict Court, N.D. California
DecidedMarch 27, 2012
DocketNos. C 04-02123 WHA, C 04-03327 WHA, C 04-03732 WHA, C 05-03117 WHA
StatusPublished
Cited by3 cases

This text of 864 F. Supp. 2d 856 (Therasense, Inc. v. Becton, Dickinson & Co.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Therasense, Inc. v. Becton, Dickinson & Co., 864 F. Supp. 2d 856, 102 U.S.P.Q. 2d (BNA) 1510, 2012 WL 1038715, 2012 U.S. Dist. LEXIS 42100 (N.D. Cal. 2012).

Opinion

ORDER ON REMAND REGARDING INEQUITABLE CONDUCT

WILLIAM ALSUP, District Judge.

INTRODUCTION

The court of appeals, sitting en banc, vacated a finding herein of inequitable conduct and remanded with instructions to redetermine specified questions under a new standard. Using the new standard, this order again comes to the same conclusion that the patent in suit was procured through inequitable conduct.

STATEMENT

Plaintiff Abbott Laboratories commenced patent infringement actions against various defendants. All were subsequently consolidated and a trial date was set for May 2008. In a trial on Abbott’s U.S. Patent No. 5,820,551, invalidity and unenforceability were tried first and tried to the bench.1

Before trial began, Abbott made a request to add Attorney Lawrence Pope, who stood co-accused of the inequitable conduct, as a live trial witness. During his earlier deposition, however, in an effort to prevent further examination and in aid of repeated instructions not to answer, Abbott’s counsel had on three separate occasions insisted that Attorney Pope would not appear in person at trial. Based on Abbott’s insistence that he would not appear live at trial, Abbott’s request to allow him to do exactly that was initially denied. The other side had relied on the promise. During trial, however, Abbott renewed its motion to allow Attorney Pope to testify in person at trial. Abbott was then asked to submit a sworn proffer. Faced with the gravity of the accusation against Attorney Pope, the Court relented and allowed Abbott to call him over defendants’ strong objections.

After the bench trial, the findings of fact and conclusions of law held that patent claims one through four were invalid due to obviousness, and that the entire patent was unenforceable due to inequitable conduct. Therasense, Inc. v. Becton, Dickinson & Co., 565 F.Supp.2d 1088, 1127 (N.D.Cal.2008). On appeal, a three-judge panel, consisting of Judges Daniel Fried[859]*859man, Timothy Dyk, and Richard Linn, unanimously affirmed the finding of obviousness, and affirmed, in a two-to-one split, the finding of inequitable conduct, Judge Linn dissenting. Therasense, Inc. v. Becton, Dickinson & Co., 593 F.3d 1289, 1311 (Fed.Cir.2010). A petition for rehearing en banc was granted. A six-judge majority in the en banc panel remanded for a new assessment on inequitable conduct, this time applying new intent and materiality standards. Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed.Cir.2011).

The majority opinion by Chief Judge Randall Rader increased the proof and findings needed for both intent and materiality. It reaffirmed that clear and convincing evidence is required to support a finding of specific intent to deceive the PTO. It reaffirmed that an accused infringer cannot carry its burden simply because the patentee fails to prove a credible alternative explanation. Overruling precedent, however, the court held that a weak showing of intent can no longer be offset by a strong showing of materiality, and intent cannot be inferred solely from materiality. Instead, to prove specific intent to deceive the PTO, the accused infringer must prove by clear and convincing evidence that the applicant knew of the omitted reference, knew that it was “but for” material, and made a deliberate decision to withhold it. Id. at 1290-92. Most dramatic was the introduction of the “but for” test.

Therasense worked a seismic shift in the law of inequitable conduct. Prior case law had employed a standard of materiality based on the PTO’s well-known Rule 56 duty of candor. Bruno Independent Living Aids, Inc. v. Acorn Mobility Servs., Ltd., 394 F.3d 1348, 1352-53 (Fed.Cir.2005). Under Rule 56, among other things, a reference was material if it “refute[d] or [was] inconsistent with any position the applicant took regarding patentability.” 37 C.F.R. 1.56 (2011). Therasense, however, held that materiality would henceforth use a but-for definition, meaning that submission of the withheld item would have led to a rejection. Id. at 1292.

Under the new standard, therefore, an applicant or attorney may knowingly and deliberately withhold from the PTO any reference known to be inconsistent with a position taken by him or her before the PTO so long as the withholder does not know that the reference itself would lead to a rejection. It would not be enough to prove that the applicant or attorney expected that the concealment would help win an allowance or expected that, if revealed to the examiner, the reference would cause the examiner to merely question patentability. Rather, the applicant or attorney must know — and it must be later proven that he or she knew — that the item, if revealed, would lead to a rejection.

A four-judge dissenting opinion, by Judge William Bryson, made common cause with the majority on two points: The standard for intent should be specific intent to deceive the PTO and there should not be a sliding scale. Id. at 1302. The dissenting judges parted company with the majority, however, over the change in materiality. They viewed the PTO’s traditional Rule 56 as the best materiality standard. First, the PTO is in a better position to know what information its own examiners would need to conduct effective and efficient examinations. Second, the new rule for materiality will not adequately police the disclosure obligations of patent applicants, an important public policy consideration, given that the PTO proceedings one-sided with no adversary to present argument. Id. at 1303. The four dissenting judges stated that the new test “does not merely reform the doc[860]*860trine of inequitable conduct, but comes close to abolishing it altogether.” Id. at 1304. In its amicus brief, the PTO agreed with the dissenting judges that the materiality standard should be left undisturbed.

Judge Kathleen O’Malley, concurring-in-part and dissenting-in-part, disagreed with the new but-for standard and would have affirmed the finding of materiality but agreed to remand on the issue of intent to deceive. Id. at 1296-302. Senior Judge Friedman, who had affirmed the finding of inequitable conduct as part of the earlier panel majority, was not part of the en banc panel. Of the twelve circuit judges participating in the two appellate decisions, therefore, six expressly favored the new and tougher materiality standard. Despite the closeness of the decision and the importance of the question to our patent system and national economy, no petition for certiorari was filed in the Supreme Court.

The remand instructions from the court of appeals were as follows:

On remand, the district court should determine whether there is clear and convincing evidence demonstrating that Sanghera or Pope knew of the EPO briefs, knew of their materiality, and made the conscious decision not to disclose them in order to deceive the PTO.

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864 F. Supp. 2d 856, 102 U.S.P.Q. 2d (BNA) 1510, 2012 WL 1038715, 2012 U.S. Dist. LEXIS 42100, Counsel Stack Legal Research, https://law.counselstack.com/opinion/therasense-inc-v-becton-dickinson-co-cand-2012.