By Kevin E. Noonan --
Last Friday, sanofi-aventis and Microsoft joined in filing an amicus curiae brief with the Federal Circuit in the Therasense, Inc. v. Becton, Dickinson & Co. case. The brief, filed in support of appellants and urging the en banc Court to reverse the three-judge panel's affirmance of inequitable conduct against Abbott, was limited to one of the "questions" posed to the parties and amici by the Federal Circuit when granting en banc review: "[w]hether the specific intent element of the inequitable conduct doctrine is properly derived from the common law" (see "Federal Circuit Grants En Banc Review in Therasense v. Becton Dickinson").
The brief's short answer is yes, particularly with regard to the specific intent standard. Amici remind the Federal Circuit that the Supreme Court has spent a decade "[r]econciling patent-law doctrines with legal principles of general applicability," citing Microsoft v. AT&T Corp., 550 U.S. 437 (2007), and eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006); the brief could have cited half a dozen more instances representing the high court's decade-long assault on Federal Circuit jurisprudence. The brief also cites one of the effects of this drubbing, that the Federal Circuit itself has been influenced in cases such as In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc), and Knorr-Bremse v. Dana Corp., 383 F.3d 1337 (Fed. Cir. 2004) (en banc). Here, the brief asserts that the CAFC has the opportunity to conform another area of its jurisprudence to the "same contours" as in other legal contexts.
Intent generally is not required for patent infringement, a strict liability tort. It is only in "extraordinary situations," amici argue, that intent becomes an issue: for infringers when the allegation is for inducing infringement, and for patentees when the allegation is inequitable conduct. The brief argues that specific intent, defined as "[t]he intent to accomplish the precise act with which one has been charged" (reflecting the origins of the concept in criminal law) is the standard that a court should apply when establishing inequitable conduct.
Support for this standard is found, amici argue, in the Supreme Court cases establishing the inequitable conduct doctrine: Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 250-51 (1944); Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814 (1945); and Keystone Driller Co. v. General Excavator Co., 290 U.S. 240 (1933). These cases were defined by "extreme circumstances of 'deliberate,' 'corrupt,' 'sordid,' and 'highly reprehensible' conduct," the brief asserts. The brief cites language from the cases relating to ''corrupt transaction[s]' that were 'highly reprehensible'" (citing Keystone Driller); "a 'deliberately planned and carefully executed scheme to defraud'' both the Patent Office and the Court of Appeals (citing Hazel-Atlas Glass); and a history that was "'steeped in perjury and undisclosed knowledge of perjury'" (citing Precision Instrument). All these cases involved "intentional misconduct" (emphasis in original) -- actual wrongdoing -- and the brief argues that it is this level of culpability that justifies the "exceptional treatment" (i.e., unenforceability) occasioned by an inequitable conduct determination.
The brief also cites instances where the alleged conduct was not sufficient for the Supreme Court to refuse to enforce the patent, specifically U.S. v. American Bell Telephone Co., 167 U.S. 224, 239-40 (1897). There, the brief maintains the Court 'derived from land patent cases a high standard for those who seek to challenge a patent for inequitable conduct." Quoting the Court as stating that:
The dignity and character of a patent from the United States is such that the holder of it cannot be called upon to prove that everything has been done that is usual in the proceedings had in the land department before its issue, nor can he be called upon to explain every irregularity or even impropriety in the process by which the patent is procured.
Citing U.S. v. Marshall Mining Co., 129 U.S. 579, 589 (1889). The brief makes the point that the Court did not cancel Bell's patent based on "extreme delay" in its issuance, on the grounds that the government's case depended on "the existence of a knowledge which no one had; of an intention which is not shown." The brief also cites Corona Cord Tire Co., v. Dovan Chem. Corp., 276 U.S. 358 (1928), where "false, 'perhaps reckless,' affidavits [were] insufficient to render [a] patent unenforceable."
The brief proffers the argument that courts apply the common law where Congress has not spoken to the contrary, citing Dura Pharm. Inc. v. Broudo, 544 U.S. 336 (2005), and Neder v. U.S., 527 U.S. (1999). With regard to specific intent, the common law standard is not "'volition' of 'knowledge' of one's acts." Rather, what is required is that the "accused wrongdoer must have desired or purposefully sought not just its actions but the wrongful consequences of the actions taken," citing the Restatement (Second) of Torts (1965). Amici argue that the "intention to cause unlawful consequences" is what "separates specific intent from negligence and recklessness." Indeed, the brief argues that the Supreme Court has "expressly rejected theories of 'intent' predicated only on negligence or gross negligence," citing Ernst & Ernst v. Hochfelder, 425 U.S. 185 (1976).
The brief then cites multiple instances outside the fraud context where the common law requires specific intent, including conspiracy, secondary liability (such as "aiding and abetting"), and inducing infringement in patent and copyright cases, including Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005); DSU Med. Corp. v. JMS Co., 471 U.S. 1293 (Fed. Cir. 2006) (en banc); and Kyocera Wireless Corp v. ITC, 545 F.3d 1340 (Fed. Cir. 2008). Returning to common law fraud, the brief again cites multiple cases that stand for the proposition that the Supreme Court "has repeatedly reiterated that '[f]raud means an intent to deceive,'" such as Lord v. Goddard, 54 U.S. (13 How.) 198, 211 (1851), among others. The lack of immunity under the antitrust law for patents "procured by intentional fraud" under Walker Process Equip. Inc. v. Good Mach. & Chem. Corp., 382 U.S. 172 (1965), is also cited as an example where the common law standard requiring specific intent is applied in the patent law context. And as the principle appellant's brief argued, specific intent is required for unenforceability in copyright, but not in the absence of an intent to defraud, S.O.S. Inc. v Payday, Inc., 886 F.2d 1081 (9th Cir. 1989).
The brief concludes from this precedent that inequitable conduct should also require a finding of specific intent. "There is no reason for patent law to diverge from general law (or the antitrust or copyright laws in particular) on this most important question," according to amici. The Federal Circuit has already held that negligence, even gross negligence, is not sufficient to satisfy the intent prong for inequitable conduct, Kingsdown Med. Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867 (Fed. Cir. 1988) (en banc), the brief reminds the Court, consistent with a requirement for specific intent for inequitable conduct.
The brief notes, however, that the Court has "departed" from the (relatively) strict standard enunciated by the en banc court in Kingsdown, particularly citing Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306 (Fed. Cir. 2008), for its "intent inferred from materiality" holding; the brief not only states that this case was wrongly decided, but calls upon the en banc Court to overrule it, to "clarify that materiality and intent are separate requirements that must each be proved independently." The brief argues that the "so-called sliding scale applied in some inequitable conduct cases is flawed at each of its steps." According to the brief, the first step, that highly material information is withheld, "inserts materiality into the test for intent." The second step, whether the applicant knew of the information and knew or should have known it was material, is "a mere negligence standard." And the third step, that the applicant fails to provide a credible explanation for withholding the information, requires applicants "to disprove intent based on [this combination of] materiality and negligence." In addition to wrongly establishing a test wherein "a highly material omission can satisfy both the materiality and intent test -- so long as the applicant should have known of the materiality," the brief argues that "[m]ere materiality coupled with negligence cannot be reconciled with the purposefully wrongful conduct required by [either] the Supreme Court's precedent or [the Federal Circuit's] decision in Kingsdown," citing (now) Chief Judge Rader's dissent in Aventis Pharma SA v. Amphastar Pharm. Inc., 525 F.3d 1334 (Fed. Cir. 2008).
The brief recites the familiar litany of deleterious consequences resulting from the inequitable conduct doctrine as applied by recent Federal Circuit decisions, including the "plague" in litigation, "in no small part due to an unduly permissive view of the intent element taken by some [Federal Circuit] decisions," and the "strong incentives" that the "proliferation of inequitable conduct charges" provide for patent applicants to "inundate the PTO with information in the hopes of forestalling a later inequitable conduct charge." The brief reminds the Court that "perpetuating the 'plague' of 'inequitable conduct as a litigation strategy" would have consequences that are "particularly severe in the pharmaceutical industry, on which the American public depends for disease-curing, lifesaving innovations," as well as in the computer industry, "which has been a major engine of American economic growth since before the first microprocessor." "[E]very conceivable policy counsels against allowing an inequitable conduct claim to proceed in any but the most extreme cases of fraud and deception," the brief asserts, reminding the Court that it "should not condone any measure of inequitable conduct that would produce a chilling effect on the 'Progress of . . . useful Arts.'"
This reining-in of inequitable conduct can be achieved by requiring a showing of specific intent, according to the brief, and the application of this "high standard" is warranted by the "dire consequences" that can result (patent unenforceability). In addition to achieving desirable policy goals, adopting a specific intent standard would enable the Court "to reconcile this area of patent law with long-standing principles of general applicability," a goal sanctioned by the many recent Supreme Court decisions that have shaped patent law and Federal Circuit jurisprudence in that direction. In so arguing, these amici further remind the CAFC that inequitable conduct, like obviousness and the doctrine of equivalents, are patent law doctrines ultimately flowing from Supreme Court decisions, and about which the Supreme Court may take a sufficient interest that it may decide to weigh in should the Federal Circuit not come to a decision consistent with the position the amici advocate.
For additional information regarding this topic, please see:
• "IPO Files Amicus Brief in Therasense Case," August 2, 2010
• "Abbott Files Brief in Therasense Case," July 28, 2010
• "CAFC Sets Date for Oral Argument En Banc in Inequitable Conduct Appeal," June 9, 2010
• "Therasense, Inc. v. Becton, Dickinson & Co. -- Briefing Schedule Update," May 16, 2010
• "Therasense, Inc. v. Becton, Dickinson & Co. Briefing," May 13, 2010
• "Federal Circuit Grants En Banc Review in Therasense v. Becton Dickinson," April 28, 2010