Examiner

Some key features of the Senate Bill include:

1. A first-inventor-to-file system and limitation of the one year grace period (Sec. 2);
2. A Post-grant review proceeding (Sec. 5);
3. New inter partes review proceeding (Sec. 5a);
4. Preissuance submission by third parties (Sec. 7);
5. USPTO fee-setting authority and USPTO funding (Secs. 9 and 10);
6. A supplemental examination proceeding (Sec. 11);
7. Elimination of the best mode defense (Sec. 15.); 
8. A transitional post-grant review of covered business method patents (Sec. 18); and
9. A change to the False Marking Statute (Sec. 2).

The House of Representatives introduced their own version of the Patent Reform Bill (House of Representatives Bill No. H.R. 1249) on March 30, 2011. The House bill is very similar to the Senate bill, but includes some notable differences. The first-inventor-to-file system and limitation of the one year grace period is the same in the passed Senate bill and recently introduced House bill. Regarding the post-grant review and inter partes review proceedings, however, the House bill changes some of the standards of review and time limits in the Senate bill.

Below is a summary of some of the key features of the Senate bill, followed by a short analysis describing some important differences in the House bill.

1) First-inventor-to-file-system

The Senate bill moves to a first-inventor-to-file system, which would become effective 18 months after its enactment. The Senate bill eliminates current 35 U.S.C. § 102(g) and interferences, and questions of conception, diligence, reduction to practice, abandonment, suppression, and concealment. 

Moving to a first-to-file system fundamentally changes other aspects of 35 U.S.C. §§ 102 and 103 (new 35 U.S.C. §§ 102 and 103 language provided on page 7). The Senate bill significantly reduces the present one-year grace period, which applies to prior art or disclosures from any source, be it derived from the inventor or from another. Under the Senate bill, that one-year grace period is limited to scenarios where the disclosure was (1) derived from the inventor or (2) made public after the inventor publicized his invention. In practical terms to a patent practitioner, the Senate bill severely limits the ability to antedate or use § 1.131 declarations to swear behind prior-filed references (when the applicant was prior inventor). The Senate bill would remove any possibility to swear behind prior art references or disclosures in, for example, the following cases:

1. References (not derived from the inventor) that are published by another less than one year before the effective filing of the patent application. 
    
2. Some Section 102(e) secret prior art references.

For example, there would be no possibility to swear behind patent applications filed more than one year before the effective date of the patent application at issue, but published less than one year before that effective date.  

The Senate bill appears to limit public uses or sales of the invention before the effective filing date. Under the current law, sales and offers-to-sell do not constitute a loss of right of a patent if those sales or offers-to-sell occurred less than one year before the effective filing date of the application. Any such grace period appears to be removed. This, however, may depend on the definition of “disclosure” made by the inventor. The Senate bill allows for “disclosures” made by the inventor if “1 year or less before the effective filing date” of the patent application. If sales or offers-to-sell constitute “disclosure,” then the rules regarding sales and offers-to-sell of the invention (at least in the United States) would remain the same. 

The Senate bill also removes geographic limitations for public uses or sales of the invention. Under the current law, an invention is not patentable if it was in public use or on sale in the United States more than one year prior to the effective filing date of the application (§ 102(b); or it was known or used by others in the United States prior to the date of invention (§ 102(a)). The Senate bill removes these geographical limitations. 35 U.S.C. § 102 of the Senate bill states that an invention is not patentable if it was “patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.” No limit to the United States is stated. Thus, public use, sales, and knowledge by others, anywhere in the world could result in the loss of right to a patent.

House bill provides the exact same language regarding 35 U.S.C. §§ 102 and 103. 

2) Post-grant review

The Senate bill provides another way for a third party to challenge a patent. The post-grant review has some interplay with the new inter partes review, which is summarized next. The post-grant review procedure includes the following features:

• Allows third parties to file a petition within nine months from when the patent issues. 
   
• Third party may challenge any claim of the patent based on any provision of the statute (i.e., §§ 101, 102, 103 and 112). In other words, it is not limited to just prior art references as in present inter partes and ex parte Reexamination.
   
• The standard for whether a post-grant review will be conducted by the “Director” is: 

if “information presented in the petition, if not rebutted would demonstrate that it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable.” The determination for conducting a post-grant review “may also be satisfied by showing that the petition raises a novel or unsettled legal question that is important to other patents or patent applications.” § 324.

• The patent owner may file a statement to challenge the petition. 
   
• The determination to proceed with a post-grant review is not appealable.
   
• Post-grant reviews will be handled by a Patent Judge (Patent Trial and Appeal Board).
   
• Post-grant reviews may not be instituted if the petitioner has filed a civil action challenging the validity of the patent. § 325.
   
• If an infringement claim is filed within three months of the issuance of a patent, the court cannot stay the consideration of the patent owner’s motion for preliminary injunction against infringement due to the filing of petition of a Post-grant review or Post-grant review was granted. § 325.
   
• The Director is given broad discretion on how to regulate the post-grant review process, including for example procedures for submitting supplemental information, procedures for discovery, and providing either party with the right to an oral hearing. § 326.
   
• The proceeding can be terminated by settlement of the parties or by a final decision of the board. § 327.
   
• Final decisions are appealable to the Federal Circuit. 

3) New inter partes Reexamination (now called inter partes review)

As stated above, the timing for inter partes review interplays with the post-grant review system. A request for inter partes review can be filed only on the later of nine months after the issuance of a patent or after a post-grant review is terminated. (§ 311(c)). Other features include:

• The standard for granting a request for inter partes review has changed in the Senate bill to “a reasonable likelihood that the petitioner will prevail with regard to at least one claim,” thereby raising the standard from a “substantial new question of patentability” under current inter partes reexamination. § 314(a).
   
• The scope of review is still patents and printed publications, i.e., only challenging the patentability of one or more claims under §§ 102 or 103. § 311(b).
   
• Unlike the current inter partes reexamination, the Senate bill’s inter partes review proceeding will be held before a Patent Judge (Patent Trial and Appeal Board).
   
• The inter partes review may be terminated by settlement or by a final decision of the board. § 317.
   
• The Director is given broad authority to establish regulations and how the proceedings will be carried out. For example, giving each party the right to an oral hearing, establishing procedures for submitting supplemental information, setting standards for discovery. § 316.
   
• The decision to proceed with inter partes review is not appealable § 314(d).
   
• Allows a preliminary response to be filed by the patent owner to explain why no inter partes review should be instituted. § 313.
   
• The Senate bill prohibits an inter partes review from being initiated or maintained if the petitioner has filed a civil action challenging the validity of a claim of the patent or if more than six months have passed since the petitioner was served with a complaint alleging infringement. § 315(a and b).
   
• The Senate bill includes estoppel provisions as provided in inter partes reexamination and does not allow for broadening of the claims. § 315(e).
   
• The final decision by the board may be appealed to the Federal Circuit. § 319.

4) Preissuance submission by third parties

This provision of the Senate bill allows for third parties to file publications or patents for consideration to the USPTO if the submission is made in writing before the notice of allowance or the later of: 1) 6 months after the application for patent is first published; or 2) the date of the first rejection of any claim by the USPTO. The brief language is provided below.

GENERAL.  Any third party may submit for consideration and inclusion in the record of a patent application, any patent, published patent application, or other printed publication of potential relevance to the examination of the application, if such submission is made in writing before the earlier of

A.    the date a notice of allowance under section 151 is given or mailed in the application for patent; or
 

B.     the later of
 

                                                                 i.      6 months after the date on which the application for patent is first published under section 122 by the Office, or
 

                                                              ii.      the date of the first rejection under section 132 of any claim by the examiner during the examination of the application for patent.

5) USPTO fee-setting authority and USPTO funding 

Currently, Congress diverts some fees collected by the PTO for government operations. It has been estimated that about $800 million in collected patent fees have been diverted over the past two decades. The Senate bill eliminates fee diversion by amending 35 U.S.C. § 42(c).

6) Supplemental Examination Proceeding

The Senate bill provides an additional, streamlined supplemental examination similar to an ex parte reexamination. The proceeding permits a patent owner to request “supplemental examination” for the USPTO to “consider, reconsider or correct information believed [by the patent owner] to be relevant to the patent.” The standard for granting such a request is that the information raises a “substantial new question of patentability,” which is the same as the current ex parte reexamination standard. In this proceeding, the patent owner does not have the right to file a patent owners statement. The proceeding appears to also be a means to correct any “inequitable” conduct during the prior examination. ”A patent will not be held unenforceable on the basis of conduct relating to information that had not been considered, was inadequately considered, or was incorrect in a prior examination of the patent if the information was considered, reconsidered, or corrected during a supplemental examination of the patent.  The making of a request under subsection (a), or the absence thereof, shall not be relevant to enforceability of the patent under section 282.”

7) Elimination of the best mode defense

The best mode under section 112 is still a condition for patentability. Best mode, however, cannot be used as a defense for which a patent may be invalid or unenforceable. The Senate bill language is as follows:

 (3) Invalidity of the patent or any claim in suit for failure to comply with:
 

A.    any requirement of section 112, except that the failure to disclose the best mode shall not be a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable; or
 

B.     any requirement of section 251.

Transitional post-grant review of covered business method patents

The Senate bill provides a post-granted review proceeding to determine the validity of business method patents. The proceeding is limited to petitioners who have been sued or charged with patent infringement of the particular business method patent.

9) False-Marking Statute

The Senate bill limits false-marking suits to the United States or any person who suffered a competitive injury as a result of a false-marking violation.

Key Differences in the House Bill

Again, the first-inventor-to-file system and limitation of the one year grace period is the same in the House bill. The big differences in the House bill relate to the post-grant review and inter partes review proceedings. The House bill changes some of the standards for determining whether to proceed and the House bill includes some important language regarding stay of other proceedings, such as patent infringement litigation. In general, the House bill’s changes are not favorable to the patentee. The House bill makes it easier to proceed with an inter partes review by lowering the standard and the House bill appears to make it easier to stay patent infringement actions in civil courts until these proceedings are terminated.

1) Post-Grant Review

The House bill expands the window of the post-grant review to twelve months after the issuance of a patent (rather than nine month window in the Senate bill). The House bill also permits review on the standard of “a novel legal question that is important to other patents or patent applications.”

The House bill also includes a new section providing guidance regarding requests for stays in other proceedings. The House bill includes considerations the courts should make regarding whether to grant a stay in a “civil action” (including patent infringement litigation as well as actions before the International Trade Commission); the court “shall decide” whether to grant the stay based on “whether the stay, or denial thereof, will simplify the issues . . . and streamline the trial.” (§ 330).

2) Inter partes review

The House bill differs from the Senate bill by keeping the old standard for proceeding with a reexamination — a substantial new question of patentability (rather than showing a “reasonable likelihood that the petition would prevail with respect to at least one of the claims challenged in the petition” in the Senate Bill).

The inter partes review timing period is changed due to the expansion of the post-grant review window. A petition can be filed for an Inter partes review from the later of twelve months after the issuance of a patent or after a post-grant review is terminated. 

The House bill also includes a new section not in the Senate version regarding requests for stays similar to the post-grant review. The House bill provides guidance when a party seeks a stay in a “civil action” (including patent infringement litigation as well as actions before the International Trade Commission); the court “shall decide” whether to grant the stay based on “whether the stay, or denial thereof, will simplify the issues . . . and streamline the trial” (§ 320).

Senate Bill S23

§ 102. Conditions for patentability; novelty

 (a) NOVELTY; PRIOR ART. A person shall be entitled to a patent unless:

1. the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or
    
2. the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.

 (b) EXCEPTIONS.

1. DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION. 

• A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if:

A.       the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or
 

B.        the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

2. DISCLOSURES APPEARING IN APPLICATIONS AND PATENTS.

•  A disclosure shall not be prior art to a claimed invention under subsection (a)(2) if: 

A.       the subject matter disclosed was obtained directly or indirectly from the inventor or a joint inventor;
 

B.        the subject matter disclosed had, before such subject matter was effectively filed under subsection (a)(2), been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or
 

C.        the subject matter disclosed and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.
 

 (c) COMMON OWNERSHIP UNDER JOINT RESEARCH AGREEMENTS Subject matter disclosed and a claimed invention shall be deemed to have been owned by the same person or subject to an obligation of assignment to the same person in applying the provisions of subsection(b)(2)(C) if:

1. the subject matter disclosed was developed and the claimed invention was made by, or on behalf of, 1 or more parties to a joint research agreement that was in effect on or before the effective filing date of the claimed invention;
    
2. the claimed invention was made as a result of activities undertaken within the scope of the joint research agreement; and
    
3. the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.

(d) PATENTS AND PUBLISHED APPLICATIONS EFFECTIVE AS PRIOR ART. For purposes of determining whether a patent or application for patent is prior art to a claimed invention under subsection (a)(2), such patent or application shall be considered to have been effectively filed, with respect to any subject matter described in the patent or application

1. if paragraph (2) does not apply, as of the actual filing date of the patent or the application for patent; or
    
2. if the patent or application for patent is entitled to claim a right of priority under section 119, 365(a), or 365(b), or to claim the benefit of an earlier filing date under section 120, 121, or 365(c), based upon 1 or more prior filed applications for patent, as of the filing date of the earliest such application that describes the subject matter.

§103. Conditions for patentability; nonobvious subject matter

A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.

This article was originally posted on Sheppard Mullin’s Life Sciences Law blog, which can be found at www.lifescienceslawblog.com.

Authored by:

Don J. Pelto
(202) 772-5362
dpelto@sheppardmullin.com

and

Andrew Keith
(202) 772-5367
akeith@sheppardmullin.com

In introducing the new bill, Senator Leahy noted the following: “China has been modernizing its patent laws and promoting innovation while the United States has failed to keep pace. It has now been nearly 60 years since Congress last acted to reform American patent law. We can no longer wait.” (157 Cong. Rec. S131 (2011).)

As Leahy further explained, the proposed reforms aim to accomplish three goals: (1) “improve the application process by transitioning to a first-inventor-to-file system”; (2) “improve the quality of patents issued by the USPTO by introducing several quality-enhancement measures”; and (3) “provide more certainty in litigation.” The most significant changes to implement these goals are described below.

The Application Process: Shift To First-To-File System

In an effort to harmonize the U.S. patent system with the systems of other countries, The Patent Reform Act of 2011 proposes to change the U.S. Patent System from a first-to-invent to a first-to-file system. This change means that patents will be awarded to the earliest-filed application for a claimed invention, regardless of the date of actual invention. In other words, under the proposed reform, if A invents a new, novel and non-obvious widget in April but fails to file its patent application (or disclose it) until August, and B invents the same widget in June and files its patent application at that time, B gets the patent under the new system, not A.

The change to the first-to-file system also impacts the prior art analysis. Under current law, for prior art that is publicly — available less than one year before an application for a patent is filed, an inventor can still obtain a patent if she can prove that she invented the claimed invention prior to the date of the prior art. The new bill, however, appears to limit a patent applicant’s ability to negate prior art. Namely, only disclosures by the inventor or someone who obtained the disclosure from the inventor are excluded as prior art.

However, inventors that get beat to the patent office are not entirely out of luck; the reforms provide for “derivation” proceedings to determine if the inventor of an earlier-filed patent “derived” the invention from the inventor of a later-filed application. In other words, returning to the example above, if A could show that B’s widget invention was derived from his widget invention, A may nonetheless obtain a patent despite B’s earlier filing date.

Patent Quality: Submission of Prior Art / Post-Grant Review Procedures

In an effort to improve patent quality, the proposed act establishes the opportunity for third parties to submit information (i.e., prior art) related to a pending application. This, in turn, should assist the examiner in determining whether an applied-for patent is indeed patentable.

In addition, the proposed act incorporates a post-grant 9-month window in which a person who is not the patent owner can institute a post-grant review proceeding to cancel as unpatentable one or more claims of the patent. However, post-grant review can only commence if, following petition, it is determined that it is more likely than not that at least one of the claims challenged is unpatentable.

To protect against abuse of the post-grant review procedure, the act also specifies that an accused infringer may not seek review (1) after it has already filed a lawsuit in district court challenging the patent, or (2) more than three months after the date the accused infringer must answer, or otherwise respond to, a complaint for patent infringement filed by the patentee. The post-grant review proceeding also has estoppel effect, i.e., the petitioner in a post-grant review proceeding cannot raise in a subsequent action any ground of invalidity that was raised or reasonably could have been raised in the post-grant proceeding.

Improve Certainty Surrounding Litigation: Damages

The proposed legislation aims to provide more certainty to litigants as to damage calculations and enhanced damages.

Specifically, the act empowers judges to serve as a gatekeeper on damages. The proposed legislation specifies that the court “shall identify the methodologies and factors that are relevant to the determination of damages, and the court or jury shall consider only those methodologies and factors relevant to making such determination.” As Senator Leahy explained: “the gatekeeper compromise on damages . . . is what is needed to ensure an award of a reasonable royalty is not artificially inflated or based on irrelevant factors.”

In addition, on a showing of good cause, litigants are entitled to have the trial sequenced such that the trier of fact decides the questions of validity and infringement prior to damages.

Finally, the proposed legislation would codify case law regarding willfulness, requiring a plaintiff to demonstrate by “clear and convincing evidence that the accused infringer’s conduct with respect to the patent was objectively reckless.” Objectively reckless conduct will be found where the infringer acted “despite an objectively high likelihood that his actions constituted infringement of a valid patent, and this objectively-defined risk was either known or so obvious that it should have been known.” Mere knowledge of a patent is insufficient to show willfulness for an enhanced damage award.

Conclusion

As Senator Leahy explained in his remarks presenting the bill to the Senate, reform of the American patent law system is long overdue. Overall, the proposed legislation is similar to previously proposed legislation; indeed it was structured around the legislative proposal from 2005. The 2011 Patent Reform Act proposes significant changes to American patent law, surely to receive comment from those in favor and those against. Whether patent reform will actually make its way onto the books is a question yet to be determined.

Authored By:

Ashley Merlo
(714) 424-8218
AMerlo@sheppardmullin.com

On November 9, 2010, the Federal Circuit, sitting en banc, heard oral arguments in Therasense, Inc. v. Becton, Dickinson & Co., regarding the legal tests to be applied in determining whether a patent is unenforceable due to inequitable conduct. This has been a controversial issue over the last several years among practitioners, Federal Circuit judges, and industry groups, particularly Big Pharma. This article assumes some familiarity with the case and the issues. However, for background information on both, please click here.

Plaintiff Abbott, Defendant Becton, Dickinson, Defendant Nova, and the PTO argued at the hearing. They addressed the following issues: (a) the standard for materiality; (b) intent; and (c) whether the facts of the case warranted a finding of inequitable conduct. The argument primarily focused on the materiality inquiry.

[Please note that while we have done our best to appropriately attribute comments to the specific Federal Circuit judges who made them, the associations may not be completely accurate. There is no official transcript available at this time.]

A. Materiality

Under the PTO’s current rules, information is “material†if it satisfies either Rule 56(b)(1) or 56(b)(2). Information is material under Rule 56(b)(1) if it “establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim.†Information is material under Rule 56(b)(2) if it: “refutes, or is inconsistent with, a position the applicant takes in: (i) Opposing an argument of unpatentability relied on by the Office, or (ii) Asserting an argument of patentability.â€

Abbott argued that the standard for inequitable conduct case should be “but for†causation, where information is only material if the patent would not have otherwise issued, contending that:

(A) Supreme Court cases only found inequitable conduct where there had been “but for†causation.

(B) Rule 56(b)(2) would swallow Rule 56(b)(1).

(C) Equitable doctrines should not be used to punish; rather, the PTO can and should fill any void by policing misconduct.

(D) Anything less than “but for†causation will maintain the status quo, whereby applicants dump information while attempting to avoid characterizing or explaining that information.

The PTO argued that Rule 56(b) should be applied because:

(A) The “but for†standard allows too much mischief, while the “reasonable examiner†standard is too vague and causes “pathological overcompliance.â€

(B) Adjustment of the intent inquiry and Exergen (requiring specific pleading) will mitigate flooding.

(C) The PTO should have the first crack at information, so the market is not disrupted years later, and then an ex post analysis done via litigation.

Defendants argued that the PTO standard at the time of prosecution should be applied because:

(A) Applicants should be judged by the standard to which the PTO held them.

(B) Rule 56 is narrower than the reasonable examiner standard, and therefore not overly broad or vague.

(C) Rule 56(b)(2) can be taken very literally. It is not about whether, for example, an invention is obvious at all, but whether it is obvious over the references relied on by the PTO. Further, disputes are not generally about Rule 56(b)(2).

(D) The real problem is with overpleading, and not with excessive findings of inequitable conduct. Exergen and tightening the intent requirement should help with this.

(E) The “but for†standard will permit misconduct, which the PTO cannot appropriately police.

The Court did not seem inclined to adopt a “but for†standard of causation. At least Judges Lourie, Dyk, and Moore expressed concern. Judge Lourie noted that the Supreme Court has struck down not just the patents that were procured by fraud, but additional patents as well. Judge Gajarsa raised some hypotheticals, seemingly pointing out that it would be hard to determine when a “but for†standard is met, and that it left much room for bad actors. Judges Linn and Dyk expressed concerned that the “but for†standard would require an accused infringer to prove that prior art would have resulted in at least a rejection.

At least Judges Dyk, Newman, Moore, and Bryson also expressed concern about Rule 56(b)(2). The PTO acknowledged that applicants are currently “flooding†the PTO with references. Judge Dyk pointed out that Rule 56(b)(2) is “exactly what the law pretty much is right now.†Judge Dyk posed a hypothetical, asking what if there is a “tiny sliver of scientific opinion that is contrary to the position you are giving.†The PTO responded that this would need to be disclosed, but could be done in context. Judge Prost also repeatedly asked the parties how many people in the last ten years have been disciplined by the PTO for lack of candor. No one could answer.

Judge Newman noted that inequitable conduct is being pled in a large number of cases, but sustained in a small number of cases. This creates a “profound†litigation burden, and many small entities cannot afford to defend such charges. She did not see a reason that this would change if 56(b) remained an applicable standard. Judge Moore expressed that she was “having trouble seeing daylight between current Rule 56 and the reasonable examiner standard,†and later followed up that it’s “(b)(2) that seems to be the real problem.â€

Judge Linn’s questioning indicated he was concerned with defendants’ proposal to track PTO standards, because the PTO can change its standards at any time, including back to the “reasonable examiner†standard.

B. Intent

Aside from the facts of the case, the parties and the PTO seemed to agree that intent needed to be clarified. In particular, both the PTO and the Defendants argued that flooding of the PTO should be mitigated not by departing from Rule 56(b), but by: (1) following Kingsdown to require subjective intent and reject the standard requiring only that one “should have known†the materiality of the misrepresentation or undisclosed information; and (2) requiring that any inference of intent must be the single most reasonable inference.

C. Balancing of Materiality and Intent

Judge Gajarsa took issue with the “tie-up of materiality with intent before we find intent.†Defendants argued that materiality can support a finding of intent, but only if there is other evidence as well (e.g., motivation to deceive and knowledge). Defendants thus admitted that it is not proper to infer intent solely from materiality.

D. Specific Facts of the Case

Overall, the arguments regarding the specific facts of the underlying case repeated the briefing and the arguments in the underlying appeal and trial. Defendants contended that the facts fit squarely within the Rule 56(b)(2) “inconsistent†standard of materiality, that this was an egregious case, that there were adverse credibility findings, a finding of motivation to deceive, awareness, and an intentional decision not to disclose.

Abbott argued that if the Court finds the “should have known†standard is improper, then the decision must be reversed. Judge Moore noted the adverse credibility findings, however, and that Judge Alsup only recited the standard, rather than relied on it. Abbott responded that there was no evidence that Attorney Pope and Dr. Sanghera actually appreciated the materiality. Rather, Judge Alsup focused on the interpretation of the EPO briefs. Judge Dyk asked if the facts would satisfy the “but for†test. Abbott denied this, contending that the disclosures related to different substantive issues.

E. Implications for the Inequitable Conduct Doctrine

Although we cannot predict how the Federal Circuit will come out on these issues, it seems obvious that the Federal Circuit will adjust the standard for materiality for purposes of determining whether a patent was procured through inequitable conduct. The Court seems very unlikely to adopt a “but for†standard of materiality. On the other hand, the parties seem to agree that the “reasonable examiner†standard is vague, overly broad, and therefore promotes overdisclosure. Further, the fact that numerous judges expressed concern regarding Rule 56(b)(2) suggests that the Federal Circuit may either tighten up the (b)(2) inquiry in inequitable conduct litigation or do away with it altogether.

The Federal Circuit also appears likely to clarify the intent standard. The Court will likely make clear that “should have known†is not good enough (per Kingsdown), and reinforce that the inference of intent must be the single most reasonable inference (per Star Scientific and Scanner). It remains to be seen whether, and if so to what extent, the Court will allow materiality to serve as a basis for inferring intent. Historically, judges have often inferred intent at least partly from materiality.

Notably, retired Federal Circuit Chief Judge Paul Michel projected at a November 12, 2010 Intellectual Property Owners Association webinar that there will be multiple opinions, both dissents and concurrences. He further predicted that there will be some modest adjustments to the materiality and intent inquiries. Additionally, he thought the Federal Circuit will take care not to push the initial burden of explaining any failure to disclose onto those associated with the patent prosecution.

This article was originally posted on Sheppard Mullin’s Life Sciences Law Blog, which can be found at www.lifescienceslawblog.com.

Authored By:

Gray M. Buccigross
(858) 720-7427
gbuccigross@sheppardmullin.com

Eight days after county officials issued a conditional use permit authorizing Frog Mountain Pet Care, an animal boarding facility, to expand and remodel, neighboring landowner Martin Mellish filed a motion for reconsideration with the county hearing examiner.  Mellish’s motion was denied 22 days later.  Another 21 days after the denial of the motion for reconsideration, Mellish filed a land use petition pursuant to the Land Use Petition Act (LUPA) which, at the time, stated that “any aggrieved party may appeal [a] final decision . . . within twenty-one (21) calendar days.â€Â  Frog Mountain moved to dismiss the case on the basis that the 21-day time limit, which it asserted ran at the date the hearing officer issued the permit, had lapsed.  Mellish and the county asserted that the 21-day time limit ran from the date Mellish’s motion for reconsideration was denied.  The superior court sided with Mellish and reversed the county’s decision to grant the permit.

On appeal, the Court of Appeals reversed, holding that the hearing examiner’s original decision to grant the permit was the “final decision†for purposes of starting the clock running on the time limit for LUPA petitions.  Therefore, the Court of Appeals held that Mellish’s motion for reconsideration did not toll the LUPA filing deadline, and his LUPA petition was not timely.  When Mellish appealed, arguing that the Court of Appeals’ decision conflicted with a previous decision in Skinner v. Civil Service Commission, 146 Wash. App. 171, 188 P.3d 550 (2008), the Court of Appeals withdrew its opinion, erased all mention of Skinner, and released a new opinion with the same holding.  Mellish then appealed.

In the intervening time, the legislature amended LUPA to clarify the time limit issue by stating that “when a timely motion for reconsideration of a local land use decision is filed, the date of the land use decision triggering the 21-day time limit for filing a land use petition in superior court is the date the local jurisdiction’s decision on a motion for reconsideration is entered.â€Â 

Here, the court reasoned that the examiner’s decision on the reconsideration motion was the final determination needed to file a land use petition in superior court, since aggrieved parties are also required under LUPA to exhaust all administrative remedies prior to filing such a petition.  The court noted that if Mellish had gone directly to the superior court with his appeal, rather than filing the motion for reconsideration with the county, he would have lacked standing because he would not have exhausted administrative remedies.  However, if he were to wait to filed a LUPA petition, the 21-day deadline might expire before the county hearing examiner issued a decision.  Therefore, the court held that LUPA implicitly tolled the finality of a land use decision where a timely motion for reconsideration had been filed with local officials.

Mellish v. Frog Mountain Pet Care, 257 P.3d 641 (Wash. Sup. Ct. 7/28/11)

The opinion can be accessed at: http://www.courts.wa.gov/opinions/pdf/842469.opn.pdf

A ceremony at Arlington National Cemetery Memorial Amphitheatre at 9:00 AM on Tuesday, August 10, 2010, will commemorate the service and sacrifice of those who participated in the Allied landings in Southern France on August 15, 1944. http://www.examiner.com/x-31731-Military-Travel-Examiner~y2010m7d26-Operation-Dragoon

The Veterans History Project collection includes the stories of Operation Dragoon veterans. One is William Charles Schwartz: http://lcweb2.loc.gov/diglib/vhp/story/loc.natlib.afc2001001.64368/