Tuesday, May 31, 2011

Pro-Patent Ruling Strengthens Patent Owners’ Hands

The Federal Circuit Court of Appeals issued a ruling last week strengthening the hand of patentees.  The Therasense ruling largely removes the “inequitable conduct” Joker from a patent infringer’s hand. 
Up until last Wednesday, a defendant could play that Joker whenever the patentee failed to disclose to the Patent Office information that might have been material to the patentability of their claims (as viewed with 20-20 hindsight).  Now, the defendant can only play that card if the patentee knew of material information, knew that it was material, made a deliberate decision to withhold it, and that the Patent Office would have withheld the patent “but for” the withheld information.  If so, the court can hold the entire patent (and possibly even related patents) unenforceable.
That rule poses a high burden for infringers trying to squirm out of ponying up damages - with one significant exception.  If the patentee acted egregiously (e.g., fabricated evidence), the court remains free to find inequitable conduct. 
The Therasense ruling seems likely to stop the avalanche of irrelevant disclosures that many patentees previously felt compelled to cause because of the now obsolete standard for inequitable conduct.  The ruling will also likely ease the burden placed on the courts by the routine play of this card.  On the downside, with the Patent Office arguably being deprived of seeing all of the applicant’s cards (information that might have otherwise been disclosed previously), invalidity arguments might shift toward the expensive setting of the trial courts rather than the relatively inexpensive setting before the Patent Office. 

This is not to say that information should be withheld.  Cautious applicants should still disclose information that they feel is material.  Moreover, the Patent Office has the power to re-write their regulations in response to this ruling.  Indeed, they have notified the community they they plan to respond. 
Nonetheless, at the Patent Office, the game of disclosure-based Indian Poker has come to a long needed end.  And the Federal Circuit handed infringers their hats.
For more information about patents and the patenting process readers are invited to visit http://www.villhardpatents.com/ or call us at (512) 897-0399.

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