Inequitable Conduct: Plead with Specificity
Commonly, a defendant during patent litigation will seek to declare a patent unenforceable using the doctrine of inequitable conduct, which stems from 37 CFR 1.56 (commonly referred to as Rule 56). Rule 56 details the duty of candor placed upon the inventors and any individual, substantially involved in the preparation or prosecution of the patent application. They must disclose to the Patent Office all information they are aware of that is material to patentability. Critikon Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 1256 (Fed. Cir. 1997). The party seeking to invalidate the patent, the moving party must demonstrate clear and convincing evidence that such conduct occurred, in the form of: (1) affirmative misrepresentations of a material fact; (2) failure to disclose material information; or (3) submission of false material information. Baxter Int’l v. McGaw, Inc., 149 F.3d 1321, 1327 (Fed. Cir. 1998). If the duty is found to be breached there is said to be “inequitable conduct” and the entire patent is unenforceable.
In a recent decision, Exergen Corp. v. Wal-Mart Stores, Inc., et al., Case Nos. 2006-1491, 2007-1180 (Fed. Cir. 2009), the ability to plead such a defense has become more burdensome. The Federal Circuit, in Exergen, decided that “a pleading that simply avers the substantive elements of inequitable conduct, without setting forth the particularized factual bases for the allegation, does not satisfy Rule 9(b).” (Slip Op. at 21). More particularly, the Federal Circuit held “that in pleading inequitable conduct cases, Rule 9(b) requires identification of the specific who, what, when, where, and how of the material misrepresentation or omission before the PTO,” (Slip Op. at 22) directing moving parties to motion a factual pleading rather than a notice pleading.
As such, the pleading must include sufficient factual allegations to permit a reasonable inference “that a specific individual (1) knew of the withheld information or of the falsity of the material misrepresentation, and (2) withheld or misrepresented this information with a specific intent to deceive the PTO.” (Slip Op. at 24-25). To comply with this new standard, the pleading must first name the specific individuals who are alleged to have committed inequitable conduct. The pleading should provide pincites to both the patent claim and a withheld reference, and establish that the allegedly material pincite is not to be found in the prior art of record. Finally, it is no longer permissible to allege merely that “on information and belief,” the information was withheld with intent to deceive. The pleading must include factual allegations that a specific person knew of the specific information in a withheld reference.
