ITC ALJ Finds Inequitable Conduct In Patent Office Renders Patent Unenforceable
On April 7, 2020, the United States International Trade Commission (ITC) published the public version of an earlier final initial determination by an ITC administrative law judge (ALJ) finding that the applicants of the asserted patent, directed at harness-type child carriers, intentionally made false statements to the United States Patent Office (PTO) during examination. In re Certain Child Carriers and Components Thereof, Inv. No. 337-TA-1154. The ALJ ruled that this intentional misconduct was egregious misconduct rendering the patent unenforceable.
A patent action in the ITC is an enforcement procedure that patent owners can use instead of, or in conjunction with, a District Court infringement litigation. See 19 U.S.C. § 1337. The patent owner files a complaint with the ITC alleging, inter alia, patent infringement. The ITC then determines whether to institute an investigation. If the ITC does institute an investigation, it typically proceeds with the patent owner and the accused infringer(s) as parties to the investigation. In some cases, the ITC investigative staff will also take a role as a party to the investigation. An ALJ ultimately issues an initial determination, which is then reviewed de novo and either adopted or rejected by the Commission itself.
In this case, an investigation was instituted and an ALJ issued a final initial determination holding, inter alia, that the asserted patent was unenforceable.
Inequitable conduct is a judicially created equitable defense to patent infringement, which, when found, renders the patent unenforceable. Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1285, 1287 (Fed. Cir. 2011) (en banc). Inequitable conduct generally requires a showing of (1) specific intent to deceive the PTO and (2) “but-for materiality,” meaning that the patent would not have issued but for the misrepresentation or omission. Id. at 1287. There is, however, a recognized exception to the “but for materiality” requirement. Under this exception, affirmative acts of “egregious misconduct” have been held to be material even if the misconduct would not have influenced the issuance of the patent. Id. at 1292.
In this case, the two applicants of the asserted patent, who were each other’s spouses, had submitted a declaration with the application leading to the asserted patent, identifying both spouses as co-inventors. The ALJ found that the applicants did so knowing this to be false and that the invention was made wholly by one spouse. In recognition of the falsehood in this declaration, as the ALJ concluded, and before filing the ITC complaint, the spouses corrected inventorship to remove the husband pursuant to 35 U.S.C. § 256 and PTO rules. Citing case law, the ALJ concluded that filing of such an unmistakably false declaration to the USPTO with the original application constituted egregious conduct and was also per se material to patentability.
The ALJ also concluded that there was clear and convincing evidence that (1) the spouses intended to deceive the Patent Office by filing their false declaration, believing (albeit mistakenly) that having a U.S. citizen on the application would bolster the protection, strength, and permanence of the patents, and (2) the spouses’ patent counsel had explained, or was presumed to have explained, the requirements for inventorship to them and they executed the false declaration anyway.
Finally, the ALJ noted that subsequent correction of inventorship pursuant to 35 U.S.C. § 256 cannot save the patent from unenforceability due to inequitable conduct.