Mixing Inventor And Patent Prosecutor Intent To Deceive: CleanTech Muddies Inequitable Conduct Law

Michael E. McCabe, Jr.Duty of Candor, Inequitable Conduct, IP Ethics, Patent EthicsLeave a Comment

Inequitable conduct is supposed to be personal to each individual who owes a duty of disclosure to the USPTO. Thus, just because an inventor may have knowingly and intentionally lied to the USPTO does not mean that prosecution counsel did so as well.

Indeed, most prosecutors are in a position where they must rely upon the apparent veracity of their clients and often do not have the time or resources to independently “verify” or “corroborate” their clients’ claims–unless those claims are utterly incredible on their face, in which case counsel may have a further duty of inquiry.

But in most contexts, counsel can (and often do) rely upon what their clients tell them. The right to rely upon what the client tells their lawyer is fundamental to the lawyer-client relationship; in only the most obvious and extreme cases–the kind you know it when you see it–may a lawyer be limited from believing his client. In most cases, lawyers may and do advocate their client’s position in good faith even if the client’s claims ultimately may be rejected.

A recent decision by the Federal Circuit appears to turn these general principles on their head and increases the risk of inequitable conduct to patent prosecutors by holding counsel separately liable for inequitable conduct based on the lies found by the court to have been committed by their inventor-clients. See GS CleanTech Corp. v. Adkins Energy (Fed. Cir. 2020) (opinion here).

The CAFC affirmed a district court judgment, which found after a fact-intensive bench trial that the inventors lied to their patent prosecution counsel regarding their alleged earliest date of invention and whether their invention was ready for patenting and offered for sale more than one year before the application filing date.  [D. Ct. Decision here].  The district court found the inventors had knowledge and intent to deceive the USPTO.

That should have ended the matter, but it did not. The district court went on to find that prosecution counsel did not do enough to “catch” the inventors (apparent) lies to the Office. The district court, and now Federal Circuit, decisions impugn the integrity of esteemed patent prosecution counsel even though there was zero evidence in the record that prosecution counsel had any motive to lie, mislead or deceive the USPTO. In that regard, CleanTech is a very disturbing precedent.

Case Background

The case has a long factual history. The invention occurred sometime in 2003 (although when it was invented was hotly contested), and there was some apparent attempt by the inventors to sell their invention in 2004 (although that too was contested, with the defendants arguing that the invention was ready for sale and was offered for sale in 2003 not 2004.

They hired different counsel (not Cantor Colburn), who filed an initial patent application in September 2005. Depending upon whether the invention was ready for patenting or not in 2004 was a major fact issue in the case, and the court decidedly rejected the inventors’ own testimony about whether they had reduced their invention to practice and it was ready for patenting more than one-year before the application was filed, and also whether the alleged offer for sale in 2003 counted as an on-sale bar (which itself required a finding that it was ready for patenting then). Very fact intensive.

Three years later, in 2008, the inventor-clients hired Cantor Colburn to continue prosecution, which at that point in time involved responding to an office action. The prosecutor determined the PTO’s applied reference did not disclose or suggest a feature of the applied for claims and attempted to distinguish the invention–what patent counsel do thousands of times a day.

The PTO did not agree with counsel’s arguments and made the rejection final. In response to the final office action, the patent attorney again distinguished the applied art and evidently relied on information provided by the inventors. This also occurred in 2008. The case was initially allowed in 2009, but Cantor Colburn withdrew the application from issue to file a new IDS. Subsequently, the patent issued.

Years later, there was the trial. Different attorneys from Cantor Colburn served as litigation counsel.

The court clearly hated one of the inventors–the judge made no bones about stating that the inventor who was communicating with prosecution counsel was not credible. There was some reference to the inventor having a sickness, although there was nothing in the opinions that explained what that sickness was or what it had to do with the inventors’ testimony. But the inventors’ demeanor, whether a result of sickness or another reason, plainly had a very negative impact on the court’s assessment of his credibility.

In any case, the court’s inequitable conduct findings only occurred as a result of the extensive discovery and litigation process, which occurred over years.

There was no indication that at the time the prosecuting attorney himself disbelieved the inventors. But the Court, with the benefit of a record that only came about through a lengthy pretrial process followed by trial, saw things the way it did, disbelieved the inventors, and by extension concluded that the prosecuting attorney was also at fault for not doing a good enough job in determining whether there was actually an on-sale activity that should have been disclosed to the PTO during prosecution.

Even though the inventor submitted a declaration to explain the sale vs non-sale issue, the Court determined that the declaration was false and applied Rohm and Haas, which applies a general rule that declarations submitted to the USPTO are usually, if not always, material. A second declaration, which was intended to clarify the mistakes made in the first, did not do a good “enough” job to correct the mistake, according to the district court.

Prosecution Counsel’s Testimony

The district court found prosecution counsel’s trial testimony to be “implausible” about what prosecution counsel deemed, in his judgment, to be immaterial or cumulative information that did not need to be disclosed. Basically the district court characterized what prosecution counsel did was to look at what he wanted to look at and not adequately look at other information that the court suggested would have led to a different conclusion.

At the end, the district court found that prosecuting counsel knowingly and purposefully withheld information that allegedly supported an earlier first sale date. However, the record on this, even as explained in the lengthy district court opinion, is less than crystal clear.

Per the district court as affirmed by the Federal Circuit, Cantor “purposefully evaded” disclosure or “failed to seek out relevant information” and on those grounds “participated in the inequitable conduct” of the inventors. Interesting. What the court seemed to do is lump in everyone’s knowledge together–inventors and Cantor Colburn’s prosecuting attorney.

The court does not get to attack on the prosecuting attorney before it first completely destroyed the credibility of the inventors. Obviously, the court had a lot more information available to it than did Cantor’s prosecution counsel. Nonetheless, the court seems incredulous that the prosecuting attorney believed his clients, even though they swore to their version of truth in a declaration. The court instead found that prosecuting counsel should have looked behind what the client represented and should not have believed the inventors.

All I can say is that hindsight is perfect vision. It is a very easy thing for a court to say, after getting to sift through mountains of witness testimony and evidence all teed up by lots of different, very skilled, advocates representing numerous defendants. Obviously the defense did a very good job selling their version of reality to the district court.

That is not to say that perhaps Cantor Colburn’s prosecuting counsel could not have done things better. But the court’s decision seems more like a finding that since the court found the inventors to be incredible, the prosecuting attorney should have done more and not have credited their clients, even when stated under oath.

In other words, it seems the court found that the prosecuting attorney had to have known that what the inventors were saying about when they reduced their invention to practice was B.S.

Interestingly, one of the court’s bases for finding intent to deceive by Cantor Colburn’s prosecuting attorney was a letter that Cantor Colburn’s (different) litigation counsel sent to a third-party that related to the critical date and was characterized by the court as a “threat.” The court did not find that the prosecuting attorney was involved in this particular communication–it was litigation counsel. And yet, the court still found that this correspondence from litigation counsel proved “Cantor Colburn’s intent to deceive the USPTO.”

Huh? Cantor Colburn, the firm, had no disclosure duty to the USPTO. The court never explains why the firm’s letter from litigation counsel proves that prosecution counsel intended to deceive the PTO.

The “Single Most Reasonable Inference”?

The court found that intent to deceive was the single most reasonable inference from the alleged conduct of prosecuting counsel. This is what I do not get.

In the real world, the differences in knowledge and intentions of inventors and their patent counsel can often be easily explainable and without necessarily having to find that the prosecuting attorney is a liar as the single most reasonable inference to be drawn.

For example, an alternative inference was that the prosecuting attorney was also duped by the client, not that he intended to hide material information from the Patent Office.

Still another possible explanation was that the inventors were very difficult clients and that created challenges for the prosecuting attorneys.

And still another possible explanation was that the inventors were mistaken about their conduct and the firm simply relied upon that mistake.

Takeaways

What seems to be the biggest takeaway from this case is the care that must be taken when litigation and prosecution counsel are in the same firm and while litigation is ongoing there are family-related applications that are being prosecuted.

It does seem that the information that the inventors had, coupled with the information that the litigators obtained, were all laid at the feet of prosecution counsel for purposes of finding inequitable conduct.

At bottom, prosecution counsel are now left in a precarious position regarding their duty of disclosure and particularly whether reliance on the information provided by the clients is sufficient to satisfy their duty of candor. In this case, the district court and Federal Circuit stretched inventor misconduct to cover the knowledge and intent of prosecution counsel. That is both inconsistent with, and a dangerous extension of, inequitable conduct jurisprudence.

Hat tip to Professor Dennis Crouch, Patently-O, whose informative article is posted here. Another to Professor David Hricik, who wrote a great article on the many mistakes made by the CAFC’s panel particularly as it came to the standard of review, posted here.

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