K The duty of candour in shambles

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					                                                                                                                     US PATENT PROSECUTION

     In summary                                   K The duty of candour in a shambles
    K   All individuals involved in the filing
        and prosecution of a patent have         US examiners are allotted between one day and one week
        a duty of candour and good faith         in total to examine a patent. The duty to disclose all
        to fulfil when dealing with the US
        Patent Office. This requirement,         information “material to patentability” is supposed to help
        often referred to as Rule 56,            them in the process, but as Eugene R Quinn, Jr, Syracuse
        includes a duty to disclose all          University College of Law, explains it is a rule without teeth
        information “material to
                                                         s anyone familiar with the patent            in today’s world, given the greed and scandals
    K   What Rule 56 does not require is
        possibly more interesting than
        what it does require. It does not
                                                 A       application process knows, obtaining a
                                                         patent is an ex parte process. In the
                                                 United States an application is filed in the
                                                                                                      rampant on Wall Street, is something of a
                                                                                                      mystery. In any ex parte process there is no
                                                                                                      opportunity for competing interests to
        mandate that a prior art search be       name of the inventor or inventors, and either        surface in an adversarial setting, thereby
        conducted, rather the language is        the inventor forwards the application or the         granting the independent decision maker the
        permissive                               beneficial owner of the exclusive rights, the        benefit of making the most informed, and
                                                 assignee, forwards the application through           hopefully correct, decision. In an ex parte
    K   Add this to the fact that it is very     the process.                                         process, such as the patent process, the
        hard to prove a breach of duty of           Regardless of who is responsible for              examiner must rely in large part upon the
        candour (known as inequitable            steering the ship on the invention side of this      information that is submitted. While searches
        conduct) and you have a rule             equation, a patent examiner sits on the “other       are conducted, even in this age of computers
        without teeth. The author                side” of the aisle. The patent process is not        and internet research, it is difficult, if not
        suggests that introducing a              supposed to be adversarial. The mission of the       impossible sometimes, to find a piece of
        mandatory requirement to                 US Patent and Trademark Office (USPTO),              relevant prior art that would surface if there
        perform a search could improve           after all, is to issue patents, provided of course   were unlimited time to search, and an
        the quality of patents granted in        there is indeed an invention worthy of the           unlimited budget for finding the needle in the
                                                 exclusive rights contained in the grant.             proverbial haystack. This is particularly true
        the US
                                                    How this patent process continues to work         in the US when one considers that when                                                                                        Patent World # 169 | February 2005 | 23

  examining “simple” inventions examiners are        does conclude with a description of what the       mind to warrant a determination that it was
  allotted maybe seven to ten hours, and when        USPTO considers exemplary behaviour, but           indeed inequitable3. As is often the case, direct
  dealing with more complex inventions, such         its language is permissive rather than             evidence of intent is rarely available in
  as communication systems and networks,             mandatory. The final sentence merely               proving the intent element, thus, “smoking
  examiners are allotted maybe 35 hours for an       “encourages” those substantively involved          gun” evidence is not required4. Nevertheless,
  entire application.                                in the patent prosecution to conduct prior         neither gross negligence nor gross
     Some help is likely on the way, as at the       art searches, the absence of which is indeed       recklessness alone can satisfy the intent
  beginning of December 2004, President              one of the problems plaguing the patent.           element necessary to demonstrate failure to
  Bush signed legislation that would not only        This all adds up to an examination process         comply with the required duty of candour5.
  increase patent fees, but would allow the          that seems hopelessly inadequate and                  The truth of the matter is that the USPTO
  USPTO to retain its revenue, thereby               doomed to result in the granting of                is not at all equipped to be able to determine
  providing the means to hire an additional          questionable patents.                              when there has been a breach in the duty of
  900 examiners. Such an infusion into the                                                                  candour. For this reason, there is perhaps
  examining core will no doubt help, but                                                                    some incentive for those who do not mind
  there is no denying that employees of the                                                                 playing fast and loose with the rules to
  USPTO are overworked. It also seems                The truth of the matter                                approach the line, or even cross over the
  evident that more invalid patents are                                                                     line. Given the growing cost of obtaining
  being issued. Of course, upon issuance a             is that the USPTO is                                 and keeping a patent portfolio, and the ever
  patent is presumed valid until declared                                                                   increasing cross licensing arrangements of
  invalid in a court of competent                     not at all equipped …                                 various shapes and forms, the name of the
  jurisdiction. This, however, does not                                                                     game these days is to get a patent today,
  change the fact that invalidity questions             to determine when                                   worry about enforcement later.
  are being raised with an ever increasing                                                                     Notwithstanding, if and when a patent
  number of issued patents.                          there has been a breach                                is litigated the first defence is the breach
     The truth of the matter is that in this                                                                of the duty of candour owed to the
  ex parte patent application process the             in the duty of candour                                USPTO. The charge of inequitable
  parties in the best position to determine                                                                 conduct is the silver bullet and the dagger
  validity are not the examiners, but the                                                                   through the heart all rolled up into one. If,
  applicants themselves. This should not                                                                and when, a court finds a breach in the duty
  come as a shock given that an examiner is          Material to patentability                          of candour, a finding that is referred to as
  allotted between one day and one week to           Furthermore, in its current form Rule 56(a)        “inequitable conduct,” the patent is rendered
  read, understand, search, prosecute and            requires only the submission of information        completely unenforceable6.
  either allow or reject a patent application.       that is known to be material to patentability.        Inequitable conduct can and does
  To be sure, examiners do develop expertise,        This current, subjective standard departs          frequently take one of the following forms:
  but no one knows an invention like                 from the old Rule 56, which was in effect prior    “affirmative misrepresentations of a material
  the inventor.                                      to 1992. The old Rule 56 required the              fact, failure to disclose material information,
                                                     disclosure of all information that a reasonable    or submission of false material information,
                                                     examiner would wish to have prior to               coupled with an intent to deceive.”7 It should
  Assisting the examiner                             determining whether an invention is                be noted, however, that there is no duty to
  In order to provide much needed assistance to      deserving of a patent2. This old Rule 56,          disclose a reference to prior art that is less
  the examiner, the USPTO places upon                which embodies the reasonable examiner             material than information already disclosed
  everyone substantively involved in the patent      standard for determining the necessity of          or is merely cumulative to that already
  application process a duty of candour. This        disclosure, is substantially different from the    considered by the examiner8. In other words,
  duty of candour stems from 37 C.F.R. § 1.56,       current standard.                                  cumulative references to prior art are not
  which is commonly referred to simply as Rule          Under the current materiality standard, if      “material” for purposes of determining
  56. In relevant part, the current Rule 56(a),      a practicing attorney is able to formulate an      inequitable conduct.
  which is where the duty is defined, states:        argument as to why a reference would not              The prior art with the most relevant
  “Each individual associated with the filing and    impact the patentability of an application         features must be disclosed, and a failure to do
  prosecution of a patent application has a duty     the reference does not need to be submitted.       so may lead to a finding of inequitable
  of candour and good faith in dealing with the      If the attorney is wrong the reference could       conduct, but this avenue of “legitimate”
  Office, which includes a duty to disclose to the   always be used successfully to prove               argument that can be made by those
  Office all information known to that               invalidity during litigation, if litigation ever   substantively involved in prosecution is a
  individual to be material to patentability as      arises. What cannot happen, however, is a          glaring loophole. It is the individuals seeking
  defined in this section.”                          finding that this attorney in question has         the patent that are charged with determining
     By its express terms Rule 56 requires all       violated the duty of candour required by           whether a reference is cumulative. While this
  those substantively involved with the              Rule 56. It is simply impossible to violate        theoretically and philosophically may make all
  preparation and prosecution of a patent            the current Rule 56 unless it was known            the sense in the world, anyone who knows a
  application to disclose to the USPTO all           that the reference would result in one or          patent attorney knows someone who is well
  information they are aware of that is material     more claims being rejected. Such a rule is         capable of making incredibly fine distinctions,
  to the examination of the application1. What       nothing more than the patent law equivalent        some even with a difference. All joking aside,
  Rule 56 does not require, however, is perhaps      of letting the fox guard the hen house.            the point is that any attorney worth his or her
  more interesting than what it does require.           With respect to the second element of the       own weight in salt can find a reason to claim
     Rule 56 does not mandate that the               duty of candour, namely the intent                 that a reference is merely cumulative and/ or
  patentee, or anyone involved in the                requirement, in order to demonstrate a             not in the least material to patentability.
  prosecution of the patent application,             violation of the duty it is necessary to prove        It is the unusual case where an argument
  conduct a patent search and/ or otherwise          that the applicant’s conduct in its entirety       cannot be made that there is at least some
  look for prior art. To be sure, Rule 56(a)         manifested a sufficiently culpable state of        reason to believe that a particular reference is

24 | February 2005 | Patent World # 169                                                                              
                                                                                                                              US PATENT PROSECUTION

not material to patentability and/ or citation      that a patent applicant conduct a prior art           inferences should arise for the failure to
of a particular reference would only be             search before they file a patent application. The     obtain a search and the failure to do or
cumulative. The USPTO may be increasingly           newly enacted patent fee legislation has ushered      obtain an adequate search.
bringing this problem on itself. There is no        in an era whereby applicants will be required            In addition to placing upon the patent
shortage of obscure, wacky and outright             not only to pay a filing fee, but also pay a search   applicant an affirmative duty to conduct a prior
strange patents that are issued every week.         fee and an examination fee. This a la carte           art search, it may be advisable to also consider
The USPTO issues patents on ridiculous              system is still not likely to lead to a quality of    returning to the pre-1992 Rule 56 definition of
inventions such as a common hairbrush               search which would uncover hard to find but           materiality. In other words, return to the
(issued November 16, 2004), an upside down          incredibly material prior art. This is because        “material to the examination of the application”
visor (issued November 2, 2004) and colour-         even with search fees examiner time will be           standard embodied in 37 C.F.R. § 1.56 (1991),
coded hair clippers (issued October 26, 2004).      limited and the party who has the superior            rather than the current materiality standard,
Each of these, and the many more that one           knowledge will still remain the applicant.            which asks whether the reference is “material to
could cite, are continuously lowering the                                                                     patentability”, which allows those seeking
threshold for what can legitimately be                                                                        the benefit of the patent to convince
considered to be “material” prior art                                                                         themselves in a manner contrary to reality.
references. The logic is that if something          Patent law in the United                                     Patent law in the United States seems to
as simple as colour-coding attachments to                                                                     be increasingly moving toward a no-fault/
a set of hair clippers makes an invention             States seems to be                                      registration system. Non-obviousness does
patentable, then the USPTO must have                                                                          not seem to matter very much at all, it is
an incredibly restrictive view of what                increasingly moving                                     virtually impossible to prove a breach of
it means to be obvious. Given the                                                                             the duty of candour, as the duty allows
questionable output that is emanating                  toward a no-fault/                                     subjective rationalisation, and the failure to
from the USPTO anyone can legitimately                                                                        follow good business practices cannot be
say that a patent can be obtained for                 registration system.                                    evidence of wilfulness. As a participant
virtually every application.                                                                                  in the system I am saddened. As a
   Under the current law of inequitable
                                                     Non-obviousness does                                     commentator I see a possible great future,
conduct, a failure to disclose is in and of                                                                   which is the saddest thing of all. K
itself insufficient to infer intent9. This mens
                                                      not seem to matter
rea required for a finding of inequitable                                                                      Notes
conduct can, however, only be achieved if a                                                                    1 Critikon Inc. v Becton Dickinson Vascular Access,
prior art search has occurred and results in           The imposition of such a true search duty is               Inc., 120 F.3d 1253, 1256 (Fed. Cir., 1997).
the location of prior art that is material to       hardly onerous, and hardly a new concept for          2     See LaBounty Mfg. v U.S. Intern. Trade Comm’n, 958
patentability. The current inequitable conduct      intellectual       property       practitioners.            F.2d 1066, 1074 (Fed. Cir., 1992).
standard, however, does not place upon the          Undoubtedly there will be some question as            3     Haliburton Co. v Schlumberger Tech. Corp., 925 F.2d
patentee or anyone associated with the              to what level of search is required in order to             1435, 1443 (Fed. Cir., 1991); Kingsdown Medical
substantive prosecution of the patent a duty        fulfil such a new duty, but that is not a reason            Consultants v Hollister, 863 F.2d 867, 876 (Fed. Cir.,
to search for prior art. Therefore, in essence,     to forego such an alternative. In fact,                     1988).
the United States Government is awarding            trademark practitioners routinely acquire             4     Elk Corp. of Dallas v GAF Building Materials Corp., 168
the opportunity to obtain monopoly profits,         searches prior to filing a trademark                        F.3d 28, 32 (Fed. Cir., 1999).
but at the same time there is no requirement        application. A trademark search together with         5     Kingsdown, 863 F.2d at 876; Halliburton, 925 F.2d at
that the patentee engage in any form of search      competent legal advice can be a defence to                  1439.
to justify the award of such an exclusive right.    damages in a trademark infringement action10.         6     Monon Corp. v Stoughton Trailers, Inc., 239 F.3d 1253,
                                                    A similar standard could, and probably                      1261 (Fed. Cir., 2001).
                                                    should, be applied to determine whether a             7     Baxter Int’l, Inc. v McGaw, Inc., 149 F.3d 1321, 1327
Addressing the problem                              patent search is reasonable. In fact, this is not           (Fed. Cir., 1998).
There are several ways to modify patent practice    a new concept even for patent law.                    8     Molins PLC v Textron, Inc., 48 F.3d 1172, 1179 (Fed.
to address the problems presented by the failure       Currently, would-be defendants can                       Cir., 1995).
to conduct prior art searches, failure to cite      escape liability for increased damages if they        9     Braun Inc. v Dynamics Corp. of America, 975 F.2d 815,
references in applications and the growing          rely upon the opinions of competent counsel                 822 (Fed. Cir. 1992).
number of questionable patents. One solution        and they are told that their device does not          10    Nalpac, Ltd. v Corning Glass Works, 784 F.2d 752,
would be to make the patent application process     infringe11. Recently, however, the Federal                  753-55 (6th Cir. 1986).
an adversarial system. This, however, seems like    Circuit ruled en banc that the failure to seek        11    Delta-X Corp. v Baker Hughes Prod. Tools, Inc., 984
overkill and a poor choice at that.                 out and obtain an opinion cannot be used to                 F.2d 410, 414 (Fed. Cir. 1993); Ortho Pharm. Corp. v
   If the contentiousness of patent litigation is   demonstrate the existence of wilful                         Smith, 959 F.2d 936, 944 (Fed. Cir. 1992).
any indication, it would seem that making the       infringement. If any new duty to search is            12    Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v
patent application process adversarial would        ever adopted penalties or negative                          Dana Corp., 383 F.3d 1337 (Fed. Cir., 2004).
certainly lead to a standstill in the granting of
patents, particularly those patents that are
perhaps the most innovative and useful to                About the author
industry. Such a standstill would be ill advised         Eugene R Quinn Jr is currently a visiting Professor of Law at
because it would be likely to allow the giant            Syracuse University College of Law. Professor Quinn is a patent
corporations of the world to freeze out start-
                                                         attorney and he teaches and specialises in the areas of intellectual
up competition. After all, one of the easiest
                                                         property, business and internet Law. He is also the founder of
ways for a start-up to compete is still to
                                               , a free internet resource for IP internet and
obtain or grow a patent portfolio.
                                                         antitrust law.
   The solution that seems to make the most
sense is to simply modify Rule 56 to require                                                                                                Patent World # 169 | February 2005 | 25

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