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Federal Circuit: Curing Inequitable Conduct by Misrepresentation?


What would you do if you discovered that in prosecuting a patent application, your client failed to disclose a relevant piece of prior art during an earlier prosecution of a related application? One way to avoid the potential inequitable conduct is to fully disclose the art in the current application. But while making this disclosure, according to the Federal Circuit, take care not to misrepresent the prior art in the process.

In a recent opinion, the Federal Circuit affirmed former Delaware district judge Kent A. Jordan’s finding of inequitable conduct under similar circumstances. After discovering the omission in the earlier prosecution, plaintiff’s outside counsel sought to cure by submitting several declarations and supporting exhibits to the PTO. Unfortunately, one declarant stated that the system under consideration, involving automated financial trading under several so-called “new rules,” did not encompass those rules. On finding that the system did in fact incorporate those rules, the district court entered a judgment of unenforceability due to inequitable conduct.

On appeal, the Federal Circuit noted the incongruity of plaintiff’s “cure”:

“The applicants submitted the declarations at issue in an apparent attempt to purge possible inequitable conduct in the ‘733 application and to disclose the Super System in the ‘526 application. Instead of being candid, Paul’s declaration disingenuously states that the Super System did not include new rules.”

The fact that the statement was made in a declaration assumed importance in both courts’ intent-to-deceive analysis: “[T]he affirmative act of submitting an affidavit must be construed as being intended to be relied upon.”

Perhaps what is most interesting is left untouched by the Court of Appeals: whether, had the declarant been truthful, the declarations and exhibits disclosing the prior art would eliminate the specter of inequitable conduct regardless of the conduct on the earlier, related application.

[District Court Opinion]
[Federal Circuit Opinion]

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