The Reexamination Center Executive Interview: Professor Lisa Dolak
November 23rd, 2011
The Reexamination Center interviews current Syracuse University College of Law Professor Lisa Dolak on the topics of inequitable conduct and supplemental examination in light of the recent passage of the America Invents Act. Professor Dolak began her career as a pharmaceutical chemist. After three years in the pharmaceutical industry, she attended law school, followed by seven years spent in private practice at the firm then known as Nixon, Hargrave, Devans and Doyle doing a combination of patent prosecution, patent litigation, trademark and copyright litigation and registration, and patent opinion work. In 1995, she joined the faculty of Syracuse University College of Law, where she teaches courses on patent law, civil procedure, and federal courts. In 2003, she spent a year clerking for then-Federal Circuit Judge Paul Michel and then returned to teaching. She has also been involved throughout her academic career in patent litigation matters, serving as a litigation consultant and expert, and is a member of the Federal Circuit Advisory Council.
THE REEXAMINATION CENTER: I know that you have taken a particular interest in the area of inequitable conduct and its creation and expansion. In light of the recent Therasense decision from the Federal Circuit, what is your view on its impact on the inequitable conduct law and litigation involving this defense?
PROFESSOR DOLAK: The Court revised the materiality standard that applies to inequitable conduct determinations. It also renewed its commitment to policing allegations and evidence of deceptive intent. The Court didn’t really say anything that it hadn’t said before about proving intent. But certainly I think you have to read the opinion as expressing a renewed commitment to policing allegations of deceptive intent.
In terms of the immediate impact on inequitable conduct law, several things are worth noting. First, obviously the USPTO has proposed new duty of candor rules that would apply in both original prosecution and in reexamination. These rules would align the USPTO’s materiality standard to conform with Therasense. In litigation, we have a new but-for materiality standard. But interestingly, but-for materiality is now determined from a patentability point of view (as opposed to a validity point of view), by applying the USPTO’s “broadest reasonable construction” claim construction standard. Thus, in some cases, litigation in the district courts will now require two claim constructions – a Markman claim construction and a Therasense claim construction. Also, we presumably will have increased reliance on summary judgment to dispose of inequitable conduct challenges. But whether there will be a major impact on the extent of inequitable conduct litigation is not clear. It does seems likely that the battle ground will shift somewhat from arguing materiality as related to patentability over to contentions that the conduct at issue constitutes what the Federal Circuit called affirmative egregious misconduct. The question is what does that mean? How broad is that exception? Because it’s not hard to see that the affirmative egregious misconduct exception has the potential to sweep within its scope many varieties of alleged inequitable conduct.
Another issue to watch follows from the fact that the Federal Circuit was obviously very divided with regard to how to determine inequitable conduct. We had three opinions and those three opinions differed regarding materiality and other issues. Now the Court goes out and sits in three judge panels, and we’ll see whether the panels stay true to the majority holdings in Therasense. The Court has been criticized for straying from its 1988 en banc opinion in Kingsdown. So, given this history, and the disagreement among the judges in Therasense, the question is whether the Court will consistently apply the Therasense standards.
THE REEXAMINATION CENTER: Going to the area of reexamination practice, which I know you have been involved in, and in particular reexams that are involved in concurrent litigation, what do you think is the practical significance of the Therasense decision there?
PROFESSOR DOLAK: There is a direct effect in that there will presumably be a new USPTO rule regarding the duty of disclosure that applies to patent owners and their representatives in reexam. Whether that change will make a difference in how owners see their disclosure duties is not clear. There is uncertainty about how Therasense will be interpreted by the courts and therefore hesitation – for good reason – on the part of owners and their representatives to significantly scale back the information disclosures that they’ve been making, at least for the time being.
Also, the evidentiary effect of reexamination as it relates to inequitable conduct has been altered. Previously, a potential infringer could be motivated to file a reexamination request to get even a USPTO determination that the information in question presented a substantial new question of patentability. That alone had potential value to challengers, because the substantial new question of patentability standard is essentially the same as the old (pre-Therasense) reasonable examiner standard. Such determinations were not binding on the courts, and the courts differed in how much evidentiary weight they gave to initial USPTO actions. Nonetheless, it was fair to argue that a substantial new question of patentability was evidence of materiality. Additionally, it was fairly well-settled that reexamination could not be used to cure previous inequitable conduct. Now, post-Therasense, a substantial new question of patentability presumably will not suffice to establish but-for materiality. In fact, reexamination results can now serve as evidence of non-materiality, because the confirmation of claims over the information that served as the basis for the reexam request is inconsistent with the notion that the information was material. In essence, some potential inequitable conduct problems are effectively curable, presumably, in reexamination.
THE REEXAMINATION CENTER: Moving on to the new Supplemental Examination Proceedings that were created under the recently promulgated America Invents Act and the fact that this proceeding is directed to inequitable conduct issues and is based on a substantial new question standard, what are your thoughts on this new proceeding and its practical impact on the inequitable conduct landscape?
PROFESSOR DOLAK: Supplemental examination proceedings will be available as of September 16 of next year and the opportunity will apply to all patents issued before or after that date. These proceedings will afford patent owners the opportunity to have information considered, reconsidered or corrected in supplemental examination. Once the information has been considered, the challenger will not be able to base an inequitable conduct charge on that information, whether the USPTO orders the patent into reexamination or not. One important aspect is that the new law does not limit the types of information that can be considered in supplemental examination. This is an expansion, if you will, of the ability to have information considered as compared with ex parte reexamination. Presumably, supplemental examination will be available for consideration of the full range of information on which inequitable conduct charges could be based — not just print prior art, but non-print prior art and even non-prior art information such as inventorship-related information and undisclosed Office Actions from copending applications, etc. Also, supplemental examination will provide applicants and owners an alternative way to bring to the USPTO’s attention potentially material information discovered late in prosecution or reexamination.
Furthermore, because the new law makes deceptive intent irrelevant, patent owners can use supplemental examination to obviate or remedy everything from innocent mistakes or even utterly frivolous anticipated inequitable conduct allegations to actual inequitable conduct. The new law was amended while it was pending in Congress to include language requiring the USPTO, if it becomes aware that a material fraud may have been committed in connection with the subject patent, to confidentially refer the matter out to the Attorney General for investigation. But it’s not at all clear that the USPTO will be able to detect fraud. And even if fraud is detected, the consequence prescribed by the statute (aside from trimming the patent down to scope to which the patent owner would have been entitled, absent the fraud) is potential punishment of the responsible individual(s). The fraud impacts the individual fraud-feasor, not the owner’s property right. Thus, supplemental examination could be used to remedy actual inequitable conduct, in that what was once a potentially unenforceable patent is now enforceable.
In terms of the impact on litigation and inequitable conduct, both patent owners and accused infringers can be expected to seek to make strategic use of supplemental examination and the records of supplemental examination proceedings. The courts will have a number of issues to resolve. One issue, for example, is the relationship between the Federal Circuit’s carve-out for affirmative egregious misconduct and the notion of material fraud. The statute requires the USPTO to refer potential material fraud to the Attorney General if it learns about it. But currently, at least, the Office is not equipped to conduct such investigations. It used to have a fraud investigation arm and publicly announced it was being disbanded. Supplemental examination will be, after all, an ex parte proceeding, so there won’t be anybody on the other side trying to persuade the Office that there was material fraud. So will the courts be willing to entertain the argument that there was material fraud, but that the USPTO didn’t become aware of it? The issue of the relationship between fraud and inequitable conduct as it is now defined may be litigated and we may learn something about whether and how those two concepts differ.
We can also expect to see litigation following the completion of supplemental examination proceedings over what information was considered (or reconsidered or corrected) in supplemental examination – and what wasn’t. In other words, what is the scope of the immunity? And, of course, in some cases, patent owners may be accused of committing inequitable conduct in supplemental examination.
THE REEXAMINATION CENTER: The PTO is now in a crash implementation of the new law program – rapidly writing the rules, getting them to OMB and then out to public comment to meet the deadline for being able to begin the supplemental examination proceedings on September 16, 2012. Given this situation, what do you think the PTO should include in its implementing legislation as it relates to this type of proceeding and, in particular, the issue of material fraud being able to be brought to the attention of the Director and other things that the statute raises from a practical point of view?
PROFESSOR DOLAK: Well, a very important decision the USPTO has to make is what information it will require or permit to be included in a request for supplemental examination. Interestingly, the supplemental examination statute does not define or specify what information must be included. In contrast, the reexamination statute does require patent owners to provide information about the applicability of the relied-upon prior art and its relevance to the claims. And yet, the USPTO is being asked to decide the same question in a supplemental examination request that it is raised in a reexamination request, namely does the subject information raise a substantial new question of patentability? And, furthermore, the statute requires the USPTO to make that determination within three months of the filing of the request for supplemental examination. So will the Office conclude that it will need some help from the requestor – in the form of some analysis as to how the subject information bears (or doesn’t) on the patentability of the claims at issue – in order to be able to fulfill its statutory mission and give a correct answer to that question in a timely fashion? Another issue for the USPTO is who will decide whether to grant or deny requests for supplemental examination requests. Will they be handled by the original examiner? Arguably that person would be in a good position to determine whether or not the information raises a substantial new question of patentability. However it may make more sense to have the Central Reexamination Unit that considers reexamination requests to decide these requests.
Also, how will the USPTO deal with situations where – regardless of what rules it puts in place – a patent owner requests supplemental examination but does not give the Office enough information to evaluate the request? Will it simply return the request to the owner and say that it can’t make a determination one way or the other as to whether a substantial new question of patentability exists? Or will it ask the patent owner for additional information under Rule 105 or otherwise? Similarly, if the Office orders the patent into reexamination and for any reason determines that it needs additional information (for example, relating to non-print prior art or non-prior art information), will it rely on Rule 105 to obtain that information? Or terminate the reexamination without issuing a certificate of supplemental examination? My point is that the reexamination process as it is currently constructed is not set up to deal with the kind of fact-gathering the USPTO may need in order to conduct supplemental examinations or associated reexaminations.
THE REEXAMINATION CENTER: Do you think that there should be any type of interview or hearing associated with a supplemental examination proceeding?
PROFESSOR DOLAK: It seems that it would be difficult to implement a hearing opportunity within that tight three month timeframe and yet that obviously is the very period during which the USPTO might need access to more facts than perhaps were included in the request.
THE PTO LITIGATION CENTER: Inequitable conduct obviously is a combination of factual and legal determinations. Also, there is a credibility and a veracity component because of intent. So is the proper place for this with the original Examiner or with the Central Reexam Unit or should the newly-created Patent Trial and Appeal Board have some role in this process? How do you think this should be properly structured?
PROFESSOR DOLAK: Well, deceptive intent by itself is irrelevant to supplemental examination. Material fraud, if the Office detects it, is relevant and its relevance is that if the Office believes that fraud may have been committed, it is required to – the statute says “shall” – refer the matter confidentially to the Attorney General. But nothing in the statute, as I understand it, requires the Office to create a fraud investigation unit. Given everything else the USPTO has to do, its resource constraints, and the fact that it isn’t equipped to deal with such intent determinations, it seems unlikely that it will undertake to conduct them. For this reason, some have speculated that this material fraud provision doesn’t really have teeth. In other words, the Office presumably won’t establish procedures to actively police fraud. It’s not required to, and we’ve had experience with its disbanding the “fraud squad” once before.
I think a different but interesting question is will the Office of Enrollment and Discipline play a role with regard to supplemental examination requests? I can envision that some supplemental examination requests may – even accidentally on the part of the patent owner – include information that suggests that misconduct (even if not fraud) may have occurred during a prior examination. Will there be a vehicle for the Office of Enrollment and Discipline to become involved? If it does, how will it determine whether the suspected misconduct was that of a registered practitioner within its disciplinary jurisdiction or was committed by an inventor or owner who isn’t? But to be sure, a registered practitioner’s ethical obligations are broader than the mere duty to refrain from committing fraud.
The bottom line is we still have a duty of disclosure and few have proposed its elimination. The USPTO certainly hasn’t. It defended its own broader duty of disclosure in the Therasense litigation and has now come back post-Therasense and has merely sought to align its disclosure duty requirements with the law of inequitable conduct. Interestingly, in this regard, in its notice of proposed rulemaking, the USPTO contemplates and even encourages patent applicants and patent owners to continue to submit more information than the rule requires. So there appears to be a commitment to retaining and enforcing the duty of disclosure on the part of the Office, on the part of the courts (in retaining the inequitable conduct doctrine), and even on the part of Congress, as evidenced by not only the AIA’s inclusion of the material fraud provision, but also an extended (in some cases) statute of limitations for OED investigations into potential misconduct. But what doesn’t appear to exist is an actual viable mechanism for enforcing that duty of disclosure. Maybe we’ll see such a mechanism in the rulemaking we’re going to see.
THE REEXAMINATION CENTER: So if material fraud is the legal standard, and that sounds to me to be a common law tort and having common law jurisprudence, wouldn’t it be reasonable to suggest that that requires some type of conscious predetermined intent on the part of the moving party in order for it to be material fraud? It’s not just fraud. It’s material fraud. And, therefore, doesn’t that bring back in the intent issue into the whole process for the PTO?
PROFESSOR DOLAK: It does, except that the statute only says that if the Office becomes aware that a material fraud may have occurred, it has to act. So it doesn’t appear to require the Office to actively look for fraud, nor does it require the Office – even if it believes there may have been fraud, to make the ultimate determination. That determination is what would be referred to the Attorney General. Whether the Attorney General would actually undertake to conduct such investigations is unclear, of course. But that is where, presumably, a factual investigation into intent would have to occur.
THE REEXAMINATION CENTER: But isn’t that suggesting that the Attorney General would be investigating something at a criminal rather than as a civil level?
PROFESSOR DOLAK: Yes. I think that’s right.
THE REEXAMINATION CENTER: So when did inequitable conduct become a criminal offense?
PROFESSOR DOLAK: Well, the false statement statute – Title 18, Section 1001 – is already obviously a part of the patent law, in that statements made to the USPTO are made with knowledge and acknowledgment of the penalty for perjury. And now, insofar as the supplemental examination statute is concerned, even fraud, apparently, will not affect the enforceability of the property right. It may result, instead, in potential criminal liability for the individual(s) involved. To be sure, the AIA expressly preserved existing sanctions including potential antitrust liability and investigations into practitioner conduct. But, again, I think we may have situations where a supplemental examination request fairly raises at least reasonable suspicion that misconduct occurred. The question is whether the USPTO will undertake to investigate and punish such misconduct. After all, it has a well-known and significant resource problem and there’s nothing in the law that requires either investigations into whether material fraud occurred for purposes of a potential referral to the Attorney General or oversight of supplemental examination requests by the Office of Enrollment and Discipline.
THE REEXAMINATION CENTER: Going now to the issue of a patent owner is considering enforcing their patent rights, but has a possible inequitable conduct issue that may arise in this enforcement action, would you recommend that they proceed with a supplemental examination or should they just go ahead and enforce the patent itself and deal with it in the Courts?
PROFESSOR DOLAK: As a general matter, dealing with it in the courts is more viable now than before, because of the Federal Circuit’s adoption in Therasense of the but-for materiality standard. So it won’t be necessary in some cases to go back to the USPTO, because the patent owner will have the benefit of the but-for materiality standard in court. On the other hand, by going back to the USPTO (in an appropriate case), and proceeding through supplemental examination or directly into reexamination, the patent owner can take advantage of the ex parte nature of those tracks.