By Jason Rantanen
Part II of this series describes the methodology used in our working paper The Federal Circuit and Inequitable Conduct: An Empirical Analysis, and summarizes some of the key findings. You can download the entire paper here. In addition to responding below, comments can be sent either directly to us or to prm.icpaper@gmail.com.
Methodology
The study uses the technique of “content analysis,” which permits researchers to systematically read and empirically analyze the text of judicial opinions. In broad terms, we first screened all Federal Circuit opinions that contained the term “inequitable conduct” to identify cases that analyzed the issue. We read all of these cases, coding pertinent information from each independent analysis of inequitable conduct.1 Overall, we coded information from 361 inequitable conduct analyses between the years 1983 and 2010. The coded information constitutes the empirical data, and the paper reports these data using a variety of statistical presentations and arguments.
Results
We first examined patent applicants’ success before the Federal Circuit as opposed to lower tribunals. Our analysis reveals that patentees are quite likely to succeed before the Federal Circuit, winning 76% of the time, a rate of success higher than that observed in the lower tribunal judgments the court is analyzing. Overall, the Federal Circuit affirms lower tribunal findings of no inequitable conduct 91% of the time, but affirms findings of inequitable conduct only 45% of the time, as illustrated by the below graphs. This suggests to us that the Federal Circuit is applying a stricter standard than in the lower tribunal opinions it reviews.
We next looked at the analytical structure of the inequitable conduct doctrine, which consists of three components: a materiality inquiry, an intent to deceive inquiry, and a discretionary judicial balancing of materiality and intent undertaken with a view toward deciding whether a patent applicant acted inequitably toward the public.
Examining the data in this light revealed two key findings. First, when the Federal Circuit gives a single reason for patentee success, that reason is nearly two and a half times more likely to be lack of intent to deceive than it is to be lack of materiality. Second, balancing is expressly discussed only 8% of the time and forms the basis for a reversal only 2% of the time. We think this means that the balancing inquiry does not play much of a substantive role in Federal Circuit inequitable conduct jurisprudence. To be clear, while it looks like lower tribunals need to engage in this step of the analysis, the Federal Circuit does not seem to have any jurisprudence that guides or constrains how lower tribunals actually apply this step. Instead, balancing at the Federal Circuit looks like a formality, such as checking a box or touching a base, as opposed to a meaningful guide to determining whether a patent applicant engaged in equitable conduct.
1In other words, if a case involved a claim that four patents were procured by inequitable conduct and the court’s analysis addressed all of the patents in a single textual analysis or rationale, then a single record entry was made in the dataset. By contrast, if the court used one textual analysis or rationale to find, perhaps, that one of the patents was procured inequitably, and then used a single textual analysis or rationale to find that the other three were not, then two record entries were made in the dataset.
Thank you for the helpful comments. David – good point. We’ll address the statistical significance issue in the next revision.
Darryl – that’s an interesting approach, and definitely something to think about. Another possibility is to conceive of it as a sliding scale, as opposed to a balancing analysis – but even that only works if you have a fairly clear idea of the spectrum of both materiality and intent, which may be impossible to divine if the standards applied by the court are variable as we suggest.
Ping and Paul – yes, the 361 analyses represent only instances in which the issue was pending before the Federal Circuit. Not all district court decisions are appealed, nor would district court opinions include settlements. Also, we looked at both published and unpublished decisions (the latter back to only 1987 due to the limitations of the databases we were using).
Mark – I know that sometimes SSRN links don’t work for people, but I have no idea why that’s the case. If you’d like a copy, send an email to prm.icpaper@gmail.com and I’ll email you a PDF.
Jason
If Paul F. Morgan be right, then the study has a terrible flaw – just how much unreported data is missing? How would that data affect the results?
Allegely extroverted patent attorneys want to know.
Darryl,
Wasn’t that “knew or should have known standard expressly voided as bad law? Plus the problem with the shifting as you call it is the blatant conflation of the two separate prongs. you be talking about a completely different test, and in that case, ita be just plain simpler to be just plain simple.
Jason, nice work and interesting analysis. On the issue of balancing, a few lower courts have applied a kind of quasi shifting of burden of proof especially where there has been a strong showing of materiality.
For example, Judge Morrow of the Central District of California once wrote: “[W]here a patent applicant (1) knew that prior art existed, (2) knew or should have known that it was material, (3) withheld the information, and (4) offers no good explanation for doing so, the court may infer intent to deceive.”
Similarly, Judge Davis of the District of Maryland once wrote: “”Intent to deceive cannot be inferred from the decision to withhold information when the reasons given for withholding are plausible. Conversely, as here, intent to deceive can be inferred from the non-disclosure, where the party gave unconvincing or no reasons for withholding information that patent law, regulation, MPEP and case law mandated, or strongly advised, to be disclosed.”
Given the difficulty of proving intent to deceive, I wonder if a shifting of the burden of proof might be a more useful procedural tool than a balancing test.
“nearly as common .. as patent attorneys saying hello to each other”
I’d like to see evidence of these allegedly extroverted patent attorneys.
“361 in 27 years” is presumably just the number of published Federal Circuit appeals where IC was still in issue at that late date, and not mooted by other decisive issues. NOT the number of times it impacts D.C. litigation and settlements. As one D.C. judge noted years ago, accusations of IC [and burdensome and unpleasant discovery on it] are nearly as common in patent suits as patent attorneys saying hello to each other.
Jason: If your data is good to only one and a half sig figs (19), you shouldn’t be reporting percentages at three.
Interesting analysis. Can you post a link to the working paper? The above link seems broken.
Were the “no inequitable conduct” appeals primarily about the lower tribunals’ “no inequitable conduct” ruling or about other issues? How did the appellants fare on the other issues?
“Overall, we coded information from 361 inequitable conduct analyses between the years 1983 and 2010.”
361 in 27 years?
361 is the number of posts from my main man IANAE in a bi-week.
That aint no plague.
PAUL F MORGAN>>>>><<<<<< WELL SAID!
Further to my above comment, in 42 years of PTO practice in three very different different enviornments I have only heard of one single case of a material reference not being promptly cited other than purely by accident or by unawareness of its existence or materiality. [E.g, a patent number missed by a secretary in being typed from a search report list into a PTO IDS list.] That one intentional case was indeed by a fool, as noted above. The omission was caught by a supervising attorney and corrected in ample time, and the young fool was discharged.
I’m pleased to see that you found that “balancing is expressly discussed only 8% of the time and forms the basis for a reversal only 2% of the time.” Because it seems to me that the “balancing test” is seriously logically flawed. There is no logical connection between an intent to withold a reference and it’s materiality unless the patent attorney, patent agent or inventor KNEW it was highly material to existing claims AND that was actually the reason or motivation for it being witheld. The latter is very rarely the case, for good reasons. For a patent attorney or agent it is utter foolishness, since the personal consequences of such conduct, the resulting disciplinary actions and long term public professional damage, can be vastly worse than making the clients patent unenforceable.
Thanks for pointing that out. The “n” should actually be 205, as opposed to 210. There were five analyses that didn’t fit into either category (mainly involving preliminary injunctions).
Am I reading figure 4 incorrectly? It says 9.27% of cases and its sample size appears to be 210. 9.27% of 210 is approximately 19.5.
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