Ethical Implications of Intellectual Property

1. Ethical Implications of Intellectual Property Dennis Crouch University of Missouri Law School www.patentlyo.com

2. Three topics Theory of Inequitable Conduct The role (and potential role) of the Patent Office in determining issues of inequitable conduct. Primer on Inequitable Conduct (Based on a handful of 2008 cases)

3. Underlying Theories Fraudulently obtained patents harm the system: Promote crafty (unethical) lawyering as opposed to true innovation Issued Patents that might be unenforceable may chill would-be competitors and follow-on research Faith in the system and apparent fairness are important Incorrect allegations of fraud harm the system (J. Rader): Personal injury; Waste money; Shape patent practice � chilling quality disclosure (But sometimes bringing charges can chill bad behavior�) Do the laws promote innovation and disclosure. Type I and Type II errors. Do the laws promote innovation and disclosure. Type I and Type II errors.

4. Underlying Theories System Design : Prevent fraudulently obtained patents Eliminate false claims of fraud Ensure that system is inexpensive; efficient; and predictable

5. The role (and potential role) of the Patent Office in determining issues of inequitable conduct.

6. Current Overlap Large overlap between patent practitioner ethics

7. Current Overlap

8. Inequitable Conduct Despite the overlap, the PTO Office of Enrollment and Discipline takes very little action against inequitable conduct. Since 1988, the PTO has only investigated "the most egregious and clear cases," such as when a court has made a final "decision that inequitable conduct has occurred.�

9. Anonymous OED Order, D-1996-01 (1997) Patent attorney secretly copied claims from an allowed patent and argued that the copied claims were patentable (they clearly were not patentable) Settlement (patent attorney admitted misconduct) While this would be considered �inequitable conduct,� it is a moot point because the patent would not issue

10. PTO BPAI Role BPAI is deciding inequitable conduct issues within the confines of interference proceedings. Here, however, the panel has the luxury of opposing counsel Unlike OED, BPAI is equipped to understand how the conduct relates to patentability

11. Initial OED Decision (2008) In an interference proceeding, patent attorney created an exhibit and introduced it during cross examination. Later claimed it was demonstrative aid. PTO sees this (inter alia) as an ethical violation.

12. PTO OED Deficiencies Usually, evidence is hidden OED lacks expertise as to how conduct factfinding PTO lacks expertise as a court of equity Potential bias & political face-saving Push problems under the rug vs Create an example

13. Benefits of PTO Playing a Role The PTO may be in the best position to understand when particular applicant actions are problematic

14. Should the PTO take a more active role Three possibilities: PTO start again investigating leads of inequitable conduct during prosecution (allow third party submissions). Allow post-grant oppositions based on inequitable conduct Create system for providing PTO expertise to courts

15. Preventive Measures Expert declarant disclosure form Process for determining which references to submit (if new rules are finalized that limit IDS Submissions) USPTO ethics continuing legal education

16. Star Scientific (Fed. Cir. 2008)(Michel, C.J.) Inequitable Conduct Two Step Analysis: Threshold Levels: Whether the accused infringer proven threshold levels of (a) intent to deceive the PTO and (b) materiality, both with clear and convincing evidence. Balancing of Equities: Do the equities warrant a finding of inequitable conduct and thus unenforceability.

17. Intent to Deceive Star Scientific (Fed. Cir. 2008): Must be a threshold level of proof of intent Must be the "single most reasonable inference� Aventis v. Amphastar (petition for writ of certiorari 2009): Argues that intent �gross neglect� is insufficient. Rather, there should be evidence of �deliberate,� �corrupt,� �sordid� and �highly reprehensible� misconduct. Lovonox Case; impassioned dissent by Judge Rader essentially wrote the petition

18. Submitting non-prior art informationMonsanto v. Bayer (Fed. Cir. 2008) Facts: Bayer scientist went to a conference and took notes Scientist provided notes to Bayer patent attorney PTO was provided abstracts from the conference, but not the notes or other information Holding: Unenforceable for failing to submit notes (even though the notes were not prior art)

19. Structuring Equitable Relief Ordinarily with issues of equity, judges are given discretion to fashion what judgment seems to fit the situation best. In injunctive relief, judges can modify the timing, scope, and other requirements. Does it make sense that inequitable conduct is simply yes/no (enforceable / unenforceable). Of course these are difference because injunctions is a request for action while inequitable conduct is a defense. Of course these are difference because injunctions is a request for action while inequitable conduct is a defense.

20. Correcting Past Mistakes Aventis v. Amphastar: Issue of whether corrected the mistake. Teva v. Apotex (D.N.J. 2008): Cannot have inequitable conduct if reference is before the examiner (even if the examiner found it) Nilssen: Bleed through to unasserted patents (failure to disclose expert�s financial ties & claiming to be a small entity)

22. Percentage of Issued Patents With an IDS Filed (Issued 2006 & 2007, PAIR)

23. Percentage of Issued Patents With an IDS Filed (Issued 2006 & 2007, PAIR)