In United States patent law, inequitable conduct is a defense to allegations of patent infringement. Even in the instance that a patent is valid and infringed, the court ruling on infringement may exercise its equitable discretion not to enforce the patent if the patentee has engaged in inequitable conduct.
Inequitable conduct is found when a patent applicant breaches his duty of candor and good faith to the US Patent and Trademark Office while applying for their patent. This breach can include: (a) failure to submit material prior art known by the applicant; (b) failure to explain references in a foreign language or submit pre-existing full or partial translations of the references; (c) misstatements of fact, including misstatements in affidavits concerning patentability; and (d) mis-description of inventorship.
The party asking the court to decline to enforce the patent, usually the alleged infringer, bears the burden of proving inequitable conduct to the court. This party must show by clear and convincing evidence that the patentee intentionally "withheld or misrepresented" information, and that the information was "material".[1] Proven inequitable conduct in any claim can lead the entire patent to be unenforceable.
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Rule 56 of the U.S. Patent and Trademark Office explains that patents are "affected with a public interest. The public interest is best served, and the most effective patent examination occurs when, at the time an application is being examined, the Office is aware of and evaluates the teachings of all information material to patentability." Accordingly, each individual person "associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability."[2]
In 2007 case of McKesson v. Bridge Medical [3], Federal Circuit Court of Appeals have found inequitable conduct because a patent attorney had failed to provide to one of patent examiners information from an office action in a related case. This case has caused patent applicants to be overly inclusive. [4]
However, in 2009 case of Exergen Corp. v. Wal-Mart Stores Inc. and S.A.A.T. Systems[5], SAAT has claimed that Exergen was aware of two earlier patents that it did not cite to the examiner during prosecution. The district court denied SAAT’s motion to add inequitable conduct as a defense, however, because its allegations were not specific enough to meet the particularity requirement. The Federal Circuit Court of Appeals upheld this ruling, and said that such allegations must specify who was guilty of the inequitable conduct, what precisely that person knowingly withheld or misstated to the PTO, and how the omission or misstatement affected the patentability of individual claims. The court said that inequitable conduct is not a “magic incantation to be asserted against every patentee” by a “mere showing that art or information having some degree of materiality was not disclosed”.[4]
As a further development, in 2011 case of Therasense, Inc. v. Becton, Dickinson and Co, the same Federal Circuit Court of Appeals, sitting en banc, has limited this defense to when the patent-holders acts were related directly to the patent, and when patent holder has had deceitful intent.[6]