Statement of the Hon. Gerald J. Mossinghoff Presented to the ABA/IPL Annual IP Law Conference: The Duty of Candor and Good Faith to the U.S. Patent and Trademark Office

Apr 2002 – Article

The Duty of Candor & Good Faith
to the United States Patent and Trademark Office



Hon. Gerald J. Mossinghoff

American Bar Association/Intellectual Property Law Section

17th Annual Intellectual Property Law Conference

Washington, D.C.

April 12, 2002

Distinguished Guests, Ladies and Gentlemen:

I am pleased to address this important conference on the duty of candor and good faith owed to the United States Patent and Trademark Office ("USPTO") by all patent applicants under Rule 56, 37 C.F.R. § 1.56.[1]

The idea that a granted patent could be challenged because of misconduct in its prosecution has been with us a long time, some would say as early as the original Patent Act of 1790. In modern times, most scholars would cite the 1945 Supreme Court's Precision Instrument case, which held that patent applicants "have an uncompromising duty to report to [the USPTO] all facts concerning possible fraud or inequitableness underlying the applications in issue."[2] Later the Court of Customs and Patent Appeals — the predecessor to the Court of Appeals for the Federal Circuit — held that patent applicants must not regard ex parte proceedings as adversarial and that they, and those substantively involved in patent application preparation and prosecution, must disclose to the USPTO material information bearing on patentability.

The USPTO Rule 56 was first promulgated as a formal rule in 1977. The original Rule 56 stated:

A duty of candor and good faith toward the Patent and Trademark Office rests on the inventor, on each attorney or agent who prepares or prosecutes the application and who is associated with the inventor, with the assignee or with anyone to whom there is an obligation to assign the application. All such individuals have a duty to disclose to the Office information they are aware of which is material to the examination of the application.

And "materiality" was defined as follows:

Such information is material where there is a substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent. The duty is commensurate with the degree of involvement in the preparation or prosecution of the application.

In 1992, Rule 56 was extensively amended to make it more objective in its implementation. The 1992 Rule 56 amended the definition of "material information" to its current form:

Under this section, information is material to patentability when it is not cumulative to information already of record or being made of record in the application, and

(1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim; or

(2) It refutes, or is inconsistent with, a position the applicant takes in:

(i) Opposing an argument of unpatentability relied on by the Office, or

(ii) Asserting an argument of patentability.

A prima facie case of unpatentability is established when the information compels a conclusion that a claim is unpatentable under the preponderance of evidence, burden-of-proof standard, giving each term in the claim its broadest reasonable construction consistent with the specification, and before any consideration is given to evidence which may be submitted in an attempt to establish a contrary conclusion of patentability.

And it specified in greater detail who was bound by the duty:

Individuals associated with the filing or prosecution of a patent application within the meaning of this section are:

(1) Each inventor named in the application;

(2) Each attorney or agent who prepares or prosecutes the application;

(3) Every other person who is substantively involved in the preparation or prosecution of the application and who is associated with the inventor, with the assignee or with anyone to whom there is an obligation to assign the application.

The Federal Circuit has not yet ruled upon the significance of the change from the "important to a reasonable examiner" standard to the "prima facie case of unpatentability" standard. In Molins PLC v. Textron, Inc.,[3] the Federal Circuit merely observed that because administrative rules are not retroactive, and because the patent in issue was granted before the 1992 amendment to Rule 56, it did not have to address the issue. In Semiconductor Energy Laboratory Co. v. Samsung Electronics Co.[4], the court applied the 1992 rule to an application filed after 1992, but it did so without discussion. My own view is that the courts should apply the version (or versions) of the Rule 56 that was (were) in effect at the time the conduct objected to occurred. That approach, which at least impliedly has been adopted by the Federal Circuit, is consistent with my administrative law experience in several contexts.

I am involved in several dozen patent cases as a patent law expert, and I have given opinions in several of those cases on what I will refer to as the Rule 56 issue. There is, in my experience, a clear split among the attorneys who have retained me. Some attorneys have asked me, based on documents and depositions, to render an opinion on whether there was or was not inequitable conduct in any given case. In those cases I consider both (1) the duty of candor and good faith to the USPTO and (2) an intent to deceive the USPTO. Other attorneys have requested me to give an opinion solely on the duty of candor and good faith and not to address whether there was or was not an intent to deceive the USPTO.

The inequitable conduct defense has a statutory basis, albeit a succinct one: the word "unenforceability" in the list of defenses specified in 35 U.S.C. § 182. Its use, or rather misuse, has been subject to harsh judicial criticism. The Court of Appeals for the Federal Circuit has decried the proliferation of inequitable conduct charges in patent litigation in these terms:

[T]he habit of charging inequitable conduct in almost every major patent case has become an absolute plague. Reputable lawyers seem to feel compelled to make the charge against other reputable lawyers on the slenderest grounds, to represent their client's interests adequately, perhaps. They get anywhere with the accusation in but a small percentage of the cases, but such charges are not inconsequential on that account. They destroy the respect for one another's integrity....A patent litigant should be made to feel, therefore, that an unsupported charge of 'inequitable conduct in the Patent Office' is a negative contribution to the rightful administration of justice.[5]

In order for a court to hold that a U.S. patent is unenforceable because of inequitable conduct, six very specific criteria must be satisfied:

(1) The party challenging a patent must show inequitable conduct by clear and convincing evidence;

(2) Information known to an individual listed in Rule 56 and not disclosed to the PTO must be material to patentability of one or more claims of the patent, and the information must not be cumulative to the information that was before the examiner;

(3) The individual listed in Rule 56 must have actual knowledge of the information and its materiality;

(4) There must be a link between what the individual actually knew and what may objectively be later shown to be information under 35 U.S.C. § 102;

(5) The individual listed in Rule 56 must have an intent to mislead the USPTO; and

(6) There is a balancing of the materiality of the information not disclosed to the USPTO and the alleged intent to mislead, but that balancing is done only after an intent to deceive is established or inferred.

I am pleased to serve on the National Academy of Sciences' Committee on Intellectual Property Rights in the Knowledge-Based Economy, which is focusing on ways to improve the U.S. patent system, among other things, by lowering the costs of acquiring and enforcing patents. As well stated by one of our very influential committee members:

Among the facts that increase cost and decrease predictability of patent litigation are issues unique to United States practice, which depend on the assessment of a party's state of mind. These subjective aspects affect both the accused infringer, who typically faces increased exposure from a finding of 'willful' infringement, and the patent holder, who frequently contends with the defenses of 'best mode' and 'inequitable conduct.' The former examines whether the inventor had in mind an ideal implementation of the invention but did not reveal it in the application, while the latter addresses whether the patent attorney intentionally misled the PTO, usually by failing to disclose important prior art. Inquiry into these subjective issues requires expensive pre-trial discovery. The committee believes that reform in this area would increase predictability of patent disputes while not substantially affecting the underlying principles which these aspects of the enforcement system were meant to promote.

It is far too early to know whether the committee as a whole will agree to recommending one or more reforms, but without question the committee will carefully examine the "subjective" aspects that have been identified.

Moreover, I am personally a strong supporter of enhanced international harmonization and cooperation in the patent field. In contrast to the U.S. practice, European law imposes no duty on applicants, inventors or their representatives analogous to that imposed by Rule 56.[6] Thus, as the harmonization efforts of the WIPO Standing Committee on the Law of Patents continue, this will surely be an area of intense consideration.

I hope that my remarks have been helpful in providing a background for our discussions today. Please feel free to quote me at length, but only after you identify me as an uncompromising supporter of honesty, candor, good faith and the American way.


[1] The duty of candor and good faith is in addition to the government-wide sanctions of 18 U.S.C. § 1001, which provides:

Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully—

(1) falsifies, conceals, or covers up by an trick, scheme, or device a material fact;

(2) makes any materially false, fictitious, or fraudulent statement or representation; or

(3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; shall be fined under this title or imprisoned not more than 5 years, or both.

[2] Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 815 (1945).

[3] 48 F.3d 1172 (Fed. Cir. 1995). The approach of the Molins case was followed in Baxter International, Inc. v. McGraw, Inc., 149 F.3d 1321, 1328 n. 3 (Fed. Cir. 1998) and the Li Second Family Limited Partnership v. Toshiba Corp., 231 F.3d 1373, 1379 n. 4 (Fed. Cir. 2000).

[4] 204 F.3d 1368 (Fed. Cir. 2000).

[5] Burlington Industries, Inc. v. Dayco Corp., 849 F.2d 1418, 1422 (Fed Cir. 1988). A computer search reveals that there are 57 Federal Circuit cases that discuss in one way or another Rule 56.

[6] See Noël J. Akers and David P. Owen, Skeletons in the Closet: No Duty of Candor In Europe Can Cause Problems in the U.S., Patent Strategy & Management, Vol. 2, No. 9, page 1 (January 2002). The authors conclude:

As with patent prosecution in the United States, there are advantages to having the European patent office consider the most relevant prior art during its examination of the application. The reader may be aware that the validity of a European patent can be challenged by filing an opposition. Oppositions are examined by a three-member panel, which usually includes the primary examiner who examined the application. An opponent will face an uphill battle to persuade the panel to revoke a European patent solely on the basis of prior art that was considered during prosecution. An applicant can therefore diffuse a potential opposition or reduce the chance that the opposition will succeed by citing relevant prior art during prosecution.

Advantages to disclosing relevant prior art may also accrue during post-grant litigation. For example, in the United Kingdom, a patentee may amend the claims of a patent during litigation to distinguish prior art asserted by the opposing party (during revocation proceedings or infringement proceedings with a countersuit for revocation).

Amendment is permitted at the discretion of the court, which will want to be sure that the patentee pursued its application in good faith and did not attempt to enforce a patent that it knew to be invalid....Therefore withholding relevant prior art during prosecution, although allowed under European law, can therefore be detrimental to showing good faith and may preclude a post-grant claim amendment by the patentee.