Not much time is devoted to training lawyers how to record their time. It rarely becomes an issue in litigation so not much thought is given to it until creative litigation counsel pushes the issue. Last week, a Court in California issued a discovery order seeking the patent prosecutor’s invoices in connection with the opposing party’s patent prosecution laches and inequitable conduct claims. The Court held that the non-privileged aspects of the patent attorney’s invoices could be relevant as to “when each particular prosecution matter was opened, how long it took between the initial opening and when the application was first filed, what activities occurred during prosecution of each application, when each activity occurred, and how much time was spent on the activity.” Equally disturbing, the Court found that the amount of annual compensation received by the patent attorney for prosecuting the patents-at-issue was discoverable in connection with the “specific intent to deceive” aspect of the asserted inequitable conduct claim. The Court also noted that the amount of annual compensation could be relevant to the patent attorney’s credibility.
Recording time is a daily task that has fallen under the radar for most firms. This case may be an anomaly, but patent prosecutors should take notice. Most lawyers merely assume that their bills will never make their way into court. However, in this case, various time entries could create some issues.
Tag: inequitable conduct
Inequitable Conduct Standard Clarified
Yesterday, the Federal Circuit clarified the standard for proving inequitable conduct in patent infringement cases in its Therasense, Inc. decision. Similar to how it addressed the burden of proof for fraud on the USPTO in the trademark context, the Court adopted a heightened standard for proving inequitable conduct. Here are several points to consider:
- it was a split decision so the Supreme Court may ultimately decide the issue;
- the Court noted that inequitable conduct allegations are a “common litigation tactic” and as such, adopted a more stringent approach in an apparent attempt to discourage this practice;
- the Court clarified the two requisite elements for proving inequitable conduct: materiality and intent;
- with regard to materiality, the Court rejected the USPTO’s broader view of materiality under its Rules as well as the previously used sliding scale approach in favor of a “but for” test– the USPTO would not have allowed a claim of the patent-at-issue had it been aware of the undisclosed prior art;
- the Court provided a carve out to the “but for” rule for “affirmative egregious misconduct” (which should be a ripe area for future litigation);
- with regard to intent, it must be shown that “the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it[;]”
- it is not enough to show that the applicant “should have known” about the materiality of the reference;
- inferring intent will become difficult as “the evidence ‘must be sufficient to require a finding of deceitful intent in light of all the circumstances'” and when there are multiple reasonable inferences, intent cannot be found; and
- absence of a good faith explanation for withholding a material reference will not, in and of itself, be sufficient to prove an intent to deceive.