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The Project is succeeded by the Hoover IP² Working Group on Intellectual Property, Innovation, and Prosperity. Hoover IP²

Chapter Nine – Defenses and Limitations

As with all causes of action, there are defenses and limitations to patent infringement.  Because infringement is a strict liability tort, most defenses focus on the behavior of the patentee rather than that of the alleged infringer (e.g., inequitable conduct and patent misuse).

The intersection of patents and antitrust is a topic of special importance because both areas of law are ultimately concerned with promoting competition.  As a result, courts often turn to the executive branch for guidance on this issue, as the Federal Circuit did in Nobelpharma.  For more recent analysis by the Department of Justice and the Federal Trade Commission, read the 2007 report on Antitrust Enforcement and Intellectual Property Rights.


  1. The America Invents Act significantly expands the prior user defense.  Previously the defense only applied to certain business method claims.  Under the Act, the defense applies to “subject matter consisting of a process, or consisting of a machine, manufacture, or composition of matter used in a manufacturing or other commercial process,” but it only applies to patents issued on or after the date of enactment of the Act (September 16, 2011).  Among other requirements, a prior use must be a commercial use by the party asserting the defense at least 1 year before the effective filing date of the claimed invention.
  2. In an en banc decision the Federal Circuit has held that the federal government may be found liable under 35 U.S.C. § 271(g) for infringement of a method patent outside the United States.  Zoltec Corp. v. United States, ___ F.3d ___ (Fed. Cir. 2012)(en banc).  The court thus overruled its prior precedent in Zoltek Corp. v. United States, 442 F.3d 1345 (Fed. Cir. 2006), which had applied federal immunity under 28 U.S.C. § 1498(a) to infringement under § 271(g).
  3. The 2011 en banc decision by the Federal Circuit in Therasense significantly changed the legal standard for inequitable conduct.  The court changed both the intent and materiality prongs of the inequitable conduct test.  On remand the district court in the case found that the Therasense patent was unenforceable due to inequitable conduct under the new standard.  Therasense, Inc. v. Becton, Dickinson and Co., No. 04-02123 (N.D. Cal. Mar. 27, 2012).
  4. Intent. Inequitable conduct now requires a specific intent to deceive. “To prevail on a claim of inequitable conduct, the accused infringer must prove that the patentee acted with the specific intent to deceive the PTO. … the accused infringer must prove by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.”  Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276, 1290 (Fed. Cir. 2011) (en banc).  This holding affirms theKingsdownline of cases and overrules the Critikon line of cases, which had held that intent could be inferred when a patentee “should have known” that withheld information was material to patentability.

The court held that Intent may be proven by circumstantial evidence, but “the specific intent to deceive must be the single most reasonable inference able to be drawn from the evidence. Indeed, the evidence must be sufficient to require a finding of deceitful intent in the light of all the circumstances.” Therasense, 649 F.3d at 1290.  The burden of proving inequitable conduct is on the party alleging it, and therefore “the patentee need not offer any good faith explanation unless the accused infringer first . . . prove[s] a threshold level of intent to deceive by clear and convincing evidence.  The absence of a good faith explanation for withholding a material reference does not, by itself, prove intent to deceive.” Id. at 1291.  This holding disposes of the “sliding scale” approach applied in some earlier cases, in which intent could be inferred from the materiality of the withheld reference.  Seee.g., Cargill, Inc. v. Canbra Foods, Ltd., 476 F. 3d 1359 (Fed. Cir. 2007).

  1. Materiality. The court also made changes to the standard of materiality.  “[A]s a general matter, the materiality required to establish inequitable conduct is but-for materiality.” Id.  That is, the party alleging inequitable conduct must prove by clear and convincing evidence that the PTO would not have allowed a claim but for the alleged inequitable conduct.  This is a stricter test than the pre-existing PTO Rule 56, which also considers information to be material if “It refutes, or is inconsistent with, a position the applicant takes in opposing an argument of unpatentability relied on by the Office, or asserting an argument of patentability.” 37 C.F.R. § 1.56.  Such information does not necessarily meet the but-for test of materiality.

The court held that there is an exception for affirmative egregious conduct, however.  “Although but-for materiality generally must be proved to satisfy the materiality prong of inequitable conduct, this court recognizes an exception in cases of affirmative egregious misconduct … such as the filing of an unmistakably false affidavit.” Id. at 1292.  In those cases the misconduct is irrebuttably presumed to be material.

  1. Therasenseand the Patent Office.  The decision in Therasense was in part a response to the uninteded consequences of prior inequitable conduct cases.  “Left unfettered, the inequitable conduct doctrine has plagued not only the courts but also the entire patent system. … With inequitable conduct casting the shadow of a hangman’s noose, it is unsurprising that patent prosecutors regularly bury PTO examiners with a deluge of prior art references, most of which have marginal value.”  Therasense, 649 F.3d at 1289.  As evidence of this the court cited the United States’ amicus brief, which noted an application in which the applicant had submitted nine hundred references without any indication of which ones were the most relevant.  Id.

The problems with this strategic behavior by patent applicants are two-fold.  Not only does the deluge of questionable prior art references make examination difficult and time-consuming, but it can also lead to applicants burying extremely relevant prior art underneath a pile of irrelevant references.  See, e.g., Molins PLC v. Textron, Inc., 48 F.3d 1172 (Fed. Cir. 1995) (holding that “‘burying’ a particularly material reference in a prior art statement containing a multiplicity of other references can be probative of bad faith” but is not per se inequitable conduct).  The holding in Therasense attempts to address these problems.  “[L]ow standards for intent and materiality have inadvertently led to many unintended consequences, among them, increased adjudication cost and complexity, reduced likelihood of settlement, burdened courts, strained PTO resources, increased PTO backlog, and impaired patent quality. This court now tightens the standards for finding both intent and materiality in order to redirect a doctrine that has been overused to the detriment of the public.” Therasense, 649 F.3d at 1290.

  1. The America Invents Act also addresses the issue of inequitable conduct through the newly-created supplemental examination procedure.  Supplemental examination allows a patent owner to “cure” inequitable conduct by submitting “information believed [by the patent owner] to be relevant to the patent.”  AIA § 12; 35 U.S.C. § 257(a).  Specifically, “A patent shall not be held unenforceable on the basis of conduct relating to information that had not been considered, was inadequately considered, or was incorrect in a prior examination of the patent if the information was considered, reconsidered, or corrected during a supplemental examination of the patent.”  35 U.S.C. § 257(c)(1). If the information raises a substantial new question of patentability, then the supplemental examination will be converted into a reexamination.  35 U.S.C. § 257(b).

There are several limitations on supplemental examination. The procedure cannot be used to cure fraud, and it cannot be requested after filing a civil action alleging infringement of the patent, nor does it protect against a charge of inequitable conduct made in a civil action before the supplemental examination was requested.  35 U.S.C. § 257(c)(2).

  1. The America Invents Act also changed the jurisdictional rules in appeals from patent litigation in the district courts by modifying the outcome reached in Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826 (2002).  Under Holmes, the test for determining whether appellate jurisdiction existed in the Federal Circuit (as compared to a regional circuit) focused on whether a question under the patent statute was presented on the face of the plaintiff’s well pleaded complaint, and not within any counter-claims.  Thus, if the only patent law issue in the case were found in a counter-claim, then a regional circuit had jurisdiction under Holmes. Section 19(b) of the AIA, effective on September 16, 2011, amends the appellate jurisdictional statute, 28 U.S.C. § 1295(a)(1), giving the Federal Circuit jurisdiction over appeals “in any civil action arising under, or in any civil action in which a party has asserted a compulsory counterclaim arising under, any Act of Congress relating to patents or plant variety protection.”
  2. The Hatch-Waxman Act allows a drug manufacturer to seek approval to market a generic version of an existing drug using a streamlined process known as an Abbreviated New Drug Application, or ANDA.  Many brand name drugs are covered by one or more patents, however, and the FDA cannot approve an ANDA until the patents covering the drug have expired.  These patents are listed in an FDA publication called the Orange Book, along with a description of the patent scope, known as use codes.  The FDA does not verify the accuracy of use codes.

In order to expedite the approval process, a generic manufacturer may file what is known as a paragraph IV certification, which alleges that the patents covering the brand drug are either invalid or would not be infringed by the generic.  A paragraph IV certification is considered a constructive act of infringement under 35 U.S.C. § 271(e)(2)(A).  Recently, the Supreme Court held that, as an alternative to a counterclaim for invalidity or noninfringement, a generic manufacturer may sue to “force correction of a use code that inaccurately describes the brand’s patent as covering a particular method of using the drug in question.” Caraco Pharmaceutical Labs., Ltd. v. Novo Nordisk A/S, ___ U.S. ___ (2012).  The Court held that 21 U.S.C. § 355(j)(5)(C)(ii)(I), which allows a generic manufacturer to sue to correct “patent information submitted by the [brand]…on the ground that the patent does not claim either the drug…or an approved method of using the drug,” also allows for the correction of use codes.  Effectively this is a kind of non-infringement claim, since if the use code is inaccurate then the listed patent does not actually cover the generic and so the generic does not infringe.



Current errata sheet for chapter 9.


 Additional Source Material