Pleading Standards For Inequitable Conduct - Did Therasense Change The Rules?

In its recent Therasense opinion, the Federal Circuit "tightened the standards for finding both intent and materiality in order to redirect a doctrine that has been overused to the detriment of the public," because "the inequitable conduct doctrine has plagued not only the courts but the entire patent system." Therasense, Inc. v. Becton-Dickinson & Co., 649 F.3d 1276, 1289-90 (Fed. Cir. 2011) (en banc). This tightened standard severed the "sliding-scale" link between intent and materiality – intent to deceive cannot be inferred from materiality alone – established that "but-for" materiality is generally required, and clarified that clear and convincing evidence of deceptive intent means that a specific intent to deceive the PTO must be "the single most reasonable inference able to be drawn from the evidence." Id. at 1290-91. The Therasense opinion altered the substantive elements of inequitable conduct, and has also led to a flurry of challenges to inequitable conduct defenses and counterclaims at the pleading stage. A number of recent opinions have discussed whether and how Therasense changed the standards for pleading, not just proving, inequitable conduct.

Under Federal Circuit law, inequitable conduct is viewed as a type of fraud subject to the heightened pleading requirements of Rule 9(b):

Moreover, although 'knowledge' and 'intent' may be averred generally, a pleading of inequitable conduct under Rule 9(b) must include sufficient allegations of underlying facts from which a court may reasonably infer that a specific individual (1) knew of the withheld material information or of the falsity of the material misrepresentation, and (2) withheld or misrepresented this information with a specific intent to deceive the PTO.

Exergen Corp. v. Wal-Mart Stores, 575 F.3d 1312, 1328-29 (Fed. Cir. 2009). The substantive changes to the merits determination of inequitable conduct in Therasense do require a corresponding change in pleadings so that, for example, the facts alleged support a finding of but-for materiality if taken as true, and do not base intent solely on materiality. See, e.g., Eon Corp. IP Holdings, LLC v. T-Mobile USA, Inc., et al., No. 6:10-CV-379-LED-JDL, slip op. at 6 (E.D. Tex. Dec. 13, 2011).

Some patent-holders have argued that Therasense implicitly raised the Exergen pleading standard so that a "reasonable inference" is no longer enough and that the facts plead in support of inequitable conduct must, if taken as true...