Federal Circuit clamps down on misconduct claims

A recent U.S. Court of Appeals for the Federal Circuit decision puts the patent bar on notice that vague claims of another lawyer’s intent to mislead or withhold data from the U.S. Patent and Trademark Office will no longer fly.

The precedent-setting Aug. 4 ruling in Exergen Corp. v. Wal-Mart Stores Inc. makes it harder for patent lawyers to prove that another attorney intentionally deceived the PTO when presenting a patent application. Lawyers defending patent infringement cases frequently accuse the other side of such misconduct — referred to as inequitable conduct — which can disqualify a patent or some of its claims. Attorneys say misconduct accusations are so frequent and frivolous that they’re significantly driving up the cost of patent litigation.

On the same day as the Federal Circuit ruling, the American Bar Association (ABA) approved of resolutions favoring restrictions on such misconduct claims.

The ABA House of Delegates’ vote to adopt the policies earlier this month means the association can now file amicus briefs supporting its position. The ABA’s goal is to preserve but limit a lawyer’s ability to bring misconduct claims, said Gordon T. Arnold, a patent attorney at Houston’s Arnold & Knobloch, and the immediate past chair of the ABA’s intellectual property section.

Arnold said changes are necessary because misconduct claims boost litigation costs. He also said patent attorneys are inundating the PTO with unnecessary supporting documents to fend off future misconduct claims.

“It is an appropriate defense,” he said. “It does need to be there, but it does need to be balanced.”

FRAUD PLEADING STANDARDS

The Federal Circuit’s 11 1/2-page discussion in Exergen about misconduct claims tied its pleading standards directly to the Federal Rules of Civil Procedure’s fraud pleading standards. “The pleading must identify the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO,” stated the ruling.