MCKESSON: MOVING THE THRESHOLD ON INEQUITABLE CONDUCT

SUMMARY

A recent decision by the Federal Circuit holding a patent unenforceable has moved the threshold on inequitable conduct when considering what information is “material to patentability” of a pending application.  The case extended the definition of “information material to patentability” to include prior art, office actions, and notices of allowance developed during the prosecution of applications, which are related not only by claims of priority, but also commonality of subject matter.

FULL ARTICLE

November 2007

Background

In the recent McKesson Info. Solutions, Inc. v. Bridge Medical Inc.¹ case, the Federal Circuit extended the definition of “information material to patentability” to include information developed during the prosecution of related applications.  Importantly, the McKesson case extends the definition of “related” applications to include not only applications related by claims of priority, but also applications related due to commonality of subject matter.

The United States Code of Federal Regulations (the “CFR”) imposes a “Duty of Disclosure, Candor and Good Faith” on the inventor and his or her representatives in the preparation or prosecution of patent applications.  The CFR observes: “A patent by its very nature is affected with a public interest.  The public interest is best served, and the most effective patent examination occurs when, at the time an application is being examined, the Office is aware of and evaluates the teachings of all information material to patentability.”²

The McKesson case concerned the prosecution of four patent applications by the patentee’s attorney, Attorney Schumann.  The four patent applications include:

(1) U.S. Patent Application No. 06/862,278 (the ‘278 Application);

(2) U.S. Patent Application No. 07/205,527 (the ‘527 Application);

(3) U.S. Patent Application No. 06/862,149 (the ‘149 Application); and

(4) U.S. Patent Application No. 07/078,195 (the ‘195 Application).

 The ‘527 Application and the ‘195 Application claim priority of the ‘278 Application.  The ‘149 Application disclosed and claimed similar subject matter as the ‘527, 195 and ‘278 Applications, but did not claim priority of any of these other Applications.

The three related applications (i.e., the ‘278, ‘527, and ‘195 Applications) were all before the same examiner, Examiner Trafton.  However, the ‘149 Application was before a different examiner, Examiner Lev. 

The ‘278 Application was abandoned in favor of the ‘527 Application.  The ‘527 Application issued as U.S. Patent No. 4,857,716 (the ‘716 Patent), which was the patent at issue in the McKesson case.  The ‘195 Application issued as U.S. Patent No. 4,835,372 (the ‘372 Patent).  The ‘149 Application issued as U.S. Patent No. 4,850,009 (the ‘009 Patent).

Holding

The District Court found, and the Federal Circuit affirmed, inequitable conduct arising from the failure of Attorney Schumann to disclose three items of information deemed material to patentability of the ‘716 Patent.

(i) Art cited by examiner in the ‘149 Application was material to the ‘716 Patent

The Court held that prior art cited by Examiner Lev during examination of the ‘149 Application was material to the patentability of the ‘716 Patent.  Specifically, Examiner Lev cited a particular reference, the Baker patent, in a rejection of the claims of the ‘149 Application.  The Court found that the Baker patent meets the “reasonable examiner” materiality standard and should have been disclosed to Examiner Trafton during prosecution of the application resulting in the ‘716 Patent. 

Further, the Court also held that the intent to deceive Examiner Trafton was inferable, because Attorney Schumann was informed of the materiality of the Baker patent by the PTO itself when Examiner Lev rejected claims in the ‘149 Patent having the same type of “communication” that Attorney Schumann had used to differentiate the claims of the ‘716 Patent from other prior art.

(ii) Rejection issued in the ‘149 Application was material to the ‘716 Patent

The Court held that the examiner’s rejection of the claims in the ‘149 Application was also material to the patentability of the ‘716 Patent.  Thus, not only was the underlying Baker patent held to be material, but the Court also held that the rejection itself to be material.

The Court reasoned that the rejection itself “would be of additional importance to Examiner Trafton because it contradicts...” Attorney Schumann’s earlier argument for patentability in the ‘716 Patent.

It should be noted that the patent holder McKesson argued that Schumann effectively disclosed Examiner Lev’s rejections by disclosing the existence of the ‘149 Application to Examiner Trafton.  However, the Court found that there is a duty of disclosure beyond mere citation of the existence of the co-pending applications.  Thus, disclosure of the existence of the ‘149 Application was deemed insufficient to discharge Schumann’s duty of disclosure.  Rather, citation of the actual rejection was deemed by the Court to be necessary.

(iii) The allowance of the related ‘372 patent was material to the ‘716 patent

The Court held that a notice of allowance in a co-pending application is material if the allowed claims could conceivably have given rise to a double patenting rejection.  As such, the Court held that the notice of allowance in the ‘372 Patent was material to the ‘716 Patent.

Importantly, the ‘372 and ‘716 Patents were both before the same examiner, Examiner Trafton.  In essence, Attorney Schumann failed to notify Examiner Trafton that he (Trafton) had allowed the continuation-in-part application prior to issuance of the original application and this oversight was sufficient to trigger unenforceability for inequitable conduct.

Conclusions

The holdings in McKesson highlight the importance of tracking the prosecution in related applications.  Again, these “related” applications include not only applications related by priority, but also applications related by commonality of subject matter. 

The purpose of this tracking is to ensure compliance to the duty of disclosure by cross citation of: (1) art cited in the related applications; and (2) all office communications (office actions, notices of allowance, etc) in the related applications.  The cross citations are necessary even though the same examiner may be handling the related application.  In fact, the cross citations are necessary to remind the examiner of actions taken by that same examiner in the related application.  Merely making the examiner aware of the relationships between applications is no longer sufficient.

In sum, “prior art” cited in a related application is material to patentability of a pending application when the core features of the “prior art” are similar to the subject matter of pending application.  Further, “rejections” in a related application are material to patentability of a pending application when the rejected claims in the related application are substantially similar to claims of pending application.  Finally, “allowances” in a related application are material to patentability of a pending application when the allowed claims in the related application could conceivably have given rise to double patenting rejection.

Courts have held that a finding of “fraud,” “inequitable conduct,” or violation of a duty of disclosure with respect to any claim in an application or patent, renders all the claims thereof unpatentable or invalid.³

The McKesson court’s findings -- that it is necessary to cross cite prior art and office communications from related applications in order to meet the Duty of Disclosure -- therefore raises the bar on the standards that must be applied in the prosecution of patent applications.

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© 2007 Ohlandt Greeley Ruggiero & Perle, LLP

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