USPTO Post-Grant Proceedings and the Duty of Candor
Lisa A. Dolak Syracuse University College of Law
Applicants and practitioners who have experience with the United States patent system are likely familiar with the duty of candor that applies during the prosecution of U.S. applications. That duty, set forth in 37 C.F.R. § 1.56, “includes a duty to disclose . . . all information known . . . to be material to patentability.” The justification underlying the duty of candor is that “[t]he public interest is best served, and the most effective patent examination occurs when, at the time an application is being examined, the [patent] Office is aware of and evaluates the teaching of all information material to patentability.”
The U.S. duty of candor is enforced primarily through the judicially-created inequitable conduct doctrine, which provides an equitable defense to a claim of patent infringement. If a court concludes that the duty was intentionally breached – either by the applicant or its legal representative – the subject patent may be held unenforceable for inequitable conduct.
Accordingly, U.S. patent applicants are well-advised to take appropriate measures to ensure compliance with the duty of candor. However, candor-related duties apply not only to applicants during prosecution. Petitioners and patent owners who become involved in the new post-grant contested proceedings in the United States Patent and Trademark Office (USPTO) are also bound by candor and disclosure duties under new rules promulgated pursuant to the America Invents Act.
New USPTO rule 42.11 expressly imposes an obligation of candor and good faith on participants in post-grant proceedings. It provides: “Parties and individuals involved in the proceeding have a duty of candor and good faith to the [USPTO] during the course of a proceeding.” The reason for the rule, according to the USPTO, is that “honesty before the [USPTO] is essential to the integrity of the proceedings.”
According to the USPTO, “The scope of the duty is comparable to the obligations toward the tribunal imposed by Rule 11 of the Federal Rules of Civil Procedure.” Accordingly, new Rule 42.11 requires candor regarding the applicable law and assertions of fact in post-grant proceedings.
The USPTO has indicated that the duty imposed by Rule 42.11 will be enforced via the Patent Trial and Appeal Board (PTAB) sanctions regime, outlined in 37 C.F.R. § 42.12. Rule 42.12(b) specifies available sanctions, including, for example, an order “holding facts to have been established in the proceeding,” “precluding a party from presenting or contesting a particular issue” or “excluding evidence,” or “[j]udgment in the trial or dismissal of the petition.” In addition, “[i]f appropriate, the misconduct may be reported to the Office of Enrollment and Discipline (OED) for consideration of a sanction directed to the attorney or firm.”
The second important new candor obligation imposed by the rules governing the new USPTO contested proceedings is a discovery-related obligation. New Rule 42.51 requires each petitioner and patent owner, as part of “routine discovery,” to serve on its opponent(s) “relevant information that is inconsistent with a position advanced by the party during the proceeding.” Such “relevant information that is inconsistent with a position advanced” is to be served “concurrent with the filing of the documents or things that contains the inconsistency,” “[u]nless previously served.”
The policy underlying this rule is the avoidance of requests for additional discovery, and ultimately, the pursuit of the USPTO’s objective of “secur[ing] the just, speedy, and inexpensive resolution of every proceeding.”
This obligation applies to “inventors, corporate officers, and persons involved in the preparation or filing of the documents or things.” Obviously, “persons involved in the preparation or filing of the documents or things” would include counsel who draft and submit papers advocating the parties’ positions, as well, presumably, as persons who submit witness affidavits or declarations. Accordingly, the obligation to disclose inconsistent information binds counsel, declarants, and parties.
The USPTO plainly contemplates the potential for PTAB imposed sanctions on parties who violate the duty imposed by Rule 42.51. In particular, the USPTO has indicated that a violation of the Rule 42.51 disclosure obligation would constitute an abuse of discovery, subject to sanction under 37 C.F.R. § 42.12(b). And clearly counsel who knowingly participate in a failure to comply with this rule could be referred for OED investigation and discipline. Furthermore, a patent owner’s violation or alleged violation of the obligation to disclose inconsistent information could lead to an inequitable conduct charge.
Post-grant practitioners and participants must develop an understanding of the new candor and disclosure obligations, and must do so in the context of the new procedures implemented for the conduct of these proceedings. These procedures include requirements that the parties make certain representations and disclosures at various stages of the proceeding. Such statements and representations must be made carefully in light of the applicable candor obligations in order to avoid omissions and misrepresentations that could result in PTAB sanctions, USPTO discipline, or inequitable conduct charges. Infringement defendants will no doubt carefully scrutinize the conduct of patentees in post-grant proceedings.