USPTO Issues Final Rule on Patent-Agent Privilege

On November 7, 2017, the USPTO issued its long-awaited new rule extending the USPTO’s attorney-client privilege to registered U.S. patent agents.  The final rule can be found here.[1]  This new rule has long been wanted by patent practitioners because, up until now, there existed a gray area of the practice which potentially prevented clients from properly communicating with their agents about patent filing strategies because of the possibility that their correspondence would be subject to discovery in a litigation.  Some firms worked around this problem by having a patent attorney “supervise” the work of the patent agent, but even in these situations, there remained the possibility that the privilege did not attach to the agent’s communications with the client.  Furthermore, the boutique firm or patent agency remained under non-privileged cloud.  As a result, the new rule provides a measured level of clarity to the patent practice.

The scope of the new privilege covers all patent prosecution-related communications between a client and an agent, including prosecution of patent applications, development of patent strategies, and the agent’s communications with foreign IP offices related to the client’s U.S. patent application.  Discovery in Patent Trial and Appeal Board (PTAB) proceedings usually implicates prosecution work, and, as a result, the scope of the patent agent privilege covers both the communications about the prosecution and the PTAB proceedings.

The rulemaking acquired some urgency after the Federal Circuit found a patent agent privilege in In re Queen’s University at Kingston.[2]  In Queen’s University, the Federal Circuit held, in finding a patent agent privilege, that the patent practice was not just a “law-like activity” but an actual “congressionally-authorized practice of law.”  The Federal Circuit further noted that: “[w]hether those communications are directed to an attorney or his or her legally equivalent patent agent should be of no moment.  Indeed, if we hold otherwise, we frustrate the very purpose of Congress’ design; namely, to afford clients to freedom to choose between an attorney and a patent agent for representation before the Patent Office.”[3]

The final rule codifies the patent-agent privilege as 37 C.F.R. § 42.57, as follows:

(a) Privileged communications.  A communication between a client and a USPTO patent practictioner or a foreign patent practitioner that is reasonably necessary and incident ot the scope of the patent practitioner’s authority shall receive the same protections of privilege under Federal law as if that communication were between a client and an attorney authorized to practice in the United States, including all limitations and exceptions.

(b) Definitions.  The term “USPTO patent practitioner” means a person who has fulfilled the requirements to practice patent matters before the United States Patent and Trademark Office under § 11.7 of this chapter.  “Foreign jurisdiction patent practitioner” means a person who is authorized to provide legal advice on patent matters in a foreign jurisdiction, provided that the jurisdiction establishes professional qualifications and the practitioner satisfies them.  For foreign jurisdiction patent practitioners, this rule applies regardless of whether that jurisdiction provides privilege or an equivalent under its laws.

(c) Scope of coverage.  USPTO patent practitioners and foreign jurisdiction patent practitioners shall receive the same treatment as attorneys on all issues affecting privilege or waiver, such as communications with employees or assistants of the practitioner and communications between multiple practitioners.

The provisions of 37 C.F.R. § 42.57 take effect on December 7, 2017.

[1] 82 Fed. Reg. 51570-75 (Nov. 7, 2017).

[2] 820 F.3d 1287 (Fed. Cir. 2016).

[3] Id. at 1298.

 

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Fed Circuit Watch: Litigation Misconduct and Inequitable Conduct

By Brent T. Yonehara

On July 27, 2017, the Court of Appeals for the Federal Circuit decided Regeneron Pharmaceuticals, Inc. v. Merus B.V.  In Regeneron, the Federal Circuit affirmed a district court’s finding that Regeneron’s patent 8,502,018 was unenforceable due to inequitable conduct.[1]  This case brings up the Therasense New Order of Inequitable Conduct in patent cases.

The law of inequitable conduct has slowly begun to take shape seven years after Therasense[2] was decided by the Federal Circuit.  In Therasense, the Federal Circuit enunciated the elements for determining an inequitable conduct defense.  First, there must be materiality.  Second, there must be intent to deceive the USPTO. [3]

To start with, the duty to disclose and deal in good faith with the USPTO in patent applications extends to the patent applicants, owners, inventors, and patent practitioners of the application.[4]  All of these individuals must disclose information material to patentability (emphasis added).[5]  A prima facie case of unpatentability is established when the information demonstrates that a claim is unpatentable under the preponderance of evidence, with each claim term given its broadest reasonable interpretation consistent with the specification.[6]  Also, information is not considered material if it is cumulative to information already of record.[7]

Further, these individuals must also have a specific intent to deceive the USPTO by failing to disclose information as to the patentability of the claim in question; this must be proved by a much higher clear and convincing evidence standard.[8]  While a direct intent is rarely proven, an inferred intent can be made from indirect and circumstantial evidence which must be the “single most reasonable inference able to be drawn from the evidence.”[9]

In Regeneron, the patent practitioners failed to disclose four prior art references cited by third parties in related U.S. and foreign prosecutions.  The Regeneron practitioners alleged that while the references withheld is not in dispute, the references themselves were merely cumulative of what was already in the file wrapper.  The subject matter of the ‘018 patent in question was the mouse-human chimera, or genetically modified mouse, for purposes of developing genetically modified mouse antibodies to be used in humans to combat certain bacteria or viruses.  Claim 1 recited:

  1. A genetically modified mouse, comprising in its germline human unrearranged variable region gene segments inserted at an endogenous mouse immunoglobulin locus.

Regeneron had argued that under the broadest reasonable interpretation, Claim 1 was limited to a reverse chimeric mouse.  In other words, Regeneron argued for a much narrower construction.  However, Merus argued that constant region of the gene segments in the claimed mouse contained either mouse or human genes, and could be reverse chimeric, humanized, or fully human.  Thus, Merus argued a broader construction of Claim 1.

Regeneron-Claim1-murine-Ig

The court found that the transitional phrase “comprising” was an open-ended term, use of the term did not exclude unrecited elements.[10]  Therefore, the germline was not just limited to mouse and also included human, which further meant the claim language included reverse chimeric, human and fully human genes.[11]

On the intent requirement, inferred intent to deceive was demonstrated by Regeneron’s in-house patent practitioner’s failure to produce discovery documents relevant to the prosecution of the ‘018 patent.  This was deemed the litigation misconduct.  Further, Regeneron had an intent to deceive because their in-house counsel failed to submit the four prior art references during the prosecution of the ‘018 patent, as it was in the belief of the in-house counsel that the references were not material to patentability.   The Federal Circuit pointed out that “Regeneron’s litigation misconduct [] obfuscated its prosecution misconduct.”[12]  Thus, the Federal Circuit held the district court did not abuse its discretion by drawing an “adverse inference of specific intent to deceive”[13] on the part of Regeneron.

Inequitable conduct is a serious issue in prosecution because, as a defense, and if used successfully, it could not only invalidate one claim of a patent but also the entire patent is found unenforceable, which cannot be cured by a reissue.[14]  This may be the reason why these cases have convoluted and lengthy histories because these issues could not be resolved back in the PTAB.

Another post-Therasense case, American Calcar v. American Honda Motor Co., [15]  also went through the numerous machinations of the federal court system, and also turned out badly for the plaintiff.  In that case, a car guidance system patent were at issue.  The Federal Circuit affirmed the district court’s ruling that the patent was invalid under §§102 and 103, and unenforceable due to inequitable conduct due to inventor’s failure to submit prior art.

As for the intent requirement, the court determined that the Calcar inventor knew that his photos of the Honda Acura car were material to patentability, and therefore, withheld them from the Examiner.  In doing so, the Calcar inventor had the specific intent to deceive the USPTO because there was an inference the inventor had undisclosed information about the Honda Acura car system (i.e., the prior art), he knew it was material, and, further, he deliberately withheld it from disclosure as required under 1.56.

These line of cases show that the there are ramifications post-prosecution, and that intent to deceive is not just limited to strictly those required under their 1.56 duty (i.e., the litigation counsel further downstream).  Further, as shown with Regeneron, intent to deceive can go back upstream to the original patent prosecutor when the litigation counsel way down the river engages in litigation misconduct (i.e., it could lead to disciplinary action before the OED).  Based just on this most recent case, the case law is beginning to show a trend of broad interpretation of intent to deceive and materiality required to show inequitable conduct.  As such, this case should be of deep concern for all patent practitioners.

[1] 144 F. Supp. 3d 530 (S.D.N.Y. 2015) (District Court found materiality of the prior art references), aff’d in divided Court, ___Fed. Appx.___ (Fed. Cir. 2017), CAFC No. 16-1346.

[2] Therasense, Inc. v. Becton Dickinson & Co., summ. j. granted, 560 F. Supp. 2d 835, 854, aff’d, 565 F. Supp. 2d 1088, 1127 (N.D. Cal. 2008), aff’d, 593 F.3d 1289, 1311 (Fed. Cir. 2010), reh’g granted, vacated & remanded, 649 F.3d 1276 (Fed. Cir. 2011) (en banc), aff’d upon remand, 864 F. Supp. 2d 856, 858 (N.D. Cal. 2012), aff’d on other grounds, 745 F.3d 513 (Fed. Cir. 2014).

[3] Id., 649 F.3d at 1290-91.

[4] See 37 C.F.R. §1.56(c); MPEP 2001.01.

[5] See 37 C.F.R. §1.56(b); MPEP 2001.05.

[6] See MPEP 2001.05.

[7] See 37 C.F.R. §1.56(b).

[8] See Therasense, supra, 649 F.3d at 1287, 1290.

[9] Id. (citing Star Scient. Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1366 (Fed. Cir. 2008).  See also Regeneron, supra (slip op. at 40) (Newman, J., dissenting) (noting that inferred intent must still be proven, and “absence of trial findings cannot be substituted by inference.”).

[10] See MPEP 2111.03 (“[t]he transitional term ‘comprising,’ . . . is inclusive or open-ended and does not exclude additional, unrecited elements or method steps.”)

[11] See Regeneron, supra (slip op. at 5-6, 13-14).

[12] Id. (slip op. at 37).

[13] Id. (slip op. at 38).

[14] See MPEP 2016 (“once a court concludes that inequitable conduct occurred, all the claims … are unenforceable.”); MPEP 2012 (“both 35 USC 251 and 37 CFR 1.175 . . . require that the error must have arisen ‘without any deceptive intention.’”).

[15] Am. Calcar, Inc. v. Am. Honda Motor Co., Inc., Case No. 06-cv-02433, 2008 WL 8990987 (S.D.Cal. Nov. 3, 2008), vacated and remanded in part, 651 F.3d 1318 (Fed. Cir. 2011), aff’d upon remand, Case No. 06-cv-0233, 2012 WL 1328640 (S.D.Cal. Apr. 17, 2012), aff’d, 768 F.3d 1185 (Fed. Cir 2014).

Patent Practitioner Ethics Rule Changes in USPTO

By Brent T. Yonehara

Several cases and proposed rule changes within that last few months harken changes to the professional ethics landscape for patent practitioners.

Patent Agent Privilege

Perhaps the biggest change in patent practitioner ethics is the proposed rule change for patent agent privilege, consistent with the 2016 Federal Circuit ruling in In re Queen’s University at Kingston, 820 F.3d 1287 (Fed. Cir. 2016).   In Queen’s University, the Federal Circuit enunciated, for the first time, a limited privilege protecting patent agent-client communications for the purposes of preparing and prosecuting patent applications.  Id. at 1302.  Fast forward ten months, and the USPTO recently annouced a proposed rule change, consistent with the Queen’s University ruling, governing patent agent privilege relating to discovery proceedings within the Patent Trial and Appeal Board (PTAB).  The USPTO’s proposed new rule § 42.57, whereby patent agents would be afforded a privilege similar to the attorney-client privilege, for any patent prosecution-related communication between the agent and client, the text which follows as:

(a) Privileged communications. A communication between a client and a domestic or foreign patent practitioner that is reasonably necessary or incident to the scope of the patent practitioner’s authority shall receive the same protections of privilege as if that communication were between a client and an attorney authorized to practice in the United States, including all limitations and exceptions.

(b) Definitions. The term ‘‘domestic patent practitioner’’ means a person who is registered by the United States Patent and Trademark Office to practice before the agency under section 11.6. ‘‘Foreign patent practitioner’’ means a person who is authorized to provide legal advice on patent matters in a foreign jurisdiction, provided that the jurisdiction establishes professional qualifications and the practitioner satisfies them, and regardless of whether that jurisdiction provides privilege or an equivalent under its laws.

Comments were due December 19, 2016, and the final rule change is forthcoming.  This would be a welcome addition to patent practice ethics, and provide a needed dose of uniformity between all registered patent practitioners, attorneys and agents alike.

Duty of Disclosure

Another proposed rule change to amend the duty of disclosure was published October 28, 2016.  This rule change was meant to bring USPTO practice in line with the Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011), ruling by the Federal Circuit.  In Therasense, the Federal Circuit raised the standard for a finding of inequitable conduct in order to “cure the problem of overdisclosure of marginally relevant prior art to the [US]PTO.”  Id. at 1291.  The Federal Circuit went on to state that only a “but-for” materiality would support a finding of inequitable conduct.  Id.

Comments were due on December 27, 2016, and were generally negative and widely divergent.  BIO specifically believed the duty of discloure should be abolished.  On the other hand, IPOA, AIPLA, and NAPP all favored a change to conform with the Therasense ruling.  More comments are anticipated to occur before a final rule is enacted.

Based on these two proposed rule changes, there appears to be major changes in the ethical landscape for patent practitioners in the near months to come.