Patents and Trademarks: The Duty of Good Faith : Patents and Trademarks: The Duty of Good Faith
Slide2 : Duty of Good Faith
Patents―Duty of Candor
Trademarks―Fraud
Slide3 : Patents: Duty of Candor
Slide4 : Rule 56
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.
Slide5 : Who?
Each inventor
Each attorney or agent who prepares or prosecutes the application
Every other person who is substantively involved in the preparation or prosecution of the application and who is associated with the inventor, with the assignee or with anyone to whom there is an obligation to assign the application
Slide6 : What is Material? 1977-1992
When there is a substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent
Under this rule, if the information withheld is not as pertinent as that considered by the examiner, or is merely cumulative to that considered by the examiner, such information is not material
Slide7 : What is Material? 1992-present
[I]nformation is material when it is not cumulative, and
It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim; or
It refutes, or is inconsistent with, a position the applicant takes in: (i) Opposing an argument of unpatentability, or (ii) Asserting an argument of patentability.
Slide8 : Is There a Difference?
Hoffmann-La Roche v. Promega Corp. (Fed. Cir. 2003)
“Although the current standard was not in effect at the time of the prosecution of this patent, the new standard was not intended to constitute a significant substantive break with the previous standard”
Slide9 : Is There a Difference?
Dayco Prods. v. Total Containment (Fed. Cir. 2003)
“Because we conclude that the outcome of this appeal would be the same under either materiality standard, we leave for another day a final disposition of this issue”
Slide10 : There is NO Difference!
Digital Control v. Merlin Technology (Fed. Cir. 2006)
“the [new] standard of materiality … merely provides an additional test of materiality. That is, if a misstatement or omission is material under the new Rule 56 standard, it is material. Similarly, if a misstatement or omission is material under the "reasonable examiner" standard or under the older three tests, it is also material.”
Slide11 : When?
Golden Valley Microwave v. Weaver Popcorn (ND Ind. 1992)
Stating in finding inequitable conduct that “the case law and the . . . (MPEP) § 2002.03 (a) and § 2003 state that such references must be cited to the Examiner promptly and as soon as the applicant is aware of the references”
See also 37 C.F.R. § 1.97 (3 month rules)
Slide12 : When?
While claims pending, until canceled withdrawn or abandoned
MPEP § 2012 (duty of candor issues can arise during reissue)
MPEP § 2280 (duty of candor explicitly required during reexamination)
MPEP § 2001.03 (duty of candor required during all proceedings with the Office)
Slide13 : Breach: Inequitable Conduct
Two elements:
Affirmative misrepresentation of a material fact, failure to disclose material information, or submission of false material information, and
Intent to deceive
Burden is clear & convincing
Question of law
Slide14 : Breach: Inequitable Conduct
A finding of materiality does not lead to a presumption of intent, but the more material a reference, the lesser the degree of intent required to prove inequitable conduct
Intent generally inferred from the facts and circumstances because direct proof of intent usually not available
Slide15 : Breach: Inequitable Conduct
Intent can be shown by proving a high degree of materiality and the applicant “should have known” of its materiality
Gross negligence alone is not sufficient
Slide16 : Breach: Misrepresentations
Refac Int’l v. Forward Reference Sys. (Fed. Cir. 1996)
Holding that the submission of misleading affidavits, which failed to disclose the affiant’s prior connection to the assignee or his prior knowledge of the invention, was inequitable conduct
Slide17 : Breach: Misrepresentations
Merck v. Danbury Pharmacal (Fed. Cir. 1989)
Upholding finding of inequitable conduct where Merck emphasized the drug’s freedom from side effects like depression, muscle weakness, drowsiness, although FDA submissions established the most common side effect was drowsiness
Also withheld prior art
Slide18 : Breach: Misrepresentations
Novo Nordisk v. Bio-Technology Gen. (Fed. Cir. 2005)
Holding patent unenforceable for inequitable conduct where the applicant held out example 1 as actual data, when it was only prophetic and where the example was important in determining that the priority document was enabling
Slide19 : Breach: Omissions
Molins PLC v. Textron (Fed. Cir. 1995)
“Failure to cite to the PTO a material reference cited elsewhere in the world justifies a strong inference that the withholding was intentional”
Slide20 : Breach: Omitting Best Mode
Consolidated Aluminum v. Foseco Int’l (Fed. Cir. 1990)
Affirming a holding of inequitable conduct where the patentee failed to provide the preferred slurry composition
Slide21 : Breach: Omitting Inventors
Frank’s Casing v. PMR Techs. (Fed. Cir. 2002)
3 inventors named, 4th omitted, statement of refusal to sign oath for 3rd, true inventors innocent, but cannot correct…
“if unenforceable due to inequitable conduct, a patent may not be enforced even by ‘innocent’ co-inventors. One bad apple spoils the entire barrel.”
Slide22 : Breach: Partial Translation
Semiconductor Energy v. Samsung (Fed. Cir. 2000)
Affirming the invalidation of the patent due to inequitable conduct where a Japanese partial translation was found to be misleading and where the inventor “whose native language is Japanese, understood the materiality of the Canon reference”
Slide23 : Breach: Subject Matter Conflict
Molins PLC v. Textron (Fed. Cir. 1995)
“The position in which Smith placed himself was one fraught with possible conflict of interest because Smith’s dual representation of two clients seeking patents in closely related technologies created a risk of sacrificing the interest of one client for that of the other and of failing to discharge his duty of candor to the PTO with respect to each client”
Slide24 : Breach: Litigation
Critikon v. Becton Dickinson (Fed. Cir. 1997)
“Critikon should have disclosed that the original Lemieux patent was concurrently involved in the present litigation and that claims of invalidity and inequitable conduct were asserted against the patent”
Slide25 : Breach: Burying
Golden Valley Microwave v. Weaver Popcorn (N.D. Ind. 1992)
“It is likewise a violation of the duty of candor . . . to disclose a pertinent prior art reference to the examiner in such a way as to ‘bury’ it or its disclosures in a series of disclosures of less relevant prior art references . . .”
Slide26 : Breach: Related Cases
McKesson Info. Sol’ns v. Bridge Med. (Fed. Cir. 2007)
3 related applications, 2 examiners
Each cross cited in other, but art raised by Examiner in one case is not cited in other, nor was the substance of rejection cited, and inconsistent argument made
NOA not cited (but same Examiner in both cases) and double patenting rejection conceivable
Slide27 : Breach: Related Cases
McKesson cont…
Omitted art not cumulative, even though other art teaches 3-node communications:
“unlike the Baker patent, only two nodes are described in any significant detail in the Hawkins patent. ”
“we find no clear error in the district court's conclusion that Baker discloses three-node communication more clearly than Hawkins”
Slide28 : Breach: Related Cases
McKesson cont…
No procedures in place to cross-cite OA
“his firm at the time did not have procedures in place for citing office actions in co-pending applications…”
“material rejections in co-pending applications fall squarely within the duty of candor.”
Slide29 : Breach: Related Cases
McKesson cont…
“allowance of the three-node system of the '372 patent claims plainly gives rise to a conceivable double patenting rejection”
Slide30 : Breach: Related Cases
McKesson cont…
Even where same Examiner allowed both cases!
“a prosecuting attorney should not ‘assume that [a PTO examiner] retains details of every pending file in his mind when he is reviewing a particular application’”
Slide31 : Breach: Related Cases
McKesson cont…
Attorney argued that art did not teach 3-node communications, though omitted art did
Therefore, inconsistent argument made!
Slide32 : Breach: Consequences
Patent unenforceable
Attorney’s fees
Antitrust claims
Disciplinary action or even disbarment
Slide33 : Breach: Infectious Unenforceability
Fox Indus. v. Structural Preservation Sys. (Fed. Cir. 1990)
“A breach of the duty of candor early in the prosecution may render unenforceable all claims which eventually issue from the same or a related application”
Slide34 : Breach: Infectious Unenforceability
Consolidated Aluminum v. Foseco (Fed. Cir 1990)
“Consolidated’s intentional concealment of the best mode and disclosure of a fictitious inoperable mode during prosecution of the application for the ‘917 patent so soiled Consolidated’s hands as to render the [continuation] ‘081, ‘212 and ‘303 patents equally unenforceable”
Slide35 : Compliance Tips
Send “duty of candor” letter with draft and after filing
Plain English, copy of rule, emphasize consequences of breach
Checklist of information to consider
Web pages, abstracts, posters, offers for sale, brochures, litigation, public uses, etc.
Slide36 : Compliance Tips
Send to the letter inventors and IP manager, but...
Maybe president too? division manager? marketing? technicians? co-authors?
Follow-up phone call?
Inform clients that copies of best prior art can reduce drafting & prosecution fees
Slide37 : Compliance Tips
Keep a separate art file where client has a large portfolio of related technology
Art is kept alphabetically in the file, along with an index that provides an indication of the relevance of each, and where cited
Add art cited by Examiner
Helps ensure related applications cross-cited
Cross-cite Office Actions per McKesson?
Slide38 : Compliance Tips
Prior art search not required, but…
Wise to check inventors own papers and websites
Slide39 : Compliance Tips
Clarify difference between actual v. prophetic work in drafting
Include conflicts of interest and failed experiments* in preparing Declarations
*Ask about failed experiments during drafting, can help to show non-obviousness
Slide40 : Compliance Tips
Clean file on issuance, discard drafts and notes
Should look like PTO file with only official correspondence
Slide41 : Compliance Tips
What if you find art that has not been cited?
Determine if material and not cumulative,
Document!
Cure unintentional breach by sending to PTO with complete statement of facts surrounding omission
If needed withdrawn from issue, or re-issue or re-examine to clarify the record
Slide42 : Trademarks: Fraud
Slide43 : There IS a Duty of Good Faith…
Aromatique v. Gold Seal (8th Cir. 1994)
“Aromatique defended its actions in part by asserting that an applicant for a trademark owes no duty of candor to the PTO. This is plainly wrong”
Slide44 : But Perhaps Less Burdensome …
TM rights exist on first use
Registration only confers certain procedural rights (such as incontestability) on owners
No rights exist outside of an issued US patent
Therefore the duty of candor is more burdensome in the patent context
Slide45 : And Codified as Fraud…
Not codified as duty of candor or good faith
Instead codified as prohibiting “fraud”
“Any person who shall procure registration in the Patent and Trademark Office of a mark by a false or fraudulent declaration or representation, oral or in writing, or by any false means, shall be liable in a civil action by any person injured thereby for any damages sustained in consequence”
Slide46 : Who?
“Any person” who procures registration
Attorney, owner, declarant
Slide47 : When?
The applicable time period is not expressly codified
But case law provides that the duty exists throughout the application for trademark
Includes a duty to continuously review and amend the Statement of Use oath
Slide48 : When?
Rosso & Mastracco. v. Giant Food (Fed. Cir. 1983)
“RM bases its claim of fraud on the ground that Giant had a duty, which it failed to carry out, to continuously review and amend the oath filed with its application … We do not doubt that an applicant has that duty.”
Slide49 : No Duty to Search…
Money Store v. Harriscorp Finance (7th Cir. 1992)
“Nowhere does the Lanham Act specifically mandate a preapplication search by one who seeks a federal registration of a mark. The language of § 17 does not explicitly place such a burden on a potential registrant. To imply the duty…would appear inconsistent with the statutory scheme”
Slide50 : No Duty to Search?
International Star Class Yacht Racing v. Tommy Hilfiger (2nd Cir. 1996)
Failure to obtain a full search report may result in a finding of bad faith or even willful infringement if legal counsel's advice to obtain a full search report is ignored
Slide51 : Oath Requirement
Rosso & Mastracco v. Giant Food (Fed. Cir. 1983)
“That oath requires that an applicant aver that ‘no other person, firm, corporation, or association, to the best of his knowledge and belief, has the right to use such mark in commerce, either in the identical form thereof or in such near resemblance thereto as to be likely…to cause confusion…’”
Slide52 : No General Duty to Disclose…
Rosso & Mastracco v. Giant Food (Fed. Cir. 1983)
“The statute does not, however, obligate ‘one seeking federal registration of a mark to investigate and report all other possible users of an identical or confusingly similar mark.’”
Slide53 : Senior uses
Rosso & Mastracco v. Giant Food (Fed. Cir. 1983)
“We agree that a senior user ordinarily need not identify junior users in the oath.”
“The rights of a junior user must be clearly established and must be in an identical mark or one so similar as to be clearly likely to cause confusion.”
Slide54 : “Clearly Established” uses
Rosso & Mastracco v. Giant Food (Fed. Cir. 1983)
Therefore, disclose senior uses and junior uses that are clearly established, such as by judgment, settlement, registration
Slide55 : Breach: Fraud
Two elements:
False material statement or ommission in obtaining registration
Intent to deceive PTO
Burden is clear & convincing
Question of fact
Slide56 : Fraud: Intent
Aromatique v. Gold Seal (8th Cir. 1994)
“Proof that false statements were made to, or that facts were withheld from, the PTO, however, is not enough to show fraud for purposes of canceling a mark because of a party’s fraudulent conduct. In order to show that an applicant defrauded the PTO the party seeking to invalidate a mark must show that the applicant intended to mislead the PTO”
Slide57 : Fraud: Intent
Medinol v. Neuro Vasx (TTAB 2003)
“The appropriate inquiry is therefore not into the registrant’s subjective intent, but rather into the objective manifestations of that intent. ‘We recognize that it is difficult, if not impossible, to prove what occurs in a person’s mind, and that intent must often be inferred from the circumstances and related statement made by that person”
Slide58 : Fraud: Renewal Affidavit
Torres v. Cantine Torresella (Fed. Cir. 1986)
“The problem of fraud arises because Torres submitted a label that he knew or should have known was not in use that contained a mark clearly different from the one in use. In addition, he submitted an affidavit stating the mark was in use on wine, vermouth, and champagne when he knew it was in use only on wine”
Slide59 : Fraud: Statement of Use
Medinol v. Neuro Vasx (TTAB 2003)
“Respondent’s explanation … that the inclusion of stents in the NOA was ‘apparently overlooked’ - does nothing to undercut the conclusion that respondent knew or should have known that its statement of use was materially incorrect. Respondent’s knowledge that its mark was not in use on stents - or its reckless disregard for the truth - is all that is required to establish intent to commit fraud”
Slide60 : Fraud: Statement of Use
Standard Knitting v. Toyota (TTAB 2006)
Canceling a mark for a fraudulent use statement where “It was not reasonable for Mr. Groumoutis to believe that if the items of clothing were ever made or sold, even if the last sale took place 20 years ago, it would support a claim that the mark ‘is’ in use on the goods”
Slide61 : Cf. Nonuse Distinguished
Grand Canyon West Ranch v. Hualapai Tribe (TTAB 2006)
Where fraud is not alleged, an incorrect allegation of use about some, but not all, of the goods identified in an application will not cause the entire application to be declared void ab initio
Rather, the applicant will be permitted to amend its application to delete the goods on which the mark has not been used
Slide62 : Fraud: Ownership
Truong Giang v. Sunny Wong (TTAB 1999)
“We consequently find that [distributor], by advising the PTO that petitioner was his licensee and claiming under oath that he was the owner of the “Three Ballerina” mark when he knew or plainly should have known otherwise, made knowingly false and material representations of fact in connection with his application which induced the PTO to issue him the subject registration”
Slide63 : Fraud: False Statements
Falsely stating mark in use for 5 yrs
Falsely dating a certificate of mailing
Failure to disclose geographic identity
Failing to correct statements no longer true
Failing to disclose that mark now generic
Slide64 : Fraud: Consequence
Mark can be cancelled
But common law rights may still exist
Attorney’s fees
Disciplinary action or disbarment
Slide65 : Fraud: Consequence
Far Out Prods. v. Oskar (9th Cir. 2001)
“Moreover, even if Goldstein knowingly submitted a false declaration such that the appellees’ federal registration should be canceled, the appellees could (and did) still bring suit alleging common law trademark infringement.
Slide66 : Compliance Tips
Send duty of good faith letter to client
Plain English
Explain the oath
Mark used for ALL goods & services
Inquire about all other marks & any controversies/settlements/judgments
Explain the consequences of breach
Slide67 : Compliance Tips
Confirm that TM used with ALL listed goods
Specimens of each use?
Check catalogs, websites?
Investigate if there is an indication that ownership and use separated, mere licensees cannot acquire rights
See also, Christopher Cotropia, “Fraud on the Trademark and Copyright Office” at AIPLA MidWinter 2007 http://www.cotropia.com/bio/CotropiaAIPLAMid-Winter2007--TrademarkandCopyrightFraud.pdf : See also, Christopher Cotropia, “Fraud on the Trademark and Copyright Office” at AIPLA MidWinter 2007 http://www.cotropia.com/bio/CotropiaAIPLAMid-Winter2007--TrademarkandCopyrightFraud.pdf
See also, Tamsen Valoir, Ph.D. and David Hricik, J.D., Patents and Trademarks: The Duty of Good Faith, JPTOS 89(4): 287-300 (2007) tamsen.valoir@bakernet.com : See also, Tamsen Valoir, Ph.D. and David Hricik, J.D., Patents and Trademarks: The Duty of Good Faith, JPTOS 89(4): 287-300 (2007) tamsen.valoir@bakernet.com
QUESTIONS? : QUESTIONS?