Inequitable Conduct in Canadian Patent Prosecution

The United States Court of Appeals for the Federal Circuit recently provided an example of when patents will be invalidated due to inequitable conduct. Canadian patent law presently has no comparable doctrine of inequitable conduct, but the US ruling provides an interesting comparative basis from which to discuss the duty of good faith in Canadian patent prosecution.

The US doctrine of inequitable conduct is based on “clean hands” – parties acting in bad faith should not be entitled to an equitable remedy. As presently interpreted by the US Federal Circuit, it requires (1) an intent to deceive the Patent and Trademark Office, and (2) materiality in the misrepresentation made, information submitted, or information omitted. Significantly, a finding of inequitable conduct can render granted patents unenforceable. The USPTO’s Patent Rule 1.56 additionally provides for a general “duty of candor and good faith in dealing with the [Patent] Office.” Under this rule, a patent will not be granted on an application “with which fraud on the Office was practiced or attempted or the duty of disclosure was violated through bad faith or intentional misconduct.” Prior to the Therasense, Inc. v. Becton, Dickinson and Co case, materiality was interpreted in line with the 1992 revision of USPTO’s Rule 56, under the standard of “importance to a reasonable examiner.” Therasense separated the close relation between the judicial doctrine and USPTO rule, and applied a stricter standard to inequitable conduct.

The case giving rise to this comment, Intellect Wireless, Inc. v HTC Corp., concerned the alleged infringement of patents involving wireless transmission of caller identification. The defendant countered by alleging the patents were invalid due to the inventor’s inequitable conduct during prosecution. To overcome a prior art challenge, the inventor had made false declarations that the claimed invention had been reduced to practice at a certain earlier date. Although the declarations were later amended, the false statements were never removed, corrected, or called to the attention of the PTO. Applying the Therasense standard, the US Court of Appeals agreed with the defendant and found the patents, although for a novel invention, invalid for the inventor’s “affirmative egregious misconduct” in filing the false declaration.

Canadian patent prosecution law currently lacks a doctrine of inequitable conduct or a general duty of good faith, although provisions do punish some acts of bad faith. Thus, under s.53 of the Patent Act, a patent is void if an application willfully, for the purposes of misleading, makes “material allegation in the petition of the applicant in respect of the patent is untrue” or omits or adds information to the specification that is either more or less than necessary. A patent must also demonstrate utility, and therefore must accurately describe the novel invention. Canada does have a narrowly defined duty of good faith: s.73(1)(a) of the Patent Act requires applicants to “reply in good faith to any requisition made by an examiner in connection with an examination.” Although the Federal Court of Appeal had the opportunity to introduce a general duty of good faith, it declined to extend the duty past the boundaries of section 73.

There is a significant limit to the duty under s.73: its breach will not invalidate a granted patent. The section applies only to requisitions made by an examiner during examination. The patent becomes abandoned if an applicant does not meet this duty during examination, but it can later be reinstated under section 73(3). By contrast, in the Intellect Wireless case, the inventor’s “affirmative act of egregious misconduct” was sufficient to invalidate the granted patents, without regard to the characteristics of the inventions or the manner in which they were described.

The US case raises once again the question of whether a general duty of good faith should be introduced into patent prosecution in Canada. The inequitable conduct doctrine reflects a moral principle that no benefit should be obtained by misrepresentation. It has been argued that the doctrine can also reduce the rate of low quality patents. But should the actions of the applicant matter more than the value and quality of the application? If such a duty were introduced, Canada should take account of the U.S. experience. Practitioners heaved a general sigh of relief when the Federal Court of Appeal of Canada declined to expand the specific duty in section 73(1) into a general duty of good faith. The doctrine has been described as a plague on the U.S. system due to the prolific use of the doctrine as a defence in “unwarranted” situations, causing increased litigation costs. It may also increase the cost of examination by encouraging inventors to disclose more than necessary. A general Canadian duty of good faith should not be created if it results in increased costs to users of the patent system, regardless of the moral imperative behind it.

Mark Bowman is a JD Candidate at Osgoode Hall Law School and is enrolled in Osgoode’s Intellectual Property Law Intensive Program.  As part of the program requirements, students were asked to write a blog on a topic of their choice.

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