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"Foreign Office Actions: To Disclose or Not Disclose?"
Michael K. Leachman
IP Law360
August 5, 2009

This article was originally published in the August 5 edition of IP Law360. The opinions expressed are those of the author and do not necessarily reflect the view of Porfolio Media, Inc., publisher of Law360. ©2009 Portfolio Media, Inc.

A patent may be rendered unenforceable for inequitable conduct if an applicant, with intent to mislead or deceive the examiner, fails to disclose information material to patentability or submits materially false information to the United States Patent and Trademark Office (USPTO) during prosecution of the application.  As recently noted by Federal Circuit Judge Richard Linn, the Federal Circuit’s recent proclamations addressing inequitable conduct have effectively adopted a simple negligence standard for proving deceptive intent, thereby perpetuating a return to the habit of charging inequitable conduct in almost every major patent case. See Larson Manufacturing Co. of South Dakota Inc. v. Aluminart Products Ltd., 90 USPQ2d 1257, 1273-1275 (Fed. Cir. 2009)(Linn, concurring)  With the lowering of the standard for proving deceptive intent, the stakes have been raised for U.S. patent practitioners to both identify and disclose any and all information material to patentability.

Patent practitioners have long presumed that details of foreign prosecution, including the foreign office actions themselves, were not material to prosecution in the United States.   After all, the Federal Circuit declared in 1998 that the details of foreign prosecution were not an additional category of material information. See ATD Corp. v. Lydall Inc., 48 USPQ2d 1321, 1331 (Fed. Cir. 1998).  However, the Federal Circuit’s  2003 decision in Dayco Products Inc. v. Total Containment Inc., 66 USPQ2d 1801 (Fed. Cir. 2003), and more recently the decisions in McKesson Information Solutions Inc. v. Bridge Medical Inc., 82 USPQ2d 1865 (Fed. Cir. 2007) and Larson Manufacturing Co. of South Dakota Inc. v. Aluminart Products Ltd., 90 USPQ2d 1257 (Fed. Cir. 2009), have raised doubts as to whether foreign office actions in related applications (i.e., continuation, divisional, or continuation-in-part applications) and associated applications (i.e., applications which disclose similar technology) must be disclosed to the USPTO.

In ATD Corp. v. Lydall Inc., ATD Corporation appealed the final judgment of the district court holding the claims in suit of United States Patents No. 5,011,743 (the ‘743 patent) and No. 5,111,577 (the ‘577 patent) to be invalid based on prior art.  Defendant Lydall, Inc. cross-appealed the district court’s determination that inequitable conduct was not established.  With respect to the inequitable conduct charge, Lydall argued that, during prosecution of the ‘577 divisional application, ATD withheld the PCT search report and prosecution records of the corresponding PCT application.  The Federal Circuit held that the International Search Report and Written Opinion in the corresponding PCT application were not material to prosecution in the United States, notwithstanding the fact that the USPTO was the International Search Authority.  The Federal Circuit stated that only the references themselves cited during foreign prosecution were material to prosecution. 

At the time, the Federal Circuit’s opinion in ATD Corp. v. Lydall Inc. had little effect on U.S. patent practitioners’ disclosure policies.  The USPTO already had encouraged applicants in 37 CFR 1.56 to disclose prior art cited in search reports of a foreign patent office in a counterpart application when such prior art was deemed material to patentability. Meanwhile, neither the CFR, the MPEP, nor the Federal Circuit had encouraged or required applicants to disclose U.S. or foreign office actions received in co-pending, related applications.  Accordingly, many U.S. patent practitioners’ disclosure practice did not include the citation of U.S. and foreign office actions from co-pending applications.

The nondisclosure of U.S. office actions from co-pending applications ultimately came back to haunt many U.S. patent practitioners.  In 2003,  the Federal Circuit in Dayco Products Inc. v. Total Containment Inc. addressed, for the first time, whether a prior rejection of a substantially similar claim in a co-pending United States application is material and therefore must be disclosed.  The Dayco court ultimately held that a contrary decision of another examiner reviewing a substantially similar claim does meet the threshold level of materiality under 37 CFR 1.56 and therefore must be disclosed.  In reaching its decision, the Dayco court noted that “[p]atent disclosures are often very complicated, and different examiners with different technical backgrounds and levels of understanding may often differ when interpreting such documents. Although examiners are not bound to follow other examiners’ interpretations, knowledge of a potentially different interpretation is clearly information that an examiner could consider important when examining an application.” 

It is unknown whether the Federal Circuit will ultimately expand its holding in Dayco to require the disclosure of foreign office actions and/or substantive documents received during PCT prosecution.  At least with respect to PCT prosecution where the USPTO is designated as the search authority and/or examining authority, ATD and Dayco appear to be at odds.  One would assume that a USPTO examiner’s opinion regarding patentability, including his or her interpretation of prior art documents, during PCT prosecution would carry the same weight in a reasonable examiner’s eyes as a USPTO examiner’s opinion regarding patentability during U.S. national phase prosecution.  Although in theory the standard of patentability during PCT prosecution and U.S. prosecution is different, in practice they appear virtually identical where the USPTO is the search authority and/or examining authority. 

Until addressed by the USPTO or the Federal Circuit, the debate to disclose or not disclose foreign office actions and substantive documents received during PCT prosecution will continue.  Many practitioners may err on the side of disclosure. However, where a patent practitioner and/or client has a large patent portfolio directed to similar technology, the disclosure of foreign office actions in both related and associated applications may simply be  unmanageable.  In such an instance, the patent practitioner may adopt a written policy of nondisclosure of foreign office actions, relying upon the Federal Circuit’s decision ATD Corp. v. Lydall Inc. to protect against a charge of inequitable conduct. Such reliance should be considered highly probative of a lack of an intent to deceive the USPTO.  If a policy of nondisclosure is adopted, the policy should be strictly followed. A practice of selectively disclosing favorable foreign office actions while withholding unfavorable office actions should be avoided, as it may significantly weaken the patent holder’s ability to argue that the withholding was without deceptive intent.