Therasense, Inc. v. Becton, Dickinson and Company

Filing 1147

ORDER ON REMAND REGARDING INEQUITABLE CONDUCT re (1131 in 3:04-cv-02123-WHA) Brief filed by Becton, Dickinson and Company, (1132 in 3:04-cv-02123-WHA) Brief filed by Therasense, Inc., Abbott Laboratories, (1134 in 3:04-cv-02123-WHA) Brief filed by Becton, Dickinson and Company. Signed by Judge Alsup on March 27, 2012. (whalc1, COURT STAFF) (Filed on 3/27/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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For the Northern District of California

United States District Court

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Plaintiff,

Consolidated with

v.

No. C 04-03327 WHA
No. C 04-03732 WHA
No. C 05-03117 WHA

BECTON, DICKINSON AND
COMPANY,
Defendant.
/

ORDER ON REMAND
REGARDING
INEQUITABLE CONDUCT

AND CONSOLIDATED CASES.
/

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No. C 04-02123 WHA

THERASENSE, INC.,

INTRODUCTION
The court of appeals, sitting en banc, vacated a finding herein of inequitable conduct and

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remanded with instructions to redetermine specified questions under a new standard. Using the

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new standard, this order again comes to the same conclusion that the patent in suit was procured

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through inequitable conduct.

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STATEMENT
Plaintiff Abbott Laboratories commenced patent infringement actions against various
defendants. All were subsequently consolidated and a trial date was set for May 2008. In a trial

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on Abbott’s U.S. Patent No. 5,820,551, invalidity and unenforceability were tried first and tried to

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the bench.1
Before trial began, Abbott made a request to add Attorney Lawrence Pope, who stood

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however, in an effort to prevent further examination and in aid of repeated instructions not to

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answer, Abbott’s counsel had on three separate occasions insisted that Attorney Pope would not

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appear in person at trial. Based on Abbott’s insistence that he would not appear live at trial,

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Abbott’s request to allow him to do exactly that was initially denied. The other side had relied on

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the promise. During trial, however, Abbott renewed its motion to allow Attorney Pope to testify

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in person at trial. Abbott was then asked to submit a sworn proffer. Faced with the gravity of the

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For the Northern District of California

co-accused of the inequitable conduct, as a live trial witness. During his earlier deposition,

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United States District Court

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accusation against Attorney Pope, the Court relented and allowed Abbott to call him over

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defendants’ strong objections.

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After the bench trial, the findings of fact and conclusions of law held that patent

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claims one through four were invalid due to obviousness, and that the entire patent was

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unenforceable due to inequitable conduct. Therasense, Inc. v. Becton, Dickinson & Co., 565 F.

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Supp. 2d 1088, 1127 (N.D. Cal. 2008). On appeal, a three-judge panel, consisting of Judges

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Daniel Friedman, Timothy Dyk, and Richard Linn, unanimously affirmed the finding of

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obviousness, and affirmed, in a two-to-one split, the finding of inequitable conduct, Judge Linn

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dissenting. Therasense, Inc. v. Becton, Dickinson & Co., 593 F.3d 1289, 1311 (Fed. Cir. 2010).

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A petition for rehearing en banc was granted. A six-judge majority in the en banc panel

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remanded for a new assessment on inequitable conduct, this time applying new intent and

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materiality standards. Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir.

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2011).
The majority opinion by Chief Judge Randall Rader increased the proof and findings

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needed for both intent and materiality. It reaffirmed that clear and convincing evidence is

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required to support a finding of specific intent to deceive the PTO. It reaffirmed that an accused

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Therasense, Inc. and Medisense, Inc. are wholly-owned subsidiaries of Abbott Laboratories. For
convenience, each is referred to as Abbott.

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infringer cannot carry its burden simply because the patentee fails to prove a credible alternative

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explanation. Overruling precedent, however, the court held that a weak showing of intent can no

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longer be offset by a strong showing of materiality, and intent cannot be inferred solely from

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materiality. Instead, to prove specific intent to deceive the PTO, the accused infringer must prove

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by clear and convincing evidence that the applicant knew of the omitted reference, knew that it

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was “but for” material, and made a deliberate decision to withhold it. Id. at 1290–92. Most

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dramatic was the introduction of the “but for” test.

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Therasense worked a seismic shift in the law of inequitable conduct. Prior case law had
employed a standard of materiality based on the PTO’s well-known Rule 56 duty of candor.
Bruno Independent Living Aids, Inc. v. Acorn Mobility Servs., Ltd., 394 F.3d 1348, 1352–53 (Fed.

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For the Northern District of California

United States District Court

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Cir. 2005). Under Rule 56, among other things, a reference was material if it “refute[d] or [was]

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inconsistent with any position the applicant took regarding patentability.” 37 C.F.R. 1.56 (2011).

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Therasense, however, held that materiality would henceforth use a but-for definition, meaning

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that submission of the withheld item would have led to a rejection. Id. at 1292.

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Under the new standard, therefore, an applicant or attorney may knowingly and

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deliberately withhold from the PTO any reference known to be inconsistent with a position taken

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by him or her before the PTO so long as the withholder does not know that the reference itself

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would lead to a rejection. It would not be enough to prove that the applicant or attorney expected

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that the concealment would help win an allowance or expected that, if revealed to the examiner,

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the reference would cause the examiner to merely question patentability. Rather, the applicant or

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attorney must know — and it must be later proven that he or she knew — that the item, if

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revealed, would lead to a rejection.

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A four-judge dissenting opinion, by Judge William Bryson, made common cause with the

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majority on two points: The standard for intent should be specific intent to deceive the PTO and

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there should not be a sliding scale. Id. at 1302. The dissenting judges parted company with the

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majority, however, over the change in materiality. They viewed the PTO’s traditional Rule 56 as

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the best materiality standard. First, the PTO is in a better position to know what information its

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own examiners would need to conduct effective and efficient examinations. Second, the new rule
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for materiality will not adequately police the disclosure obligations of patent applicants, an

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important public policy consideration, given that the PTO proceedings one-sided with no

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adversary to present argument. Id. at 1303. The four dissenting judges stated that the new test

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“does not merely reform the doctrine of inequitable conduct, but comes close to abolishing it

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altogether.” Id. at 1304. In its amicus brief, the PTO agreed with the dissenting judges that the

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materiality standard should be left undisturbed.

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Judge Kathleen O’Malley, concurring-in-part and dissenting-in-part, disagreed with the

the issue of intent to deceive. Id. at 1296–302. Senior Judge Friedman, who had affirmed the

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finding of inequitable conduct as part of the earlier panel majority, was not part of the en banc

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For the Northern District of California

new but-for standard and would have affirmed the finding of materiality but agreed to remand on

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United States District Court

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panel. Of the twelve circuit judges participating in the two appellate decisions, therefore, six

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expressly favored the new and tougher materiality standard. Despite the closeness of the decision

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and the importance of the question to our patent system and national economy, no petition for

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certoriari was filed in the Supreme Court.

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The remand instructions from the court of appeals were as follows:

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On remand, the district court should determine whether
there is clear and convincing evidence demonstrating that
Sanghera or Pope knew of the EPO briefs, knew of their
materiality, and made the conscious decision not to disclose
them in order to deceive the PTO.

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*

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*

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On remand, the district court should determine whether the
PTO would not have granted the patent but for Abbott’s
failure to disclose the EPO briefs. In particular, the district
court must determine whether the PTO would have found
Sanghera’s declaration and Pope’s accompanying
submission unpersuasive in overcoming the obviousness
rejection over the ’382 patent if Abbott had disclosed the
EPO briefs.

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Id. at 1296.
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On remand, there was extensive briefing, both before and after a long hearing and oral
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argument. The parties rested their cases on the 2008 trial record.
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FINDINGS ON REMAND ISSUES

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This order now turns to the remand issues.

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1.

REMAND FINDING NO. 1: THE WITHHELD EPO BRIEFS
WERE MATERIAL UNDER THE NEW BUT-FOR TEST.

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The court of appeals instructed the district court to redetermine the issue of materiality
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using the new but-for standard. The 2008 order found that the EPO briefs were highly material
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and inconsistent with the main point being made by Abbott to the PTO examiner. The EPO briefs
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centered on the precise concern of the PTO examiner, who was ultimately misled by Abbott’s
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submissions. 565 F. Supp. 2d at 1112. This order again makes the finding under the clear and
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convincing standard and further finds that the omission of the EPO briefs was but-for material,
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the ’551 patent had the EPO briefs been submitted. The evidence is clear and convincing on this
For the Northern District of California

United States District Court

leading to the allowance of the ’551 patent; that is, the examiner would not have finally allowed
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point, as follows.
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A.
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The “Optionally, But Preferably” Sentence Was
the Roadblock Against Allowance of the ’551 Patent.

Blood-glucose test strips for diabetes management were already well known. Such strips

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employed electrochemical sensors on an electrode to measure the level of glucose in blood. As

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blood came in contact with the sensors, glucose in the blood reacted with an enzyme on the sensor

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to generate electrons. The electrons then passed via a chemical mediator to the active electrode,

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which then electrically signaled the glucose concentration. Since electrodes were already

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well-known, the point of contention over the ’551 patent came down to membranes and

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specifically whether or not the ’551 application revealed for the first time that a protective

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membrane around the active electrode was unnecessary for use in whole blood. Whole blood is

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normal blood drawn outside the body (as in a blood sample). Live blood is blood still inside the

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body. Both contain red blood cells.

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The original application leading to the ’551 patent was filed in 1984. For thirteen years, it

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saw multiple rejections over prior art U.S. Patent No. 4,545,382, another patent owned by Abbott.

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When Abbott acquired Medisense, Inc. and its then-pending ’551 patent application in 1997,

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Abbott’s in-house lawyer, Lawrence Pope, took over the prosecution. He advanced a new
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argument for patentability: Whereas the ’382 patent had required a protective membrane around

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the active electrode, the pending ’551 invention did not (TX 470 at AL28137–39). To make this

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no-membrane argument to the PTO, however, Attorney Pope needed to show that the ’382 patent

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disclosure indeed had required a protective membrane. But as the PTO examiner pointed out to

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Attorney Pope the ’382 patent specification had already called out an optional protective

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membrane. In point of fact, the ’382 patent specification stated that, for the invention there

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disclosed, a protective membrane was only optional, not required (col. 4 at 63–66) (emphasis

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added):

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For the Northern District of California

United States District Court

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Optionally, but preferably when being used on live blood, a
protective membrane surrounds both the enzyme and the
mediator layers, permeable to water and glucose molecules.
The enzyme and mediator layers referenced were on the active electrode. The protective

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membrane could optionally surround those layers but was not required in the ’382 teaching.

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To overcome this, Attorney Pope took the position that in 1983 skilled artisans all

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assumed that a protective membrane was needed when testing whole blood and that the

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“optionally, but preferably” sentence would have been understood to mean “required” when used

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with whole blood. Again, this was supposedly because the conventional wisdom in 1983 was that

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a protective membrane was necessary to protect a sensor when used in whole blood (TX 470 at

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AL28138).

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To accept this, the examiner required a qualified scientist’s declaration swearing that

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“optionally, but preferably” would have been understood to mean “required” (TX 469 at

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AL28129). This is where Dr. Gordon Sanghera came in. Dr. Sanghera, who was Abbott’s

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research director for managing IP applications, provided a sworn declaration representing to the

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examiner that “based on his historical knowledge” he was “confident” and “sure” that those

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skilled in the art would have understood the phrase to mean that a protective membrane was

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required when used with whole blood, given that this was the supposed conventional wisdom at

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the time (TX 443 at TH0012275). Attorney Pope made the same representation and added that

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there was “no teaching or suggestion” in the ’382 patent to omit a protective membrane for use in

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whole blood. To meet the question why that very sentence was not such a teaching, he said that
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skilled artisans would have viewed the sentence as mere “patent phraseology” rather than as a

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“technical teaching” (TX 470 at AL28138–39). Put differently, the submissions represented that

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the accepted understanding at the time of the ’382 invention was that protective membranes were

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necessary when testing whole blood and that the sentence in question would not have been

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regarded as a teaching to the contrary.

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B.

The Abbott EPO Briefs.

Several years earlier, however, while prosecuting the European counterpart to the ’382

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patent, European Patent 0,078,636, Abbott itself had made contrary representations to the

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European Patent Office regarding the very same “optionally, but preferably” sentence. In order to
distinguish a German prior art patent, which had required a different type of membrane, Abbott

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For the Northern District of California

United States District Court

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had seized upon the very same sentence at issue and urged that it was “unequivocally clear” that a

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protective membrane was indeed optional and not required, stating as follows (TX 315 at 8)

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(emphasis added):

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In the application from which the [’382/’636 patent] was
granted, a membrane never constituted a feature of the
independent claim. In fact, a membrane did not appear but
in original claim 13 (claim 10 as granted) and is defined as a
“protective membrane permeable to water and glucose
molecules.” Column 5, lines 30 to 34 of the [’636 patent]
provides the following information:
“Optionally, but preferably when being used on live
blood, a protective membrane surrounds both the
enzyme and the mediator layers, permeable to water
and glucose molecules.”

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It is submitted that this disclosure is unequivocally clear.
The protective membrane is optional, however, it is
preferred when used on live blood in order to prevent the
large constituents of the blood, in particular [red blood cells]
from interfering with the electrode sensor.

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In another EPO brief, Abbott again argued that point (TX 311 at AL54151–52) (emphasis added):
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Contrary to the semipermeable membrane of [the German
reference], the protective membrane optionally utilized with
the glucose sensor of the patent [in] suit is not controlling
the permeability of [glucose] . . . . Rather, in accordance
with column 5, lines 30 to 33 of the [’636 patent]:

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“Optionally, but preferably when being used on live
blood, a protective membrane surrounds both the
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enzyme and the mediator layers, permeable to water
and glucose molecules.”

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At the EPO hearing, Abbott yet again argued to the EPO that either “you had a membrane that
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was permeable to glucose, or you had no membrane at all” under the teachings of the ’382 patent
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(Tr. 772–73).2

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The EPO accepted Abbott’s arguments and held that the “optionally, but preferably”
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sentence disclosed electrodes “with and without protective membranes” (TX 314 at 6–7)
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(emphasis added):
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Now Claim 1 is silent as to the presence or absence of a
membrane. However dependent Claim 9 is directed to the
feature that the sensor electrode has a protective membrane
permeable to water and glucose molecules, from which it
follows that Claim 1 is intended to embrace sensor
electrodes with and without such protective membranes.
Further in column 5, lines 30 to 33 it is stated that
optionally, but preferably when being used on live blood, a
protective membrane surrounds the enzyme and the
mediator layers, permeable to water and glucose molecules.

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For the Northern District of California

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Abbott’s argument to the EPO had been clear: A protective membrane was preferable for use

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with live blood and optional in all other cases including whole blood but in any case was never

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required (see, e.g., TX 311 at AL54151–54).

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C.

Had the PTO Examiner Been Provided the EPO Briefs,
He Would Not Have Allowed the ’551 Patent To Issue.

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If the PTO examiner had read the EPO briefs, then he would not have allowed the ’551
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patent to issue. Even without knowledge of Abbott’s EPO briefs, the PTO examiner had already
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raised the ’382 sentence as a problem (TX 469; see Tr. 136). In his interview summary with
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Attorney Pope, the PTO examiner wrote that the ’382 patent expressly taught that its sensor did
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not require a membrane (specifically referring to the “optionally, but preferably” passage) but that
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an affidavit from Abbott could overcome this teaching (TX 469) (emphasis added):
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Applicant indicated that he would like to submit claims
specifically covering a compound specific electrode with the
filtering membrane absent. The Higgins, et al. (’382)
disclosure was discussed esp[ecially] the paragraph

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For all purposes relevant to this action, Abbott’s EP ’636 and US ’382 shared the same specification
as each other. In both, the “optionally, but preferably” sentence and its immediate context were completely
identical. This order refers to them as the ’382 patent.

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spanning columns 4 & 5 [the optionally but preferably
paragraph]. It was determined that since Higgins et al.
appear to require the membrane for use with whole blood
(see example 8) an affidavit or other evidentiary showing
that at the time of the invention such a membrane was
considered essential would overcome this teaching.

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The EPO briefs would have reinforced the examiner’s expressed concern on the meaning of the
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“optionally, but preferably” teaching.
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The PTO examiner was completely dependent on Attorney Pope and Dr. Sanghera to
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accurately represent the information covered by their submissions. The examiner relied on their
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submissions and allowed the ’551 patent. The examiner was misled by and relied on the
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representations, which would have been proven false by the EPO briefs.
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to the EPO briefs. In one sense, this is true, for trial courts cannot demand that PTO examiners
For the Northern District of California

United States District Court

Abbott now argues that the trial record is silent on how the examiner would have reacted
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testify on this issue. PTO examiners cannot be compelled to testify about their “bases, reasons,
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mental processes, analyses or conclusions” in reaching a decision on an application. Green v.
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Rich Iron Co., Inc., 944 F.2d 852, 854 (Fed. Cir. 1991). Even if examiners could so testify and
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even if they could remember the specific case, the exercise would still involve hindsight opinion.
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Surely this is not what Therasense required. Instead, the court of appeals surely meant that but17
for causation should be evaluated in the same traditional way known to the trial courts, that is, the
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trier of fact must evaluate all of the trial evidence and make an estimate as to what would have
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happened in the alternative scenario. Doing so here, it is manifest that the withheld EPO briefs
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would have contradicted Abbott’s declaration and submission. The EPO briefs would have
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convinced the examiner that skilled artisans would have understood the sentence to teach optional
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protective membranes. Had the EPO briefs been presented to him, the examiner would have seen
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through Abbott’s representations to him. In that event, the examiner would have persisted in the
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13-year history of rejections. This is an inference but it has been shown by clear and
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convincing evidence.
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Abbott counters that even if the EPO briefs had been before the examiner, and if the
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examiner had understood that the ’382 patent had already described a membraneless sensor, he
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would not have believed that such a possibility was achievable in 1983 and would still have
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allowed the ’551 patent. This is wholly unpersuasive. The 2008 order found this attack on the

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’382 disclosure unconvincing when invalidating claims one through four of the ’551 patent. The

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reason was and remains simple. The plain language of the ’382 disclosure was clear that the

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disclosure taught that a protective membrane was preferable for use with live blood and optional

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in all other cases including whole blood; it was never required in any case. For these very

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reasons, claims one through four of the ’551 patent were found invalid as obvious both at the

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district court and by twelve judges on the Federal Circuit. Therasense, Inc. v. Becton, Dickinson

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& Co., 649 F.3d 1276, 1296 (Fed. Cir. 2011). The examiner would have come to the same

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conclusion. In short, had the EPO briefs been before the examiner, he would have rejected the
’551 patent application. This has been shown by clear and convincing evidence.3

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For the Northern District of California

United States District Court

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2.

REMAND ISSUE NO. 2 — KNOWLEDGE OF BUT-FOR MATERIALITY.

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The court of appeals instructed the district court to “determine whether there is clear and

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convincing evidence demonstrating that Sanghera and Pope knew of the EPO briefs, knew of

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their materiality, and made the conscious decision not to disclose them in order to deceive the

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PTO.” 649 F.3d at 1296.

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Two parts of this are straightforward. Both Dr. Sanghera and Attorney Pope knew of the

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EPO briefs. And, they made a conscious decision not to disclose them. The evidence on these

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points is overwhelming and need not be repeated here. Indeed, these points seem conceded by

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all.

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Requiring more inspection is whether they knew of the materiality of the EPO briefs —

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measured under the new but-for standard — and whether their intent in withholding them was to

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deceive the PTO. With respect to knowledge of materiality, the key question is: Did they know

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that disclosure of the EPO briefs would lead to a rejection?

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In evaluating this, a question of law arises: Do we presume that the disclosure of the EPO

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briefs would have been accompanied by a further, hypothetical submission setting forth Abbott’s

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argument for distinguishing those EPO briefs? To this, the en banc majority opinion did not give

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Although the en banc majority opinion stated that materiality need only be proven by a
preponderance of the evidence, the opinion went on to require that knowledge of materiality be proven by clear
and convincing evidence. It seems, therefore, that materiality must be proven by clear and convincing evidence
anyway in order to satisfy the knowledge of materiality element. This is the standard used in this order.

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a direct answer. The best reading of the opinion is that such further explanations are premature at

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this step. First, the remand instruction as to materiality focused on the question “whether the

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PTO would have found Sanghera’s declaration and Pope’s accompanying submission

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unpersuasive in overcoming the obviousness rejection over the ’382 patent if Abbott had

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disclosed the EPO briefs.” 649 F.3d at 1296. Notably, this remand instruction called out specific

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actual documents, namely the actual submissions and the actual suppressed items. It did not

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mention consideration of hypothetical memoranda. The further remand instruction as to

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knowledge of materiality directed the district court to determine whether the withholders “knew

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of their materiality,” again without adding in consideration of hypothetical memoranda. And, in
its long analysis of materiality and knowledge of materiality, the en banc majority opinion

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For the Northern District of California

United States District Court

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nowhere stated that a withholder should receive the benefit of hypothetical arguments in making

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these determinations.

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Second, the PTO had encountered this post-hoc problem and had expressly stated that

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materiality should be judged “before any consideration is given to evidence which may be

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submitted in an attempt to establish a contrary conclusion of patentability.” 37 C.F.R. 1.56

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(2011). The point of its caveat was to eliminate the apologies for nondisclosure suggesting that

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concealed art could have been explained away. The en banc majority noted this feature of Rule

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56 and used it to explain why it was important, in the court’s view, to harden the definition of

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materiality. But it did not disapprove of evaluating knowledge of materiality without regard to

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hypothetical efforts to distinguish the withheld item. Id. at 1294.

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Third, if, at the “knowledge of materiality” stage in the Therasense framework, the

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applicant must be credited with reasons for why the withheld material should make no difference

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to the examiner, then such a rule would be in conflict with another Therasense rule that the

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applicant must not and may not be required to present any reasons for the withholding until after

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a “threshold” case has been proven. That is, Therasense insisted that the applicant must not be

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required to give an explanation at all for the withholding until after a threshold case has been

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established. One of the three elements needed for a threshold case was held expressly to be

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knowledge of materiality. Id. at 1290–91. In proving knowledge of materiality, is the accused
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infringer, therefore, required to anticipate an explanation not yet due and to negate it even before

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it is in play? This conceptual snafu is avoided by holding that at the “knowledge of materiality”

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step, explanations that might have been (but were not) given to the examiner are premature.

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Instead, the explanations come into play only after the threshold case, including knowledge of

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materiality, has been established. The knowledge of materiality inquiry must focus, as the

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remand instructions call out, on the impact of the actual withheld item. (The explanation offered

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here by Abbott will be considered below as part of the intent analysis).

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Applying the foregoing, this order finds, by clear and convincing evidence, that

their actual PTO submissions, the examiner would have rejected the claims. They knew that the

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For the Northern District of California

Dr. Sanghera and Attorney Pope knew that if they had included the actual EPO briefs along with

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United States District Court

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very language they were characterizing as mere “patent phraseology” and not a teaching had been

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earlier argued by Abbott itself to the EPO to be an “unequivocally clear” teaching. They knew

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that the very same language had earlier been represented as teaching that a protective membrane

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was at most merely “preferred” when dealing with “live blood” and “optional” in all other cases,

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including whole blood. The evidence is clear and convincing that Dr. Sanghera and

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Attorney Pope knew the content of the EPO briefs and knew that the EPO briefs, standing alone,

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would so seriously undermine their submission that the examiner would have reverted

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to unpatentability.

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3.

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The next remand issue is whether Dr. Sanghera and Attorney Pope intended to deceive the

REMAND ISSUE NO. 3 — SPECIFIC INTENT TO DECEIVE.

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PTO when they withheld the EPO briefs. In addressing this issue, it is again best to say how this

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district judge reads Therasense on some subordinate questions.

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First, that an item is material and that the withholder “should have known of its

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materiality” are no longer sufficient to prove intent under Therasense. 649 F.3d at 1290. This

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holding overruled decisions as recent as one year before the 2008 findings herein. In Cargill,

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Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1366–67 (Fed Cir. 2007), for example, the Federal

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Circuit repeatedly used the phrase “should have known” to affirm a finding of inequitable

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conduct, as had earlier decisions in the same vein. The Federal Circuit has now outlawed this
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phrase and mode of analysis. That someone “should have known” of an item’s materiality may

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no longer be considered.

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Instead, Part V of the en banc majority opinion, in canvassing the law of specific intent to
deceive, summarized the necessary elements as follows:

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In other words, the accused infringer must prove by clear
and convincing evidence that the applicant knew of the
reference, knew that it was material, and made a deliberate
decision to withhold it.

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7
Id. at 1290.
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Thus, three elements together are enough to establish a threshold case of specific intent to
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defraud: (i) actual knowledge of the withheld item, (ii) actual knowledge of its materiality (using
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knowledge of materiality — is, of course, a harder-to-prove element than materiality itself.
For the Northern District of California

United States District Court

the but-for standard), and (iii) a deliberate decision to withhold it. The second element — actual
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12
In addition to the Therasense test quoted above, Abbott contends that the accused
13
infringer must separately and independently prove specific intent to deceive the PTO. This order,
14
however, reads Part V of the en banc majority opinion to hold that the three elements are indeed
15
sufficient to establish at least a threshold case of specific intent to deceive. Most of Part V dealt
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with why gross negligence was insufficient and why materiality by itself was insufficient. Part V
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therefore insisted on actual knowledge of materiality as a required element of the three-part test.
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Nowhere in Part V was there a fourth stand-alone intent element. Instead, a threshold case of
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specific intent to defraud can be inferred from the three elements stated above. This
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understanding is supported by a subsequent Federal Circuit decision interpreting the same
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sentence quoted above to hold that specific intent to deceive can be proven by finding those three
22
elements. American Calcar, Inc. v. American Honda Motor Co., Inc., 651 F.3d 1318, 1335–36
23
(Fed. Cir. 2011).
24
Nonetheless, out of caution, this order proceeds on the assumption that even once the three
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elements are proven, the district judge must still consider all the facts and circumstances shown at
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trial and determine whether there was a specific intent to deceive the PTO. That is, while the
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three elements establish at least a threshold case of inequitable conduct, the district judge should
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consider whether, in combination and viewed in light of all the trial evidence, specific intent to

2

deceive is clear and convincing.

3

Second, what is the role of explanations or the absence thereof? Therasense stated that the

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“patentee need not offer any good faith explanation unless the accused infringer first . . . prove[s]

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a threshold level of intent to deceive by clear and convincing evidence” and added that “the

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absence of a good faith explanation for withholding a material reference does not, but itself, prove

7

intent to deceive.” 649 F.3d at 1291. The “threshold level” referenced is the set of the three

8

elements above. Until those are proven, the patentee can remain silent and its silence may not be

9

used against it. If the threshold is met, however, then the silence of the patentee may be
considered as adverse evidence. Any explanation given may be considered, pro or con, on the

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For the Northern District of California

United States District Court

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overall mix of trial evidence.

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Third, the en banc majority described the role of circumstantial evidence as follows:
Because direct evidence of deceptive intent is rare, a district
court may infer intent from indirect and circumstantial
evidence. [citation omitted.] However, to meet the clear
and convincing evidence standard, the specific intent to
deceive must be “the single most reasonable inference able
to be drawn from the evidence.” Star, 537 F.3d at 1366.
Indeed, the evidence “must be sufficient to require a finding
of deceitful intent in the light of all the circumstances.”
Kingsdown, 863 F.2d at 873 (emphasis added). Hence,
when there are multiple reasonable inferences that may be
drawn, intent to deceive cannot be found. See Scanner
Techs. Corp. v. ICOS Vision Sys. Corp., 528 F.3d 1365,
1376 (Fed. Cir. 2008) (“Whenever evidence proffered to
show either materiality or intent is susceptible of multiple
reasonable inferences, a district court clearly errs in
overlooking one inference in favor of another equally
reasonable inference.”).

22

Id. at 1290–91 (emphasis in original). The second sentence in this block quote stated that specific

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intent to deceive must be “the single most reasonable inference.” Where, however, two equally

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reasonable inferences are possible, the more innocent one must be adopted, as stated in the

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decision and parenthetical squib at page 1291 (col. one).

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With the foregoing in mind, this order now addresses the remand issue of specific intent to

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deceive the PTO. The three elements necessary for a “threshold showing” have been proven by

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clear and convincing evidence.
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First, Dr. Sanghera and Attorney Pope knew of the EPO briefs. This is conceded.

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Second, as set forth in Remand Findings Nos. 1 and 2 above, they knew that the EPO briefs were

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material (using the but-for standard). Third, they made a conscious decision to withhold. This is

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conceded. The threshold case has been proven.

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On the overall evidence, moreover, intent to deceive is the single most reasonable

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inference. This Court has re-read its earlier decision, the trial record, and re-affirms all factual

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findings, leaving out the “should have known” phrase with apologies, and emphasizing that

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Dr. Sanghera and Attorney Pope actually knew of the materiality of the withheld EPO briefs.

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Again, the single most reasonable inference is that Dr. Sanghera and Attorney Pope had the
specific intent to deceive the PTO by withholding the EPO briefs. This finding is based on clear

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For the Northern District of California

United States District Court

10

and convincing overall trial evidence whether or not Abbott’s explanations are taken into account.

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Without repeating all of the prior findings, this order now lists the main facts and

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circumstances leading this district judge to find that the single most reasonable inference is

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specific intent to deceive the PTO. After thirteen years of rejections, Attorney Pope and

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Dr. Sanghera realized that the “optionally, but preferably” sentence in Abbott’s own ’382 prior art

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patent was the last roadblock to eking out an allowed claim. They knew the examiner had

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permitted them to file a declaration swearing around the ’382 sentence and that the declaration

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had to establish that skilled artisans would not have understood the sentence in its plain language

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sense but would have construed it otherwise. They knew, however, that Abbott’s own EPO briefs

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had earlier exalted the plain meaning of the very same sentence and had stated that the sentence

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was “unequivocally clear.” They knew that the EPO briefs were in conflict with their own

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submissions to the PTO wherein they had tried to explain the sentence away as not a “teaching”

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but merely “patent phraseology.” They knew that they were telling the PTO that the ’382 patent

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had required a protective membrane for use with whole blood, but they also knew that Abbott’s

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EPO briefs had said the protective membrane was, at most, merely preferred for live blood and

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optional otherwise. Despite a close friendship with the ’382 Inventor Allen Hill, Dr. Sanghera

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did not ask him how his “optionally, but preferably” sentence would have been understood, an

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obvious question for anyone who wished to be accurate (Tr. 740–42). Attorney Pope and
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Dr. Sanghera were keen to win an allowance quickly in order to meet competition in the

2

marketplace, as illustrated by the fact that the very day the ’551 patent issued, Abbott asserted it

3

in an infringement action against a competing home diabetic kit made by Lifescan, Inc. Abbott

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Laboratories v. Lifescan, Inc., et al., 1:98-cv-12053-EFH (D. Mass. Oct. 13, 1998). The single

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most reasonable inference to be drawn is that Dr. Sanghera and Attorney Pope intended to

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deceive the PTO by consciously withholding the EPO briefs.4

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In the face of this evidence, Abbott has offered its explanation for the conscious
withholding of material items. In that respect, the remand instruction seemed to criticize the 2008

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order for using the absence of a good faith explanation against Abbott. Id. at 1296. This order

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now clarifies that intent to deceive has been proven with or without regard to any explanation.

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For the Northern District of California

United States District Court

8

At trial, Abbott chose affirmatively to introduce an explanation, going so far as to revoke

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its earlier promise and to insist that Attorney Pope be allowed to testify and to offer explanation

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beyond those in his deposition. This was allowed. This is not a case, therefore, where the

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patentee gave no explanation and its silence was held against it. Here, the patentee demanded to

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testify and the district court found (and finds again) that its story is not credible and the witness

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demeanor was not favorable.

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The explanation given was that Dr. Sanghera and Attorney Pope thought that there was a

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distinction between a protective membrane and a diffusion-limiting membrane and that the EPO

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briefs had not really addressed the issue of whether a protective membrane was required and

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instead had really addressed only the issue of whether a diffusion-limiting membrane was required

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by the ’382 invention. Without repeating the many steps in the argument, Abbott’s main point

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boiled down to the proposition that they thought, at the time of the PTO submission, that the

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embarrassing words in the EPO briefs were mere dicta that could be explained away as

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unnecessary. As found in the 2008 order, this explanation is not credible. Before the EPO,

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Abbott made two points to distinguish the earlier prior art, one point of which has been the

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27
4

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Inventor Hill explained at his deposition, which was entered into the trial record, that the “optionally,
but preferably” sentence indeed disclosed membraneless sensor for use in whole blood (Hill Dep. at 74–75)
(Dkt. No. 792 at Exh. C) (Joint Motion to Admit Certain Deposition Transcripts).

16

1

problem ever since. That Abbott might have succeeded before the EPO with only the other point

2

does not eliminate the fact that the critical point was indeed made and made indelibly.

demeanor, and particularly the witness demeanor of Dr. Sanghera and Attorney Pope, is that they

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did believe that the omission was necessary to win an allowance and that they did deliberately

6

elect to withhold the EPO briefs — precisely because they knew the briefs could not be explained

7

away. This order finds the withholding was done with specific intent to deceive the PTO and

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finds that the evidence in support of this finding, circumstantial though it may be, is clear and is

9

convincing. The explanation simply lacked sufficient coherence and consistency compared to the

10

rest of the record. There is not one shred of documentary evidence to corroborate their testimony

11
For the Northern District of California

The single most reasonable inference to be drawn from the trial record, including witness

4

United States District Court

3

that at the time in question they actually believed or documented or discussed the supposed

12

reason for not submitting the EPO briefs. It surfaced for the first time in this litigation.

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14

*

*

*

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Although not specifically called out in the remand instructions, elsewhere in the

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Therasense opinion was a requirement for district courts to weigh the equities to determine

18

whether the applicant’s conduct before the PTO warrants rendering the entire patent

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unenforceable. 649 F.3d at 1287. Here, the conduct of Attorney Pope and Dr. Sanghera warrants

20

the remedy of unenforceability. Abbott was willing to conceal important evidence to get the

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patent and immediately use it to suppress the competition. There is no countervailing equity.

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Unenforceability is the just result.

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CONCLUSION

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No judge takes any satisfaction in finding fault in the conduct of a professional. That is

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certainly true here. For the reasons stated, however, the district judge feels it is his duty to find

4

that Attorney Pope and Dr. Sanghera committed inequitable conduct, even under the new law to

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be applied on remand. U.S. Patent No. 5,820,551 is unenforceable.

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7

IT IS SO ORDERED.

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Dated: March 27, 2012.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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For the Northern District of California

United States District Court

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