[Federal Register Volume 76, Number 140 (Thursday, July 21, 2011)]
[Proposed Rules]
[Pages 43631-43634]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-18408]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

Patent and Trademark Office

37 CFR Part 1

[Docket No. PTO-P-2011-0030]
RIN 0651-AC58


Revision of the Materiality to Patentability Standard for the 
Duty To Disclose Information in Patent Applications

AGENCY: United States Patent and Trademark Office, Commerce.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The United States Patent and Trademark Office (Office or PTO) 
is proposing to revise the standard for materiality for the duty to 
disclose information in patent applications and reexamination 
proceedings in light of the decision by the U.S. Court of Appeals for 
the Federal Circuit (Federal Circuit or Court) in Therasense, Inc. v. 
Becton, Dickinson & Co. Specifically, the Office is proposing to revise 
the materiality standard for the duty to disclose to match the 
materiality standard, as defined in Therasense, for the inequitable 
conduct doctrine. While Therasense does not require the Office to 
harmonize the materiality standards underlying the duty of disclosure 
and the inequitable conduct doctrine, the Office believes that there 
are important reasons to do so. The materiality standard set forth in 
Therasense should reduce the frequency with which applicants and 
practitioners are being charged with inequitable conduct, consequently 
reducing the incentive to submit information disclosure statements 
containing marginally relevant information and enabling applicants to 
be more forthcoming and helpful to the Office. At the same time, it 
should also continue to prevent fraud on the Office and other egregious 
forms of misconduct. Additionally, harmonization of the materiality 
standards is simpler for the patent system as a whole.

DATES: The Office solicits comments from the public on this proposed 
rule change. Written comments must be received on or before September 
19, 2011 to ensure consideration. No public hearing will be held.

ADDRESSES: Comments concerning this notice should be sent by electronic 
mail message over the Internet addressed to [email protected]. 
Comments may also be submitted by mail addressed to: Mail Stop 
Comments-Patents, Commissioner for Patents, P.O. Box 1450, Alexandria, 
VA 22313-1450, marked to the attention of Hiram H. Bernstein, Senior 
Legal Advisor, Office of Patent Legal Administration, Office of the 
Associate Commissioner for Patent Examination Policy. Although comments 
may be submitted by mail, the Office prefers to receive comments via 
the Internet.
    Comments may also be sent by electronic mail message over the 
Internet via the Federal eRulemaking Portal. See the Federal 
eRulemaking Portal Web site (http://www.regulations.gov) for additional 
instructions on providing comments via the Federal eRulemaking Portal. 
The comments will be available for public inspection at the Office of 
the Commissioner for Patents, located in Madison East, Tenth Floor, 600 
Dulany Street, Alexandria, Virginia, and will be available via the 
Internet (http://www.uspto.gov). Because comments will be made 
available for public inspection,

[[Page 43632]]

information that the submitter does not desire to make public, such as 
an address or phone number, should not be included in the comments.

FOR FURTHER INFORMATION CONTACT: Hiram H. Bernstein, Senior Legal 
Advisor; Kenneth M. Schor, Senior Legal Advisor; or Nicole D. Haines, 
Legal Advisor, Office of Patent Legal Administration, Office of the 
Associate Commissioner for Patent Examination Policy, by telephone at 
(571) 272-7707, (571) 272-7710, or (571) 272-7717, respectively, or by 
mail addressed to: Mail Stop Comments-Patents, Commissioner for 
Patents, P.O. Box 1450, Alexandria, VA 22313-1450, marked to the 
attention of Hiram H. Bernstein.

SUPPLEMENTARY INFORMATION: The Office is proposing to revise the 
materiality standard for the duty to disclose information to the Office 
in patent applications and reexamination proceedings set forth in 
Sec. Sec.  1.56(b) and 1.555(b) in light of the Federal Circuit's 
decision in Therasense, Inc. v. Becton, Dickinson & Co., ------ F.3d --
----, 2011 WL 2028255 (Fed. Cir. 2011) (en banc). Specifically, the 
Office is proposing to adopt the standard for materiality required to 
establish inequitable conduct as defined in Therasense as the standard 
for materiality under Sec. Sec.  1.56(b) and 1.555(b).
    In Therasense, the Court defined materiality using a ``but-for-
plus'' standard. As the general rule, the Court explained that ``[w]hen 
an applicant fails to disclose prior art to the PTO, that prior art is 
but-for material if the PTO would not have allowed a claim had it been 
aware of the undisclosed prior art.'' Therasense, 2011 WL 2028255, at 
*11. Said differently, the Court explained: ``[I]n assessing the 
materiality of a withheld reference, the court must determine whether 
the PTO would have allowed the claim if it had been aware of the 
undisclosed reference[,] * * * apply[ing] the preponderance of the 
evidence standard and giv[ing] claims their broadest reasonable 
construction.'' Id. The Court also recognized that ``affirmative acts 
of egregious misconduct,'' Id. at *12, before the PTO are unacceptable: 
``Although but-for materiality generally must be proved to satisfy the 
materiality prong of inequitable conduct, this court recognizes an 
exception in cases of affirmative egregious misconduct.'' Id. The Court 
reasoned that ``a patentee is unlikely to go to great lengths to 
deceive the PTO with a falsehood unless it believes that the falsehood 
will affect issuance of the patent.'' Id. The Court clarified that 
``neither mere nondisclosure of prior art references to the PTO nor 
failure to mention prior art references in an affidavit constitutes 
affirmative egregious misconduct.'' Id. Lastly, the Court identified 
the submission of an unmistakably false affidavit as an example of 
affirmative egregious misconduct. Id.
    Historically, the Federal Circuit connected the materiality 
standard for inequitable conduct with the PTO's materiality standard 
for the duty of disclosure. That is, the Court has invoked the 
materiality standard for the duty of disclosure to measure materiality 
in cases raising claims of inequitable conduct. In doing so, the Court 
has utilized both the ``reasonable examiner'' standard set forth in the 
1977 version of Sec.  1.56(b) and current Sec.  1.56(b) promulgated in 
1992. See, e.g., Am. Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 
1350, 1363 (Fed. Cir. 1984); Bruno Indep. Living Aids, Inc. v. Acorn 
Mobility Servs., Inc., 394 F.3d 1348, 1352-53 (Fed. Cir. 2005). While 
the Therasense Court severed what existed of the historical connection 
between the two materiality standards, as most recently articulated in 
Digital Control Inc. v. Charles Mach. Works, 437 F.3d 1309, 1315-16 
(Fed. Cir. 2006) (identifying the PTO's current standard as one of many 
standards the courts could apply), it did not indicate that the Office 
must apply the standard for materiality required to establish 
inequitable conduct under Therasense as the standard for determining 
materiality under Sec.  1.56(b) or Sec.  1.555(b). As the dissent in 
Therasense noted, ``the scope of the court-made [inequitable conduct] 
doctrine is not inseparably tied to the breadth of the PTO's disclosure 
rules.'' Therasense, 2011 WL 2028255, at *33. The Office, however, 
believes that there are important reasons to amend Sec.  1.56(b) and 
Sec.  1.555(b) so that the PTO's materiality standard for the duty of 
disclosure matches the materiality standard for inequitable conduct.
    While not as inclusive as current Sec.  1.56(b), the Office expects 
that the ``but-for-plus'' standard from Therasense will result in 
patent applicants providing the most relevant information and reduce 
the incentive for applicants to submit information disclosure 
statements containing only marginally relevant information out of an 
abundance of caution. The Court stated that its ``but-for-plus'' 
standard, ``[b]y creating an exception to punish affirmative egregious 
acts without penalizing the failure to disclose information that would 
not have changed the issuance decision, * * * strikes a necessary 
balance between encouraging honesty before the PTO and preventing 
unfounded accusations of inequitable conduct.'' Therasense, 2011 WL 
2028255, at *12. Thus, the Office expects that the ``but-for-plus'' 
standard will reduce the frequency with which applicants and 
practitioners are being charged with inequitable conduct, thereby 
reducing the incentive for applicants to submit marginally relevant 
information to the Office. At the same time, it will continue to 
prevent applicants from deceiving the Office and breaching their duty 
of candor and good faith.
    The Office also believes that a unitary materiality standard is 
simpler for the patent bar to implement. Under the single ``but-for-
plus'' standard of materiality, patent applicants will not be put in 
the position of having to meet one standard for materiality as defined 
in Therasense in defending against inequitable conduct allegations and 
a second, different materiality standard to fulfill the duty to 
disclose before the Office.
    The Office recognizes that it previously considered, and rejected, 
a ``but-for'' standard for the duty of disclosure in 1992 when it 
promulgated current Sec.  1.56(b). Duty of Disclosure, 57 FR 2021, 2024 
(Jan. 17, 1992). The affirmative egregious misconduct exception set 
forth in Therasense addresses the Office's long-standing concern about 
the types of unscrupulous conduct that could occur unchecked under a 
pure ``but-for'' standard.
    Although the Office is proposing to revise Sec. Sec.  1.56(b) and 
1.555(b) to match the ``but-for-plus'' materiality standard announced 
in Therasense, the Office recognizes that Therasense could be reviewed 
by the U.S. Supreme Court. Because the rule making process is lengthy 
and because the Office prefers to receive and consider public comments 
before issuing a final rule, the Office is proceeding in parallel with 
the possibility of a Therasense certiorari petition. Should a petition 
for certiorari be filed and the Supreme Court grant review of the case, 
the Office will consider delaying issuance of a final rule until the 
Supreme Court has issued its decision.
    Additionally, the Office is considering further actions that may 
provide an incentive for applicants to assist the Office by explaining/
clarifying the relationship of prior art to the claimed invention. 
While this form of information would not implicate the standard of 
materiality as that term has been defined in Therasense, and therefore 
would not be required under the proposed changes to Sec.  1.56, the

[[Page 43633]]

Office believes it is worthwhile to explore ways to encourage 
applicants to submit information, beyond that required under the 
Therasense materiality standard, that would be helpful and useful in 
advancing examination.

Discussion of Specific Rules

    Title 37 of the Code of Federal Regulations, Part 1, is proposed to 
be amended as follows:
    Section 1.56: Section 1.56(b) as proposed to be amended would 
provide that information is material to patentability if it is material 
under the standard set forth in Therasense, and that information is 
material to patentability under Therasense if: (1) The Office would not 
allow a claim if it were aware of the information, applying the 
preponderance of the evidence standard and giving the claim its 
broadest reasonable construction; or (2) the applicant engages in 
affirmative egregious misconduct before the Office as to the 
information. As stated in Therasense, neither mere nondisclosure of 
information to the Office nor failure to mention information in an 
affidavit, declaration, or other statement to the Office constitutes 
affirmative egregious misconduct. Therasense, 2011 WL 2028255, at *12.
    The Office notes that, under the ``but-for-plus'' standard of 
Therasense, information is not material if the pending claim is 
allowable, applying the preponderance of the evidence standard and 
giving the claim its broadest reasonable construction, and the 
applicant does not engage in affirmative egregious misconduct before 
the Office as to the information. The Office recognizes the tension 
inherent in a disclosure standard based on unpatentability, but 
appreciates and expects that patent applicants are inclined to be 
forthcoming and submit information beyond that required by proposed 
Rule 56, in an effort to assist examiners in performing their duties. 
The Office wishes to facilitate and encourage such efforts by 
applicants. While applicants should avoid drafting claims that are 
unpatentable in the face of the prior art they disclose, the Office 
will not regard information disclosures as admissions of 
unpatentability for any claims in the application. See Sec.  1.97(h). 
In addition, there is no duty under Sec.  1.56 to submit information 
that is not material under the ``but-for-plus'' standard of Therasense 
and Sec.  1.56(b).
    Section 1.555: Section 1.555(b) as proposed to be amended would 
provide that information is material to patentability if it is material 
under the standard set forth in Therasense, and that information is 
material to patentability under Therasense if: (1) The Office would not 
find a claim patentable if it were aware of the information, applying 
the preponderance of the evidence standard and giving the claim its 
broadest reasonable construction; or (2) the patent owner engages in 
affirmative egregious misconduct before the Office as to the 
information. Again as stated in Therasense, neither mere nondisclosure 
of information to the Office nor failure to mention information in an 
affidavit, declaration, or other statement to the Office constitutes 
affirmative egregious misconduct. Therasense, 2011 WL 2028255, at *12.
    Section 1.933 is directed to the duty of disclosure in inter partes 
reexamination proceedings; however, the statement as to materiality of 
information simply incorporates Sec.  1.555. Thus, no revision is 
proposed for Sec.  1.933.

Rule Making Considerations

    A. Regulatory Flexibility Act: For the reasons set forth herein, 
the Deputy General Counsel for General Law of the United States Patent 
and Trademark Office has certified to the Chief Counsel for Advocacy of 
the Small Business Administration that changes proposed in this notice 
will not have a significant economic impact on a substantial number of 
small entities. See 5 U.S.C. 605(b).
    This notice proposes to harmonize the standard for materiality 
under Sec. Sec.  1.56 and 1.555 with the standard for materiality 
required to establish inequitable conduct. Additionally, the single 
harmonized materiality standard should reduce the incentives to submit 
information of marginal relevance. This notice does not propose any 
additional fees or requirements on patent applicants or patentees. 
Therefore, the changes proposed in this notice will not have a 
significant economic impact on a substantial number of small entities.
    B. Executive Order 12866 (Regulatory Planning and Review): This 
rule making has been determined to be not significant for purposes of 
Executive Order 12866 (Sept. 30, 1993).
    C. Executive Order 13563 (Improving Regulation and Regulatory 
Review): The Office has complied with Executive Order 13563. 
Specifically, the Office has, to the extent feasible: (1) Used the best 
available techniques to quantify costs and benefits, and has considered 
values such as equity, fairness and distributive impacts; (2) involved 
the public in an open exchange of information and perspectives among 
experts in relevant disciplines, affected stakeholders in the private 
sector and the public as a whole, and provided on-line access to the 
rule making docket; (3) attempted to promote coordination, 
simplification and harmonization across government agencies and 
identified goals designed to promote innovation; (4) considered 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public; and (5) ensured the objectivity of scientific 
and technological information and processes, to the extent applicable.
    D. Executive Order 13132 (Federalism): This rule making does not 
contain policies with federalism implications sufficient to warrant 
preparation of a Federalism Assessment under Executive Order 13132 
(Aug. 4, 1999).
    E. Executive Order 13175 (Tribal Consultation): This rule making 
will not: (1) Have substantial direct effects on one or more Indian 
tribes; (2) impose substantial direct compliance costs on Indian tribal 
governments; or (3) preempt tribal law. Therefore, a tribal summary 
impact statement is not required under Executive Order 13175 (Nov. 6, 
2000).
    F. Executive Order 13211 (Energy Effects): This rule making is not 
a significant energy action under Executive Order 13211 because this 
rule making is not likely to have a significant adverse effect on the 
supply, distribution, or use of energy. Therefore, a Statement of 
Energy Effects is not required under Executive Order 13211 (May 18, 
2001).
    G. Executive Order 12988 (Civil Justice Reform): This rule making 
meets applicable standards to minimize litigation, eliminate ambiguity, 
and reduce burden as set forth in sections 3(a) and 3(b)(2) of 
Executive Order 12988 (Feb. 5, 1996).
    H. Executive Order 13045 (Protection of Children): This rule making 
does not concern an environmental risk to health or safety that may 
disproportionately affect children under Executive Order 13045 (Apr. 
21, 1997).
    I. Executive Order 12630 (Taking of Private Property): This rule 
making will not effect a taking of private property or otherwise have 
taking implications under Executive Order 12630 (Mar. 15, 1988).
    J. Congressional Review Act: Under the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801 et seq.), prior to issuing any final rule, the 
United States Patent and Trademark Office will submit a report 
containing the final rule and other required information to the U.S. 
Senate, the U.S. House of

[[Page 43634]]

Representatives and the Comptroller General of the Government 
Accountability Office. The changes in this notice are not expected to 
result in an annual effect on the economy of 100 million dollars or 
more, a major increase in costs or prices, or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic and export markets. 
Therefore, this notice is not expected to result in a ``major rule'' as 
defined in 5 U.S.C. 804(2).
    K. Unfunded Mandates Reform Act of 1995: The changes proposed in 
this notice do not involve a Federal intergovernmental mandate that 
will result in the expenditure by State, local, and tribal governments, 
in the aggregate, of 100 million dollars (as adjusted) or more in any 
one year, or a Federal private sector mandate that will result in the 
expenditure by the private sector of 100 million dollars (as adjusted) 
or more in any one year, and will not significantly or uniquely affect 
small governments. Therefore, no actions are necessary under the 
provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 
1501 et seq.
    L. National Environmental Policy Act: This rule making will not 
have any effect on the quality of environment and is thus categorically 
excluded from review under the National Environmental Policy Act of 
1969. See 42 U.S.C. 4321 et seq.
    M. National Technology Transfer and Advancement Act: The 
requirements of section 12(d) of the National Technology Transfer and 
Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because 
this rule making does not contain provisions which involve the use of 
technical standards.
    N. Paperwork Reduction Act: The changes in this rule making involve 
information collection requirements which are subject to review by the 
Office of Management and Budget (OMB) under the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.). The collection of information 
involved in this notice has been reviewed and approved by OMB under OMB 
control number 0651-0031. This rule making proposes to harmonize the 
standard for materiality under Sec. Sec.  1.56 and 1.555 with the 
standard for materiality required to establish inequitable conduct. 
This notice does not propose any additional fees or information 
collection requirements on patent applicants or patentees.
    Notwithstanding any other provision of law, no person is required 
to respond to nor shall a person be subject to a penalty for failure to 
comply with a collection of information subject to the requirements of 
the Paperwork Reduction Act unless that collection of information 
displays a currently valid OMB control number.

List of Subjects in 37 CFR Part 1

    Administrative practice and procedure, Courts, Freedom of 
Information, Inventions and patents, Reporting and record keeping 
requirements, Small businesses.

    For the reasons set forth in the preamble, 37 CFR Part 1 is 
proposed to be amended as follows:

PART 1--RULES OF PRACTICE IN PATENT CASES

    1. The authority citation for 37 CFR Part 1 continues to read as 
follows:

    Authority:  35 U.S.C. 2(b)(2).

    2. Section 1.56 is amended by revising paragraph (b) to read as 
follows:


Sec.  1.56  Duty to disclose information material to patentability.

* * * * *
    (b) Information is material to patentability if it is material 
under the standard set forth in Therasense, Inc. v. Becton, Dickinson & 
Co., ------ F.3d ------ (Fed. Cir. 2011). Information is material to 
patentability under Therasense if:
    (1) The Office would not allow a claim if it were aware of the 
information, applying the preponderance of the evidence standard and 
giving the claim its broadest reasonable construction; or
    (2) The applicant engages in affirmative egregious misconduct 
before the Office as to the information.
* * * * *
    3. Section 1.555 is amended by revising paragraph (b) to read as 
follows:


Sec.  1.555  Information material to patentability in ex parte 
reexamination and inter partes reexamination proceedings.

* * * * *
    (b) Information is material to patentability if it is material 
under the standard set forth in Therasense, Inc. v. Becton, Dickinson & 
Co., ------ F.3d ------ (Fed. Cir. 2011). Information is material to 
patentability under Therasense if:
    (1) The Office would not find a claim patentable if it were aware 
of the information, applying the preponderance of the evidence standard 
and giving the claim its broadest reasonable construction; or
    (2) The patent owner engages in affirmative egregious misconduct 
before the Office as to the information.
* * * * *

    Dated: July 15, 2011.
David J. Kappos,
Under Secretary of Commerce for Intellectual Property and Director of 
the United States Patent and Trademark Office.
[FR Doc. 2011-18408 Filed 7-20-11; 8:45 am]
BILLING CODE 3510-16-P