A Duty Above Confidentiality: A Recent PTAB Decision Illustrates the Duty of Candor in PTAB Proceedings

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Patent agents and patent attorneys have a duty to protect their clients’ confidential secrets under the USPTO’s Rules of Professional Conduct. However, patent practitioners also have additional duties that must be observed and upheld at the USPTO. In ex parte prosecution, for example, both patent applicants and their legal representatives have a duty to disclose material information to the USPTO during the examination of a patent application.  The requirements governing this duty to disclose are codified in the Code of Federal Regulations (CFR) under 37 CFR 1.56. But this duty is not the only disclosure obligation when dealing with the USPTO. Patent practitioners involved in PTAB proceedings, such as inter partes review (IPR) and post-grant review (PGR), also have equally important legal obligations as shown in a recent Patent Trial and Appeal Board (PTAB) decision, Spectrum Solutions LLC v. Longhorn Vaccines & Diagnostics, LLC (“Longhorn Vaccines”).[1]

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In Longhorn Vaccines, the patent owner conducted biological testing in an attempt to distinguish a prior art reference used by the IPR petitioner to challenge patent claims in an issued patent.  During the IPR proceeding, the patent owner selectively and improperly withheld material results of the biological testing that were inconsistent with its patentability arguments for both the original issued claims and proposed substitute claims.  Finding the patent owner’s actions in violation of the USPTO’s duty of candor and fair dealing under the USPTO’s Code of Federal Regulations, the PTAB subsequently granted the IPR petitioner’s request for sanctions against the patent owner. In granting sanctions, the PTAB determined a sanction of adverse judgment against the patent owner as to all challenged claims as well as a denial of various motions to amend the challenged claims. Despite these sanctions, the PTAB withheld an award of attorney fees to the requesting petitioner, finding the adverse judgment sufficient to deter future parties from such misconduct.   

Turning to the PTAB decision, the PTAB relied on 37 CFR 42.11(a) for the patent owner’s duty of candor during the IPR proceeding. As an initial matter, it is worth noting that the duty of candor to the PTAB is broader in scope than the duty of candor for ex parte prosecution. For example, the PTAB duty applies to parties as well as individuals involved in any PTAB proceeding and during the course of the proceeding. On the other hand, the duty to disclose material information during patent application examination is only limited to each individual associated with the filing and prosecution of that patent application. An inventor on a different application at the same company may be aware of one or more prior art references that would render a particular claimed invention anticipated or obvious.  However, because the inventor is not involved in that particular patent application filing, he would have no duty to bring the material prior art references to the USPTO’s attention.  For the duty in a PTAB proceeding, that same company – as a party involved in the proceeding -- would need to turn over material information that would be known by their employees to be contrary to any patentability arguments made during a PTAB proceeding.  

Furthermore, the USPTO has not proposed any concrete standard for determining what information should be disclosed in a PTAB proceeding. For prosecuting a patent application, the USPTO provides examples and definitions of what “material information” might be required.  Under 37 CFR 1.56, the USPTO encourages patent applicants to disclose prior art cited in a search report of a foreign patent office in a counterpart application. Likewise, the USPTO defines “material information” to include information that is not cumulative to information already of record, and information that (1) establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim, or (2) refutes or is inconsistent with a position the patent applicant takes regarding patentability or unpatentability.  In Longhorn Vaccines, for instance, the PTAB cited to 37 CFR 1.56 for analogous support that the biological testing should be disclosed under the PTAB’s duty of candor. 

Another important difference between these two distinct candor obligations is the time period when the duties apply. In prosecuting a patent application, the duty to disclose material information applies for a pending claim until the claim is withdrawn or issues in a U.S. patent. Prior art discovered after the patent issues need not be disclosed for that patent. On the other hand, the PTAB’s duty of candor applies throughout the course of the PTAB proceeding. Because of this later disclosure period, the PTAB’s duty of candor may apply to many confidential documents covered by attorney-client privilege and the work product doctrine during pending litigation.  Even when a document is protected by one or more privileges, the Longhorn Vaccines decision makes clear that the relevant document must be provided to the PTAB. For example, privileged documents may be provided to the PTAB as exhibits under seal as “Filing Party and Board” in the PTAB’s electronic filing system.  By filing the documents under seal, the disclosing party may shield the information from other parties while the PTAB determines whether the information is material or protected under any privilege. The Longhorn Vaccines decision further notes that patent owners may also request authorization for en camera review of withheld information and brief their privilege claim before any withheld information is revealed during a deposition.

The Longhorn Vaccines case provides an important reminder that attorney-client privilege and other confidentiality requirements have limits and do not prevent all disclosure at the USPTO of material information relating to patentability. While patent owners are often aware of the dangers of inequitable conduct in prosecuting a patent application, patent owners may also render their patents unenforceable based on their own litigation conduct in PTAB proceedings.