Neither Narrow Proposed Claim Construction nor Work Product Claim Justify Withholding Material Factual Information

By on June 1, 2023
Posted In Patents

The Patent Trial & Appeal Board of the US Patent & Trademark Office (PTO) canceled all challenged claims across five patents because the patent owner failed to meet its duty of candor by selectively and improperly withholding material information that was inconsistent with its patentability arguments. Spectrum Solutions, LLC v. Longhorn Vaccines & Diagnostics, LLC, IPR2021-00847; -00850; -00854; -00857; -00860 (PTAB May 3, 2023) (Braden, Yang, Derrick, Pollock, APJs) (per curiam) (Braden, APJ concurring).

The Board instituted inter partes reviews (IPRs) against five Longhorn patents based on petitions filed by Spectrum. During the proceedings, Longhorn filed motions to amend, after which the Board issued preliminary guidance suggesting that Spectrum established a reasonable likelihood that the proposed substitute claims were unpatentable. Longhorn engaged Assured Bio Labs (ABL) to conduct biological testing that would support its arguments distinguishing a prior art reference, but Longhorn made attorney work product objections in Spectrum’s ABL depositions and withheld testing data inconsistent with its arguments on the patentability of the original and proposed substitute claims. The Board subsequently allowed additional questioning on certain ABL testing, after which Spectrum filed a motion for sanctions, requesting judgment against Longhorn, a finding that the prior art reference taught the claim limitations and precluding Longhorn from contesting the finding, and an award to Spectrum of compensatory expenses, including attorneys’ fees.

The Board determined that sanctions of adverse judgment as to all challenged claims was appropriate because Longhorn failed to meet its duty of candor and good faith. The Board explained that parties have a duty of candor and good faith before the Board that requires any factual contentions to be well supported by evidence. Parties have “a duty to disclose to the [PTO] all information known . . . to be material to patentability.” (37 C.F.R. §1.56(a).) Information is material to patentability when it is “not cumulative to information already of record or being made of record in the application and . . . it refutes, or is inconsistent with, a position the applicant takes in . . . asserting an argument of patentability.” Taking a position contrary to any known fact while shielding factual information from the Board violates the duty of candor and good faith to the PTO, even if the party may otherwise withhold the information as being immaterial to patentability or privileged.

The Board criticized Longhorn’s proposed claim constructions as too narrow and contrary to the express language in both the original and proposed substitute claims. The Board explained that although Longhorn was free to maintain arguments grounded on Longhorn’s claim constructions, that did not excuse Longhorn’s duty of candor and good faith dealing, including disclosing material information relating to the Board’s preliminary claim constructions. Longhorn could not “simply withhold information” that the PTO would find material to patentability and should instead contest the Board’s constructions at trial.

The Board also explained that Longhorn took an overly strict view of what was material to claim patentability and a lax view as to the duty of candor and fair dealing. The failure of ABL to include certain testing results was “explained by the intervention of [Longhorn’s] own counsel,” and ABL was “instructed to omit the data . . . once the results were known.” But the withheld testing data was relevant to the patentability of the claims under the Board’s or Longhorn’s constructions, especially considering Longhorn’s counsel’s representations. The Board further commented that Longhorn made a statement that appeared wholly untrue on its face in the process. Thus, despite Longhorn’s position that the withheld data was not inconsistent with Longhorn’s comments, the withheld testing data was directly relevant to the stated purpose of the testing because the results showed the “very effects” that the testing was purported to seek.

The Board rejected Longhorn’s argument that the report was privileged attorney work product and stated that “there is no sound basis for the withheld factual information being privileged as work product.” The Board explained that the attorney work product doctrine is not absolute and the scope of protection before the PTO is limited, and that Longhorn should have filed the full report to comply with the duty of candor and good faith even if it meant that the exhibit was filed under seal. The Board, therefore, imposed sanctions against Longhorn canceling the challenged claims.

The Board, however, declined to award compensatory expenses, including attorneys’ fees, because it found the canceling of claims to be sufficient deterrence. As the Board noted, compensatory expenses were “neither sufficient, nor necessary to protect the interests of the PTO and the public.”

In his concurring opinion, Judge Braden disagreed. Judge Braden stated that ordering Longhorn to pay Spectrum’s attorneys’ fees and lab costs associated with countering Longhorn’s “egregious and willful actions” (including incomplete lab data and test results, incorrect deposition testimony and knowingly false attorney arguments) would protect the PTO’s interest and the public interest, be a deterrent to future parties and attorneys declining to meet this duty, and make Spectrum whole again.

Hannah Hurley, a summer associate in the Silicon Valley office, also contributed to this case note.

Cecilia Choy, Ph.D.
Cecilia Choy, Ph.D., focuses her practice on intellectual property matters and is a certified patent agent. Read Cecilia Choy's full bio.