Download this Paper Open PDF in Browser

The Upside Down Inequitable Conduct Defense

65 Pages Posted: 16 Dec 2011 Last revised: 2 Jan 2015

Tun-Jen Chiang

George Mason University School of Law

Date Written: December 14, 2011

Abstract

“Inequitable conduct” is a patent law doctrine that renders a patent unenforceable when the patentee is found to have acted improperly before the U.S. Patent and Trademark Office. It is widely reviled and frequently criticized for being draconian: the Federal Circuit has famously called the doctrine an “absolute plague” that terrorizes patent owners. Responding to the concern about overdeterrence, the Federal Circuit has repeatedly narrowed the doctrine.

This Article takes a different perspective. The conventional wisdom is correct enough in arguing that the inequitable conduct doctrine sometimes produces overdeterrence. What has been overlooked, however, is the fact that the doctrine also produces underdeterrence. Specifically, as this Article will demonstrate, the unenforceability penalty creates too much deterrence against minor errors, but it also produces inadequate deterrence against the most serious patentee frauds. In this way, the doctrine is upside down.

Once we understand that there is an underdeterrence problem, it quickly becomes evident that conventional proposals to narrow liability (which the Federal Circuit has generally adopted) are misguided. Narrowing the inequitable conduct doctrine can mitigate the overdeterrence problem, but only at the price of exacerbating the underdeterrence problem. At the same time, the Article will demonstrate that expanding liability, as some have argued, is no better: it simply exacerbates the overdeterrence problem. Rather than focus on the liability standard, the proper solution is to reform the penalty in a way that addresses both the over- and underdeterrence effects.

Keywords: inequitable conduct, Therasense, marginal deterrence, availability heuristic, Kingsdown, unenforceability, upside down, fraud paradox

JEL Classification: K11, O34

Suggested Citation

Chiang, Tun-Jen, The Upside Down Inequitable Conduct Defense (December 14, 2011). Northwestern University Law Review, Vol. 107, No. 3, Spring 2013, pp. 1243-1306; George Mason Law & Economics Research Paper No. 11-53. Available at SSRN: https://ssrn.com/abstract=1972435 or http://dx.doi.org/10.2139/ssrn.1972435

Tun-Jen Chiang (Contact Author)

George Mason University School of Law ( email )

Paper statistics

Downloads
82
Rank
259,571
Abstract Views
847