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In a per curium order issued under seal May 3, 2023 but recently made public, the Patent Trial and Appeal Board awarded sanctions against Patent Owner, Longhorn Vaccines & Diagnostics, canceling all challenged claims of its five asserted patents for its “egregious abuse of the PTAB process.” Particularly, the Board determined that Patent Owner, through its counsel, failed to meet its duty of candor and fair dealing before the Board by “selectively and improperly” withholding information material to the patentability of the claims challenged in the IPR proceeding.

In its decision, the PTAB ordered sanctions of adverse judgment as to all challenged claims and denied Patent Owner’s motions to amend. The Board determined that Patent Owner “failed to meet its duty of candor and fair dealing in its actions before the Board” by withholding information relating to biological testing conducted by the company in support of its Patent Owner’s Response.

The Board found that Patent Owner proffered evidence “that was intentionally misleading” because it “omits results contrary to Patent Owner’s general position.” The Board also determined that that Patent Owner “intentionally intervened with the evidence of … witness(es) in order to “tailor” the test results and omit relevant results,” supplied this incomplete information to its expert as support for their testimony, and withheld these test results as to its proposed substitute claims in its Motion to Amend.

The Dispute

Petitioner, Spectrum Solutions LLC, sought inter partes review of five patents owned by Longhorn Vaccines & Diagnostics, LLC relating to biological specimen collection.

Patent Owner engaged an independent lab to conduct biological testing in support of its Patent Owner’s Response and Motion to Amend the claims. During Petitioner’s deposition of the independent lab, Petitioner disputed attorney-work-product objections raised by Patent Owner’s counsel relating the lab test results. In response, the PTAB issued an Order authorizing additional questioning on the lab testing and ordering Patent Owner to serve any relevant inconsistent information. 

Patent Owner ultimately served additional documents relating to its testing, but maintained that “the testing conducted on its behalf … is privileged as attorney work product.” Patent Owner also argued that it complied with its duty of candor “because the withheld data was not “inconsistent with any statement in [its] witnesses’ testimony, Exhibit 2019” and was not “inconsistent with anything that the patent owner has said.”

Petitioner filed a Motion for Sanctions, which requested: (1) entering judgment against Patent Owner; (2) holding that a particular reference meets particular claim limitations and precluding Patent Owner from contesting otherwise; and (3) providing Petitioner compensatory expenses, including attorney fees.

The Board’s Findings

According to the Board, “the testing data that Patent Owner initially withheld … is relevant to the patentability of the claims as we construed them in the institution decisions, … [and] is also relevant to the patentability of the claims as Patent Owner seeks to construe them.”

The Board stated that “Patent Owner’s representation to the Board that ‘no other testing exists relating to the conclusions or results presented in Ex. 2019’ … appears wholly untrue.” And, according to the Board, “the test results, and related documentation” that Patent Owner provided to its expert “were misleading at best and omitted information that a declarant reasonably would have considered relevant to the conclusion he reached as to the” prior art.

The Board also determined that there was no sound basis for asserting the attorney-work-product privilege for the factual information withheld. According to the Board, “the withheld data appears on its face to be the very type of factual information—research, tests, and experiments pertinent to patentability—that cannot be hidden behind the work product doctrine.”

The Board noted that where privileged information may exist, the party may still file the material with the Board under seal to allow the party to comply with its duty of candor and good faith to the Office.

Take Aways

Remember that the duty of candor due the Office is not limited to the time period when you are prosecuting patent applications prior to issuance. Under Rule 42.11, the duty of candor applies to any proceeding before the Board. See, 37 C.F.R. § 42.11. This includes IPR proceedings.

Your mere reliance on the material being privileged as attorney work product likely won’t excuse a failure to properly assert the privilege when filing (and serving) your papers or when presenting witnesses for deposition. If you would like to rely on privilege but are concerned that the privileged information may be material to the patentability, you can file this information with the Board under seal as “Filing Party and Board” in the Board’s electronic filing system. Doing so will allow your privileged information to be shielded while attempting to comply with the duty of candor and good faith and while the Board determines what is material and confirms it is privileged.

You may also request authorization for en camera review of the information and briefing to assert a privilege claim before you reach the deposition stage, or as soon as you are aware of the potential issue.