* Inequitable conduct defense OK only if critical gaps
* Many patent reform elements in court decisions
* Bill awaiting vote in House of Representatives
WASHINGTON, May 25 A U.S. appeals court that
specializes in patent disputes made it harder on Wednesday for
patents to be declared invalid because of gaps or errors in
The U.S. Court of Appeals for the Federal Circuit said that
"inequitable conduct," which is often alleged in lawsuits,
could only be used to invalidate a patent if the withheld
material was critical to whether a patent should have been
The court made the ruling in reversing a lower court that
had declared an Abbott Laboratories patent to make disposable
blood glucose test strips unenforceable because of missing
Abbott said it was happy to see the court move to hem in
the use of inequitable conduct, which is often alleged in
"We are pleased that the Federal Circuit has tightened the
standards for finding inequitable conduct, and reversed the
decision that found our patent to be unenforceable," said
Abbott spokesman Scott Stoffel.
The inequitable conduct standard was one of several
measures that some lawmakers have targeted for change in a
While congressional moves to overhaul the patent system
have stalled repeatedly, many of the original goals of patent
reform have been accomplished through court decisions.
One critical court ruling affected how damages for
infringement are calculated.
In 2009, the Court of Appeals for the Federal Circuit found
that Microsoft Corp (MSFT.O) infringed a patent owned by
Alcatel -- now owned by Lucent -- to make its Outlook software,
but it also held that the jury erred in using Microsoft's total
Outlook sales in calculating damages.
Then in January of this year, the same court tossed out a
commonly used method of calculating damages in another case
While finding that Microsoft infringed a patent to prevent
software piracy, the appeals court said flat out it would no
longer accept a "25 percent rule" to determine the reasonable
royalty rate a manufacturer will pay.
Uniloc, which owns the patent, was awarded $388 million in
damages, but that will be recalculated.
Companies that won an infringement lawsuit in the past
could get an injunction shutting down the infringement.
In 2006, a federal district judge in Virginia shook
official Washington and the business world by considering
enforcing an injunction on Research in Motion Ltd RIM.TO
that would have blacked out BlackBerry service nationwide.
The injunction threat has since waned, in large part
because of a 2006 Supreme Court ruling, eBay v. MercExchange,
which made it harder to get an injunction. It added tests, one
of which was whether public interest would be harmed by a
Both the U.S. Senate and the House of Representatives'
Judiciary Committee voted this spring to overhaul U.S. patent
law, backing a measure aimed at chipping away at a huge backlog
of patent applications and offering cheaper alternatives to
The bill is a stripped down version of bills proposed in
The case before the U.S. Court of Appeals for the Federal
Circuit is Therasense Inc. (now known as Abbott Diabetes Care,
Inc.) and Abbott Laboratories v. Becton, Dickinson and Co, and
Nova Biomedical Corp, and Bayer Healthcare LLC, case numbers
2008-1511, -1512, -1513, -1514, -1595.
(Reporting by Diane Bartz; Editing by Tim Dobbyn and Steve