From this, the board went on to state that "we have no reason to assume, from any positive testimony, that the present Norton exhibits 11 and 12 are not the very same fibers exhibited to the Examiner." Having said that, however, the board then hedged, noting that

There is always the possibility of some switch or change, accidental or otherwise, in items which have had so much handling and attention, and the testimony of the Curtiss witnesses at the Special Hearing may cast some doubt as to identity.

It was finally decided to "assume for the purpose of our further discussion that the present Norton exhibits 11 and 12 are the very fibers used in the demonstration."

At this point, the board stated what it felt to be the applicable law on the subject as follows:

to subject Curtiss to the penalty of forfeiture on the ground of fraud the supporting proofs must show by evidence that is clear, positive, cogent and convincing:

A. That there was knowledge by Curtiss that the information which he gave the Patent Office was false.

B. That such false information was essentially material to the allowance of his claims.

C. That there was a fraudulent motive, i.e., a degree of "irresponsibility in utterance which is tantamount to wilfulness."

The board then went on to summarily dismiss the charges of fraud aimed at Curtiss's qualitative statements concerning the performance characteristics of plastic-coated fibers and the withholding of Norton Ex. 23 (the plastic-coated fiber bundle). As to the former, it was noted that

the relatively poor performance in these years of the plastic coated fibers as compared to the glass coated ones is confirmed not only by Curtiss' ante litem motem writings but also by the testimony of Norton's witnesses Hicks and Hyde * * *. We note further that Curtis has not at any point represented that the performance of his plastic coated 1956 fibers was as poor in comparison with his glass coated ones as was Norton Exhibit 11 in 1961 in comparison with Norton Exhibit 12; in fact, his attorney made a specific point of the opinion held by Curtiss that the plastic deteriorates upon aging, and by implication that the performance of Exhibit 11 was admittedly not nearly so good in 1960 and 1961 as in 1956 or 1957.

Concerning the latter, the board stated that a comparison of the glasscoated fibers with Norton Exhibit 23 "would have demonstrated the required 'difference in kind', although the comparison would not have been a fair one in view of the known defects of a perhaps avoidable character in Exhibit 23."

374-293-71- -46

Finally, the board considered the issue of whether Curtiss had committed fraud in representing the actual fibers compared to be different from what they actually were. It pointed out first that Curtiss's "good faith in producing these exhibits and in later bringing the discrepancies to the attention of the Patent Office are factors tending to belie the accusation that he has been guilty of intentional misrepresentation." Then going on to consider whether Curtiss was fraudulently neglectful, the board held that, while "it was a deplorable fact that such an unfair comparison was made in the demonstration before the Examiner," and, on hindsight, "Curtiss should have investigated further before making his representations to the Patent Office," the record failed to support a finding that Curtiss had "committed fraud in assuming that the fibers were as stated."

Opinion

As far as we have been able to determine, this is the first occasion on which this court has been asked to review an action of the Patent Office dealing with charges of fraudulent misconduct. The importance of the questions raised in this case requires consideration in some detail.

[3] Regarding the question of Norton's fraud charges, the only issue we have power to decide is whether the Commissioner abused his authority in holding that the conduct of Curtiss did not warrant striking his application under Patent Office Rule 56. Compare Vanderber v. Reynolds, 46 CCPA 938, 268 F. 2d 744, 122 USPQ 381 (the second decision, 1959). We will resolve this question by first determining the standards of law which the Commissioner was required to apply in arriving at his decision, and then by determining whether the evidence presented justified the decision made.

[4] Initially, we observe that the statutes contain no express grant to the Commissioner of authority to strike an application for patent. Such authority must be found in 35 USC 6, which gives the Commissioner authority to establish regulations governing the conduct of proceedings in the Patent Office. We have long held that such regulations, when not inconsistent with the statutes, have the force and effect of law. See, e.g., Piel v. Falkner, 57 CCPA 1132, 426 F.2d 412, 165 USPQ 708 (1970). The Commissioner's authority to strike, under present Patent Office Rule 56, as well as its predecessor, Rule 31, has been the subject of court consideration before and has not been questioned. See Vandenberg v. Reynolds, 44 CCPA 873, 242 F.2d 761, 113 USPQ 275 (1957); Lindstrom v. Ames, 37 App. D.C. 365, 1911 C.D. 384. We do not question it now. It is true that the question of the Commissioner's power to deal specifically with fraudulent misconduct has

never before been the subject of direct [5] court review. However, we find ourselves in complete accord with the reasoning of Commissioner Ooms in holding that where the courts have approved this striking of an application for conduct less serious than fraud, it must follow that "a deliberate fraud in an attempt to secure the allowance of a claim affords a basis for similar action." Ex parte Mallard, 71 USPQ 294 (Com'r Pats. 1946).

Heretofore, it appears that the action of the Commissioner in striking an application has always been preceded by the finding of a court that a fraud had been committed. Nevertheless, we can see no reason, in logic or in law, why such a finding may not be made within the Patent Office. Having established that the Commissioner may strike an application for conduct which he finds to be fraudulent, however, the question remains concerning the standards to be applied in making such a finding. The term "fraud" is not defined in the rules and we have been unable to find elsewhere any authoritative interpretation of that word as used in Rule 56. It follows then, that this court is called upon, as it so often is, to construe a term in an administrative regulation.

Here, however, we have not been left to our own resources. We have been aided by the following unquestionable logic in the Commissioner's opinion in In re Heany, 1911 C.D. 139, 154, 171 O.G. 983 (1911): if the Commissioner should find from evidence duly taken in accordance with the law that an application or applications are so permeated with fraud as to justify the opinion that any patent or patents granted on those applications, whether amended or not, would be annulled or set aside by a court of equity on petition of the United States through the Attorney-General, on the ground that the patent was obtained through fraud, then it would be the duty of the Commissioner, under the law, to refuse, upon that ground, to grant such a patent.

[6] We take this to indicate that any conduct which will prevent the enforcement of a patent after the patent issues 12 should, if discovered earlier, prevent the issuance of the patent. The only rational,

12 It will be noticed that the opinion in Heany refers to a petition by the United States to set aside the patent on the grounds that it had been fraudently procured. At the time of that opinion, it was the prevailing law that only the United States could raise the issue of such fraud and then only in a sult by the Attorney General to cancel (revoke) the patent grant. United States v. Bell Telephone Co., 128 U.S. 315 (1888); Mowry v. Whitney, 81 U.S. 434 (1871). Since that time, however, the Supreme Court has recognized the right of a private party to assert that a patent has been procured by fraud practiced on the Patent Office,-first, as an equitable defense to an infringement charge, Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 19 USPQ 228 (1933); more recently, as an element of an affirmative counterclaim of antitrust violation. Walker Process Equipment Co. v. Food Machinery and Chemical Corp., 382 U.S. 172, 147 USPQ 404 (1965). As a result, there have been many occasions on which other courts have been called upon to evaluate charges of misconduct similar to those the party Norton is asserting here, and patents have been held unenforceable on the ground of fraudulent procurement for reasons not substantially different from those for which patents have been cancelled.

practical interpretation of the term "fraud” in Rule 56 which could follow is that the term refers to the very same types of conduct which the courts, in patent infringement suits, would hold fraudulent.

[7] We note first that traditionally, the concept of "fraud” has most often been used by the courts, in general, to refer to a type of conduct so reprehensible that it could alone form the basis of an actionable wrong (e.g., the common law action for deceit). That narrow range of conduct, now frequently referred to as "technical" or "affirmative" fraud, is looked upon by the law as quite serious. Because severe penalties are usually meted out to the party found guilty of such conduct, technical fraud is generally held not to exist unless the following indispensable elements are found to be present: (1) a representation of a material fact, (2) the falsity of that representation, (3) the intent to deceive or, at least, a state of mind so reckless as to the consequences that it is held to be the equivalent of intent (scienter), (4) a justifiable reliance upon the misrepresentation by the party deceived which induces him to act thereon, and (5) injury to the party deceived as a result of his reliance on the misrepresentation. See, e.g., W. Prosser, Law of Torts, §§ 100-05 (3d ed. 1964); 37 C.J.S., Fraud, § 3 (1943).

But the term "fraud" is also commonly used to define that conduct which may be raised as a defense in an action at equity for enforcement of a specific obligation. In this context, it is evident that the concept takes on a whole new scope. Conduct constituting what has been called earlier "technical fraud" will, of course, always be recognized as a defense. However, in these situations, failure, for one reason or another, to satisfy all the elements of the technical offense often will not necessarily result in a holding of "no fraud”. Rather the courts appear to look at the equities of the particular case and determine whether the conduct before them-which might have been admittedly less than fraudulent in the technical sense-was still so reprehensible as to justify the court's refusing to enforce the rights of the party guilty of such conduct. It might be said that in such instances the concept of fraud becomes intermingled with the equitable doctrine of "unclean hands". A court might still evaluate the evidence in light of the traditional elements of technical fraud, but will now include a broader range of conduct within each of those elements, giving consideration to the equities involved in the particular case.

[8] In suits for patent infringement, unenforceability, as well as noninfringement or invalidity under the patent laws, is a statutory defense. See 35 USC 282(1). We have noticed that unenforceability due to fraudulent procurement is a rather common defense. In such circumstances, we find that the courts are generally applying equitable principles in evaluating the charges of misconduct alleged to be fraud

ulent. Thus, in suits involving patents, today, the concept of "fraud” on the Patent Office (at least where a patentee's conduct pertaining to the relative merits of his invention is concerned), encompasses not only that which we have earlier termed "technical" fraud, but also a wider range of "inequitable" conduct found to justify holding a patent unenforceable. The courts differ as to the conduct they will recognize as being sufficiently reprehensible so as to carry with it the consequences of technical fraud. Nevertheless, one factor stands clear: the courts have become more critical in their interpretation of the relationship existing between applicants for patent and the Patent Office and their scrutiny of the conduct of applicants in light of that relationship. Not unlike those appearing before other administrative agencies, applicants before the Patent Office are being held to a relationship of confidence and trust to that agency. The indicated expansion of the concept of "fraud” manifests an attempt by the courts to make this relationship meaningful.

[9] This court does not wish to indicate approval of specific holdings or of every manner and way in which other courts have handled the question of fraud in the procurement of a patent. Nevertheless, we do subscribe to the recognition of a relationship of trust between the Patent Office and those wishing to avail themselves of the governmental grants which that agency has been given authority to issue. The ex parte prosecution and examination of a patent application must not be considered as an adversary proceeding and should not be limited to the standards required in inter partes proceedings. With the seemingly ever-increasing number of applications before it, the Patent Office has a tremendous burden. While being a fact-finding as well as an adjudicatory agency, it is necessarily limited in the time permitted to ascertain the facts necessary to adjudge the patentable merits of each application. In addition, it has no testing facilities of its own. Clearly, it must rely on applicants for many of the facts upon which its decisions are based. The highest standards of honesty and candor on the part of applicants in presenting such facts to the office are thus necessary elements in a working patent system. We would go so far as to say they are essential. It follows, therefore, that we do approve of the indicated expansion of the types of misconduct for which applicants will be penalized.

In the present case, the charges of fraud are basically three-pronged. The party Norton asserts first, that the representations made in the affidavit and demonstration by Curtiss as to the performance characteristics of plastic-coated fibers amounted to an unfair denigration of the actual state of the prior art. He also charges that Curtiss deliberately withheld the bundle comprising exhibit 23 from the