How to Meet the Inequitable Conduct Standard after Therasense
The Court of Appeals for the Federal Circuit recently clarified the standard necessary for holding a patent unenforceable for inequitable conduct relating to intentionally withheld references and misrepresentations of material information. Apotex Inc. v. UCB, Inc., No. 2013-1674 (Aug. 15, 2014). Given the high standard set forth in the Federal Circuit’s prior opinion in Therasense, this decision finding inequitable conduct provides a roadmap for inventors, prosecutors, and litigants alike with regard to potential claims of inequitable conduct.
The patent at issue, U.S. Patent No. 6,767,556, was written by the sole inventor, Dr. Bernard Sherman, who is also the founder and chairman of Apotex Inc. Apotex at 3. The patent is directed to a process for manufacturing moexipril tablets, which are used to treat hypertension as an angiotensin-converting enzyme. Id. Moexipril and its acid addition salts are not stable and tend to degrade quickly. Id. The ‘556 patent discloses a process for improving overall stability by reacting moexipril or its acid addition salt with an alkaline magnesium compound. Id.
The ‘556 patent received three obviousness rejections by the United States Patent and Trademark Office (“USPTO”) during prosecution. Id. at 5. Dr. Sherman overcame these rejections by making arguments that the prior art did not teach the specific reacting steps disclosed by his application. At the direction of Dr. Sherman, a third-party expert declaration was submitted in support of patentability over the prior art. Id. at 6-7. In view of these arguments, the USPTO found the claims to be allowable with the added limitation that the reacting step result in “greater than 80%” conversion of the moexipril or its acid addition salt into moexipril magnesium. Id. at 8. Apotex subsequently brought an infringement suit in the U.S. District Court for the Southern District of Florida against UCB in regard to its drugs Univasc and Uniretic, and the generic versions of these brands. Id. These drugs have been on sale in the United States since 1995 and 1997 respectively. Id. at 4.
In Therasense, the Federal Circuit acknowledged that the inequitable conduct defense traditionally required findings of materiality and intent to deceive, and held that the proper finding of materiality is “but-for materiality” (in other words, the patent claim would not have been allowed “but for” the cited conduct). Therasense at 27. An exception to this rule is recognized for conduct that constitutes “affirmative acts of egregious misconduct.” Id. at 29. As to intent to deceive, the Federal Circuit held that clear and convincing evidence is required and is established only when such intent is “the single most reasonable inference able to be drawn from the evidence.” Id. at 25.
In Apotex’s suit, the U.S. District Court for the Southern District of Florida found that clear and convincing evidence established that Dr. Sherman knew the “reacting” step was disclosed in earlier prior art processes, that he concealed that knowledge from the examiner, and that he misrepresented the prior art in the expert declaration and arguments made during prosecution. The court found that Dr. Sherman lacked credibility as a witness (particularly in light of his “selective memory” while testifying), and provided misrepresentations to the examiner (submitting results of experiments that he “made up in his head”), and withheld material information (relevant prior art) during prosecution. Apotex at 9-10. The court also found that Dr. Sherman made similar misrepresentations to the third-party expert who prepared the expert declaration. Id.
The district court determined that the withheld prior art disclosing the claimed “reacting” step was material to the prosecution of the patent, and that the USPTO examiner would not have allowed the claims if he had been aware of that withheld prior art. Id. at 11. Alternatively, the district court noted that Dr. Sherman’s conduct during prosecution of the patent application was so egregious that the court did not even need to engage in a full but-for materiality analysis. Id. As to intent, the court concluded that the single most reasonable inference from Dr. Sherman’s conduct was that he intended to deceive the USPTO, as evidenced by his pattern of misconduct, his poor credibility at trial, repeated violations of his duty of candor, and purposefully preventing an expert from reviewing relevant information in order to obtain a misinformed declaration that would mislead the examiner to allow the claims. Id. at 12. Accordingly, the patent was held unenforceable for inequitable conduct.
The Federal Circuit upheld as not clearly erroneous most of the district court’s findings as to materiality and intent, while avoiding the issue of whether the conduct was truly egregious by saying merely that Dr. Sherman’s conduct approaches that level. Id. at 12-13, 15. Judge Reyna, writing for the panel, indicated that the Federal Circuit did not require inventors to disclose doubts or concerns about the prior art, as arguments advancing reasonable interpretations of the teachings of prior art do not violate the duty of candor. Id. at 15. Here, however, it is unreasonable to infer that Dr. Sherman’s conduct constituted anything other than a lack of candor with deceptive intent. Id. at 16.
Practitioners should note that the Federal Circuit took special issue with an inventor’s procurement and submission of an expert declaration that contained false statements instrumental to issuance of the patent. Further, litigators should take note that the credibility of Dr. Sherman’s testimony at trial was also found to be particularly relevant to the intent inquiry, meaning that litigators should prepare witnesses to be candid and forthcoming about prosecution kerfluffles so that inconsistencies, delays, or poorly received prosecution arguments do not look like intent to deceive in retrospect.
Gibbons will continue to monitor applications of the Federal Circuit’s heightened standard for inequitable conduct in patent decisions.