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June 28, 2007

Snuffed

Star Scientific sued tobacco giant R.J. Reynolds in May 2001 for infringing its tobacco curing patents. R.J. Reynolds fought back, winning invalidity by indefiniteness in January for 6,202,649 and 6,425,401, and now egregious inequitable conduct for 6,805,134. Law firms participated in a cover-up.

The inequitable conduct trial was held in early February, 2005. Maryland District Court Judge Marvin Garbis snuffed the patent butt in his ruling Tuesday (opinion; order).

[T]he actions of Patentee Johnnie Williams ("Williams") and others participating in the prosecution of the Patents-in-Suit constitute a substantial failure to meet the duty of candor vís-a-vís the Patent and Trademark Office. Williams and others deliberately misled the PTO in a material manner by keeping from the PTO the critical fact known to Williams and others that the claimed beneficial result - tobacco with low to undetectable TSNA levels - had been achieved in the United States prior to the application that led to the Patents-in-Suit.

The following was written in the provisional application.

[I]t has been determined that [the prior art] as applied to tobacco grown in the United States yields tobacco products with high levels of TSNA.

This statement in the Provisional Application was designed to mislead the PTO into believing that the prior art could not yield tobacco with low levels of TSNA. There had been no determination of the type claimed. Yet, the PTO was led to believe that the alleged invention enabled the achievement of low-TSNA tobacco for the first time.

A letter written by the patentee's technical consultant, Professor Burton (the "Burton Letter") to the patent attorney drafting the initial application, was a focus of the evidence at the inequitable conduct trial. It was RJR's discovery of this letter that provided clear proof that Williams, the prosecuting patent attorney and others, had been aware that low and undetectable levels of TSNA had been achieved under the prior art. The Burton Letter establishes that they knew that the alleged invention did not, for the first time, enable curing of tobacco with low levels of TSNA.

[T]he significance of the Burton Letter - in context - is that Burton affirmatively stated to Williams that he attributed the low levels of TSNA found in the Chinese cigarettes to the use of the indirect fire flue-curing process that had previously been used in the United States. It is of no moment whether the practice in China constituted prior art. The significance is that the Burton Letter reveals that he knew, and informed Williams and Delmendo, that the prior art practiced in the United States had been able to achieve tobacco with low to undetectable levels of TSNA.

Patent counsel (Delmendo) and Williams were aware from the Burton Letter that Burton had obtained cigarettes in China that had low or non-existent levels of TSNA. Moreover, Burton had stated that "the probable cause for the absence of TSNA [in the Chinese cigarettes] was their use of the old flue-curing techniques" formerly used in the United States.

Not only was the PTO not informed that low levels of TSNA had been obtainable, but there was no adequate basis for the statement of a "determination" that the process applied to United States-grown tobacco yields high levels of TSNA.

Williams "stretched" to transform some kind of information relating to the curing of Brazilian tobacco into a "determination" as to what would result with tobacco grown in the United States.

This "stretch" kept the PTO from knowing that, as Williams knew, cured tobacco with low levels of TSNA had been achieved in the United States with tobacco grown in the United States. It is substantially likely that knowledge that the prior art could - albeit not every time - achieve low levels of TSNA would have affected a reasonable PTO examiner's evaluation of the claims at issue in the instant case. The materiality of the omission is particularly strong because of the absence of a specification of precisely how one practicing the alleged invention is to obtain the purportedly assured result.

Delmendo felt "concern" as to whether the information should be disclosed in an Information Disclosure Statement ("IDS") or in the patent specification, as the information might be important to the Patent Office. Id. at 97. However, the PTO was not informed that the prior art was at least capable of yielding TSNA levels as low as that purportedly yielded by practice of the alleged invention. Moreover, as noted below, the concern on the part of Delmendo was not communicated to, indeed, affirmatively kept from, his successor patent counsel after he was discharged by Star.

The Non-Provisional Application that was ultimately filed still did not reveal that the prior art could yield low levels of TSNA. Instead it "danced" around the matter, stating:

[T]his [old] process does not appreciate, and does not provide for, controlling the conditions within the barn to achieve prevention or reduction of TSNA's. This technique has been largely replaced in the United States by a different flue-curing process.

The record confirms that Williams and patent prosecution counsel were well aware throughout the PTO process that the prior art had been capable of providing low-TSNA tobacco and that the purported benefit of the alleged invention was to enable one to "ensure the reduction and prevention of TSNAs." Id. The PTO was not, however, candidly and clearly informed of this, but was led to believe that the prior art could not achieve tobacco with low levels of TSNA.

Two days after filing the non-provisional application, Star fired Delmondo (of the Sughrue firm) and hired Banner & Witcoff.

There was no contact between the two firms, even for the purpose of effecting a turnover of the pertinent files. See id. at 104, 380. Instead, Scott Flicker, a lawyer from Paul Hastings - the law firm of Star's Chairman, Paul Perito - acted as a "prophylactic intermediary" to transfer the files between the two firms... No plausible reason has been presented for this course of action other than the obvious one - to keep the Banner firm from learning what the Sughrue firm knew and thought.

The Burton letter was never delivered to Banner & Witcoff, who only later found out about it, but still did nothing about it.

While a suspicious matter, the Court does not find, sufficiently to satisfy the clear and convincing standard, that someone intentionally removed the Burton Letter from the Sughrue firm file before delivery to the Banner firm.

Star cannot seek to avoid an inequitable conduct finding by relying upon an attorney whom it blocked from such consultations with prior counsel. McKesson Information Solutions, Inc. v. Bridge Medical, Inc., ___ F.3d ___, No. 2006-1517 (Fed. Cir. May 18, 2007) (stating that firms cannot insulate their attorneys "against charges of inequitable conduct by instituting policies that present [the attorneys] from complying with the law"); Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 267 F.3d 1370 (Fed. Cir. 2001).

Further, Star filed a Make Special petition, which raises the bar for disclosure. The new Banner & Witcoff attorney, Paul Rivard, did not review the Sughrue file in preparing a prior art (IDS) statement, but he did tell several Star executives of the duty to disclose all relevant prior art.

In the context of an inequitable conduct determination, there is particular significance to a petition to make special. "[A] false statement in a petition to make special is material if . . . it succeeds in prompting expedited consideration of the application." Gen. Elec. Music Corp. v. Samick Music Corp., 19 F.3d 1405, 1411 (Fed. Cir. 1994). This is so "because, by filing a petition to make special, the applicant 'requested special treatment and induced reliance on its statement that a prior art search had been conducted.'" Regents of the Univ. of Cal. v. Eli Lilly & Co., 423 U.S. 1089 (1998) (quoting Gen. Elec. Music Corp., 19 F.3d at 1411); see also MPEP § 708.02, II(5).

The Petition to Make Special did not disclose that the prior art had been capable of producing low-TSNA tobacco and continued to give the impression that it was the alleged invention that, for the first time, enabled such a result.

Litigation attorneys for Star disavowed any obligation to reveal what they knew.

Attorneys who ultimately became trial counsel in the instant case were involved in monitoring the prosecution of the Patents-in-Suit. However, trial counsel did not believe themselves to be bound by the duty of candor. In anticipation of suit against RJR, and after suit was filed, Crowell & Moring ("the Crowell firm") monitored Patent Office filings. Nevertheless, the Crowell firm disavowed any obligation to tell the Banner firm about information it obtained that was material to the PTO... The Crowell firm, providing input to the Banner firm, knew of the fact that the prior art had been capable of producing low- TSNA tobacco.

When the continuation patent was allowed, but not yet issued, there was still a duty to disclose. R.J. Reynolds found out about the Burton letter, as did Rivard of Banner & Witcoff, but the firm declined to disclose what it had found out.

The Court finds that there was no valid justification for failing to make the disclosure as originally recommended by the Banner firm. Upon an evaluation of credibility and reasonable inferences from the evidence, the Court finds that Williams and others "leaned" on the Banner firm and that the Banner firm made an inappropriate professional decision.

To cover all bases, Star bought Burton.

Star funded a chair at the University of Kentucky in Burton's name, paid him a retainer more than his annual salary regardless of any work product produced, and gave Burton hundreds of thousands of dollars in stock options.

The denouement -

The balancing test [of proving materiality and intent by clear and convincing evidence] does not present a close issue in the instant case. There is clear and convincing proof of substantial material false statements and omissions. There is also clear and convincing proof of an intent to deceive on the part of Williams and others to a seriously high degree.

Star Scientific snorted that it welcomes the chance to appeal.

Posted by Patent Hawk at June 28, 2007 8:48 PM | Inequitable Conduct

Comments

Question: Isn't a provisional patent application not examined by the PTO? And therefore, a so called 'misstatement' in this provisional application cannot logically be important to a PTO examiner's patentability assessment, thus cannot be material.

Answer:...

Posted by: Hank at September 14, 2007 12:04 PM

The case has been heard at CAFC and by all accounts will most likely be reversed. I hope the district court judge (Marvin Garbis) is sanctioned for gross incompetence or worse, corruption!

Posted by: hank at March 22, 2008 5:19 AM

As expected, Star won the appeal at CAFC!
The District court judge, Marvin Garbis was clearly incompetent in his original rulings. Sad day for the Maryland District court. Good day for Star and their legal team, including Carter Philips!

Posted by: hank at August 25, 2008 2:07 PM

Regarding,

"The denouement -

The balancing test [of proving materiality and intent by clear and convincing evidence] does not present a close issue in the instant case. There is clear and convincing proof of substantial material false statements and omissions. There is also clear and convincing proof of an intent to deceive on the part of Williams and others to a seriously high degree.

Star Scientific snorted that it welcomes the chance to appeal."

Yeah, so how does this all sound now ... now that the appeal, which Star won decisively, is so often cited?

RE "Burton", if Patent Hawk had known half as much about science as it seems to think it knows about law, it could be clearly seen that "Burton" was a complete non-issue. Curing tobacco can result in "low TSNA" if the tobacco itself does not have the TSNA chemical precursors ... as tobaccos grown in China often do not. Star's curing patents presume that the tobacco being cured for low TSNA is not merely low in precursors in the first place.

For example, from the '649 patent,

"What is claimed is:

1. A process of substantially preventing the formation of at least one nitrosamine in a tobacco plant, the process comprising:

heating at least a portion of a tobacco plant with a flow of air while said portion is uncured, yellow, and in a state susceptible to having formation of said at least one nitrosamine arrested, for a time sufficient to substantially prevent formation of said at least one nitrosamine;

wherein said flow of air is sufficient to avoid an anaerobic condition around the vicinity of said plant portion."

Note, "... in a state susceptible to having formation of said at least one nitrosamine arrested ...". Perhaps it escapes Patent Hawk, but if you are not in a particular state, then you're not going to get arrested there : )

Patent Hawk stated, "The Non-Provisional Application that was ultimately filed still did not reveal that the prior art could yield low levels of TSNA." That overlooks the possibility that the Chinese tobacco mentioned was simply without (or very low in) TSNA precursors, as was, with virtual certainty, the case.

Thus Burton says nothing about "prior art" as applied to tobacco "... in a state susceptible to having formation of said at least one nitrosamine arrested ...", because the Chinese tobacco was not in such a state, being inherently low in TSNA. "The denouement -

The balancing test [of proving materiality and intent by clear and convincing evidence] does not present a close issue in the instant case. There is clear and convincing proof of substantial material false statements and omissions. There is also clear and convincing proof of an intent to deceive on the part of Williams and others to a seriously high degree.

Star Scientific snorted that it welcomes the chance to appeal."

Yeah, so how does this all sound now ... now that the appeal, which Star won decisively, is so often cited?

RE "Burton", if Patent Hawk had known half as much about science as it seems to think it knows about law, it could be clearly seen that "Burton" was a complete non-issue. Curing tobacco can result in "low TSNA" if the tobacco itself does not have the TSNA chemical precursors ... as tobaccos grown in China often do not. Star's curing patents presume that the tobacco being cured for low TSNA is not merely low in precursors in the first place.

For example, from the '649 patent,

"What is claimed is:

1. A process of substantially preventing the formation of at least one nitrosamine in a tobacco plant, the process comprising:

heating at least a portion of a tobacco plant with a flow of air while said portion is uncured, yellow, and in a state susceptible to having formation of said at least one nitrosamine arrested, for a time sufficient to substantially prevent formation of said at least one nitrosamine;

wherein said flow of air is sufficient to avoid an anaerobic condition around the vicinity of said plant portion."

Note, "... in a state susceptible to having formation of said at least one nitrosamine arrested ...". Perhaps it escapes Patent Hawk, but if you are not in a particular state, then you're not going to get arrested there : )

Patent Hawk stated, "The Non-Provisional Application that was ultimately filed still did not reveal that the prior art could yield low levels of TSNA." That overlooks the possibility that the Chinese tobacco mentioned was simply without (or very low in) TSNA precursors, as was, with virtual certainty, the case.

Thus Burton says nothing about "prior art" as applied to tobacco "... in a state susceptible to having formation of said at least one nitrosamine arrested ...", because the Chinese tobacco was not in such a state, being inherently low in TSNA.

Overall, the conclusions by Garbis were ludicrous in consideration of the actual record (as in trial) in the case ... pure fiction.

Patent Hawk should take a good look at what it's about to swallow ... things that aren't what they seem have been known to come back up. Patent Hawk should also try to reserve its opinions to law and try to avoid science ... evidently.

Overall, the conclusions by Garbis were ludicrous in consideration of the actual record (as in trial) in the case ... pure fiction.

Patent Hawk should take a good look at what it's about to swallow ... things that aren't what they seem have been known to come back up. Patent Hawk should also try to reserve its opinions to law and try to avoid science ... evidently.

Posted by: izof_texas at June 17, 2010 2:46 PM