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September 26, 2009


Teva and Sandoz tangled with AstraZeneca by trying to butt in on its patented antipsychotic drug. Their filing an ANDA riled AstraZeneca to assert infringement of 4,879,288. Defendants filed a summary judgment motion of inequitable conduct, which the district court denied. Another recitation on the high bar for finding inequitable conduct.

AstraZeneca v. Teva Pharmaceuticals and Sandoz (CAFC 2008-1480, -1481) precedential

Inequitable conduct is not easily shown.

The issue presented in this case relates to the extent to which the patent applicant, having fully disclosed the relevant prior art and having provided comparative data to the satisfaction of the patent examiner, must also present any additional unpublished information in the applicant's possession concerning other less structurally similar compounds, and must also synthesize additional compounds for comparative testing. The district court reviewed the evidence in the dual contexts of the materiality of any withheld or omitted information, and whether deceptive intent had been established. These are the essential factual underpinnings of the charge of inequitable conduct, and both materiality and deceptive intent must be established by clear and convincing evidence. See Kingsdown Medical Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 872 (Fed. Cir. 1988) (en banc) (both materiality and deceptive intent must be shown). Intent to deceive cannot be inferred from a high degree of materiality alone, but must be separately proved to establish unenforceability due to inequitable conduct. Id. at 876; see Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1366 (Fed. Cir. 2008) ("[T]he fact that information later found material was not disclosed cannot, by itself, satisfy the deceptive intent element of inequitable conduct.").

If both materiality and deceptive intent are established, the court shall balance these findings, with cognizance of the underlying facts, and determine whether, in the specific case, there was inequitable conduct in the prosecution of the patent application. Star Scientific, 537 F.3d at 1365. Upon determining that there was inequitable conduct in obtaining the patent, the district court may in its discretion declare the patent permanently unenforceable. Kingsdown, 863 F.2d at 876.

The patent grant was a close call.

During the prosecution the applicant and the examiner discussed the prior art compounds, for it was not disputed that the structural differences were small among these various compounds. The examiner based the rejection on structural similarity alone, and the applicant in response pressed the unpredictability of the critical physiological property of atypicality, and that the prior art provided no reason to make the particular compound quetiapine for the purpose of obtaining atypical antipsychotic properties. AstraZeneca pointed to the long-felt need for such a drug, because the use of clozapine was severely limited and no suitable replacement was available in the United States.

The examiner persisted in the rejection, stating that in accordance with the law of obviousness as to the claimed structure it is not necessary that the prior art described or suggested that a specific structure would impart a specific property, if in fact the prior art product had the desired property. The examiner stated that in order to overcome the structural obviousness rejection AstraZeneca must provide proof that the prior art compounds:

do not necessarily or inherently possess the characteristics of the claimed product. . . . In other words, once a condition of prima facie structural obviousness has been made out, it must be overcome by a side-to-side comparison with the closest art compound(s). In this case, one would test both the prior art species ([Horrom compound] and [Schmutz X]) and the claimed specie for their ability to avoid e.g. tardive dyskinesia (or whatever undesirable side effect applicant wishes to focus on).

PTO Paper No. 10, December 2, 1988. The examiner referred to the IDS and stated:

[T]he cited references are noted. None disclose [sic] compounds closer than the species already discussed.


In response to the examiner's position, AstraZeneca submitted the Declaration of one of the inventors, Dr. Migler, with data for the Horrom compound and a Schmutz compound.

The defendants' charge was thin, starting with the fact that the prior art at issue was before the PTO during prosecution. The brouhaha was over internal test data, and second-best prior art.

The references on which the Appellants base their argument of withholding comparative data were all before the PTO.

The Appellants' inequitable conduct arguments before the district court, and again before this court, focus on the fact that AstraZeneca did not submit to the PTO its internal test data...

The Appellants state that it was a material withholding to provide test data only for the compounds on which the examiner relied, stating that AstraZeneca's internal test data showed that compounds other than quetiapine possessed potential atypical antipsychotic activity. Thus, the Appellants argued that the Migler Declaration was deliberately misleading.

The district court found that AstraZeneca properly addressed the closest prior art, in response to the examiner's specific requests, and that the premises of the factual allegations of material withholding with deceptive intent had not been shown sufficiently to avoid the grant of summary judgment, citing that inequitable conduct in patent prosecution requires proof by clear and convincing evidence of both (1) an affirmative misrepresentation of material fact, a failure to disclose material information, or submission of false material information, and (2) an intent to deceive the examiner by such material falsity. AstraZeneca, 567 F. Supp. 2d at 691 (citing Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1364 (Fed. Cir. 2007)).


Several standards for establishing the fact of materiality in connection with patent prosecution have been proposed. See, e.g., Litton Indus. Products, Inc. v. Solid State Systems Corp., 755 F.2d 158, 166 n.19 (Fed. Cir. 1985) (identifying "four tests: (1) objective 'but for'; (2) subjective 'but for'; (3) 'but it may have been'; (4) PTO Rule 1.56(a), i.e., whether there is a substantial likelihood that a reasonable examiner would have considered the omitted reference or false information important in deciding whether to allow the application to issue as a patent.") While a uniform standard has not been rigorously applied in the courts, the fourth test of whether a reasonable examiner would have considered the information important in deciding whether to grant the patent, even when the omitted information does not negate patentability, is most often employed. See, e.g., Upjohn Co. v. Mova Pharm. Corp., 225 F.3d 1306, 1312 (Fed. Cir. 2000). "However, a reference need not be provided to the examiner if it is merely cumulative to or less material than other references before the examiner." Id.

No relevant reference is asserted to have been withheld.

Although there may be situations in which the failure to conduct specific tests of specific compounds can be criticized, in this case there was no evidence that the information gleaned, if such tests had been conducted, would have been material to patentability.

While AstraZeneca hadn't given the PTO all the prior art it had, it had provided the best known.

A reasonable examiner would understand AstraZeneca's statements to refer to the closest prior art compounds, not all prior art compounds.

Deceptive Intent

Intent to deceive is an independent element of inequitable conduct, and must be independently established by clear and convincing evidence. Star Scientific, 537 F.3d at 1365; Cargill, 476 F.3d at 1364; see Molins PLC v. Textron, Inc., 48 F.3d 1172, 1181 (Fed. Cir. 1995) ("[C]lear and convincing evidence must prove that an applicant had the specific intent to accomplish an act that the applicant ought not to have performed, viz., misleading or deceiving the PTO. In a case involving nondisclosure of information, clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference."); Allen Organ Co. v. Kimball Int'l, Inc., 839 F.2d 1556, 1567 (Fed. Cir. 1988) ("[m]ateriality does not presume intent, which is a separate and essential component of inequitable conduct").

Appellants state that they have shown a "high degree of materiality," and that they therefore need a proportionally lesser showing of intent to deceive to establish the requisite threshold level of intent. That is incorrect. Evidence of mistake or negligence, even gross negligence, is not sufficient to support inequitable conduct in patent prosecution. Kingsdown, 863 F.2d at 876. To establish the requisite deceptive intent, "the involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive." Id. While the court must, as the final step, weigh and balance the findings of materiality and intent, this presupposes that a threshold level of both of these elements has already been established by clear and convincing evidence. See Manville Sales Corp. v. Paramount Systems, Inc., 917 F.2d 544, 551 (Fed. Cir. 1990) ("Inequitable conduct requires proof by clear and convincing evidence. A threshold showing of both materiality and intent to mislead or deceive must be first established, and then those fact-findings are balanced to make the determination whether 'the scales tilt to a conclusion that inequitable conduct occurred.'").

The only evidence of intent offered by the Appellants is AstraZeneca's internal knowledge of certain compounds of this structural class that were atypical, without including this information in the IDS. The Appellants argue that it is irrelevant that the omitted compounds are not the closest structural analogs, and irrelevant that the patent examiner asked for comparative data for other, closer compounds. The Appellants offer no evidence or suggestion of deceptive intent, other than the fact that this information was not provided. The law is clear that "inequitable conduct requires not intent to withhold, but rather intent to deceive. Intent to deceive cannot be inferred simply from the decision to withhold [information] where the reasons given for the withholding are plausible." Dayco Products, Inc. v. Total Containment, Inc., 329 F.3d 1358, 1367 (Fed. Cir. 2003). As argued by Appellants, an applicant would not know how much of its research effort must be filed with the PTO, although of no interest to the examiner, or run the risk of accusation of wrongdoing no matter where the line is drawn.

As we have discussed, the omitted test data were not material because the compounds were not the structurally closest compounds, whereas AstraZeneca and the examiner focused on the structurally closest compounds. Although the Appellants argue that this is an inadequate reason, no evidence of bad faith has been proffered concerning the omission of data for the less similar compounds....


Posted by Patent Hawk at September 26, 2009 12:57 PM | Inequitable Conduct


If anyone can tell me what the difference is structurally between Compound 24028 and Schmutz X, I would be interested. As far as I can tell, based on the formulas in the case, these compounds are not just structurally similar, but are, in fact, structurally idential.

Posted by: EG at September 28, 2009 10:53 AM