November 9, 2010
The application that led to 5,260,291 took 13 years to allowance. Prosecutors twiddled by ignoring office actions and filing continuations. Nine years into it, ownership changed hands, where, for the first time, the prosecutor argued against examiner's rejection on lack of utility, relying upon animal tests for the claimed cancer treatment. '291 issued in November 1993. From there the cancer spread.
Cancer Research Technology & Schering v. Barr (CAFC 2010-1204) precedential
The application for the '291 patent was filed in the United States on August 23, 1982, by a British pharmaceutical company... On March 25, 1991, ownership of the patent application changed hands, with Cancer Research receiving an absolute assignment of rights.
In October 1999, Schering Corp., the new exclusive licensee under the patent, filed for a patent term extension under 35 U.S.C. § 156, which added 1,006 days to the '291 patent's term. The patent also was granted a pediatric exclusivity period and will expire in February 2014.
On March 19, 2007, Barr Laboratories, Inc. and Barr Pharmaceuticals, Inc. (collectively, "Barr") filed an Abbreviated New Drug Application ("ANDA") with a Paragraph IV certification under the Hatch-Waxman Act, 21 U.S.C. § 355, challenging the validity of the '291 patent and seeking FDA approval for generic Temodar®. Cancer Research sued Barr for patent infringement in the United States District Court for the District of Delaware on July 20, 2007. The parties stipulated to infringement and validity of claim 13 directed to temozolomide, leaving only Barr's counterclaims that the patent was unenforceable for prosecution laches and for inequitable conduct.
The lame prosecution drag-out finally came acropper.
After a bench trial, the district court held the '291 patent unenforceable for prosecution laches. The district court first decided that under Symbol Technologies, Inc. v. Lemelson Medical, 422 F.3d 1378 (Fed. Cir. 2005) ("Symbol Techs. II"), prosecution laches did not require a showing of intervening rights but rather turned on whether under the totality of the circumstances Cancer Research's delay in prosecution in light of the PTO's utility rejections was unreasonable and unexplained. Cancer Research, 679 F. Supp. 2d at 572-73. The court then found that even assuming, as Cancer Research claimed, that the PTO's rejections required the submission of human clinical data to establish utility in humans, and thus patentability, Cancer Research could have attempted to traverse the rejection based on then-existing case law holding that such utility could be shown by animal tests, but waited until doing so benefited it commercially. Id. at 574. Furthermore, according to the district court, even if the examiner had rejected Cancer Research's position, a subsequent office action would have at the very least clarified the examiner's position on the need for human data without putting the company in a worse position. Id. The district court thus held that the delay caused by eleven continuation applications, ten abandonments, and no substantive prosecution for nearly a decade was unreasonable and a sufficiently egregious misuse of the patent system to bar enforcement of the '291 patent for prosecution laches. Id. at 575.
Then there was the withholding of evidence that led to a trial court finding of inequitable conduct.
The district court also held the '291 patent unenforceable for inequitable conduct. The court first found that Cancer Research failed to disclose highly material information to the PTO. Specifically, the court found that Cancer Research did not disclose Phase I and II human data indicating that mitozolomide failed to treat numerous cancers covered by the '291 patent claims and did not disclose other data indicating that the inventors considered other claimed tetrazine compounds to be inactive in at least one cancer model. Id. at 580. The district court found this withheld information to be highly material because it directly contradicted statements in the '291 patent regarding the compounds' broad utility in treating cancers and directly contravened the patentability of broadly written claim 28. Id. at 580-81. In so finding, the court rejected Cancer Research's arguments that the Phase I data were not material because they focused on safety rather than efficacy and that the Phase II data were not material because they were preliminary and inconclusive. The court found that those arguments were belied by inventor Stevens's widespread publication of the data. Id. at 580. The district court also rejected Cancer Research's argument that other undisclosed studies were positive and supported the utility of the claims, concluding that the nondisclosure of positive data did not mitigate the fact that Cancer Research withheld negative data or its finding that the negative data were highly material. Id. at 581.
The district court next found that inventor Stevens withheld the data with intent to deceive because (1) the withheld information was highly material, (2) Stevens knew about the information and should have appreciated its materiality as it directly contradicted the application's disclosure, and (3) Stevens did not provide a credible explanation for withholding the information. Id. With regard to the latter, the district court found not credible Stevens's testimony that he considered the withheld data to be confidential to clinicians and inconclusive in view of Stevens's widespread publication both of the data and of his conclusions that the data showed the compounds to be inactive and toxic. Id. The district court also found Stevens's publication of the withheld data a sufficient basis upon which to infer intent to deceive. Id. at 582.
And so the appeal.
Prosecution laches is an equitable defense to a charge of patent infringement. Symbol Techs., Inc. v. Lemelson Med., 277 F.3d 1361, 1366 (Fed. Cir. 2002) ("Symbol Techs. I"). The doctrine "may render a patent unenforceable when it has issued only after an unreasonable and unexplained delay in prosecution" that constitutes an egregious misuse of the statutory patent system under the totality of the circumstances. Symbol Techs. II, 422 F.3d at 1385-86. We review a district court's determination of prosecution laches for abuse of discretion, id. at 1384, but we review the legal standard applied by the district court de novo, IPXL Holdings, L.L.C. v. Amazon.com, Inc., 430 F.3d 1377, 1380 (Fed. Cir. 2005).
Whereupon a very controversial standard for prosecution laches is set forth: that the claimed invention was developed by someone else during the delay duration, and so there are intervening rights.
In sum, both the Supreme Court and our cases establish that evidence of intervening rights is required to establish "an unreasonable and unexplained delay in prosecution." Symbol Techs. II, 422 F.3d at 1385. Barr has failed to establish either that it or that others developed or invested in temozolomide or any other claimed tetrazine compound between 1982 and 1991, the period of delay. Accordingly, Barr cannot establish prosecution laches as a matter of law, and we reverse the decision of the district court.
The district court also held the '291 patent unenforceable for inequitable conduct. Cancer Research, 679 F. Supp. 2d at 577-82. To successfully prove inequitable conduct, the accused infringer must provide evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) did so with intent to deceive the PTO. Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1365 (Fed. Cir. 2008). Both materiality and intent must be proven by clear and convincing evidence. Id. While deceptive intent can be inferred from indirect and circumstantial evidence, that "inference must not only be based on sufficient evidence and be reasonable in light of that evidence, but it must also be the single most reasonable inference able to be drawn from the evidence to meet the clear and convincing standard." Id. at 1366.
This court reviews a district court's determination of inequitable conduct under a two-tiered standard; we review the underlying factual determinations of materiality and intent for clear error, and we review the ultimate decision as to inequitable conduct for an abuse of discretion. Id. at 1365. If the district court's inequitable conduct determination rests on a clearly erroneous finding of materiality and/or intent, it constitutes an abuse of discretion and must be reversed. Id.
The district court had found that the "highly material" material withheld by the inventor was proof of intent.
But materiality and intent are separate requirements, and intent to deceive cannot be found based on materiality alone. Larson Mfg. Co. of S.D., Inc. v. Aluminart Prods. Ltd., 559 F.3d 1317, 1340 (Fed. Cir. 2009). A court cannot simply infer that an applicant "should have known" the materiality of withheld information and thus intended to deceive the PTO because the applicant knew of the information and the information is material. A district court must find some other evidence that indicates that the applicant appreciated the information's materiality. See, e.g., Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 1256 (Fed. Cir. 1997) (finding intent to deceive based in part on handwritten notes of prosecution counsel corroborating that counsel subjectively believed the undisclosed patent was material). In this case, evidence that Stevens co-authored articles that contradict the disclosure of the '291 patent specification does not alone establish that Stevens withheld those studies intending to deceive the PTO.
We also disagree with the inference the district court drew from Stevens's publication of the withheld data. While publication to the scientific community is not the same as disclosure to the PTO and does not foreclose a finding of deceptive intent, see Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1241 (Fed. Cir. 2003), the prompt publication of data in multiple articles over the entire course of prosecution is inconsistent with finding that intent to deceive is the single most reasonable inference to draw from the evidence in this case, see Research Corp. Techs., Inc. v. Microsoft Corp., 536 F.3d 1247, 1252 (Fed. Cir. 2008) (stating that "[p]ublication [to the scientific community] is an act inconsistent with an intent to conceal data from the USPTO."). Also, Stevens did not selectively withhold information; the withheld information includes both positive and negative data regarding the claimed tetrazine derivatives. Cf. Semiconductor Energy Lab. Co. v. Samsung Elecs. Co., 204 F.3d 1368, 1376 (Fed. Cir. 2000) (affirming a finding of intent to deceive based on a partial translation of a prior art reference). Accordingly, an equally reasonable inference to draw from the evidence is that Stevens viewed publication of all the data as important to his career as a scientist but did not appreciate their potential importance to the patentability of the tetrazine derivatives patent claims.
Judge Prost failed to convince his colleagues, in this case, Lourie and Newman, of sensible application of the law.
In my view, the majority opinion seriously errs in reversing the district court's findings and conclusions that U.S. Patent No. 5,260,291 ("'291 patent") is unenforceable on the grounds of both prosecution laches and inequitable conduct. In doing so, the majority propounds a new and unsupportable legal standard for prosecution laches. With regard to inequitable conduct, the majority not only creates a new evidentiary standard, but it also ignores virtually unassailable credibility findings made by the district court after a four-day bench trial.
I. Prosecution Laches
The majority appears to not take issue with the district court's findings and conclusion that the patentee's almost decade-long delay in prosecuting its application-- caused by filing eleven continuation applications, abandoning ten of those applications, and obtaining nearly two years' worth of time extensions merely to file continuation applications rather than responses to the Office Actions-- was unreasonable. Despite Cancer Research Technology Limited and Schering Corporation's (collectively, "Cancer Research") excuses justifying the delay, the information eventually used to overcome the examiner's initial rejection was contained in the application as originally filed ten years earlier. The district court carefully rejected all of the patentee's excuses for its delay, ultimately concluding that the applicants did not prosecute the application until it became commercially advantageous to do so.
Instead, the majority rejects the legal standard the district court applied. The district court concluded that under Symbol Technologies, Inc. v. Lemelson Medical, 422 F.3d 1378 (Fed. Cir. 2005) ("Symbol Techs. II"), prosecution laches does not require a showing of intervening rights, but rather turns on whether under the totality of the circumstances Cancer Research's delay was unreasonable and unexplained. See Cancer Research Tech. v. Barr Labs., Inc., 679 F. Supp. 2d 560, 572-73 (D. Del. 2010). Besides rejecting this standard, the majority says that in order to establish prosecution laches (1) prejudice to the alleged infringer must be shown, and (2) that prejudice requires that "either the accused infringer or others invested in, worked on, or used the claimed technology during the period of delay." Maj. Op. at 9 (emphasis added); see also id. at 13-14 ("Barr has failed to establish either that it or that others developed or invested in temozolomide or any other claimed tetrazine compound between 1982 and 1991, the period of delay. Accordingly, Barr cannot establish prosecution laches as a matter of law . . . .").
Judge Prost points out the logical absurdity of the new standard promulgated by the majority opinion, as well as misreading of precedent.
First, I think the district court got it right because I do not agree with the majority that a showing of intervening rights, i.e. prejudice, is compelled by our precedent. Moreover, even if one could construe the case law as requiring prejudice, there is no basis, in the relevant case law or otherwise, for the majority's further temporal limitation that the prejudice exists during the period of delay.
Shifting the inquiry regarding prosecution laches from Cancer Research's own conduct to the conduct of the party invoking the defense ignores that prosecution laches is an equitable defense. Neither the Supreme Court nor this court has required a defendant to establish prejudice to assert prosecution laches. Indeed, in Woodbridge v. United States, the Court held that a plaintiff's willful or negligent postponement in obtaining patent rights alone can result in forfeiture. 263 U.S. 50, 57 (1923) (quoting Kendall v. Winsor, 62 U.S. 322, 329 (1858), for the proposition that an inventor "'may forfeit his rights as an inventor by a willful or negligent postponement of his claims, or by an attempt to withhold the benefit of his improvement from the public until a similar or the same improvement should have been made and introduced by others'" (emphasis added)).1 Our precedent is no more restrictive. Recognizing that prosecution laches is an equitable doctrine, we have declined to "set forth any firm guidelines for determining when such laches exists." Symbol Techs. II, 422 F.3d at 1385. Laches may be triggered by "the totality of the circumstances, including the prosecution history of all of a series of related patents and overall delay in issuing claims." Id. at 1386. And we have specifically indicated that "repetitive refilings that demonstrate a pattern of unjustifiably delayed prosecution" "for the business purpose of delaying . . . issuance [of the patent]"--an apt description of Cancer Research's behavior during the prosecution of the '291 patent--supports a finding of laches. Id. at 1385-86.
1 The majority also cites to Webster Electric Co. v. Splitdorf Electic Co., 264 U.S. 463 (1924), Crown Cork & Seal Co. v. Ferdinand Gutmann Co., 304 U.S. 159 (1938), and General Talking Pictures Corp. v. Western Electric Co., 304 U.S. 175 (1938). None of these Supreme Court cases require a showing of prejudice where an applicant unreasonably extends prosecution by refusing to respond to the merits of nine substantially similar Office Actions. Under Webster, "laches, equitable estoppel or intervening private or public rights" can each alone bar the right to a claim presented in a subsequent divisional patent. 264 U.S. at 471 (emphasis added). The Webster Court suggested that there is a presumption that such claims are unreasonable (and thus time-barred) where the applicant waited more than two years to present the claims in a divisional application. Id. Under Webster, applicants could only obtain such claims if they provided justification for the more than two-year delay. Id. In Crown Cork, the Court clarified that "in the absence of intervening rights, the decision in [Webster] does not mean that an excuse must be shown for a lapse of more than two years in presenting the divisional." 304 U.S. at 167-68; see also General Talking Pictures, 304 U.S. at 184. Crown Cork and General Talking Pictures make clear that a two-year delay in filing a divisional is not per se unreasonable in the absence of intervening rights. However, nothing in these cases requires a party to show that it had intervening rights or suffered any other prejudice as a prerequisite to asserting the equitable defense of prosecution laches where the patentee's prosecution delays are unreasonable under the totality of the circumstances.
More importantly, even if prejudice is required, there is no basis for the majority's new requirement that one must confine himself to the period of prosecution delay in determining whether prejudice exists. Such a requirement (1) discounts the relationship between prosecution laches and broad public interests in the timely issuance of patents and (2) imposes a novel time restriction on the harm suffered.
The majority considered a 32-year patent grant copasetic.
By requiring this particularized prejudice, the majority sidesteps the real harm at issue in this case. The Supreme Court has explicitly recognized that delaying a patentee's monopoly period harms the public by delaying its free use of the patented invention. Woodbridge, 263 U.S. at 48-49. Here, the applicant first filed the patent application disclosing temozolomide in 1982. By stalling prosecution for its own business purposes for nearly a decade, Cancer Research obtained a patent which does not expire until 2014--almost thirty-two years after the first application in this chain was filed. The majority downplays the public prejudice caused by this delay,2 Maj. Op. at 12-13; however, Cancer Research's conduct has prejudiced the public by extending its patent monopoly over temozolomide. Indeed, Congress has specifically recognized the public's interest in obtaining affordable prescription drugs by enacting a regulatory scheme to expedite the availability of generic drugs. See Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417, 1984 Stat. 1538 (codified as amended in scattered sections of 21 & 35 U.S.C.). Barr Laboratories, Inc. and Barr Pharmaceuticals, Inc. (collectively, "Barr"), as well as other makers of generic pharmaceuticals, are likewise harmed. It is unable to enter the market without risking a patent infringement suit until a date far later than the one it would have faced had Cancer Research not engaged in its excessive delays.
The majority avoids entirely these harms by confining the relevant harm to the period during which Cancer Research delayed prosecution of its patent application. There is no basis for the majority's limitations. I would hold that the more generalized harm associated with the improper extension of the patent monopoly, including the accompanying market uncertainty and denial to the public of free use of the invention, is sufficient prejudice to justify the use of an equitable defense. Even if our precedent required adverse intervening rights, it is not appropriate to confine the inquiry to the period of time when Cancer Research was actively delaying prosecution. The harm continued though the patent term "extension" Cancer Research improperly created though its delay tactics.
II. Inequitable Conduct
Similarly, in reversing the district court's findings and conclusions regarding inequitable conduct, the majority veers from our precedent in at least two respects: (1) it creates a new evidentiary standard for establishing inequitable conduct, and (2) it inexplicably rejects the district court's unassailable credibility determinations, which served as the basis for its conclusion that inequitable conduct occurred.
Again, in my view, the district court got it exactly right. Here, an inventor, Dr. Stevens, withheld important data from the U.S. Patent and Trademark Office ("PTO") that contradicted the disclosure in the patent applications. The majority does not take issue with the district court's conclusion that this data was highly material. Clearly, it could not, because at a minimum the disclosure would have affected the scope of the patent granted. Rather, it rejects the district court's credibility determination that Dr. Stevens's explanation for not submitting this highly material data was belied by the facts that Stevens found the data conclusive enough (and sufficiently nonconfidential) to publish the data and his conclusions of inactivity or toxicity to the scientific community. Stevens did not qualify his statements regarding inactivity. Certainly, if Stevens found the information sufficiently accurate to base conclusions upon and to publish to his peers, it was sufficiently accurate and conclusive enough to submit to the PTO. Cancer Research, 679 F. Supp. 2d at 581.
The majority's rejection of the findings and conclusions of the trial judge rests on two faulty pillars. The majority first missteps by determining that materiality and intent require separate evidentiary bases. The majority concludes that the district court erred because it "did not rely on any other evidence to support its finding of deceptive intent beyond that used to find the withheld data material." Maj. Op. at 17. Requiring separate evidence for each prong, however, has no basis in our precedent. The majority is correct that the district court cited to the same evidence in support of its findings of intent and materiality. But it by no means rested on its finding of materiality to infer intent. Rather, the evidence presented at trial separately supports the district court's findings on both prongs, and when combined with the district court's credibility findings regarding Dr. Stevens's "explanation" for his failure to disclose, is absolutely sufficient to support the conclusion that highly material evidence was withheld from the PTO with intent to deceive.
Further, the majority's treatment of the district court's credibility determinations--which are virtually unreviewable by this court--is baffling. See LNP Eng'g Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347, 1361 (Fed. Cir. 2001). The majority concludes that the district court did not draw the most reasonable inference regarding Stevens's withholding of the published data. Maj. Op. at 17-18. Instead, the majority believes that there is another "an equally reasonable inference"-- Stevens did not appreciate the potential importance of the data to the patentability of the claims. We should not draw inferences that the district court has already excluded based on its own credibility findings with respect to Stevens's explanations for the withholding.
In sum, in light of our prosecution laches precedent, I would not require that Barr have intervening rights during the period that Cancer Research delayed prosecution of its patent. Even if I did, I would not limit the prejudice inquiry to the period of delay. Further, given our differential standard of review, I cannot agree that the district court's intent finding with regard to inequitable conduct is clearly erroneous. Accordingly, I would uphold the district court's application of prosecution laches and its finding of inequitable conduct.
Posted by Patent Hawk at November 9, 2010 3:09 PM | Prosecution
Newman was in the majority here. Prost dissented.
Posted by: Aaron Feigelson at November 9, 2010 11:50 PM
To Aaron's point:
Opinion for the court filed by Circuit Judge LOURIE, in which Circuit Judge NEWMAN joins.
Dissenting opinion filed by Circuit Judge PROST.
Posted by: Pedantic Pete at November 10, 2010 5:45 AM
When the other two members of the panel disagree, Newman doesn't have much choice but to sign the majority decision.
Posted by: IANAE at November 10, 2010 8:29 AM
"When the other two members of the panel disagree, Newman doesn't have much choice but to sign the majority decision."
Y is that? Because she's so pro-patent? Or because she's so patent protectionist?
Posted by: 6000 at November 10, 2010 3:01 PM
"When the other two members of the panel disagree, Newman doesn't have much choice but to sign the majority decision.
Impressive math skills there IANAE.
Another one who needs to take their head out of their ass.
You do realize of course that she could disagree with both.
Posted by: Pedantic Pete at November 10, 2010 3:33 PM
"Neither the Supreme Court nor this court has required a defendant to establish prejudice to assert prosecution laches."
That's not correct. In the 2005 Symbol case, the Federal Circuit specifically pointed to the potential adverse effects on other businesses and intervening rights for upholding the district court ruling that prosecution laches had occurred. Whether Prost likes it or not, "prejudice" is part of the doctrine of laches, including prosecution laches in litigation.
Also, Symbol makes clear that prosecution laches "should be applied only in egregious cases of misuse of the statutory patent system." In Symbol, we had the ultimate submarine patent Admiral in Lemelson who thoroughly abused the system. In Bogese, the applicant was specifically warned that if they didn't provide a substantive response, prosecution laches would be imposed. I see nothing this case that the applicant was given such a warning.
Prost's statement that the patent applicant was "stalling prosecution for its own business purposes" would have had more traction under Symbol if that "stalling" was for the purpose of snaring potential infringers. But nothing in these facts says that.
Admittedly, the patent applicant "played with fire" and potentially set themselves up for a fatal prosecution laches defense. But the circumstances are simply not "egregious" in the Symbol sense, nor was there "prejudice" specifically to Barr from the delay.
Posted by: EG at November 12, 2010 7:39 AM
"Prost's statement that the patent applicant was 'stalling prosecution for its own business purposes' would have had more traction under Symbol if that 'stalling' was for the purpose of snaring potential infringers. But nothing in these facts says that."
What is a patent for, if not for snaring or excluding potential infringers? What other business purpose could it serve?
In this case, the patentee clearly wanted an exclusive market extending farther into the future, and we all know that generics go to market quickly once a patent expires (because otherwise they would be potential infringers). Does the patentee have to have a particular generic in mind for laches to apply, and why would such a rule make any sense in pharma where all the generics treat patented drugs pretty much the same?
Posted by: IANAE at November 12, 2010 8:01 AM
If I follow your logic IANAE, then guilt is established by the mere act, without the act directed to anybody at all.
I think the courts require a case or controversy to actually involve two parties, thus the guilt-in-act-alone theory doesnt make it.
Posted by: Pedantic Pete at November 12, 2010 8:14 AM
The act of extending one's patent term is inherently directed at the entire public, other than the real party in interest. If you fire a gun into a crowd, you should expect to be sued by the person you hit, even if you weren't aiming at anybody in particular.
Besides, there can be a case or controversy actually involving two parties, even if one party acts without the other party specifically in mind. Here there is a clear attempt to exclude all competitors from the patentee's market for an extended period of time - a market the patentee clearly expected would exist, since it was counting on generating significant profit as long as it could exclude all its competitors.
Posted by: IANAE at November 12, 2010 9:20 AM
"The act of extending one's patent term is inherently directed at the entire public, other than the real party in interest. If you fire a gun into a crowd, you should expect to be sued by the person you hit, even if you weren't aiming at anybody in particular."
Unless you automatically aim at everyone's head. BOOM HEADSHOT!!!!!!!!!!!!!!!
Then you don't have to worry about being sued by the person you hit.
I doubt that any of the readers here will get that joke in the first two lines.
Posted by: 6000 at November 16, 2010 1:56 PM
"Then you don't have to worry about being sued by the person you hit."
Not until they respawn, anyway.
Posted by: IANAE at November 16, 2010 3:09 PM