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Inequitable Conduct in the Prosecution of Pharmaceutical

and Biotechnology Patents

Stephen D. Harper, Ph.DRatnerPrestiaApril 1, 2011

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Inequitable Conduct

Patents are enforced through equitable relief (e.g., injunctions)

Equitable principles can also preclude enforcement of patent rights (“unclean hands”)

Judicially created equitable defenses to charge of infringement include inequitable conduct before Patent Office

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Inequitable Conduct

Inequitable conduct defense originally arose from cases involving common law fraud (deliberate falsehood)

However, conduct short of actual fraud may justify sanction of unenforceability

Applicants have duty to prosecute patents with candor, good faith & honesty

Patent Office rules impose a “duty of disclosure”

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Inequitable Conduct

Why is the inequitable conduct doctrine so important?

Proof of inequitable conduct as to any claim renders all claims unenforceableDefense may extend to other related patents that are otherwise

“clean” Defense is pled in nearly every patent case

Ca. 40% of all appeals since 1988 on issue of inequitable conduct involved biotech, drug, medical diagnostic or medical device patents

Patent owners must commit significant resources during litigation to respond to inequitable conduct allegations

If inequitable conduct found, attorney fees may be awarded to accused infringer

Creates substantial burden (cost) during prosecution

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Inequitable Conduct

What constitutes inequitable conduct? 1) Misrepresentation of material fact

Failure to disclose material informationSubmission of false/misleading material informationMisrepresentation need not bear directly on patentability

of claim 2) Intent to deceive the Patent Office

Can be (& usually is) inferred from circumstantial evidenceMere intent to withhold is not sufficientIntent prong cannot be met by “gross negligence”

At least a threshold level of each element must be established by clear and convincing evidence

Materiality and intent are then weighed to assess whether applicant’s conduct is so culpable that patent should be held unenforceable

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Inequitable Conduct

When is information “material”?

No single standard applies

Courts have looked to Patent Office rules for guidance

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Inequitable Conduct

Current Rule 56:Information is material when it is not cumulative to

information already before Patent Office andestablishes, by itself or in combination with other information, prima facie unpatentability of claim, orrefutes or is inconsistent with position applicant is taking

Other materiality standards“But For” standards (objective/subjective)“Reasonable Examiner” standard

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Inequitable Conduct

Intent Prong - Recent Federal Circuit cases have not been entirely consistent

High materiality plus lack of a credible explanation for failure to disclose may be sufficient

Intent to deceive may be inferred where applicant knew or should have known of information’s materiality

Deceptive intent must be the single most reasonable inference able to be drawn from evidence

Evidence of “good faith”

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Inequitable Conduct

Common scenarios where inequitable conduct is alleged:

Failure to disclose known material prior art reference

Failure to disclose unfavorable test data or all relevant test parameters

Failure to disclose material prior commercial activity or public disclosures

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Inequitable Conduct

Failure to disclose relationship of declarant (technical expert) to applicant/owner

Failure to disclose Office Actions and responses thereto in related US and foreign applications

Falsely claiming small entity status Failure to disclose ongoing litigation

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Inequitable Conduct

What can patentees do to protect their patents from being found unenforceable?

If in doubt as to the materiality of information, err on the side of disclosure

If volume of disclosed information becomes overwhelming, consider highlighting or summarizing key documents

Be careful in selecting experimental results to present

Consider submitting relevant information/documents generated in prosecution of related cases

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Inequitable Conduct

Have the courts gone too far in expanding the doctrine of inequitable conduct?

Are the boundaries which define inequitable conduct sufficiently clear and consistently applied?

Federal Circuit has taken on a case en banc to reconsider (& possibly reform) this area of the law

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Inequitable Conduct

Therasense, Inc. v. Becton, Dickinson & Co.

Claimed invention involved technology for measuring glucose levels in blood

District court held that patentee committed inequitable conduct

Representations made to European Patent Office that were (according to the DC) directly contradictory to those made to US Patent Office

These contradictory representations were not disclosed to US Patent Office

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Inequitable Conduct

Initially, 3 judge Federal Circuit panel upheld district court decision

Federal Circuit then vacated the panel decision and agreed to hear the case en banc

Oral arguments November 2010 – decision should be rendered soon

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Inequitable Conduct

Federal Circuit asked the parties to address several questions:

Should materiality-intent balancing framework be modified or replaced?

Should standard be tied directly to fraud or unclean hands?

What is proper standard for materiality? Patent Office rules or “but for” test?

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Inequitable Conduct

Therasense (Abbott) petition for en banc rehearing raised the following questions:

Can intent to deceive be inferred from evidence that applicant “should have known” of materiality of information?

Can intent be inferred solely from court’s conclusion that applicant’s view of immateriality is “implausible”?

Can attorney arguments about prior art be material when that prior art is already of record?

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Inequitable Conduct

Biotechnology Industry Organization (BIO) has filed amicus brief in Therasense case

Urges adoption of “more certain framework” Biotech patents are “particularly attractive”

targets for inequitable conduct charges Procured against a backdrop of fast-moving

science and competing business needs that make it virtually impossible to monitor all potentially relevant information that may be circulating into and out of a company

BIO proposes a “but for” standard of materiality

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Inequitable Conduct

Questions?