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May 1, 2006 (Vol. 26, No. 9)

Analysis of a Patent Applicant's Obligations

Candor, Honesty, and Good Faith

  • Patent applicants and their attorneys are charged with a duty of candor and good faith in their dealings with the U.S. Patent Office. In this regard, they have an obligation to make the Patent Office aware of any reference or information that is material to the patentability of the claimed invention. The penalty for not meeting this duty is severe.

    If a patent has been issued, and a court determines that the patentee was engaged in inequitable conduct during prosecution (i.e., failing to meet their duty of candor and good faith), then the entire patent is deemed unenforceable. Accordingly, it is critical that patent applicants understand their obligations and take them seriously.

    Relevant information includes disclosure of the financial relationship of any experts arguing in support of the patent, as well as the source and accuracy of any comparative data presented. This article provides a discussion of recent Federal Circuit case law that affect the duty of candor and good faith owed to the Patent Office.

    The first in a line of recent Federal Circuit cases, the Purdue Pharma L.P. v Endo Pharmaceuticals case, involved several patents directed toward the treatment of moderate-to-severe pain with controlled release oxycodone (OxyContin). The trial court held that the patents at issue were unenforceable due to the inequitable conduct of the patent applicants during the prosecution of the applications.

    The Federal Circuit initially affirmed the finding of inequitable conduct. Upon rehearing by another panel, however, the Federal Circuit withdrew the initial affirmance and remanded the case to the district court.

    The Federal Circuit discussed the standards for determining whether there has been inequitable conduct with respect to a particular application. A breach of the duty of candor and good faith in dealing with the Patent Office can arise from an affirmative misrepresentation of a material fact, failure to disclose material information, or submission of false information.

    Further, this affirmative action or omission regarding material information must be coupled with an intent to deceive or mislead the Patent Office. These elements must be proven by clear and convincing evidence for a determination that inequitable conduct has occurred. Where the threshold of evidence has been met for each of the two elements, then the court must carefully balance the evidence to determine whether a finding of unenforceability of the patent is appropriate under the circumstances.

    If the misrepresentation or withheld information is highly material, then less proof is necessary as to the intent of the individual making the statement. If the misrepresentation or withheld information is less material, then more proof is necessary to prove intent.

    In Purdue Pharma, language used in the specification of these applications and in a declaration during the prosecution of a previous application was misleading. The specifications referred to the “surprising discovery“ that the claimed formulations were effective in 90% of patients in a dosage range that was half the range required for opioid analgesics in general.

    What was not disclosed, however, was that this surprising discovery was not based on clinical data, but rather it was based on an inventors insight.

    The trial court held that the failure to disclose that the discovery was based only on insight was highly material, therefore requiring less proof of intent. Accordingly, the trial court held that the patents were unenforceable, and the Federal Circuit upheld that determination on appeal.

    Upon rehearing, the Federal Circuit concluded that while the actions met the threshold level of clear and convincing evidence of materiality and intent, the actions were not particularly high with respect to materiality. Accordingly, the court remanded the case to the trial court to make further determinations as to the appropriate balancing of the evidence regarding whether equities would favor rendering the patents unenforceable.

  • Inequitable Conduct

    After two weeks, another panel of the Federal Circuit revisited the issue of inequitable conduct in the context of another case. The Ferring B.V. et al. v. Barr Laboratories case involved a patent directed to the compound desmopressin and methods for administering the same.

    The issue of inequitable conduct in the Ferring case involved several declarations that were submitted by Ferring during the prosecution of the patent. On summary judgment, the trial court held that the patent was unenforceable due to the inequitable conduct of the patent applicants during the prosecution of the application. The Federal Circuit affirmed in a 2-1 decision the finding of inequitable conduct, and a rehearing in this case was denied.

    During the prosecution of the patent at issue, the Patent Office had repeatedly rejected the application as unpatentable over the prior art. Finally, in response to the examiners earlier suggestion that applicants submit “evidence from a noninventor“ to support Ferrings assertion that the prior art did not teach the oral administration of desmopressin, Ferring submitted five declarations.

    After seven years of prosecution, the examiner proceeded to allow the application on the basis of these declarations. One declarant was Ferrings former preclinical research director, a paid Ferring consultant both before and after his employment with Ferring, who received Ferring funding for his own lab.

    The second declarant also served as a Ferring consultant and received Ferring funding for his own desmopressin research. The district court found that these facts satisfied both the materiality and intent elements of inequitable conduct inquiry.

    The Federal Circuit court affirmed the trial courts finding that the declarations were highly material and that the declarants previous relationships were significant. Because the declarations and the omissions therein were highly material, less proof was required of the intent corresponding to the omissions. Accordingly, the court deemed the patent unenforceable, and subsequently, a rehearing in this case was denied.

    On April 10, 2006, another panel of the Federal Circuit addressed the issue of inequitable conduct in the Aventis Pharma S.A. v. Amphastar Pharmaceuticals, Inc. case, involving patents related to low molecular weight herapin, which is used to prevent blood clots (Lovenox).

    The trial court found on summary judgment that the patent was unenforceable due to the failure of the patent applicants to disclose certain material information during the prosecution of the application. The Federal Circuit reversed the trial courts determination and remanded the case to the trial court for further proceedings with respect to Aventis intent to deceive.

    During the prosecution of the patents at issue in the Aventis case, the examiner asserted a European patent as destroying the patentability of the invention. To overcome the rejection as to that European patent, Aventis made a comparison of the product, allegedly covered by its application, at one dose to the prior art product at a different dose, without identifying the fact that the products were being compared at different doses.

    Although the applicants did not expressly represent that the comparison was being made at the same dose, the applicants did repeatedly compare the data as if they were. The appeals court found the omission was material and that it was insufficient to submit underlying data without dosage information and to later argue that the examiner could have requested that.

    With respect to Aventis intent to deceive, the district court found it irrelevant whether a comparison at different doses was reasonable and held that the facts supported a strong inference of intent to deceive. The appeals court held that although the district courts inference was reasonable, it was not the only reasonable inference.

    Another inference would be that if the comparison between different doses was reasonable, then the failure to disclose the doses may have been an inadvertent omission. Accordingly, the court remanded the case to the district court for further proceedings with respect to determining whether there was an intent to deceive the Patent Office and thereafter for the balancing necessary to reach a conclusion that the patent should be unenforceable, based on the equities.

    The Federal Circuit has rendered several opinions recently regarding the issue of inequitable conduct and patent validity, highlighting the need to fully disclose the nature of any relationship between the patent owner and a declarant arguing for patentability on its behalf, as well as whether any alleged surprising discoveries are based on actual and appropriately compared data or merely speculation.

    For this reason, it is essential to take a very broad approach with respect to disclosure of information to the Patent Office.



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