IP News

Federal Circuit Grants Rehearing En Banc on Inequitable Conduct Question

On April 26, 2010, the Federal Circuit granted plaintiffs-appellants Abbott Diabetes Care, Inc. et al.'s petition for rehearing en banc, vacated the panel opinion in Therasense, Inc. v. Becton, Dickinson & Co., 593 F.3d 1325 (Fed. Cir. 2010) holding U.S. Patent No. 5,820,551 (“the '551 patent”) unenforceable due to inequitable conduct, and requested the parties file new briefs addressing the following issues:

1. Should the materiality-intent-balancing framework for inequitable conduct be modified or replaced?
2. If so, how? In particular, should the standard be tied directly to fraud or unclean hands? If so, what is the appropriate standard for fraud or unclean hands?
3. What is the proper standard for materiality? What role should the United States Patent and Trademark Office's rules play in defining materiality? Should a finding of materiality require that but for the alleged misconduct, one or more claims would not have issued?
4. Under what circumstances is it proper to infer intent from materiality?
5. Should the balancing inquiry (balancing materiality and intent) be abandoned?
6. Whether the standards for materiality and intent in other federal agency contexts or at common law shed light on the appropriate standards to be applied in the patent context.

The '551 patent relates generally to the field of disposable blood glucose test strips used by diabetic patients to test insulin levels. When whole blood is introduced to a test strip, the glucose in the blood reacts with an enzyme on the strip, transferring electrons to an “active electrode” sensor on the strip. Prior art sensors employed membranes over the electrode for a variety of reasons, including, e.g., as a safety measure to prevent the chemistry from dissolving into the body. The '551 patent claims a test strip with an electromechanical sensor for testing whole blood without any membrane over the electrode.

The original application leading to the '551 patent, and subsequent continuation applications, were repeatedly rejected for anticipation and obviousness over, inter alia, U.S. Patent No. 4,545,382 (“the '382 patent”), which issued from an application filed by one of Abbott's predecessors. The '382 patent discloses electrochemical sensors in which a protective membrane is optional in all cases except the case of live blood, in which case the protective membrane is “preferred ' but not required.” Abbott argued during prosecution (via declaration and affidavit) that one of ordinary skill would have understood the “preferred” language in the '382 patent as “patent phraseology” and that a membrane is required for active electrodes designed for use with any whole blood test. Based on this representation, the PTO allowed the '551 patent to issue with the membraneless sensor claims.

Prior to issuance of the '551 patent, one of Abbott's predecessors, Medisense, was involved in the prosecution before the EPO of a counterpart to the '382 patent with a virtually identical specification ' European Patent EP 0 078 636 (“the '636 patent”). In response to an obviousness rejection, Medisense's patent counsel argued that the “optionally, but preferably” language was “unequivocally clear” and that a membrane was optional for in vitro testing, where, unlike in vivo testing, there was no concern that particles would enter the body. Abbott did not disclose these arguments to the PTO.

The majority Federal Circuit panel held the '551 patent unenforceable for inequitable conduct. With respect to materiality, the court held that Abbott had clearly represented to the EPO that the membrane in the '636 patent was optional, and that to condone the withholding of such a representation from the PTO, would be to “eviscerate the duty of disclosure.” With respect to intent, the majority opined that there was no dispute that Abbott's representatives were aware of the EPO statements and that the district court was within its discretion to discredit their testimony to the contrary. Judge Richard Linn dissented, arguing that the submissions made by Medisense were susceptible to multiple reasonable inferences, and that it was entirely plausible that Abbott's representatives subjectively believed that the EPO discussion did not contradict the representations made to the PTO.

Abbott's opening en banc brief is due July 26, 2010.

eBay Applicable to Preliminary Injunctions Issued for Alleged Copyright Infringement

On April 30, 2010, in Salinger v. Colting, No. 09-2878 (2d Cir. April 30, 2010), the Second Circuit held that the Supreme Court's eBay decision (eBay Inc. v. MercExchange, LLC, 547 U.S. 388 (2006) applies to preliminary injunctions that are issued for alleged copyright infringement.

Plaintiff J.D. Salinger (represented by certain trustees), author of the famed novel, Catcher in the Rye, brought suit to enjoin defendants from selling the book 60 Years Later: Coming Through the Rye (“60 Years Later“), a fictional story about Salinger as well as Catcher's main character, Holden Caulfield. The district court granted Salinger's motion for a preliminary injunction. Specifically, the district court determined that Salinger was likely to succeed on the merits that 60 Years Later infringed a valid copyright in Catcher in the Rye, and that defendants' fair use defense was likely to fail. Having made these determinations, and based upon its understanding of Second Circuit precedent, the district court presumed irreparable harm and, accordingly, granted the requested preliminary injunction.

The Second Circuit reversed and remanded. The court acknowledged that the district court had properly applied Second Circuit precedent, which held that preliminary injunctions in copyright cases should issue upon a finding of: 1) irreparable harm, and 2) either likelihood of success on the merits, or sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief. However, the court held that the Supreme Court's eBay decision overruled the Second Circuit test. The court reasoned that the text and logic of eBay strongly indicate that the traditional four-factor test in equity is the presumptive standard for injunctions in any context and that the eBay Court specifically relied upon copyright cases in reaching its decision. Further, the court reasoned that neither eBay nor the recent Supreme Court decision in Winter v. Natural Resources Defense Counsel, 129 S. Ct. 365 (2008), permit an easier grant of a preliminary than of a permanent injunction. For one, the court opined that one of the cases eBay relied upon in stating the traditional equitable test involved a preliminary injunction. Second, the court noted that Winter applied eBay in a case involving a preliminary injunction.

The Salinger court therefore concluded that, when faced with preliminary injunction motions in copyright cases, district courts must, as a threshold matter, consider whether the plaintiff has demonstrated “either (a) a likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in plaintiff's favor.” If so, the court held that a district court must then consider, consistent with eBay: 1) the likelihood of irreparable harm, 2) the balance of hardships, and 3) whether the public interest would be disserved. With respect to the balance of hardships, the court noted that preliminary injunctions in the copyright context raise unique First Amendment concerns, and that a district court must account for: 1) a copyright holder's potential First Amendment interest in not speaking, and 2) a defendant's freedom to express him or herself, so long as that expression does not infringe the plaintiff's copyright.

Jeffrey S. Ginsberg is a partner and Matthew Berkowitz is an associate in the New York office of Kenyon & Kenyon LLP.

Federal Circuit Grants Rehearing En Banc on Inequitable Conduct Question

On April 26, 2010, the Federal Circuit granted plaintiffs-appellants Abbott Diabetes Care, Inc. et al.'s petition for rehearing en banc, vacated the panel opinion in Therasense, Inc. v. Becton, Dickinson & Co. , 593 F.3d 1325 (Fed. Cir. 2010) holding U.S. Patent No. 5,820,551 (“the '551 patent”) unenforceable due to inequitable conduct, and requested the parties file new briefs addressing the following issues:

1. Should the materiality-intent-balancing framework for inequitable conduct be modified or replaced?
2. If so, how? In particular, should the standard be tied directly to fraud or unclean hands? If so, what is the appropriate standard for fraud or unclean hands?
3. What is the proper standard for materiality? What role should the United States Patent and Trademark Office's rules play in defining materiality? Should a finding of materiality require that but for the alleged misconduct, one or more claims would not have issued?
4. Under what circumstances is it proper to infer intent from materiality?
5. Should the balancing inquiry (balancing materiality and intent) be abandoned?
6. Whether the standards for materiality and intent in other federal agency contexts or at common law shed light on the appropriate standards to be applied in the patent context.

The '551 patent relates generally to the field of disposable blood glucose test strips used by diabetic patients to test insulin levels. When whole blood is introduced to a test strip, the glucose in the blood reacts with an enzyme on the strip, transferring electrons to an “active electrode” sensor on the strip. Prior art sensors employed membranes over the electrode for a variety of reasons, including, e.g., as a safety measure to prevent the chemistry from dissolving into the body. The '551 patent claims a test strip with an electromechanical sensor for testing whole blood without any membrane over the electrode.

The original application leading to the '551 patent, and subsequent continuation applications, were repeatedly rejected for anticipation and obviousness over, inter alia, U.S. Patent No. 4,545,382 (“the '382 patent”), which issued from an application filed by one of Abbott's predecessors. The '382 patent discloses electrochemical sensors in which a protective membrane is optional in all cases except the case of live blood, in which case the protective membrane is “preferred ' but not required.” Abbott argued during prosecution (via declaration and affidavit) that one of ordinary skill would have understood the “preferred” language in the '382 patent as “patent phraseology” and that a membrane is required for active electrodes designed for use with any whole blood test. Based on this representation, the PTO allowed the '551 patent to issue with the membraneless sensor claims.

Prior to issuance of the '551 patent, one of Abbott's predecessors, Medisense, was involved in the prosecution before the EPO of a counterpart to the '382 patent with a virtually identical specification ' European Patent EP 0 078 636 (“the '636 patent”). In response to an obviousness rejection, Medisense's patent counsel argued that the “optionally, but preferably” language was “unequivocally clear” and that a membrane was optional for in vitro testing, where, unlike in vivo testing, there was no concern that particles would enter the body. Abbott did not disclose these arguments to the PTO.

The majority Federal Circuit panel held the '551 patent unenforceable for inequitable conduct. With respect to materiality, the court held that Abbott had clearly represented to the EPO that the membrane in the '636 patent was optional, and that to condone the withholding of such a representation from the PTO, would be to “eviscerate the duty of disclosure.” With respect to intent, the majority opined that there was no dispute that Abbott's representatives were aware of the EPO statements and that the district court was within its discretion to discredit their testimony to the contrary. Judge Richard Linn dissented, arguing that the submissions made by Medisense were susceptible to multiple reasonable inferences, and that it was entirely plausible that Abbott's representatives subjectively believed that the EPO discussion did not contradict the representations made to the PTO.

Abbott's opening en banc brief is due July 26, 2010.

eBay Applicable to Preliminary Injunctions Issued for Alleged Copyright Infringement

On April 30, 2010, in Salinger v. Colting, No. 09-2878 (2d Cir. April 30, 2010), the Second Circuit held that the Supreme Court's eBay decision ( eBay Inc. v. MercExchange, LLC , 547 U.S. 388 (2006) applies to preliminary injunctions that are issued for alleged copyright infringement.

Plaintiff J.D. Salinger (represented by certain trustees), author of the famed novel, Catcher in the Rye, brought suit to enjoin defendants from selling the book 60 Years Later: Coming Through the Rye (“60 Years Later“), a fictional story about Salinger as well as Catcher's main character, Holden Caulfield. The district court granted Salinger's motion for a preliminary injunction. Specifically, the district court determined that Salinger was likely to succeed on the merits that 60 Years Later infringed a valid copyright in Catcher in the Rye, and that defendants' fair use defense was likely to fail. Having made these determinations, and based upon its understanding of Second Circuit precedent, the district court presumed irreparable harm and, accordingly, granted the requested preliminary injunction.

The Second Circuit reversed and remanded. The court acknowledged that the district court had properly applied Second Circuit precedent, which held that preliminary injunctions in copyright cases should issue upon a finding of: 1) irreparable harm, and 2) either likelihood of success on the merits, or sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief. However, the court held that the Supreme Court's eBay decision overruled the Second Circuit test. The court reasoned that the text and logic of eBay strongly indicate that the traditional four-factor test in equity is the presumptive standard for injunctions in any context and that the eBay Court specifically relied upon copyright cases in reaching its decision. Further, the court reasoned that neither eBay nor the recent Supreme Court decision in Winter v. Natural Resources Defense Counsel , 129 S. Ct. 365 (2008), permit an easier grant of a preliminary than of a permanent injunction. For one, the court opined that one of the cases eBay relied upon in stating the traditional equitable test involved a preliminary injunction. Second, the court noted that Winter applied eBay in a case involving a preliminary injunction.

The Salinger court therefore concluded that, when faced with preliminary injunction motions in copyright cases, district courts must, as a threshold matter, consider whether the plaintiff has demonstrated “either (a) a likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in plaintiff's favor.” If so, the court held that a district court must then consider, consistent with eBay: 1) the likelihood of irreparable harm, 2) the balance of hardships, and 3) whether the public interest would be disserved. With respect to the balance of hardships, the court noted that preliminary injunctions in the copyright context raise unique First Amendment concerns, and that a district court must account for: 1) a copyright holder's potential First Amendment interest in not speaking, and 2) a defendant's freedom to express him or herself, so long as that expression does not infringe the plaintiff's copyright.

Jeffrey S. Ginsberg is a partner and Matthew Berkowitz is an associate in the New York office of Kenyon & Kenyon LLP.