IP News

Federal Circuit Reverses District of Delaware on Prosecution Laches and
Inequitable Conduct

On Nov. 9, 2010, the Federal Circuit delivered its opinion in Cancer Research Labs. v. Barr Labs., Civ. No. 10-1204. The case involved a single patent, 5,260,291, titled “Tetrazine derivatives” (the '291 patent). The patent claims a genus of tetrazine derivative compounds and methods for treating cancer by administering those compounds. One claimed compound, temozolomide, is the active ingredient in the drug Temodar', approved by the Food and Drug Administration (“FDA”) for the treatment of two types of brain cancer, refractory anaplastic astrocytoma and glioblastoma multiforme.

The specification of the '291 patent discloses data from animal tests, specifically mouse tumor models, that demonstrate the efficacy of the tetrazine derivatives. In the first substantive office action, the Examiner rejected the original method claim for lack of utility. Instead of responding to the office action, the applicants filed a continuation application and abandoned the original application. This rejection-continuation-abandonment pattern repeated itself nine more times before the Examiner rejected all pending claims for lack of utility.

In 1991 Cancer Research received ownership of the patent application, and filed another continuation application, but for the first time challenged the examiner's utility rejection, arguing that the disclosure of animal data in the original specification sufficed to establish utility in humans. A new examiner modified the utility rejection in another office action and stated that the disclosure established utility, but only for claims limited to the specific antineoplastic activity listed and tested in the specification. In response, Cancer Research again argued patentability based on the animal testing disclosed in the original specification, relying on a quote from In re Buting, 418 F.2d 540 (CCPA 1969), that “[s]ubstantiating evidence may be in the form of animal tests which constitute recognized screening procedures with clear relevance to utility in humans.” Subsequently, a third examiner found the claims allowable, and the '291 patent issued on Nov. 9, 1993.

During the lengthy prosecution of the '291 patent, the inventor continued to study tetrazine derivatives, and co-authored numerous articles reporting both animal and human clinical data to the scientific community. The human trials showed that one of the claimed compounds, mitozolomide, had toxic side effects and little activity against many cancers. A second tetrazine derivative, temozolomide, proved in human clinical trials to be safe and exhibited some anti-cancer activity, and the FDA approved Temodar' for the treatment of refractory anaplastic astrocytoma in August 1999, and for the treatment of glioblastoma multiforme in March 2005.

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 U.S. 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.

After a bench trial, Judge Sue L. Robinson held the '291 patent unenforceable due to prosecution laches and inequitable conduct. Judge Robinson decided that the law of prosecution laches 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. Judge Robinson held that the applicant could have traversed the utility rejection, because existing case law stated that animal tests could establish utility. Instead, the applicant waited until traversing the rejection would benefit it commercially. The district court thus held that the delay caused by 11 continuation applications, 10 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.

The district court also held the '291 patent unenforceable for inequitable conduct, finding that Cancer Research did not disclose the human data which indicated that mitozolomide failed to treat cancers covered by the 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. The district court held that these data were highly material, and 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.

The Federal Circuit panel of Judges Pauline Newman, Alan D. Lourie, and Sharon Prost reversed the district court on both prosecution laches and inequitable conduct. The majority opinion, authored by Judge Lourie with Judge Newman joining, reaffirmed that prosecution laches requires a finding of prejudice. The opinion also raised the bar for a finding of prosecution laches, holding that to establish prejudice an accused infringer must show evidence of intervening rights, i.e., that either the accused infringer or others invested in, worked on, or used the claimed technology during the period of delay.

The Federal Circuit held that Barr did not intervene and claim prejudice from the delay in prosecuting and issuing the patent application, even though Cancer Research's delay opened the door to such a claim. The court also found that a consequence of Cancer Research's delay in prosecuting its patent is that it did not get the full patent term extension allowed under 35 U.S.C. ' 156 because of the 14-year cap on exclusivity when a patent has been extended under the Hatch-Waxman Act. Thus, the court found that Cancer Research incurred a cost to its own patent term, and that neither Barr nor the public was prejudiced by the delay.

The Federal Circuit also reversed the district court's holding of unenforceability due to inequitable conduct. The majority opinion held that the district court “clearly erred” by relying solely on the materiality of the withheld references to infer intent to deceive the PTO. The Federal Circuit stated that intent to deceive cannot be inferred using only the evidence used to prove materiality. Finally, the Federal Circuit held that the publication of the withheld data in scientific articles does not by itself lead to intent to deceive, and the court noted that the published information included both positive and negative data regarding the claimed tetrazine derivatives. The Federal Circuit stated that 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 its potential importance to the patentability of the tetrazine derivatives patent claims.

In a dissenting opinion, Judge Prost argued that the district court did not err in holding the '291 patent unenforceable for both prosecution laches and inequitable conduct. She noted that the information eventually used to overcome the initial rejection was contained in the original application as filed. She rejected the injection of the additional requirement of intervening rights into the prosecution laches standard, instead propounding the advantages of the original “totality of the circumstances” test. Judge Prost also disagreed with the additional requirement that the new test arbitrarily limits the time period to prove prejudice to the period of the alleged prosecution delay. According to Judge Prost, 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.

Judge Prost also dissented on the reversal of the district court's inequitable conduct findings, stating that the panel improperly and inexplicitly rejected the district court's “unassailable credibility determinations” that served as the basis for its inequitable conduct ruling. She stated that if the inventor 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. Judge Prost stated that the new requirement that materiality and intent be based on separate evidence has no basis in precedent, and that the evidence presented at the bench trial separately supported the district court's findings on both prongs. Judge Prost would uphold the district court's holding of unenforceability due to both prosecution laches and inequitable conduct.

Howard J. Shire is a partner and Joseph Mercadante is an associate in the New York office of Kenyon & Kenyon LLP.

Federal Circuit Reverses District of Delaware on Prosecution Laches and
Inequitable Conduct

On Nov. 9, 2010, the Federal Circuit delivered its opinion in Cancer Research Labs. v. Barr Labs., Civ. No. 10-1204. The case involved a single patent, 5,260,291, titled “Tetrazine derivatives” (the '291 patent). The patent claims a genus of tetrazine derivative compounds and methods for treating cancer by administering those compounds. One claimed compound, temozolomide, is the active ingredient in the drug Temodar', approved by the Food and Drug Administration (“FDA”) for the treatment of two types of brain cancer, refractory anaplastic astrocytoma and glioblastoma multiforme.

The specification of the '291 patent discloses data from animal tests, specifically mouse tumor models, that demonstrate the efficacy of the tetrazine derivatives. In the first substantive office action, the Examiner rejected the original method claim for lack of utility. Instead of responding to the office action, the applicants filed a continuation application and abandoned the original application. This rejection-continuation-abandonment pattern repeated itself nine more times before the Examiner rejected all pending claims for lack of utility.

In 1991 Cancer Research received ownership of the patent application, and filed another continuation application, but for the first time challenged the examiner's utility rejection, arguing that the disclosure of animal data in the original specification sufficed to establish utility in humans. A new examiner modified the utility rejection in another office action and stated that the disclosure established utility, but only for claims limited to the specific antineoplastic activity listed and tested in the specification. In response, Cancer Research again argued patentability based on the animal testing disclosed in the original specification, relying on a quote from In re Buting, 418 F.2d 540 (CCPA 1969), that “[s]ubstantiating evidence may be in the form of animal tests which constitute recognized screening procedures with clear relevance to utility in humans.” Subsequently, a third examiner found the claims allowable, and the '291 patent issued on Nov. 9, 1993.

During the lengthy prosecution of the '291 patent, the inventor continued to study tetrazine derivatives, and co-authored numerous articles reporting both animal and human clinical data to the scientific community. The human trials showed that one of the claimed compounds, mitozolomide, had toxic side effects and little activity against many cancers. A second tetrazine derivative, temozolomide, proved in human clinical trials to be safe and exhibited some anti-cancer activity, and the FDA approved Temodar' for the treatment of refractory anaplastic astrocytoma in August 1999, and for the treatment of glioblastoma multiforme in March 2005.

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 U.S. 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.

After a bench trial, Judge Sue L. Robinson held the '291 patent unenforceable due to prosecution laches and inequitable conduct. Judge Robinson decided that the law of prosecution laches 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. Judge Robinson held that the applicant could have traversed the utility rejection, because existing case law stated that animal tests could establish utility. Instead, the applicant waited until traversing the rejection would benefit it commercially. The district court thus held that the delay caused by 11 continuation applications, 10 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.

The district court also held the '291 patent unenforceable for inequitable conduct, finding that Cancer Research did not disclose the human data which indicated that mitozolomide failed to treat cancers covered by the 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. The district court held that these data were highly material, and 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.

The Federal Circuit panel of Judges Pauline Newman, Alan D. Lourie, and Sharon Prost reversed the district court on both prosecution laches and inequitable conduct. The majority opinion, authored by Judge Lourie with Judge Newman joining, reaffirmed that prosecution laches requires a finding of prejudice. The opinion also raised the bar for a finding of prosecution laches, holding that to establish prejudice an accused infringer must show evidence of intervening rights, i.e., that either the accused infringer or others invested in, worked on, or used the claimed technology during the period of delay.

The Federal Circuit held that Barr did not intervene and claim prejudice from the delay in prosecuting and issuing the patent application, even though Cancer Research's delay opened the door to such a claim. The court also found that a consequence of Cancer Research's delay in prosecuting its patent is that it did not get the full patent term extension allowed under 35 U.S.C. ' 156 because of the 14-year cap on exclusivity when a patent has been extended under the Hatch-Waxman Act. Thus, the court found that Cancer Research incurred a cost to its own patent term, and that neither Barr nor the public was prejudiced by the delay.

The Federal Circuit also reversed the district court's holding of unenforceability due to inequitable conduct. The majority opinion held that the district court “clearly erred” by relying solely on the materiality of the withheld references to infer intent to deceive the PTO. The Federal Circuit stated that intent to deceive cannot be inferred using only the evidence used to prove materiality. Finally, the Federal Circuit held that the publication of the withheld data in scientific articles does not by itself lead to intent to deceive, and the court noted that the published information included both positive and negative data regarding the claimed tetrazine derivatives. The Federal Circuit stated that 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 its potential importance to the patentability of the tetrazine derivatives patent claims.

In a dissenting opinion, Judge Prost argued that the district court did not err in holding the '291 patent unenforceable for both prosecution laches and inequitable conduct. She noted that the information eventually used to overcome the initial rejection was contained in the original application as filed. She rejected the injection of the additional requirement of intervening rights into the prosecution laches standard, instead propounding the advantages of the original “totality of the circumstances” test. Judge Prost also disagreed with the additional requirement that the new test arbitrarily limits the time period to prove prejudice to the period of the alleged prosecution delay. According to Judge Prost, 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.

Judge Prost also dissented on the reversal of the district court's inequitable conduct findings, stating that the panel improperly and inexplicitly rejected the district court's “unassailable credibility determinations” that served as the basis for its inequitable conduct ruling. She stated that if the inventor 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. Judge Prost stated that the new requirement that materiality and intent be based on separate evidence has no basis in precedent, and that the evidence presented at the bench trial separately supported the district court's findings on both prongs. Judge Prost would uphold the district court's holding of unenforceability due to both prosecution laches and inequitable conduct.

Howard J. Shire is a partner and Joseph Mercadante is an associate in the New York office of Kenyon & Kenyon LLP.