Federal Circuit Unravels Aventis' Tangled Web in Affirming Inequitable Conduct Finding

Aventis Pharma brought suit against Hospira, Inc. and Apotex Corp. asserting two patents, the '561 patent and the '512 patent. Each patent related to the administration of a chemotherapy cancer drug, docetaxel, which belongs to a class of compounds known as taxanes. Taxanes are administered through an intravenous infusion, accomplished by slowly delivering the drug in a diluted aqueous solution called a “perfusion,” which was one of the key claim terms at issue. Because taxanes have low solubility in water and tend to precipitate by forming solid clumps, there is a need to counteract this tendency. As the Federal Circuit noted, “[t]o delay precipitation, taxanes are mixed with additives like surfactants and ethanol, these additives stabilize the perfusion and delay the amount of time before precipitation occurs.” Id. at 1328.

The prior art disclosed one surfactant, Cremophor, used to form a “stock solution.” Cremophor, however, had substantial detrimental side-effects, including allergic reactions so severe that they caused anaphylactic shock. The asserted patents disclosed the use of surfactants other than Cremophor to decrease the amount of ethanol, reduce alcohol intoxication, and reduce the chance of anaphylactic reactions. Just one claim in each patent was asserted against the defendants, each of whom denied infringement and challenged validity on obviousness grounds as well as the overall enforceability of the patents on grounds of inequitable conduct.

The appeal came to the Federal Circuit following a bench trial in which the district court had invalidated both asserted claims and, further, found that the patentee had committed inequitable conduct in the prosecution of the two asserted patents. The Federal Circuit affirmed.

The nub of the controversy turned on the patentee's effort to convince the Federal Circuit that it had acted as its own lexicographer to limit the definition of perfusion in a way rejected by the district court. The practical impulse for this argument was to avoid the impact of prior art references upon which the district court had relied to invalidate the asserted claims as obvious. The Federal Circuit rejected the argument because the specification did not clearly limit perfusion's definition nor was there a “clear and unmistakable disavowal of claim scope” in the prosecution history to justify narrowing the definition to what the patentee now wanted, post-grant.

Affirming the district court's definition, the Federal Circuit then concluded that the district court had correctly determined that two references that the patentee had withheld from the Patent Office during prosecution rendered the asserted claims obvious and therefore invalid. Indeed, with respect to one claim, the patentee had conceded at oral argument that the district court's definition did indeed render one claim obvious. Affirmance of the definition necessarily affirmed the invalidity finding. With respect to the other claim, the patentee had mounted its principal challenge to the invalidity holding in its reply brief, but not its principal brief. Citing prior authority, the Federal Circuit deemed the argument waived, noting that “[t]his court has consistently held that a party waives an argument not raised in its opening brief.”

The Federal Circuit then applied its Therasense formula for inequitable conduct: A prior art reference “is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art” and the intent requirement is satisfied if “the accused infringer [proves] by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.” Although the district court had decided this case before the Therasense opinion was rendered, the Federal Circuit held that it had made findings consistent with Therasense, and affirmed. First, because the withheld references were the very ones upon which the holdings of invalidity were premised, they were ipso facto “material.” The only real question, therefore, was whether the defendants had successfully established by clear and convincing evidence that there had been specific intent to deceive the PTO as the district court had held. The Federal Circuit agreed.

The Federal Circuit relied fundamentally on the district court's rejection of the inventor's testimony attempting to justify having withheld the two invalidating references as being unworthy of credibility. First, the district court (and the Federal Circuit) found that the inventor had disclosed references that supported the “problem” but withheld references that suggested the “solution.” The district court held that the inventor knew of the withheld references, knew that they were “material,” as that term is used, and nevertheless withheld them. These conclusions compelled the unenforceability finding that the Federal Circuit affirmed.

The Lessons

Perhaps most fundamentally, Aventis reinforces the fact that the Federal Circuit means to enforce a common law fraud type analysis in determining the existence of inequitable conduct: a showing of materially significant prior art, knowingly withheld, where the applicant is shown, reasonably, to believe the references material. From that kind of showing, the district court in Aventis concluded that the inventor “acted with the intent to deceive the PTO.” The Federal Circuit affirmed. Two practical lessons may be drawn from this holding. First, a district court has the discretion, consistent with its general powers, to reject testimony on credibility grounds and support with circumstantial evidence, the core findings of intent and materiality for inequitable conduct. Second, efforts to offer a court post-grant justifications of why a reference was not supplied to the PTO will be subjected to searching examination in any infringement action, and at risk of rejection if those explanations do not accord with the circumstances contemporaneous with the application.

For the patent prosecutor, Aventis is a tocsin that withholding references may be a toxin for an application. (OK, that play on words was irresistible, but what should be utterly resistible is an off-hand decision to withhold references.) It is one thing if a reference is cumulative; it is quite another where a reference, as those in Aventis, suggests the solution to a problem. The latter should be produced.

For litigators, several lessons stand out. First and foremost, before an infringement complaint is signed and filed, subject to Rule 11, part of the pre-filing investigation should include an inquiry into the prosecution history of the patent beyond what is in the PTO's records. What wasn't disclosed to the PTO? Why wasn't it? And what is the “materiality” of the withheld information, tested under the Therasense and Aventis standards? These may present awkward and difficult questions, but they are better asked in the context of pre-filing investigation, subject to attorney/client privileged communications, than learning potentially uncomfortable facts after filing when they are inevitably to be part of discovery.

Finally, on a very nuts and bolts basis, if an appellate argument is deemed important, it needs to be included in the main brief. Perhaps in this case the argument's omission from the principal brief was of no real moment in light of the ultimate unenforceability finding, but the loss of an argument through waiver by failing in a principal brief to preserve the argument is a chilling prospect. It shouldn't happen, period.

Walter Scott was no patent lawyer, but his caution about the tangled web we weave when first we “practice to deceive,” is fully in force here. Good patent practice forbids deception.

Frederick L. Whitmer is the managing partner of the New York office of the international law firm, Kilpatrick Townsend & Stockton LLP. He concentrates his practice on trying intellectual property cases.

In 2011, an en banc panel of the Federal Circuit decided Therasense, Inc. v. Becton, Dickinson & Co. , 649 F.3d 1276, 1290 (Fed. Cir. 2011) (en banc) and clarified that the standard for a patentee's “inequitable conduct,” rendering its patent unenforceable, was effectively the common law standard of fraud, thereby harking back to the prior, venerable “fraud on the patent office” characterization. At the time of the Therasense decision there was some question as to just how stringently the Federal Circuit would adhere to the nominal standards for common law fraud. Aventis Pharma S.A. v. Hospira, Inc. , 675 F.3d 1324 (Fed. Cir. 2012), appears to answer that question for both patent prosecutors and litigators.

This article analyzes the decision from both a theoretical and practical standpoint to suggest its lessons to guide future actions.

Background

Aventis Pharma brought suit against Hospira, Inc. and Apotex Corp. asserting two patents, the '561 patent and the '512 patent. Each patent related to the administration of a chemotherapy cancer drug, docetaxel, which belongs to a class of compounds known as taxanes. Taxanes are administered through an intravenous infusion, accomplished by slowly delivering the drug in a diluted aqueous solution called a “perfusion,” which was one of the key claim terms at issue. Because taxanes have low solubility in water and tend to precipitate by forming solid clumps, there is a need to counteract this tendency. As the Federal Circuit noted, “[t]o delay precipitation, taxanes are mixed with additives like surfactants and ethanol, these additives stabilize the perfusion and delay the amount of time before precipitation occurs.” Id. at 1328.

The prior art disclosed one surfactant, Cremophor, used to form a “stock solution.” Cremophor, however, had substantial detrimental side-effects, including allergic reactions so severe that they caused anaphylactic shock. The asserted patents disclosed the use of surfactants other than Cremophor to decrease the amount of ethanol, reduce alcohol intoxication, and reduce the chance of anaphylactic reactions. Just one claim in each patent was asserted against the defendants, each of whom denied infringement and challenged validity on obviousness grounds as well as the overall enforceability of the patents on grounds of inequitable conduct.

The appeal came to the Federal Circuit following a bench trial in which the district court had invalidated both asserted claims and, further, found that the patentee had committed inequitable conduct in the prosecution of the two asserted patents. The Federal Circuit affirmed.

The nub of the controversy turned on the patentee's effort to convince the Federal Circuit that it had acted as its own lexicographer to limit the definition of perfusion in a way rejected by the district court. The practical impulse for this argument was to avoid the impact of prior art references upon which the district court had relied to invalidate the asserted claims as obvious. The Federal Circuit rejected the argument because the specification did not clearly limit perfusion's definition nor was there a “clear and unmistakable disavowal of claim scope” in the prosecution history to justify narrowing the definition to what the patentee now wanted, post-grant.

Affirming the district court's definition, the Federal Circuit then concluded that the district court had correctly determined that two references that the patentee had withheld from the Patent Office during prosecution rendered the asserted claims obvious and therefore invalid. Indeed, with respect to one claim, the patentee had conceded at oral argument that the district court's definition did indeed render one claim obvious. Affirmance of the definition necessarily affirmed the invalidity finding. With respect to the other claim, the patentee had mounted its principal challenge to the invalidity holding in its reply brief, but not its principal brief. Citing prior authority, the Federal Circuit deemed the argument waived, noting that “[t]his court has consistently held that a party waives an argument not raised in its opening brief.”

The Federal Circuit then applied its Therasense formula for inequitable conduct: A prior art reference “is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art” and the intent requirement is satisfied if “the accused infringer [proves] by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.” Although the district court had decided this case before the Therasense opinion was rendered, the Federal Circuit held that it had made findings consistent with Therasense, and affirmed. First, because the withheld references were the very ones upon which the holdings of invalidity were premised, they were ipso facto “material.” The only real question, therefore, was whether the defendants had successfully established by clear and convincing evidence that there had been specific intent to deceive the PTO as the district court had held. The Federal Circuit agreed.

The Federal Circuit relied fundamentally on the district court's rejection of the inventor's testimony attempting to justify having withheld the two invalidating references as being unworthy of credibility. First, the district court (and the Federal Circuit) found that the inventor had disclosed references that supported the “problem” but withheld references that suggested the “solution.” The district court held that the inventor knew of the withheld references, knew that they were “material,” as that term is used, and nevertheless withheld them. These conclusions compelled the unenforceability finding that the Federal Circuit affirmed.

The Lessons

Perhaps most fundamentally, Aventis reinforces the fact that the Federal Circuit means to enforce a common law fraud type analysis in determining the existence of inequitable conduct: a showing of materially significant prior art, knowingly withheld, where the applicant is shown, reasonably, to believe the references material. From that kind of showing, the district court in Aventis concluded that the inventor “acted with the intent to deceive the PTO.” The Federal Circuit affirmed. Two practical lessons may be drawn from this holding. First, a district court has the discretion, consistent with its general powers, to reject testimony on credibility grounds and support with circumstantial evidence, the core findings of intent and materiality for inequitable conduct. Second, efforts to offer a court post-grant justifications of why a reference was not supplied to the PTO will be subjected to searching examination in any infringement action, and at risk of rejection if those explanations do not accord with the circumstances contemporaneous with the application.

For the patent prosecutor, Aventis is a tocsin that withholding references may be a toxin for an application. (OK, that play on words was irresistible, but what should be utterly resistible is an off-hand decision to withhold references.) It is one thing if a reference is cumulative; it is quite another where a reference, as those in Aventis, suggests the solution to a problem. The latter should be produced.

For litigators, several lessons stand out. First and foremost, before an infringement complaint is signed and filed, subject to Rule 11, part of the pre-filing investigation should include an inquiry into the prosecution history of the patent beyond what is in the PTO's records. What wasn't disclosed to the PTO? Why wasn't it? And what is the “materiality” of the withheld information, tested under the Therasense and Aventis standards? These may present awkward and difficult questions, but they are better asked in the context of pre-filing investigation, subject to attorney/client privileged communications, than learning potentially uncomfortable facts after filing when they are inevitably to be part of discovery.

Finally, on a very nuts and bolts basis, if an appellate argument is deemed important, it needs to be included in the main brief. Perhaps in this case the argument's omission from the principal brief was of no real moment in light of the ultimate unenforceability finding, but the loss of an argument through waiver by failing in a principal brief to preserve the argument is a chilling prospect. It shouldn't happen, period.

Walter Scott was no patent lawyer, but his caution about the tangled web we weave when first we “practice to deceive,” is fully in force here. Good patent practice forbids deception.

Frederick L. Whitmer is the managing partner of the New York office of the international law firm, Kilpatrick Townsend & Stockton LLP. He concentrates his practice on trying intellectual property cases.