• Inequitable Conduct after Therasense
• Adoption of the Therasense Standard within
PTO Proceedings
• PTO Rules of Professional Conduct
• Rule 11 Obligations within the Hatch-Waxman
Context
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“While honesty at the PTO is essential, low standards for intent and materiality have inadvertently led to many unintended consequences, among them, increased adjudication cost and complexity, reduced likelihood of settlement, burdened courts, strained PTO resources, increased PTO backlog, and impaired patent quality. This court now tightens the standards for finding both intent and materiality in order to redirect a doctrine that has been overused to the detriment of the public.”
Therasense v. Becton, Dickinson & Co., 649 F.3d 1276, 1289-90 (Fed. Cir. 2011)(en banc)
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Materiality
• Undisclosed information has to be “but for”
material
• An exception may be found for affirmative
egregious misconduct
Conduct at issue in Supreme Court trio
Applies to false declarations in particular
Specific Intent
• Three-part test
Knowledge of the reference/information
Knowledge that the reference/information
was material (“should have known” is
insufficient)
Deliberate decision to withhold it
• Must be the single most reasonable inference
Materiality and Intent
are Distinct
• No sliding scale
Court can no longer infer intent to deceive
solely because a reference was known and
material
• Following Therasense district courts
have curbed the use of inequitable
conduct
Decline in findings of inequitable
conduct
Increase of early dismissals
Blocking the defense from finding its
way into the case
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• Pozen v. Par Pharmaceutical, Inc.
• Pfizer v. Teva Pharmaceuticals USA, Inc.
• Schering Corp. v. Mylan Pharmaceuticals
• Hospira, Inc. v. Sandoz
• Pronova Biopharma Norge AS v. Teva
• Teva Pharmaeuticals USA, Inc. v. Sandoz
• Wyeth v. Sandoz
• Galderma Laboratories v. Tolmar
• Bristol-Myers Squibb v. Teva Pharm. USA
• Gilead Sciences v. SigmaPharm Laboratories
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• Declarations/Affidavits Intent to deceive found more often in
situations where individual provide a false
statement in a declaration to the PTO
• Prior Art Non-submission of prior art is rarely a basis
for a finding of inequitable conduct post-
Therasense
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• Wyeth Holdings v. Sandoz (D. Del.)
In addressing the post-Therasense
intent pleading standard, the court
sought to reconcile the “single most
reasonable inference” language with
the “reasonable inference” directive
from Exergen A claimant need only allege facts from which
the court could reasonably infer that the
patent applicant made a deliberate decision to
deceive the PTO
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• Pfizer v. Sandoz Inc. (D. Del.) Motion to amend pleadings to assert
inequitable conduct denied under Rules 15
and 16
The theory was first raised in expert reports
Delay prejudiced Pfizer
Court concluded amendment would be futile
as Sandoz failed to allege basis to draw an
inference of specific intent to deceive
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• Santarus v. Par Pharmaceutical
• In re Rosuvastatin Calcium Patent
Litigation
• Aventis v. Hospira
• Novo-Nordisk v. Caraco
Pharmaceutical
• Apotex v. Cephalon
• Apotex v. UCB
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• Facts: Applicant delayed telling the USPTO
that the inventor had administered the
formulation to hospital patients before filing
the priority application
• District court had found the information
material and inventor’s disclosure “strained
credibility” –but didn’t rise to inequitable
conduct
• Holding: CAFC affirmed, finding no
inequitable conduct; no clear and convincing
evidence of deceptive intent
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• Facts: The applicant withheld prior art that was later disclosed in a reissue application
• The district court found that deceptive intent was not the single most reasonable inference where more innocent explanation provided was also plausible (heavy workload, belief that he had fulfilled requirements)
• Holding: CAFC affirmed district court decision of no inequitable conduct
• Credibility determinations should be left to the district court
• Gross negligence isn’t sufficient
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• Facts: The inventor withheld prior art that
was found to be material; he disclosed the
problem existing in the art, but withheld art
disclosing prior invention
• The inventor was found to lack credibility, in
particular under cross-examination his
testimony conflicted with documentary
evidence
• Holding: CAFC affirmed the district court’s
finding of inequitable conduct
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• Facts: Inventor sent an email to the
prosecuting attorney stating that certain
tests “may” prove efficacy of a drug
combination, but contradicted later
statement to the PTO that study was “clear
evidence” of efficacy
• The carefully chosen words in the
declarations were found to be consistent
with the scientist’s findings
• Holding: CAFC found no inequitable conduct;
reversed district court’s determination of
materiality and did not reach issue of intent
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• Facts: Applicant failed to disclose the role of
a third party in the invention
• The withheld information went to an issue of
obviousness raised numerous times during
examination; was “but-for” material
• The involvement of the third-party was
hidden from the PTO; affirmative
misrepresentations were made regarding
changed to the product
• Holding: CAFC affirmed district court’s
holding of inequitable conduct
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• Facts: During examination, at the direction of the applicant, counsel submitted an expert declaration to support arguments that prior art did not teach the claimed process for making moexipril tablets
• Found applicant misrepresented the prior art to the examiner, withheld prior art and submitted results of experiments he never conducted, caused the expert to submit a false declaration
• Art was “but-for” material; deceptive intent was single most reasonable inference
• Holding: CAFC affirmed district court’s determination of inequitable conduct
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Credibility
determinations (inventor
in particular)
• Cordis v. Boston Scientific (inventor’s credibility
rebutted threshold level of intent to deceive)
• Aventis v. Hospira (inventor’s explanation for
withholding references not credible)
• Intellect Wireless (Inventor’s false declaration to
overcome rejection is affirmative egregious
misconduct)
Specific Intent
• Santarus v. Par (Insufficient evidence of inventor’s
affirmative intent to deceive)
• In re Rosuvastatin Calcium (no clear and convincing
evidence of deliberate decision to withhold
references)
Materiality
• Aventis v. Hospira (withheld references were
material—formed basis of invalidity finding)
• Novo-Nordisk v. Caraco (omission of test protocol
and opinion were troubling but not “but for”
material)
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Section 12:
Supplemental examination
• Can be used to cure inequitable conduct, but
not where the inequitable conduct allegations
were already pending
• Cannot cure fraud which must be reported to
the attorney general for consideration of
criminal sanctions.
Section 20:
Technical Amendments
"error without deceptive intent" is no longer a
requirement for the following:
• correcting inventorship and addressing
inventorship issues (Sections 116 and 256)
• obtaining a foreign filing license (Sections
184 and 185)
• obtaining a reissue patent (Section 251)
• disclaimer (Section 253)
• suing for patent infringement (Section 288)
• Creation of the America Invents Act,
effective as of September 16, 2012
• Allows a patent owner to seek a low-level
review of an issued patent to make sure that
it was properly issued based upon some
newly submitted information
• If PTO agrees patent is viable it will issue a
certificate indicating that the information
does not raise a substantial new question of
patentability
• If PTO agrees patent is viable it will issue a
certificate indicating that the information
does not raise a substantial new question of
patentability
• If the PTO finds a substantial new question of
patentability, it will order a full ex parte
reexamination
• Two statutory exceptions
Supplemental examination and any subsequent
reexamination must be completed prior to the
filing of a lawsuit where inequitable conduct may
be raised as a defense.
In addition, the supplemental examination must
be filed prior to the inequitable conduct being
alleged in a pleading or Paragraph IV
certification.
• Otherwise, a court will have power to
adjudge the inequitable conduct
• Under new section 257(c) a patent owner can
obtain preemptive protection
A patent cannot be held unenforceable for
failure to disclose information during a prior
examination once that information is considered
in a supplemental examination.
Does this encourage applicants to avoid fully
complying with the duties of candor and good
faith in dealings with the PTO?
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• Effective May 3, 2013 the USPTO adopted
the USPTO Rules of Professional Conduct,
which are based on the ABA Model Rules
• 37 CFR §§ 11.101-901
• Previously, the USPTO practice proceeded
in accordance with the ABA 1969 Canons
of Ethics, which were adopted in 1985
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• Section 1: Client Practitioner Relationship
• Section 2: Counselor
• Section 3: Advocate
• Section 4: Transactions with persons other
than clients
• Section 5: Law firms and associations
• Section 7: Legal Services
• Section 8: Maintaining the integrity of the
profession
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• New definition of “competence”: Section
11.101
A practitioner shall provide competent
representation to a client. Competent
representation requires the legal, scientific,
and technical knowledge, skill, thoroughness
and preparation reasonably necessary for the
representation
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• Confidentiality of information; Section 11.106(a): Requires confidentiality regarding the client's
information in the absence of informed consent, except where disclosure is necessary to Prevent the client from committing inequitable
conduct before the Office, or prevent the client from committing a crime or fraud which will result in substantial injury to the interests or property of another
• Section 11.106(c) provides: “A practitioner shall disclose to the Office
information necessary to comply with applicable duty of disclosure provisions.” § 11.303(e), “Candor toward the tribunal,” has the same requirement
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• Confidentiality of information; Section
11.116:
A practitioner shall not represent a client, or
where representation has commenced, shall
withdraw from the representation of a client if:
(1) the representation will result in violation of
the USPTO Rules of Professional Conduct or
other law
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• What if a practitioner has confidential information of Client A which should be disclosed under Rule 56 in Client B's application? Must the information be disclosed to B and the PTO?
• The PTO Comment to § 11.106(c) says: “Solely for the purposes of enforcement under 37 C.F.R. part 11 (Representation of Others before the PTO), if a practitioner has a conflict of interest in a certain matter, arising from a different client, timely withdrawal by the practitioner from the given matter would generally result in the OED not seeking discipline for conflicts of interest under part 11.
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• New definition of “fraud”: Section 11.1 “Fraud or fraudulent means conduct that involves a
misrepresentation of material fact made with intent to deceive or a state of mind so reckless respecting consequences as to be the equivalent of intent, where there is justifiable reliance on the misrepresentation by the party deceived, inducing the party to act thereon, and where there is injury to the party deceived resulting from reliance on the misrepresentation. Fraud may also be established by a purposeful omission or failure to state a material fact, which omission or failure to state makes other statements misleading, and where the other elements of justifiable reliance and injury are established.” Unitherm Food v. Swift-Eklrich (2004) and In re Spalding (2000)
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• § 11.116(b) Unless the tribunal denies a request
to withdraw, a practitioner may withdraw from
representing a client, if:
(1) No material adverse effect on the client's interest
(2) Client persists in criminal or fraudulent conduct
(3) Client has used practitioner to commit a crime or fraud
(4) Client insists on action with is fundamentally repugnant
to P
(5) Client fails to pay reasonable fee after reasonable
warning
(6) Representation or client will result in unreasonable
burden on P
(7) Other good cause for withdrawal exists
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• Candor toward the Tribunal, Section 11.303:
A practitioner shall not knowingly:
fail to disclose to the tribunal legal authority
in the controlling jurisdiction known to the
practitioner to be directly adverse to the
position of the client and not disclosed by
opposing counsel in an inter partes
proceeding or fail to disclose such authority
in an ex parte proceeding before the Office if
such authority is not other wise disclosed
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• Section 11.303(e)
In a proceeding before the Office, a practitioner
shall disclose to the Office information necessary
to comply with applicable duty of disclosure
provisions
No counterpart in the ABA Model Rules. Similar
to a patent applicant’s duty to disclose
information material to patentability set forth in
37 CFR 1.56
• Section 11.301:
Practitioner shall not bring or defend
proceeding, or assert an issue unless non-
frivolous basis in law and fact for doing so
• Section 11.302:
P shall make reasonable efforts to
expedite PTO proceedings
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• § 11.303 Candor
(d) “In ex parte proceeding, a practitioner shall inform the tribunal of all material facts known to the practitioner that will enable the tribunal to make an informed decision, whether or not the facts are adverse
Addendum to Rule 56? Adopted from ABA Rule 3.3(d)
(f) In a proceeding before the Office, a practitioner shall disclose to the Office information necessary to comply with applicable duty of disclosure provisions
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• Attorney certifies that he or she has performed
“an inquiry reasonable under the circumstances”
and concluded:
Pleading or motion not presented for any improper
purpose
Claims, defenses and other legal contentions
warranted by existing law or nonfrivolous argument
for change of law
Allegations and other factual contentions have
evidentiary support
• Attorney certifies to this in filing a pleading,
motion or other paper with the court
• Court may impose sanctions for failure to comply
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• In a case brought pursuant to the Hatch-
Waxman statutes, an ANDA filer has a duty not
to go forward on baseless or frivolous positions
Yamanouchi Pharm. V. Danbury Pharm., 231 F.3d
1339 (Fed. Cir. 2000) Hatch-Waxman imposes a
duty of care on an ANDA filer; attorneys fees
awarded for baseless Para. IV certification
Takeda v. Mylan, 549 F. 3d 1381 (Fed. Cir. 2008)
$16.8 million in attorneys fees and costs awarded
on baseless certification letter with scientific
errors, along with litigation misconduct (switching
obviousness theory, frivolous inequitable conduct
claims)
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• Patentee’s complaint must be based on a
reasonable investigation and warranted by
existing law
Q-Pharma, Inv. V. Andrew Jergens, 360 F.3d
1295 (Fed Cir. 2004)
Attorney must interpret the claims of the
patent before filing a complaint
Cannot rely upon the client’s construction
Must compare the accused device with those
claims before filing a claim alleging
infringement
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• In a case brought pursuant to the Hatch-
Waxman statutes, a patentee need not
investigate infringement
Celgene Corp. v. KV Pharm. (D.N.J. 2008)
No pre-suit investigation was undertaken other
than to determine that an ANDA was filed
Because submitting an ANDA is an act of
infringement, in a Hatch-Waxman case, the
attorney fulfills his or her duties under Rule 11
by determining a relevant ANDA has been filed
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• Recent Supreme Court decisions have
sought to lower the bar on exceptional-
case attorney fees and costs
Octane Fitness v. Icon Health & Fitness (U.S.
2014)
Highmark Inc. v. Allcare Health Mgmt. (U.S.
2014)
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• Source Vagabond v. Hydrapak (Fed. Cir. 2014) Affirmed district court sanctioning under Rule 11
for bringing a frivolous patent infringement suit
Claim construction: Sources’s proposed construction “violates all the relevant canons of claim construction” and even under the erroneous construction Hydrapak did not infringe
Source failed to conduct an adequate investigation before filing suit, as there was “no evidentiary support no matter how the claim was construed”
Sanction was instituted against attorneys, rather than Source
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