Posts Tagged: "inequitable conduct"

The U.S. Court of Appeals for the Federal Circuit (CAFC) issued a precedential decision Monday affirming a district court’s ruling that denied attorney fees and sanctions to Pure Hemp Collective, Inc. over a patent infringement suit brought against it by United Cannabis Corporation. The patent at issue, U.S. Patent No. 9730911, covers “Cannabis Extracts and Methods of Preparing and Using Same.” United Cannabis sued Pure Hemp for infringement in July 2018, but, following United Cannabis’ bankruptcy proceedings, the parties stipulated to the dismissal of the patent case. United Cannabis’ infringement claims were dismissed with prejudice while Pure Hemp’s invalidity and inequitable conduct counterclaims were dismissed without prejudice.

In a precedential decision written by Judge Reyna, the U.S. Court of Appeals for the Federal Circuit (CAFC) on Wednesday upheld a Delaware district court’s ruling that Belcher Pharmaceuticals Inc.’s Chief Science Officer engaged in inequitable conduct, making its U.S. Patent No. 9,283,197 unenforceable. Belcher brought the suit against Hospira, Inc. for infringement of the ‘197 patent under the Hatch-Waxman Act, but the district court found that the Belcher Chief Science Officer withheld material information from the U.S. Patent and Trademark Office (USPTO) during patent prosecution, and the CAFC affirmed.

The U.S. Court of Appeals for the Federal Circuit has affirmed a ruling by the United States District Court for the Southern District of Indiana finding CleanTech’s patents-in-suit unenforceable for inequitable conduct for making a pre-critical-date offer for sale.  The patents-in-suit, U.S. Patent Nos. 7,601,858 (“the ’858 patent”), 8,008,516 (“the ’516 patent”), 8,008,517 (“the ’517 patent”), and 8,283,484 (“the ’484 patent”), are directed to methods of recovering oil from a dry mill ethanol plant’s byproduct, i.e. “thin stillage.” 

Inequitable conduct is practically the stuff of ghost stories among patent practitioners. You must satisfy your duty of candor to the U.S. Patent and Trademark Office (USPTO) or the patent – all the claims – will be worthless. Since Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc) ushered in the “but-for” materiality standard, some patent practitioners may have become too complacent and willing to take a chance. Who will find out? A recent decision in Deep Fix, LLC v. Marine Well Containment Co. LLC (S.D.Tx. Feb. 18, 2020) may have patent prosecutors reviewing their files and even filing a request for supplemental examination or two.

Inequitable conduct remains the most powerful defense to patent infringement. In contrast to other defenses to patent infringement that require a claim-by-claim analysis, the defense of inequitable conduct is global. A finding of inequitable conduct renders the entire patent unenforceable. For this reason, the U.S. Court of Appeals for the Federal Circuit has referred to the defense of inequitable conduct as the “atom bomb of patent law” Aventis Pharma S.A. v. Amphastar Pharmaceutical, Inc., 525 F.3d 1334, 1349 (Fed.Cir.2008). Given the tremendous impact of the inequitable conduct defense, the Federal Circuit, in Therasense, Inc. v. Becton, Dickinson and Co., 649 F. 3d 1276 (Fed. Cir., 2011), has significantly increased the burden on patent infringers who assert this defense. Rather than needing to prove materiality in the context of 37 C.F.R. § 1.56 and intent to deceive, Therasense now requires an infringer prove “but for” materiality and a specific intent to deceive—a much higher burden than before. To the disappointment of those who believed that Therasense would spell the demise of inequitable conduct, this defense to patent infringement remains alive and well, although less prevalent than before. See Energy Heating, LLC v. Heat On-The-Fly LLC, 889. F.3d 1291 (Fed. Cir. 2018). Moreover, the Federal Circuit, in Gilead Sciences, Inc. v. Merck & Co. 890 F.3d 1231(Fed. Cir 2018), now seems to recognize an equitable defense (“business misconduct”) separate from inequitable conduct to penalize patentees for unethical behavior committed outside of the confines of patent prosecution before the United States Patent and Trademark Office (USPTO).

In Energy Heating v. Heat On-The-Fly, the court did not abuse its discretion in finding clear and convincing evidence that the inventor knew that the prior uses were material and specifically intended to deceive the PTO by not disclosing them. The court had sufficient evidence – including evidence of 61 commercial sales dating back to 2006 and no contemporaneous evidence of experimentation – to disbelieve Mr. Hefley’s testimony to the contrary.

Although the patent prosecution process is adversarial in nature, patent practitioners must be keenly aware of their duty to maintain the integrity of any subsequently issued patent by supplying the patent examiner with all prior art that is believed to be relevant and also avoiding any misrepresentations of the prior art.  Patent litigators have long been aware of the potential pitfall of having a patent invalidated based on inequitable conduct due to activities of a patent prosecutor carried out months or years prior to the litigation proceedings.  In light of a recent decision by the Federal Circuit in Regeneron Pharmaceuticals v. Merus, however, it now appears that inequitable conduct by a patent prosecutor may be inferred due to activities of a patent litigator carried out month or years after patent prosecution has concluded.

Objective indicia must be evaluated before drawing an ultimate conclusion on obviousness, but are not necessarily part of a prima facie “motivation-to-combine” analysis. To prove inequitable conduct based on failure to correct a misrepresentation, the moving party must show actual knowledge of a material misrepresentation and a deliberate failure to inform the PTO with an intent to deceive.

The Federal Circuit issued a decision in Regeneron Pharmaceuticals, Inc. v. Merus N.V. upholding the determination that the patent owned by biotech firm Regeneron was unenforceable. The decision affirmed a lower court’s finding based on Regeneron’s inequitable conduct during prosecution of the patent at the U.S. Patent and Trademark Office (USPTO), which was the result of the withholding of references from the USPTO that had but-for materiality. The patent, which the Federal Circuit deemed unenforceable, is U.S. Patent No. 8502018, titled Methods of Modifying Eukaryotic Cells.

It is inappropriate for a trial court to discount material expert testimony so as to weigh the evidence in favor of a party seeking summary judgment. The presence of a genuine dispute precludes summary judgment in such cases. … Failure to disclose arguments concerning claims of a different scope in a different patent application was not inequitable conduct when differences were apparent to the Examiner.

Drafters need to think both outside and inside the claims. Outside thinking aims to make the court’s task easier by providing claim terms amenable to straightforward, simple claim construction. Preferably, at least, the key terms are expressly defined, or at least explained through demonstration. Inside thinking takes up the question whether the claim construction supports the patentee’s or owner’s intention, as manifested in the claims and specification. By the time a drafter is “experienced,” she has been exposed to considerable instruction on claim drafting. Claim construction rules, claim drafting principles, claim drafting strategy—the endless seminar. Yet, the Federal Circuit regularly lectures the patent bar on its drafting practices. The difficulty is that among all of our construction rules and strategic principles, we have lost sight of clarity and precision. We need to refocus on basic principles. Indeed, we’re going to need a bigger boat.