• 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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