1. 1 Inequitable Conduct in the Prosecution of Pharmaceutical and Biotechnology Patents Stephen D. Harper, Ph.D RatnerPrestia April 1, 2011

2. 2 Inequitable Conduct  Patents are enforced through equitable relief (e.g., injunctions)  Equitable principles can also preclude enforcement of patent rights (“unclean hands”)  Judicially created equitable defenses to charge of infringement include inequitable conduct before Patent Office

3. 3 Inequitable Conduct  Inequitable conduct defense originally arose from cases involving common law fraud (deliberate falsehood)  However, conduct short of actual fraud may justify sanction of unenforceability  Applicants have duty to prosecute patents with candor, good faith & honesty  Patent Office rules impose a “duty of disclosure”

4. 4 Inequitable Conduct  Why is the inequitable conduct doctrine so important?  Proof of inequitable conduct as to any claim renders all claims unenforceable Defense may extend to other related patents that are otherwise “clean”  Defense is pled in nearly every patent case Ca. 40% of all appeals since 1988 on issue of inequitable conduct involved biotech, drug, medical diagnostic or medical device patents  Patent owners must commit significant resources during litigation to respond to inequitable conduct allegations  If inequitable conduct found, attorney fees may be awarded to accused infringer  Creates substantial burden (cost) during prosecution

5. 5 Inequitable Conduct  What constitutes inequitable conduct?  1) Misrepresentation of material fact Failure to disclose material information Submission of false/misleading material information Misrepresentation need not bear directly on patentability of claim  2) Intent to deceive the Patent Office Can be (& usually is) inferred from circumstantial evidence Mere intent to withhold is not sufficient Intent prong cannot be met by “gross negligence”  At least a threshold level of each element must be established by clear and convincing evidence  Materiality and intent are then weighed to assess whether applicant’s conduct is so culpable that patent should be held unenforceable

6. 6 Inequitable Conduct  When is information “material”?  No single standard applies  Courts have looked to Patent Office rules for guidance

7. 7 Inequitable Conduct  Current Rule 56: Information is material when it is not cumulative to information already before Patent Office and establishes, by itself or in combination with other information, prima facie unpatentability of claim, or refutes or is inconsistent with position applicant is taking  Other materiality standards “But For” standards (objective/subjective) “Reasonable Examiner” standard

8. 8 Inequitable Conduct  Intent Prong - Recent Federal Circuit cases have not been entirely consistent  High materiality plus lack of a credible explanation for failure to disclose may be sufficient  Intent to deceive may be inferred where applicant knew or should have known of information’s materiality  Deceptive intent must be the single most reasonable inference able to be drawn from evidence  Evidence of “good faith”

9. 9 Inequitable Conduct  Common scenarios where inequitable conduct is alleged:  Failure to disclose known material prior art reference  Failure to disclose unfavorable test data or all relevant test parameters  Failure to disclose material prior commercial activity or public disclosures

10. 10 Inequitable Conduct  Failure to disclose relationship of declarant (technical expert) to applicant/owner  Failure to disclose Office Actions and responses thereto in related US and foreign applications  Falsely claiming small entity status  Failure to disclose ongoing litigation

11. 11 Inequitable Conduct  What can patentees do to protect their patents from being found unenforceable?  If in doubt as to the materiality of information, err on the side of disclosure  If volume of disclosed information becomes overwhelming, consider highlighting or summarizing key documents  Be careful in selecting experimental results to present  Consider submitting relevant information/documents generated in prosecution of related cases

12. 12 Inequitable Conduct  Have the courts gone too far in expanding the doctrine of inequitable conduct?  Are the boundaries which define inequitable conduct sufficiently clear and consistently applied?  Federal Circuit has taken on a case en banc to reconsider (& possibly reform) this area of the law

13. 13 Inequitable Conduct  Therasense, Inc. v. Becton, Dickinson & Co.  Claimed invention involved technology for measuring glucose levels in blood  District court held that patentee committed inequitable conduct Representations made to European Patent Office that were (according to the DC) directly contradictory to those made to US Patent Office These contradictory representations were not disclosed to US Patent Office

14. 14 Inequitable Conduct  Initially, 3 judge Federal Circuit panel upheld district court decision  Federal Circuit then vacated the panel decision and agreed to hear the case en banc  Oral arguments November 2010 – decision should be rendered soon

15. 15 Inequitable Conduct  Federal Circuit asked the parties to address several questions:  Should materiality-intent balancing framework be modified or replaced?  Should standard be tied directly to fraud or unclean hands?  What is proper standard for materiality? Patent Office rules or “but for” test?

16. 16 Inequitable Conduct  Therasense (Abbott) petition for en banc rehearing raised the following questions:  Can intent to deceive be inferred from evidence that applicant “should have known” of materiality of information?  Can intent be inferred solely from court’s conclusion that applicant’s view of immateriality is “implausible”?  Can attorney arguments about prior art be material when that prior art is already of record?

17. 17 Inequitable Conduct  Biotechnology Industry Organization (BIO) has filed amicus brief in Therasense case  Urges adoption of “more certain framework”  Biotech patents are “particularly attractive” targets for inequitable conduct charges  Procured against a backdrop of fast-moving science and competing business needs that make it virtually impossible to monitor all potentially relevant information that may be circulating into and out of a company  BIO proposes a “but for” standard of materiality

18. 18 Inequitable Conduct  Questions?