Failure to Disclose Relationship Between Declarants and Applicant Affirmed to Be Inequitable Conduct
February 15, 2006
Last Month at the Federal Circuit - March 2006
Judges: Newman (dissenting), Mayer, Dyk (author)
In Ferring B.V. v. Barr Laboratories, Inc., No. 05-1284 (Fed. Cir. Feb. 15, 2006), the Federal Circuit upheld the district court’s grant of SJ that Ferring B.V.’s (“Ferring”) patent was unenforceable due to inequitable conduct, affirming that Ferring’s failure to inform the
PTO that key declarations were drafted by scientists who had significant ties to Ferring was both material and intentional.
Ferring submitted a patent application for a pharmaceutical compound and a method of administering it orally, whereby it is absorbed in the gastrointestinal tract. Ferring had a preliminary interview with the PTO to discuss a prior art reference, U.S. Patent No. 3,497,491 (“the ’491 patent”), which disclosed administering the same pharmaceutical compound by “peroral” application. Ferring argued that “peroral” meant that the drug was absorbed in the mouth rather than in the gastrointestinal tract. The PTO requested that Ferring submit declarations from “non-inventors” to support its interpretation of “peroral.” Ferring submitted four declarations in support of its position, including one declaration from a scientist who had recently received research funding from Ferring. However, Ferring did not disclose this relationship.
The application was nonetheless rejected over the ’491 patent, and Ferring appealed to the Board. The Board generally agreed with Ferring’s interpretation of “peroral” but found that when the ’491 patent was combined with a previously undisclosed prior art reference (“Vavra”), the claims would still be obvious. The Board allowed Ferring to continue prosecution in response to this new matter rejection.
Ferring submitted five new declarations to support its argument that in light of the ’491 patent and Vavra reference, it would not have been obvious that the drug would be absorbed in the gastrointestinal tract. Three of these declarations were submitted by scientists, who had either received funding from Ferring or were former employees. Again, Ferring did not disclose these relationships. Further, Ferring submitted a CV for one of these scientists that did not mention that he received research funding from Ferring and did not submit a CV for the other two scientists. After reviewing the declarations, the examiner allowed the claims and issued the patent as U.S. Patent No. 5,047,398 (“the ’398 patent”).
Ferring brought a patent infringement lawsuit against Barr Laboratories, Inc. (“Barr”), alleging that Barr infringed claims of the ’398 patent. Barr moved for SJ, alleging that the’398 patent was not infringed and unenforceable due to inequitable conduct during the prosecution of the patent. The district court granted SJ in favor of Barr on both issues. Ferring appealed. The CAFC first examined whether Ferring’s failure to disclose the past relationships with the declarants was material by examining whether “(1) the declarant’s views on the underlying issue are material and (2) the past relationship to the applicant was a significant one.” Slip op. at 12. The Court found that the declarations were “absolutely critical in overcoming the Board’s obviousness rejection” and that the three undisclosed relationships were significant and ongoing during the prosecution of the application. Id. at 13. Ferring argued that the examiner would not have placed any significance on the identity of the declarants. The Court found that Ferring was placed on notice about the materiality of the relationship between Ferring and the declarants when the examiner informed applicants that it wanted “non-inventor” affidavits and stated that it was concerned about the objectivity of the declarants.
The CAFC then affirmed that the district court had appropriately granted SJ on the issue of intent by determining that “(1) the applicant knew of the information; (2) the applicant knew or should have known of the materiality of the information; and (3) the applicant has not provided a credible explanation for the withholding.” Id. at 17-18.
The Court then held that the district court did not abuse its discretion when determining that the materiality and intent were raised to a sufficient level to render the failure to disclose inequitable. The Court placed significance on the fact that there were multiple failures to disclose the relationship, that the relationships, including past employment by Ferring, were significant, and that four of the five declarations were submitted by scientists with significant ties to the applicant. The Court affirmed the inequitable conduct decision of the district court, concluding that “where the objectivity of the declarant is an issue in the prosecution, the inventor must disclose the known relationships and affiliations of the
declarants so that those interests can be considered in weighing the declarations.” Id. at 24. The Court did not reach the infringement issue.
Judge Newman “urgently” dissented, arguing that this decision ignored the requirement set forth in Kingsdown Medical Consultants Ltd. v. Hollister, Inc., 863 F.2d 867 (Fed. Cir. 1988) (en banc), for “clear and convincing evidence of a misrepresentation or omission material to patentability, made intentionally and for the purpose of deception” and instead set a “‘should have known’ standard of materiality.”