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Federal Circuit Finds Inequitable Conduct Based on Applicant’s Conflicting Statements Made to the EPO

January 25, 2010

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Judges: Linn (concurring-in-part and dissenting-in-part), Friedman, Dyk (author)

[Appealed from: N.D. Cal., Judge Alsup]

In Therasense, Inc. v. Becton, Dickinson & Co., Nos. 08-1511, -1512, -1513, -1514, -1595 (Fed. Cir. Jan. 25, 2010), the Federal Circuit affirmed the district court’s decision that claims 1-4 of U.S. Patent No. 5,820,551 (“the ’551 patent”) were invalid due to obviousness and the entire patent was unenforceable due to inequitable conduct, affirmed the district court’s grant of SJ of noninfringement of all asserted claims in U.S. Patent Nos. 6,143,164 (“the ’164 patent”) and 6,592,745 (“the ’745 patent”), and affirmed the district court’s findings that nearly all of the asserted claims of the ’745 patent were invalid due to anticipation. 

Becton, Dickinson and Co. (“Becton”) sued Therasense, Inc. (now Abbott Diabetes Care, Inc.) seeking a DJ of noninfringement of the ’164 and ’745 patents.  Abbott Diabetes Care, Inc. and Abbott Laboratories (collectively “Abbott”) are the owners of the patents-in-suit, all of which relate to disposable blood glucose test strips utilizing electrochemical biosensors to measure the level of glucose in a sample of blood. 

Abbott countersued Becton alleging infringement of the ’164, ’745, and ’551 patents.  Abbott also initiated an infringement action against Nova Biomedical Corp. (“Nova”), Becton’s supplier, alleging infringement of the same patents for the same products.  Abbott also sued Bayer Healthcare LLC (“Bayer”) alleging that its blood glucose strips infringed the ’551 and ’745 patents.  The cases were consolidated, with all defendants asserting that their products did not infringe Abbott’s patents and that Abbott’s patents were invalid. 

The district court granted SJ of noninfringement of all asserted claims in the ’164 and ’745 patents, and found nearly all of the asserted claims of the ’745 patent invalid due to anticipation.  Following a bench trial, the district court held claims 1-4 of the ’551 patent invalid due to obviousness and the entire ’551 patent unenforceable due to inequitable conduct during prosecution. 

On appeal, the Court first addressed the district court’s holding that claims 1-4 of the ’551 patent were obvious in light of U.S. Patent Nos. 4,545,382 (“the ’382 patent”) and 4,225,410 (“the ’410 patent”).  The central question for obviousness of the ’551 patent claims was whether the prior art disclosed a glucose sensor without a membrane for use in whole blood, as required by the claims.  The Court upheld the district court’s obviousness determination and held that the lower court did not err in finding that the ’382 patent disclosed electrochemical sensors in which “a protective membrane was optional in all cases except the case of live blood, in which case the protective membrane was preferred—but not required.”  Slip op. at 6. 

The Court next addressed whether the ’382 patent, in combination with the ’410 patent, could have enabled the membraneless sensor of the ’551 invention.  Abbott argued that the oxygen sensitivity of the ’382 patent rendered it ineffective when testing whole blood without a membrane, and, therefore, the combination of the ’382 patent with the ’410 patent could not have enabled the ’551 patent.  The district court made no explicit finding that the ’382 patent would have enabled one having ordinary skill in the art to make and use a membraneless sensor.  The district court did find, however, that the ’382 patent exhibited “very low oxygen sensitivity” comparable to that disclosed in the ’551 patent, and, therefore, “the ’382 patent would not have any issues with oxygen sensitivity.”  Id. at 13.  On appeal, the Court held this finding was not clearly erroneous.  Although the Court identified conflicting testimony on the issue, it held that the district court could properly credit Bayer’s expert testimony that the ’382 patent showed that there would be no greater than 5% oxygen sensitivity when testing with whole blood. 

The Court also upheld the district court’s determination that one skilled in the art would have been motivated to combine the ’382 patent and the ’410 patent to create the membraneless sensor for whole blood of the ’551 patent.  The Court reasoned that in light of its conclusions that (1) the district court did not clearly err in finding that the ’382 patent disclosed a membraneless sensor and (2) that those with ordinary skill in the art would have expected such a membraneless sensor to work, the district court did not err in finding that those with ordinary skill would have been motivated to combine this sensor in a disposable form (the contribution of the ’410 patent). 

The Court also held that the district court’s finding that Abbott failed to demonstrate a sufficient nexus between the claims of the ’551 patent and the commercial success of Abbott’s Exactech product was not clearly erroneous because of uncontroverted evidence that the Exactech product’s success was due to features already in the prior art, such as the ’382 patent.  Thus, the Court held that the district court did not err in rejecting Abbott’s assertion that commercial success supported a finding of nonobviousness. 

In sum, the Court found no error with the district court’s conclusion that claims 1-4 of the ’551 patent would have been obvious in light of the prior art.

The Court also affirmed the district court’s decision finding the ’551 patent unenforceable due to inequitable conduct based on a failure to disclose statements made to the European Patent Office (“EPO”) during proceedings involving the European counterpart to the ’382 patent.  The Court upheld the conclusion that statements made by Abbott’s predecessor to the EPO were highly material to the prosecution of the ’551 patent because they contradicted representations Abbott made to the PTO regarding the membraneless sensor disclosed in the ’382 patent.

The original application that led to the ’551 patent was filed in 1984.  The application was repeatedly rejected over the ’382 patent.  Thirteen years into the prosecution of the application, Abbott drafted new claims including electrochemical sensors lacking a membrane.  During an interview with the examiner, Abbott’s patent attorney presented the new claims along with argument that the amended claims were not anticipated or obvious because they taught a new glucose sensor that did not require a protective membrane when testing whole blood.  Abbott submitted a declaration to the PTO stating that, at the time of the invention, such a membrane was considered essential for whole blood and that one skilled in the art would read the ’382 patent’s “optionally, but preferably” language not as a technical teaching but rather as “patent phraseology.”  Id. at 20.  Shortly thereafter, the PTO allowed the ’551 patent with the new claims for a membraneless sensor. 

During prosecution of European Patent EP 0 078 636 (“the ’636 patent”)—a counterpart to the ’382 patent with a virtually identical specification—Abbott’s patent counsel submitted a brief to the EPO stating that the ’636 patent “is unequivocally clear.  The protective membrane is optional, however, it is preferred when used on live blood.”  Id. at 22 (emphasis omitted). 

The Court upheld the district court’s findings that the EPO statements contradicted the PTO representations in at least two significant ways.  First, by describing the “[o]ptionally, but preferably” language as “unequivocally clear,” Abbott’s EPO representations contradicted Abbott’s representations to the PTO that a person having ordinary skill in the art would have understood the phrase as mere “patent phraseology” that did not convey a clear meaning.  Second, the EPO documents clearly explained that membranes were merely preferred for live blood and that a membrane was not necessary for testing whole blood in vitro.

The Court concluded that to deprive an examiner of the EPO statements—statements directly contrary to Abbott’s representations to the PTO—on the grounds that they were not material would be to eviscerate the duty of disclosure.  Moreover, if this could be regarded as a close case, which the Court found it was not, the Court stated that “the duty of disclosure requires that the material in question be submitted to the examiner rather than withheld by the applicant.”  Id. at 26. 

Abbott, nonetheless, contended that attorney arguments about prior art were not information material to patentability, and that since both the EPO and the PTO representations were merely argument, any inconsistency between the two could not be material.  The Court, however, distinguished this case from those involving patentees making representations to the PTO about prior art.  Here, the applicant made contradictory arguments in another forum that were withheld from the PTO.  The Court found that an applicant’s earlier statements about prior art, especially the applicant’s own prior art, were highly material to the PTO when those statements directly contradicted the applicant’s position regarding that prior art in the PTO.

The Court also affirmed the holding that Abbott intended to deceive the PTO by withholding the EPO documents.  The Court confirmed the following findings of the district court:  (1) that the statements made to the PTO concerning the prior art ’382 patent were absolutely critical in overcoming the examiner’s earlier rejections of the claims of the ’551 patent; (2) that the EPO statements would have been very important to an examiner because they contradicted the representations made to the PTO; (3) that Abbott’s representatives both knew of the EPO statements and consciously withheld them from the PTO; (4) that neither of Abbott’s representatives provided a credible explanation for failing to submit the EPO documents to the PTO; and (5) that Abbott’s representatives’ explanations for withholding the EPO documents were so incredible that they suggested intent to deceive.

The first and third findings were undisputed, and the second was not clearly erroneous, as previously explained by the Court.  The fourth and fifth findings both involved witness credibility.  Based on the lower court’s assessment of witness credibility and given its opportunity to observe Abbott’s representatives’ testimony, the Court found the record clearly supported the findings of lack of witness credibility.  Thus, the Court concluded that the district court’s findings that the EPO submissions were highly material to the prosecution of the ’551 patent and that Abbott’s representatives intended to deceive the PTO by withholding those submissions were not clearly erroneous, and, therefore, the lower court did not abuse its discretion in holding the ’551 patent unenforceable.

The Court also affirmed the district court’s grant of SJ with respect to noninfringement of the ’164 and ’745 patents.  A limitation in each of Abbott’s asserted claims in the ’164 and ’745 patents requires that the blood sample being analyzed be held within the strip in a “non-flowing manner.” 

The district court construed the term narrowly, precluding all motion, including convective flow.  The Court rejected the district court’s claim construction, finding that any reasonable construction must allow for fluid motion that is inherent within liquids, including convective flow and Brownian motion.  The Court therefore interpreted the recitation of a “non-flowing manner” to mean that a sample “is not moving in the sample chamber during the measurement,” other than motion attributable to convective flow, Brownian motion, or other qualities inherent to all liquids.  Id. at 35.  The Court held that under this claim construction, SJ of noninfringement was still appropriate.  Expert testimony and uncontroverted evidence supported the conclusion that the test strip at issue demonstrated that blood sample flowed in a swirling motion within the strip’s measurement zone during the entire measurement period, and therefore did not infringe Abbott’s ’164 and ’745 patents.

The Court also affirmed the district court’s grant of SJ as to anticipation of the ’745 patent based on  PCT application WO 98/35225 (“the ’225 reference”).  On appeal, Abbott challenged whether the ’225 reference disclosed the “diffusible redox mediator” limitation and the “background signal” claim limitation of the ’745 patent.  Because Abbott did not argue the “background signal” limitation to the district court, the Court held that Abbott waived the issue.  The Court then found that the language of the ’225 reference implied that diffusible mediators are contemplated, though they are not preferred.  The Court also looked to claim 127 of the ’225 reference describing a method calling for a “redox mediator,” in combination with dependent claim 128 reciting “[t]he method of claim 127, wherein the redox mediator is a non-leachable redox mediator,” i.e., a nondiffusible mediator, compelled the conclusion that the ’225 reference claims diffusible and nondiffusible mediators in claim 127.  Id. at 37-38.  Accordingly, the Court found there was no triable issue of material fact for a jury to consider on the issue of whether the ’225 reference disclosed diffusible mediators.  As such, the Court held SJ was proper.

In a separate opinion, Judge Linn dissented from the Court’s inequitable conduct ruling.  Judge Linn also stated that he concurred with the result and with much of the majority’s reasoning in affirming the judgments of obviousness and anticipation, but disagreed with the majority’s reference to the claims of the prior art as a measure of what the prior art discloses.

With respect to inequitable conduct, Judge Linn argued that the question for purposes of materiality here is not whether Abbott’s arguments to the PTO were meritorious (i.e., that the word “preferably” in the ’382/’636 patent would actually have been interpreted by a skilled artisan to mean “required”), but rather whether anything in Abbott’s EPO submissions “refutes, or is inconsistent with,” its arguments to the PTO.  Judge Linn also asserted that even if this information were material, the individuals who owed a duty of disclosure to the PTO produced a good-faith explanation as to why they withheld the EPO submissions.  Judge Linn stated that such an explanation should defeat a charge of inequitable conduct if it was “plausible” that the individuals subjectively believed that the reference was immaterial at the time they withheld it.  Judge Linn believed the district court erred in finding the statements were material and made with an intent to deceive the PTO.  As to invalidity, Judge Linn noted that he agreed with the holding of invalidity of the ’551 and ’745 patents, but that the descriptive portions of the prior art patents were alone sufficient to invalidate the claims-in-suit.  Thus, Judge Linn believed that it was unnecessary and improper to look to the claims of the prior art patents as a measure of what the prior art disclosed for purposes of obviousness and anticipation.