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Court Clarifies the Prejudice Requirement for Prosecution Laches and the Intent Requirement for Inequitable Conduct

November 09, 2010
Jacobstein, Jeffrey M.

Decision icon Decision

Last Month at the Federal Circuit - December 2010

Judges: Newman, Lourie (author), Prost (dissenting)

[Appealed from: D. Del., Judge Robinson]

In Cancer Research Technology Ltd. v. Barr Laboratories, Inc., No. 10-1204 (Fed. Cir. Nov. 9, 2010), the Federal Circuit reversed the district court’s decision holding U.S. Patent No. 5,260,291 (“the ’291 patent”) unenforceable for prosecution laches and inequitable conduct. 

Cancer Research Technology Limited (“Cancer Research”) is the owner of the ’291 patent, which claims a genus of tetrazine derivative compounds and methods for treating cancer by administering those compounds.  During prosecution of the ’291 patent, the examiner rejected the application for lack of utility.  The examiner asserted that the utility of a human cancer treatment could only be established by data showing efficacy in humans, but the applicants lacked such data.  Rather than respond to the office action, Cancer Research filed a continuation application.  The continuation was again rejected for lack of utility, and a further continuation was filed by the applicants.  This process was repeated eight more times.  On the final application, Cancer Research responded for the first time to the utility rejection, arguing that animal tests were adequate to establish utility in humans.  The PTO agreed and the ’291 patent subsequently issued.

During prosecution of the ’291 patent, Cancer Research continued to study the claimed tetrazine derivatives, revealing that several of the compounds were toxic and had little anti-cancer activity.  This data was published in scientific journals but was never submitted to the PTO.  Nor did Cancer Research amend their claims in light of the new data.

Several years after the FDA approved an NDA for Temodar®, which contained one of the tetrazine compounds claimed in the ’291 patent, Barr Laboratories, Inc. and Barr Pharmaceuticals, Inc. (collectively “Barr”) filed an ANDA with a Paragraph IV certification challenging the validity of the ’291 patent.  Cancer Research sued Barr for patent infringement and the district court held the ’291 patent unenforceable for prosecution laches and inequitable conduct.

On appeal, the Federal Circuit held that prosecution laches requires a finding of prejudice.  Furthermore, to establish prejudice, the Court explained that an accused infringer must demonstrate intervening rights, meaning that “either the accused infringer or others invested in, worked on, or used the claimed technology during the period of delay.”  Slip op. at 9.  The Court rejected Barr’s argument that the public was inherently prejudiced by Cancer Research’s delay in prosecuting the ’291 patent.  The Court found that the public was not harmed by the delayed prosecution because Cancer Research did not receive FDA approval to distribute its first cancer drug until several years after the’291 patent issued.  Thus, the Court held that the delay did not deprive the public of earlier access to Temodar.  Furthermore, the Court held that the harm to the public caused by the extended patent life of the ’291 patent was not relevant as it was not a prejudice that emerged during prosecution.

The Court noted that Barr, on the other hand, waited more than seven years after FDA approval of Temodar before filing its ANDA.  While entitled to file an ANDA four years after NDA approval, Barr chose to wait an additional three years.  Thus, the Court found that Barr was not prejudiced by the delay in issuance of the ’291 patent.  Furthermore, Barr failed to introduce evidence that any other company was deterred from entering the market for tetrazine derivatives because of the delay in prosecuting the ’291 patent.  Thus, the Court concluded that Barr failed to establish the prejudice necessary for a finding of laches and reversed the decision of the district court.

After considering prosecution laches, the Federal Circuit turned to the issue of inequitable conduct.  The district court had established materiality and inferred intent from the fact that the inventors of the ’291 patent published data showing some of their claimed tetrazine compounds lacked cancer utility but failed to report this data to the PTO.  The Federal Circuit found that the district court committed clear error in relying solely on evidence of materiality to also infer intent to deceive the PTO. 

The Federal Circuit stated that evidence of both materiality and intent are required to render a patent unenforceable for inequitable conduct.  A court may not “simply infer that an applicant ‘should have known’ the materiality of withheld information and thus intended to deceive the PTO because the applicant knew of the information and the information is material.”  Slip op. at 17.  Rather, the Court held that there must be additional evidence from which to deduce intent.  In the present case, the Court noted that the district court relied solely on its materiality finding to infer intent to deceive.  The Court found that the fact that the articles contradict the disclosure of the ’291 patent did not alone establish that the inventors withheld those studies intending to deceive the PTO.  The Federal Circuit found this inference unwarranted, as “the prompt publication of data in multiple articles over the entire course of prosecution is inconsistent with finding that intent to deceive is the single most reasonable inference to draw from the evidence in this case.”  Id. at 18 (citing Research Corp. Techs., Inc. v. Microsoft Corp., 536 F.3d 1247, 1252 (Fed. Cir. 2008)).  The Court noted that an equally likely inference was that the inventors knew the publication was important for their scientific careers but did not appreciate the importance for patent prosecution purposes.  Given this alternative, the Federal Circuit held that it was clear error for the district court to infer intent to deceive from the publication alone.  Thus, the Court held that the district court abused its discretion by failing to establish the intent element of inequitable conduct.

In her dissent, Judge Prost stated that she would have affirmed the district court’s finding of prosecution laches for two reasons.  First, Judge Prost noted that no Supreme Court or Federal Circuit precedent required a finding of intervening rights to establish prosecution laches.  While intervening rights can serve as one route to establish laches, Judge Prost stated that mere delay in prosecution alone can also be adequate.  Second, Judge Prost argued that even if prejudice were required, then the majority erred by ignoring the harm to the public from allowing Cancer Research to extend its patent term through delayed prosecution.  Judge Prost stated that the majority avoided this issue by confining the relevant harm to the period during which prosecution was pending.  However, Judge Prost stated that no legal basis existed for such a limitation.

Judge Prost would also have affirmed the district court’s finding of inequitable conduct.  Judge Prost felt that the majority created a new evidentiary standard for inequitable conduct when it required separate evidence to prove materiality and intent.  Judge Prost noted that while a court must address the two issues separately, there is no legal basis for preventing a court from applying the same evidence to reach both elements.  Furthermore, Judge Prost noted that the majority did not afford adequate deference to the district court’s credibility findings regarding the intent to deceive the PTO.


Summary authored by Jeffrey M. Jacobstein, Esq.