IP Law News

INSIGHT: Inequitable Conduct Accusations Still Powerful Pharma Patent Litigation Tool Post-Therasense

July 17, 2019, 8:01 AM

Accusations are the currency of conflict. True accusations reveal wrongdoing; false accusations harm reputations, subject the accused to ordeal and waste resources.

In patent litigation, the accusation of “inequitable conduct”—“fraud-like” behavior in the Patent Office to obtain a patent—if proven, makes patents unenforceable. The accusation, however, is controversial in the otherwise cerebral world of patent law. The Federal Circuit has described such accusations as a “plague” upon the system where honorable patent attorneys and scientists have their reputations sullied. Others contend that the lure of obtaining valuable patents through deceit must be deterred.

Obtaining a patent on a potentially lucrative drug, in theory, could incentivize deceit in the Patent Office. However, generic companies, knowing they may reap a windfall by rendering a good patent unenforceable, may also be incentivized to conjure far-fetched accusations of misdeeds during prosecution.

Years ago, I successfully defended a pharmaceutical patent, and an elderly inventor, against claims that he lied about being the true inventor. The inventor—a distinguished chemist and veteran of the Royal Air Force in World War II—had simply (and evidently) forgotten his work from many years before. Subjected to the stresses of being accused of lying and multiple depositions, as well as age, his memory often failed and embarrassed him. Thankfully, his voluminous handwritten lab notebooks revealed his inventive work, his sincere and honest character shown through and the accusation was defeated—but only after a long trial.

Law of Inequitable Conduct Revised

Some years after that case, the Federal Circuit revised the law of inequitable conduct in its 2011 Therasense opinion—raising the level of proof required. Therasense changed the standards for the two elements of inequitable conduct—materiality and intent. Materiality now generally requires that “but for” the false statement or omission the patent would not have issued; and there must be a showing of a specific intent to deceive—when circumstantial evidence is relied on, intent to deceive must be the most reasonable inference that can be drawn. Therasense was viewed by many as a death knell for inequitable conduct allegations.

While that has not proven true, the case law does show that most accusations of inequitable conduct (including those in Hatch-Waxman cases) are ultimately defeated, but that was also true before Therasense.

Post-Therasense, courts do appear more willing to dismiss allegations of inequitable conduct at an earlier stage and also to deny motions to add such allegations. In Leo Pharma v. Actavis (D. Del. Feb. 26, 2018), the court recommended dismissal of the inequitable conduct counterclaim, stating that it “fails to identify a specific individual who owed a duty of disclosure … which is fatal to [defendant’s] efforts to plead the requisite scienter.”

Similarly, in Senju Pharm. Co. v. Apotex Inc., 921 F. Supp.2d 297 (D. Del. 2013), the court dismissed charges of inequitable conduct, stating “the court finds that [defendant] has not met the … pleading standard with respect to ‘who’ deceived the PTO.” Other courts have found no materiality. See, e.g., Spectrum Pharm’ls Inc. v. Sandoz Inc. (D. Nev. Dec. 29, 2014) (granting summary judgment of no inequitable conduct), aff’d. by 802 F.3d 1326 (Fed. Cir. 2015).

Proof Has Been Wanting

When cases have gone to trial, Therasense-level proof has often been wanting. In Medicines Co. v. Mylan, the court concluded after trial that the “evidence supports an inference that the inventors … did not believe the [omitted] information to be material to the asserted claims, not [that] they intended to deceive the PTO. Accordingly, Mylan failed to prove the specific intent element of its inequitable conduct theory.”

Nonetheless, inequitable conduct can still be a potent tool in a defendant’s arsenal. In Regeneron Pharmaceuticals Inc. v. Merus N.V., the Federal Circuit affirmed a finding of inequitable conduct where the lower court had found “but for” materiality regarding withheld prior art references and then invoked a “negative inference” against the patentee to find specific intent to deceive the Patent Office (without holding a trial on that issue).

The negative inference itself was not based upon behaviors in the Patent Office by Regeneron’s patent attorneys, but upon litigation misconduct by Regeneron’s litigation attorneys (including withholding documents relevant to the alleged inequitable conduct). The effective result is a finding that the patent attorneys had a “specific intent to deceive” the Patent Office based upon wrongdoing by other attorneys in a different and subsequent court proceeding While this outcome may be particular to the facts of Regeneron, it may also indicate the beginnings of a possible rethinking of the “specific intent” criteria.

In sum, litigants defending against inequitable conduct charges, as well as those advancing such accusations, should have experienced patent trial counsel who can address the “crime-like” aspects of this issue. The stakes are high and despite Therasense’s heightened standards of proof, the accusation remains a potentially powerful and consequential one in patent cases.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Jason Lief is a patent litigator with Cooley LLP and focuses on pharmaceutical and Hatch-Waxman litigation. For more than two decades Jason has represented innovators around the world in dozens of cases, establishing a winning track record.

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