US – Inequitable Conduct

There is a requirement that parties will have behaved equitably, before a Patent Office, in the procurement of intellectual property and if they have not, then there are consequences, such as a granted patent being unenforceable in patent litigation.

This article has been written as an insight and reminder for UK and European patent attorneys, and attorneys in other jurisdictions, and businesses that make patent filings at the USPTO.

Before the United States Patent & Trademark Office (USPTO), “[e]ach individual associated with the filing and prosecution of a patent application has a duty of candour and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability….”[1].

That duty of disclosure applies to individuals who are substantively involved in the preparation or prosecution of a patent application. Such individuals can be inventors, attorneys or agents, and “[e]very other person who is substantively involved in the preparation or prosecution of the application and who is associated with the inventor, with the assignee or with anyone to whom there is an obligation to assign the application”[2].

Failure to meet this duty can lead to a finding that a patent was the subject of ‘inequitable conduct’ before the USPTO.

Accused infringers in patent litigation almost invariably raise inequitable conduct as a defence, as a finding of inequitable conduct can result in not only a patent that was the subject of the inequitable conduct being found to be unenforceable but other family members as well. Consequently, ‘inequitable conduct” has been described as the ‘atomic bomb’ of patent law.

Prior to 2011, ‘inequitable conduct’ was considered a ‘scourge’ and a ‘plague’ of patent infringement proceedings. This was because, in about 80% of infringement proceedings, the potential infringer would counterclaim asserting ‘inequitable conduct’ even when such claims were weak and perfunctory. Therefore, in Therasense, Inc. v., Becton, Dickinson & Co [3]. the US Court of Appeal of the Federal Circuit (CAFC) sought to put a stop to the overuse of the ‘inequitable conduct’ defence. ‘Inequitable conduct’ requires two elements:

• Materiality, i.e. where the patent applicant misrepresents or omits material information; and
• Intent, i.e. an intent to deceive the United States Patent and Trademark Office (USPTO).

Prior to Therasense the intent requirement was met by mere negligence, and the court took a “sliding scale” approach so that a strong showing of materiality would reduce the threshold for a showing of intent, and vice versa. In Therasense, the CAFC:

• removed the sliding scale so that both intent and materiality must meet the standard independently;
• required a court must find that the specific intent to deceive was “the single most reasonable inference able to be drawn from the evidence”; and
• established a ‘but for’ test for materiality; the USPTO would not have allowed the claim but-for the omission or misrepresentation.

The Therasense decision has been largely successful in its goal of eradicating the plague of weak and perfunctory inequitable conduct counterclaims, and the US Supreme Court has effectively approved the approach, by deciding not to review the heightened standard.

Belcher vs Hospira

Immediately post the Therasense decision, some commentators suggested the new intent framework was almost impossible to meet. However, subsequent cases have proved this is not the case; one such case is the recent decision in Belcher Pharmaceuticals vs Hospira Inc [4].

In Belcher vs Hospira, the patent related to a formulation of L-epinephrine (L-adrenaline) with a pH of 2.8-3.3. The stability of L-epinephrine depends on pH; at low pH the L-epinephrine converts to D‑epinephrine and at high pH, the L- epinephrine is prone to oxidation. During prosecution, it was argued that increasing the pH to 2.8 or above had the surprising effect of reducing degradation of L‑epinephrine.

Prior to filing the patent application, Belcher had filed for regulatory approval in the US. Initially, the new drug application (NDA) was directed to a formulation with a pH in range 2.8-3.3, but during the FDA’s review they amended the pH to 2.4.-2.6. In response to the FDA asking for data supporting the new range, Belcher argued that the pH change was a very minor change, not requiring additional stability studies. The FDA did not accept this, and to avoid a delay to the regulatory approval, Belcher reverted to the 2.8-3.3 pH range, which is the product which was approved. Therefore, contradictory arguments were filed before the FDA and the USPTO and the District Court found ‘inequitable conduct’, a decision which was affirmed after the appeal to the CAFC. The patent was, therefore, found to be unenforceable. One key fact in the case was the Chief Scientific Officer (CSO) was involved in both the regulatory and patent submissions and the court considered he had performed an about-face in arguments filed before the USPTO.

Learnings

The case highlights the difficulties in managing prosecution before the USPTO, be it prosecuting different patent applications in related fields of technology before the USPTO, prosecuting before the USPTO in combination with other patent offices, or prosecuting before the USPTO while advancing a product before regulatory authorities, such as the US FDA. Whilst in the present case, it appears that it may have helped if the FDA proceedings and USPTO proceedings had been separated within the company, in this case, the CEO and CSO were inventors, and therefore, this would not have been possible. However, it would be much better practice to ensure processes are put in place to ensure consistency of argumentation filed before other patent offices, regulatory authorities and the USPTO.

Acknowledgements

The Author is grateful for the assistance of the US attorneys, Muna Abu-Shaar and Paul Pyla, of Biospark Intellectual Property Law for their input reviewing the text and their useful additions.

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[1] 37 CFR § 1.56 (Title 37, Code of Federal Regulations) and MPEP (Manual of Patent Examining Procedure) § 2000
[2] 37 CFR § 1.56(c)(1)-(3)
[3] Therasense, Inc. v. Beckton, Dickenson and Co. 649 F.3d 1276, 1285 (Fed. Cir. 2011) (en banc)
[4] Belcher Pharmaceuticals, LLC v. Hospira, Inc., 11 F.4th 1345 (Fed. Circ. 2021)