Replies to post #108128 on Biotech Values

[DewDiligence]

I am surprised you consider inequitable conduct that unlikely.

The legal hurdle for inequitable conduct appears to be rising—e.g. see #msg-49455265.

I assume from these you do not expect a summary judgment next spring.

I would say it’s a long shot; I hope I’m wrong, of course.

[DewDiligence]

Here are musings on inequitable conduct within the framework of the ABT-BD
glucose-monitor case. Please see #msg-49455265 for background on this case;
see #msg-33580867 for how inequitable conduct entered the Copaxone case;
and see #msg-56320705 for how I handicap the Copaxone trial (FWIW).

http://www.bloomberg.com/news/2010-11-09/abbott-bayer-ask-court-to-narrow-patent-misconduct-standard.html

›Abbott, Bayer Ask Court to Narrow Patent-Misconduct Standard

By Susan Decker - Nov 9, 2010

Abbott Laboratories urged a U.S. appeals court to make it harder for companies to block patent owners from enforcing their intellectual property rights because of misconduct in obtaining the patent.

“When people are making minor mistakes and the patent would have been issued anyway, the public is not harmed,” John Whealan, a law professor who is representing Abbott in the case, told the nine-judge U.S. Court of Appeals for the Federal Circuit in Washington today.

The court, which specializes in patent law, is trying to find a standard that judges can use to determine when inventors have committed inequitable conduct at the U.S. Patent and Trademark Office. The legal argument has been used more often by generic-drug companies to challenge patents on medicines.

The case before the court is an appeal involving an Abbott dispute with Becton, Dickinson & Co. and Bayer AG’s health-care unit over a glucose-monitor design. An Abbott patent was deemed unenforceable as punishment for the Abbott Park, Illinois-based company giving contradictory information to the U.S. and European patent offices on the same invention.

Whealan, the patent office’s former top lawyer who’s now an associate dean at George Washington University, said the court should have patents deemed unenforceable only if there has been fraud that was committed to obtain the patent.

His successor at the patent office, Raymond Chen, said that if it was too difficult to prove inequitable conduct, patentees could “engage in gamesmanship and mischief.”

‘Plague on Litigation’

Chen said he wants the standard limited because the patent office is overwhelmed with inventors presenting too much data for fear they would later be found to have withheld information.

Allegations of inequitable conduct are raised in about a third of lawsuits, yet sustained in few, said Circuit Judge Pauline Newman. Chen called it a “plague” in litigation.

A lawyer for Leverkusen, Germany-based Bayer, Rachel Krevans of Morrison & Foerster in San Francisco, said only four cases of inequitable conduct have been upheld by the Federal Circuit, and judges have the option of throwing the issue out.

Sanofi-Aventis SA’s patent on a $4 billion-a-year drug, the blood-thinner Lovenox, was ruled unenforceable when an appeals court in 2008 found the Paris-based company misled the U.S. patent office. The court, in a 2-1 decision, said Sanofi withheld information on studies that compared the active ingredient of Lovenox with a related compound to ensure the patent office believed the two were different.

Full Disclosure

Too strict a standard would discourage inventors from disclosing all appropriate information, Krevans said.

A lawyer for Franklin Lakes, New Jersey-based Becton Dickinson, Jim Badke of Ropes & Gray in New York, rejected questions of letting the patent office impose some other sanction, such as monetary penalties, than having the patent deemed unenforceable.

“The linchpin of our patent system is disclosure,” he told the court. Without the harsh penalty, “it will permit people to lie to the patent office.”

The Pharmaceutical Research and Manufacturers of America, which represents drugmakers including Pfizer Inc. and Merck & Co., urged the court to clarify the standard.

“The oft-cited justification for the inequitable conduct doctrine is to deter fraudulent conduct before the PTO,” the trade group said in a filing on the case. “In its present form, however, the doctrine has spiraled out of control.”

Good Faith

Courts in patent cases must now decide how important withheld information was, and how much evidence there is of intent to deceive, with each factor weighed against the other. If the information is key to obtaining the patent, then intent matters less. If there is clear evidence of deception, the material nature of the information is less important.

The court is unlikely to completely reject that standard even as it makes it harder to prove, said Charles Shifley, a lawyer with Banner & Witcoff who filed written arguments on behalf of the Intellectual Property Law Association of Chicago.

“They don’t want those appeals on that issue in that quantity,” Shifley said before today’s hearing. “They see situations where they think people were, in all likelihood, acting in good faith and getting taken to task for it.”

‘Ubiquitous Weed’

Federal Circuit judges have been open with their belief that the legal argument is overused. Chief Judge Randall Rader, in the April issue of the American University Law Review, said inequitable conduct has grown “from a tiny bush on the patent landscape that inhibited gross fraud into a ubiquitous weed that infects every prosecution and litigation involving patents.”

A three-judge panel, voting 2-1, in January upheld the finding of unenforceability with Circuit Judge Richard Linn saying the information wasn’t as conflicting as Bayer and Becton Dickinson argued.

A decision may have less impact on the case before the court. Becton Dickinson -- which has since sold its glucose monitoring business -- and Bayer HealthCare won rulings that the aspects of the patent that were in the case were invalid and that issue won’t be reconsidered.

The case is Therasense Inc. v. Becton, Dickinson & Co., 2008-1511, -1512, -1513, -1514, -1595, U.S. Court of Appeals for the Federal Circuit (Washington).‹