In Ferring B.V., and Aventis v. Barr Labs, (05-1284), the Court of Appeals for the Federal Circuit, deemed a patent unenforceable due to inequitable conduct where the inventors submitted declarations to the examiner in order to define the term “peroral” but did not disclose to the examiner that some of the declarants had been employed by the applicant’s company or performing paid research for the company.
Ferring B.V. and Aventis Pharmaceuticals sued Barr Laboratories for infringement of Ferring’s patent, U.S. Patent No. 5,047,398 [1] (‘398 patent). The ‘398 patent claimed an “antidiuretic composition for humans comprising a gastrointestinally absorbable, antidiuretically effective, amount of [the peptide] 1-deamino-8-D-arginine vasopressin and a pharmaceutically acceptable carrier in solid oral dosage form for absorption in the gastrointestinal tract of said humans.”
Desmopressin acetate (DDAVP) is approved as anti-diuretic replacement therapy in the management of central diabetes insipidus and to manage the temporary polyuria and polydipsia following head trauma or surgery in the pituitary region. It is also approved for the management of primary nocturnal enuresis.
1-deamino-8-D-arginine vasopressin and other compounds were known in the art to prevent the diuretic symptoms associated with diabetes when they were absorbed through the walls of the patient’s mouth via a dissolving tablet, or through the patient’s nasal passage via a liquid spray or plastic tube. However, such modes of administering the medicine proved cumbersome and time-consuming. Therefore, the claimed solid oral dosage form of the compound and method of administering it were thought to be an improvement over the prior art, because the medicine was designed to be simply swallowed and absorbed through the gastrointestinal tract.
During prosecution, the examiners discussed certain prior art references, including U.S. Patent No. 3,497,491, which taught, for antidiuretic purposes, that “1-deamino-8-D-arginine vasopressin” “may be used . . . for the parenteral, peroral, intranasal, subcutaneous, intramuscular, or intravenous application.”
The examiners were concerned that the ‘491 patent’s disclosure of the “peroral” application of the peptide may have suggested the oral administration of the peptide for gastrointestinal absorption. Vilhardt argued that the term “peroral” as used in the ‘491 patent did not teach the oral administration of the peptide for gastrointestinal absorption, but rather for absorption through the walls of the mouth. As the examiners were not entirely convinced, they “suggested that applicants obtain evidence from a non-inventor” to support their interpretation of the term “peroral.”
The inventors submitted declarations explaining the scientific belief that the term “peroral” in the ‘491 patent meant that the compound could be administered “through the mouth,” but only for absorption through the cheek of the mouth or under the tongue. However, the declarations failed to disclose that a declarant had been receiving research funding from Ferring from to conduct a clinical investigation relating to a particular drug (DDAVP) preparation (although he testified that he was not receiving funding from Ferring in June 1986, when he submitted his first declaration). They also failed to inform the examiners that one of the new declarants had been Ferring’s pre-clinical research director and a paid consultant for Ferring.
In the end, four of the five declarations submitted to the PTO in 1990 were written by scientists who had been employed or had received research funds from Ferring, and Vilhardt participated in the drafting of two of the four declarations submitted by non-inventors. The examiners were not otherwise made aware of the Ferring connections and allowed the previously rejected claims.
The district court granted summary judgment to Barr on grounds of inequitable conduct, stating:
The undisputed evidence in this case supports the finding of inequitable conduct by the patentee and its agents and the grant of summary judgment. The reluctance of the PTO to issue the ‘398 patent was evident. Each affidavit submitted in support of its issuance was thus highly material to the prosecution history. That three of the challenged declarations were submitted after several iterations of rejected attempts to obtain the patent’s issuance speaks loudly as to motive and intent. While credibility determinations from a courtroom observation may at times be necessary on the issue of intent, here, the entire record presents clear and convincing evidence of an intent to mislead the examiners, even viewing the evidence, as it must be viewed, in the light most favorable to Plaintiff.
Inequitable conduct occurs when a patentee breaches his or her duty to the PTO of ‘candor, good faith, and honesty. While inequitable conduct includes affirmative misrepresentations of material facts, it also arises when the patentee fails to disclose material information to the PTO. The inequitable conduct analysis is performed in two steps comprising first, a determination of whether the withheld reference meets a threshold level of materiality and intent to mislead, and second, a weighing of the materiality and intent in light of all the circumstances to determine whether the applicant’s conduct is so culpable that the patent should be held unenforceable. The predicate facts must be proven by clear and convincing evidence.
On appeal, they argue that the Ferring affiliations were immaterial as a matter of law because (1) those affiliations supposedly did not bear directly on the critical assertion that each made in his declaration, meaning that the relationships were not the source of the information in the declarations, and (2) the declarants did not have a direct financial stake in the success of the patent.
The CAFC saw it differently:
Our jurisprudence does not suggest such a narrow view of materiality. A witness’s interest is always pertinent to his credibility and to the weight to be given to his testimony, and relevant interests are not limited to direct financial interests. Under Refac and Paragon, a declarant’s past relationships with the applicant are material if (1) the declarant’s views on the underlying issue are material and (2) the past relationship to the applicant was a significant one. Here we think that each of these requirements was satisfied on the summary judgment record.
The CAFC felt that the affirmative act of submitting an affidavit must be construed as being intended to be relied upon and that it is not comparable to omitting an unnecessary act. The court stated that these relationships were not isolated, nor were they confined to the distant past. The declarants clearly had ongoing and mutually beneficial relationships with Ferring during the prosecution of the ‘398 patent:
Even if an omission is found to be material, the omission must also be found to have been made with the intent to deceive. In the absence of a credible explanation, intent to deceive is generally inferred from the facts and circumstances surrounding a knowing failure to disclose material information. Thee question of intent is directed to the applicant’s intent, not to the intent of the declarants. Thus, that the declarants may have had no intent to deceive is entirely irrelevant. The question is whether the applicant (here Vilhardt) had such an intent.
We need not in this case attempt to lay down a general rule as to when intent may be or must be inferred from the withholding of material information by an applicant. Suffice it to say that we have recognized, in cases such as Paragon, that summary judgment is appropriate on the issue of intent if there has been a failure to supply highly material information and if the summary judgment record establishes that (1) the applicant knew of the information; (2) the applicant knew or should have known of the materiality of the information; and (3) the applicant has not provided a credible explanation for the withholding. See Bruno Indep. Living Aids, 394 F.3d at 1354; Critikon, Inc., 120 F.3d at 1257. Here, all three conditions are satisfied.
The CAFC did add comforting words for patent practitioners who will now be worried about submitting declarations with some undisclosed conflict of interest. The court stated flatly that:
In coming to this conclusion, we fully recognize that inventors often consult their colleagues or other persons skilled in the art whom they have met during the course of their professional life. Accordingly, when an inventor is asked to provide supportive declarations to the PTO, it may be completely natural for the inventor to recommend, and even contact, his own colleagues or people who are, or who have been, affiliated with his employer and to submit declarations from such people. Nothing in this opinion should be read as discouraging such practice. Rather, at least where the objectivity of the declarant is an issue in the prosecution, the inventor must disclose the known relationships and affiliations of the declarants so that those interests can be considered in weighing the declarations. This is not an onerous burden to place on any applicant.
Judge Newman dissented stating that:
“Inequitable conduct” in patent practice means misconduct by the patent applicant in dealings with the patent examiner, whereby the applicant or its attorney is found to have engaged in practices intended to deceive or mislead the examiner into granting the patent. It is a serious charge, and the effect is that an otherwise valid and invariably valuable patent is rendered unenforceable, for the charge arises only as a defense to patent infringement.
As this litigation-driven issue evolved, the law came to demand a perfection that few could attain in the complexities of patent practice. The result was not simply the elimination of fraudulently obtained patents, when such situations existed. The consequences were disproportionally pernicious, for they went far beyond punishing improper practice. The defense was grossly misused, and with inequitable conduct charged in almost every case in litigation, judges came to believe that every inventor and every patent attorney wallowed in sharp practice. This history was recently summarized as follows:
As is known, about 20 years ago inequitable conduct was frequently pleaded as a defense to patent infringement; a patent that is “unenforceable” due to a finding of inequitable conduct is dead. The defense was so misused by alleged infringers that the Federal Circuit once called this defense a “scourge” on US patent litigation . . . . The famous Kingsdown seemed to put a stop to the defense of inequitable conduct. . . .