Litigating Inequitable Conduct after Therasense and the AIA

Litigating Inequitable Conduct after Therasense and the AIA AIPLA Chemical Patent Practice Roadshow June 20, 2013 Lisa A. Dolak Syracuse University College of Law

Agenda New judicial standards for pleading and proving inequitable conduct Examples: the new standards in operation Summary of lessons from the cases Overview of supplemental examination Options for patent owners after Therasense and the AIA

New Judicial Standards: Proving Inequitable Conduct Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (2011) (en banc): Challenger must prove that the applicant misrepresented or omitted material information with the specific intent to deceive the [USPTO] Revised materiality and intent standards

Therasense (cont d) Materiality either: But-for material ( the [USPTO] would not have allowed a claim had it been aware of the undisclosed or correct information), OR Intent: Affirmative egregious misconduct Specific intent to deceive is required Gross negligence and should have known do not suffice Deliberate decision to withhold required No sliding scale : a district court may not infer intent solely from materiality

New Judicial Standards: Pleading Inequitable Conduct Exergen v. Wal-Mart Stores, 575 F.3d 1312 (Fed. Cir. 2009): [FRCP] 9(b) requires identification of the specific who, what, when, where, and how of the material misrepresentation or omission committed before the [USPTO]

New Standards in Operation: Materiality Prior art that anticipates or renders obvious is but-for material American Calcar, Inc. v. American Honda Motor Co., 651 F.3d 1318 (Fed. Cir. 2011); Aventis Pharma S.A. v. Hospira, Inc., 675 F.3d 1321 (Fed. Cir. 2012) Compare: undisclosed product is not material, even if qualifies as on-sale prior art, where it would not render the asserted claims obvious in view of the other cited prior art August Tech. Corp. v. Camtek, Ltd., 655 F.3d 1278 (Fed. Cir. 2011)

New Standards in Operation: Materiality Applicant s failure to update a Petition to Make Special (to alert the USPTO that he was no longer under an obligation to manufacture, as previously alleged) obviously fails the but-for materiality standard and is not the type of unequivocal act, such as the filing of an unmistakably false affidavit, that would rise to the level of affirmative egregious misconduct Powell v. Home Depot U.S.A., Inc., 663 F.3d 1221 (Fed. Cir. 2011)

New Standards in Operation: Materiality Existence of litigation regarding a parent patent was not material to the prosecution of a continuation where the litigation did not involve allegations of invalidity or unenforceability Outside the Box Innovations, LLC v. Travel Caddy, Inc., 695 F.3d 1285 (Fed. Cir. 2012)

New Standards in Operation: Materiality Is filing a false declaration of small entity status affirmative egregious misconduct? Split panel declined to decide, where there was inadequate evidence of deceptive intent (although on its face, it appears that a false small entity declaration would fall within the definition of an unmistakably false affidavit, particularly since [it is a] sworn written declaration ) Outside the Box Innovations, LLC v. Travel Caddy, Inc., 695 F.3d 1285 (Fed. Cir. 2012)

New Standards in Operation: Deceptive Intent No deceptive intent where the inferences argued by [the patentee] are supported by evidence of record and are as reasonable as those inferences argued by [the challengers] Cordis Corp. v. Boston Scientific Corp., 658 F.3d 1347 (Fed. Cir. 2011) Although the undisclosed references at issue were material, unenforceability was not established because deceptive intent was not the single most reasonable inference In re Rosuvastatin Calcium Patent Litigation, 703 F.3d 511 (Fed. Cir. 2012)

New Standards in Operation: Deceptive Intent Deceptive intent found (and affirmed) based on the district court s specific findings that the witness s explanations for withholding the references at issue lacked credibility and evidence relating to the witness s knowledge of the relevant prior art, his selective citation of information to the USPTO, and inconsistencies between the witness s testimony and corporate documents regarding relevant experiments Aventis Pharma S.A. v. Hospira, Inc., 675 F.3d 1324 (Fed. Cir. 2012)

New Standards in Operation: Pleading (the Who ) Exergen, its agents and/or attorneys fails to identify the who Also held insufficient: Exergen (Fed. Cir. 2009) Senju [Pharma], Kyorin, the inventors, and/or those acting on their behalf Senju Pharm. Co. v. Apotex, Inc., No. 12-159-SLR, 2013 WL 444928 (D. Del. Feb. 6, 2013) Abraham Zelkin or one or more of the other individuals listed as inventor XpertUniverse, Inc. v. Cisco Sys., Inc., 868 F.Supp.2d 376 (D. Del. 2012)

New Standards in Operation: Pleading (the Who ) Also held insufficient: [A], [B], [C], and/or other persons who were substantially involved in the preparation or prosecution of the application that led to the [patent at issue] Everlight Electronics Co. v. Nichia Corp., No. 12-cv-11758, 2012 WL 5389696 (E.D. Mich. Nov. 2, 2012) the named inventors [A], [B], and [C], and/or the attorneys and agents substantively involved in the preparation or prosecution of the [patent at issue] Mitsubishi Heavy Indus., Ltd. v. GE, No. 12-cv-812, 2012 WL 831525 (M.D. Fla. Mar. 12, 2012)

New Standards in Operation: Pleading (the Who ) Regarding the ever-popular and/or : The double and/or conjunction is too often used by lawyers trying to cover all bases. Its use often has unintended consequences. Through the and part of the conjunction, GE has managed to lump the named inventors, attorneys, and agents together under the title Applicants, and through the or portion GE has disjoined them; the result is that GE has failed to specifically identify who is guilty of misconduct.... Under this construction, GE certainly cannot be said to have made an allegation against a particular person. Mitsubishi (M.D. Fla., Mar. 12, 2012)

New Standards in Operation: Pleading (the Who ) For example, as to a pleading identifying as the who : Oracle International ; Kim Rejndrup, the 221 patent inventor ; Each attorney or agent who prepared or prosecuted the application ; Every other person who was substantively involved in the preparation or prosecution of the application that became the 221 patent and who was associated with the inventor, with the assignee, or with anyone to whom there was an obligation to assign the application ; Every individual having a duty of disclosure under 37 C.F.R. 1.56 ; This Court finds that DrugLogic has adequately pled the who of the alleged material omission with respect to Mr. Rejndrup, but not with respect to any other person. In any amended complaint, DrugLogic may only name specific, identified individuals, including Mr. Rejndrup. Oracle Corp. v. DrugLogic, Inc., 807 F.Supp.2d 885 (N.D. Cal. 2011)

New Standards in Operation: Pleading (the What and Where ) What doesn t suffice? fail[ing] to identify which claims, and which limitation in those claims, the withheld references are relevant to, and where in those references the material information is found What does? Exergen (Fed. Cir. 2009) alleging that specified references render obvious all the asserted claims of the patent at issue because they disclose the use of CompuServe on the internet and were relevant to teaching the use of the Internet-like networking systems generally CoStar Realty Information, Inc. v. CIVIX-DDI, LLC, Nos. 12 C 4968, 12 C 7091, 12 C 8632 (N.D. Ill. May 15, 2013)

New Standards in Operation: Pleading (the Why and How ) What doesn t suffice? Generally stating that the withheld references are material and not cumulative to the information already of record fails to explain both why the withheld information is material and not cumulative, and how an examiner would have used this information in assessing the patentability of the claims What does? Exergen (Fed. Cir. 2009) [I]dentify[ing] the particular claim limitations, or combination of claim limitations, that are supposedly absent from the information of record Exergen (Fed. Cir. 2009)

New Standards in Operation: Pleading (Intent) What s required? [S]ufficient allegations of underlying facts from which a court may reasonably infer that a specific individual (1) knew of the withheld material information or of the falsity of the material misrepresentation, and (2) withheld or misrepresented this information with a specific intent to deceive the [USPTO] Merely alleging awareness of a reference does not allege knowledge of the allegedly material information contained in the reference Exergen (Fed. Cir. 2009) Issue: Has Therasense raised the bar for pleading intent?

Therasense: Impact on Pleading Compare: Hansen Mfg. Corp. v. Enduro Sys., Inc., No. CIV.11-4030, 2011 WL 5526627 (D.S.D., Nov. 14, 2011) (denying leave to amend because there [were] multiple reasonable inferences that may be drawn from the alleged facts) with CoStar (N.D. Ill. May 15, 2013) ( At the pleading stage,... the proponent of inequitable conduct need only plead sufficient facts that the court may reasonably infer knowledge and intent. CoStar s allegations meet that standard, insofar as they identify a plausible motive and opportunity for hiding the relevant references )

Therasense: Impact on Pleading Compare: Pfizer Inc. v. Teva Pharms. USA, Inc., 803 F.Supp.2d 409 (E.D. Va. 2011) ( a party must make an initial showing from which it may be plausibly inferred that... the intent to deceive is the single most likely explanation for the nondisclosure ) with Wyeth Holdings Corp. v. Sandoz, Inc., No. 09-955-LPS-CJB, 2012 WL 600715 (D. Del. Feb. 3, 2012) ( to adequately plead the intent prong of an inequitable conduct defense, the claimant need only allege facts from which the Court could reasonably infer that the patent applicant made a deliberate decision to deceive the [USPTO] )

Therasense: Impact on Pleading Magistrate Judge Burke in Wyeth: The Therasense single most reasonable inference requirement is an evidentiary standard; all of the circumstances are not considered at the pleading stage Exergen itself distinguished between the pleading stage (where an inference of deceptive intent must be reasonable ) and the proving stage (where deceptive intent must be the single most reasonable inference able to be drawn from the evidence ) In Delano Farms Co. v. Cal. Table Grape Comm n, 655 F.3d 1337 (Fed. Cir. 2011), the Federal Circuit said [a] charge of inequitable conduct... will survive a motion to dismiss only if the plaintiff s complaint recites facts from which the court may reasonably infer that a specific individual both knew of invalidating information... and withheld that information with a specific intent to deceive the [USPTO]

Therasense: Impact on Pleading Issue awaits definitive CAFC consideration But, where an equal or more reasonable inference (other than deceptive intent) can be drawn at the pleading stage, dismissal is appropriate See, e.g., Parkervision, Inc. v. Qualcomm Inc., No. 3:11- cv-719-j-37tem, 2013 WL 230179 (M.D. Fla. Jan. 22, 2013) (dismissing an inequitable conduct charge based on alleged burying because an equally if not more reasonable inference is that [the patentee] aimed to insulate itself from such claims by over-disclosing references )

Summary: What the Cases Teach Withheld information that invalidates is but-for material USPTO-required information may nonetheless not be material The intent element is increasingly determinative (law regarding materiality will now develop more slowly)

Summary: What the Cases Teach The courts are carefully scrutinizing proffered intent evidence Findings based significantly on the materiality of the withheld or misrepresented information will be vulnerable on appeal Allegations that inequitable conduct was committed by entities, persons involved in the prosecution, or inventors and/or attorneys are unlikely to be held sufficient The precise interplay between Therasense and Exergen on pleading deceptive intent is unresolved

Supplemental Examination One of the new AIA-created post-grant proceedings Effective September 16, 2012 Applies to patents issued before, on, or after that date Patent owner can request consider[ation], reconsider[ation], or correct[ion of] information believed to be relevant to the patent 25

Supplemental Examination USPTO has 3 months to evaluate whether the information presented... raises a substantial new question of patentability If a substantial new question, ex parte reexamination is ordered No patent owner s statement SE-related reexamination is not limited to patents and printed publications Print prior art Non-print prior art (e.g., sales and uses) Non-prior art information (e.g., test data, misinformation about inventorship, office actions in co-pending applications, unjustified claims to small entity status) 26

Supplemental Examination Effect : A patent shall not be held unenforceable on the basis of conduct relating to information that had not been considered, was inadequately considered, or was incorrect in a prior examination of the patent if the information was considered, reconsidered, or corrected during a supplemental examination of the patent. 27

Supplemental Examination Except that the courts can entertain the defense if: The patent owner s requested supplemental examination and any resulting reexamination weren t concluded before the patent owner sued The patent challenger pled the inequitable conduct at issue (with particularity) in a civil action or Paragraph IV certification before the patent owner filed a supplemental examination request 28

Supplemental Examination Fraud provision: If the Director becomes aware... that a material fraud on the Office may have been committed in connection with the patent that is the subject of the supplemental examination, then in addition to any other actions the Director is authorized to take, including the cancellation of any claims found to be invalid..., the Director shall also refer the matter to the Attorney General for such further action as the Attorney General may deem appropriate. Any such referral shall be treated as confidential, shall not be included in the file of the patent, and shall not be disclosed to the public unless the United States charges a person with a criminal offense in connection with such referral. 29

Patent Owner Options: Introduction Evidentiary significance of reexamination/reissue has been altered by Therasense: Pre-Therasense: grant of reexam/rejection could serve as evidence of materiality Post-Therasense: reexam/reissue can be used to show non-materiality

Patent Owner Options: Introduction Also: In re Tanaka, 640 F.3d 1246 (Fed. Cir. 2010) (holding that reissue is available to add a dependent claim or claims) Tanaka provides an avenue into reissue to obtain consideration of (certain) information via an IDS Plus, no more requirement for averment that the error occurred without any deceptive intention

Patent Owner Options: Choosing a Post-Grant Cure Does it make sense to litigate under Therasense? Or, is true immunity the goal? How material is the information at issue? Are there bad facts?

Patent Owner Options: Choosing a Post-Grant Cure What (type of) information needs to be considered? Standards: Mere SNQ will trigger reexam in SE Prima facie unpatentability required for rejection (e.g., in reissue) Is it too late to file supplemental examination?

Patent Owner Options: Choosing a Post-Grant Cure Risk of reopening prosecution in reissue Need for speed (SE/reexam vs. reissue) Relative cost (SE/reexam vs. reissue) Risks of characterizing / commenting on information

When to Choose SE To obtain speedy consideration of marginally relevant information found late in prosecution If reexam likely, though, must consider reexam vs. continuation As part of a two-stage reissue-first strategy Where SE is the only option High-risk or actual inequitable conduct situations If the nature of the information at issue dictates

Questions? Comments?