McKesson and Bilski

www.schwabe.com

Inequitable Conduct and the Duty of
Disclosure: The Road to Hell is
Paved with Good Intentions

Paul H. Beattie
Gary M. Myles, Ph.D.
Schwabe, Williamson & Wyatt
March 18, 2009
Bend, OR | Portland, OR | Salem, OR | Seattle, WA | Vancouver, WA

www.schwabe.com

37 C.F.R. §1.56:
Duty to Disclose
“Each individual associated with the
filing and prosecution of a patent
application has a duty of candor 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”


www.schwabe.com

Consequences of
Inequitable Conduct
• Digital Control v. Charles Mach. Works
(Fed. Cir. 2006)
– All claims in a patent may be rendered
unenforceable for inequitable conduct before
the PTO if applicant:
• with intent to mislead or deceive the examiner
– fails to disclose material information or
– submits materially false information

www.schwabe.com

37 C.F.R. §1.56: Persons having
the Duty of Candor
• Each inventor named in the application
• Each attorney or agent who prepares or
prosecutes the application
• Every other person who is substantively involved
in the preparation or prosecution of the
application and who is associated with the
inventor, assignee, or with anyone to whom
there is an obligation to assign the application


www.schwabe.com

Determining Inequitable
Conduct is a Two-step Process

• Material to Patentability
– Determined by either:
• Federal Circuit’s “reasonable examiner” (old 37
C.F.R. §1.56) standard or
• USPTO’s New 37 C.F.R. §1.56 standard
• Intent to Deceive
– May be inferred from circumstantial evidence


www.schwabe.com

Federal Circuit:
Material To Patentability

• Dayco v. Total Containment (Fed. Cir. 2003)
– Information is material to patentability
when “a reasonable examiner would have
considered such prior art important in
deciding whether to allow …application”


www.schwabe.com

37 C.F.R. §1.56:
Material To Patentability
• Information is material to patentability when it is
not cumulative to information already of record
and
– Establishes, by itself or in combination with other
information, a prima facie case of unpatentability of a
claim or
– Refutes, or is inconsistent with, a position the
applicant takes in
• opposing an argument of unpatentability relied on by the
Office or
• asserting an argument of patentability

www.schwabe.com

Finding Inequitable Conduct

• A party seeking to render a patent
unenforceable must provide clear and
convincing evidence (“highly probable”) of
inequitable conduct
• Issues of materiality and intent are factual
in nature; advocates need to make a
detailed factual record on these issues.


www.schwabe.com

Finding Inequitable Conduct

• Court’s factual findings are reviewed under
the clearly erroneous standard. Court’s
ultimate decision reviewed for abuse of
discretion.
• Court balances materiality and intent
– Halliburton v. Schlumberger (Fed. Cir. 1991)
• “The more material the omission, the less culpable
the intent required, and vice versa”


www.schwabe.com

Federal Circuit: Finding of
Inequitable Conduct Rare

• Kingsdown v. Hollister (Fed. Cir. 1988)
– “The involved conduct, viewed in light of all the
evidence, including evidence of good faith,
must indicate sufficient culpability to require a
finding of intent to deceive”


www.schwabe.com

The Federal Circuit
Changes Gear

• Molins v. Textron (Fed. Cir. 1995)
– Finding inequitable conduct where patentee
failed to cite to the USPTO a material
reference cited elsewhere in the world


www.schwabe.com

Materiality: Misrepresentations
and Omitted Results
• Important to reveal enough information so
as not to mislead the examiner
– Purdue Pharma v. Endo (Fed. Cir. 2006)
• Finding material patentee’s assertion that it was
“surprisingly discovered” that controlled release
formulations achieved the same clinical results as
prior art formulations where
– Patentee had no scientific evidence to support this
assertion and
– Patentee falsely implied that this discovery was based on
clinical studies

www.schwabe.com

Materiality: Misrepresentations
and Omitted Results
– Hoffman La Roche v. Promega (Fed. Cir.
2003)
• Finding material patentee’s false statement in its
specification that an experiment had been
performed
– Cargill v. Canbra Foods (Fed. Cir. 2007)
• Finding material patentee’s failure to disclose
negative test data


www.schwabe.com

Materiality: Voluminous
Exhibits and Foreign References
• Important not to bury material information
in a “blizzard of paper” submitted to the
PTO
– eSpeed v. Brokertec (Fed. Cir. 2007)
• Finding material declarations and exhibits totaling
1,139 pages including claimed software known in
the art at the time of filing patent application where
declarations indicated that software was not
relevant


www.schwabe.com

Materiality: Voluminous
Exhibits and Foreign References
– Semiconductor v. Samsung (Fed. Cir. 2000)
• Finding material a partial translation of a Japanese
prior art reference where material sections of the
reference remained untranslated


www.schwabe.com

Materiality: Litigation in
Related Cases
• Important to disclose information regarding
litigation in related cases with claims that
are substantially similar to those in a
pending application
– Mallinckrodt v. Masimo (Fed. Cir. 2005)
• Finding material the outcome of a Markman
hearing not disclosed to PTO examiner where the
construed claim terms were the same as in the
pending application

www.schwabe.com

Intent to Deceive: Inferred From
False Statements
• Intent rarely can be proven by direct evidence.
Instead, an intent to deceive is usually inferred
from the facts and circumstances of the conduct
at issue
– eSpeed v. Brokertec (Fed. Cir. 2007)
• Intent inferred where material false statements were made in
a declaration
– Bruno v. Acorn (Fed. Cir. 2005)
• Intent inferred where patentee failed to disclose known prior
art and
• characterized that art as disclosing a “substantial equivalent”
in a written disclosure to the FDA

www.schwabe.com

Intent to Deceive: Failure to
Disclose Prior Sales

• Intent may be inferred when there is a
failure to disclose prior sales that are not
experimental in nature
– Dippin’ Dots v. Mosey (Fed. Cir. 2007)
• Intent inferred where product sold more than one
year prior to filing a patent application


www.schwabe.com

McKesson: Expanding the
Scope of Materiality
McKesson v. Bridge Medical (Fed. Cir. 2007)
Three acts of nondisclosure “strongly support[] an
inference of deceptive intent”:
1. Failure to disclose reference that discussed key
inventive concept, where patent attorney had
suggested none of the references teaches that
concept
2. Failure to disclose fact that another examiner had
rejected similar claims in a co-pending application


www.schwabe.com

3. Failure to disclose allowance of claims in a co-
pending application, where those claims were
close enough to result in an obviousness-type
double patenting rejection.
There are several lessons here.
● Don’t assume examiner is omniscient
● Don’t try to sneak things by the examiner
● The cumulative effect of multiple instances of
alleged inequitable conduct is powerful


www.schwabe.com

• Federal Circuit Finds Inequitable Conduct
– The test for materiality is whether a reasonable
Examiner would have considered the information
important, not whether the information would
conclusively decide the issue of patentability
– Cannot assume that the Examiner remembers details
of other pending files while reviewing one particular
application
• Cannot avoid inequitable conduct simply because two co-
pending applications are being prosecuted by the same
Examiner


www.schwabe.com

Aventis: Inequitable Conduct Where
Declarant Failed to Perform Proper
Experimental Comparisons
• Aventis v. Amphastar (Fed. Cir. 2008)
– Finding inequitable conduct based on the content of
an expert declaration regarding comparisons between
the prior art and compounds of the claimed invention
– Aventis’ expert
• Failed to disclose that claimed heparin formulations
(Lovenox®) were administered at different and higher dosage
than the prior art compounds
• Failed to point out that half-lives of the invention and prior art
formulations were significantly closer when comparison was
performed using same administered dose

www.schwabe.com

Aventis: Inequitable Conduct Where
Declarant Failed to Perform Proper
Experimental Comparisons
– Federal Circuit Affirms District Court Decision:
• Aventis’ claim that claimed composition had a
better half-life than the prior art composition was
material to patentability
• Strong inference of intent to deceive since there
was “no credible explanation for comparing half-
lives at different doses and because comparisons
at the same dose showed little difference in half-
life”

www.schwabe.com

Patent Reform Act of 2007
• The Patent Reform Act of 2007 (S-1145) ,
§ 298
– A party claiming unenforceability due to
inequitable conduct shall prove independently
by clear and convincing evidence that:
• Material information was misrepresented or omitted
from the patent application, and
• Patentee intended to deceive the Patent Office


www.schwabe.com

• The Patent Reform Act of 2007 (S-1145), § 298
– Materiality found where
• a reasonable patent examiner would consider such
information important in deciding whether to grant a patent
and
• Information is not cumulative to information already of record
– Intent to deceive the Patent Office
• May be inferred, but not
– Based solely on gross negligence or
– Based solely on the materiality of the misrepresentation or non-
disclosure


www.schwabe.com


• The Patent Reform Act of 2007 (S-1145),
§ 298
– The court balances the equities to hold, in the
alternative:
• Patent unenforceable
• One or more claims unenforceable, or
• Patentee is not entitled to an injunction


www.schwabe.com

New Patent Office Rules
• 37 C.F.R. §1.78(f)(1)
– Applicant must submit a statement identifying related pending or
patented nonprovisional applications which:
• (A) have a filing date that is the same or within two months of the filing date
of the other pending or patented nonprovisional application;
• (B) names at least one inventor in common with the other…application; and
• (C) is owned by the same person, or subject to an obligation of assignment to
the same person as the other…application.
– Applicable “to any nonprovisional application pending on or after
November 1, 2007”
• SmithKline v. Dudas (E.D. Va. Apr. 1, 2008)
– Permanently enjoined Rules of Fed. Reg. 46716 (Aug. 21, 2007)


www.schwabe.com

Practice Tips: Prosecution
• Inform inventors and others substantively
involved in the preparation or prosecution of the
application of their duty of candor and good faith
to the USPTO
– Provide any references and information that may be
material to patentability throughout the prosecution
process
• Disclose to the USPTO all references cited by
the examiner in related US applications or in
corresponding or related non-US applications
– even if the related US applications are being
examiner by the same examiner


www.schwabe.com

Practice Tips: Prosecution
• When in doubt, disclose to the USPTO
– Related applications, Office Actions, cited art, and Notices of
Allowance
• Ensure that patent specifications, declarations, and
amendments accurately characterize experimental data
– Prophetic vs. working examples
• Disclose to the USPTO prior sales, public disclosures, or
independent invention by other companies
– Information relevant to 102 statutory bars
• Disclose arguments for invalidity or unenforceability in
pending litigation regarding the same or related matters


www.schwabe.com

Practice Tips: Litigation

Bad Lawyering Makes Bad Law
• Inequitable conduct is won or lost at the trial
level, not on appeal
• Underlying issues of materiality and intent are
factual; if you do not make a strong factual
record you will lose
• Appellate review is deferential: clearly erroneous
on facts and abuse of discretion on ultimate
conclusion


www.schwabe.com

Biotechnology Process Inventions:
Patentable Subject Matter
after In Re Bilski
Schwabe, Williamson & Wyatt
March 18, 2009


www.schwabe.com

The Statutory Requirements
for Patentability
• 35 U.S.C. § 101 Patentable/Utility
– Statutory subject matter
– Specific, substantial, and credible
• 35 U.S.C. § 102 Novelty
– Single reference
– Discloses every element of claimed invention
• 35 U.S.C. § 103 Non-obviousness
– Multiple references
– Motivation to combine
– Teach or suggest claimed invention
– Reasonable expectation of success
• 35 U.S.C. § 112, ¶ 1 Specification
– Enablement
– Written Description
– Best Mode

www.schwabe.com

35 U.S.C. §101 Inventions
Patentable/Utility
Whoever invents or discovers any new and
useful process, machine, manufacture,
or composition of matter, or any new and
useful improvement thereof, may obtain
a patent therefore, subject to the conditions
and requirements of this title


www.schwabe.com

Patentable Subject Matter:
Fundamental Principles
• Funk Bros. v. Kalo (S.Ct. 1948)
– Mixed culture of root-nodule bacteria for inoculating seeds of
leguminous plants
• No patentable subject matter
– Each species infects same group of plants
– No species acquires a different use
– No change in the individual bacteria
– No change in their individual utilities
– Use in combination does not improve natural functioning
– “Manifestations of nature are free to all men and reserved exclusively to
none”
• Laws of nature
– E = mc2
– Law of gravity
• Physical phenomena
• Principles
• Abstract ideas
• Products of nature


www.schwabe.com

Patentable Subject Matter:
Fundamental Principles
• Diamond v. Chakrabarty (S.Ct. 1980)
– Chakrabarty:
• Created oil-eating bacterium
• Claimed “A bacterium from the genus Pseudomonas containing therein
at least two stable energy-generating plasmids, each of said plasmids
providing a separate hydrocarbon degradative pathway”

• USPTO
– Rejected claim because a bacterium is
• A “product of nature”
• A living thing

• Supreme Court
– Upholds validity of Chakrabarty’s claim
• “Anything under the sun that is made by man”


www.schwabe.com

Are These Inventions Patentable?
• “Biologically pure” bacterial culture
– Yes per CCPA in In re Bergy (1977)
– The culture is not a “product of nature” because the culture did not exist in nature in
its pure form

• “Purified and isolated” DNA sequences
– Yes per Fed. Cir. In Amgen v. Chugai (1991)

• “Purified and isolated” stem cells
– Yes per USPTO (see, Q. Todd Dickinson,
www.ogc.doc.gov/ogc/legreg/testimon/106f/dickinson0112.htm)

• Hydrostatically altered Pacific polyploid oysters, which grow larger than normal oysters
– Yes per Ex parte Allen (BPAI 1987)

• A transgenic non-human mammal all of whose germ cells and somatic cells contain a
recombinant activated oncogene sequence …
– Yes per Phil Leder, US Patent No. 4,736,866; “The Harvard Mouse”


www.schwabe.com

LabCorp v. Metabolite (S.Ct. 2006)
• Claim at issue
13. A method for detecting a deficiency of
cobalamin or folate in warm-blooded animals
comprising the steps of:
• assaying a body fluid for an elevated level of total
homocysteine; and
• correlating an elevated level of total homocysteine
in said body fluid with a deficiency of cobalamin or
folate


www.schwabe.com

• Lower Courts
– Upheld the patent claim’s validity and found that LabCorp
infringed the claim

• Supreme Court
– Granted cert to determine whether claim is invalid because it
seeks to “claim a monopoly over a basic scientific relationship”
(cobalamin/folate = homocysteine)
– Dismissed writ of certiorari as improvidently granted
– Justice Breyer dissented (joined by Stevens and Souter)


www.schwabe.com

• Policy for Unpatentable Subject Matter
– Laws of nature are unpatentable because “sometimes
too much patent protection can impede rather than
‘promote the Progress of Science and useful Arts.’ ”
U.S. Const., Art 1, § 8
– That rule reflects:
• “the enormous potential for rent seeking that would be created
if property rights could be obtained in [those basic principles]”
and
• “the enormous transaction costs that would be imposed on
would-be users”


www.schwabe.com

• LabCorp
– “If the Court were to uphold this vague claim,
anyone could obtain a patent on any scientific
correlation -- that there is a link between fact A
and fact B -- merely by drafting a patent
claiming no more than ‘test for fact A and
correlate with fact B’ … ”


www.schwabe.com

• Metabolite
– Detecting a vitamin deficiency, with discrete
testing and correlating steps, is:
• Patentable as a “process”
• A patentable “application of a law of nature”
– (1) It entails a physical transformation of matter
» alteration of a blood sample during whatever test is used …
– (2) It produces a useful, concrete, and tangible result
» detection of a vitamin deficiency


www.schwabe.com

• Breyer
– “There can be little doubt that the correlation between
homocysteine and vitamin deficiency set forth in claim
13 is a ‘natural phenomenon’
– “[T]he process described in claim 13 is not a process
for transforming blood or any other matter. Claim 13’s
process instructs the user to
• (1) obtain test results and
• (2) think about them”


www.schwabe.com

So, what makes a process patentable?


www.schwabe.com

In re Bilski (Fed. Cir. 2008)
• Claim 1. A method for managing the consumption risk
costs of a commodity sold by a commodity provider at a
fixed price comprising the steps of:
– (a) initiating a series of transactions between said commodity
provider and consumers of said commodity wherein said
consumers purchase said commodity at a fixed rate
corresponding to a risk position of said consumer;
– (b) identifying market participants for said commodity having
a counter-risk position to said consumers; and
– (c) initiating a series of transactions between said commodity
provider and said market participants at a second fixed rate
such that said series of market participant transactions
balances the risk position of said series of consumer
transactions

www.schwabe.com

• Examiner rejected claims as directed to
unpatentable subject matter under § 101

• BPAI affirmed the Examiner’s § 101 rejections

• Federal Circuit ordered en banc review and, on
October 30, 2008, issues a 9-3 decision
– Affirms BPAI’s § 101 rejections
– Establishes a new test for patentable subject matter
under § 101


www.schwabe.com

• Federal Circuit (Citing Diamond v. Diehr)
– A “process” under § 101 excludes fundamental
principles and mental processes:
– Fundamental principles
• Laws of nature
• Natural phenomena
• Abstract ideas (including mathematical algorithms)
– Mental processes
• Processes of human thinking
• Systems that depend for their operation on human
intelligence alone

www.schwabe.com

• The § 101 inquiry
– If a claim preempts substantially all uses of
a fundamental principle, it is unpatentable
subject matter
– If a claim preempts only a particular
application of a fundamental principle, it is
patentable subject matter


www.schwabe.com

• Federal Circuit applies a machine-or-
transformation test to determine
preemption of a fundamental principle
– A claimed process is directed to patentable
subject matter under § 101 if:
• (1) is tied to a particular machine or apparatus; or
• (2) transforms a particular article into a different
state or thing


www.schwabe.com

Will the Supreme Court Review In re Bilski?
• Petition for writ of certiorari filed January 28,
2009 seeking to overturn the Federal Circuit
• Questions presented:
– Whether the CAFC erred by holding that a “process”
must be tied to a particular machine or apparatus, or
transform a particular article into a different state or
thing. . . .
– Whether the Federal Circuit’s “machine-or-
transformation” test for patent eligibility . . . contradicts
the clear Congressional intent that patents protect
“method[s] of doing or conducting business.” 35 U.S.C.
§ 273


www.schwabe.com

Will the Supreme Court Review In re Bilski?

• Industry Support?
– As of March 11, 2009 nine amicus briefs have been
filed
• One is from the biotech industry
– Medistem
» Personalized medicine: Adult stem cell-based medicines, and
methods of treatment combining the use of diagnostics and their
medicines
» Citing Judge Rader’s dissent: Bilski holding will “undermine and
discourage future research for diagnostic tools"
• None from big pharmaceutical companies
• None from BIO or PhRMA


www.schwabe.com

Diagnostic Tools and Personalized Medicine:
The Future of Biotechnology?
• Genomic Personalized Medicine
– Information about a patient's genotype or
gene expression profile used to tailor
medical care
• Provide a specific therapy for an individual's
disease
• Initiate a preventative measure suited to an
individual
• “Rational drug design" based on knowledge of
disease pathophysiology

www.schwabe.com


• Breast Cancer as an Example
– Identify over expression of HER2 in a subset
of breast cancer patients
– Indicate treatment of HER2 positive patients
with HER2-specific therapy (e.g. Herceptin)


www.schwabe.com

• Compare these Exemplary Claims:

– A method for identifying a breast cancer patient susceptible to treatment with
Herceptin®, said method comprising the steps of:
• isolating a breast tissue sample from the patient,
• measuring HER2 expression levels in the patient sample, and
• comparing HER2 expression levels to a control sample,
wherein an elevated level of HER2 expression in said patient sample indicates that
the patient may be effectively treated with Herceptin®

– A method for treating a breast cancer patient, said method comprising the
steps of:
• isolating a breast tissue sample from the patient,
• measuring HER2 expression levels in the patient sample,
• comparing HER2 expression levels to a control sample, and
• administering Herceptin® to the patient if an increased level of HER2 expression is
detected


www.schwabe.com

Classen v. Biogen (DC MD 2006)
• Classen claims:
– A method of determining whether an immunization
schedule affects the incidence or severity of a chronic
immune-mediated disorder in a treatment group of
mammals, relative to a control group of mammals,
comprising
• immunization of a treatment group; and
• a comparison of the incidence of chronic immune mediated
disorders in the treatment group relative to a control group


www.schwabe.com

Classen v. Biogen (DC MD 2006)
• DC MD
– “The [ ] patent does not claim a specific technique or
technical process of testing vaccine safety
– Instead, the [ ] patent describes only a general inquiry
of whether the proposed correlation between an
immunization schedule and the incidence of chronic
disorders exists
– As such, the process is indistinguishable from the idea
itself
– Accordingly, the [ ] patent seeks to patent an
unpatentable natural phenomenon”

www.schwabe.com

Classen v. Biogen (CAFC 2008)
• Federal Circuit
– “In light of our decision in In re Bilski … we
affirm the district court’s grant of summary
judgment that these claims are invalid under 35
U.S.C. § 101
– Dr. Classen’s claims are neither ‘tied to a
particular machine or apparatus’ nor do they
‘transform[ ] a particular article into a different
state or thing’

www.schwabe.com

Prometheus v. Mayo (SD CA 2008)

• Patents in suit involve measurements of
the level of metabolites in a patient’s blood
after taking a thiopurine drug such as the
anti-Crohn’s disease drug azathioprine for
the treatment of autoimmune diseases


www.schwabe.com

• Prometheus Claim 1
– A method of optimizing therapeutic efficacy for
treatment of an immune mediated gastrointestinal
disorder, comprising:
• administering a drug providing 6-thioguanine to a subject
having said immune-mediated gastrointestinal disorder; and
• determining the level of 6-thioguanine in said subject having
said immune-mediated gastrointestinal disorder wherein the
levels of 6-thioguanine less than about 230 pmol per 8x108
red blood cells indicates a need to increase the amount of
said drug subsequently administered to said subject and
wherein the levels of 6-thioguanine greater than about 400
pmol per 8x108 red blood cells indicates a need to decrease
the amount of said drug subsequently administered to said
subject

www.schwabe.com

• SD CA
– Claimed correlations between certain thiopurine drug
metabolite levels and therapeutic efficacy and toxicity
are natural phenomena
• Result from innate metabolic activity in human body
• Inventors did not “create” the correlation; the correlation
results from a natural body process
• Claims wholly preempt use of the correlations
– The only practical use of the correlation is in drug treatment for
autoimmune diseases


www.schwabe.com

Prometheus Labs. v. Mayo (CAFC)
• Appealed to Federal Circuit

• Amicus brief filed by American IP Law Association (AIPLA)
– Claimed methods meet Bilski machine-or-transformation test
• Physical transformation of a composition of matter, a drug (azathioprine), into a
metabolite (6-thioguanine or 6-methyl-mercaptopurine)
• District court places too much weight on “natural metabolizing”

– District court overreacted to LabCorp dissent
• LabCorp did not deal with physical transformation (i.e. measured naturally
occurring homocysteine levels)

– This case is distinguishable from Bilski
• Bilski did not involve a physical transformation of a composition of matter

– District court did not consider Prometheus’ claims “as a whole”
• Dismissed drug consumption and physical transformation as “necessary data
gathering steps”


www.schwabe.com

Ariad v. Eli Lilly (DC MA 2007)
• A method of inhibiting the expression of a gene
whose transcription is regulated by NF-κB in a
eukaryotic cell comprising the step of:
– reducing NF-κB activity in the cell such that the
expression of said gene is inhibited

• No particular agent or substance need be used,
nor any particular steps performed, to reduce
NF-κB activity in order to practice the invention

www.schwabe.com

Ariad v. Eli Lilly (DC Mass 2007)
• DC Mass
– “While not all processes are patentable, I find that Lilly has
failed to show that the proposed model of the Autoregulatory
Loop actually exists in nature and thus that a natural
phenomenon is encompassed by the [ ] patent’s claims”

• Holman’s Biotech IP Blog
– “The court’s reasoning in Ariad was quite bizarre … The court
appears to have been bamboozled into adopting an unduly
narrow definition of the relevant natural phenomenon, and
then found that the evidence supporting this narrowly defined
phenomenon was insufficient to overcome the statutory
presumption in favor of patent validity”


www.schwabe.com

Thank You!

gmyles@schwabe.com

Paul Beattie
pbeattie@schwabe.com


McKesson and Bilski

Recomendados

Recomendados

Más contenido relacionado

Similar a McKesson and Bilski

Similar a McKesson and Bilski (19)

Más de Gary M. Myles, Ph.D.

Más de Gary M. Myles, Ph.D. (19)

McKesson and Bilski