Free Declaration - District Court of Delaware - Delaware

Case1:04-cv—00884-SLR D0cument71-4 Filed 07/17/2006 Page10f3
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SZ . Case 1 CV Page 2 q\1llo§da5g April 10, 2006

Reaching opposite findings on inequitable conduct
Both (Purdue? and of the inequitable conduct issue on sum- tory" and that Purdue’s representations mitted the declarations, and moved for
‘ , mary jfidtgment "oiéghg to be, and can gvirzilcedda "deliberate desision to vsgith- gummgry judgréient of inequiiiiblge con-
` propery e, rare in ee o an misrepresent t e origin o its uct. ranting arr’s motion, t e istrict
Fcrflng focused On ‘discovery‘ to the PTO." ld. at 698, 701. court determined that the declarations
` ` ° ‘Purdue’: reversal of fortune On a motion for reconsideration, the were " ‘highly material’ " to the prosecu-
Inatcrlahty and Intent Purdue Pharma asserted three court changed its position: "Our further tion of the patent and that their submis-
patents against Endo Pharmaceuticals review has persuaded us that the trial sion alter several rounds of rejection
By A1'16 M- Mxchclsohn generic version of Purdue’s highly suc- judge may have erred in how he viewed " ‘speaks loudly as to motive and intentf ”
SPECIAL T° THE ""'°""L LAW ’°"“"“ cessful opioid pain medicine, controlled- certain ofthe evidence, and that this may 437 F.3d at 1186 (quoting the district
rnAun ON THE Patent Office——"inequit- release oxycodone, better known as have caused an error in the balancing court). The district court reasoned that
able conduct" in the modern language of Oxycontin. According to the patents, Pur- step." 438 F.3d at 1126. Specifically, "[w]hile credibility determinations from
patent law——-renders the patent unen- due inventors "surprisingly discovered" while affirming its conclusion that Pur- a courtroom observation may at times be
forceable, To establish inequitable con- that the claimed controlled-release oxy- due’s failure to tell the PTO that its dis- necessary on the issue of intent, here, the
duct, one must prove both materiality codone formulations can control pain covery was based on insight constituted entire record presents clear and convinc-
and intent. In two recent biotechnolo- over a substantially narrower dosing a material misrepresentation, the panel ing evidence of an intent to mislead." Id.
gy/pharmaceutical cases, Purdue Phar- range in most patients, relative to opioid remeasured the misrepresentation’s ma- On appeal to the Federal Circuit, a
ma L.R v. Endo Pharmaceuticals Inc., analgesics generally. The patents later teriality, finding it "not especially l1igh" panel majority affirmed over a strongly
438 F.3d 1123 (Fed. Cir. 2006), and Fer- explain the "clinica1 significance" of the and "not as material as an aflirmative worded dissent. The majority viewed the
ring BM v. Barr Laboratories, 437 F.3d narrower dosage range as permitting misrepresentation would have been." declarations as "pivotal" and reasoned
1181 (Fed. Cir. 2006), different panels of doctors to determine more efficiently On the issue of intent, the panel that the examiner’s request for nonin-
the U.S. Court of Appeals for the Federal dosing regimens capable of relieving stressed it “important to remember" that ventor declarations evidenced a clear
Circuit measured materiality and intent materiality does not presume intent and concern about the objectivity of the de-
and drew virtually opposite conclusions. ( ’ referred to intent as a "separate and es- clarants that was communicated explic-
These decisions suggest uncertainty in sential component of inequitable con- itly to Ferring. "Under such circum-
the law and demonstrate the problems ’ duct." ld. at 1134. The panel then found stances," the majority asserted, "the
faced by practitioners when confronted error in the trial court’s discounting of applicant is on notice as to the materiali-
with an allegation of inequitable con- Purdue’s seeking a labeling claim before ty of information regarding the declar-
duct. . . . the FDA as evidence of good faith, since ants’ ties to Ferring." Id. at 1190.
Rule 56 of the U.S. Patent and Trade- l "evidence regarding the difficulty in prov- On the issue of intent, the majority
mark Office (PTO) Code of Federal Regu- ing the titration claim is not inconsistent concluded that Barr had suitably estab-
lations, 37 C.F.R. 1.56(a), requires that ‘’`‘‘°`‘`‘‘ i :‘‘‘:'‘°‘‘’l‘ ‘ :‘:‘ ‘ ``i` ’ ’‘‘`` ` `l’’il I i’i I ‘:‘ ’i’’ ”’;`fi‘‘’‘”‘`‘```‘`‘`°‘ ‘ `:’``’‘’`‘``‘’ ` `’’i‘``:‘```’‘‘``’‘ ` ‘ `‘‘`‘`i’°’i`‘‘`‘’°’’i`’’’’`’`’i’f’‘:’’ii’’l’l with Purdue’s asserted belief that it had lished Ferring‘s knowledge of the declar-
applicants for patents act with "candor pain in individual patients without caus- discovered" the more effective dosage ants' relationships and that Ferring
and good faith" during the patent appli- ing unacceptable side effects. range of its formulations. Id. Overall, the knew these relationships were material.
cation process. This obligation includes During prosecution of its patents, Pur- panel found, errors in measuring materi- Pointing to Refac International Ltd. v.
aduty to disclose to the PTO all informa- due submitted arguments that distin- ality and intent required the district Lotus Development Corp., 81 F.3d 1576,
tion known to the applicants to be "ma- guished its formulations over the prior court to "reweigh" these factors on re- 1581 (Fed. Cir. 1996), the majority stated
terial to patentability." Id. The definition art based on the “su.rprising result" of mand while “keepling] in mind that when that "[u]nder similar circumstancesmthe
g of "material" includes information that narrower dosage ranges and more eiii- the level of materiality is relatively low, omission of prior employment with the
is not cumulative of information already cient dosing. One of the named inventors the showing of intent must be propor- patentee supported a showing of intent."
before theexaminer and that would, by filed a declaration in support of pat- tionately higher." Id. at 1135. 437 F.3d at 1193. Citing to Paragon Podi-
itself or in combination with other infor- entability that discussed clinical studies atry Laboratory Inc; v. KLM Laboratories
mation, establish “a prima facie case of comparing the blood levels of controlled- ‘Ferring’: intent per se? Inc., 984 F.2d 1182, 1191 (Fed. Cir.
unpatentability of a claim" (as further release oxycodone to immediate-release A different result was arguably 1993), a case in which the Federal Cir-
defined in the regulation), or be incon- oxycodone and the "clinical signiHcance" reached in Ferring. There, Ferring as- cuit previously affirmed summary judg-
sistent with positions taken by the appli- of a narrower dosing range for pain serted its patent, directed to a solid oral ment of inequitable conduct, the majori-
cant during the patent examination management. Later during prosecution, dosage form of a peptide used to treat di- ty concluded that no credibility deter-
process. Purdue further contended that the dos- abetes, against Barr Laboratories, A pri- minations were necessary because
To End a breach of this duty, a court ing parameters set forth in its patent or Ferring patent taught the use of this "[c]redibility can only become an issue
traditionally needs to determine not only claims "are specifically related to the peptide through "peroral" application, once a party offers a declarant’s testimo-
that omitted information was material, surprising results obtained by the inven- The patent examiner contended during ny in support or in opposition to summa-
but also that the omission happened with tion." At the time it prosecuted its an interview with one of the patent’s ry judgment," which Ferring did not do.
intent to deceive the PTO. Settled law patents, however, Purdue had not actual- named inventors that this teaching may 437 F.3d at 1192. As such, summary
mandates that a court balance materiali- ly performed clinical studies to support have suggested oral administration for judgment was appropriate.
ty and intent to determine whether in- these assertions, and did not reveal this gastrointestinal (GI) absorption in the Judge Pauline Newman dissented:
equitable conduct occurred. See, e.g., fact to the examiner. manner claimed by Ferring in its pend- "Today my colleagues on this panel not
American Hoist & Derrick Co. v. Sowa & Following a bench trial, the district ing patent application. The inventor ar- only ignore Kingsdown and restore a
Sons Inc., 725 F.2d 1350, 1364 (Fed. Cir, court concluded that Purdue’s multiple gued that "peroral" as used in the prior casually subjective standard, they also
1984). representations made it look to the PTO patent did not teach oral administration impose a positive inference of wrong-
V As a general rule, the more material as if Purdue had discovered its invention for Gl absorption, but rather for ahsorp- doing...even in the total absence of
the information at issue, the less proof of based on experiment rather than insight, tion through the walls of the mouth; Ap- evidence." Id. at 1196. Pointing to the de-
intent is necessary to establish in- and that this reflected a"clear pattern of parently not convinced, the examiner clarants’ eminent reputations as scien-
equitable conduct. See, e.g., Kangaroos intentional misrepresentation? Purdue suggested that Ferring submit evidence tists, Newman considered the majority’s
U.S.A. Inc. v. Caldor Inc., 778 F.2d 1571, attempted to convince the court of its inference of bias and deceptive intent a
1573 (Fed. Cir. 1985). Still, as an en banc good-faith belief in the veracity of its as- E . ’ "travesty." Newman further noted that
Federal Circuit emphasized in Kings- sertions to the examiner by submitting as the law does not require affidavits in op-
down Medical Consultants Ltd. v. Hollis- evidence its application to the Food and ’ posing motions for summary judgment,
ter Inc., 863 F.2d 867, 876 (Fed. Cir. Drug Administration (FDA) for approval G` `t ` f d and that in any event, Ferring had pre-
1988), "the involved conduct, viewed in of a labeling claim that its Oxycontin drug sented deposition testimony in its opposi-
light of all the evidence, including evi- was the most efficient dose-adjustable ¤ ¤ tion to Barr's motion that appeared to
dence indicative of good faith, must indi- analgesic. The trial court rejected this negate intent. Newman "at a minimum"
cate sufficient culpability to require a evidence, however, because Purdue’s would have remanded the case for trial.
A contemporaneous panel of the Purdue’s own admission, unsuccessful. from a noninventor. Uncertainty in the law
court, in Burlington Industries Inc. v. On appeal, the Federal Circuit ac- Over several rounds of prosecution The panel majority inFerring relied in
Dayco Corp., 849 FZ2d 1418, 1422 (Fed. knowledged that under the patent before two examiners and on appeal to part on the Refac and Paragon decisions. `
Cir. 1988), noted further that resolution statute, 35 U.5.C. 103(a), it does not mat- the PTO, Ferring submitted declarations But in Refac, there was a full trial, and
ter to patentability whether an invention from four noninventors. The inventor "[s]ignilicantly," by the Federal Circuit’s
Arie M. Michelsohn {arie.michels0hn@- is made through insight or experiment. whom the examiner interviewed helped own description in that case, "determin-
finnegan.com} is an associate at Wash- Purdue Pharma L.R v. Endo Pharmaceu- prepare two of the declarations. One of ing whether there was an intent to mis-
ington-basedFinnegan, Henderson, Fara- ticals Inc., 410 F.3d 690 (Fed. Cir. 2005). the declarants was a former research lead the PTO involved credibility deter-
boui Garrett & Dunnen an intellectual The court also acknowledged that Pur- director at Ferring, and the other three minations." 81 F.3d at 1582. Also notable
property law firm, where he practices due never expressly stated that the dis- had received research funding from is that inParagon, the declarants at issue
patent litigation and strategic counseling covery of the narrow dosage range was Ferring and were later characterized on owned Paragon stock and were paid
as a member of the biotechnology/phar— based on the results of clinical studies. Ferring’s privilege log as "consultants." company consultants, and in their decla-
maceutical practice group. Two attorneys Nonetheless, it affirmed, reasoning that Ferring did not make any of these rela- rations were openly evasive on the issue
at the firm wrote an amicus brief on be- such a conclusion "was clearly to be in- tionships known to the PTO. of stock ownership and explicitly stated
hay of Purdue Pharma in the Purdue re- ferred from the language used by Purdue Barr adduced evidence that Ferring that they were not employed by the
hearing proceeding. in both the patents and prosecution his- knew of these relationships when it sub- sms ‘rNeoUrrAm.E CONDUCT, PAGE sg

‘ ** Case 1 :04-cv—00884-SLR Document 71 -4 Filed 07/17/2006 Page 3 of 3



D`
1 I
‘INEQUITABLE coNDUcT’ Fnom PAGE S2
company. The court accordingly consid- ,
ered the declarations "deceptive, if not
outright[ly] false." 984 F.2d at 1192. The
Ferring decision thus appears to overstep
Refac and Paragon by making credibility
determinations virtually unnecessary on
the issue of intent when the materiality of
omitted information is found to be "high"
enough. But when is enough, enough?
ln Purdue, the Federal Circuit itself
equivocated on the issues of materiality
and intent, as is apparent from the pan- .
el’s changed decision on reconsideration.
In Ferring, a panel majority felt assured
that it could pass judgment summarily
on the issue of intent, while the dissent
strongly disagreed. To what can one
attribute the difference in positions of
the panels and the individual judges?
Unfortunately, the Purdue and Ferring
cases provide little guidance about which
omissions a court will consider so "highly
“ material" as to warrant a pass over trial
on the issue of intent, and which it will
consider relatively benign and thus no
obstacle to patent enforceability.
I Because of such uncertainty in the
law, some—including the American
Intellectual Property Law Association
(AIPLA)-—have called for elimination of
the inequitable conduct defense alto-
gether. See, e.g., Statement of Michael K.
Kirk, executive director, AIPLA, before
the Senate Subcommittee on Intellectual
Property, April 25, 2005, http://Judiciary.-
senate.gov/testimony.cfm?id=1475&wit_-
id=4232. Pending House legislation would
refer inequitable conduct investigations
to the PTO Office of Enrollment and Dis-
cipline and provide a threshold before a
court can rule a patent unenforceable.
See H.R, 2795 (lndustry "Redline"/Coali-
tion Print, Sept. 1, 2005). ln the mean-
time, Purdue and Ferring leave patent
practitioners with mixed messages. B11]