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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

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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”

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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

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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

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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

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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”

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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

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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 factualin nature; advocates need to make a detailed factual record on these issues.

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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”

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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”

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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

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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

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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

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Materiality: VoluminousExhibits 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

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Materiality: VoluminousExhibits 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

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Materiality: Litigation inRelated 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

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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

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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

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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

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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

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• 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

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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 dosagethan 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

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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”

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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

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• 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

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• 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

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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)

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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

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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

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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

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Biotechnology Process Inventions: Patentable Subject Matter

after In Re Bilski

Gary M. Myles, Ph.D.

Schwabe, Williamson & Wyatt

March 18, 2009

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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

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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

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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

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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”

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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 arecombinant activated oncogene sequence …

– Yes per Phil Leder, US Patent No. 4,736,866; “The Harvard Mouse”

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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

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LabCorp v. Metabolite (S.Ct. 2006)• 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)

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LabCorp v. Metabolite (S.Ct. 2006)• 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”

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• 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’ … ”

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• 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

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• 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”

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So, what makes a process patentable?

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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

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In re Bilski (Fed. Cir. 2008)• 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

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In re Bilski (Fed. Cir. 2008)• 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

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In re Bilski (Fed. Cir. 2008)• 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

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In re Bilski (Fed. Cir. 2008)• 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

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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

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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

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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

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• 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)

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• 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

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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

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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”

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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’

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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

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• 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

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• 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

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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”

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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

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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”

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Thank You!

Gary M. Myles, [email protected]

Paul [email protected]

mckesson and bilski

Documents

wa vancouver

material information

patentability information

process material

material reference

finding of intent

involved conduct

material patentees assertion