By Kevin E. Noonan --
Sanity may be returning to the Federal Circuit's treatment of two issues, obviousness and inequitable conduct. In Eisai Co. v. Dr. Reddy's Laboratories, Inc., the Court (in an opinion by Judge Rader joined by Judges Linn and Prost) affirmed the District Court's determination that the patent-in-suit, U.S. Patent No. 5,045,552 was not obvious and was not obtained through inequitable conduct. In doing so, the Court illustrated how its approach to chemical obviousness has developed after KSR Int'l Co. v. Teleflex Inc. and suggested that its inequitable conduct analysis may be returning to the principles enunciated in Kingsdown Medical Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867 (Fed. Cir. 1988) (en banc).
The '552 patent discloses and claims rabeprazole, a proton pump inhibitor that suppress gastric acid production by inhibiting action of the enzyme H+, K+ ATPase. Eisai sells the sodium salt of rabeprazole as Aciphex® for duodenal ulcers, heartburn, and related disorders. It has worldwide sales of more than $1 billion. Eisai filed suit pursuant to notification from Defendants Dr. Reddy's Laboratories and Teva Pharmaceuticals that each company had filed an Abbreviated New Drug Application (ANDA) containing a Paragraph IV certification that the '552 patent was invalid and/or unenforceable. (Mylan Laboratories, Inc. and Mylan Pharmaceuticals also filed ANDAs, but Eisai's lawsuit against those companies was stayed pending resolution of this action; Mylan agreed to be bound by the final judgments and any appeals in Eisai's lawsuit against Dr. Reddy's and Teva.)
Neither Defendant contested that filing an ANDA constituted infringement under the Hatch-Waxman Act, and both asserted the affirmative defense that the '552 patent was unenforceable for being obtained by Eisai through inequitable conduct. In addition, Teva asserted that the '552 patent claims were invalid as being obvious over three prior art references. The District Court granted summary judgment in Eisai's favor on infringement, invalidity, and inequitable conduct. Infringement was not appealed by either Defendant.
Teva based its allegations that the '552 patent was obvious over three prior art references: 1) European Patent No. 0 174 726, claiming lansoprazole (see below); 2) U. S. Patent No. 4,255,431, claiming omeprazole; and 3) an article by Brändström et al., entitled "Structure Activity Relationships of Substituted Benzimidazoles." Lansoprazole was disclosed in the '726 EP for treating ulcers, and differs from rabeprazole in having a trifluoroethoxy at the 4-position on the pyridine ring instead of a methoxypropoxy substituent:
Omeprazole differs more significantly in chemical structure, having a methoxy substituent at the equivalent 4-position:
The Brändström reference discloses a generic structure for anti-ulcerative compounds having a benzimidazole-sulfinylmethyl-pyridine core structure that encompasses lansoprazole, omeprazole, and rabeprazole:
The Federal Circuit adopted for the purposes of the appeal two properties of lansoprazole: that it was twenty-fold more active than omeprazole in its anti-ulcer action, and that the trifluoroethoxy group improved lipophilicity "that would have made it desirable to the skilled artisan."
The Court took this as evidence that lansoprazole would have been considered a "lead compound" for the skilled artisan in the search for alternative anti-ulcer compounds. Contrary evidence considered by the Court was testimony by Teva's expert that the data set forth in the '726 EP application would not permit the level of acid secretion to be determined. Moreover, the District Court, and the Federal Circuit, considered the teachings of the '726 EP application that the trifluoroethoxy substituent provided "a special path to achieving lipophilicity," a desirable property for an anti-ulcer medication, something Teva's expert testified was supported by a separate prior art reference. Another of Teva's experts refused to testify as to the relevance of the '726 EP application to the patentability of the '552 patent claims, and the Federal Circuit further noted that there was "no discernible reason for a skilled artisan to begin with lansoprazole only to drop the very feature, the fluorinated substituent, that gave this advantageous property."
The Federal Circuit articulated the following principles for applying the Supreme Court's KSR teachings to the question of chemical obviousness:
First, KSR assumes a starting reference point or points in the art, prior to the time of invention, from which a skilled artisan might identify a problem and pursue potential solutions. Second, KSR presupposes that the record up to the time of invention would give some reasons, available within the knowledge of one of skill in the art, to make particular modifications to achieve the claimed compound. See Takeda Chem. Indus. v. Alphapharm Pty., Ltd., 492 F.3d 1350, 1356 (Fed. Cir. 2007). ("Thus, in cases involving new chemical compounds, it remains necessary to identify some reason that would have led a chemist to modify a known compound in a particular manner to establish prima facie obviousness of a new claimed compound."). Third, the Supreme Court's analysis in KSR presumes that the record before the time of invention would supply some reasons for narrowing the prior art universe to a "finite number of identified, predictable solutions," 127 S. Ct. at 1742. In Ortho-McNeil Pharmaceutical, Inc. v. Mylan Laboratories, Inc., 520 F.3d 1358, 1364 (Fed. Cir. 2008), this court further explained that this "easily traversed, small and finite number of alternatives . . . might support an inference of obviousness." To the extent an art is unpredictable, as the chemical arts often are, KSR's focus on these "identified, predictable solutions" may present a difficult hurdle because potential solutions are less likely to be genuinely predictable. (Emphasis added)
The Federal Circuit stated that the record showed no reasons why the skilled artisan would have identified modifying lansoprazole to substitute the lipophilicity-conferring trifluoroethoxy group as a predictable solution to the problem of providing an alternative anti-ulcer compound. The Court characterized Teva's argument as relying on "unsupported assertions" that compounds other than lansoprazole, such as rabeprazole, would have been identified by the skilled artisan as an alternative anti-ulcer compound. Thus, finding no genuine issue of material fact and no evidence that the District Court committed clear error, the Federal Circuit affirmed the finding that the '552 patent claims were non-obvious.
Turning to the question of inequitable conduct, the defendants raised five bases for their allegations: first, that Eisai did not disclose a related, co-pending application that disclosed the "ethyl homolog" of rabeprazole; second, failing to disclose rejections in the related application alleged to be material to patentability; third, failing to disclose a prior art reference (WO 86/02646); fourth, by submitting a misleading declaration; and finally, concealing the existence of lansoprazole in the prior art. The District Court found the materiality of the ethyl homolog application to be low, even in the face of Teva's allegation that its existence could have provoked an obviousness-type double patenting rejection. Although the Federal Circuit stated that disclosure of the co-pending application would have been "prudent," Eisai's failure to do so was not inequitable conduct, according to the Federal Circuit because the low materiality of the application was coupled with a record "devoid of any real suggestion of intent to deceive." Similarly, the District Court found, and the Federal Circuit agreed, that there was "no compelling evidence" of an intent to deceive relating to Eisai's failure to disclose the rejections asserted by the Examiner in the co-pending application. This determination was based in part on the District Court's appreciation that filing separate applications on sufficiently-related subject matter in an effort to "hide" the existence of each of them from the Patent Examiner was "implausibly risky" in view of the likelihood that the same examiner would be assigned to both. The District Court found the undisclosed reference to be merely cumulative to art of record during prosecution of the '552 patent. Although the Court found the declaration at issue "highly material," it was unconvinced by the Defendants that the failure to disclose the relationship between the anti-ulcerative properties of rabeprazole and the "ethyl homolog" was material, characterizing the undisclosed information as "additional" and "unnecessary." Moreover, there was a sufficient lack of any evidence of an intent to deceive to render "stillborn" the inequitable conduct allegation. Finally, the lansoprazole allegation, which the District Court had dismissed on summary judgment, was supported by evidence of neither materiality nor an intent to deceive.
More important than the decision in this case regarding inequitable conduct was the Federal Circuit's discussion of the guiding principles of law it applied:
Inequitable conduct in prosecuting a patent application before the United States Patent & Trademark Office may take the form of an affirmative misrepresentation of material fact, a failure to disclose material information, or the submission of false material information, but in every case this false or misleading material communication or failure to communicate must be coupled with an intent to deceive. Innogenetics, N.V. v. Abbott Labs., 512 F.3d 1363, 1378 (Fed. Cir. 2008). Materiality, defined as "what a reasonable examiner would have considered important in deciding whether to allow a patent application," and intent are both questions of fact, and require proof by clear and convincing evidence. Id. To satisfy the "intent" prong for unenforceability, "the involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive." Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (en banc) (citing Norton v. Curtiss, 433 F.2d 779 (CCPA 1970)). Gross negligence is not sufficient. Id. This is a high bar.
Lately, it hasn't been a high bar. Indeed, since Kingsdown, the Court has expanded the limits of the behavior it has considered amounts to inequitable conduct. Examples of this expansion include improperly claiming small entity status (Nilssen v. Osram Sylvania, Inc.), improperly filing a petition to make special (General Electro Music Corp. v. Samick Music Corp.), failing to disclose that a declarant had been a paid consultant prior to filing an expert declaration under 37 C.F.R. § 1.132 (Ferring B.V. v. Barr Laboratories, Inc.), misjoinder of inventorship (PerSeptive Biosystems, Inc. v. Pharmacia Biotech, Inc.), and inaccuracies in an expert declaration (Aventis Pharma S.A. v. Amphastar Pharma, Inc.). Judge Rader, who dissented in Aventis Pharma, here emphasized the need, in his opinion, for affirmative instances of "culpable conduct" rather that mere omissions, with the concomitantly more difficult need to discern evidence of intent from such conduct. And Judge Rader is more clearly focused, in Aventis and in this opinion, on a defendant carrying the extraordinary burden of establishing inequitable conduct by clear and convincing evidence.
It remains to be seen whether Judge Rader's formulation of the proper boundaries of what constitutes inequitable conduct for the Federal Circuit will prevail.
Eisai Co. v. Dr. Reddy's Laboratories, Inc. (Fed. Cir. 2008)
Panel: Circuit Judges Rader, Linn, and Prost
Opinion by Circuit Judge Rader
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