By Kevin E. Noonan --
Happy families are all alike; every unhappy family is unhappy in its own way.
Leo Tolstoy, Anna Karenina, Chapter 1, first line
The several amicus curiae briefs that have been filed in the en banc rehearing of Therasense, Inc. v. Becton, Dickinson & Co. bring this quote to mind, since none of them advocate that the Federal Circuit's inequitable conduct jurisprudence is anything other than dysfunctional. However, the briefs are instructive in what and how they illustrate the different perspectives and interests each amicus brings to the issue.
In this regard, the brief from the Pharmaceutical Research and Manufacturers of America (PhRMA), submitted in favor of neither party, does not disappoint. This brief's take on the issue is that the Court should "use this opportunity to reset the [inequitable conduct] doctrine firmly on its historical foundation of Supreme Court precedent." How should this be achieved? By correcting the "substantial drift" of the doctrine the canonical Supreme Court precedent of Keystone Driller Co. v. General Excavator Co., 290 U.S. 240 (1933); Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 250-51 (1944); and Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806, 814 (1945).
That precedent is grounded in fraud, according to the brief, and more particularly continuing fraud, where the fraudulent activity in obtaining a patent is compounded by then asserting the patent against an accused infringer. Such an action attempts to make the Court complicit n the fraud, and courts can and should use their equitable discretion to refuse to be co-opted by the patent holder under these circumstances.
But this is not how the doctrine has been developed by the Federal Circuit, the brief argues, so that fraud need not be alleged nor proven but "any blemish" on the prosecution record can be used to allege misconduct. This has led to three "fundamental flaws" in the existing law of inequitable conduct: that there is an "overpowering incentive" on the accused infringer to assert the defense, even when it is unlikely to be successful, since such an action incurs no risks and has the benefits of rendering the patent unenforceable in toto, as well as harassing (or at least distracting) the patentee. The brief next mentions the "varying standards of 'materiality'" that the Court has embraced and the inconsistencies therein. Finally, the brief descries the lack of a requirement for proof of a specific intent to defraud, especially through the use of the "balancing test" where lesser proof of specific intent can be successfully asserted if the evidence of materiality is particularly strong. The negative consequences are not limited to patent owners, the brief asserts, but squanders scare judicial resources, overburdens the PTO, and "weakens the patent incentive," thereby "depriving the American public of the tangible benefits of innovation," specifically "new products and services."
PhRMA's prescription to remedy the situation is similarly three-fold. First, the groups says that inequitable conduct should be considered and found only to claims actually asserted in a litigation, which would "firmly anchor the doctrine on its common-law foundation as a mechanism to prevent the continuation of a fraud originally perpetrated on the PTO by an action in court to enforce a tainted patent claim." Second, the Court must "articulate a clear formulation of materiality," which for PhRMA would be only such information that would "establish that one or more of the claims asserted in the litigation is invalid," i.e., an objective "but for" test as has been advocated by several other amici. Third, and also in common with other amici, PhRMA urges that the Court adopt a specific intent requirement and abandon the "balancing test" or "sliding scale" wherein proof of greater materiality can compensate for lack of proof of specific intent. Such "balancing" has not only "contributed substantially to the unpredictable behavior of the doctrine," the brief asserts, it is also "unsupported in the common law."
The brief recites statistics on inequitable conduct, particularly Mammen, Controlling the "Plague": Reforming the Doctrine of Inequitable Conduct, 24 Berkeley Tech. L.J. 1329 (2009). These include that the frequency with which inequitable conduct has been plead rose from 20% of the cases (in 2003) to 40% (in 2008). In contrast, the frequency with which inequitable conduct has been found has dramatically declined, from 1% in 2001 to 0.35% in 2008 (finding that the frequency has varied from 0.04% to 0.23% in any given year over the past 15 years). In addition, Mammen is reported to show that the Federal Circuit affirms a district court's rejection of an inequitable conduct claim 92% of the time (and reversing in only 3% of cases), and reverses or vacates a district court's finding of inequitable conduct 59% of the time. What do these statistics illustrate, according to the brief? That the defense is plead almost regardless of its objective likelihood of success, as a litigation tactic aimed at securing the jackpot of finding a patent entirely unenforceable. This high reward to accused infringers "perverse[ly]" offsets the small likelihood of success, and the brief asserts that merely raising the defense can provide "significant benefits" to an accused infringer, even if the defendant does not ultimately prevail. Citing (now Chief) Judge Rader's dissent in Aventis Pharma S.A. v. Amphastar Pharms. Inc.:
The allegation of inequitable conduct opens new avenues of discovery; impugns the integrity of [a] patentee, its counsel, and the patent itself; excludes the prosecuting attorney from trial participation (other than as a witness); and even offers the trial court a way to dispose of a case without the rigors of claim construction and other complex patent doctrines.
525 F.3d 1334, 1349-50 (Fed. Cir. 2008) (Rader, J., dissenting). The brief mentions the additional costs on the patent owner, the risk of a challenge to attorney-client privilege by assertion of the crime-fraud exception, and the pressures it can bring to bear on patent holders to settle "otherwise meritorious claims of infringement." These additional costs and risks are borne almost entirely by the patentee, creating an "substantial asymmetry of risk" between the parties. In a footnote, the brief notes the outcome of the Purdue Pharma L.P. v. Endo Pharms., Inc. case (No. 00-8029,2004 WL 26523 (S.D.N.Y. Jan. 5, 2004), where in the interim between the time the District Court found inequitable conduct and the Federal Circuit reversed, "nearly 70 lawsuits were filed, including putative class actions, alleging that the manufacturer's inequitable conduct had violated the antitrust laws. See, e.g., Complaint, City of New York v. Purdue Pharma, Inc., No. 04-3499,2005 WL 2873297 (S.D.N.Y., Aug. 15,2005)." And, of course, the brief mentions the burdens on the Office occasioned by the prophylactic over-disclosure of not particularly material information in an attempt to avoid an inequitable conduct charge (and noting the Catch-22 nature of such an activity, which is just as likely to produce a charge of "burying" material references, citing Molins PLC v. Textron, Inc., 48 F.3d 1172, 1184 (Fed. Cir. 1995).
The brief's bases for limiting the scope of material information to what will invalidate a claim asserted in the litigation are both jurisprudential as well as practical. Legally, the brief argues that a court "derives its authority to render a patent unenforceable from the patent owner's decision to extend the fraud into the court by enforcing a tainted patent claim." "Only asserted claims continue the fraud perpetrated on the PTO into court, and thus give courts a proper basis for imposing sanctions against the patent," citing Precision Instrument Mfg. Co., which as a practical matter "appropriately shifts the focus away from matters that are collateral to the actual controversy before the court," citing Alcatel USA, Inc. v.DGI Techs., Inc.,166 F.3d 772, 797 (5th Cir. 1999). The brief also argues (albeit more weakly in view of the expansive language of Genentech v. MedImmune) that considering unasserted claims raises jurisdiction (i.e., "case or controversy") issues under Article III, and conflates the role of the judiciary and administrative agencies in policing practitioner behavior. Finally, the brief argues that there is some justice, and substantial public interest, in inequitable conduct arising in a claim a patentee asserts against an accused infringer, being "those most likely to have an impact upon competitors and the public, and thus [being] the claims as to which the incentive to commit fraud, and the public interest in deterring and punishing it, are greatest."
Regarding specific intent and the balancing test applied by the Federal Circuit, the brief says little not said by others except insofar as it forthrightly urges the Federal Circuit to abandon the balancing test. "Having gone through a rigorous administrative process to obtain a patent, it is inappropriate to revoke a patent absent proof of intentional misconduct on the part of the patentee -- the need to restrict its scope to cases involving specific intent to deceive is crucial 'because the penalty for inequitable conduct is so severe, the loss of the entire patent,'" citing Star Scientific inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1365 (Fed. Cir. 2008), cert. denied, 129 S. Ct. 1595 (2009).
The brief notes that these negative consequences are particularly relevant to PhRMA and its members, because "this cloud of unpredictable risk and uncertainty caused by the current doctrine undermines the effectiveness of the patent incentive for PhRMA Members to make the huge investments necessary to discover, develop, and bring new medicines to market."
PhRMA includes some statistics in its "Statement of Interest," including that PhRMA members invested about $45.8 billion in new drug discovery in 2009 alone, as well as a "complete list" of PhRMA members (which can be found here).
For additional information regarding this topic, please see:
• "PTO Files Amicus Brief in Therasense Case," August 19, 2010
• "American Bar Association Files Amicus Brief in Therasense Case," August 17, 2010
• "Therasense, Inc. v. Becton, Dickinson & Co. -- Briefing Schedule Update," August 8, 2010
• "BIO Files Amicus Brief in Therasense Case," August 8, 2010
• "Pharma and Software Companies File Joint Amicus Brief in Therasense Case," August 3, 2010
• "IPO Files Amicus Brief in Therasense Case," August 2, 2010
• "Abbott Files Brief in Therasense Case," July 28, 2010
• "CAFC Sets Date for Oral Argument En Banc in Inequitable Conduct Appeal," June 9, 2010
• "Therasense, Inc. v. Becton, Dickinson & Co. -- Briefing Schedule Update," May 16, 2010
• "Therasense, Inc. v. Becton, Dickinson & Co. Briefing," May 13, 2010
• "Federal Circuit Grants En Banc Review in Therasense v. Becton Dickinson," April 28, 2010
The Financial Times' Take on Gene Patenting
By Kevin E. Noonan --
The paper's conservative bona fides are established on its website:
First published in 1888 as a four-page newspaper, the Financial Times' initial readership was the financial community of the City of London. The Financial Times soon established itself as the sober but reliable "stockbroker's Bible", with its only rival being the slightly older and more daring Financial News. In 1893, the FT turned salmon pink -- a masterstroke that made it immediately distinguishable from its competitor. From their initial rivalry, the two papers merged in 1945 to form a single six-page newspaper. The Financial Times brought with it a higher circulation, while the Financial News provided enormous editorial talent.
And it is with a "sober" voice that the article by James Boyle, William Neal Reynolds Professor at Law, Duke Law School addresses a frequently emotional subject. He cites critics of gene patenting as describing a "'genetic land grab' that promised to privatize the common heritage of mankind," and characterizes their arguments as "frankly moral, protesting the hubris and in some eyes, heresy, of claiming to own the human genome." He contrasts this with arguments that "patents over genes [are] necessary to spur investment and jump start biotech innovation." And he includes the third part of the debate, whether gene patents "spur innovation" or slow it, by "introducing a tangle of property rights into the most fundamental building blocks of research science."
Although evenhanded, the piece suffers from the common misconception that genetic information is patented (Judge Sweet's view), rather than isolated nucleic acids themselves as chemical compounds (which, despite Judge Dyks' recent pronouncements, has been the Federal Circuit's view). This deficiency also informs the article's discussion of what the author calls a "new consensus," patterned on the recent publicity regarding the Alzheimer's Disease Initiative. As previously reported in The New York Times, this is an effort by the National Institutes of Health joined with academic and "commercial" researchers "to unlock the secrets of that debilitating disease." The key development, cited in this article as well as the original Times piece, was that the data from the collaboration would be made public "immediately," and that "no one would own the data" (and no one would file any patent applications, although "private companies would ultimately profit from any drugs or imaging tests developed as a result of the effort"). Professor Boyle hails this development as one where "all parties . . . are better off." He attributes (without attribution) to private companies "who had watched their drug pipelines dry up" the fear that "the old model of in-house development and jealous guarding of data" would not be able to "unlock such complex biological mysteries" as the motivation for joining the initiative.
Perhaps. It is also good to remember that a great deal of the initial research from the Initiative (like much initial research) was unlikely to lead to any patentable subject matter in the first place. Patents protect inventions, not data. As the Federal Circuit said in Ariad v. Eli Lilly:
Ariad complains that the doctrine disadvantages universities to the extent that basic research cannot be patented. But the patent law has always been directed to the "useful Arts," U.S. Const. art. I, § 8, cl. 8, meaning inventions with a practical use, see Brenner v. Manson, 383 U.S. 519, 532-36 (1966). Much university research relates to basic research, including research into scientific principles and mechanisms of action, see, e.g., Rochester, 358 F.3d 916, and universities may not have the resources or inclination to work out the practical implications of all such research, i.e., finding and identifying compounds able to affect the mechanism discovered. That is no failure of the law's interpretation, but its intention. Patents are not awarded for academic theories, no matter how groundbreaking or necessary to the later patentable inventions of others. "[A] patent is not a hunting license. It is not a reward for the search, but compensation for its successful conclusion." Id. at 930 n.10 (quoting Brenner, 383 U.S. at 536). Requiring a written description of the invention limits patent protection to those who actually perform the difficult work of "invention" -- that is, conceive of the complete and final invention with all its claimed limitations -- and disclose the fruits of that effort to the public.
That research hypotheses do not qualify for patent protection possibly results in some loss of incentive, although Ariad presents no evidence of any discernable impact on the pace of innovation or the number of patents obtained by universities. But claims to research plans also impose costs on downstream research, discouraging later invention. The goal is to get the right balance, and the written description doctrine does so by giving the incentive to actual invention and not "attempt[s] to preempt the future before it has arrived." Fiers, 984 F.2d at 1171. As this court has repeatedly stated, the purpose of the written description requirement is to "ensure that the scope of the right to exclude, as set forth in the claims, does not overreach the scope of the inventor's contribution to the field of art as described in the patent specification." Rochester, 358 F.3d at 920 (quoting Reiffin v. Microsoft Corp., 214 F.3d 1342, 1345 (Fed. Cir. 2000)). It is part of the quid pro quo of the patent grant and ensures that the public receives a meaningful disclosure in exchange for being excluded from practicing an invention for a period of time. Enzo, 323 F.3d at 970.
And it is also well to remember that the reason for the extensive collaboration between scientists (who heretofore guarded their pre-publication Alzheimer's disease research results just as jealously as any commercial enterprise) is precisely because Alzheimer's disease has proven so intractable. In today's New York Times is an article bemoaning the lack of progress at developing an effective treatment for the disease, in the face of 30 years effort (and 10 years of that same Alzheimer's Disease Initiative so praised by Professor Boyle). So while it is evident that at least some of the participants were happy (and self-satisfied) to paraphrase Quincy Jones by proclaiming that they "left their intellectual property at the door," it is less evident that anything of commercial value (or any intellectual property) was put at risk by what was publicly disclosed by the Initiative. (Recognition of this reality explains as well as the Professor's speculation does why commercial entities were willing to participate in the Initiative.)
Being the Financial Times, the article is quick to point out that "[t]he idea is not to give up property rights," because "these will be essential in the development of therapies down the line." Rather, Professor Boyle contends that "science -- and commerce -- will benefit from the establishment of a pre-competitive commons, a pool of information from which all can draw," using the NIH as an "honest broker." As evidence of a trend, he cites the Bermuda Accords guiding the public prong of the Human Genome Project, the Sage Bionetworks project, as well as the Science Commons (which organization had Professor Boyle as one of its founders). He suggests that the economic tools exist to ascertain the best ways to "jump-start commercial innovation" while at the same time recognizing that the task of deciding where sharing should end and privatization and property rights begin is complex. Refreshingly, he says that this enterprise "is not an ideological war but a pragmatic process of design."
The article charmingly analogizes the gene patenting debate to enclosure of the English commons over 500 years ago, and in doing so returns the analogy from the "anticommons" rhetoric that usually accompanies discussions of this debate. The article begins and ends with part of a poem regarding this ancient argument:
The law locks up the man or woman
Who steals the goose from off the common
But leaves the greater villain loose
Who steals the common from off the goose
And geese will still a common lack,
Til' they go and steal it back.
However the gene patenting debate is resolved, it would be well if the same benefits garnered from enclosing the common -- providing the greatest benefits to the greatest number -- are the result.
Posted at 11:59 PM in Media Commentary, Patentable Subject Matter | Permalink | Comments (5) | TrackBack (0)