United States: Even After Therasense a Defense of Inequitable Conduct Survives Summary Judgment

Last Updated: February 1 2012
Article by Stanley M. Gibson

After the Federal Circuit's decision in Thereasense, Inc. v. Becton, Dickinson and Co., 2011 WL 2028255 (Fed. Cir. 2011), it appeared likely that it would be difficult, if not impossible, to proceed on an inequitable conduct claim. A recent decision from the United States District Court for the District of New Jersey may change that trend.

Schering Corp. ("Schering") filed a complaint alleging that Mylan Pharmaceuticals' ("Mylan") Abbreviated New Drug Application ("ANDA") infringed two of Schering's patents that disclosed different ways to reduce cholesterol levels. Schering filed motions for partial summary judgment, one of which sought to eliminate Mylan's defense of inequitable conduct in light of Thereasense. After granting Schering's motion for summary judgment on the issue of infringement, the district court examined the motion addressing the inequitable conduct defense.

The district court began by noting that "[i]n Thereasense, the Federal Circuit revised the law of inequitable conduct by 'tighten[ing] the standards for finding both intent and materiality in order to redirect a doctrine that had been overused to the detriment of the public." The Federal Circuit now requires that the accused infringer prove that the patentee acted with the specific intent to deceive the Patent and Trademark Office ("PTO") and the Federal Circuit also adopted a "but for" standard of materiality. That is, the accused infringer must show that the "PTO would not have allowed a claim had it been aware of the undisclosed prior art."

Schering contended that Myland could not show that the patents would not have issued "but for" Schering's failure to disclose certain metabolite information because while the patent was prosecuted, the case law regarding the law of inherent anticipation had not yet changed. Schering argued that such a change only occurred after the patent prosecution was concluded when the Federal Circuit announced its decision in Schering Corp. v. Geneva Pharmaceuticals, 393 F.3d 1373 (Fed. Cir. 2003). The district court disagreed, finding that the Geneva decision did not overrule any of the Federal Circuit's previous decisions. "While patents are entitled to a presumption of validity, Schering has pointed to no case in which similar metabolite claims were affirmatively found valid, and Mylan need only prove by a preponderance of the evidence that the PTO would have denied Schering's claims had it been aware of the undisclosed reference."

Schering also argued that Mylan had failed to set out sufficient evidence to show that Schering acted with specific intent to deceive the PTO. Schering contended that Mylan failed to put forth evidence both that Schering knew that such information would be material to the PTO's decision and that Schering deliberately withheld that information from the agency. To support its position, Schering relied on the declaration of an in-house counsel stating that at the time the patents were prosecuted she believed that the metabolites of prior art compounds were patentable. Mylan responded by noting this same witness when asked to provide the basis for her belief could not do so and stated that she could not recall.

The district court then concluded that there were material issues of fact that precluded summary judgment. "Given that 'direct evidence of deceptive intent is rare,' Thereasense, 2011 WL 2028255, at *10, and drawing all reasonable inferences in the light most favorable to Mylan, the non-moving party, the Court concludes that Mylan has put forth sufficient indirect and circumstantial evidence from which a reasonable fact finder could conclude that Schering had knowledge of the materiality of the withheld prior art. As this showing appears to depend at least in part on the testimony ... and the question of her credibility, a genuine issue of material fact exists as to this element of the inequitable conduct inquiry. Furthermore, given that Schering does not appear to dispute that it had knowledge of the relevant prior art, a deliberate decision to withhold that information could likewise be reasonably inferred from the evidence already presented."

* * *

Although the defense of inequitable conduct was significantly weakened by Therasense, this district court decision shows that it may remain viable if the district court will treat the absence of evidence of specific intent as an issue of fact. The district court decision here may also have inferred intent from materiality which is no longer permissible under Thereasense.

Schering Corp. v. Mylan Pharmaceuticals, Inc.,Case No. 09-6383 (JLL) (D.N.J. Aug. 22, 2011)"

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