United States: No Inference of Deceptive Intent Where It Is "Equally Plausible" That Patent Owner Believed Prosecution Requirements Had Been Met

In AstraZeneca v. Aurobindo, Nos. 10-1460 to -1473 (Fed. Cir. Dec. 14, 2012), the Federal Circuit affirmed the district court's decision that U.S. Reissue Patent No. 37,314 ("the '314 patent"), which is a reissue of U.S. Patent No. 5,260,440 ("the '440 patent"), is not invalid for obviousness or unenforceable for inequitable conduct.  The Court also affirmed the district court's decisions that the PTO properly reissued the '440 patent and that defendant Apotex U.S. infringed the '314 patent by submitting an ANDA for a generic version of Crestor® on behalf of Apotex Inc. ("Apotex Canada").

The '314 patent, which is directed to the statin compound known as rosuvastatin, is owned by Shionogi Seiyaku Kabushiki Kaisha ("Shionogi").  AstraZeneca UK, IPR Pharmaceuticals Inc., and Shionogi (collectively "Plaintiffs") market Crestor®, whose active ingredient is the calcium salt of rosuvastatin.  Crestor® is approved by the FDA for use in control of cholesterol and for treatment of atherosclerosis.  Several generic producers filed ANDAs to market generic versions of Crestor® before the expiration of the '314 patent, and Plaintiffs filed suit.  The district court ruled that the '314 patent is valid, enforceable, and infringed.  Eight generic producers appealed the rulings of validity and enforceability, and only Apotex U.S. appealed the ruling of infringement.

On appeal, the generic producers challenged patent validity on the ground of obviousness.  The generic producers argued that Sandoz, Inc.'s ("Sandoz") European Patent Office ("EPO") Publication No. 0 367 895 disclosed "a good 'lead compound,'" and that the change from the -CH3 substituent at the C2 position in that compound to the -SO2CH3 substituent in rosuvastatin would have been obvious in order to increase hydrophilicity.  Slip op. at 7.  In response, Plaintiffs pointed out that the Sandoz compound demonstrated unexpected increased toxicity; that publications stated that statin potency could be increased by substituents at the C2 position that are lipophilic, the converse of hydrophilic; and that statin development was unpredictable.

"Recognizing the complexity of patent prosecution, negligence—even gross negligence—is insufficient to establish deceptive intent."  Slip op. at 18.

The Federal Circuit held that the district court correctly determined that the '314 patent was not invalid for obviousness.  The Court noted the district court's conclusion that the generic producers did not demonstrate the required motivation for selecting the Sandoz compound as a lead compound, or for making the specific change to that compound.  "We agree that 'obvious to try' was negated by the general skepticism concerning pyrimidine-based statins, the fact that other pharmaceutical companies had abandoned this general structure, and the evidence that the prior art taught a preference not for hydrophilic substituents but for lipophilic substituents at the C2 position."  Id. at 10.

The Court also affirmed the district court's decision that the '314 patent was not unenforceable for inequitable conduct.  The generic producers argued that the '314 patent was unenforceable because two employees in Shionogi's in-house patent staff, Ms. Tomoko Kitamura and Mr. Takashi Shibata, did not disclose the Sandoz reference, a Bayer Japanese patent application, or an EPO search report that included the Sandoz reference to the PTO during prosecution of the original '440 patent.  The generic producers argued that the Sandoz and Bayer references were material, and that they were deliberately withheld with deceptive intent.  Plaintiffs responded that there was no intent to deceive or mislead the PTO, and that any error in prosecution of the '440 patent was unintentional and was rectified by prompt filing of the reissue application and disclosure of the references as soon as Shionogi discovered the error.

The Court noted that there was extensive evidence and argument before the district court, including the live testimony of the Shionogi personnel who were accused of acting inequitably.  It was explained that when Shionogi scientists obtained favorable results with certain compounds, including rosuvastatin, Shionogi's patent department was asked to file a patent application on their results.  Ms. Kitamura in the patent department obtained search reports related to the products, and the reports identified the Sandoz reference and the Bayer application, which described a large class of statin compounds that generically included the rosuvastatin class of substituents, but did not show the specific compounds submitted for patenting.  Ms. Kitamura testified that because there were no instances of the same compounds as Shionogi, she did not believe that the references created a patentability problem.  She then left her employment at Shionogi shortly after filing the '440 patent application, and Mr. Shibata assumed responsibility for the applications.  Mr. Shibata received an EPO search report in a counterpart application that identified the Sandoz reference as particularly relevant.  No IDS was filed for the '440 patent application, and neither the Sandoz reference nor the Bayer application was provided to the PTO or cited by the examiner.  The '440 patent later issued on November 9, 1993. 

During subsequent licensing negotiations between AstraZeneca and Shionogi, it was discovered that no IDS had been filed during prosecution of the '440 patent application.  U.S. patent counsel was consulted and Shionogi filed an application to reissue the '440 patent to submit an IDS citing the references.  Shionogi certified that it had erroneously not brought these references to the examiner's attention, and that it was through error and not due to deceptive intent.  The reissue examiner rejected the original, generic statin claim of the '440 patent based on one of the IDS references, and Shionogi responded by limiting the '440 patent to rosuvastatin and its salts.  The application was subsequently allowed and reissued as the '314 patent.

Regarding materiality, the Federal Circuit agreed with the district court that the reference compounds were sufficiently similar in structure to warrant citation, even though they did not negate the patentability of rosuvastatin.  The Federal Circuit held, however, that there was no deceptive intent.  The generic producers argued that deceptive intent should be inferred because (1) Ms. Kitamura possessed the Bayer reference at the time she filed the '440 patent application and knew she had a duty to disclose it to the PTO; (2) an internal Shionogi memorandum stated that "[d]evelopment information on S-4522 [rosuvastatin] must not be leaked to the outside because it is included in the text of the published unexamined Bayer patent application"; and (3) Mr. Shibata did not disclose the Bayer and Sandoz references to the PTO, even though, according to the generic producers, he knew about them.  Id. at 15 (alterations in original).

The Federal Circuit noted that the district court disagreed with the generic producers after receiving testimony from Mr. Shibata, Ms. Kitamura, and a third Shionogi employee, and that the district court found that "actions suggestive of malfeasance become no more than a string of mishaps, mistakes, misapprehensions and misjudgments on the part of inexperienced and overworked individuals."  Id. (citation omitted).  The Court held that "[c]lear error has not been shown in the district court's finding that deceptive intent was not shown, and was not the single most reasonable inference based on all of the evidence."  Id. at 17.  "The district court observed the witnesses under examination and cross-examination, examined the documents, and reasonably found that it was 'equally plausible' that Mr. Shibata believed the requirements of the United States patent prosecution had been met."  Id.  "Recognizing the complexity of patent prosecution, negligence—even gross negligence—is insufficient to establish deceptive intent."  Id. at 18.

Turning to the question of reissue, the Federal Circuit agreed with the district court that the PTO properly reissued the '440 patent.  The generic producers argued that the statutory reissue requirement of error without deceptive intent had not been met.  The Court disagreed, noting that the district court found no evidence of deceptive intent or a deliberate choice to omit or abandon the rosuvastatin species, which was described in the specification as the most effective product.  "The district court considered the . . . arguments directed to both error and deceptive intent, and concluded that Shionogi did not act intentionally to make the error for which it seeks reissue."  Id. at 23.

Finally, the Federal Circuit addressed Apotex U.S.'s appeal on the issue of infringement.  Apotex U.S. argued that while it signed and filed an ANDA on behalf of Apotex Canada, it did not "submit" the ANDA within the meaning of 35 U.S.C. § 271(e)(2) and thus did not infringe the '314 patent.  The Court disagreed.  The Court noted that Apotex U.S. participated in preparing the ANDA and represented that it would sell the product in the United States.  The Court concluded that the district court did not err in holding that Apotex U.S. was properly named as a defendant in the action, and affirmed the judgment of infringement against all of the generic producers.

Judge Plager concurred, writing separately "to clarify [his] understanding of why Apotex U.S. should be treated as having 'submit[ted]' an application for an ANDA, and therefore be held liable as an infringer under 35 U.S.C. § 271(e)(2)."  Plager Concurrence at 2 (second alteration in original).  Judge Plager opined that the district court's decision was supported by the statutory analysis and the evidentiary record, noting that Apotex U.S. and Apotex Canada were closely related through a complex corporate structure.  Judge Plager also stated that Apotex U.S. clearly intended to engage in, and presumably submitted the ANDA for the purpose of, selling the approved drug in the United States, and that the statute speaks in terms of engaging in the drug's use or sale.  "Under either analysis, the district court did not err in concluding that Apotex U.S. is liable for an act of infringement."  Id. at 6.

Judge Mayer dissented, stating that there can be no infringement of the '314 patent because he believed that patent is invalid for improper reissue.  According to Judge Mayer, "reissue is warranted only where a patentee 'supplies . . . facts indicating how . . . ignorance,' accident, or mistake caused an error in his claims."  Mayer Dissent at 7.  Judge Mayer stated that "the majority conflate[d] the issue of whether Shionogi was guilty of inequitable conduct with the question of whether it met the requirements for reissue under section 251."  Id. at 9.  Judge Mayer additionally stated that Shionogi forfeited its right to obtain reissue by not exercising due diligence in seeking to rectify the alleged defect.

Judges:  Newman (author), Mayer (dissenting), Plager (concurring)

[Appealed from D. Del., Judge Farnan, Jr.]

This article previously appeared in Last Month at the Federal Circuit, January 2013

Copyright © 2013 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP | All rights reserved

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