United States: At The Federal Circuit - Affirmatively And Knowingly Misrepresenting Prior Art Constitutes Inequitable Conduct

In Apotex, the Federal Circuit affirmed the district court's holding that the inventor-applicant Dr. Sherman's misrepresentations regarding the prior art cited against his application during prosecution were but-for material, and thus constituted inequitable conduct. Apotex, Inc. v. UCB, Inc., 763 F.3d 1354, 1361(Fed. Cir. Aug. 15, 2014).

The district court found, and the Federal Circuit affirmed, that the inventor, Dr. Sherman, made multiple misrepresentations regarding the prior art during prosecution that "evidence[d] a pattern of lack of candor" constituting inequitable conduct.  See id. at 1362.  During prosecution, Dr. Sherman concealed the fact that Univasc—the product Apotex would later accuse of infringement—was made according to the process claimed in his pending application.  Id. at 1357-58.  He also affirmatively misrepresented the nature of the asserted prior art reference, U.S. Patent No. 4,753,450 ("the '450 patent"), which is listed in the FDA Orange Book as covering Univasc.  Id.

The issue during prosecution was whether the prior art disclosed reacting moexipril hydrochloride with an alkaline stabilizing agent.  See id. at 6.  Based on preliminary tests Dr. Sherman conducted the day he filed his application, Dr. Sherman suspected that Univasc included moexipril magnesium.  This information was sufficient to indicate that Univasc included the reacted moexipril hydrochloride and alkaline stabilizing agent.  Id. at 1358.  His suspicions were confirmed two months later when he received a detailed mass spectrometry report on Univasc.  Id. at 1359.

Despite this information, which Dr. Sherman failed to disclose to the United States Patent and Trademark Office ("USPTO"), Dr. Sherman consistently argued that Univasc and the '450 patent disclosed an unreacted combination of moexipril hydrocloride and alkaline stabilizing agent.  See id. at 1357-58.  First, Dr. Sherman submitted the Orange Book listing that stated the moexipril hydrochloride and magnesium oxide were "unreacted but combined."  Id. at 1357.  He instructed counsel to reinforce these arguments with a declaration from an expert.  Id. Tellingly, Dr. Sherman failed to apprise his expert of all of the information he possessed regarding Univasc and the '450 patent, including the mass spectrometry report.  Id. at 1358. 

The court agreed with the patentee that the duty of candor and good faith does not require applicants to disclose personal suspicions or beliefs regarding the prior art to the USPTO.  Id. at 1361.  Reasonable, good-faith arguments distinguishing an application over the prior art do not constitute misconduct by an applicant, regardless of the applicant's personal beliefs regarding the prior art.  Id.  However, the Apotex court explained that knowingly misrepresenting material facts regarding the prior art to the USPTO, however, does constitute misconduct. Id. at 1362.

Distinguishing between acceptable, good-faith advocacy and unacceptable misrepresentations of prior art, the Federal Circuit found that Dr. Sherman's statements constituted the latter because they were "factual in nature" and "contrary to the true information he had in his possession."  Id. at 16.  The Federal Circuit concluded that "Dr. Sherman knew enough to recognize that he was crossing the line from legitimate advocacy to genuine misrepresentation of material facts."  Id.

Distinguishing between acceptable, good faith advocacy and unacceptable misrepresentations of prior art, the Federal Circuit found that Dr. Sherman's statements constituted the latter because they were "factual in nature" and "contrary to the true information he had in his possession."  Id.  The Federal Circuit concluded that "Dr. Sherman knew enough to recognize that he was crossing the line from legitimate advocacy to genuine misrepresentation of material facts."  Id. at 1362.

The Apotex decision is in-line with previous decisions, like Therasense, regarding the applicant's duty of candor before the USPTO.  This case serves as a reminder that practitioners clearly explain the duty of candor to applicants, regardless of their familiarity with the USPTO.  The Federal Circuit found that it was not necessary to address the district court's alternative holding that Dr. Sherman's misbehavior was so egregious that materiality could have been presumed, consistent with the Federal Circuit's en banc decision in Therasense v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc).  However, dictum does indicate that had the Apotex court reached this issue, it would have found Dr. Sherman's conduct—particularly, "the fact that Dr. Sherman arranged for the preparation and submission of an expert declaration containing false statements instrumental to issuance of the patent"—would have amounted to affirmative misconduct such as that in Therasense.

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