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Federal Circuit Reverses Findings of Prosecution Laches and Inequitable Conduct in Temodar Case

By Aaron Barkoff

Cancer Res. Tech. and Schering v. Barr Labs., No. 2010-1204 (Fed. Cir. 2010)

by Andrew W. Williams

Last week, the Federal Circuit clarified that the equitable defense of prosecution laches requires a separate finding of prejudice resulting from an unreasonable and unexplained delay in prosecution.  Moreover, the prejudice must have been suffered by the alleged infringer, and not some inherent prejudice to the public as a result of the unexplained delay.

The patent at issue, U.S. Patent No. 5,260,291, claims priority back to a patent application filed by a British pharmaceutical company on August 23, 1982.  The original specification identified and characterized thirteen tetrazine derivative compounds, including temozolomide (the active ingredient in the cancer drug Temodar).  The specification also contained animal model data, but no data from human testing.  Claim 31, directed to a method of treating leukemia by administering a tertazine compound, was rejected under 35 U.S.C. § 101 for a lack of utility.  The Examiner indicated that utility could be established by clinical reports and data.  But instead of responding that the human utility of anti-cancer compounds was established by the animal data, the applicants abandoned the application in favor of an identical continuation.  The applicants then proceeded to repeat this pattern eight more times, never once responding to any of the utility rejections.

After Cancer Research obtained ownership of the application on March 25, 1991, it filed the final continuation application on October 18, 1991.  For the first time, the applicants challenged the utility rejection, and the ?291 patent subsequently issued on November 9, 1993.  The FDA approved Temodar for the treatment of refractory anaplastic astrocytoma in August 1999, and for the treatment of newly diagnosed glioblastoma multiforme in March 2005.  Because of a patent term extension of 1,006 days, the ?291 patent will not expire until February 2014.

Barr filed an ANDA for temozolomide on March 19, 2007, with a Paragraph IV certification challenging the validity of the ?291 patent.  Cancer Research filed suit in the United States District Court for the District of Delaware on July 20, 2007.  The only issues at trial were Barr?s counterclaims that the patent was unenforceable for prosecution laches and inequitable conduct.  The district court found that Cancer Research?s delay in prosecution was unreasonable and an egregious misuse of the patent system.  The court also found that the patent was unenforceable because inventor Stevens withheld data that was highly material, that he should have appreciated its materiality, and that he did not provide a credible explanation for withholding the information.  In a 2-1 opinion released last week, the Federal Circuit reversed the district court on both issues.

The Federal Circuit reversed the district court?s finding of prosecution laches because the district court did not find prejudice to Barr, and Barr did not show evidence of intervening rights, such as investing in, working on, or using the claimed technology during the period of delay.  Judge Newman, writing for herself and Judge Lourie, pointed out that this requirement was dictated by Supreme Court precedent, and consistent with earlier Federal Circuit opinions.  In addition, the majority noted that Cancer Research ran the risk that, because of its delay, some other pharmaceutical company (such as Barr) could have intervened and claimed prejudice.  This did not happen.  In fact, because the FDA approved the product in 1999, Barr could have filed its ANDA in 2003, instead of waiting until 2007.  Because of this four-year delay, the majority called into question Barr?s alleged prejudice.

With respect to inequitable conduct, the majority noted that the lower court relied on its finding of materiality of the undisclosed data to infer Dr. Stevens? intent to withhold the data.  However, inventor Stevens had testified that he did not consider the withheld data to be material.  According to the majority, even when undisclosed information is highly material, as long as the individual involved in prosecution does not believe that the data is material, there can be no finding of intent.  This is true even when the individual is aware of their duty to disclose material information.  In other words, even if an individual should have appreciated the materiality of information, there still needs to be a separate showing of intent to find inequitable conduct--the two requirements cannot be conflated.

Judge Prost, in dissent, took issue with the supposed new requirement for a showing of intervening rights.  She pointed out that there was no support to create a temporal limitation requiring the prejudice to have existed during the prosecution delay.  Instead, prosecution laches is an equitable defense and should be triggered by a totality of the circumstances.  Nevertheless, shifting the inquiry to the conduct of the alleged infringer, or any other party for that matter, is inappropriate.  Moreover, Judge Prost noted that the real harm is to the public because of the delay in the free use of patented inventions.  For example, in this case, the ?291 patent will not expire until almost 32 years after the first application was filed.  Judge Prost pointed out that in this case the public will be harmed because Barr, as well as any other generic manufacturer, will be prevented from bringing generic temozolomide to the market because of the delay in prosecution.  Clearly Congress views this as a significant harm, Judge Prost concluded, as evidenced by the Hatch-Waxman regulatory scheme.

Judge Prost also took issue with the majority?s opinion on inequitable conduct.  According to Judge Prost, Dr. Stevens had published the data that was not disclosed to the patent office, and if he believed that information was material enough to publish, he should have understood that the information was material to patentability.  Moreover, Judge Prost took issue with the fact that the majority ignored the district court?s credibility determination.  She warned that the Federal Circuit should not draw inferences that the district court already rejected based on its credibility determinations.

Full post as published by Orange Book Blog: At the Intersection of Patent Law and FDA Law on November 17, 2010 (boomark / email).