Latest Federal Court Cases, 09/07/21
Belcher Pharmaceuticals, LLC v. Hospira, Inc., Appeal No. 2020-1799 (Fed. Cir. Sept. 1, 2021)
In an appeal from the United States District Court for the District of Delaware, the Federal Circuit affirmed the district court’s finding that Belcher Pharmaceuticals, LLC (“Belcher”) engaged in inequitable conduct by withholding prior art from the Patent and Trademark Office (the “PTO”) during the prosecution of Belcher’s patent. This is a rare case since Therasense in which the Federal Circuit has affirmed a finding of inequitable conduct for failure to disclose prior art during prosecution of the relevant patent.
At issue was Belcher’s patent relating to an injectable l-epinephrine formulation. The patent sought to address a problem with epinephrine degradation. The patent claimed to provide a solution to this problem that “seemed impossible” and “had never been accomplished before.” According to the inventor—Belcher’s CEO—the solution involved a new method of manufacturing a sulfite-free, l-epinephrine solution with an in-process pH of 2.8 to 3.3. Claims 6 and 7 of the patent, which were at issue in the appeal, covered epinephrine formulations having a pH between 2.8 and 3.3.
The Patent Office initially rejecting the patent’s claims as obvious based on a Canadian patent application, which taught a epinephrine injection with a pH range of 2.2 to 5.0 (“Helenek’s Application”). Belcher responded by arguing that Helenek’s Application’s 2.2 to 5.0 pH range failed to render obvious the claimed range of 2.8 to 3.3 because the particular range is “critical” and achieves “unexpected results relative to the prior art range.” On that basis, the Patent Office withdrew the pending rejection and allowed the patent. In discussing the reasons for allowance, the Patent Office explained that the cited art failed to render the claims unpatentable “in view of Applicant’s demonstration of criticality of a pH range between 2.8 and 3.3.”
Prior to obtaining the patent, Belcher also submitted a new drug application (the “NDA”) to the Food and Drug Administration (the “FDA”) related to the same subject matter. During the NDA process, Belcher disclosed prior art that was never disclosed during prosecution of the patent, and took positions that were inconsistent with positions later taken during the prosecution of the patent.
After Hospira sought FDA approval for a generic version, Belcher sued for infringing the Patent. Hospira asserted inequitable conduct as a defense. The district court found that the patent was unenforceable for inequitable conduct based on the actions of a Belcher employee, Mr. Rubin, who had been heavily involved in both the prosecution of the patent and the NDA.
Regarding materiality, the district court credited the testimony of Hospira’s expert witness that the withheld art was but-for material to patentability because it disclosed two aspects of the asserted claims: the pH range and the impurity levels. The district court also concluded that clear and convincing evidence demonstrated that Mr. Rubin acted with requisite intent to deceive the PTO. The district court explained that Mr. Rubin knew of the withheld art before and during the patent’s prosecution. The district court also noted that Mr. Rubin was a key player in the NDA approval process as well as the patent’s prosecution. According to the district court, from his dealings with the FDA during the NDA, Mr. Rubin knew that Belcher described the claimed pH range of 2.8 to 3.3 as “old”; that Belcher disclosed some of the prior art that teaches an overlapping pH range of 3.25 to 3.70; that Belcher had submitted data on some of the prior art showing a pH within the claimed range; and that Belcher switched from a lower pH range to the claimed 2.8 to 3.3 pH range at least in part to expedite FDA approval. But when dealing with the PTO, the district court explained, Mr. Rubin did not merely withhold this information but also used emphatic language to argue that the claimed pH range of 2.8 to 3.3 was a “critical” innovation that “unexpectedly” reduced racemization.
The Federal Circuit affirmed the district court’s findings.
First, the Federal Circuit rejected Belcher’s argument that the withheld art was immaterial because it was “cumulative” of Helenek’s Application’s disclosure of epinephrine formulations with pH between 2.2 and 5.0, including withheld art with epinephrine solutions with a pH range of 3.0 to 4.0. According to the Court, Belcher’s argument was directly at odds with its argument during prosecution that the claimed range was “critical.”
Second, the Federal Circuit found the lack of direct evidence of intent immaterial. The Federal Circuit was persuaded by the district court’s reasoning that deceptive intent was the only reasonable inference given Mr. Rubin’s involvement in the NDA approval process and his inconsistent statements to the PTO. In so holding, the Federal Circuit rejected Belcher’s argument that Mr. Rubin withheld the references not because he had deceptive intent, but because he genuinely believed that the withheld products were irrelevant. The Federal Circuit found no error in the district court’s finding that the most reasonable inference was that Mr. Rubin possessed the specific intent to deceive the PTO when withholding prior art.
A copy of the opinion can be found here.
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Lubby Holdings LLC v. Henry Chung, Appeal No. 2019-2286 (Fed. Cir. Sept. 1, 2021)
In an appeal from a district court judgment, the Federal Circuit reversed the damages award, finding there was insufficient evidence to establish compliance with the marking statute. The defendant, Chung, argued that the plaintiffs had sold unmarked products practicing the patented invention. The majority found: (i) Chung satisfied his initial burden of production—a low bar according to the majority—by identifying an unmarked product that was sold by plaintiffs, and alleged not to practice the patented invention; and (ii) the plaintiffs failed to satisfy their own burden of proof, failing to rebut with evidence that the identified unmarked product did not practice the patented invention. Unable to benefit from their products being deemed “marked” under § 287(a) to recover damages prior to the complaint being filed, the plaintiffs had to show they gave Chung actual notice under § 287(a) prior to the filing date. The majority determined that the plaintiffs had only ever previously said that Chung could not use the patented technology, but never previously notified Chung of any allegedly infringing activity. Because the plaintiffs did not previously notify Chung of any allegedly infringing activity, the majority determined that the plaintiffs failed to give Chung actual notice. Thus, the majority reversed the district court on damages, remanding for the district court to determine how many infringing products were sold since the complaint was filed and a reasonable royalty rate at which to calculate damages.
Judge Newman dissented, arguing that the jury’s findings regarding notice and damages should not have been overturned.
A copy of the opinion can be found here.
By Tyler Hall