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'Inequitable Conduct' Survives; Denial of Apotex Patent Affirmed

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By Mark Wilson, Esq. on August 19, 2014 5:35 PM

Following the Federal Circuit's 2011 opinion in Therasense Inc. v, Becton, Dickinson & Co., the "inequitable conduct" defense -- described by one Quinn Emanuel article on the subject as "the 'atomic bomb' of patent law" -- became much harder to invoke.

Last week, the Federal Circuit proved that news of its death had been greatly exaggerated, as it used inequitable conduct to invalidate a plaintiff's patent.

The Patent

In 2004, Dr. Bernard Charles Sherman of Apotex was issued a patent for manufacturing Moexipril, a drug used to treat hypertension. The drug is stabilized with a magnesium compound. The process for stabilizing drugs like Moexipril has been around since the 1980s, and Dr. Sherman disclosed these processes in the prior art section of his patent. Well, sort of.

Another company, UCB, sells two Moexipril drugs that are made in accordance with an even older patent describing a process for stabilizing that type of drug with a magnesium compound. During the process of getting his 2004 patent, Dr. Sherman's application was rejected three times for obviousness (the examiner found that anyone could have obtained the results Dr. Sherman did by combining UCB's process with another process described in an article by a Dr. Gu). But after Dr. Sherman provided expert testimony that the results were not obvious, the patent was eventually granted.

That's a Bold Move, Cotton; Let's See If It Pays Off

Apotex sued UCB for infringement, but the district court found for UCB, holding Apotex's patent unenforceable because of "Dr. Sherman's inequitable conduct before the PTO." Apparently, Dr. Sherman knew that UCB's drugs were made according to a process it had patented, and misrepresented UCB's prior art in his own patent application.

The Federal Circuit affirmed the district court's decision under a "clearly erroneous" standard; but really, the standard here is, "How brazen were you that you thought you could get away with this?" All the evidence showed that Dr. Sherman knew that the prior UCB patent applied to his own patent, yet he claimed he was uncertain. He actively collaborated with his attorney throughout the litigation and came up with the idea to bolster his arguments via expert testimony that he knew was a bunch of baloney.

Dr. Sherman's false claims were highly material to finally getting his patent approved, the court said. The patent examiner issued the patent only after Dr. Sherman assured him that the two processes were different -- the same assurance that in this case turned out to be false.

The court emphasized that Dr. Sherman had no affirmative duty to comment on the prior art at issue here. But since he did open his mouth and nothing but lies came out, he's getting his patent taken away. Dr. Sherman didn't know everything about how UCB made its drug, but "[h]e knew enough to recognize that he was crossing the line from legitimate advocacy to genuine misrepresentation of material facts."

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