Abstract
Helicos Sues Three Firms for Infringement of Patents on Sequencing-by-Synthesis
CAMBRIDGE, MASS. 10/25/10—Helicos Biosciences has added Life Technologies and Illumina to its patent infringement lawsuit filed in US District Court for the District of Delaware against Pacific Biosciences alleging infringement of US Patents 7,645,596; 7,037,687; 7,169,560; 7,767,400; and 7,593,109. The patents cover the company's single-molecule sequencing-by-synthesis technology. The suit seeks damages and injunctions.
The company said it was the first to use technology of this type and that machines sold by the defendants employ the same patented process.
Gene Codes Sues NYC over Software Developed to Identify 9-11 Victims
ANN ARBOR, MICH. 11/1/10—Gene Codes has alleged that New York City stole trade secrets from the firm while it was working on identification of victims of the Sept. 11, 2001, terror attacks. Specifically, the suit alleges that the Office of the Chief Medical Examiner inappropriately shared proprietary technology on DNA use in identification with the Federal Bureau of Investigation.
The suit was filed in US District Court for the Southern District of New York.
The company had been asked to develop special software for the 911 identification project and to organize the data it collected. The company already had Sequencher software, which analyzes mitochondrial DNA. It said that in order to fulfill the Medical Examiner's request for assistance, it “suspended its existing commercial software research and development activities and devoted all of its efforts and energies to developing a new and groundbreaking system of DNA profile matching technology.”
Working under a 3-year contract, the company eventually created what was named the Mass-Fatality Identification System, or M-FISys. This system was used in the identification of 20,000 human body fragments recovered from the Ground Zero site. After the contract expired, Gene Codes alleges that the Office violated a separate contract with Gene Codes by providing trade secrets to the FBI.
Gene Codes wants damages of at least $10 million.
New York City has filed a countersuit for dismissal and damages. The City says it received a “perpetual, royalty-free” license to the new software for non-commercial purposes. Gene Codes was to be allowed to claim copyright but not to use the software commercially. The City says that its specification of the desired functionalities of the software and comments on the work as it progressed made the development a collaborative effort. Moreover, Gene Codes allegedly did not provide the promised training and upgrades.
Reportedly, the City could have claimed joint ownership of the software but chose not to because Gene Codes was devoting nearly all of its resources and accepting compensation at a lower rate than it ordinarily would have charged.
Abraxis Bioscience Has No Grounds to Sue for Infringement
WASHINGTON, D.C. 11/9/10—Circuit Judges
Judge Gajarsa's opinion for the court and Judge Newman's dissent are reprinted in the documents section of this issue.
Richard De Bodo of Hogan & Hartson, LLP (Los Angeles, Cal) argued for Abraxis Bioscience. With him on the brief were
Background
Abraxis sells the local anesthetic ropivacaine in four concentrations under the name Naropin® for use in surgery and to manage acute pain, such as during childbirth. Only the 0.2% concentration has been approved by the US Food and Drug Administration for use during labor and delivery.
The US District Court for the District of New Jersey (Judge
The first of these patents is US 4,870,086, which claims ropivacaine hydrochloride monohydrate. The inventor, Rune Sandberg, had assigned his rights in the patent to Astra Lakemedel Aktieboag (Astra L) in October 1986. Patent 5,670,524 discloses the use of ropivacaine at concentrations less than 0.25% for treating pain. Claim 9 of this patent was critical to the case. It covers “a pharmaceutical salt of ropivacaine at a concentration […] lower than 0.25% by weight.” Finally, Patent 5,834,489 claims the use of ropivacaine for treating pain at concentrations less than 0.5% administered epidurally. The sole inventor on the latter two patents, Arne Torsten Eek, assigned his rights to AB Astra in June 1994. AB Astra and AstraZeneca AB (AZ-AB) later merged, and AB Astra assigned the ‘524 and ‘489 patents to AZ-AB.
The patents have led a rather complicated life, as detailed in the opinion. To summarize, in April 2006, Abraxis executed an Asset Purchase Agreement with AstraZeneca under which the patents were transferred to the former. AstraZeneca and Abraxis also signed an Intellectual Property Assignment Agreement conveying the ropivacaine patents to the latter. The chain of title was broken, however, because Astra L and AZ-AB had not assigned the rights in the patents to AstraZeneca at the time this agreement was signed.1
On November 13, 2006, Navinta filed an ANDA for a generic version of Naropin® along with a Paragraph IV certification. The formulation the company intended to produce was not the compound described in the ‘489 and ‘524 patents, so Navinta submitted a Section viii statement to the effect that its formulation was not the same as that in Naropin. At that time, the only patent listed by Astra in the Orange Book was the ‘086 composition patent. Navinta's proposed labeling differed from that for the brand-name drug, as it maintained only the indication for surgical anesthesia at a recommended concentration of greater than 0.5%. “It is uncontested that the use of ropivacaine for surgical anesthesia at concentrations of at least 0.5% does not infringe the ‘524 and ‘489 patents because the claims of those patents are limited to methods of treating pain and also require concentrations less than 0.25% and 0.5%, respectively.”
In March of the following year, Abraxis filed a lawsuit alleging that Navinta's ANDA and Paragraph IV certification infringed the ‘086 patent under 35 USC §271(e)(2).2 To avoid the Orange Book listing requirements under §271(e)(2), the Abraxis complaint “erroneously alleged” indirect infringement of the ‘489 and ‘524 method patents under 35 USC §271(b)–(c). Abraxis actually was not allowed to make the allegations, “because Navinta has never sold or offered to sell ropivacaine hydrochloride products and an act of actual commercial infringement is required for induced or contributory infringement.” The same day the infringement suit was filed, the three patents were assigned to AstraZeneca. Eight months later, the company executed an Intellectual Property Assignment Agreement conveying the patents to Abraxis for its “sole and exclusive use and enjoyment.” Thereafter, Abraxis was said to “own all rights, title, and interest” to the patents, including the right to sue for patent infringement no later than June 28, 2006.
In response to the ANDA, the FDA immediately said that Navinta could not change the labeling of the drug because the ‘489 and ‘524 patents were not listed in the Orange Book.
Late in 2007, Abraxis submitted the ‘524 and ‘489 patents for inclusion in the Orange Book. Navinta then resubmitted its Section viii statement and made significant changes in its proposed labeling to remove any statement relating to uses claimed in those patents.
Navinta filed a motion to dismiss Abraxis' infringement suit on the ‘489 and ‘524 patents for lack of subject matter jurisdiction because the counts alleged speculative future infringement of the unlisted method patents under §271(b)–(c). In response, Abraxis amended its complaint to add a claim of infringement of the ‘524 and ‘489 patents under §271(e)(2).
The District Court Decision
Navinta said the district court lacked jurisdiction under §271(e)(2) because the method patents were not listed in the Orange Book. Abraxis amended its complaint to include the ‘489 and ‘524 patents3 and contested Navinta's motion to dismiss for lack of jurisdiction. Navinta filed a Rule 12(b)(1) motion to dismiss for lack of standing, arguing that Abraxis did not own the patents at the time it filed suit for infringement. The court said that Abraxis did indeed own the patents because, as the CAFC put it, “the ‘intent’ of the various Astra entities was sufficient to imply a nunc pro tunc assignment based on the relationship between the corporate entities.”
The district court issued its decision two days before 30-month stay attending Navinta's ANDA would have expired. The court found direct and indirect infringement of the ‘086 patent and indirect infringement of the ‘524 and ‘489 patents. The court said that Navinta's ANDA could not be approved until the ‘489 and ‘524 patents expired. Navinta appealed.
The Cafc Analysis
The CAFC first considered the question of standing, which required consideration of who held the patent rights at the relevant time:
If the contract expressly conveys rights in future inventions, no further act is required once an invention comes into being, and the transfer of title occurs by operation of law. … In contrast, contracts that obligate the owner to grant rights in the future do not vest legal title to the patents in the assignee. … Here, the contractual language of the [Asset Purchase Agreement] indicates that the actual transfer of the asserted patents was to occur in the future. … Because the APA is a promise by AZ-UK to assign the relevant patents to Abraxis when AZ-UK obtains legal title, under our “promise to assign” cases, a subsequent written agreement is necessary to consummate the assignment. … It is clear from the record that AZ-UK did not have legal title when it executed the June 28, 2006 IP Assignment Agreement and it did not obtain legal title to the patents until March 15, 2007. … The only subsequent written agreement between AZ-UK and Abraxis is the November 12, 2007 Intellectual Property Assignment Agreement. This document is a clear recognition by Abraxis that AZ-UK did not hold legal title and therefore could not have transferred the patents without a properly executed assignment. It was a futile attempt by the parties to correct a critical error by a nunc pro tunc assignment. The effect of this document—executed eight months after the lawsuit was filed—is the critical issue on appeal.
After looking at the history of patents' meanderings, the CAFC found that Abraxis did not have title to the patents the day it filed the infringement action. “Thus, despite Abraxis's delayed attempt to obtain title to the asserted patents, the action must be dismissed because Abraxis lacked standing on the day it filed the action.”
There is one exception to this rule. “A party may sue for past infringement transpiring before it acquired legal title if a written assignment expressly grants the party a right to do so.” Such was not the case here.
“Accordingly, we reverse the denial of the motion to dismiss the infringement complaint for lack of standing, vacate the district court's judgment, and remand with instructions for the district court to dismiss Abraxis's complaint without prejudice.”
The Dissent
The district court, applying the laws of contract and property transfer, held that the three patents in suit were owned by the plaintiff Abraxis when this suit was filed, and that the plaintiff had standing to bring this suit. The defendant did not seek interlocutory review of that ruling; and there have been over three years of litigation, including full trial of infringement of all three patents, and judicial determination of complex questions of law and fact concerning the Hatch-Waxman Act and its application. This court now finds that the plaintiff did not have standing, after all.
The court thus erases the trial, nullifies the judgment, cancels the appeal, and sends the case back so that the parties and the district court and this court can do it all again. However, the court has not shown reversible error in the district court's ruling on the question of standing, a ruling based on state contract and commercial transaction law. Instead, the panel majority creates a new and convoluted law unique to the patent aspect of commercial transactions. No special public policy is served, and no reason exists for creating a new commercial law, divergent from the governing state law, when the subject of the commercial sale is a patent. I must, respectfully, dissent.
In Judge Newman's view, the patent rights were sold to Abraxis on April 26, 2006, and the district court thus decided correctly.
It is beyond cavil that parties to a contract can set the effective date of their agreement. … All parties to the transaction agree that the patents were sold and transferred to Abraxis as of the Effective Date stated in the agreements. This court's ruling that the transaction was legally void is negated by all precedent, is contrary to New York law, and is not within any federal exception to state law. The district court correctly ruled that Abraxis had standing to sue when this case was filed. With all respect to my colleagues on this panel, I must dissent from their ruling and their reasoning.
CAFC Reverses Finding of Prosecution Laches, Inequitable Conduct Concerning Anticancer Drug
WASHINGTON, DC 11/9/10—Circuit Judges Newman, Lourie, and Prost of the US Court of Appeals for the Federal Circuit today reversed a finding of prosecution laches and inequitable conduct concerning a patent on an anticancer drug that had been challenged by a generic manufacturer. The opinion, by
Background
US Patent 5,260,291 claims tetrazine derivatives and methods of using them to treat cancer. Temozolomide, a member of the class, is the active ingredient in Temodar®, approved by the US Food and Drug Administration for the treatment of two brain tumors, refractory anaplastic astrocytoma and newly diagnosed glioblastoma multiforme. The patent application, filed in August 1982, characterizes 13 compounds, three of which, including temozolomide, are said to have “particular importance.” As a group, the compounds are said to “possess valuable antineoplastic activity, for example against carcinomas, melanomas, sarcomas, lymphomas and leukaemias” and “have proved particularly active” in several different mouse tumor models.
Originally, the Examiner rejected one claim of the application, to a method of treating leukemia, because it “is not a believable utility on its face.” The Examiner went on to say that in order to prove utility, the company would have to provide “clinical reports and data” or demonstrate “acceptance of the drug … by the Food and Drug Administration and by the American Medical Association Council on Pharmacy.”
(Many readers will remember the time the US Patent and Trademark Office believed in vivo data were required to prove efficacy if a claim was made for use of a compound to treat disease.)
The British company that filed the patent application thereafter abandoned it and filed a continuation, which was rejected on utility grounds in October 1984. After this sequence had been repeated eight times, the application was rejected for lack of utility.
In 1991, the bedraggled patent application was assigned to Cancer Research, which soon filed another continuation application and challenged the Examiner's finding of lack of utility, arguing that the animal data in the initial application should have been sufficient to prove the point. A new Examiner then took over, rejecting the application on the grounds that although the disclosure proved utility, such utility was only for claims to the specific activity listed and tested. Cancer Research protested, and eventually, a third Examiner allowed the patent to issue, in November 1993.
Not surprisingly, research continued on the compounds while all this was going on, and several scientific and clinical papers were published. Temozolomide entered Phase I testing in 1987, and the FDA approved it for anaplastic astrocytoma in August 1999 and newly diagnosed glioblastoma multiforme in March 2005. Schering acquired an exclusive license to the patent and in October 1999 filed for a patent term extension under 35 USC §156. Schering later applied for pediatric exclusivity, which was granted; the patent now is scheduled to expire in February 2014.
Barr filed an Abbreviated New Drug Application with a Paragraph IV certification for temozolamide in March 2007. Cancer Research sued for infringement. Barr and Cancer Research stipulated to infringement and validity, so the US District Court for the District of Delaware (Judge
The court agreed with Barr that the ‘291 patent was unenforceable for prosecution laches. In the court's view, such a finding did not require a demonstration of intervening rights but rather concerned only whether the delay in the prosecution of the patent was unreasonable and unexplained. The court said that even if the PTO was requiring human clinical trial data, Cancer Research could have objected on the basis of case law showing that animal test data were adequate to prove utility. In the court's view, Cancer Research had not done this because it stood to benefit commercially from later issuance of the patent, as that would delay market entry of a generic version.
The court went on to find inequitable conduct, in that Cancer Research supposedly had failed to disclose “highly material information” to the PTO. This information consisted of clinical trial data showing that one of the tetrazine compounds, mitozolamide, was not effective and had significant safety issues and that some other members of the group were ineffective in at least one animal model. Judge Robinson found this information to contradict the patentability of the broadly written claims to utility of the compounds in treating cancer. Cancer Research's argument that the data were not that important was said by the court to be contradicted by the number of scientific papers the company had published containing the data. The court also found fault with the company's nondisclosure of data showing utility. In the court's view, as described by the CAFC, the inventor “withheld the data with intent to deceive because (1) the withheld information was highly material, (2) [the inventor] knew about the information and should have appreciated its materiality as it directly contradicted the application's disclosure, and (3) [he] did not provide a credible explanation for withholding the information.”
The Cafc Analysis
The CAFC first took up the question of prosecution laches, an equitable defense to a charge of infringement, under which “‘a patent [may be] unenforceable when it has issued only after an unreasonable and unexplained delay in prosecution’ that constitutes an egregious misuse of the statutory patent system under the totality of the circumstances” (Symbol Technologies, Inc v Lemelson Medical, 422 F.3d 1378 [Fed Cir 2005] at 1385–6). Cancer Research said the finding by the district court was inappropriate “because the court failed to find any evidence of actual prejudice either to the defendant, Barr, or to the public” and because the delay in the issuance of the patent arose from the company's belief that clinical data were necessary and such were not available. Barr countered that no finding of prejudice was required and that Cancer Research had “offer[ed] no credible justification for the nine-year delay.”
The CAFC sided with Cancer Research. “We … hold that to establish prejudice an accused infringer must show evidence of intervening rights; i.e., that either the accused infringer or others invested in, worked on, or used the claimed technology during the period of delay.” Such was not the case here. “This court's precedent also recognizes intervening adverse rights as a requirement to holding a patent unenforceable for prosecution laches. … Barr's argument that the public was inherently prejudiced by Cancer Research's delay is not persuasive. … An inventor is not obligated to develop its product at any particular time prior to issuance or within the patent's term, but, once its patent issued and it had a licensee, it filed its IND promptly.” Moreover, “Barr filed its ANDA more than thirteen years after the issuance of Cancer Research's patent and more than seven years after approval of Cancer Research's product. Barr was thus hardly prejudiced by the delay in the issuance of the ‘291 patent … Nor was anyone else.”
The CAFC next took up the question of inequitable conduct.
To successfully prove inequitable conduct, the accused infringer must provide evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) did so with intent to deceive the PTO. Star Scientific, Inc v RJ Reynolds Tobacco Co, 537 F.3d 1357, 1365 (Fed Cir 2008). Both materiality and intent must be proven by clear and convincing evidence. Id. While deceptive intent can be inferred from indirect and circumstantial evidence, that “inference must not only be based on sufficient evidence and be reasonable in light of that evidence, but it must also be the single most reasonable inference able to be drawn from the evidence to meet the clear and convincing standard.” Id. at 1366.
Examination of a finding of such conduct by an appeals court requires “review [of] the underlying factual determinations of materiality and intent for clear error, and … review [of] the ultimate decision as to inequitable conduct for an abuse of discretion.
We agree with Cancer Research that the district court clearly erred in finding that [the inventor] intended to deceive the PTO by not disclosing data on the claimed compounds, and specifically we agree that the district court erred because it relied solely on its finding of materiality to infer intent. … Because the district court did not rely on any other evidence to support its finding of deceptive intent beyond that used to find the withheld data material, the court in effect relied solely on its materiality finding to infer intent to deceive. But materiality and intent are separate requirements, and intent to deceive cannot be found based on materiality alone. … A court cannot simply infer that an applicant “should have known” the materiality of withheld information and thus intended to deceive the PTO because the applicant knew of the information and the information is material. A district court must find some other evidence that indicates that the applicant appreciated the information's materiality. … In this case, evidence that [the inventor] co-authored articles that contradict the disclosure of the ‘291 patent specification does not alone establish that [he] withheld those studies intending to deceive the PTO. … While publication to the scientific community is not the same as disclosure to the PTO and does not foreclose a finding of deceptive intent, … the prompt publication of data in multiple articles over the entire course of prosecution is inconsistent with finding that intent to deceive is the single most reasonable inference to draw from the evidence in this case … [citations omitted]
The Dissent
“In my view, the majority opinion seriously errs in reversing the district court's findings and conclusions that US Patent No 5,260,291 … is unenforceable on the grounds of both prosecution laches and inequitable conduct,” Judge Prost wrote.
The majority appears to not take issue with the district court's findings and conclusion that the patentee's almost decade-long delay in prosecuting its application … was unreasonable. … [T]he majority rejects the legal standard the district court applied. … I do not agree with the majority that a showing of intervening rights; i.e., prejudice, is compelled by our precedent. Moreover, even if one could construe the case law as requiring prejudice, there is no basis, in the relevant case law or otherwise, for the majority's further temporal limitation that the prejudice exists during the period of delay. … Neither the Supreme Court nor this court has required a defendant to establish prejudice to assert prosecution laches. … More importantly, even if prejudice is required, there is no basis for the majority's new requirement that one must confine himself to the period of prosecution delay in determining whether prejudice exists. … Similarly, in reversing the district court's findings and conclusions regarding inequitable conduct, the majority veers from our precedent in at least two respects: (1) it creates a new evidentiary standard for establishing inequitable conduct, and (2) it inexplicably rejects the district court's unassailable credibility determinations, which served as the basis for its conclusion that inequitable conduct occurred. … Certainly, if [the inventor] found the [withheld] information sufficiently accurate to base conclusions upon and to publish to his peers, it was sufficiently accurate and conclusive enough to submit to the PTO. … The majority's rejection of the findings and conclusions of the trial judge rests on two faulty pillars. The majority first missteps by determining that materiality and intent require separate evidentiary bases. … [This view] has no basis in our precedent. … [T]he evidence presented at trial separately supports the district court's findings … and when combined with the district court's credibility findings regarding the [inventor's] “explanation” for his failure to disclose, is absolutely sufficient to support the conclusion that highly material evidence was withheld from the PTO with intent to deceive.
Footnotes
1
Abraxis Bioscience, Inc v Navinta LLC, No. 07-1251, 2009 WL 904043, at *2 (DNJ Mar. 30, 2009)(order denying motion to dismiss for lack of subject matter jurisdiction).
2
See Eli Lilly & Co v Medtronic, Inc, 496 US 661, 678 (1990)(§271(e)(2) creates “a highly artificial act of infringement that consists of submitting an ANDA…containing a [Paragraph IV Certification] that is in error as to whether commercial, manufacture, use, or sale of the new drug (none of which, of course, has actually occurred) violates the relevant patent.”); Glaxo Group Ltd v Apotex, Inc, 376 F.3d 1339, 1351 (Fed Cir 2004)(“[§] 271(e)(2) is designed to create an artificial act of infringement for purposes of establishing jurisdiction in the federal courts.…”).
3
Abraxis Bioscience, Inc v Navinta LLC, No. 07-1251 (DNJ Oct. 9, 2007)(order granting motion to amend complaint).