United States Court of Appeals for the Federal Circuit
04-1478, -1496
PHARMACIA CORPORATION, PHARMACIA AB,
PHARMACIA ENTERPRISES S.A., and PHARMACIA & UPJOHN COMPANY,
Plaintiffs-Cross Appellants,
and
THE TRUSTEES OF COLUMBIA UNIVERSITY IN THE CITY OF NEW YORK,
Plaintiff,
v.
PAR PHARMACEUTICAL, INC.,
Defendant-Appellant.
Jack B. Blumenfeld, Morris, Nichols, Arsht & Tunnell, of Wilmington, Delaware,
argued for plaintiffs-cross appellants. With him on the brief were Maryellen Noreika,
Rodger D. Smith, II, and Leslie A. Polizoti. Of counsel on the brief was Robert D.
Rhoad, Dechert LLP, of Princeton, New Jersey.
Glenn J. Pfadenhauer, Williams & Connolly LLP, of Washington, DC, argued for
defendant-appellant. With him on the brief were John G. Kester and Jessamyn S.
Berniker. Of counsel was Aaron P. Maurer.
Appealed from: United States District Court for the District of New Jersey
Judge Stanley R. Chesler
United States Court of Appeals for the Federal Circuit
04-1478,-1496
PHARMACIA CORPORATION, PHARMACIA AB,
PHARMACIA ENTERPRISES S.A., and PHARMACIA & UPJOHN COMPANY,
Plaintiffs-Cross Appellants,
and
THE TRUSTEES OF COLUMBIA UNIVERSITY IN THE CITY OF NEW YORK,
Plaintiff,
v.
PAR PHARMACEUTICAL, INC.,
Defendant-Appellant.
___________________________
DECIDED: August 10, 2005
___________________________
Before RADER, SCHALL, and LINN, Circuit Judges.
RADER, Circuit Judge.
Par Pharmaceutical, Inc. (Par) filed Abbreviated New Drug Application (ANDA)
No. 76-218, seeking approval to market and sell a generic version of a glaucoma
medication called Xalatan. Because the United States District Court for the District of
New Jersey did not abuse its discretion in finding only U.S. Patent No. 5,422,368 (the
’368 patent) unenforceable due to inequitable conduct, this court affirms.
I.
Glaucoma is a chronic disease manifested by an increased fluid pressure in the
eye, known as intraocular pressure. Treatments include topical medications, oral
medications and surgery. Xalatan treats glaucoma by topical application. The United
States Food & Drug Administration’s (FDA) “Orange Book,” a register that provides
notice of patents covering name brand drugs, shows that multiple patents cover
Xalatan. Two of these patents, U.S. Patent No. 5,296,504 (the ’504 patent) and the
’368 patent, are collectively owned by Pharmacia Corp., Pharmacia AB, Pharmacia
Enterprises S.A. and Pharmacia & Upjohn Co. (Pharmacia).
Under requirements for an ANDA, Par notified Pharmacia on November 6, 2001
of its intent to seek to market a generic version of Xalatan. In response to this notice,
Pharmacia filed suit on December 21, 2001 in the U.S. District Court for the District of
New Jersey, alleging infringement by virtue of Par’s ANDA submission.1
At trial, Par admitted infringement of the ’368 and ’504 patents, and did not assert
any invalidity defenses based on prior art or 35 U.S.C. § 112. Instead, Par asserted
that inequitable conduct rendered the patents unenforceable. Specifically, Par alleged
that the patent applicants issued a declaration and terminal disclaimer during
prosecution of the ’368 patent with an intent to deceive the Patent Office on a point of
material significance. After a bench trial, the district court found only the ’368 patent
unenforceable due to inequitable conduct. Thus, the ’504 patent remained enforceable.
Pharmacia Corp. v. Par Pharm., Inc., No. 01-6011 (D.N.J. July 6, 2004) (Final
Judgment). As noted, Par had conceded that it infringed the ’504 patent. Thus, the
district court entered judgment for Pharmacia on the ’504 patent and for Par on the ’368
patent. Id., slip op. at 59. This appeal followed.
1
The district court’s findings as to improper inventorship and inequitable
conduct with respect to U.S. Patent No. 4,599,353 (the ’353 patent), owned by the
Trustees of Columbia University and licensed to Pharmacia, have not been appealed
and thus are not addressed by this opinion.
04-1478,-1496 2
II.
The ’368 patent and the ’504 patent are siblings, filed simultaneously on
December 8, 1992 as continuations of U.S. Patent Application No. 07/469,442 (the ’442
application). During prosecution of the ’368 patent, the U.S. Patent & Trademark Office
(PTO) issued an October 21, 1993 Office Action (the Office Action) including two
rejections at the heart of the alleged inequitable conduct.
The first rejection involved a prior art rejection under 35 U.S.C. § 103(a).
Specifically, the PTO rejected various claims directed at 13,14-dihydro-15-keto-17-
phenyl-18,19,20-trinor PGF2α isopropyl ester (the 17-phenyl compound) as being
obvious in light of U.S. Patent No. 5,151,444 (the Ueno patent). The Ueno patent
disclosed a group of compounds including the 17-phenyl compound. In response to this
rejection, Pharmacia argued the Ueno patent preferred 13,14-dihydro-15-keto-20-ethyl
PGF2α isopropyl ester (the 20-ethyl compound) and thus failed to appreciate the
benefits of phenyl-substituted prostaglandins, such as the claimed 17-phenyl
compound. Pharmacia supported its argument with a 37 C.F.R. § 1.132 declaration
(the declaration) comparing the 17-phenyl compound to the 20-ethyl compound. This
declaration includes inaccurate statements that the district court found highly material.
While the parties dispute the accuracy of several statements in the declaration,
paragraphs 9 and 10 are representative:
9. Thus at a dose of 5 µg, the 17-phenyl compound shows a
statistically significant decrease in [intraocular pressure (IOP)]
(p<0.05) after 8 hours, while the 20-ethyl compound does not.
10. Even at dosages of 45 µg, the 20-ethyl compound does not cause
statistically significant decrease in IOP.
04-1478,-1496 3
Paragraph 10 conflicts with an article co-authored by the declarant, Dr.
Stjernschantz. In fact, paragraph 10 also conflicts with two Japanese articles cited in
that Stjernschantz article. The Stjernschantz article, co-authored with Bahram Resul,
carries the title Structure-Activity Relationships of Prostaglandin Analogues as Ocular
Hypotensive Agents, Current Opinion in Therapeutic Patents, and appeared in June
1993 (the Stjernschantz article). Citing two Japanese articles for authority, the
Stjernschantz article states (emphasis added) that “[t]opical application of [45 µg of the
20-ethyl compound] causes a statistically significant IOP reduction without appreciable
ocular side-effects.” In contrast, the declaration states that the 20-ethyl compound does
not cause a statistically significant decrease in IOP at 45 µg. The patent applicants did
not bring either the Stjernschantz article or the two Japanese articles to the attention of
the PTO.
Pharmacia acknowledges the inconsistency in paragraph 10, but argues that
Stjernschantz, because he was a foreign national, simply used the wrong verb tense in
saying that the 20-ethyl compound “does not” reduce IOP. According to Pharmacia,
replacing “does not” with “did not” would limit this statement to only those tests actually
conducted by Stjernschantz, rather than including conflicting tests by other researchers.
The district court rejected this explanation.
In addition, paragraph 9 in the declaration states that the 17-phenyl compound
shows a particular result after 8 hours. Beyond that the paragraph adds that, at a dose
of 5 µg, the 20-ethyl compound does not show a statistically significant decrease in IOP
(p<0.5) in the same time period. Despite the implicit suggestion in this language,
Stjernschantz never tested a 5 µg dose of the 20-ethyl compound.
04-1478,-1496 4
Once again Pharmacia has an explanation. Pharmacia points out that the
declaration focused on showing that the claimed 17-phenyl compound was more potent
than the 20-ethyl compound. Because a much larger dose, 45 µg of the 20-ethyl
compound, produced a smaller decrease in IOP than 5 µg of the 17-phenyl compound,
Stjernschantz had good reason to believe that the 17-phenyl compound was more
potent than the prior art 20-ethyl compound at 5 µg as well. Indeed evidence presented
at trial confirms this common sense proposition. Nonetheless, the district court rejected
this explanation because the declaration suggests that Stjernschantz conducted a test
(on a 5 µg dose of 20-ethyl compound) that he in fact never conducted.
Based on the conflict between the declaration in paragraph 10 and prior
Stjernschantz article, the district court found that Stjernschantz submitted a declaration
to the PTO that he knew or should have known was inaccurate and misleading. The
district court held that this misleading declaration was crucial to overcoming the PTO’s
rejection over the Ueno patent and thus highly material. Based on these circumstances,
the district court inferred intent. Having found Stjernschantz intentionally filed a
misleading and highly material declaration, the district court found clear and convincing
evidence that the ’368 patent was unenforceable due to inequitable conduct. Final
Judgment, slip op. at 1.
Par also asserted this inequitable conduct tainted the ’504 patent as well as the
’368 patent. The second rejection in the Office Action discussed above forms the basis
of Par’s inequitable conduct theory on the ’504 patent. Specifically, the second rejection
involved an obviousness-type double patenting rejection in view of co-pending
application 987,520 (which eventually matured into the ’504 patent) and co-pending
04-1478,-1496 5
application 988,389 (which eventually matured into U.S. Patent No. 5,321,128). To
overcome this rejection, Pharmacia filed terminal disclaimers on these two applications.
According to Par, these terminal disclaimers effectively combine the ’368 patent and the
’504 patent. Under this theory, the inequitable conduct on the ’368 patent applies
automatically to the ’504 patent as well. The district court rejected this argument,
finding instead that “any conduct occurring in connection with the ’368 patent cannot
reach the ’504 patent.” Final Judgment, slip op. at 55.
Par appealed the district court’s findings on the ’504 patent and Pharmacia
appealed the district court’s findings on the ’368 patent. This court consolidated the
appeals. This court has jurisdiction under 28 U.S.C. § 1295(a)(1) (1994).
II
“[I]nequitable conduct includes affirmative misrepresentation of a material fact,
failure to disclose material information, or submission of false material information,
coupled with an intent to deceive.” Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178
(Fed. Cir. 1995). This court reviews a determination of inequitable conduct for abuse of
discretion and reviews the underlying factual issues of materiality and intent for clear
error. Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1234
(Fed. Cir. 2003). “A district court abuses its discretion when its decision is based on
clearly erroneous findings of fact, is based on erroneous interpretations of the law, or is
clearly unreasonable, arbitrary or fanciful.” Cybor Corp. v. FAS Techs., Inc., 138 F.3d
1448, 1460 (Fed. Cir. 1998) (en banc).
04-1478,-1496 6
A.
Turning first to the ’368 patent, the district court did not commit clear error in
determining the underlying factual issues of materiality and intent. Paragraph 10
conflicts with the prior Stjernschantz article and supporting Japanese articles, which
were never disclosed to the PTO. On the point of materiality, the applicants submitted
these statements in support of patentability over the sole prior art reference relied upon
by the Examiner. Thus these misleading declarations go to the very point of novelty.
The district court properly found paragraph 10 highly material. 37 C.F.R. § 1.56(b)
(2004); see Bruno Indep. Living Aids, Inc. v. Acorn Mobility Serv., Ltd., 394 F.3d 1348,
1352-53 (Fed. Cir. 2005) (applying the PTO’s Rule 56(b) to determine materiality).
Contrary to Pharmacia’s assertion against materiality, the record does not show
that the Examiner consulted only the arguments in the April 20, 1994 response or
looked only to the “potency” discussion in the declaration. The Notice of Allowance did
not contain any explanation that the Examiner thus limited his inquiry. In sum,
paragraph 10 is, as the district court correctly found, highly material.
Given the highly material nature of these misleading statements and the failure
to submit a directly conflicting article co-authored by the declarant himself, the district
court did not clearly err in inferring an intent to deceive. Molins PLC, 48 F.3d at 1180
(“Intent need not be proven by direct evidence.”). The district court’s analysis and
conclusions were well reasoned, supported by the evidence, and certainly do not
constitute clear error. Semiconductor Energy Lab. Co. v. Samsung Elecs. Co., 204
F.3d 1368, 1375 (Fed. Cir. 2000) (“Proof of high materiality and that the applicant knew
or should have known of that materiality makes it difficult to show good faith to
04-1478,-1496 7
overcome an inference of intent to mislead.”); Critikon, Inc. v. Becton Dickinson
Vascular Access, Inc., 120 F.3d 1253, 1256 (Fed. Cir. 1997) (“The more material the
omission or the misrepresentation, the lower the level of intent required to establish
inequitable conduct, and vice versa.”). Thus, the district court acted within its discretion
in finding the ’368 patent unenforceable due to inequitable conduct stemming from the
misleading nature of paragraph 10 in the declaration. As such, this court need not
reach the issue of whether paragraph 9 in the declaration also supports the district
court’s findings.
B.
Because the district court acted within its discretion in finding the ’368 patent
unenforceable due to inequitable conduct, this court also must address the district
court’s finding that the terminal disclaimer was not, without more, sufficient to render
the ’504 patent unenforceable as well. Par has not asserted on appeal that the ’504
patent is unenforceable under a general unclean hands theory; i.e., that a broad pattern
of inequitable conduct transfers inequitable conduct from one patent to another. See
Consol. Aluminum Corp. v. Foseco Int’l Ltd., 910 F.2d 804, 812 (Fed. Cir. 1990)
(discussing an unclean hands theory arising from actions that occurred during
prosecution before the PTO). Instead, Par asserts that a terminal disclaimer can bind
two related patents together so that inequitable conduct in procuring a later prosecuted
patent will automatically infect an earlier issued patent. The district court correctly
rejected that assertion.
Indeed “[a] terminal disclaimer ties the affected patents together; they expire on
the same date and are enforceable only during periods in which they are owned by the
04-1478,-1496 8
same person.” Donald S. Chisum, Chisum on Patents, § 9.04[5] at 9-107 (2003); see
In re Van Ornum, 686 F.2d 937 (CCPA 1982) (upholding the PTO’s non-alienation
requirement). Strong policies dictated the judicial creation of this doctrine governing
the co-expiration and co-ownership of sufficiently related patents. In re Griswold, 365
F.2d 834 (CCPA 1966) (noting the co-ownership requirement is a creative solution to
potential harassment suits from two separate patents); Ortho Pharm. Corp. v. Smith,
959 F.2d 936 (Fed. Cir. 1992) (discussing the requirement that a patentee disclaim any
extension of patent protection for the later filed application of two terminally disclaimed
applications). Beyond their shared expiration date, however, two disclaimed patents
maintain significant attributes of individuality. Ortho Pharm. Corp. v. Smith, 18
U.S.P.Q.2d 1977, 1990-91 (E.D.Pa. 1990), aff’d 959 F.2d 936 (Fed. Cir. 1992) (noting
patents tied by a terminal disclaimer are still independently presumed valid). For
example, Pharmacia pays two sets of maintenance fees – one for each of the ’368 and
’504 patents. If Pharmacia does not pay the maintenance fee on one of the patents,
that oversight would have no effect on the validity or enforceability of the other patent.
This individuality between terminally disclaimed patents indicates something more than
a naked terminal disclaimer is required.
The specific terminal disclaimer in this case illustrates that the two patents retain
individual attributes. The language of the terminal disclaimer in this case emphasizes
that validity doctrines will apply separately to the two patents that share an expiration
date (emphasis added):
In making the above disclaimer, petitioner does not disclaim the terminal
part of any patent granted on the instant application that would extend to
the expiration date of the full statutory term as defined in 35 U.S.C. 154 to
156 and 173 of the prior patent as presently [shortened] by any terminal
04-1478,-1496 9
disclaimer, in the event that it later: expires for failure to pay a
maintenance fee, is held unenforceable, is found invalid by a court of
competent jurisdiction, is statutorily disclaimed in whole or terminally
disclaimed under 37 CFR 1.321, has all claims canceled by a
reexamination certificate, or is in any manner terminated prior to the
expiration of its full statutory term as shortened by any terminal disclaimer.
This language shows that the patentee justifiably expected individual treatment of
the patents beyond their shared expiration date.
The case law of this court does not disturb that justifiable expectation. This
court has held that a finding of inequitable conduct in the acquisition of even a single
claim of a patent renders the remaining claims of that patent unenforceable, even those
without the taint of inequitable conduct. See Kingsdown Med. Consultants, Ltd. v.
Hollister, Inc., 863 F.2d 867, 877 (Fed. Cir. 1988) (en banc in pertinent part) (“When a
court has finally determined that inequitable conduct occurred in relation to one or more
claims during prosecution of the patent application, the entire patent is rendered
unenforceable.”); Hewlett-Packard Co. v. Baush & Lomb Inc., 882 F.2d 1556, 1563
(Fed. Cir. 1989) (inequitable conduct that occurs during prosecution of a reissue
application renders all the claims of the reissued patent, including the original claims,
unenforceable). This case law, however, applies only to claims in one patent. Even
Hewlett-Packard, which Par argued involves two patents (i.e., an original patent and a
reissue patent), rendered only the claims in the single reissue patent invalid for
inequitable conduct. Hewlett Packard voluntarily surrendered the original patent in
order to enter reissue proceedings. Hewlett-Packard, 882 F.2d at 1564 (discussing the
surrender of an original patent to initiate reissue proceedings); see also 37 C.F.R.
§ 1.178(a) (2004) (requiring an offer to surrender the original patent or statement that
the original is lost or inaccessible to initiate reissue proceedings). Thus, this court’s
04-1478,-1496 10
inequitable conduct cases do not extend inequitable conduct in one patent to another
patent that was not acquired through culpable conduct. In other words, these cases
simply do not apply to the facts of this case, which involves two separate patents.
The district court correctly concluded that the terminal disclaimer alone did not
bind the ’368 patent and the ’504 patent together for purposes of unenforceability due
to inequitable conduct. Because the record shows no inequitable conduct during
prosecution of the ’504 patent itself, the district court did not abuse its discretion in
finding the ’504 patent to be valid and enforceable. In fact, the ’504 patent had already
issued before the inequitable conduct occurred. The ’504 patent issued on March 22,
1994; Stjernschantz executed his declaration on April 20, 1994. Thus, this court affirms
the district court’s decision.
III
In sum, this court affirms the district court’s finding that the ’368 patent is
unenforceable due to inequitable conduct. This court also affirms the district court’s
finding that the ’504 patent is enforceable and infringed by Par.
COSTS
Each party shall bear its own costs.
AFFIRMED
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