Aventis Files for Certiorari: Challenging Federal Circuit's Low Standard for Intent to Deceive in Inequitable Conduct Proceedings

Aventis Pharma v. Amphastar Pharmaceuticals and Teva (on petition for a writ of certiorari)

In a split 2008 decision, the Federal Circuit affirmed a lower court decision holding two Aventis patents unenforceable due to inequitable conduct. The patents cover a low molecular weight form of the blood thinner heparin and is marketed under the Lovenox brand. The alleged offense involved an Aventis failure to report that its tests showing improved drug half-life used a different dosage than the tests on prior-art compound. Inequitable conduct requires proof of both materiality and intent to deceive. Here, the intent was shown only through circumstantial evidence.

In a strongly worded dissent, Judge Rader argued that inequitable conduct law should be restricted to "only the most extreme cases of fraud and deception." Rader also discusses how past inequitable conduct should be correctable.

Now, Aventis has hired Supreme Court powerhouse (and champion of the Federalist Society) Ted Olson and has asked the Supreme Court for its view. Aventis posits as an extension of Judge Rader's dissent - arguing that inequitable conduct should not be a viable cause of action when the mens rea evidence only rises to gross negligence. The question presented:

Under the judge-made doctrine of “inequitable conduct,” a federal court may decline to enforce an otherwise valid patent that was procured through fraud or deceit. Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 (1945). As befits the punitive nature of the doctrine, this Court has invoked it only in extreme circumstances involving “deliberate,” “corrupt,” “sordid” and “highly reprehensible” misconduct. Some panels of the Federal Circuit have similarly limited the inequitable conduct doctrine to deliberately planned and carefully executed schemes to defraud, but other Federal Circuit panels—including the majority in this case— have adopted a “sliding scale” under which “less intent” is required as the materiality of an omission or misrepresentation increases. The question presented is:

Whether a court may refuse to enforce an otherwise valid patent on the basis of an inequitable conduct determination premised on a sliding scale between intent and materiality, effectively permitting a finding of fraudulent intent to be predicated on gross negligence.

Aventis has written a strong petition, amici briefs in support of the Aventis position would be due by February 25.

Notes:

• Aventis Petition for Certiorari
• Inequitable Conduct: Failure to Submit Full Experimental Details
• Patently-O: Split over Inequitable Conduct

Comments

[bleedingpen]

I don't know if this case represents the best vehicle for this subject, but I do think the Supremes should review the uncertainty over IC.

The most flagrant of the IC cases is McKesson, IMO. Was cert filed on that case?

[StoopidQ]

McKesson was a royal screwup by the panel majority that sends a shiver down the spine of every prosecutor. This is what you get when pretty much no one on the court has any practical experience in the trenches.

I know: let's send the CAFC (except Newman) to prosecution boot camp. Make them handle an average docket for a week and see how many "inequitable conduct" problems they cause.

[Alan McDonald]

Better idea - Make Newman have to explain to a defendant's CEO why misstatements or omissions of information to the PTO shouldn't put the burden on the patentee to prove the patent isn't invalid.

[EG]

I wish Aventis luck, but it's unlikely this petition will be accepted by SCOTUS. Remember that it was SCOTUS that originated the ugly doctrine of inequitable conduct (first in the more virulent form of "fraud on the patent office"). Also, the patent was killed by "inequitable conduct" in this case. SCOTUS generally doesn't accept cert in a patent case unless the patent is deemed valid, infringed, and enforceable. U.S. v. Adams, Chakrabarty v. Diamond, Diamond v. Diehr, and Festo are the rare exceptions in the past 50 years.

[Michael F. Martin]

Total non-event thanks to Kingsdown.

[Lionel Hutz]

Go Aventis, Go!

[Pacific Reporter]

That is a strong petition. I hope the case gets granted.

[Malcolm Mooney]

"Whether a court may refuse to enforce an otherwise valid patent on the basis of an inequitable conduct determination premised on a sliding scale between intent and materiality, effectively permitting a finding of fraudulent intent to be predicated on gross negligence"

Answer: yes, a court may refuse to enforce an otherwise valid patent on findings that negligence during prosecution was so gross that a finding of fraudulent intent could be inferred.

Why should it be otherwise? A contrary finding by the Supremes (which won't happen, this petition is even worse than Bilski's) would merely encourage applicants to double their efforts to disguise their intent as gross negligence.

We must remember that Judge Rader lives in a fantasy world where scientists' reputations depend on whether some district court found that they engaged in "deceptive behavior" before the PTO decades earlier. I think the Supremes are more cynical than that. I know Justice Alito is.

[Lionel Hutz]

"Answer: yes, a court may refuse to enforce an otherwise valid patent on findings that negligence during prosecution was so gross that a finding of fraudulent intent could be inferred.

Why should it be otherwise?"

Of course it should be otherwise. It's punitive in nature and along with willful conduct should require some evidence of bad faith.

[Malcolm Mooney]

"evidence of bad faith."

The *apparent* gross negligence is the evidence of bad faith, Lionel. What is wrong with finding a patent unenforceable on those grounds? There's nothing in the Constitution that disallows it. I just don't see what the problem is. The fraction of patents that are found invalid for inequitable conduct is extremely small.

[fisher ames]

"I think the Supremes are more cynical than that. I know Justice Alito is."

I seem to recall that Justice Alito was shown to be on the "Vanguard" of legal ethics in his confirmation hearings.

[AllSeeingEye]

Negligence and intention are mutually exclusive

Torts 101

[Mooney's imaginary Torts professor]

Here at Imaginary Law School, Mooney rarely attended my class and when he did, he slept and usually left a puddle of drool.

[posing as Mooney]

Judge Rader lives in a fantasy world and I am firmly grounded. Also any posts that dispute that will be removed.

[smashmouth football]

AllSeeingEye said:
"Negligence and intention are mutually exclusive"

That's generally true, but I'm not 100% sure the boundary between gross negligence and intent is so sharply defined. This reminds me of a similar debate that went on for years about the standard required to support punitive damages in non-intentional tort cases (usually asbestos-related). In a number of states, the standard had been gross negligence, but in the late 1980s-early 1990s some states moved the standard to "actual malice." A specific example with which I'm familiar is Owens-Illinois v. Zenobia, 325 Md. 420 (1992). Arguably a similar standard should apply here. IIRC, the basic idea was that the defendant had to exhibit bad faith. And of course, the burden was by clear and convincing evidence, which supposedly is the standard already for IC.

[AllSeeingEye]

I can see evidence of gross negligence raising certain presumptions, but I don't think it can ever, in itself, amount to "evidence" of intent to defraud (not sure what "fraudulent intent" is,is it non-intent masquerading as intent? Apparently Mooney knows what it is).

Certain definitions of actual malice would include that behavior that was done in the knowledge that it would cause or be likely to cause injury. Malice would also exist if acts were done with reckless indifference or deliberate blindness to the likelihood of injury.

Gross negligence can rise to reckless indifference, but I find it hard to morph that into fraud, which requires specific intent.

[smashmouth football]

AllSeeingEye-
I agree, except I think a malice standard requires some level of actual or inferred knowledge. Anyway, all you have to do is go back and read Kingsdown, and it's hard to escape the conclusion that the Federal Circuit ignores its own precedent.

[Jeffrey McKinney]

Although I have not reviewed the Aventis prosecution history, they must have argued unexpected beneficial results. Given this is a rebuttal argument to an established prima facie case of obviousness, some sort of evidence is necessary to rebut the obviousness determination. That comes from the submission of evidence showing one of ordinary skill would not have predicted the obtained result. Common law in this area is sparse, and I am aware of only two rules: 1) comparative data must be actually be comparative (i.e., all but one variable the same); and, 2) comparative data showing unexpected beneficial activity must be statistically significant and better than the baseline. In short, but for the test at issue, the Aventis patent could not have issued. In the absence of an inequitable conduct determination, what are the Court's options for not enforcing an otherwise vaild patent that should not have issued?

[3L]

That's a great petition. My only worry is that the Supreme Court would take the case, then decide it on a non-issue, like the district court was wrong about materiality in the first place (which Rader suggests in his dissent), so it didn't matter if the intent requirement was lowered or not.