Source: https://www.patentbaristas.com/archives/2005/07/22/should-inequitable-conduct-be-heard-in-open-court/
Timestamp: 2017-12-13 18:59:07
Document Index: 350891493

Matched Legal Cases: ['§271', '§136', '§136', '§136', '§136', '§136', '§136', '§136', '§136', '§136', '§136', '§136']

Patent Baristas » Should Inequitable Conduct be Heard in Open Court?
Should Inequitable Conduct be Heard in Open Court?
Today’s post comes from Guest Barista C. Lee Thomason, a registered patent attorney and senior litigator at Frost Brown Todd LLC, writing on whether or not inequitable conduct claims in a patent suit should be heard in open court, or confined to a “special office” as proposed in the draft Patent Act of 2005 (H.R. 2795):
On the topic of proposed “patent reform” legislation, many comments fix upon doctrinal or policy arguments, or they predict improvement to the ‘system.’ The area of interest to me (but, to few others) are the proposals to eliminate the inequitable conduct defense, or to remand it from the courts to the USPTO. Those who do comment on that topic of reform, slot it as an issue of reducing litigation costs or as a question of whether district courts are up to the task of deciding “state of mind” issues. I have added my comments to those. See, e.g., pgs. 102-105.
Nonetheless, my further inquiry sought to draw a fair comparison between the old way that courts resolved the defense of inequitable conduct, and the proposed new way of handling that first in the USPTO, and then in the courts. To do that, I looked at several pharmaceutical cases and their online dockets, to gauge how long the time frame was from inequitable conduct being pleaded to it being decided. That set a baseline for the old way of handling the issue. From there, I wanted to compare that time frame with, or how that may change if, the new way proposed in the draft Patent Act of 2005 became law.
Consider some recent district court decisions, which arise from the filing of an ANDA for approval of a generic drug, and which decide the issue of inequitable conduct. By way of background, the filing of an ANDA is deemed an act of infringement under 35 U.S.C. §271(e)(2). Coincidentally, two of the decisions involve Aventis Pharmaceutical.
In August, 2003, the infringement complaint was filed in Aventis Pharma S.A. v. Amphastar Pharms., Inc., 2005 U.S. Dist. LEXIS 12510 (C.D. Cal. June 15, 2005). After the complaint was amended, an amended answer pleaded inequitable conduct in May or June, 2004 (see, dkt # 274 in 5:05cv887). A opinion and order granted summary judgment on the inequitable conduct defense on June 15, 2005. Thus, in a one-year span, the defense was pleaded, discovery was taken, motions were made, and the issue was decided.
The suit commenced June, 2002 in Impax Labs., Inc. v. Aventis Pharms., Inc., 333 F. Supp. 2d 265, 2004 U.S. Dist. LEXIS 17321 (D. Del. 2004), as a declaratory judgment action, alleged invalidity and inequitable conduct. Id., at 268. By stipulation in April, 2003, Impax agreed that if valid and enforceable, the patent would be infringed by the drug described in the ANDA (see, dkt. # 93, in 02cv581). In June, 2003, the briefing of a summary judgment motion on the unenforceability defense was completed. The case was tried in late October 2003 (Id., at 268), and after post-trial submissions, the issues were decided August, 2004. The inequitable conduct defense apparently was present from the outset of the case (although an amended complaint was presented in April, 2003), even so, the time from pleading to resolution was about 26 months.
Consider further the recently decided Oxy-Contin case, in Purdue Pharma L.P. v. Endo Pharms., Inc., 410 F.3d 690, 2005 U.S. App. LEXIS 10416 (Fed. Cir. 2005). As the docket in 01cv8177 indicates, the infringement suit was filed in August, 2001, followed by Endo’s counterclaim in late September, 2001 which presumably alleged inequitable conduct. The antitrust case was severed in December, 2002, and as the Federal Circuit’s opinion notes, a trial on the patent issues occurred “in June 2003.” The District Court ruled in January, 2004. Thus, the time from the pleading to the disposition of the inequitable conduct defense (and all patent issues) was about 40 months. Those three results (13, 26 & 40 months) compare too with the 24 months from pleading to decision, in Ferring B.V. v. Barr Labs., Inc., 2005 U.S. Dist. LEXIS 3597 (S.D.N.Y. Feb. 7, 2005), which again, arose from filing of an ANDA for a generic drug.
Presumably, the defense of inequitable conduct in a pharmaceutical case is as complicated as it would be in most any patent case. Also, the stakes and costs of these cases is as high, or higher, than with other litigation over patents in other fields of invention. Yet, the time from pleading to decision, in these recent cases, is not excessive. The average time of around 2 years, over which the defense was pleaded, answered, discovered, tried and decided, is not unreasonable. Many, in my experience most, complex civil cases last at least two years.
Can the proponents of proposals to remove inequitable conduct from the courts, and to create an administrative tribunal to investigate that conduct, can they fairly show that this new procedure will resolve the issue in the same or a shorter time frame that is demonstrated in these recent ANDA cases? I genuinely doubt that the USPTO “special office” can investigate and decide these issues any faster or more efficiently than the U.S. District Courts.
In §136 of the draft Patent Act of 2005, some minimum time frames are set out. After the Court refers the matter §136(c)(4), and notice is provided §136(e)(2)(B), then discovery can commence §136(e)(2)(C). The office is to conclude the investigation and make a preliminary determination “at the earliest practicable time” §136(e)(2)(D). If the preliminary determination is that misconduct may have occurred, then the office has “1 month” to notify the parties, then they get to “respond to the preliminary determination” and they are allowed some “period of time” to “reach a settlement” §136(e)(3)(B). If not settled, and a request is made “within 2 months,” then a “hearing” occurs §136(e)(4)(A) & (B). Next, “1 year after” the request for a hearing was made, the special office will issue a “final” determination. §136(e)(4)(C). A further time period “for settlement” may follow that §136(e)(5), and then an appeal can follow §136(e)(8).
Taken together, the minimum time frame is “1 month” plus “2 months” and “1 year after” all of which totals 15 months. Added to that is the time for the actual investigation, and the settlement period/s. At the end of these “special office” procedures (and perhaps an appeal to the CAFC), the inequitable conduct finding matter can go back to the district court for an unenforceability determination. §136(d).
This approach cannot be faster, based on my experience in district courts and the CAFC, and nothing about it suggests it will be cheaper for the adversaries.
Unstated in the proposed law is the amount of time for the “special office” to investigate and then to make a preliminary determination, and I am unqualified to predict that. However, ask what number of months typically pass to complete the administrative process, that runs from issuance of a final rejection, through an appeal to the BPAI, to decision on that appeal. That action by the BPAI is only a review of the record, and no “investigation” time is required. Does that take less than 24 months? Also, ask how long an interference proceeding takes, especially, when the subject invention is a pharmaceutical method and composition. Is it more or less than 30 months?
My comparison of time frames in ANDA suits that allege inequitable conduct to the estimated time that a USPTO “special office” could handle the same matter is, wholly unscientific. It does raise my genuine concern that the good intentions of those advocating these reforms will not be furthered by the solutions that they advocate. It will not be faster, or less expensive. More broadly, the concern is not about good or ‘bad’ patents, and the solution may not cure the “plague” of inequitable conduct charges. The true inquiry asks, as between a U. S. District Court and the proposed “special office” which one is the forum non conveniens for adjudication of the defense of unenforceability. Having spent my career in those courts, I believe they have more resources and case management skills than an as-yet-unassembled administrative panel.
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