Opinion ID: 3054322
Heading Depth: 5
Heading Rank: 2

Heading: Walker Process Fraud

Text: Kaiser contends that Abbott obtained its ’207 patent through Walker Process fraud. The district court concluded that Kaiser had not presented “any evidence” to support its Walker Process fraud contention. In re Antitrust Litig. II, 335 F. Supp. 2d at 1370. We disagree. [10] “[T]he enforcement of a patent procured by fraud on the Patent Office may be violative of § 2 of the Sherman Act . . . .” Walker Process, 382 U.S. at 174. “ ‘[T]o strip [a patentee] of its exemption from the antitrust laws’ because of its attempting to enforce its patent monopoly, an antitrust plaintiff is first required to prove that the patentee ‘obtained the patent by knowingly and willfully misrepresenting facts to the [PTO].’ ” Nobelpharma AB, 141 F.3d at 1068 (quoting Walker Process, 382 U.S. at 177) (alterations in original). “The plaintiff in the patent infringement suit must also have been aware of the fraud when bringing suit.” Id. at 1069. An antitrust plaintiff must produce “independent and clear evidence of deceptive intent [on the part of the patentee] together with a clear showing . . . that the patent would not have issued but for the misrepresentation or omission.” Id. at 1071. “Direct evidence of intent to deceive or mislead the PTO is rarely available but may be inferred from clear and convincing evidence of the surrounding circumstances.” Purdue Pharma L.P. v. Endo Pharms. Inc., 438 F.3d 1123, 1133-34 (Fed. Cir. 2006) (internal quotation marks omitted). 450 KAISER FOUNDATION v. ABBOTT LABORATORIES The patentee’s good faith before the PTO “would furnish a complete defense.” Walker Process, 382 U.S. at 177. “This includes an honest mistake as to the effect of prior [art] upon patentability—so-called ‘technical fraud.’ ” Id. Inequitable conduct may render a patent invalid, but it is not enough to bring a patentee’s conduct within the Walker Process exception to Noerr-Pennington immunity. See Nobelpharma AB, 141 F.3d at 1070 (“Inequitable conduct is thus an equitable defense in a patent infringement action and serves as a shield, while a more serious finding of fraud potentially exposes a patentee to antitrust liability and thus serves as a sword.”); 37 C.F.R. § 1.56 (“[N]o patent will be granted on an application in connection with which fraud on the [PTO] was practiced or attempted or the duty of disclosure was violated through bad faith or intentional misconduct.”). [11] Rule 56 of the PTO specifies that a patent applicant has “a duty to disclose to the [PTO] all information known to that individual to be material to patentability as defined in this section.” 37 C.F.R. § 1.56(a). Materiality is broadly defined under the rule: “[I]nformation is material to patentability when it . . . establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim; or it refutes, or is inconsistent with, a position the applicant takes in . . . [a]sserting an argument of patentability.” Id. § 1.56(b)(1), (b)(2)(ii). A patent may not issue if “the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States.” 35 U.S.C. § 102(b). Kaiser claims that Abbott committed Walker Process fraud in seeking its ’207 patent. Kaiser points to two pieces of information that it contends were material to the § 102(b) bar but that Abbott failed to provide to the PTO in connection with its application for the ’207 patent. [12] First, Kaiser points to Abbott’s failure to provide with its ’207 patent application an English translation of an earlier KAISER FOUNDATION v. ABBOTT LABORATORIES 451 Japanese patent application for Form IV terazosin hydrochloride. Abbott applied for its ’207 patent on October 18, 1994. More than a year earlier, in March 1993, the Sumika Fine Chemical Company published a Japanese Patent Application (“the Sumika reference”) disclosing seven crystal forms of terazosin hydrochloride. It is undisputed that one of the crystal forms in the Sumika reference was the Form IV terazosin hydrochloride described in Abbott’s application for the ’207 patent. Thus, if the patent examiner had fully understood the Sumika reference, he would have concluded that Abbott’s patent application should have been denied because it was “described in a printed publication in . . . a foreign country . . . more than one year prior to the date of the application for patent in the United States.” 35 U.S.C. § 102(b). Abbott submitted a PTO Form 1449 in connection with its patent application for Form IV terazosin hydrochloride. The Form indicated that an English translation of the Sumika reference was included in the application. However, the patent examiner testified in his deposition that the English translation was not, in fact, included in the application. The examiner had written “(Abstract only)” in the file, thereby indicating that only an English-language abstract, rather than an English translation of the entire reference, had been provided. The Abbott in-house attorney who prepared and submitted the application for the ’207 patent testified in a 1997 deposition that he had intended to submit the English translation of the Sumika reference with the application, but that he could not remember actually having done so: Q: What was your general practice at the time in having your secretary fill out Form 1449s? How did you generally do that in the ’94-’95 time frame? A: Generally by giving her a stack of copies of the references. 452 KAISER FOUNDATION v. ABBOTT LABORATORIES Q: And that is what you did in this instance? A: I don’t recall. ... Q: Do you recall whether or not you included [the English translation of the Sumika reference] in the documents that you gave to your secretary to fill out Form 1449? A: I just answered no, I don’t recall whether that document was in that collection. ... Q: Did you submit an English-language translation of Japanese Patent Application 5-78,352 to the United States Patent Office during the prosecution of the application upon which the ’207 patent was issued? A: That was certainly my intent and — Q: Well, did you do that? A: Do I recall specifically doing that? No. The patent examiner could not read Japanese. However, he could read Chinese, and could understand kanji characters in Japanese because they are the same as Chinese characters.2 He testified that he was able to read words such as “invention” and “name,” and he remembered that he had been able to read two tables, including one referring to “crystalline forms and their characteristics.” But he testified that he was unable to 2 The patent examiner spelled out “K-A-N-G-I” in his deposition. The more common spelling is “kanji.” KAISER FOUNDATION v. ABBOTT LABORATORIES 453 read the entire Sumika reference. The examiner also testified that he had seen the English translation of the Sumika reference because it had been submitted in connection with Abbott’s earlier application for the ’095 patent, which was still pending when he was considering Abbott’s application for the ’207 patent. Second, Kaiser points to Abbott’s failure to mention a decision of the Federal Circuit, J.A. LaPorte, Inc. v. Norfolk Dredging Co., 787 F.2d 1577 (Fed. Cir. 1986), in its application for the ’207 patent. In December 1995, more than a year after its initial application for the ’207 patent for Form IV terazosin hydrochloride, Abbott submitted an Information Disclosure Statement (“IDS”) and a Supplemental IDS to the PTO. These documents were prepared by the same in-house Abbott attorney who had prepared the initial application. These supplemental documents revealed that there had been two prior public sales of Form IV terazosin hydrochloride, more than one year before the patent application was filed. In re Antitrust Litig. II, 335 F. Supp. 2d at 1354. These prior sales had come to light in the litigation challenging patent ’207’s validity, to which Abbott was a party. Independently of the Sumika reference, these sales likely prevented Abbott from obtaining a patent on Form IV terazosin hydrochloride because they appeared to come within the on-sale bar of § 102(b). Abbott’s only hope was to argue that the parties to these prior sales had not known that the product contained Form IV terazosin hydrochloride, and that the sales had therefore not come within the scope of the on-sale bar. Abbott first made this knowledge-of-the-parties-to-the-sale argument in a brief in the litigation in which these sales had come to light. Abbott’s in-house attorney later made the same argument to the PTO in Abbott’s IDS and Supplemental IDS. The in-house attorney used substantially the same language as in the litigation brief, but with one exception. Abbott’s litigation brief had included a citation to the LaPorte case, and an attempt to distinguish it. Abbott’s in-house attorney failed to 454 KAISER FOUNDATION v. ABBOTT LABORATORIES include any reference to LaPorte in the documents submitted to the PTO. In LaPorte, the inventor of an extension to a dredging drill had allowed others to sell his invention. More than a year later, the inventor and two assignees sought to patent the extension. They argued that the on-sale bar did not apply to sales by anyone other than the inventor unless the invention was publicly disclosed at the time of the sale. In this case, there had been no such disclosure. The Federal Circuit rejected the inventor’s argument. It wrote, inter alia, “[O]ur precedent holds that the question is not whether the sale, even a third party sale, ‘discloses’ the invention at the time of the sale, but whether the sale relates to a device that embodies the invention.” 787 F.2d at 1583 (emphasis in original). The Federal Circuit ultimately resolved the on-sale bar issue adversely to Abbott, holding in Geneva II, that the buyers’ and sellers’ lack of knowledge of the presence of Form IV terazosin hydrochloride was irrelevant to the on-sale bar. The court principally relied on Pfaff, a recent Supreme Court case, but it also relied on LaPorte, quoting the sentence that we have quoted in the previous paragraph. 182 F.3d at 1318-19. When the MDL court granted summary judgment to Abbott on the Walker Process fraud issue, it wrote, “Plaintiffs . . . have not presented any evidence that Abbott acted knowingly and willfully with a clear intent to deceive the PTO, or that the omission of either the complete English-language translation of the Sumika reference or the LaPorte decision would have prevented the PTO from issuing the ’207 patent.” In re Antitrust Litig. II, 335 F. Supp. 2d at 1370. We disagree with the district court that Kaiser did not present “any evidence” that there was an intent to deceive or that, in the absence of the deceit, the patent would nonetheless have issued. We divide our discussion of the evidence into two parts — eviKAISER FOUNDATION v. ABBOTT LABORATORIES 455 dence of intent to deceive the PTO, and evidence of the effect of the deceit. First, we believe that Kaiser provided sufficient evidence to get to the jury on whether Abbott intended to deceive the PTO. As the Federal Circuit wrote in Purdue Pharma L.P., direct evidence of intent to deceive the PTO in a patent application is “rarely available.” 438 F.3d at 1133-34. For example, it would be naive to expect that someone who had sought to deceive the PTO would state in a deposition that this had been his intent. We are therefore generally obliged to rely on circumstantial evidence in Walker Process fraud cases. Abbott needed the ’207 patent to maintain its monopoly on Hytrin. In its original NDA for terazosin hydrochloride, Abbott had relied on three patents — the ’894, ’097 and ’532 patents. The ’894 patent expired on May 31, 1994. The ’097 patent was scheduled to expire on September 5, 1995. And the ’532 patent did not protect certain forms of terazosin hydrochloride. Therefore, beginning on July 13, 1993, Abbott applied for three additional patents, to protect Forms II, III, and IV terazosin hydrochloride. The ’207 patent, protecting Form IV terazosin hydrochloride, was the last of these three additional patents to be filed. [13] It is of course possible that a competent in-house attorney could indicate on PTO Form 1449 that a particular document was included in a patent application, but then inadvertently fail to include that document in the application. But several things suggest that the failure to include the English translation of the Sumika reference was not inadvertent. We begin with the unavoidable fact that the English translation of the Sumika reference was the only document in the initial application that, if fully understood by the patent examiner, would have resulted in a denial of the application. There was thus a substantial incentive not to include the translation. 456 KAISER FOUNDATION v. ABBOTT LABORATORIES [14] Later conduct by Abbott’s in-house attorney in connection with the application for the ’207 patent suggests that the omission of the English translation was not inadvertent. When the attorney submitted supplemental information to the PTO about prior sales of Form IV terazosin hydrochloride, he failed to mention the LaPorte case when arguing that lack of knowledge of the parties to an earlier sale of the invention meant that the sale did not trigger the on-sale bar of 35 U.S.C. § 102(b). The attorney’s failure to mention LaPorte was unlikely to have been inadvertent, given that the attorney took his argument from a litigation brief filed by Abbott that had specifically mentioned and distinguished LaPorte. Prior conduct by the same in-house attorney, in connection with Abbott’s application for the ’095 patent, also suggests that the omission was not inadvertent. Five months before its application for the ’207 patent for Form IV terazosin hydrochloride, Abbott submitted its application for the ’095 patent for Form III terazosin hydrochloride. In connection with this ’095 application, the in-house attorney submitted the English translation, as well as a different English abstract, of the Sumika reference. Why, if he had submitted the translation with the application for the ’095 patent, would he have failed to include it with the application for the ’207 patent? A possible answer is that the Sumika reference was fatal to the patentability of Form IV terazosin hydrochloride (the ’207 patent), but did not pose a substantial threat to the patentability of Form III (the ’095 patent). The English language abstracts submitted by Abbott’s inhouse attorney in connection with the two applications suggest that the in-house attorney knew he had more to fear from an accurate description of the Sumika reference in the ’207 application than in the ’095 application. The English abstract of the Sumika reference submitted with the ’095 application specifically stated that the Sumika reference contained seven crystal forms: KAISER FOUNDATION v. ABBOTT LABORATORIES 457 Japanese KoKai Patent . . . , published March 30, 1993 to Sumika Fine Chemicals, Ltd., which dis- closes seven crystalline modifications of terazosin hydrochloride and their preparation. By contrast, the English abstract of the Sumika reference submitted with the ‘207 application, five months later, was less specific: Published Japanese Patent Application . . . to Sumika Fine Chemical Co., Ltd., which discloses and claims crystalline modifications of anhydrous terazosin hydrochloride. An affidavit from Kaiser’s scientific expert shows why Abbott had less to fear from the Sumika reference in its application for the ’095 patent than in its application for the ’207 patent. The expert compared the crystalline forms contained in the Sumika reference to Form III and Form IV. In assessing the match between the relevant Sumika crystal and Form III (the ’095 patent), the expert could not say conclusively that they were the same, even though it was in Kaiser’s interest that he do so. He could write only that the “two powder patterns are actually a reasonably good match” and that the Sumika crystal “appears” to be the same as Form III. By contrast, in assessing the match between the relevant Sumika crystal and Form IV (the ’207 patent), the expert was confident that they were the same. He wrote that “the two patterns [ ] match up very well. . . . I conclude that the Sumika Type A-2 crystal form . . . is the same crystal form as the Abbott Form IV . . . reported in the ’207 patent.” [15] We do not, of course, ourselves conclude that Abbott’s in-house attorney deliberately failed to include the English translation of the Sumika reference. But we hold that there is enough circumstantial evidence in the record to support a jury’s conclusion to that effect. 458 KAISER FOUNDATION v. ABBOTT LABORATORIES Second, we believe that Kaiser presented sufficient evidence to get to the jury on whether the failure to include the English translation of the Sumika reference enabled Abbott to obtain a patent that it would not have otherwise obtained. We start with the undisputed proposition that if the patent examiner had fully understood the Sumika reference, he would have denied Abbott’s application for a patent of Form IV terazosin hydrochloride. The question then becomes whether the patent examiner would have understood the significance of an English translation of the Sumika reference if it had been part of the application for the ’207 patent, and whether he would have concluded that the application therefore had to be denied. Abbott contends that it would have made no difference if the examiner had had the English translation in connection with the ’207 patent application. Abbott points out that during the period the examiner was evaluating the ’207 patent application, he had the English translation of the Sumika reference before him as part of Abbott’s earlier application for the ’095 patent. Therefore, Abbott argues, the failure to submit the English translation with the ’207 application made no difference to the outcome of that application. However, the examiner did not testify that he even read the English translation from the ’095 application when he was evaluating the ’207 application. The examiner testified that he saw the English translation of the Sumika reference, but that he did not recall reading it: Q: Do you recall at any time during the pendency of the application upon which the ’207 patent issued seeing a full English language translation of [the Sumika reference]? A: Yes, I do. Q: Under what circumstances did you see that translation? KAISER FOUNDATION v. ABBOTT LABORATORIES 459 A: It was in the file of a related case filed by the same applicant on this related subject matter, terazosin. Q: What were the full facts and circumstances under which you saw that full English translation of the Japanese application? A: I can only remember that when I was looking at files of related cases I recall seeing such a translation. Q: Did you read it if you recall? A: I cannot recall that I read it now. Abbott argues further that because the English translation of the Sumika reference was included in the application for the ’095 patent, and because that patent was granted, we should conclude that the ’207 patent would also have been granted. Abbott writes in its brief to us, “[T]he PTO issued the ’095 patent even though Abbott indisputably submitted the translation with that application . . . . There is no reason to believe that the outcome for the ’207 patent would have been any different.” In making this argument, Abbott fails to take into account the significantly weaker match between the Sumika reference crystals with Form III (the ’095 patent) than with Form IV (the ’207 patent) terazosin hydrochloride. Contrary to Abbott’s contention, the significantly weaker match with Form III is a “reason to believe that the outcome for the ’207 patent would have been different.” We do not, of course, decide that if the English translation had been included with Abbott’s ’207 patent application the application would have been denied. But we hold that there is enough evidence in the record to support a jury’s conclusion to that effect. 460 KAISER FOUNDATION v. ABBOTT LABORATORIES