Court Opinion

ID: 211133
Source: CourtListenerOpinion
Date Created: 2011-03-13 08:23:58+00
Date Added: 2024-06-11T17:28:04.854401
License: Public Domain

NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition
                    is not citable as precedent. It is a public record.

 United States Court of Appeals for the Federal Circuit
                                           06-1083

                        BAYER AG and BAYER CORPORATION,

                                                          Plaintiffs-Appellees,

                                              v.

                          HOUSEY PHARMACEUTICALS, INC.,

                                                          Defendant-Appellant.

                             ___________________________

                             DECIDED: August 4, 2006
                             ___________________________

Before RADER, SCHALL, and BRYSON, Circuit Judges.

RADER, Circuit Judge.

       The United States District Court for the District of Delaware found U.S. Patent

Nos. 4,980,281 (the ’281 patent), 5,266,464 (the ’464 patent), 5,688,655 (the ’655

patent), and 5,877,007 (the ’007 patent) unenforceable due to the inequitable conduct of

Dr. Gerard M. Housey, the named inventor on all four patents. Bayer AG v. Housey

Pharm., Inc., 386 F. Supp. 2d. 578, 582 (D. Del. 2005) (Bayer III). Because the district

court did not err in its inequitable conduct analysis, this court affirms.

                                              I.

       This appeal is the second time Housey Pharmaceuticals has asked this court to

reverse the district court’s inequitable conduct determination. After the district court’s

earlier decision, Bayer AG v. Housey Pharm., Inc., Civ. No. 01-148-SLR, 2003 WL
22953187, 2003 U.S. Dist. LEXIS 22411 (D. Del. Dec. 4, 2003) (Bayer I), this court

vacated and remanded to give the district court an opportunity to provide additional

support for its decision. Bayer AG v. Housey Pharm., Inc., 128 Fed. Appx. 767 (Fed.

Cir. 2005) (non-precedential) (Bayer II). In so doing, this court explained:

                         [U]pon review of the district court's reasons for finding
                 inequitable conduct, this court holds that the reasons given
                 by the district court for finding Dr. Housey’s testimony not
                 credible were insufficient to support the court’s conclusion.
                 The district court based its conclusion on findings that Dr.
                 Housey actively concealed work from his colleagues, failed
                 to provide clear acknowledgement of his colleagues’
                 contributions, and knowingly withheld material prior art.
                 [Bayer I, 2003 WL 22953187,] at *15, 2003 U.S. Dist. LEXIS
                 22411, at *47. The record does not supply adequate support
                 for these findings. As a result, this court vacates and
                 remands for the district court to present additional bases for
                 its credibility determination.
                         The purpose of the remand is not to open the record
                 for further evidence or to allow further argument by the
                 parties. Here, if one is to believe Housey, then the grounds
                 asserted by Bayer for material misrepresentation by Housey
                 to the PTO, with the requisite intent to deceive, dissolve.
                 The reasons stated by the district court for its disbelief of
                 Housey do not alone support this result.             From the
                 somewhat cursory explanation of its reasons by the district
                 court, this court is unable to discern whether the district court
                 fully elaborated its grounds for finding Housey incredible.
                 The purpose of the remand is simply to permit the district
                 court to provide any further reason it may have to find
                 Housey incredible.
Id. at 770-71.

       On remand, the district court again ruled that Dr. Housey had commited

inequitable conduct, but provided further reasoning in support of that decision.

Regarding the lack of data for Dr. Housey’s “soft agar” experiment (the Table 3

experiment), the district court acknowledged that while the lack of data itself is not

evidence of inequitable conduct, Dr. Housey was not forthcoming about that data.

06-1083                                         2
Bayer III, 386 F. Supp. 2d at 580. The district court explained further the contradictions

between Dr. Housey’s testimony at trial and his pretrial deposition testimony. Id.

      With respect to the existence of 24-well plates in the laboratory, the district court

acknowledged the existence of multi-well plates, but emphasized the lack of evidence of

24-well plates specifically.    Id.   Regarding the number of incubators used in the

laboratory, the district court emphasized that whatever that number may be, several

experiments shared “incubator space,” yet none of Dr. Housey’s colleagues remember

any experiment conducted in that shared space matching Dr. Housey’s description of

the soft agar experiment. Id.

      Thus, the district court concluded: “I continue to believe that the clear and

convincing evidence of record supports my conclusion that Dr. Housey is not credible

and that he committed inequitable conduct before the PTO by presenting fabricated

experimental results that were material to the issuance of the patents in suit.” Id. at

582. Housey once again appeals the decision of the district court.

                                            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). These elements must be shown with clear and convincing evidence.

Id. 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).

06-1083                                      3
       In Bayer I, the district court made a number of errors including the perceived

nexus between secrecy and inequitable conduct.              The trial court also placed

inappropriate weight on findings regarding the lack of multi-well plates and the number

of incubators in the shared laboratory space. Because every stated basis for the district

court’s inequitable conduct determination contained some measure of error, this court

vacated the district court’s judgment of unenforceability. Nonetheless, this court did not

reverse that judgment. Now, as then, this court’s role is not to weigh the evidence of

inequitable conduct itself, or to assess the credibility of witnesses. See LNP Eng’g

Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347, 1361 (Fed. Cir. 2001) (“[T]he

district court’s determination on intent in this case depends heavily on the assessment

of witness testimony at trial. This court may not reassess, and indeed is incapable of

reassessing, witness credibility and motive issues on review.”).

       The district court’s decision in Bayer III does not contain the errors of its earlier

decision. Instead, the district court emphasized the role of Dr. Housey’s credibility in the

district court’s judgment. Moreover the trial court provided additional reasons for its

conclusion that Dr. Housey’s credibility was lacking. Following our earlier remand, the

district court complied exactly with this court’s instruction: it provided further reasons

supporting its credibility findings about Dr. Housey. See Housey II, 128 Fed. Appx. at

767. Nevertheless, Housey raises a number of specific challenges to the district court’s

Housey III decision.

       Housey first argues that evidence of Dr. Housey’s use of a calculator, his typed

invention reports, and the specificity of his data all constitute specific evidence that he

performed the Table 3 experiment. Contrary to Housey’s arguments, the presence of a

06-1083                                      4
calculator does not prove its use in any particular experiment. Likewise, his typed

invention reports and the specificity of data are no more evidence that the experiment

was performed than is Table 3 itself. The issue confronted by the district court was not

the existence of the Table 3 data, but whether Dr. Housey actually performed the

experiment that purportedly produced the Table 3 data.

     Housey points to a declaration submitted by Dr. Housey indicating that he

replicated the Table 3 experiment in 2004 and confirmed that the numbers reported in

Table 3 were consistent with his assertions that he had actually performed the

experiment. He argues that the numbers in Table 3 could not have been predicted in

advance and that their correctness is nearly conclusive evidence that he actually

performed the soft agar experiment.

     The main problem with this argument is that Dr. Housey provides no evidence to

substantiate his claim that the numbers in Table 3 could not have been predicted in

advance. Moreover, as the district court noted, Dr. Weinstein testified that he believed

that Dr. Housey had invented the numbers in Table 3. Finally, the declaration that Dr.

Housey submitted purporting to confirm the validity of the data in Table 3 suffers from

the same flaws as the table itself: there is no raw data or detail provided; the declaration

consists only of Dr. Housey’s statement that he performed the experiment and obtained

the claimed results.

       Housey further takes issue with the district court’s identified inconsistency in Dr.

Housey’s testimony. This court does not accept Housey’s position that Dr. Housey

limited his earlier deposition testimony to the existence of calculator records. Instead,

the record fully supports the district court’s conclusion that Dr. Housey’s trial testimony,

06-1083                                      5
i.e., that he intentionally did not create any records of the Table 3 experiment, Bayer III,

386 F. Supp. 2d at 580, was inconsistent with his earlier deposition testimony that the

underlying data for the Table 3 experiments were somewhere in the information

produced during discovery. Id. Later, of course, that underlying data did not appear in

the boxes produced during discovery.

       Finally, Housey points to information suggesting that 24-well plates may have

been used in the laboratory at times other than when Dr. Housey claims to have

conducted the Table 3 experiment. For example, Housey notes Dr. Ueffing’s use of 24-

well plates. Dr. Ueffing, however, did not arrive at the laboratory until after Dr. Housey

claims to have conducted the Table 3 experiment. According to Housey, Dr. Ueffing

testified both that he unsuccessfully attempted to use 24-well plates, and that he

recalled only seeing single-well plates in the laboratory. Although Housey urges this

court to draw a number of inferences from that testimony, none establishes that the

district court committed clear error.

       While this court has identified deficiencies in Housey’s individual arguments,

Housey faces a more serious challenge: in order to prevail, it must establish that the

district court lacked a sufficient basis for finding that Dr. Housey lacked credibility.

Thus, even if, for example, the district court erred regarding the existence of 24-well

plates, that error alone would not require reversal. When this court vacated Bayer I, it

did so because all the bases for the district court’s determination were erroneous. See

Bayer II, 128 Fed. Appx. at 767. Before this court for the second time, Housey has

fallen well short of establishing that the district court’s credibility determination

amounted to clear error.

06-1083                                      6
       Finally, the district court explained: “As the finder of fact who sat through the

bench trial, I was required to, and did, make subjective credibility determinations about

the witnesses who testified, including Dr. Housey.” Bayer III, 386 F. Supp. 2d at 580.

Implicit in that reference to “subjective credibility determinations” is the district court’s

observations during trial of the witnesses’ demeanor. Unable to review demeanor, this

court has very good reason to defer with respect to credibility determinations. See

Medichem, S.A. v. Rolabo, S.L., 437 F.3d 1157, 1171 (Fed. Cir. 2006) (“[D]eference is

appropriately accorded to assessments of witness credibility because ‘only the trial

judge can be aware of the variations in demeanor and tone of voice that bear so heavily

on the listener’s understanding of and belief in what is said.’”) (quoting Anderson v.

Bessemer City, 470 U.S. 564, 575 (1985)). In this case, demeanor no doubt played a

role in the district court’s credibility determinations, which were otherwise well-

supported.

        In addition, the district court credited the testimony of Dr. Housey’s former

laboratory colleagues, who testified that they did not see Dr. Housey perform the “soft

agar” experiment and that they did not believe he could have done so without their

knowledge. The district court was entitled to credit this evidence which, taken with the

court’s other reasons for disbelieving Dr. Housey’s contrary testimony, supports the

court’s finding of inequitable conduct.

06-1083                                      7