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Reconciling Therasense and Exergen, Judge Burke Recommends That Motion to Dismiss Inequitable Conduct Counterclaim and to Strike Inequitable Conduct Affirmative Defense Be Denied

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In a recent Report and Recommendation in Wyeth Holdings Corp., et al. v. Sandoz, Inc., C.A. No. 09-955-LPS-CJB, Judge Burke concluded that plaintiffs’ motion to dismiss defendant’s inequitable conduct counterclaim and to strike defendant’s affirmative defense based on inequitable conduct should be denied. Id. at 1, 30. In this case, plaintiffs initially filed a complaint against defendant for patent infringement arising from defendant’s filing of an ANDA seeking to market a generic version of an injectable antibiotic drug. Id. a 1-2. In the complaint, plaintiffs alleged that defendant’s generic product infringed two of their patents, and sought a permanent injunction to bar defendant from the manufacture, sale, use or importation of that product in the U.S. Id. at 2. Defendant conceded (and actually stipulated to) infringement, but challenged both the validity and enforceability of the patents-in-suit, including counterclaiming that one of the patents-in-suit was “unenforceable based on several acts of inequitable conduct” and asserting “unenforceability based on inequitable conduct” as an affirmative defense. Id. at 2. In part, as bases for its allegations of inequitable conduct, defendant alleged that during prosecution of one of the patents-in-suit, plaintiffs “deceived the Examiner” by, among other things, “misrepresent[ing] the teachings of the prior art” and “omitt[ing] key information regarding experimental error and discrepancies in data.” Id. at 6.

In response to these allegations, plaintiffs filed a motion to dismiss defendant’s counterclaim for inequitable conduct and to strike the accompanying inequitable conduct affirmative defense. Id. at 2. Plaintiffs argued that, in light of the Fed. Cir.’s decision in Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir 2011), defendant’s inequitable conduct defense should be dismissed because defendant “did not plead any facts that would allow the Court to conclude that the single most reasonable inference from the applicants’ alleged conduct is that the applicants had the specific intent to deceive the PTO.” Id. at 11 (emphasis in original). Defendant countered that the “single most reasonable inference” language from Therasense did not apply and is not the appropriate standard. Id. at 12. Rather, in assessing the sufficiency of the intent prong of defendant’s inequitable conduct defense, the “whether deceptive intent could be ‘reasonably inferred’ from the facts as pled” standard articulated by the Fed. Cir. in Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009) should be applied. Id. at 12 (brackets omitted). The Court agreed, holding that “in order to adequately plead the intent prong of an inequitable conduct defense, the claimant need only allege facts from which the Court could reasonably infer that the patent applicant made a deliberate decision to deceive the PTO.” Id. at 13-14 (emphasis in original).

Reconciling the Fed. Cir.’s language in Therasense and Exergen, the Court held that the single most reasonable inference requirement of Therasense was an “evidentiary standard that must be satisfied at the proof stage, not a pleading standard.” Id. at 14. In its analysis, the Court found that defendant had pled inequitable conduct with sufficient clarity to survive dismissal, satisfying both the “but-for” materiality and the specific intent to deceive prongs of the standard. Regarding the “but-for” materiality prong, the Court found: (1) that defendant had “properly and specifically identified the ‘who, what, where, when and how’ of the alleged material misrepresentations” id. at 17 (citation omitted) and (2) that there was a reasonable inference that one of the patens-in-suit would not have issued “but for the alleged misrepresentations” as pled by defendant. Id. at 19. Likewise, regarding the specific intent to deceive prong, the Court found that defendant had, indeed, “pled sufficient facts, with sufficient particularity, to give a reasonable inference that [plaintiff’s] representatives deliberately acted to deceive the PTO during the prosecution of [one of the patents-in-suit].” Id. at 25.


Wyeth Holdings Corp., et al. v. Sandoz, Inc., C.A. No. 09-955-LPS-CJB

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