Cancer Research Technology Limited and Schering v. Barr Laboratories , 625 F.3d 724 ( 2010 )

United States Court of Appeals
for the Federal Circuit
__________________________
CANCER RESEARCH TECHNOLOGY LIMITED
AND SCHERING CORPORATION,
Plaintiffs-Appellants,
v.
BARR LABORATORIES, INC. AND
BARR PHARMACEUTICALS, INC.,
Defendants-Appellees.
__________________________
2010-1204
__________________________
Appeal from the United States District Court for the
District of Delaware in Case No. 07-CV-0457, Judge Sue
L. Robinson.
____________________________
Decided: November 9, 2010
____________________________
MATTHEW D. POWERS, Weil Gotshal & Manges LLP, of
Redwood Shores, California, argued for plaintiffs-
appellants. With him on the brief were NICOLAS G.
BARZOUKAS and JASON C. ABAIR, of Houston, Texas; and
JENNIFER H. WU, of New York, New York.
GEORGE C. LOMBARDI, Winston & Strawn LLP, of Chi-
cago, Illinois, argued for defendants-appellees. With him
on the brief were LYNN M. ULRICH, MAUREEN L. RURKA,
CANCER RESEARCH v. BARR LABS 2
IVAN M. POULLAOS, and JULIA MANO JOHNSON. Of counsel
on the brief was STEFFAN N. JOHNSON, of Washington,
DC.
__________________________
Before NEWMAN, LOURIE, and PROST, Circuit Judges.
Opinion for the court filed by Circuit Judge LOURIE, in
which Circuit Judge NEWMAN joins.
Dissenting opinion filed by Circuit Judge PROST.
LOURIE, Circuit Judge.
Cancer Research Technology Limited and Schering
Corporation (collectively, “Cancer Research”) appeal from
the final decision of the United States District Court for
the District of Delaware holding U.S. Patent 5,260,291
(“the ’291 patent”) unenforceable for prosecution laches
and inequitable conduct. Cancer Research Tech. v. Barr
Labs., Inc., 679 F. Supp. 2d 560 (D. Del. 2010). We re-
verse.
BACKGROUND
The ’291 patent claims a genus of tetrazine derivative
compounds and methods for treating cancer by adminis-
tering those compounds. One claimed compound, temo-
zolomide, is the active ingredient in the drug Temodar®,
approved by the Food and Drug Administration (“FDA”)
for the treatment of two types of brain cancer—refractory
anaplastic astrocytoma and newly diagnosed glioblastoma
multiforme.
The application for the ’291 patent was filed in the
United States on August 23, 1982, by a British pharma-
ceutical company. The original specification identifies
and characterizes thirteen “[i]mportant” tetrazine deriva-
tive compounds, designated A through M, and it identifies
three of the thirteen compounds, including temozolomide
3 CANCER RESEARCH v. BARR LABS
(designated as A) and mitozolomide (designated as C), as
having “particular importance.” ’291 patent col.4 l.57,
col.5 ll.17-18. The specification states that the new
tetrazine derivatives “possess valuable antineoplastic
activity, for example against carcinomas, melanomas,
sarcomas, lymphomas and leukaemias” and “have proved
particularly active” in several different mouse tumor
models. Id. col.4 ll.29-56. The specification goes on to
disclose positive data from those animal models. Id.In the first substantive office action dated November
18, 1983, the examiner, Examiner Ford, rejected original
claim 31 directed to a method of treating leukemia by
administering a tetrazine compound because “[t]he treat-
ment of leukaemia is not a believable utility on its face”
and objected to the composition claims “pending clarifica-
tion of utility.” A2394-96. The examiner wrote that
utility could be established “by clinical reports and data,
the acceptance of the drug employed by the Food and
Drug Administration and by the American Medical Asso-
ciation Council on Pharmacy,” citing Ex parte Timmis,
123 U.S.P.Q. 581 (POBA 1959). A2395. The applicants
did not respond to the office action but instead filed a
continuation application on March 6, 1984, and aban-
doned the original application. On October 24, 1984,
Examiner Ford again rejected claim 31 for lack of utility
and objected to the composition claims pending clarifica-
tion of utility. Again, the applicants, rather than respond
to the office action, filed a continuation application and
abandoned the pending application. This pattern re-
peated itself eight more times, with the examiner ulti-
mately rejecting all the pending claims for lack of utility.
On March 25, 1991, ownership of the patent applica-
tion changed hands, with Cancer Research receiving an
absolute assignment of rights. On October 18, 1991,
Cancer Research filed another continuation application,
CANCER RESEARCH v. BARR LABS 4
but for the first time challenged the examiner’s utility
rejection, arguing that the disclosure of animal data in
the original specification sufficed to establish utility in
humans. In the next office action, a new examiner, Exam-
iner Richter, modified the utility rejection, stating that
the disclosure established utility but only for claims
limited to the specific antineoplastic activity listed and
tested in the specification. In response, Cancer Research
again argued patentability based on the animal testing
disclosed in the original specification, relying on a quote
from In re Buting, 418 F.2d 540 (CCPA 1969), that
“[s]ubstantiating evidence may be in the form of animal
tests which constitute recognized screening procedures
with clear relevance to utility in humans.” A2086. Sub-
sequently, a third examiner, Examiner Dentz, found the
claims allowable, and the ’291 patent issued on November
9, 1993.
During the prosecution of the ’291 patent, the appli-
cants continued to study tetrazine derivatives as a treat-
ment for cancer, and inventor Dr. Malcolm Stevens co-
authored numerous articles reporting both animal and
human clinical data to the scientific community. One of
the tetrazine compounds described in the ’291 patent as
having “particular importance,” mitozolomide, showed
broad spectrum antitumor activity in mice and was ad-
vanced to human clinical trials in 1983. Phase I and II
human trials showed mitozolomide to have toxic side
effects and little activity against many cancers. In light of
mitozolomide’s toxic side effects, further studies with the
compound were halted. Instead, a second tetrazine com-
pound of “particular importance,” temozolomide, entered
Phase I human testing in 1987. By 1989, reports showed
that temozolomide was safe and had some anti-cancer
activity. Clinical testing of temozolomide continued after
the issuance of the ’291 patent, and the FDA approved
5 CANCER RESEARCH v. BARR LABS
Temodar® for the treatment of refractory anaplastic
astrocytoma in August 1999, and for the treatment of
newly diagnosed glioblastoma multiforme in March 2005.
In October 1999, Schering Corp., the new exclusive licen-
see under the patent, filed for a patent term extension
under 35 U.S.C. § 156, which added 1,006 days to the ’291
patent’s term. The patent also was granted a pediatric
exclusivity period and will expire in February 2014.
On March 19, 2007, Barr Laboratories, Inc. and Barr
Pharmaceuticals, Inc. (collectively, “Barr”) filed an Abbre-
viated New Drug Application (“ANDA”) with a Paragraph
IV certification under the Hatch-Waxman Act, 21 U.S.C.
§ 355, challenging the validity of the ’291 patent and
seeking FDA approval for generic Temodar®. Cancer
Research sued Barr for patent infringement in the United
States District Court for the District of Delaware on July
20, 2007. The parties stipulated to infringement and
validity of claim 13 directed to temozolomide, leaving only
Barr’s counterclaims that the patent was unenforceable
for prosecution laches and for inequitable conduct.
After a bench trial, the district court held the ’291
patent unenforceable for prosecution laches. The district
court first decided that under Symbol Technologies, Inc. v.
Lemelson Medical, 422 F.3d 1378 (Fed. Cir. 2005) (“Sym-
bol Techs. II”), prosecution laches did not require a show-
ing of intervening rights but rather turned on whether
under the totality of the circumstances Cancer Research’s
delay in prosecution in light of the PTO’s utility rejections
was unreasonable and unexplained. Cancer Research,
679 F. Supp. 2d at 572-73. The court then found that
even assuming, as Cancer Research claimed, that the
PTO’s rejections required the submission of human clini-
cal data to establish utility in humans, and thus pat-
entability, Cancer Research could have attempted to
traverse the rejection based on then-existing case law
CANCER RESEARCH v. BARR LABS 6
holding that such utility could be shown by animal tests,
but waited until doing so benefited it commercially. Id. at
574. Furthermore, according to the district court, even if
the examiner had rejected Cancer Research’s position, a
subsequent office action would have at the very least
clarified the examiner’s position on the need for human
data without putting the company in a worse position. Id.The district court thus held that the delay caused by
eleven continuation applications, ten abandonments, and
no substantive prosecution for nearly a decade was unrea-
sonable and a sufficiently egregious misuse of the patent
system to bar enforcement of the ’291 patent for prosecu-
tion laches. Id. at 575.
The district court also held the ’291 patent unenforce-
able for inequitable conduct. The court first found that
Cancer Research failed to disclose highly material infor-
mation to the PTO. Specifically, the court found that
Cancer Research did not disclose Phase I and II human
data indicating that mitozolomide failed to treat numer-
ous cancers covered by the ’291 patent claims and did not
disclose other data indicating that the inventors consid-
ered other claimed tetrazine compounds to be inactive in
at least one cancer model. Id. at 580. The district court
found this withheld information to be highly material
because it directly contradicted statements in the ’291
patent regarding the compounds’ broad utility in treating
cancers and directly contravened the patentability of
broadly written claim 28. Id. at 580-81. In so finding, the
court rejected Cancer Research’s arguments that the
Phase I data were not material because they focused on
safety rather than efficacy and that the Phase II data
were not material because they were preliminary and
inconclusive. The court found that those arguments were
belied by inventor Stevens’s widespread publication of the
data. Id. at 580. The district court also rejected Cancer
7 CANCER RESEARCH v. BARR LABS
Research’s argument that other undisclosed studies were
positive and supported the utility of the claims, conclud-
ing that the nondisclosure of positive data did not miti-
gate the fact that Cancer Research withheld negative
data or its finding that the negative data were highly
material. Id. at 581.
The district court next found that inventor Stevens
withheld the data with intent to deceive because (1) the
withheld information was highly material, (2) Stevens
knew about the information and should have appreciated
its materiality as it directly contradicted the application’s
disclosure, and (3) Stevens did not provide a credible
explanation for withholding the information. Id. With
regard to the latter, the district court found not credible
Stevens’s testimony that he considered the withheld data
to be confidential to clinicians and inconclusive in view of
Stevens’s widespread publication both of the data and of
his conclusions that the data showed the compounds to be
inactive and toxic. Id. The district court also found
Stevens’s publication of the withheld data a sufficient
basis upon which to infer intent to deceive. Id. at 582.
The district court entered final judgment in favor of
Barr on January 29, 2010, and Cancer Research appealed.
We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
DISCUSSION
I. Prosecution Laches
Prosecution laches is an equitable defense to a charge
of patent infringement. Symbol Techs., Inc. v. Lemelson
Med., 277 F.3d 1361, 1366 (Fed. Cir. 2002) (“Symbol
Techs. I”). The doctrine “may render a patent unenforce-
able when it has issued only after an unreasonable and
unexplained delay in prosecution” that constitutes an
egregious misuse of the statutory patent system under the
CANCER RESEARCH v. BARR LABS 8
totality of the circumstances. Symbol Techs. II, 422 F.3d
at 1385-86. We review a district court’s determination of
prosecution laches for abuse of discretion, id. at 1384, but
we review the legal standard applied by the district court
de novo, IPXL Holdings, L.L.C. v. Amazon.com, Inc., 430
F.3d 1377, 1380 (Fed. Cir. 2005).
Cancer Research first argues that the district court
erred as a matter of law in holding the ’291 patent unen-
forceable for prosecution laches because the court failed to
find any evidence of actual prejudice either to the defen-
dant, Barr, or to the public. Cancer Research argues that
prosecution laches is a limited doctrine that only applies
to bar enforcement of a patent when an applicant pur-
posely delays prosecution in an attempt to cover technol-
ogy that has already been exploited by others who have no
knowledge of the patent. In other words, according to
Cancer Research, the doctrine of prosecution laches
requires both an unreasonable and unexplained delay in
prosecution and prejudice based on the intervening rights
of the defendant or the public during the period of delay.
Alternatively, Cancer Research argues that the district
court erred in finding that it unreasonably delayed prose-
cution of the ’291 patent because it did not deliberately
seek to delay the patent’s issuance or the public’s access
to Temodar®, but rather filed continuations based on a
good faith belief that conclusive human clinical data were
required to overcome the PTO’s utility rejections.
Barr responds that the district court correctly held
the ’291 patent unenforceable due to prosecution laches.
Barr first argues that the district court correctly recog-
nized that the defense of prosecution laches does not
require a specific showing of prejudice. Rather, Barr
suggests that an unreasonable and unexplained delay in
prosecution inherently prejudices the public if, as here,
the delay extends the patent monopoly into the future,
9 CANCER RESEARCH v. BARR LABS
thus preventing Barr’s earlier entry into the market for
temozolomide. Barr also argues that the district court
correctly found that the applicants unreasonably delayed
prosecution. Specifically, Barr contends that it was
unreasonable to file identical continuation applications,
abandonments, and requests for extension of time for nine
years without any attempt to substantively advance
prosecution until it became commercially advantageous to
do so. Furthermore, Barr argues that Cancer Research
offers no credible justification for the nine-year delay.
According to Barr, Cancer Research’s alleged belief that
clinical human data were required to overcome the PTO’s
utility rejections not only ignores pre-1982 case law
holding that animal data can establish the human utility
of anti-cancer compounds, but also is belied by the appli-
cants’ use of animal data to secure issuance of the ’291
patent and by their failure to submit human data to the
PTO as such data became available during prosecution.
We agree with Cancer Research that prosecution la-
ches’ requirement of an unreasonable and unexplained
delay includes a finding of prejudice, as does any laches
defense. See A.C. Aukerman Co. v. R.L. Chaides Const.
Co., 960 F.2d 1020, 1028 (Fed. Cir. 1992) (“Two elements
underlie the defense of laches: (a) the patentee’s delay in
bringing suit was unreasonable and inexcusable, and (b)
the alleged infringer suffered material prejudice attribut-
able to the delay.”). We also agree and now hold that to
establish prejudice an accused infringer must show evi-
dence of intervening rights, i.e., that either the accused
infringer or others invested in, worked on, or used the
claimed technology during the period of delay.
The Supreme Court cases underlying the doctrine all
rely on a finding that the applicant’s delay in prosecution
adversely affected others working in the same field. In
Woodbridge v. United States, applicant Woodbridge
CANCER RESEARCH v. BARR LABS 10
delayed the issuance of his patent after allowance by
requesting that the PTO keep it secret in its archives as
the then-governing patent statute permitted for a term
not to exceed one year. 263 U.S. 50, 52-53 (1923). Nine
and a half years later, Woodbridge requested that the
patent issue because the technology had become commer-
cially profitable. Id. at 53, 56. He also requested that his
specification and claims be broadened to cover related
innovations that others had patented in the intervening
years. Id. at 53, 57. The Court held that Woodbridge had
forfeited his right to his patent by “designed delay,” and
specifically by attempting, for the admitted purpose of
capturing the most commercial profit, to extend both the
term of his patent monopoly and its scope to cover ad-
vances made by others in the field who had obtained
patents without knowledge of Woodbridge’s patent. Id. at
56-57.
Similarly in Webster Electric Co. v. Splitdorf Electrical
Co., 264 U.S. 463 (1924), the Court again relied on both
an unreasonable delay and intervening adverse rights to
hold a patent forfeited for prosecution laches. In Webster,
the applicant filed new and broader claims in a divisional
application over eight years after his original application
was filed. Yet during the eight-year delay, the subject
matter of those new and broader claims had been dis-
closed and had come to be in general use while the appli-
cant and his assignee “simply stood by and awaited
developments.” Id. at 465. In holding that the delay was
unreasonable and thus constituted laches, the Court
concluded that the patent law should not be so loosely
construed as to “bring about an undue extension of the
patent monopoly against private and public rights.” Id. at
466 (emphasis added).
The Court’s last pronouncements on prosecution la-
ches in Crown Cork & Seal Co. v. Ferdinand Gutmann
11 CANCER RESEARCH v. BARR LABS
Co., 304 U.S. 159 (1938), and General Talking Pictures
Corp. v. Western Electric Co., 304 U.S. 175 (1938), also
relied on a requirement for intervening rights. In both
cases the Court held that in the absence of intervening
rights, no excuse is necessary for a delay in presenting
new claims in a continuation or divisional application.
Crown Cork, 304 U.S. at 167-68 (“It is clear that, in the
absence of intervening adverse rights, the decision in
Webster, . . . does not mean that an excuse must be shown
for a lapse of more than two years in presenting the
divisional application.”); Gen. Talking Pictures, 304 U.S.
at 183 (“In the absence of intervening adverse rights for
more than two years prior to the [filing of new claims in]
continuation applications, they were [filed] in time.”).
This court’s precedent also recognizes intervening ad-
verse rights as a requirement to holding a patent unen-
forceable for prosecution laches. In first recognizing the
doctrine, we relied on the above-cited Supreme Court
cases and noted their reliance on intervening rights.
Symbol Techs. I, 277 F.3d at 1364-65. For example, we
stated that in Crown Cork, “the [Supreme C]ourt ratified
the existence of the prosecution laches defense; it did not
apply the defense there in the absence of intervening
rights,” and we noted that “in General Talking Pictures,
the Court rejected the defense of prosecution laches
because there was no evidence of intervening public
rights.” Id. at 1365. We then applied the doctrine in a
manner that recognized the requirement for intervening
rights. We held that the district court had not abused its
discretion in holding certain patents unenforceable for
prosecution laches based on the applicant’s unreasonable
delay and “the existence of ‘intervening private and public
rights.’” Symbol Techs. II, 422 F.3d at 1386. We also
extended the holding to all the remaining claims based on
finding that the subject matter of all the asserted patents
CANCER RESEARCH v. BARR LABS 12
had been pending for eighteen to thirty-nine years, an
unreasonably long time, and that “prejudice to the public
as a whole has been shown here in the long period of time
during which parties, including the [declaratory judg-
ment] plaintiffs, have invested in the technology described
in the delayed patents.” Id.In re Bogese, 303 F.3d 1362 (Fed. Cir. 2002), is not to
the contrary. In Bogese, we upheld the PTO’s forfeiture
decision after an applicant filed twelve continuation
applications over eight years without presenting any
substantive amendments to traverse an outstanding
obviousness rejection. Id. at 1363-64. In upholding the
examiner’s decision that the applicant had forfeited his
right to the patent, the Board relied on both an unreason-
able delay and intervening rights. Regarding the latter,
the Board found that documentation filed with the PTO
before the period of delay showed that “the applicant was
keenly aware, . . . that [articles] embodying [his] inven-
tion were being developed and exploited commercially in
the market place.” Id. at 1366. On appeal, Bogese did not
challenge the PTO’s decision based on the facts of his
case, but rather challenged the PTO’s authority to require
applicants to advance prosecution. Id. at 1369. We
upheld the PTO’s authority to sanction undue delay under
the Administrative Procedure Act, 5 U.S.C. § 706, as not
arbitrary, capricious, or contrary to law. Id. at 1367-69.
The court did not discuss intervening rights in its opinion,
as it did not need to, but the PTO relied on the existence
of intervening rights in its decision in that case.
Barr’s argument that the public was inherently
prejudiced by Cancer Research’s delay is not persuasive.
Cancer Research maintains that it could not have devel-
oped temozolomide until Schering agreed to become its
licensee, after which Schering filed an Investigational
New Drug Application (“IND”) only one month after the
13 CANCER RESEARCH v. BARR LABS
issuance of the ’291 patent. An inventor is not obligated
to develop its product at any particular time prior to
issuance or within the patent’s term, but, once its patent
issued and it had a licensee, it filed its IND promptly. Its
product was approved for marketing in 1999.
Barr, on the other hand, while entitled under the law
to file an ANDA four years after the NDA approval, in
this case in 2003, did not do so until 2007. Thus, Barr
filed its ANDA more than thirteen years after the issu-
ance of Cancer Research’s patent and more than seven
years after approval of Cancer Research’s product. Barr
was thus hardly prejudiced by the delay in the issuance of
the ’291 patent, in 1993. Nor was anyone else. There has
been no evidence presented that anyone was deterred
from entering the market for temozolomide because
Cancer Research’s patent issued in 1993 rather than
several years earlier. Thus, the delay had only limited
consequences to Barr and the public.
Cancer Research’s delay in prosecuting and issuing its
patent application, whatever the asserted justifications,
and we do not appraise them here, caused it to run the
risk that some other pharmaceutical company (e.g., Barr)
would intervene and claim prejudice from the delay, but
that did not happen. Moreover, a consequence of Cancer
Research’s delay in prosecuting its patent is that it did
not get the full patent term extension allowed under 35
U.S.C. § 156 because of the fourteen-year cap on exclusiv-
ity when a patent has been extended under the Hatch-
Waxman Act. Id. § 156(c)(3). Thus, rather than having
consequences for Barr and the public by its delay, Cancer
Research incurred a cost to its own patent term.
Finally, we note that the facts of this case are not
likely to be frequently repeated, as patent terms are now
measured from effective filing date, id. § 154(c)(1), subject
CANCER RESEARCH v. BARR LABS 14
to only limited extensions provided by statute, not by
delaying issuance by refiling. And, it also should be noted
that, when one considers the public interest, the public
has benefited here by the fact that Cancer Research did
develop and market temozolomide, induced by the protec-
tion of its patent. Cancer Research should not lose that
protection because its patent issuance was delayed under
circumstances where no one suffered prejudice.
In sum, both the Supreme Court and our cases estab-
lish that evidence of intervening rights is required to
establish “an unreasonable and unexplained delay in
prosecution.” Symbol Techs. II, 422 F.3d at 1385. Barr
has failed to establish either that it or that others devel-
oped or invested in temozolomide or any other claimed
tetrazine compound between 1982 and 1991, the period of
delay. Accordingly, Barr cannot establish prosecution
laches as a matter of law, and we reverse the decision of
the district court.
Because we conclude that the district court committed
legal error in holding the ’291 patent unenforceable for
prosecution laches in the absence of any evidence of
intervening rights, we need not decide if Cancer Re-
search’s delay in prosecuting the ’291 patent was unrea-
sonable or unexplained.
II. Inequitable Conduct
The district court also held the ’291 patent unenforce-
able for inequitable conduct. Cancer Research, 679 F.
Supp. 2d at 577-82. To successfully prove inequitable
conduct, the accused infringer must provide evidence that
the applicant (1) made an affirmative misrepresentation
of material fact, failed to disclose material information, or
submitted false material information, and (2) did so with
intent to deceive the PTO. Star Scientific, Inc. v. R.J.
Reynolds Tobacco Co., 537 F.3d 1357, 1365 (Fed. Cir.
15 CANCER RESEARCH v. BARR LABS
2008). Both materiality and intent must be proven by
clear and convincing evidence. Id. While deceptive intent
can be inferred from indirect and circumstantial evidence,
that “inference must not only be based on sufficient
evidence and be reasonable in light of that evidence, but it
must also be the single most reasonable inference able to
be drawn from the evidence to meet the clear and convinc-
ing standard.” Id. at 1366.
This court reviews a district court’s determination of
inequitable conduct under a two-tiered standard; we
review the underlying factual determinations of material-
ity and intent for clear error, and we review the ultimate
decision as to inequitable conduct for an abuse of discre-
tion. Id. at 1365. If the district court’s inequitable con-
duct determination rests on a clearly erroneous finding of
materiality and/or intent, it constitutes an abuse of dis-
cretion and must be reversed. Id.Cancer Research alleges that, inter alia, the district
court erred in finding that inventor Stevens withheld
studies on tetrazine derivatives with deceptive intent.
Cancer Research argues that there is no evidence to
counter Stevens’s testimony that he did not consider the
withheld data material and that by identifying only
Stevens’s publication of the data to establish his knowl-
edge of its materiality, the district court erroneously
relied solely on its finding of materiality to infer deceptive
intent. Furthermore, Cancer Research argues that Ste-
vens provided a good faith explanation for the nondisclo-
sure, testifying that he honestly and to the best of his
ability provided all necessary information about the
claimed compounds and, as a laboratory scientist, be-
lieved the clinical data were confidential. Finally, Cancer
Research asserts that nothing in Stevens’s widespread
publication of the data evidences wrongful intent, but
rather the opposite, extreme candor. Accordingly, Cancer
CANCER RESEARCH v. BARR LABS 16
Research concludes that the district court’s inference of
deceptive intent is far from the single most reasonable
inference to draw from the evidence, and thus the court’s
determination of inequitable conduct must be reversed.
In response, Barr defends the district court’s finding
of intent. Specifically, Barr argues that, based on Ste-
vens’s testimony at trial, the district court correctly found
that Stevens knew he possessed undisclosed data that
contradicted the disclosure in the patent application and
knew he had a duty to disclose such material information
to the PTO but did not do so. According to Barr, the only
reasonable inference to draw from this evidence is an
intent to deceive. Moreover, Barr argues that the district
court found Stevens’s explanations for his failure to
disclose the information not credible, concluding that
Stevens’s publication of the data along with statements
regarding the compounds’ “inactivity” and “toxicity” belied
his assertions that he believed the data to be “inconclu-
sive” and “confidential.” Finally, Barr argues that, con-
trary to Cancer Research’s contention, the district court
did not clearly err in finding that Stevens’s publication of
the withheld data was relevant to intent; the publications
demonstrate that Stevens’s stated reasons for not disclos-
ing the data were untrue.
We agree with Cancer Research that the district court
clearly erred in finding that Stevens intended to deceive
the PTO by not disclosing data on the claimed compounds,
and specifically we agree that the district court erred
because it relied solely on its finding of materiality to
infer intent. The district court found that “Stevens should
have appreciated the materiality of the data . . . as they
expressly contradicted the disclosure of the pending
applications” and that under the circumstances “Stevens’
publications to the scientific community [provided] a
sufficient basis upon which to infer an intent to deceive.”
17 CANCER RESEARCH v. BARR LABS
Cancer Research, 679 F. Supp. 2d at 581-82. The district
court, however, relied on the same evidence in finding the
withheld data to be “highly material”; the court found
that “the withheld information directly contradicts state-
ments made in the ’291 patent’s specification,” making it
highly material, and rejected Cancer Research’s argu-
ments regarding materiality as “belied by the fact that
Stevens . . . thought the data [were] significant enough to
describe in publications to the scientific community.” Id.
at 580-81. Because the district court did not rely on any
other evidence to support its finding of deceptive intent
beyond that used to find the withheld data material, the
court in effect relied solely on its materiality finding to
infer intent to deceive.
But materiality and intent are separate requirements,
and intent to deceive cannot be found based on material-
ity alone. Larson Mfg. Co. of S.D., Inc. v. Aluminart
Prods. Ltd., 559 F.3d 1317, 1340 (Fed. Cir. 2009). A court
cannot simply infer that an applicant “should have
known” the materiality of withheld information and thus
intended to deceive the PTO because the applicant knew
of the information and the information is material. A
district court must find some other evidence that indi-
cates that the applicant appreciated the information’s
materiality. See, e.g., Critikon, Inc. v. Becton Dickinson
Vascular Access, Inc., 120 F.3d 1253, 1256 (Fed. Cir. 1997)
(finding intent to deceive based in part on handwritten
notes of prosecution counsel corroborating that counsel
subjectively believed the undisclosed patent was mate-
rial). In this case, evidence that Stevens co-authored
articles that contradict the disclosure of the ’291 patent
specification does not alone establish that Stevens with-
held those studies intending to deceive the PTO.
We also disagree with the inference the district court
drew from Stevens’s publication of the withheld data.
CANCER RESEARCH v. BARR LABS 18
While publication to the scientific community is not the
same as disclosure to the PTO and does not foreclose a
finding of deceptive intent, see Bristol-Myers Squibb Co. v.
Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1241 (Fed. Cir.
2003), the prompt publication of data in multiple articles
over the entire course of prosecution is inconsistent with
finding that intent to deceive is the single most reason-
able inference to draw from the evidence in this case, see
Research Corp. Techs., Inc. v. Microsoft Corp., 536 F.3d
1247, 1252 (Fed. Cir. 2008) (stating that “[p]ublication [to
the scientific community] is an act inconsistent with an
intent to conceal data from the USPTO.”). Also, Stevens
did not selectively withhold information; the withheld
information includes both positive and negative data
regarding the claimed tetrazine derivatives. Cf. Semicon-
ductor Energy Lab. Co. v. Samsung Elecs. Co., 204 F.3d
1368, 1376 (Fed. Cir. 2000) (affirming a finding of intent
to deceive based on a partial translation of a prior art
reference). Accordingly, an equally reasonable inference
to draw from the evidence is that Stevens viewed publica-
tion of all the data as important to his career as a scien-
tist but did not appreciate their potential importance to
the patentability of the tetrazine derivatives patent
claims.
Because we conclude that the district court committed
clear error in finding that Stevens acted with deceptive
intent, we need not address Cancer Research’s argument
that the district court also erred in finding the withheld
data highly material, and we reverse the district court’s
decision holding the ’291 patent unenforceable for inequi-
table conduct.
19 CANCER RESEARCH v. BARR LABS
CONCLUSION
For the foregoing reasons, we reverse the district
court’s decision holding the ’291 patent unenforceable for
prosecution laches and inequitable conduct.
REVERSED
United States Court of Appeals
for the Federal Circuit
__________________________
CANCER RESEARCH TECHNOLOGY LIMITED
AND SCHERING CORPORATION,
Plaintiffs-Appellants,
v.
BARR LABORATORIES, INC. AND
BARR PHARMACEUTICALS, INC.,
Defendants-Appellees.
__________________________
2010-1204
__________________________
Appeal from the United States District for the District
of Delaware in case no. 07-CV-0457.
__________________________
PROST, Circuit Judge, dissenting.
I respectfully dissent. In my view, the majority opin-
ion seriously errs in reversing the district court’s findings
and conclusions that U.S. Patent No. 5,260,291 (“’291
patent”) is unenforceable on the grounds of both prosecu-
tion laches and inequitable conduct. In doing so, the
majority propounds a new and unsupportable legal stan-
dard for prosecution laches. With regard to inequitable
conduct, the majority not only creates a new evidentiary
standard, but it also ignores virtually unassailable credi-
bility findings made by the district court after a four-day
bench trial. I address each in turn below.
CANCER RESEARCH v. BARR LABS 2
I. Prosecution Laches
The majority appears to not take issue with the dis-
trict court’s findings and conclusion that the patentee’s
almost decade-long delay in prosecuting its application—
caused by filing eleven continuation applications, aban-
doning ten of those applications, and obtaining nearly two
years’ worth of time extensions merely to file continuation
applications rather than responses to the Office Actions—
was unreasonable. Despite Cancer Research Technology
Limited and Schering Corporation’s (collectively, “Cancer
Research”) excuses justifying the delay, the information
eventually used to overcome the examiner’s initial rejec-
tion was contained in the application as originally filed
ten years earlier. The district court carefully rejected all
of the patentee’s excuses for its delay, ultimately conclud-
ing that the applicants did not prosecute the application
until it became commercially advantageous to do so.
Instead, the majority rejects the legal standard the
district court applied. The district court concluded that
under Symbol Technologies, Inc. v. Lemelson Medical, 422
F.3d 1378 (Fed. Cir. 2005) (“Symbol Techs. II”), prosecu-
tion laches does not require a showing of intervening
rights, but rather turns on whether under the totality of
the circumstances Cancer Research’s delay was unrea-
sonable and unexplained. See Cancer Research Tech. v.
Barr Labs., Inc., 679 F. Supp. 2d 560, 572-73 (D. Del.
2010). Besides rejecting this standard, the majority says
that in order to establish prosecution laches (1) prejudice
to the alleged infringer must be shown, and (2) that
prejudice requires that “either the accused infringer or
others invested in, worked on, or used the claimed tech-
nology during the period of delay.” Maj. Op. at 9 (empha-
sis added); see also id. at 13-14 (“Barr has failed to
establish either that it or that others developed or in-
3 CANCER RESEARCH v. BARR LABS
vested in temozolomide or any other claimed tetrazine
compound between 1982 and 1991, the period of delay.
Accordingly, Barr cannot establish prosecution laches as a
matter of law . . . .”).
First, I think the district court got it right because I
do not agree with the majority that a showing of interven-
ing rights, i.e. prejudice, is compelled by our precedent.
Moreover, even if one could construe the case law as
requiring prejudice, there is no basis, in the relevant case
law or otherwise, for the majority’s further temporal
limitation that the prejudice exists during the period of
delay.
Shifting the inquiry regarding prosecution laches
from Cancer Research’s own conduct to the conduct of the
party invoking the defense ignores that prosecution
laches is an equitable defense. Neither the Supreme
Court nor this court has required a defendant to establish
prejudice to assert prosecution laches. Indeed, in Wood-
bridge v. United States, the Court held that a plaintiff’s
willful or negligent postponement in obtaining patent
rights alone can result in forfeiture. 263 U.S. 50, 57
(1923) (quoting Kendall v. Winsor, 62 U.S. 322, 329
(1858), for the proposition that an inventor “‘may forfeit
his rights as an inventor by a willful or negligent post-
ponement of his claims, or by an attempt to withhold the
benefit of his improvement from the public until a similar
or the same improvement should have been made and
introduced by others’” (emphasis added)). 1 Our precedent
1 The majority also cites to Webster Electric Co. v.
Splitdorf Electic Co., 264 U.S. 463 (1924), Crown Cork &
Seal Co. v. Ferdinand Gutmann Co., 304 U.S. 159 (1938),
and General Talking Pictures Corp. v. Western Electric
Co., 304 U.S. 175 (1938). None of these Supreme Court
cases require a showing of prejudice where an applicant
CANCER RESEARCH v. BARR LABS 4
is no more restrictive. Recognizing that prosecution
laches is an equitable doctrine, we have declined to “set
forth any firm guidelines for determining when such
laches exists.” Symbol Techs. II, 422 F.3d at 1385. La-
ches may be triggered by “the totality of the circum-
stances, including the prosecution history of all of a series
of related patents and overall delay in issuing claims.” Id.
at 1386. And we have specifically indicated that “repeti-
tive refilings that demonstrate a pattern of unjustifiably
delayed prosecution” “for the business purpose of delaying
. . . issuance [of the patent]”—an apt description of Cancer
Research’s behavior during the prosecution of the ’291
patent—supports a finding of laches. Id. at 1385-86.
unreasonably extends prosecution by refusing to respond
to the merits of nine substantially similar Office Actions.
Under Webster, “laches, equitable estoppel or intervening
private or public rights” can each alone bar the right to a
claim presented in a subsequent divisional patent. 264
U.S. at 471 (emphasis added). The Webster Court sug-
gested that there is a presumption that such claims are
unreasonable (and thus time-barred) where the applicant
waited more than two years to present the claims in a
divisional application. Id. Under Webster, applicants
could only obtain such claims if they provided justification
for the more than two-year delay. Id. In Crown Cork, the
Court clarified that “in the absence of intervening rights,
the decision in [Webster] does not mean that an excuse
must be shown for a lapse of more than two years in
presenting the divisional.” 304 U.S. at 167-68; see also
General Talking Pictures, 304 U.S. at 184. Crown Cork
and General Talking Pictures make clear that a two-year
delay in filing a divisional is not per se unreasonable in
the absence of intervening rights. However, nothing in
these cases requires a party to show that it had interven-
ing rights or suffered any other prejudice as a prerequi-
site to asserting the equitable defense of prosecution
laches where the patentee’s prosecution delays are unrea-
sonable under the totality of the circumstances.
5 CANCER RESEARCH v. BARR LABS
More importantly, even if prejudice is required, there
is no basis for the majority’s new requirement that one
must confine himself to the period of prosecution delay in
determining whether prejudice exists. Such a require-
ment (1) discounts the relationship between prosecution
laches and broad public interests in the timely issuance of
patents and (2) imposes a novel time restriction on the
harm suffered.
By requiring this particularized prejudice, the major-
ity sidesteps the real harm at issue in this case. The
Supreme Court has explicitly recognized that delaying a
patentee’s monopoly period harms the public by delaying
its free use of the patented invention. Woodbridge, 263
U.S. at 48-49. Here, the applicant first filed the patent
application disclosing temozolomide in 1982. By stalling
prosecution for its own business purposes for nearly a
decade, Cancer Research obtained a patent which does
not expire until 2014—almost thirty-two years after the
first application in this chain was filed. The majority
downplays the public prejudice caused by this delay, 2
Maj. Op. at 12-13; however, Cancer Research’s conduct
has prejudiced the public by extending its patent monop-
oly over temozolomide. Indeed, Congress has specifically
recognized the public’s interest in obtaining affordable
prescription drugs by enacting a regulatory scheme to
expedite the availability of generic drugs. See Drug Price
Competition and Patent Term Restoration Act of 1984,
Pub. L. No. 98-417, 1984 Stat. 1538 (codified as amended
2 While the majority suggests Cancer Research it-
self “incurred a cost” due to the prosecution delay, that
Cancer Research’s delay resulted in its not getting the full
patent term extension has absolutely no relevance to
whether public or private interests were prejudiced by the
delay.
CANCER RESEARCH v. BARR LABS 6
in scattered sections of 21 & 35 U.S.C.). Barr Laborato-
ries, Inc. and Barr Pharmaceuticals, Inc. (collectively,
“Barr”), as well as other makers of generic pharmaceuti-
cals, are likewise harmed. It is unable to enter the mar-
ket without risking a patent infringement suit until a
date far later than the one it would have faced had Can-
cer Research not engaged in its excessive delays.
The majority avoids entirely these harms by confining
the relevant harm to the period during which Cancer
Research delayed prosecution of its patent application.
There is no basis for the majority’s limitations. I would
hold that the more generalized harm associated with the
improper extension of the patent monopoly, including the
accompanying market uncertainty and denial to the
public of free use of the invention, is sufficient prejudice
to justify the use of an equitable defense. Even if our
precedent required adverse intervening rights, it is not
appropriate to confine the inquiry to the period of time
when Cancer Research was actively delaying prosecution.
The harm continued though the patent term “extension”
Cancer Research improperly created though its delay
tactics.
II. Inequitable Conduct
Similarly, in reversing the district court’s findings
and conclusions regarding inequitable conduct, the major-
ity veers from our precedent in at least two respects: (1)
it creates a new evidentiary standard for establishing
inequitable conduct, and (2) it inexplicably rejects the
district court’s unassailable credibility determinations,
which served as the basis for its conclusion that inequita-
ble conduct occurred.
7 CANCER RESEARCH v. BARR LABS
Again, in my view, the district court got it exactly
right. Here, an inventor, Dr. Stevens, withheld important
data from the U.S. Patent and Trademark Office (“PTO”)
that contradicted the disclosure in the patent applica-
tions. The majority does not take issue with the district
court’s conclusion that this data was highly material.
Clearly, it could not, because at a minimum the disclosure
would have affected the scope of the patent granted.
Rather, it rejects the district court’s credibility determina-
tion that Dr. Stevens’s explanation for not submitting this
highly material data was belied by the facts that Stevens
found the data conclusive enough (and sufficiently non-
confidential) to publish the data and his conclusions of
inactivity or toxicity to the scientific community. Stevens
did not qualify his statements regarding inactivity.
Certainly, if Stevens found the information sufficiently
accurate to base conclusions upon and to publish to his
peers, it was sufficiently accurate and conclusive enough
to submit to the PTO. Cancer Research, 679 F. Supp. 2d
at 581.
The majority’s rejection of the findings and conclu-
sions of the trial judge rests on two faulty pillars. The
majority first missteps by determining that materiality
and intent require separate evidentiary bases. The
majority concludes that the district court erred because it
“did not rely on any other evidence to support its finding
of deceptive intent beyond that used to find the withheld
data material.” Maj. Op. at 17. Requiring separate
evidence for each prong, however, has no basis in our
precedent. The majority is correct that the district court
cited to the same evidence in support of its findings of
intent and materiality. But it by no means rested on its
finding of materiality to infer intent. Rather, the evi-
dence presented at trial separately supports the district
court’s findings on both prongs, and when combined with
CANCER RESEARCH v. BARR LABS 8
the district court’s credibility findings regarding Dr.
Stevens’s “explanation” for his failure to disclose, is
absolutely sufficient to support the conclusion that highly
material evidence was withheld from the PTO with intent
to deceive.
Further, the majority’s treatment of the district
court’s credibility determinations—which are virtually
unreviewable by this court—is baffling. See LNP Eng’g
Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347,
1361 (Fed. Cir. 2001). The majority concludes that the
district court did not draw the most reasonable inference
regarding Stevens’s withholding of the published data.
Maj. Op. at 17-18. Instead, the majority believes that
there is another “an equally reasonable inference”—
Stevens did not appreciate the potential importance of the
data to the patentability of the claims. We should not
draw inferences that the district court has already ex-
cluded based on its own credibility findings with respect
to Stevens’s explanations for the withholding.
In sum, in light of our prosecution laches precedent, I
would not require that Barr have intervening rights
during the period that Cancer Research delayed prosecu-
tion of its patent. Even if I did, I would not limit the
prejudice inquiry to the period of delay. Further, given
our differential standard of review, I cannot agree that
the district court’s intent finding with regard to inequita-
ble conduct is clearly erroneous. Accordingly, I would
uphold the district court’s application of prosecution
laches and its finding of inequitable conduct.