Kaiser Foundation v. Abbott Laboratories

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
KAISER FOUNDATION HEALTH PLAN 
INC.,
Plaintiff-Appellant, No. 06-55687
v.
 D.C. No.
CV-02-02443-JFW
ABBOTT LABORATORIES, INC.;
GENEVA PHARMACEUTICALS
TECHNOLOGY CORPORATION,
Defendants-Appellees.

KAISER FOUNDATION HEALTH PLAN 
INC.,
Plaintiff-Appellee, No. 06-55748
v.
 D.C. No.
CV-02-02443-JFW
ABBOTT LABORATORIES, INC.;
GENEVA PHARMACEUTICALS OPINION
TECHNOLOGY CORPORATION,
Defendants-Appellants.

Appeal from the United States District Court
for the Central District of California
John F. Walter, District Judge, Presiding
Argued and Submitted
February 4, 2008—Pasadena, California
Filed January 13, 2009
Before: Alex Kozinski, Chief Judge,
Diarmuid F. O’Scannlain, and William A. Fletcher,
Circuit Judges.
423
424 KAISER FOUNDATION v. ABBOTT LABORATORIES
Opinion by Judge William A. Fletcher
KAISER FOUNDATION v. ABBOTT LABORATORIES 427
COUNSEL
David C. Frederick, KELLOGG HUBER HANSEN TODD &
EVANS, Washington, D.C., W. Scott Simmer, Hardy Vieux,
ROBINS, KAPLAN, MILLER & CIRESI, Minneapolis, Min-
nesota, for the appellant.
Paul Olszowka, WILDMAN, HARROLD, ALLEN &
DIXON, Chicago, Illinois, Rohit K. Singla, MUNGER TOL-
LES & OLSON, San Francisco, California, Stuart Neil Sena-
tor, Jeffrey I. Weinberger, MUNGER TOLLES & OLSON,
Los Angeles, California, Bryan Alexander Merryman,
WHITE & CASE, Los Angeles, California, Robert A. Milne,
WHITE & CASE, New York, New York, for the appellees.
OPINION
W. FLETCHER, Circuit Judge:
Plaintiff-Appellant Kaiser Foundation Health Plan, Inc.
(“Kaiser”) sued Defendants-Appellees Abbott Laboratories
(“Abbott”) and Geneva Pharmaceuticals (“Geneva”) for viola-
tions of the Sherman Antitrust Act and analogous provisions
of California law. Kaiser brought a claim under Section One
of the Sherman Act against both Abbott and Geneva, and a
claim under Section Two against only Abbott. A multidistrict
litigation federal district court in Florida allowed Kaiser’s
Section One claim to go to trial. The suit was transferred to
a federal district court in California for trial on that claim. The
jury returned a verdict against Kaiser. The district court in
428 KAISER FOUNDATION v. ABBOTT LABORATORIES
Florida granted summary judgment against Kaiser on its Sec-
tion Two claim.
We affirm the judgment entered on the jury’s verdict on
Kaiser’s Section One claim. We reverse summary judgment
on Kaiser’s Section Two claim and remand for further pro-
ceedings.
I. Regulatory Background
The Federal Food, Drug, and Cosmetic Act (“FDCA”), 21
U.S.C. §§ 301 et seq., governs the sale and manufacture of
prescription drugs in the United States. Any entity seeking to
distribute a new prescription drug must file a New Drug
Application (“NDA”) with the Food and Drug Administration
(“FDA”). The application must include “full reports of inves-
tigations which have been made to show whether or not such
drug is safe for use and whether such drug is effective in use.”
21 U.S.C. § 355(b)(1)(A). Upon approval by the FDA, a drug
may be manufactured and sold in the United States. Drugs
approved by the FDA under the NDA process are commonly
referred to as “brand-name” drugs.
Brand-name drugs are typically protected by patents at the
time of their approval by the FDA, and for a number of years
thereafter. A patent holder has the exclusive right to make,
use and sell the patented invention during the life of the
patent. 35 U.S.C. § 154(a). A manufacturer of a brand-name
drug protected by a patent is able to sell the drug at monopoly
prices.
The Drug Price Competition and Patent Term Restoration
Act of 1984, commonly referred to as the “Hatch-Waxman
Act” or “Hatch-Waxman,” was passed to facilitate the
approval of generic versions of brand-name drugs. 21 U.S.C.
§ 355. Under Hatch-Waxman, a manufacturer seeking FDA
approval of a new brand-name drug must file with its NDA
the patent number and expiration date of
KAISER FOUNDATION v. ABBOTT LABORATORIES 429
any patent which claims the drug for which the
applicant submitted the application or which claims
a method of using such drug and with respect to
which a claim of patent infringement could reason-
ably be asserted if a person not licensed by the
owner engaged in the manufacture, use, or sale of
the drug.
Id. § 355(b)(1). The brand-name drug and its associate patent
or patents are then published in the “Approved Drug Products
with Therapeutic Equivalence Evaluations,” commonly
referred to as the “Orange Book.”
Under Hatch-Waxman, a drug manufacturer seeking FDA
approval for a generic version of a brand-name drug may file
an Abbreviated New Drug Application (“ANDA”) showing
that its proposed generic drug is the “bioequivalent” of an
already approved brand-name drug. Id. § 355(j). The ANDA
shall contain, with respect to patents for the already approved
brand-name drug listed in the Orange Book,
a certification . . .
(I) that such patent information has not been filed,
(II) that such patent has expired,
(III) of the date on which such patent will expire, or
(IV) that such patent is invalid or will not be
infringed by the manufacture, use, or sale of the new
drug for which the application is submitted[.]
Id. § 355(j)(2)(A)(vii). Such a certification is referred to as a
“Paragraph I,” “Paragraph II,” “Paragraph III,” or “Paragraph
IV” certification. The first ANDA applicant for approval of a
generic version of a particular brand-name drug who makes
a Paragraph IV certification is guaranteed a 180-day period of
430 KAISER FOUNDATION v. ABBOTT LABORATORIES
exclusive distribution of the generic drug if that drug is
approved by the FDA. The 180-day period begins either on
the date the applicant notifies the FDA of its first “commer-
cial marketing” of the generic drug, or on the date of the judi-
cial decision holding the patent invalid or not infringed,
whichever is earlier. Id. § 355(j)(5)(B)(iv).
An ANDA applicant who makes a Paragraph IV certifica-
tion must notify the patent holder of that certification. Id.
§ 355(j)(2)(B). If an ANDA contains a Paragraph IV certifica-
tion, FDA approval of the proposed generic drug must be
“made effective immediately unless . . . an action is brought
for infringement of the patent that is the subject of the certifi-
cation” within forty-five days of the patent holder receiving
notice of the certification. Id. § 355(j)(5)(B)(iii). If a patent
holder brings suit within forty-five days, FDA approval will
not become effective until thirty months after the receipt of
the notice, subject to certain exceptions. Id. This thirty-month
delay is commonly referred to as the “automatic stay.” An
exception to the thirty-month automatic stay is a final court
decision in the patent holder’s infringement suit that the
patent is invalid or not infringed. In the event of such a court
decision, FDA approval “shall be made effective on the date
on which the court enters judgment reflecting the decision” if
the court decision is less than thirty months after receipt of the
notice.1 Id. § 355(j)(5)(B)(iii)(I).
If a patent holder fails to bring an infringement suit within
forty-five days of receipt of a Paragraph IV notification, it
loses the right to the thirty-month automatic stay of FDA
approval of the proposed generic drug. However, the patent
holder does not lose the right to bring an infringement suit
against the generic drug manufacturer; the patent holder sim-
ply loses the right to bring the infringement suit under Hatch-
1
At the time relevant to our case, FDA regulations provided that a final
court decision meant the decision of an appellate court or an unappealed
decision of a district court. 21 C.F.R. § 314.107(e) (1989).
KAISER FOUNDATION v. ABBOTT LABORATORIES 431
Waxman. A patent holder who misses the forty-five day dead-
line for bringing a Hatch-Waxman infringement suit suffers
two significant disadvantages. First, the patent holder cannot
bring an infringement suit immediately upon the filing of the
ANDA; it must wait until the generic drug is sold commer-
cially. See 35 U.S.C. § 271(e)(1). See generally Merck KGaA
v. Integra Lifesciences I, Ltd., 545 U.S. 193 (2005). Second,
there is no automatic stay barring the FDA from approving
the generic drug. Once approved, its manufacturer may sell
the generic drug during the pendency of any infringement suit
brought by the patent holder.
II. Factual Background and Procedural History
Plaintiff-appellant Kaiser is a health care provider that buys
large quantities of prescription drugs. Defendant-appellee
Abbott is a large developer and manufacturer of brand-name
drugs. Defendant-appellee Geneva is a large developer and
manufacturer of generic drugs.
Abbott sought and obtained FDA approval through the
NDA process to sell terazosin hydrochloride as a brand-name
drug to treat hypertension and enlarged prostate. Abbott
began selling terazosin hydrochloride, in tablet and capsule
form, under the brand name Hytrin in 1987. The sale of
Hytrin was extremely lucrative. In 1998, Hytrin generated
$540 million in sales, accounting for more than twenty per-
cent of Abbott’s domestic sales of pharmaceutical products.
Abbott submitted three patents, described below, for inclu-
sion in the Orange Book in connection with its NDA for tera-
zosin hydrochloride.
Patent 4,026,894 (“the ’894 patent”) was filed on October
14, 1975, and issued on May 31, 1977. It protected terazosin
hydrochloride. The ’894 patent expired on May 31, 1994. No
generic drug manufacturer ever challenged the validity of the
432 KAISER FOUNDATION v. ABBOTT LABORATORIES
’894 patent or sought to market a generic terazosin hydrochlo-
ride product before its expiration.
Patent 4,112,097 (“the ’097 patent”), a divisional applica-
tion of the ’894 patent, was filed on January 21, 1977, and
issued on September 5, 1978. It protected a pharmaceutical
composition of terazosin hydrochloride for treating hyperten-
sion and a method for treating hypertension with the drug.
The ’097 patent was scheduled to expire on September 5,
1995. In separate litigation, Abbott argued that the Uruguay
Round Agreements Act extended the ’097 patent’s term until
January 21, 1997. The Federal Circuit rejected Abbott’s argu-
ment and held that the patent had expired on October 14,
1995. See Abbott Labs. v. Novopharm Ltd., 104 F.3d 1305,
1308-09 (Fed. Cir. 1997). No generic drug manufacturer ever
challenged the validity of the ’097 patent or sought to market
a generic terazosin hydrochloride product before October 14,
1995. However, Geneva and two other generic drug manufac-
turers filed ANDAs before January 21, 1997, certifying under
Paragraph III that the ’097 patent had expired on October 14,
1995.
Patent 4,251,532 ( “the ’532 patent”) was filed on Septem-
ber 24, 1979, and issued on February 17, 1981. It protected
dihydrate terazosin hydrochloride, its pharmaceutical compo-
sition, and a method for treating hypertension with dihydrate
terazosin hydrochloride. The ’532 patent expired on February
17, 2000. No generic drug manufacturer ever challenged the
validity of the ’532 patent.
Just as the ’894 and ’097 patents were about to expire, or
had expired, Abbott filed three more patents for terazosin
hydrochloride. They were as follows.
Patent 5,294,615 (“the ’615 patent”) was filed on July 13,
1993, and issued on March 15, 1994. It protected a crystalline
polymorph of terazosin hydrochloride with a certain x-ray dif-
fraction pattern (“Form II”). The ’615 patent was listed in the
KAISER FOUNDATION v. ABBOTT LABORATORIES 433
March 1995 supplement to the Orange Book, and was sched-
uled to expire on April 29, 2013.
Patent 5,412,095 (“the ’095 patent”) was filed on May 20,
1994, and issued on May 2, 1995. It protected a crystalline
polymorph of terazosin hydrochloride with a different x-ray
diffraction pattern (“Form III”). The ’095 patent was listed in
the Orange Book on May 8, 1995, and was scheduled to
expire on April 29, 2013.
Patent 5,504,207 (“the ’207 patent”) was filed on October
18, 1994, and issued on April 2, 1996. It protected a crystal-
line polymorph of terazosin hydrochloride with a different x-
ray diffraction pattern (“Form IV”) and a process for prepar-
ing terazosin hydrochloride dihydrate using Form IV. The
’207 patent was submitted to the FDA for listing in the
Orange Book on April 2, 1996, and was scheduled to expire
on April 29, 2013.
Geneva began work on a generic version of Hytrin in 1990
and subsequently filed two ANDAs related to terazosin
hydrochloride. Geneva filed its first ANDA in January 1993,
for a tablet form of generic terazosin hydrochloride (“tablet
ANDA”). In December 1995, Geneva filed its second ANDA
for a capsule form of generic terazosin hydrochloride
(“capsule ANDA”). Between 1993 and 1996, Geneva made
six Paragraph IV certifications related to these ANDAs and
provided notice to Abbott for each certification. We describe
the certifications in turn.
First, on January 12, 1993, Geneva provided Abbott notice
of a Paragraph IV certification for its tablet ANDA with
respect to the ’532 patent. It asserted that its proposed generic
terazosin hydrochloride would not infringe the ’532 patent
because its product was anhydrous (“without water”) rather
than dihydrate (“including water”) terazosin hyrdochloride.
Second, on October 5, 1995, Geneva provided Abbott
notice of a Paragraph IV certification for its tablet ANDA
434 KAISER FOUNDATION v. ABBOTT LABORATORIES
with respect to the ’097 patent. It asserted that the ’097 patent
expired on October 14, 1995. Geneva proposed to sell generic
terazosin hydrochloride after October 14, 1995, but before
January 21, 1997, the date Abbott claimed its ’097 patent
expired.
Third, also on October 5, 1995, Geneva provided Abbott
notice of a Paragraph IV certification for its tablet ANDA
with respect to the ’095 patent. It asserted that its proposed
generic terazosin hydrochloride would not infringe the ’095
patent because its product used an anhydrous form of terzosin
hyrdochloride different from the “Form III” claimed in the
’095 patent.
Fourth, on February 16, 1996, Geneva provided Abbott
notice of a Paragraph IV certification for its capsule ANDA
with respect to the ’615 patent. It asserted that its proposed
generic terazosin hydrochloride would not infringe the ’615
patent because its product contained “Form IV” terazosin
hydrochloride rather than the “Form II” claimed in the ’615
patent. (Abbott’s ’207 patent claiming Form IV terazosin
hydrochloride was not issued until April 2, 1996, a month and
a half after Geneva’s Paragraph IV certification.)
Finally, on April 29, 1996, Geneva provided Abbott notice
of two Paragraph IV certifications with respect to the ’207
patent. One certification supplemented Geneva’s tablet
ANDA and the other supplemented Geneva’s capsule ANDA.
Geneva conceded that these two proposed products infringed
the part of the ’207 patent that protected Form IV terazosin
hydrochloride, but it asserted this part of the ’207 patent was
invalid under 35 U.S.C. § 102(b). Section 102(b) bars patents
on inventions that already have been patented, described in a
printed publication, or sold in the United States more than one
year before the patent application. The bar on patents for
inventions previously sold in the United States is commonly
referred to as the “on-sale bar.”
KAISER FOUNDATION v. ABBOTT LABORATORIES 435
Abbott filed timely suits under Hatch-Waxman in response
to five of Geneva’s six Paragraph IV certifications. In those
five suits, Abbott received the thirty-month automatic stay of
FDA approval. However, Abbott neglected to file a timely
suit under Hatch-Waxman in response to Geneva’s Paragraph
IV certification with respect to the ’207 patent for the capsule
form of generic terazosin hydrochloride. The FDA proceeded
to evaluate Geneva’s capsule ANDA. Geneva received final
FDA approval to market its capsule form of terazosin hydro-
chloride on March 30, 1998. At the time of the FDA approval,
there had been no judicial determination of the validity of the
’207 patent.
Between 1993 and 1998, seven generic drug manufacturers
filed ANDAs seeking FDA approval of generic terazosin
hydrochloride accompanied by Paragraph IV certifications. In
chronological order of their ANDAs, those manufacturers
were (in addition to Geneva) Novopharm, Zenith-Goldline
(“Zenith”), Invamed, Lemmon Pharmacal, Warner-Chilcott,
and Mylan Pharmaceuticals. Abbott filed infringement suits in
response to all of the ANDAs, with the exception of Geneva’s
capsule ANDA that infringed the ’207 patent. All told, Abbott
filed seventeen patent infringement suits during this period in
an attempt to preserve its Hytrin market monopoly.
On April 1, 1998, two days after the FDA approved Gene-
va’s capsule ANDA, Abbott and Geneva entered into a con-
tract. In brief, Geneva agreed to keep its generic capsule form
of terazosin hydrochloride off the market until the earliest of
(1) the sale of generic terazosin hydrochloride by another
generic manufacturer, (2) the expiration date of the ’532
patent (February 17, 2000), or (3) a final unappealable judg-
ment holding the ’207 patent invalid. In return, Abbott agreed
to pay Geneva $4.5 million dollars per month during this
period. If a final but appealable judgment holding the ’207
patent invalid was rendered during the period, Abbott would
pay the $4.5 million per month into escrow until the earliest
of the three above-specified events occurred.
436 KAISER FOUNDATION v. ABBOTT LABORATORIES
Abbott and Zenith had entered into a comparable contract
the day before, on March 31, 1998. Like Geneva, Zenith had
filed an ANDA in June 1994 seeking approval of a generic
terazosin hydrochloride drug. Zenith successfully opposed
two patent infringement suits brought by Abbott under its
’615 patent. See Abbott Labs. v. Zenith Labs., 934 F. Supp.
925, 928, 933-36 (N.D. Ill. 1995) (“Zenith”). Abbott then sub-
mitted its ’095 and ’207 patents for inclusion in the Orange
Book. In March 1996, the FDA informed Zenith that it would
have to amend its ANDA to provide a Paragraph IV certifica-
tion with respect to these patents. Zenith declined to do so.
Instead, it filed suit against Abbott alleging that the ’095 and
’207 patents had been improperly listed in the Orange Book
and seeking an injunction requiring that they be delisted.
Abbott counterclaimed for infringement.
In brief, Zenith agreed in its contract with Abbott to dis-
miss its delisting suit and not to sell any form of terazosin
hydrochloride until another generic manufacturer began to
sell generic terazosin hydrochloride or until the ’532 patent
expired (February 17, 2000), whichever occurred first. In
return, Abbott agreed to dismiss its counterclaim and to pay
Zenith $3 million immediately, $3 million after three months,
and $6 million every three months thereafter until March 1,
2000, unless excused earlier by the terms of the contract. Val-
ley Drug Co. v. Geneva Pharms., Inc., 344 F.3d 1294, 1300
(11th Cir. 2003).
Among the seventeen suits brought by Abbott was an
infringement suit under Hatch-Waxman against Geneva,
Novopharm and Invamed alleging infringement of the ’207
patent, which protected Form IV terazosin hydrochloride.
(The suit against Geneva was based on its tablet ANDA rather
than its capsule ANDA.) All three defendants contended that
the ’207 patent was invalid under the on-sale bar of 35 U.S.C.
§ 102(b). It was undisputed that there had been at least three
sales of Form IV terazosin hydrochloride more than a year
prior to the date Abbott filed its ’207 patent. Abbott Labs. v.
KAISER FOUNDATION v. ABBOTT LABORATORIES 437
Geneva Pharms., Inc., 182 F.3d 1315, 1317 (Fed. Cir. 1999)
(“Geneva II”). At the time of the prior sales, neither the buy-
ers nor the sellers knew that the terazosin hydrochloride sold
was Form IV. However, the district court held that whether
the parties to the prior sales were aware that the product con-
tained Form IV terazosin hydrochloride was immaterial for
purposes of the on-sale bar of § 102(b). Abbott Labs. v.
Geneva Pharms., Inc., 1998 WL 566884 (N.D. Ill. Sept. 1,
1998). The Federal Circuit affirmed, agreeing with the district
court that the parties’ knowledge was irrelevant under
§ 102(b), and holding the ’207 patent invalid. Geneva II, 182
F.3d at 1318-19.
After the Federal Circuit held that Abbott’s ’207 patent was
invalid, Abbott terminated its contracts with Geneva and
Zenith. Geneva then entered the market with its generic cap-
sule form of terazosin hydrochloride. Before Geneva entered
the market, Kaiser had been buying brand-name Hytrin from
Abbott for between 67 and 70 cents per tablet. After Geneva
entered the market, Abbott offered to sell Hytrin to Kaiser at
10 cents per tablet. Kaiser declined Abbott’s offer. Instead, it
began purchasing generic terazosin hyrdochloride from
Geneva.
On March 22, 2002, Kaiser filed suit against Abbott and
Geneva in the Central District of California. Kaiser brought
two claims under the Sherman Act, 15 U.S.C. §§ 1-2, and
claims under the analogous provisions of California’s Cart-
wright Act, California Business & Professional Code
§§ 16720 et seq. (For simplicity’s sake, we will refer only to
Kaiser’s claims under the Sherman Act.) Kaiser brought a
restraint-of-trade claim against Abbott and Geneva under Sec-
tion One of the Sherman Act, and a monopolization claim
against only Abbott under Section Two. In 2003, Kaiser’s suit
was transferred to the District Court for the Southern District
of Florida (“the MDL court”) under 28 U.S.C. § 1407. Kaiser
had not sued Zenith as part of its Section One claim, but
438 KAISER FOUNDATION v. ABBOTT LABORATORIES
plaintiffs in other Section One suits transferred to the MDL
court had done so.
The MDL court granted partial summary judgment to Kai-
ser on its restraint-of-trade claim, holding that Abbott and
Geneva’s agreement constituted a per se violation of Section
One. In re Terazosin Hydrochloride Antitrust Litig., 164 F.
Supp. 2d 1340, 1354 (S.D. Fla. 2000) (“In re Antitrust Litig.
I”). It later granted summary judgment to Abbott on Kaiser’s
Section Two monopolization claim, holding that the Noerr-
Pennington doctrine immunized Abbott’s patent and litigation
activity. In re Terazosin Hydrochloride Antitrust Litig., 335 F.
Supp. 2d 1336, 1370 (S.D. Fla. 2004) (“In re Antitrust Litig.
II”). The Eleventh Circuit reversed the district court’s finding
of a per se violation under Section One. Valley Drug, 344
F.3d at 1304-06. It remanded to the district court, indicating
that the district court might be able to find a per se violation
if it reframed its analysis. Id. at 1311-13. On remand, the dis-
trict court again found a per se violation of Section One. In
re Terazosin Hydrochloride Antitrust Litig., 352 F. Supp. 2d
1279, 1319-20 (S.D. Fla. 2005) (“In re Antitrust Litig. III”).
At that point, all plaintiffs except Kaiser settled their Section
One claims.
The MDL court then transferred Kaiser’s entire suit back to
the Central District of California. Kaiser’s Section One claim
went to trial on the issue of causation and damages. The jury
was asked to decide whether Abbott and Geneva’s contract
had delayed Geneva’s commercial sale of generic terazosin
hydrochloride, and, if so, whether Kaiser had suffered dam-
ages as a result of the delay. After an eleven-day trial, the jury
found that the contract had not caused any delay and that Kai-
ser had therefore suffered no injury.
Kaiser appeals. First, Kaiser appeals the entry of judgment
on the jury’s verdict on its Section One claim, contending that
the district court made several erroneous evidentiary rulings.
Second, Kaiser appeals the MDL court’s grant of summary
KAISER FOUNDATION v. ABBOTT LABORATORIES 439
judgment to Abbott on its Section Two claim. For the reasons
that follow, we affirm the California district court’s judgment
on the jury’s verdict on Kaiser’s Section One claim. We
reverse the MDL court’s grant of summary judgment on Kai-
ser’s Section Two claim.
III. Standard of Review
We review a grant of summary judgment de novo. Cascade
Health Solutions v. PeaceHealth, 515 F.3d 883, 912 (9th Cir.
2008). We review the trial court’s evidentiary rulings for
abuse of discretion. Hoffman v. Constr. Prot. Servs., Inc., 541
F.3d 1175, 1178 (9th Cir. 2008).
IV. Discussion
A. Section One Restraint-of-Trade Claim
Section One of the Sherman Act makes unlawful “[e]very
contract, combination . . . , or conspiracy, in restraint of trade
or commerce among the several States.” 15 U.S.C. § 1. The
MDL court held that Abbott and Geneva’s agreement was a
per se violation of Section One before transferring the case
back to the California district court for trial. We do not revisit
that holding.
1. Trial Court’s Evidentiary Rulings
Kaiser challenges several evidentiary rulings made by the
district court during the trial of Kaiser’s Section One restraint-
of-trade claim against Abbott and Geneva. We reverse an evi-
dentiary ruling only if we find “that the district court abused
its discretion and that the error was prejudicial.” Columbia
Pictures Television, Inc. v. Krypton Broad. of Birmingham,
Inc., 259 F.3d 1186, 1195 (9th Cir. 2001). We hold that all of
Kaiser’s evidentiary challenges fail and affirm the district
court’s entry of judgment against Kaiser.
440 KAISER FOUNDATION v. ABBOTT LABORATORIES
a. Advice-of-Counsel Defense
Kaiser first challenges a ruling that prevented it from dis-
covering privileged opinions of Geneva’s counsel. Kaiser
sought these opinions in order to counter what Kaiser por-
trayed as Geneva’s advice-of-counsel defense. Abbott and
Geneva presented evidence at trial that their agreement did
not delay Geneva’s marketing of its generic terazosin hydro-
chloride drug because Geneva did not want to risk bringing its
product to market without the protection of an appellate deci-
sion holding the ’207 patent invalid. If Abbott had prevailed
in the ’207 litigation and Geneva had already sold its generic
version of the drug, Geneva would have faced potentially
disastrous damages.
[1] “The privilege which protects attorney-client communi-
cations may not be used both as a sword and a shield. Where
a party raises a claim which in fairness requires disclosure of
the protected communication, the privilege may be implicitly
waived.” Chevron Corp. v. Pennzoil Co., 974 F.2d 1156, 1162
(9th Cir. 1992) (citing United States v. Bilzerian, 926 F.2d
1285, 1292 (2d Cir. 1991)). See also United States v. Amlani,
169 F.3d 1189, 1195-96 (9th Cir. 1999). Kaiser contends that
Geneva was advised by its counsel to avoid taking its product
to market without the protection of an appellate decision on
Abbott’s ’207 patent, and that this alleged advice of counsel
was used as a sword in the Section One litigation. Therefore,
according to Kaiser, Geneva could not use the attorney-client
privilege as a shield to conceal the actual advice given by
counsel.
[2] If, as Kaiser argues, Geneva’s defense was based on the
advice of its attorneys, Kaiser should have had access to those
otherwise privileged attorney-client communications. How-
ever, we agree with the district court that Geneva did not actu-
ally rely on an advice-of-counsel defense at trial. Geneva
presented evidence that regardless of the assurances from
Geneva’s counsel and from Geneva’s parent company’s coun-
KAISER FOUNDATION v. ABBOTT LABORATORIES 441
sel that Geneva would likely prevail in the ’207 litigation,
Geneva’s Board of Directors did not want to undertake the
business risk of marketing its generic terazosin hydrochloride
drug so long as the validity of the ’207 patent had not been
authoritatively determined. Thus, Geneva’s defense at trial
was not that it acted based on advice of counsel. Instead, its
defense was that it acted without regard to, or even contrary
to, what counsel advised. Therefore, it was not an abuse of
discretion for the district court to deny Kaiser access to Gene-
va’s privileged communications. See Home Indem. Co. v.
Lane Powell Moss & Miller, 43 F.3d 1322, 1326-27 (9th Cir.
1995).
b. Abbott’s ’207 Patent Litigation
Kaiser next challenges the district court’s decision exclud-
ing evidence of Abbott’s conduct in seeking the ’207 patent.
Kaiser hoped to use the evidence to demonstrate that Abbott
had not acted in good faith when applying for the ’207 patent,
that Geneva knew about the nature of Abbott’s conduct, and
that Geneva therefore had no reason to believe that Abbott
would prevail in the ’207 patent litigation. The court excluded
this evidence because of the MDL court’s ruling that there
was no evidence of misconduct in Abbott’s patent prosecution
and litigation activity, because the evidence was irrelevant to
Geneva’s liability, and because the prejudicial effect of the
evidence “substantially outweighed” its probative value.
[3] Abbott’s ’207 patent application and its litigation
defending the patent’s validity were only marginally relevant
to Kaiser’s Section One causation and damages trial. But see
MCI Commc’ns Corp. v. AT&T, 708 F.2d 1081, 1159-60 (7th
Cir. 1983) (allowing evidence of behavior protected under
Noerr-Pennington to be introduced for other relevant pur-
poses). Even though Abbott might have acted improperly in
seeking the ’207 patent, as we discuss in a moment, the dis-
trict court did not abuse its discretion in excluding the evi-
dence.
442 KAISER FOUNDATION v. ABBOTT LABORATORIES
c. Cumulative Effect of Other Evidentiary Decisions
[4] Finally, Kaiser challenges a series of exclusions that it
argues compound the prejudice it suffered from the other two
evidentiary rulings it challenges. Even viewed cumulatively,
the exclusions do not constitute abuse of the district court’s
broad discretion on evidentiary matters, and we find no preju-
dice. See Harper v. City of Los Angeles, 533 F.3d 1010, 1030
(9th Cir. 2008).
2. Abbott and Geneva’s Cross-Appeal
Because we affirm the district court’s entry of judgment for
Abbott and Geneva on Kaiser’s Section One claim, we need
not address Abbott and Geneva’s cross-appeal of the MDL
court’s holding that the contract was a per se violation.
B. Section Two Monopolization Claim
Section Two of the Sherman Act makes it unlawful to “mo-
nopolize, or attempt to monopolize . . . trade or commerce
among the several States.” 15 U.S.C. § 2. Kaiser pursues both
monopolization and attempted monopolization claims against
Abbott. For a successful Section Two monopolization claim,
a plaintiff must establish: “(1) the possession of monopoly
power in the relevant market and (2) the willful acquisition or
maintenance of that power as distinguished from growth or
development as a consequence of a superior product, business
acumen, or historic accident.” United States v. Grinnell Corp.,
384 U.S. 563, 570-71 (1966). For a successful attempted
monopolization claim, a plaintiff must establish: “(1) that the
defendant has engaged in predatory or anticompetitive con-
duct with (2) a specific intent to monopolize and (3) a danger-
ous probability of achieving monopoly power.” Spectrum
Sports, Inc. v. McQuillan, 506 U.S. 447, 456 (1993).
The holder of a patent enjoys a lawful monopoly to prevent
others from “making, using, offering for sale, or selling” the
KAISER FOUNDATION v. ABBOTT LABORATORIES 443
patented invention during the term of the patent. 35 U.S.C.
§ 154(a)(1)-(2). Abbott’s initial patent-based monopoly in the
terazosin hydrochloride market is not at issue. Rather, Kaiser
contends that Abbott improperly tried to extend its patent
monopoly by filing sham lawsuits in order to delay the entry
of generic competition, and by fraudulently obtaining an
invalid patent for the same purpose.
Even though Kaiser must ultimately prove the existence of
a “sham” by clear and convincing evidence, it need only show
that there is a genuine issue of material fact to avoid summary
judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
255 (1986). This determination is made “through the prism”
of the clear and convincing evidentiary standard. Id. at
254-55. There is no antitrust exception to the standard set
forth in Federal Rule of Civil Procedure 56.
1. Noerr-Pennington Framework
[5] The Noerr-Pennington doctrine allows private citizens
to exercise their First Amendment rights to petition the gov-
ernment without fear of antitrust liability. See Eastern R.R.
Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S.
127 (1961) (“Noerr”); United Mine Workers of Am. v. Pen-
nington, 381 U.S. 657 (1965) (“Pennington”). The Supreme
Court has explained, “In light of the government’s ‘power to
act in [its] representative capacity’ and ‘to take actions . . .
that operate to restrain trade,’ we reasoned that the Sherman
Act does not punish ‘political activity’ through which ‘the
people . . . freely inform the government of their wishes.’ ”
Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indus.,
508 U.S. 49, 56 (1993) (all alterations in original) (quoting
Noerr, 365 U.S. at 137). Noerr-Pennington originally immu-
nized only petitions to legislative officials, but the Supreme
Court extended Noerr-Pennington immunity to petitions to
administrative agencies and courts. Cal. Motor Transp. Co. v.
Trucking Unlimited, 404 U.S. 508, 510 (1972).
444 KAISER FOUNDATION v. ABBOTT LABORATORIES
[6] An entity loses Noerr-Pennington immunity from anti-
trust liability if its conduct falls within the “sham” exception
to the doctrine. That is, “[t]here may be situations in which a
publicity campaign, ostensibly directed toward influencing
governmental action, is a mere sham to cover what is actually
nothing more than an attempt to interfere directly with the
business relationships of a competitor and the application of
the Sherman Act would be justified.” Noerr, 365 U.S. at 144.
The Court has elaborated:
The “sham” exception to Noerr encompasses situa-
tions in which persons use the governmental process
—as opposed to the outcome of that process—as an
anticompetitive weapon. A classic example is the fil-
ing of frivolous objections to the license application
of a competitor, with no expectation of achieving
denial of the license but simply in order to impose
expense and delay. A “sham” situation involves a
defendant whose activities are not genuinely aimed
at procuring favorable government action at all, not
one who genuinely seeks to achieve his governmen-
tal result, but does so through improper means.
City of Columbia v. Omni Outdoor Adver., Inc., 499 U.S. 365,
380 (1991) (citations and internal quotation marks omitted).
We recently described three situations where the sham excep-
tion applies:
[F]irst, where the lawsuit is objectively baseless and
the defendant’s motive in bringing it was unlawful;
second, where the conduct involves a series of law-
suits brought pursuant to a policy of starting legal
proceedings without regard to the merits and for an
unlawful purpose; and third, if the allegedly unlaw-
ful conduct consists of making intentional misrepre-
sentations to the court, litigation can be deemed a
sham if a party’s knowing fraud upon, or its inten-
KAISER FOUNDATION v. ABBOTT LABORATORIES 445
tional misrepresentations to, the court deprive the lit-
igation of its legitimacy.
Sosa v. DIRECTV, Inc., 437 F.3d 923, 938 (9th Cir. 2006)
(citations and internal quotation marks omitted).
[7] The third situation described in Sosa — “knowing fraud
upon” or “intentional misrepresentations to” a court — has a
particular meaning in patent infringement suits. In such suits,
the fraud or misrepresentation may have been directed to the
federal Patent and Trademark Office (“PTO”), not merely to
a court. In Walker Process Equipment, Inc. v. Food
Machinery & Chemical Corp., 382 U.S. 172, 177 (1965), the
Court held that an entity that obtains a patent fraudulently and
then uses that patent to exclude a competitor from the market
through infringement suits is not protected by Noerr-
Pennington. This fraud-based exception to Noerr-Pennington
is commonly called Walker Process fraud. See also Nobel-
pharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1068
(Fed. Cir. 1998) (“A patentee who brings an infringement suit
may be subject to antitrust liability for the anti-competitive
effects of that suit if the alleged infringer (the antitrust plain-
tiff) proves . . . that the asserted patent was obtained through
knowing and willful fraud within the meaning of Walker Pro-
cess Equipment[.]”).
2. Application of the “Sham” Exception
Kaiser contends that two versions of the “sham” exception
to Noerr-Pennington immunity apply in this case. First, Kai-
ser contends that Abbott’s seventeen patent infringement suits
against would-be generic manufacturers of terazosin hydro-
chloride between 1993 and 1998 constituted sham litigation.
Second, Kaiser contends that Abbott obtained its ’207 patent
by Walker Process fraud and that its infringement suits based
on the ’207 patent therefore were a sham. The MDL district
court granted summary judgment to Abbott, holding that there
were no genuine issues of material fact with respect to either
446 KAISER FOUNDATION v. ABBOTT LABORATORIES
contention, thereby upholding Abbott’s defense of Noerr-
Pennington immunity.
For the reasons that follow, we reverse the MDL court’s
grant of summary judgment. We agree with the MDL court’s
conclusion that Kaiser has not produced evidence that would
allow it to avoid summary judgment on its claim of sham liti-
gation. However, we disagree with the MDL court’s conclu-
sion that Kaiser has not produced sufficient evidence to avoid
summary judgment on its claim of Walker Process fraud.
a. Sham Litigation
Kaiser contends that Abbott’s seventeen infringement suits
against the seven would-be manufacturers of generic terazosin
hydrochloride constitute sham litigation. Kaiser argues that
Abbott’s litigation was an attempt to use the judicial process,
rather than favorable judicial outcomes, to extend improperly
its terazosin hydrochloride monopoly. See Omni Outdoor
Adver., Inc., 499 U.S. at 380.
[8] We discussed the sham litigation exception to Noerr-
Pennington at length in USS-POSCO Industries v. Contra
Costa County Building & Construction Trades Council, 31
F.3d 800 (9th Cir. 1994). We took pains in USS-POSCO to
reconcile the Supreme Court’s opinions in Professional Real
Estate Investors, Inc. v. Columbia Pictures Industries, 508
U.S. 49 (1993), and California Motor Transport v. Trucking
Unlimited, 404 U.S. 508 (1972), both of which dealt with the
sham litigation exception to Noerr-Pennington. We wrote:
We reconcile these cases by reading them as
applying to different situations. Professional Real
Estate Investors provides a strict two-step analysis to
assess whether a single action constitutes sham peti-
tioning. This inquiry is essentially retrospective: If
the suit turns out to have objective merit, the plaintiff
KAISER FOUNDATION v. ABBOTT LABORATORIES 447
can’t proceed to inquire into subjective purposes,
and the action is perforce not a sham.
California Motor Transport deals with the case
where the defendant is accused of bringing a whole
series of legal proceedings. Litigation is invariably
costly, distracting and time-consuming; having to
defend a whole series of such proceedings can inflict
a crushing burden on a business. California Motor
Transport thus recognized that the filing of a whole
series of lawsuits and other legal actions without
regard to the merits has far more serious implications
than filing a single action, and can serve as a very
effective restraint on trade. When dealing with a
series of lawsuits, the question is not whether any
one of them has merit—some may turn out to, just
as a matter of chance—but whether they are brought
pursuant to a policy of starting legal proceedings
without regard to the merits and for the purpose of
injuring a market rival. The inquiry in such cases is
prospective: Were the legal filings made, not out of
a genuine interest in redressing grievances, but as
part of a pattern or practice of successive filings
undertaken essentially for purposes of harassment?
USS-POSCO, 31 F.3d at 810-11 (internal citation omitted).
Kaiser asks us to apply the California Motor Transport test
for sham litigation, as we described that test in USS-POSCO,
because Abbott brought a “series of legal proceedings.”
Abbott objects to our application of USS-POSCO (and Cali-
fornia Motor Transport) on the ground that Kaiser asked the
MDL court to apply only the Professional Real Estate Inves-
tors test. We need not decide whether Kaiser has waived its
argument that the California Motor Transport test applies, for
even under that test Kaiser loses its sham litigation claim.
The MDL court carefully analyzed each of the seventeen
suits brought by Abbott against the would-be generic manu-
448 KAISER FOUNDATION v. ABBOTT LABORATORIES
facturers. In re Antitrust Litig. II, 335 F. Supp. 2d at 1356-65.
Abbott won seven of the seventeen suits. It lost the other ten,
but in each of the ten cases it had a plausible argument on
which it could have prevailed.
Two of the ten suits depended on whether a Hatch-
Waxman infringement suit could be brought based on a patent
that was not listed in the Orange Book. This was a question
of first impression. The district court held against Abbott, but
only after detailed and careful analysis. Zenith, 934 F. Supp.
at 933-36. Two more of the suits depended on whether the
Uruguay Round Agreements Act of 1994 extended the life of
Abbott’s ’097 patent for three years. The MDL court wrote,
“The [Uruguay Round] treaty was new, the provision had not
been the subject of prior interpretation, and [Abbott’s] argu-
ment, while hypertechnical, passed the ‘straight face’ test.” In
re Antitrust Litig. II, 335 F. Supp. 2d at 1359.
The last six suits were all infringement suits brought by
Abbott to enforce its ’207 patent. The MDL court viewed
these suits as presenting the closest question. Id. at 1360. The
same issue was litigated in all six of these suits — whether the
on-sale bar of 35 U.S.C. § 102(b) invalidated Abbott’s ’207
patent on Form IV terazosin hydrochloride. Abbott admitted
that Form IV terazosin hydrochloride had been sold more than
a year before Abbott sought its ’207 patent, but it argued that
the on-sale bar did not apply because neither the seller nor the
buyer knew that Form IV terazosin hydrochloride had been
sold. The Federal Circuit ultimately resolved all six suits by
holding that the sellers’ and buyers’ knowledge was irrelevant
to the on-sale bar. Geneva II, 182 F.3d at 1318-19. The
court’s decision was influenced by the Supreme Court’s deci-
sion in Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998),
which was rendered after Abbott filed its suits.
[9] There is insufficient evidence in this record to allow a
jury to conclude that Abbott’s seventeen suits constituted
“sham” litigation within the meaning of the exception to
KAISER FOUNDATION v. ABBOTT LABORATORIES 449
Noerr-Pennington. It is true that Abbott was litigious, but to
some degree its litigiousness was a product of Hatch-
Waxman. Abbott filed suit quickly in order to preserve its
rights under Hatch-Waxman, but it did not persist in litigating
when it became obvious that the suits were baseless. Further,
the volume of Abbott’s suits was dependent on the number of
generic companies attempting to enter the terazosin hydro-
chloride marketplace, a matter over which Abbott had no con-
trol.
b. Walker Process Fraud
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 paten-
tee] of its exemption from the antitrust laws’ because of its
attempting to enforce its patent monopoly, an antitrust plain-
tiff 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 evi-
dence 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. “Di-
rect evidence of intent to deceive or mislead the PTO is rarely
available but may be inferred from clear and convincing evi-
dence 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 excep-
tion 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 inven-
tion 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 infor-
mation 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 hydrochlo-
ride. 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 crys-
tal 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 ref-
erence was included in the application. However, the patent
examiner testified in his deposition that the English transla-
tion was not, in fact, included in the application. The exam-
iner 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 pro-
vided.
The Abbott in-house attorney who prepared and submitted
the application for the ’207 patent testified in a 1997 deposi-
tion 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 refer-
ence 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 deci-
sion of the Federal Circuit, J.A. LaPorte, Inc. v. Norfolk
Dredging Co., 787 F.2d 1577 (Fed. Cir. 1986), in its applica-
tion 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 there-
fore 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 litiga-
tion 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 buy-
ers’ 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 transla-
tion 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 — evi-
KAISER 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 appli-
cation is “rarely available.” 438 F.3d at 1133-34. For exam-
ple, 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 hydro-
chloride. 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 attor-
ney could indicate on PTO Form 1449 that a particular docu-
ment 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 inadver-
tent. 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 trans-
lation.
456 KAISER FOUNDATION v. ABBOTT LABORATORIES
[14] Later conduct by Abbott’s in-house attorney in con-
nection 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 hydro-
chloride, 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 possi-
ble answer is that the Sumika reference was fatal to the pat-
entability of Form IV terazosin hydrochloride (the ’207
patent), but did not pose a substantial threat to the patentabil-
ity of Form III (the ’095 patent).
The English language abstracts submitted by Abbott’s in-
house attorney in connection with the two applications sug-
gest 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 sub-
mitted 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 appli-
cation 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 pat-
terns are actually a reasonably good match” and that the
Sumika crystal “appears” to be the same as Form III. By con-
trast, in assessing the match between the relevant Sumika
crystal and Form IV (the ’207 patent), the expert was confi-
dent 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 evi-
dence 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 exam-
iner had fully understood the Sumika reference, he would
have denied Abbott’s application for a patent of Form IV tera-
zosin 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 appli-
cation, 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 differ-
ence 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, terazo-
sin.
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 transla-
tion.
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. Con-
trary 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 conclu-
sion to that effect.
460 KAISER FOUNDATION v. ABBOTT LABORATORIES
3. Statute of Limitations
Because the MDL court ruled against Kaiser based on
Noerr-Pennington, it did not reach Abbott’s statute of limita-
tions defense. We decline to decide that question in the first
instance. That question may be presented to the district court
on remand.
V. Conclusion
[16] For the foregoing reasons, we affirm the California
district court’s entry of judgment against Kaiser on its Sher-
man Act Section One claim. We reverse the MDL court’s
summary judgment against Kaiser on its Section Two claim.
We remand for further proceedings consistent with this opin-
ion.
AFFIRMED in part, REVERSED in part and REMANDED
for further proceedings. Each side is to bear its own costs on
appeal.