CAFC affirms SDNY in Unigene v. Apotex; obviousness discussed
The bottom line of the CAFC decision:
Accordingly, this court affirms the district court’s grant of summary judgment of nonobviousness in favor of Unigene, affirms the district court’s denial of summary judgment of obviousness, affirms the district court’s denial of Apotex’s crime-fraud motion, and affirms the district court’s dismissal of Apotex’s new claims and defenses.
Yes, part of the case involved "crime-fraud":
In September 2007, during fact discovery, Apotex moved to breach Unigene’s attorney-client privilege under the crime-fraud exception. In support of these allega- tions, Apotex referred to Unigene’s alleged failure to disclose U.S. Patent No. 5,912,014 (“’014 patent”) to the U.S. Patent and Trademark Office (“Patent Office”) and to errors in Table 3 of the ’392 patent, the same conduct upon which Apotex premised some of its inequitable conduct claims at issue in this appeal.
As to the error in the '392 patent:
The error on the top axis, characterized as clearly typographical in nature by the district court, labels a column “20 mM” instead of “25 mM.” Second, the point of Apotex’s allegations, a data point on the table reads 20 percent instead of the 52 percent actually meas- ured. The column containing the second error shows that a salmon calcitonin solution with 100 mM of citric acid degrades over time, as the percentages of recovered calcitonin decrease from 100 percent to 52 percent over time. Whether the 15 day measurement is 20 percent or 52 percent, the recovery is still below the 66 percent recovered after 9 days.
AND
The district court also found that the errors in Table 3 of the ’392 patent were immaterial. Id. at 14-15. The district court found the corrected version of the table consistent with Unigene’s assertions at the Patent Office. Id. at 16. The district court concluded that the errors were not material with respect to patentability or common law fraud. Id. The district court also determined that evidence of Stern’s submission of a second declaration to clarify errors in Table 3 lacked deceptive intent, making that conduct insufficient to support an assertion of com- mon law fraud. Id. at 17-18.
The CAFC noted:
This court applies its own law to review a district court’s application of the crime-fraud exception to the attorney-client privilege. In re Spalding Sports World- wide, Inc., 203 F.3d 800 (Fed. Cir. 2000). This court reviews a district court’s determination of material pro- tected by the attorney-client privilege for an abuse of discretion. Apotex Corp. v. Merck & Co., 507 F.3d 1357, 1362 (Fed. Cir. 2007).
A party must establish Walker-Process fraud, also known as common law fraud, to successfully pierce the attorney-client privilege under the crime-fraud exception. See Walker-Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 177 (1965). A finding of common law fraud in the patent context “must be based on independ- ent and clear evidence of deceptive intent together with a clear showing of reliance.” Spalding, 203 F.3d at 803; see Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1070 (Fed. Cir. 1998) (holding that both fraudulent misrepresentations and omissions can support a finding of common law fraud). Such independent and clear evidence must establish a prima facie case of fraud, which is “gen- erally held not to exist” unless the accusing party can show:
(1) a representation of material fact, (2) the falsity of that representation, (3) the intent to deceive or, at least, a state of mind so reckless as to the consequences that it is held to the equivalent of intent (scienter), (4) a justifiable reliance upon the misrepresentation by the party de- ceived which induces him to act thereon, and (5) injury to the party deceived as a result of his reliance on the misrepresen- tation
Spalding Sports, 203 F.3d at 807 (citing Nobelpharma, 141 F.3d at 1069-70). This court need only examine Apotex’s proffered evidence of intent to uphold the district court’s refusal to invoke the crime-fraud exception.
The CAFC found no (bad) intent by Unigene:
The record does not show clear evidence of intent for either of the alleged fraudulent acts by Unigene. As noted by the district court, the record contains only an essentially “unsupported allegation” that Dr. Stern intentionally left the ’014 patent off of the initial information disclosure statement of the ’392 patent. Crime-Fraud Opinion, at 12. The second allegation of fraud rests on a similarly flimsy foundation.
In the first place, the typographical error in Table 3 of the ’392 patent, corrected on reissue, does not call for the extreme remedy of piercing the attorney-client privilege. The district court found the “evidence tend[ed] to prove that this error was an honest mistake, though perhaps a careless one.” Id. at 16. Indeed, Dr. Stern submitted a declaration during the reissue proceedings to explain the error in Table 3. Further, as the trial court found, the error itself did not alter the arguments made by Unigene to the PTO. Accordingly, the district court concluded that the record did not show any evidence of intent to deceive the Patent Office. Id. at 18.
As to the issue of obviousness:
In considering forty-plus pieces of prior art submitted by Apotex (also considered by the Patent Office during prosecution of the ’812E patent), the district court found that no prior art teaches using 20 mM citric acid to achieve “both shelf stability and enhanced bioavailability” in a nasal salmon calcitonin formulation. Summary Judgment Opinion at 15.
The CAFC noted:
Obviousness requires more than a mere showing that the prior art includes separate references covering each separate limitation in a claim under examination. KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418 (2007). Rather, obviousness requires the additional showing that a person of ordinary skill at the time of the invention would have selected and combined those prior art elements in the normal course of research and development to yield the claimed invention. Id. at 421 (describing that a person of ordinary skill possesses “ordinary creativity, [and is] not an automaton”); see also Bayer Schering Pharm. AG v. Barr Labs., Inc., 575 F.3d 1341, 1350 (Fed. Cir. 2009) (Newman, J., dissenting) (“The statutory criterion is whether the invention would have been obvious to persons of ordinary skill at the time of the invention, not whether it is sufficiently simple to appear obvious to judges after the discovery is finally made . . . .”).
A person of ordinary skill at the time of the invention interprets the prior art using common sense and appro- priate perspective. KSR, 550 U.S. at 421. In KSR the Supreme Court observed:
When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordi- nary skill and common sense.
Id. Accordingly, when design need and market pressure may dictate a commonsensical path using a finite number of identified predictable solutions to one of ordinary skill, deviations from that path are likely products of innova- tion.
This court has observed that teachings from prior art, suggestions beyond the literal teachings of those art references, or even motivations from the store of common knowledge of one of ordinary skill in the art field (“TSM”)—flexibly viewed and applied—provide the sources of evidence that an ordinary skilled artisan might have found and combined at the time of the invention. Ortho-McNeil, 520 F.3d at 1364-65 (“[A] flexible TSM test remains the primary guarantor against a non-statutory hindsight analysis . . . .”); see also KSR, 550 U.S. at 419 (“The obviousness analysis cannot be confined by a formalistic conception of the words, teachings, suggestion, and motivation, or by overemphasis on the importance of published articles and the explicit content of issued patents.”).
AND
To render a claim obvious, prior art cannot be “vague” and must collectively, although not explicitly, guide an artisan of ordinary skill towards a particular solution. Bayer Schering., 575 F.3d at 1347. Indeed, “most inven- tions that are obvious were also obvious to try,” id., and a combination is only obvious to try if a person of ordinary skill has “a good reason to pursue the known options.” KSR, 550 U.S. at 421. When a field is “unreduced by direction of the prior art,” and when prior art gives “no indication of which parameters were critical or no direc- tion as to which of many possible choices is likely to be successful,” an invention is not obvious to try. Bayer Schering, 575 F.3d at 1347 (citing O’Farrell, 853 F.2d at 903); see also Ortho-McNeil, 520 F.3d at 1364 (stating the number of options must be “small or easily traversed”).
In terms of the "legal value" of a Ph.D.:
The record shows that a person of ordinary skill was an individual with a masters degree in chemistry, pharma- ceutical chemistry, biochemistry, or a similar field with at least eight years of practical experience in pharmaceutical liquid dosage form development, or an individual with a Ph.D. in the same fields with at least four years of practical experience in pharmaceutical liquid dosage form development.
Accordingly, this court affirms the district court’s grant of summary judgment of nonobviousness in favor of Unigene, affirms the district court’s denial of summary judgment of obviousness, affirms the district court’s denial of Apotex’s crime-fraud motion, and affirms the district court’s dismissal of Apotex’s new claims and defenses.
Yes, part of the case involved "crime-fraud":
In September 2007, during fact discovery, Apotex moved to breach Unigene’s attorney-client privilege under the crime-fraud exception. In support of these allega- tions, Apotex referred to Unigene’s alleged failure to disclose U.S. Patent No. 5,912,014 (“’014 patent”) to the U.S. Patent and Trademark Office (“Patent Office”) and to errors in Table 3 of the ’392 patent, the same conduct upon which Apotex premised some of its inequitable conduct claims at issue in this appeal.
As to the error in the '392 patent:
The error on the top axis, characterized as clearly typographical in nature by the district court, labels a column “20 mM” instead of “25 mM.” Second, the point of Apotex’s allegations, a data point on the table reads 20 percent instead of the 52 percent actually meas- ured. The column containing the second error shows that a salmon calcitonin solution with 100 mM of citric acid degrades over time, as the percentages of recovered calcitonin decrease from 100 percent to 52 percent over time. Whether the 15 day measurement is 20 percent or 52 percent, the recovery is still below the 66 percent recovered after 9 days.
AND
The district court also found that the errors in Table 3 of the ’392 patent were immaterial. Id. at 14-15. The district court found the corrected version of the table consistent with Unigene’s assertions at the Patent Office. Id. at 16. The district court concluded that the errors were not material with respect to patentability or common law fraud. Id. The district court also determined that evidence of Stern’s submission of a second declaration to clarify errors in Table 3 lacked deceptive intent, making that conduct insufficient to support an assertion of com- mon law fraud. Id. at 17-18.
The CAFC noted:
This court applies its own law to review a district court’s application of the crime-fraud exception to the attorney-client privilege. In re Spalding Sports World- wide, Inc., 203 F.3d 800 (Fed. Cir. 2000). This court reviews a district court’s determination of material pro- tected by the attorney-client privilege for an abuse of discretion. Apotex Corp. v. Merck & Co., 507 F.3d 1357, 1362 (Fed. Cir. 2007).
A party must establish Walker-Process fraud, also known as common law fraud, to successfully pierce the attorney-client privilege under the crime-fraud exception. See Walker-Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 177 (1965). A finding of common law fraud in the patent context “must be based on independ- ent and clear evidence of deceptive intent together with a clear showing of reliance.” Spalding, 203 F.3d at 803; see Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1070 (Fed. Cir. 1998) (holding that both fraudulent misrepresentations and omissions can support a finding of common law fraud). Such independent and clear evidence must establish a prima facie case of fraud, which is “gen- erally held not to exist” unless the accusing party can show:
(1) a representation of material fact, (2) the falsity of that representation, (3) the intent to deceive or, at least, a state of mind so reckless as to the consequences that it is held to the equivalent of intent (scienter), (4) a justifiable reliance upon the misrepresentation by the party de- ceived which induces him to act thereon, and (5) injury to the party deceived as a result of his reliance on the misrepresen- tation
Spalding Sports, 203 F.3d at 807 (citing Nobelpharma, 141 F.3d at 1069-70). This court need only examine Apotex’s proffered evidence of intent to uphold the district court’s refusal to invoke the crime-fraud exception.
The CAFC found no (bad) intent by Unigene:
The record does not show clear evidence of intent for either of the alleged fraudulent acts by Unigene. As noted by the district court, the record contains only an essentially “unsupported allegation” that Dr. Stern intentionally left the ’014 patent off of the initial information disclosure statement of the ’392 patent. Crime-Fraud Opinion, at 12. The second allegation of fraud rests on a similarly flimsy foundation.
In the first place, the typographical error in Table 3 of the ’392 patent, corrected on reissue, does not call for the extreme remedy of piercing the attorney-client privilege. The district court found the “evidence tend[ed] to prove that this error was an honest mistake, though perhaps a careless one.” Id. at 16. Indeed, Dr. Stern submitted a declaration during the reissue proceedings to explain the error in Table 3. Further, as the trial court found, the error itself did not alter the arguments made by Unigene to the PTO. Accordingly, the district court concluded that the record did not show any evidence of intent to deceive the Patent Office. Id. at 18.
As to the issue of obviousness:
In considering forty-plus pieces of prior art submitted by Apotex (also considered by the Patent Office during prosecution of the ’812E patent), the district court found that no prior art teaches using 20 mM citric acid to achieve “both shelf stability and enhanced bioavailability” in a nasal salmon calcitonin formulation. Summary Judgment Opinion at 15.
The CAFC noted:
Obviousness requires more than a mere showing that the prior art includes separate references covering each separate limitation in a claim under examination. KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418 (2007). Rather, obviousness requires the additional showing that a person of ordinary skill at the time of the invention would have selected and combined those prior art elements in the normal course of research and development to yield the claimed invention. Id. at 421 (describing that a person of ordinary skill possesses “ordinary creativity, [and is] not an automaton”); see also Bayer Schering Pharm. AG v. Barr Labs., Inc., 575 F.3d 1341, 1350 (Fed. Cir. 2009) (Newman, J., dissenting) (“The statutory criterion is whether the invention would have been obvious to persons of ordinary skill at the time of the invention, not whether it is sufficiently simple to appear obvious to judges after the discovery is finally made . . . .”).
A person of ordinary skill at the time of the invention interprets the prior art using common sense and appro- priate perspective. KSR, 550 U.S. at 421. In KSR the Supreme Court observed:
When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordi- nary skill and common sense.
Id. Accordingly, when design need and market pressure may dictate a commonsensical path using a finite number of identified predictable solutions to one of ordinary skill, deviations from that path are likely products of innova- tion.
This court has observed that teachings from prior art, suggestions beyond the literal teachings of those art references, or even motivations from the store of common knowledge of one of ordinary skill in the art field (“TSM”)—flexibly viewed and applied—provide the sources of evidence that an ordinary skilled artisan might have found and combined at the time of the invention. Ortho-McNeil, 520 F.3d at 1364-65 (“[A] flexible TSM test remains the primary guarantor against a non-statutory hindsight analysis . . . .”); see also KSR, 550 U.S. at 419 (“The obviousness analysis cannot be confined by a formalistic conception of the words, teachings, suggestion, and motivation, or by overemphasis on the importance of published articles and the explicit content of issued patents.”).
AND
To render a claim obvious, prior art cannot be “vague” and must collectively, although not explicitly, guide an artisan of ordinary skill towards a particular solution. Bayer Schering., 575 F.3d at 1347. Indeed, “most inven- tions that are obvious were also obvious to try,” id., and a combination is only obvious to try if a person of ordinary skill has “a good reason to pursue the known options.” KSR, 550 U.S. at 421. When a field is “unreduced by direction of the prior art,” and when prior art gives “no indication of which parameters were critical or no direc- tion as to which of many possible choices is likely to be successful,” an invention is not obvious to try. Bayer Schering, 575 F.3d at 1347 (citing O’Farrell, 853 F.2d at 903); see also Ortho-McNeil, 520 F.3d at 1364 (stating the number of options must be “small or easily traversed”).
In terms of the "legal value" of a Ph.D.:
The record shows that a person of ordinary skill was an individual with a masters degree in chemistry, pharma- ceutical chemistry, biochemistry, or a similar field with at least eight years of practical experience in pharmaceutical liquid dosage form development, or an individual with a Ph.D. in the same fields with at least four years of practical experience in pharmaceutical liquid dosage form development.
posted by Lawrence B. Ebert at 8:14 AM
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