Thursday, February 02, 2006

Schwartz prevails over Filardi in latest round of Purdue/Endo saga

In June 2005, IPBiz highlighted the human cost of the Purdue loss on inequitable conduct grounds in the OxyContin matter.

On Feb. 1, 2006, the same three judge panel withdrew the earlier opinion and remanded to the district court on the inequitable conduct matter. [2006 U.S. App. LEXIS 2887]

In a battle of IP giants, Herbert F. Schwartz (of Fish & Neave of Ropes & Gray) prevailed against Edward Filardi of Skadden in this particular round of the case. [Skadden is separately involved in the pending Supreme Court case MercExchange v. eBay and did co-author the brief citing to the 97% patent grant rate number of the first Quillen and Webster paper.]

The CAFC panel stated that further review has persuaded us that the trial judge may have erred in how he viewed certain of the evidence.

Part of the earlier decision had focused on a discovery that was based on insight without scientific proof. In the present decision, the CAFC states that we cannot say that the trial court's finding that Purdue's failed to disclose material information was clearly erroneous. The "new insight" in the case is that the material information was not "that" material. The statements Purdue made to the examiner IMPLIED an empirical basis, when in fact the statements were based on insight. The omission was material, but NOT AS BAD as an affirmative misrepresentation.

The CAFC again rejected the argument by Purdue and amici Guilford Pharmaceuticals that the district court decision required supporting clinical results.

In the new decision, the CAFC highlighted the balancing between materiality and intent, citing to Akzo v DuPont, 810 F.2d 1148, 1153 (CAFC 1987).

Important text in the CAFC decision:

Because of these errors in the trial court's intent analysis, we are
unable to uphold the court's finding that Purdue intended to deceive the PTO
when it failed to disclose that its "surprising discovery" of the reduced
dosage range was based only on insight.
However, since the trial court is in a
better position than we are to evaluate the evidence of record, we
think the prudent course is to vacate the inequitable conduct judgment and remand
the case to give the trial court an opportunity to reconsider its intent
finding. In doing so, the trial court should rethink the relevance of the evidence
relating to whether Purdue could prove that OxyContin(R) was the most easily
titratable analgesic. If the trial court still finds that a threshold level of
intent to deceive has been established, the court should reweigh its materiality
and intent findings to determine whether the sanction of unenforceability
due to inequitable conduct is warranted. In making this determination, the
trial court should keep in mind that when the level of materiality is relatively
low, the showing of intent must be proportionately higher.


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