The U.S. Court of Appeals for the Federal Circuit reversed a district court’s ruling of patent unenforceability for prosecution laches, holding that evidence of intervening rights is required to establish “an unreasonable and unexplained delay in prosecution.” The Federal Circuit also reversed the district court’s ruling of patent unenforceability for inequitable conduct, finding that materiality and intent are separate requirements, as well as that intent to deceive cannot be found based on materiality alone. Cancer Research Tech. et al. v. Barr Laboratories et al., Case No. 10-1204 (Fed. Cir., Nov. 9, 2010) (Lourie, J.) (Prost, J., dissenting).

The application for the patent in suit was filed in the United States, claiming a genus of tetrazine derivative compounds and methods for treating cancer by administering those compounds. One claimed compound, temozolomide, is the active ingredient in the drug Temodar®, approved by the U.S. Food and Drug Administration (FDA) for the treatment of two types of brain cancer. In the first substantive office action dated issued in 1983, the examiner rejected am original claim directed to a method of treating leukemia by administering a tetrazine compound for lack of utility. The applicants did not respond to the office action but instead filed a continuation application and abandoned the pending application. This pattern repeated itself nine more times, with the examiner ultimately rejecting all the pending claims for lack of utility. More than nine years later, when ownership of the application changed hands in 1991, the attorney prosecuting the application argued against the examiner’s rejection on lack of utility for the first time, relying on animal tests for the claimed cancer treatment. A patent issued in 1993.

In 2007 Barr Laboratories filed an Abbreviated New Drug Application (ANDA) challenging the validity of the patent and seeking FDA approval for generic Temodar®. Cancer Research sued Barr for patent infringement. The parties stipulated to infringement, leaving only Barr Laboratories’ counterclaims that the patent was unenforceable for prosecution laches and for inequitable conduct.

After a bench trial, the district court held the patent unenforceable for prosecution laches. The district court decided that prosecution laches did not require a showing of intervening rights, but rather turned on whether under the totality of the circumstances and whether Cancer Research’s delay in prosecution in light of the U.S. Patent and Trademark Office’s (USPTO’s) utility rejections was unreasonable and unexplained. The district court held that the delay caused by the 11 continuation applications, 10 abandonments and no substantive prosecution for nearly a decade was unreasonable and a sufficiently egregious misuse of the patent system to bar enforcement of the patent for prosecution laches. Cancer Research appealed.

The Federal Circuit reversed, explaining that prosecution laches’ requirement of an unreasonable and unexplained delay does include a predicate finding of prejudice. To establish prejudice, an accused infringer must show evidence 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 Federal Circuit also reversed the district court’s holding that the patent was unenforceable for inequitable conduct, finding that the district court clearly erred in ruling that one of the inventors intended to deceive the USPTO, noting that the finding of intent relied solely on the district court’s finding of materiality that was used to infer intent. The Federal Circuit noted that materiality and intent are separate requirements, and intent to deceive cannot be found based on materiality alone.

In dissent, Judge Prost argued that the majority propounded a new and unsupportable legal standard for prosecution laches in requiring that either the accused infringer or others invested in, worked on or used the claimed technology during the period of delay to show prejudice. Judge Prost argues that shifting the inquiry regarding prosecution laches from the applicant’s own conduct to the conduct of the party invoking the defense ignores that prosecution laches is an equitable defense. With regard to inequitable conduct, Judge Prost states that the majority not only creates a new evidentiary standard, but it also ignores virtually unassailable credibility findings made by the district court after a four-day bench trial.

Practice Note: As a result of the present patent term 20 years from the filing date the prosecution “strategy” used in this case would no longer be advantageous.