The defense of prosecution laches requires a finding of prejudice as shown by evidence of intervening rights; for inequitable conduct, a finding of intent to deceive cannot rely solely on the same evidence used to support a finding of materiality.

Cancer Research Tech. Ltd. v. Barr Laboratories, Inc., No. 2010-1204 (Fed. Cir. Nov. 9, 2010).

The patentee brought suit against the alleged infringer over a proposed generic version of the patentee’s brain cancer drug Temodar®. The district court found the patent-in-suit unenforceable for prosecution laches and inequitable conduct. The Federal Circuit reversed.

The Federal Circuit held that the defense of prosecution laches, which renders a patent unenforceable for an unreasonable and unexplained delay in prosecution, requires “a finding of prejudice, as does any laches defense.” Specifically, “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 district court’s finding that the “eleven continuation applications, ten abandonments, and no substantive prosecution for nearly a decade was unreasonable and a[n] egregious misuse of the patent system” was not reviewed. Rather, because there was no evidence that the accused infringer or anyone else developed or invested in the claimed compounds during the period of delay, the prosecution laches defense failed as a matter of law.

The Federal Circuit also reversed the finding of inequitable conduct. The district court erred “because it relied solely on its finding of materiality to infer intent.” Specifically, 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 dissent by Judge Prost would have affirmed the district court on both counts. On prosecution laches, the dissent argued that there is no requirement that an alleged infringer show intervening rights. The prejudice in this case exists because “[b]y stalling the prosecution for its own business purposes for nearly a decade, [the patentee] obtained a patent which does not expire until . . . almost thirty-two years after the first application” was filed. On inequitable conduct, the majority’s holding that materiality and intent require separate evidentiary bases “has no basis in our precedent,” nor did the district court actually rest on its finding of materiality to infer intent. Finally, the majority ignored the district court’s “virtually unreviewable” credibility determination of the inventor.

A copy of the opinion can be found here.