An evenly (5-5) divided U.S. Court of Appeals for the Federal Circuit denied a petition for a rehearing en banc of its November decision overturning a district court’s finding of unenforceability for inequitable conduct and prosecution laches. Cancer Research Technology and Schering Corp. v. Barr Laboratories, Case No. 10-1204 (Fed. Cir., Feb. 28, 2011) (Prost, J. dissenting, joined by Judges Gajarsa, Moore and O’Malley) (per curiam) (Dyk, J., dissenting).

In November 2010, the Federal Circuit overturned a district court, finding that patent holder Cancer Research Technologies (CRT) and its licensee, Schering Corporation, had intentionally withheld material information from the U.S. Patent and Trademark Office (USPTO) and had delayed prosecution of the patent in suit for more than a decade (see IP Update, Vol. 13, No. 11). The three-judge panel (with Judge Prost dissenting) determined that although the district court was correct in its finding CRT’s prosecution practice to be unreasonable, it erred in its failure to find any evidence that the accused infringer, Barr (now part of Teva Pharmaceutical) was prejudiced by CRT’s delay in prosecuting the application for the patent in suit. In effect, the ruling imposed a two-part test for Symbol Technologies-type prosecution laches: a showing of delay during prosecution and prejudice, such as by intervening rights, arising during the delay period. Barr petitioned for rehearing en banc.

In dissent to denial of the en banc petition, Judge Prost again stressed the need for flexibility in the “totality of circumstances” test used in the doctrine of prosecution laches, in order to “accommodate the different ways in which the public might be harmed by a delay in the patent monopoly, whether it be late entry of generic pharmaceuticals, a lack of access to foundational technologies, distortion of markets, or other harms we have not yet encountered.” In her view the November 2010 decision “committed a serious wrong” in its requirement of direct evidence of intervening rights harmed during the period of delay, as well as its failure to account for the extent of the harm visited on the accused infringer and on the public after issuance. Judge Prost argued that an en banc rehearing could have prevented the “harm” done by the majority’s narrowing of the totality of circumstances test. As Judge Prost further noted, the majority’s narrowing is at odds with recent Supreme Court precedent cautioning against excessive formalism in the application of the patent laws (i.e., Bilski v. Kappos).

Judge Dyk joined Judge Prost’s dissent (except in Prost’s argument that the “totality of circumstances” test should be applied in this context), finding that an en banc rehearing would have provided patent prosecutors with much-needed guidance “as to when they risk a defense of prosecution laches.”