On February 23, 2007, Judge Kendall of the Northern District of Illinois denied a motion by Abbott Laboratories to dismiss Mylan’s Walker Process counterclaims, which arose out of a patent infringement suit Abbott filed against Mylan after the generic drug company filed an ANDA (Abbott Laboratories v. Mylan Pharmaceuticals, Inc., Case No. 05 C 6561 (N.D. Ill. Feb. 23, 2007)). At the same time, the court dismissed Mylan’s sham litigation claim. This case illustrates the role that antitrust laws may play in the patent-procurement and enforcement process.

In the instant case, Mylan alleged that Abbott’s patents were procured through fraud on the Patent and Trademark Office (PTO), and that Abbott’s patent infringement suit was filed in bad faith. Under the antitrust laws, Abbott could be subject to liability if Mylan could prove that (i) the patent was obtained through knowing and wilful fraud (“Walker Process” fraud) or (ii) the infringement suit was “sham litigation” designed to interfere with legitimate business relationships. Walker Process claims are fraud claims and are thus subject to the heightened pleading requirements. A successful claimant must show the following: 

  • that the patent was obtained through knowing and willful misrepresentation of facts to the PTO; 
  • that the patentee was aware of the fraud when it filed its infringement suit; 
  • that there is independent evidence of the patentee's deceptive intent toward the PTO; and 
  • that the PTO relied upon the misrepresentation in issuing the patent.

Mylan alleged that Abbott committed Walker Process fraud by making untrue statements to the PTO during the prosecution of the two patents at issue in the litigation. Mylan claimed that during the prosecution of these patents, two individual employees of Abbott made knowing misrepresentations to the PTO that were material to Abbott’s procurement of the patents. Specifically, Mylan alleged that Abbott presented declarations from two employees that relied on scientific methods that were known at the time to be inappropriate for testing the specific compounds used in the process detailed in the patents. Mylan further alleged that the patents would not have issued absent the misrepresentations, and attempted to support its claim of illegal intent with citations to specific actions before the PTO and specific allegations regarding the state of the art at the time the actions were taken.

In its defense, Abbott relied on an earlier ruling that it had secured against another defendant, Torpharm, in the same district. That ruling had found that Abbott's conduct before the PTO was not inequitable. In order to prove that a suit was a “sham,” an antitrust plaintiff must prove that the suit was both objectively baseless and subjectively motivated by a desire to impose anti-competitive harm. Because Abbott had been successful in the prior proceeding based on similar facts, Kendall found that the current patent infringement suit could not constitute sham litigation, noting that by definition, a “winning lawsuit” is “a reasonable effort at petitioning for redress and therefore not a sham.”

As to the Walker Process claim, however, the court reasoned that Torpham did not preclude Mylan’s allegations of fraud because Mylan was not a party to the prior litigation and thus did not have the opportunity to present its facts on the issue. The court stated that while the it “may take judicial notice of the existence of such [prior] litigation … [it] may not take the facts stated in that opinion to be true for application to [Mylan].”

Of course, the court’s denial of the motion to dismiss based on the pleadings does not address the merits of the claim, which will be the subject of further proceedings.