New Take on PatentsShakes Up Abbott-Becton Dickinson Case A federal appeals court ruled that &ldq

New Take on PatentsShakes Up Abbott-Becton Dickinson Case

A federal appeals court ruled that “inequitable conduct” should be used to invalidate a patent only if materials information was withheld in order to obtain the patent. The decision follows an en banc hearing that is part of an ongoing lawsuit filed by Abbott Laboratories against Franklin Lakes, N.J.-based Becton Dickinson & Co. and Leverkusen, Germany-based Bayer HealthCare LLC, and is expected to make the invalidation of patents due to application errors more difficult.

Abbott claims that Becton Dickinson and Bayer HealthCare infringed its patents for disposable blood glucose test strips, which are manufactured by subsidiary Therasense, Inc.

The court reversed a previous edict that ruled the test strips patent unenforceable due to missing disclosures. According to discovery, however, contradicting information was supplied to patent offices in the United States and Europe.

Abbott, based in Abbott Park, Ill.,argued that companies should not be penalized for errors that do not affect theissuing of a patent.

Chief Judge of the U.S. Court of Appeals Federal Circuit, Randall Rader, who has labeled inequitable conduct allegations the “atomic bomb” of patent law, stated that to “prevail on the defense of inequitable conduct, the accused infringer must prove that the applicant misrepresented or omitted material information with the specific intent to deceive the [U.S. Patent and Trademark Office (PTO)].”

Proof of intent still can be taken from indirect or circumstantial evidence, but only when it is “the single most reasonable inference able to be drawn from the evidence.”

Defendants also will have to meet a “but for” standard, requiring courts to “determine whether the PTO would have allowed the claim if it had been aware of the undisclosed reference.” Five of Rader’s Federal Circuit colleagues supported the decision; one partially dissented and four dissented.

“We are pleased that the Federal Circuit has tightened the standards for finding inequitable contact, and reversed the decision that found our patent unenforceable,” said Scott Stoffel, a spokesperson for Abbott.

A Becton Dickinson spokeswoman said in a statement that the decision is not expected to have much impact on the underlying litigation “as the asserted patents claims have been held and remain invalid.”

However, the defendants’ attorney fee awards resulting from the original inequitable conduct finding by Judge William Alsup in 2008 might not be in the same safety zone; Becton Dickinson was awarded $6 million; Bayer’s award is confidential.

“The only issue here is inequitable conduct, and at stake is the $6 million attorneys fee award,” Becton Dickinson counsel Bradford Badke of Ropes & Gray LLP said.

It is estimated that 80 percent of patent lawsuits include allegations of unfair dealings with the patent office. These allegations have “plagued not only the courts but also the entire patent system,” according to a statement released by the FederalCircuit Court.

“The case raised the standard for proving inequitable conduct,” said David Dykeman, a shareholder and patent attorney at Greenberg Traurig, LLP. “The inequitable conduct defense will be harder to prove, as the accuser must prove both intent and materiality by ‘clear and convincing’ evidence.”

“It’s a game-changer,” said Charles Shifley, a patent lawyer with Banner & Witcoff Ltd. in Chicago, Ill. “The last place for a scoundrel who was found to infringe and couldn’t probe invalidity was to throw mud at the patent lawyer. This will rein that in.”