BOEHRINGER INGELHEIM VETMEDICA v. SCHERING-PLOUGH

The opinion of the court was delivered by: Ackerman, Senior District Judge.

OPINION

This matter comes before the Court on Schering's defense of inequitable conduct in the above-referenced case. This Court severed the defense of inequitable conduct from Boehringer's claim of infringement and Schering's defense of obviousness. On January 20, 2000 a jury found the Boehringer had proven infringement by a preponderance of the evidence and that Schering had failed to demonstrate that the 5,476,778 Patent (hereinafter "the '778 Patent") was obvious. Thereafter, this Court held a two-day hearing on the issue at hand, i.e., whether Boehringer engaged in inequitable conduct before the United States Patent Office (hereinafter "USPO").

After carefully consideration, for the reasons stated below, this Court finds that Schering has failed to prove that Boehringer engaged in inequitable conduct that would invalidate the '778 Patent. Accordingly, since all substantive issues have now been resolved in this matter, together with an Order issued on this same date, final judgment shall be entered in this matter in favor of Boehringer.*fn1

I. DISCUSSION

This is not the Court's first opinion on the issue of inequitable conduct and the standards that apply thereto. See Boehringer Ingelheim v. Schering-Plough, 984 F. Supp. 239 (N.J. 1997) (hereinafter "Boehringer I"); Boehringer Ingelheim v. Schering-Plough, 6 F. Supp.2d 324 (N.J. 1998) (hereinafter "Boehringer II") and Boehringer Ingelheim v. Schering-Plough, 68 F. Supp.2d 508, 536 (N.J. 1999) (hereinafter "Boehringer III"). Therefore, this Court will not engage in a lengthy recitation of the relevant case law but instead will focus on the law which is most relevant to this inquiry. In addition, familiarity with the subject matter at issue is assumed.

Inequitable conduct means any "affirmative misrepresentation of a material fact, failure to disclose material information, or submission of false material information, coupled with an intent to deceive." Refac International, Ltd. v. Lotus Development Corp., 81 F.3d 1576, 1581 (Fed.Cir. 1996) (quoting Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed.Cir. 1995)). The party alleging "inequitable conduct" must prove by clear and convincing evidence a threshold level of both the materiality of the withheld or misrepresented information as well as the opposing party's intent to deceive. Id. This high burden of proof is required because each duly issued patents enjoy a presumption of validity. "Clear and convincing" evidence is evidence that produces an abiding conviction that the truth of a factual contention is highly probable. Buildex, Inc. v. Kason Indus., Inc., 849 F.2d 1461, 1463 (Fed.Cir. 1988) (citing Colorado v. New Mexico, 467 U.S. 310, 316, 104 S.Ct. 2433, 81 L.Ed.2d 247 (1984)).

Once a threshold level of materiality and intent is established, the Court must balance these findings to determine whether the equities of the case warrant a finding of inequitable conduct. Molins, 48 F.3d at 1178. In balancing the materiality of the undisclosed or misrepresented information and the applicant's intent to deceive the USPO, the Court must consider all of the evidence, including evidence of the applicant's good faith. Id., 48 F.3d at 1181; Kingsdown Medical Consultants Ltd. v. Hollister, Inc., 863 F.2d 867, 876 (Fed.Cir. 1988); Schering's Post-Trial Br. at p. 12. Because this Court's inquiry must consider materiality and intent together, "the more material the omission or misrepresentation, the less intent that must be shown to reach a conclusion of inequitable conduct." Akzo N.V. v. United States International Trade Commission, 808 F.2d 1471, 1481-82 (Fed.Cir. 1986). This ultimate determination is entrusted to the Court's discretion. Halliburton Co. v. Schlumberger Technology Corp., 925 F.2d 1435, 1439-1440 (Fed.Cir. 1991).

The materiality of a reference for purposes of an inequitable conduct defense is tested by the standard enunciated in 37 C.F.R. § 1.56. Prior to amendment in 1992, information was deemed material if there was a "substantial likelihood that a reasonable examiner would have considered the information important in deciding whether to allow the application to issue as a patent." Refac, 81 F.3d at 1581; 37 C.F.R. § 1.56 (1984). In 1992, however, this standard was amended to provide that "information is material to patentability when it is not cumulative to information already of record or being made of record in the application, and (1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim; or (2) It refutes, or is inconsistent with, a position the applicant takes . . ." 37 C.F.R. § 1.56 (1992). The post-1992 standard further provides that a "prima facie case of unpatentability is established when the information compels a conclusion that a claim is unpatentable under the preponderance of evidence, burden-of-proof standard, giving each term in the claim its broadest reasonable construction consistent with the specification, and before any consideration is given to evidence which may be submitted in an attempt to establish a contrary conclusion of patentability." Id. Although Schering suggests that the pre-amendment standard applies to this case, Schering argues in its brief that it has proven the materiality of the relevant references under both the pre- and post-1992 standards. See e.g., Schering's Post-Trial Br. at p. 5 (the "change [in the standard] is unimportant in the present case because there are a number of reasons why the Collins and Benfield homogenate would clearly have been material under Rule 56 before and after the 1992 change"). For purposes of this Opinion, this Court will apply both the pre-1992 and post-1992 standard for materiality.

It is axiomatic in patent law that a patentee has no duty to disclose material prior art which is merely cumulative of (or less material than) other art submitted to the USPO. See Halliburton, 925 F.2d at 1440; Baxter Int'l, Inc. v. McGaw, Inc., 149 F.3d 1321, 1328 (Fed.Cir. 1998). Thus, a defense of inequitable conduct will fail if it is based on the non-disclosure of prior art which was merely cumulative of other art disclosed to the USPO.

"Intent" for purposes of an inequitable conduct defense means "design, resolve, or determination with which a person acts; a state of mind in which a person seeks to accomplish a given result through a course of action." Molins, 48 F.3d at 1180. Intent "need not be proven by direct evidence" and is "most often proven by a showing of acts, the natural consequences of which are presumably intended by the actor." Id. An intent to deceive is "found when in light of all the evidence, the conduct indicates `sufficient culpability to require a finding of intent to deceive.'" Paragon Podiatry Laboratory, Inc. v. KLM Laboratories, Inc., 984 F.2d 1182, 1183 (Fed.Cir. 1993).

Proof of inequitable conduct based upon the non-disclosure of prior art may be rebutted by showing: (1) that the disputed reference was not material; (2) that if the reference was material, the applicant did not know of its existence or that the reference was "merely cumulative" of another reference already disclosed; (3) if the applicant knew of the contested reference, the applicant did not know of its materiality; or (4) that the applicant did not intend to mislead the PTO by failing to disclose it. Elk Corp. v. GAF Building Materials Corp., 168 F.3d 28, 30-31 (Fed. Cir. 1999).

Here, Schering argues that Boehringer failed to disclose and intentionally misrepresented the following information to the USPO: (a) the origins of the work completed by Drs. Collins and Benfield and (b) the existence of Drs. Dea and Van Alstine's work and its relevance to the '778 Patent application. Each of these arguments will be discussed in turn.

A. Drs. Collins and Benfield's Work

Schering argues that Boehringer intentionally included Drs. Collins and Benfield's homogenate work in the section entitled "The Invention" rather than citing that work as prior art in an effort to deceive the USPO of the true state of the prior art at the time of Boehringer's invention. I disagree and find that Schering has failed to prove by clear and convincing evidence that this information was material and that Boehringer included this work in "The Invention" section of the '778 Patent to deceive the USPO.

The first inquiry this Court undertakes is to determine whether Boehringer made a material misrepresentation to the USPO regarding the Collins and Benfield work.*fn2

As stated above, where a party alleges inequitable conduct from an affirmative misrepresentation of information, the party must prove by clear and convincing evidence (1) the information submitted was material and false and (2) the information was submitted with an intent to deceive. J.P. Stevens & Co., Inc. v. Lex Tex Inc., 747 F.2d 1553, 1559 (Fed.Cir. 1984), cert. denied, 474 U.S. 822, 106 S.Ct. 73, 88 L.Ed.2d 60 (1985). Materiality in this case will be measured by both the standard in place at the time Boehringer initially filed its application for the '778 Patent as well as the standard enacted in 1992 while the '778 Patent was still pending before the USPO. Under either standard, this Court concludes that Schering has not met its burden of proving a threshold level of materiality with respect to the Drs. Collins and Benfield work.

Since Schering contends that Boehringer misrepresented the Collins and Benfield work in the '778 Patent application by including this work under the heading "The Invention," it is helpful to review exactly how the homogenate work was included in "The Invention" section of the '778 Patent application. That section provided:

PTX 1. It is undisputed that the work described from the beginning of the above-cited paragraph through to the sentence "The same inoculum also caused reproductive effects identical to those seen in SIRS-infected herds" is truly the work of Drs. Collins and Benfield and was not part of the invention.

Schering argues that "[I]f the Examiner had known that the prior art already included the Collins and Benfield homogenate and filtering work which established that the agent was a virus (as opposed to a mycotoxin or chlamydia, for example), the only question the Examiner would have had to ask and answer was whether one skilled in the art would have been motivated to take the MSD [mystery swine disease] virus already identified as contained in the Collins and Benfield homogenate and inoculate it on simian lines, known to be very permissive, with a reasonable expectation of success." Schering's Post-Trial Br. at p. 7 (internal citation omitted); see also Id. at pp. 7-8.

Boehringer argues that the homogenate work is not material because (a) it is cumulative to the Wensvoort Reference which disclosed that Porcine Reproductive Respiratory Syndrome (hereinafter "PRRS") was a virus and that PRRS had been isolated on porcine macrophage and (b) it would not have been important to the USPO's obviousness determination because it did not motivate one skilled in the art to grow PRRS on simian cells. Boehringer further argues that the immateriality of the homogenate work is illustrated by the fact that USPO examiners considered the Drs. Collins and Benfield work and issued the 5,840,563 Patent (hereinafter "the '563 Patent"), a patent which is broader in scope than the current '778 Patent. After considering the parties' respective positions as well as the evidence received by the Court to date, this Court finds that Schering has failed to prove a threshold level of materiality by clear and convincing evidence.

a. The USPO knew that PRRS was a virus

First, Schering argues that Boehringer's misrepresentation was material because it kept the examiners ignorant of the fact that the prior art disclosed that PRRS was a virus. Putting aside the questions of whether or not it was important for the examiners to know that PRRS was a virus to evaluate the obviousness of the '778 Patent and whether Collins and Benfield's work would have informed the USPO of this, Schering has failed to prove the materiality of this misrepresentation because Boehringer did inform the USPO that PRRS was a virus. In the prosecution of the '778 Patent, Boehringer disclosed to the USPO the article entitled "Mystery swine disease in the Netherlands: the isolation of Lelystad virus" by Dr. Wensvoort, et al. which was published in the July 1991 edition of The Veterinary Quarterly. See PTX 7 (hereinafter "Wensvoort," "Wensvoort reference" or "Wensvoort article"). The Wensvoort article disclosed that an unknown virus was the likely cause of PRRS. Indeed, the Wensvoort reference disclosed that:

PX7 at B 067199 (emphasis added). Therefore, the examiners of the '778 Patent had an article before them for consideration which concluded that a virus was responsible for mystery swine disease.

As stated above, a reference cannot be material if it is merely cumulative of the references before the USPO. Thus, assuming arguendo that Collins and Benfield work disclosed that PRRS was a virus, Schering has failed to prove that that reference was material in light of the evidence that it would have been cumulative of the Wensvoort reference which was disclosed to the USPO. Accordingly, since the identification of PRRS as a virus was before the USPO, Schering has failed to prove that Boehringer kept the USPO ignorant of that fact.*fn3 Thus, in this respect Schering has failed to prove that including the Collins and Benfield work under the heading "The Invention," was a material misrepresentation.

b. Collins and Benfield's Teachings

Even if Boehringer's disclosure left the USPO ignorant of the fact that the prior art disclosed that PRRS was a virus, this Court rejects the second prong of Schering's materiality argument, ie., that disclosure of the Collins and Benfield homogenate work would have disclosed that PRRS was a virus and that this disclosure would have been important to the USPO's obviousness determination. Schering argues that Drs. Collins and Benfield's work was material because it showed that PRRS was a virus and that would have fixed a different starting-off point for the invention than what was otherwise disclosed to the USPO. Schering's position rests on the argument that because the homogenate was filtered at 0.1 μm, one would know that the causative agent was a virus and from that knowledge one would proceed just as Boehringer had in April 1991. This Court rejects Schering's inequitable conduct defense because Schering has failed to prove (a) that the homogenate work conclusively showed that PRRS was a virus, (b) that even if the homogenate work would have shown this, that this would have been material to the USPO's consideration of the '778 Patent.

First, Schering has not proven to this Court that the homogenate work conclusively revealed that PRRS was a virus, at the time of the patent prosecution. Dr. Easterday, an expert in veterinary virology, testified that one would not necessarily know that PRRS was a virus from the fact that it had been filtered at 0.1 μm. Tr. at 16.119. Dr. Collins, who was directly involved with the homogenate work, even testified that his work on the PRRS homogenate did not conclusively show that PRRS was a virus. Tr. at 3.37. Dr. Collins said that at the time he was involved in the homogenate work, he hypothesized that PRRS might be a virus but he never proved that PRRS was a virus or not a virus. Tr. at 3.65. He explained that he "hadn't concluded that it was a virus, because it could have been something new, never discovered before that passed through or a toxin or whatever. We were working on a hypothesis that possibly or probably was a virus, but we wanted to keep our minds open to toxins or new discoveries or whatever that were small and could pass through a filter of that size." Tr. at 3.117. Dr. Harris, Boehringer's scientist and co-inventor of the '778 Patent who received the homogenate from Dr. Collins, testified that when he received the homogenate he was sure that it contained the causative agent for PRRS but that he did not know conclusively that the causative agent was a virus. Tr. at 4.107108. Although Schering offered evidence to the contrary, this Court credits the testimony of Boehringer's witnesses and finds that Schering has not proven that disclosure of the Collins an Benfield homogenate work as prior art would have informed the USPO that PRRS was a virus.

Second, as this Court has held in the past, even assuming that the homogenate work revealed that a virus was the cause of PRRS, Schering has not proven that that discovery was not material to the USPO's obviousness determination. To be important to the USPO's obviousness decision the prior art must have been important to showing that one of ordinary skill would have a reasonable expectation of success growing PRRS on simian cells. Schering has failed to convince this Court that mere knowledge that PRRS was a virus would have been important in determining the obviousness of the '778 Patent.

This Court credits Boehringer's experts who testified that even if the USPO knew that PRRS was a virus, this would not have been important under 35 U.S.C. § 103 because the state of the art at the time did not teach the growth of an unknown porcine virus on simian cells. Dr. Easterday opined that the Collins homogenate was not relevant to the '778 Patent at all because it did not disclose anything about the use of MA-104 cells (or simian cells) or other methods of culturing PRRS. 16.76-77. Dr. Easterday testified further that the Collins and Benfield homogenate work did not teach anything about how to isolate this unknown entity. Tr. at 16.78. Dr. Easterday also opined that there was nothing in the Dea, Van Alstine and Collins works that would have made the '778 Patent obvious. Tr. at 16.78. While this opinion speaks to the conclusion the USPO would make rather than whether these references would be material to the USPO's obviousness consideration, Dr. Easterday's testimony is very informative.

This testimony is supported by the failure of others to isolate and grow PRRS on simian cells or even attempt to isolate PRRS on simian cells. For example, Dr. Collins' team failed to isolate PRRS. This is very telling given that Dr. Collins' team worked with the homogenate, hypothesized that PRRS was a virus, and had scientists who exceeded the level of ordinary skill in the art. Dr. Collins supervised the isolation attempts of two Ph.D. virologists in his laboratory and another scientist, D. McCullough, who was visiting South Dakota Statute University. Tr. at 3.37. These scientists tried without success to grow PRRS. Their attempts were not fleeting. Dr. McCullough worked nearly full-time attempting to isolate the causative agent. Tr. at 3.42. Dr. Benfield's personal failure to isolate PRRS is also probative of this issue. Dr. Benfield, an experienced scientist, who had access to both the homogenate and Boehringer's list of available cells which included simian cells did not have any success growing PRRS. Nor did Dr. Benfield even attempt to grow PRRS on simian cells. Tr. at 3.46.

In addition to the failure of Dr. Collins's team, Dr. Collins's testimony about the state of the art in 1990 and 1991 is also helpful in this regard. Dr. Collins testified that when he reviewed the list of cells available to him through Boehringer, he concluded that "there was nothing particularly unusual or enlightening to me from this list," despite the fact that simian cells were on the list of available cells. Tr. at 3.46. Dr. Collins testified further that when he learned that Dr. Harris had success growing PRRS on simian cells, he was surprised. Tr. at 3.48-3.49.

The work of Dr. Collins's team and Dr. Collins's credible testimony in this case weighs heavily on this Court's conclusion that even if Schering were right that Dr. Collins's work conclusively determined that PRRS was a virus, that knowledge would not have been material to the obviousness determination because there was nothing about this knowledge that would have shed light on whether the art taught one to isolate PRRS on simian cells. Moreover, although Mr. Chladek, one of the inventors of the '778 Patent, testified that it would have been helpful to know that PRRS was a virus before trying to isolate it, he did not testify that such knowledge would have taught him to use simian cells or would have been material to the obviousness decision.*fn4

Thus, under the post-1992 standard of materiality, Schering has not proven that a prima facie case of obviousness would have been compelled based upon the homogenate work even giving each term in the claim its broadest reasonable construction consistent with the specification, and before any consideration is given to evidence which may be submitted in an attempt to establish a contrary conclusion of patentability. In addition, Schering has not proven that the homogenate work would have been important to a reasonable examiner under the pre-1992 standard of materiality.

c. Other Evidence of Immateriality

This Court's conclusion that Schering has not proven a threshold level of materiality with respect to the homogenate work is supported by the USPO's treatment of the '778 Patent in light of the Boehringer's disclosure of the Wensvoort reference. The fact that the USPO did not reject as obvious the '778 Patent after considering the Wensvoort reference supports this Court's independent conclusion that the knowledge that the prior art disclosed that PRRS was a virus would not have been material to a reasonable examiner considering the '778 Patent.*fn5 As discussed above, the Wensvoort reference disclosed that PRRS was likely caused by a virus rather than other causative agents. After considering the Wensvoort reference, the USPO neither rejected nor questioned the '778 patent under 35 U.S.C. § 103. If the USPO considered it important or material to the '778 Patent that PRRS was a virus, the USPO could have rejected the '778 Patent as obvious based upon the Wensvoort reference (which the USPO treated as prior art). Thus, the fact that the USPO did not reject the '778 Patent as obvious based upon the Wensvoort reference supports this Court's conclusion that Schering has failed to prove the materiality of the Drs. Collins and Benfield work.

Moreover, this Court's conclusion that Schering has not proven the materiality of the homogenate work is buttressed further by the fact that the homogenate work was disclosed to the USPO in connection with the related '563 Patent and the USPO neither rejected the '563 Patent as obvious nor questioned Boehringer in light of the homogenate work. In this case, Boehringer's '563 Patent and the '778 Patent were both pending before the USPO at the same time. It is uncontested that the '563 Patent is broader than the '778 Patent but "not patentably distinct" from the '778 Patent. Tr. at 20:99. In connection with the related '563 Patent application, Boehringer disclosed to the Patent Office an abstract by Drs. Collins and Benfield. See PTX 89. That abstract originated from a presentation made by Drs. Collins, Benfield, Goyal and Shaw at a Conference of Research Workers and Animal Diseases in November of 1990. Tr. at 16.76. That abstract disclosed that:

PTX 89 at B10531.

The record demonstrates that Examiner Preston reviewed this abstract in 1992. After reviewing this abstract, however, the USPO did not reject the '563 Patent as obvious. Thus, the USPO's conduct after considering the Collins abstract in connection with the broader '563 Patent further supports this Court's conclusion that Schering has not proven that the Collins work would either compel a conclusion of obviousness or would have even been important to a reasonable examiner in deciding whether to allow the application to issue as a patent.

Evidence of the USPO's reaction to the homogenate work is particularly instructive in this case because the same examiners who considered the '778 Patent also considered the '563 Patent application. There is evidence that on August 12, 1992, Examiner Preston, who was considering the '778 Patent and '563 Patent both (a) indicated that he read the Collins abstract in connection with the '563 Patent and (b) searched for prior art in connection with the '778 Patent. Tr. 21.131:5-10. Also, Examiner Caputo, who ultimately permitted the '778 Patent also reviewed the Collins abstract during the pendency of the '778 Patent. Tr. 21.133:3-14; 21.134. The evidence that at least one examiner who considered the Collins abstract considered contemporaneously prior art in the '778 Patent prosecution heavily supports this Court's conclusion that the homogenate work would not have been important to a reasonable examiner or would "compel a conclusion" of obviousness under 37 C.F.R. § 1.56.*fn6 The evidence that a second examiner, Examiner Caputo who ultimately allowed the '778 Patent, also reviewed the Collins abstract during the pendency of the '778 Patent is also probative of the materiality of the Collins and Benfield homogenate work and supports this Court's conclusion.

Thus, this Court finds that Schering has failed to prove that Boehringer's inclusion of the Drs. Benfield and Collins work under the heading "The Invention" was a material misrepresentation or that Boehringer's failure to rely upon the Collins and ...