A US federal appeals court ruling will make it harder for patent holders to lose their intellectual property protection because of charges—often based on small errors or omissions in patent applications—that they engaged in misconduct by misleading or deceiving the patent office. Now, except in egregious cases, such legal challenges can only succeed if the missing information would have affected whether the patent was issued in the first place.

Copyright of way: New legal precedent. Credit: istockphoto

The ruling, issued by the US Court of Appeals for the Federal Circuit in Washington, DC in late May, pivoted around a patent for the design of disposable blood glucose test strips held by the Chicago drugmaker Abbott Laboratories. Several drug companies, including a subsidiary of Germany's Bayer, had argued that Abbott's patent was unenforceable because contradictory information had been filed with the US and European patent offices. In 2008, a lower court agreed and overturned the patent license, but the latest ruling reverses that decision and establishes a new legal precedent.

The case could still find its way up to the US Supreme Court. Even so, the appeals court decision is “a very big deal,” says Christian Mammen, a patent attorney in private practice who also lectures at the University of California Hastings College of the Law in San Francisco.

Mammen, together with eight other intellectual property law professors, filed a friend-of-the-court brief last year supporting the move to narrow the scope of legal challenges based what are often trivial technicalities. Last year, Mammen calculated that as many as 60% of patent lawsuits in the US center around challenges based on this so-called 'inequitable conduct', taking the focus away from more substantive issues such as a patent's novelty (Berkeley Tech. Law J. 24, 1329–1398, 2009).

Inequitable conduct “has certainly gummed up patent litigation, and it has made patent litigation more expensive and time consuming,” as well as caused applicants to overwhelm the patent office with extraneous information to cover their bases in the case of future lawsuits, Mammen says.

Good intentions

The old legal standard was “well intentioned,” says Hans Sauer, a lawyer at the Biotechnology Industry Organization, a trade association based in Washington, DC. But the number of lawsuits based on insignificant omissions has spun out of control, he argued in an amicus brief BIO filed in the case.

As an example, Sauer points to one lawsuit, settled in 2006, in which a patent examiner had asked Ferring Pharmaceuticals to provide input from outside experts to help define certain wording before approving the filing for an antidiuretic drug. A court declared the patent unenforceable because the Swiss drugmaker did not disclose in its patent application that some of the experts had financial ties to the company. Sauer hopes that the new ruling will boost investor confidence that drug companies' intellectual property will not be shot down by such difficult-to-anticipate legal arguments.

According to Kevin Noonan, a partner at McDonnell Boehnen Hulbert & Berghoff, an intellectual property firm based in Chicago that also filed an amicus brief in the recent case, the ruling should also make it harder for generic drug companies to win favorable settlements in patent disputes with pharmaceutical firms, as such disputes often center around inequitable conduct. The Washington, DC–based Generic Pharmaceutical Association in a statement said it was “disappointed” in the decision.

Mammen and Sauer say that the ruling is unlikely to be affected by patent reform legislation now working its way through the US Congress.