Lundbeck: The Duty of Good Faith Patent Prosecution
February 3, 2010 by Ankur BhattAnkur Bhatt is a J.D. candidate (2011) at Osgoode Hall and is taking the Patent Law course.
On November 23 of last year, the Federal Court of Canada released its decision in the case of Lundbeck v. ratiopharm, 2009 FC 1102 (“Lundbeck”), wherein a drug patent was considered to be invalid on the basis, inter alia, that the claimant had been remiss in its duty of good faith patent prosecution.
The patent at issue “claim[ed] the use of memantine in conjunction with … acetylcholinesterase inhibitors for the treatment of … Alzheimer’s disease.” At the heart of the patent, forming its purported non-obviousness and utility, was the synergistic, as opposed to simply additive, therapeutic effect of this combination of two otherwise known drugs.
The respondent ratiopharm sought to have Lundbeck’s patent invalidated on the grounds of anticipation, non-obviousness, inutility, and lack of good faith prosecution. While rejecting the first two allegations, the Federal Court of Canada accepted the third allegation of inutility, thereby invalidating the patent. However, “[a]lthough not strictly necessary”, the Court went on to “deal with [the] last challenge … in the event that a reviewing court takes a different view of [the finding on] utility.”
The relevant provision of Canada’s Patent Act was the following: “73. (1) An application for a patent in Canada shall be deemed to be abandoned if the applicant does not (a) reply in good faith to any requisition made by an examiner in connection with an examination …”. ratiopharm asserted that Lundbeck had contravened this good faith duty during the original prosecution by “fail[ing] to make full, frank, and fair disclosure” of a certain scholarly, materially relevant article. In response to the patent examiner’s concern, in the form of a requisition for prior art, that a combination of two known compounds could not be obvious, Lundbeck had (mis)represented that “the prior art clearly teaches away from the [claimed] combination”. The prior art references Lundbeck had fully disclosed demonstrated that when combined, memantine in fact attenuated the therapeutic effect of achetylcholinesterase inhibitors. However, the prior art reference that Lundbeck had not fully disclosed showed that this attenuation really only occurred with a certain class of acetycholinesterase inhibitors; the acetycholinesterase inhibitor in Lundbeck’s combination was of the non-attenuating class.
The Court thus found for ratiopharm that Lundbeck’s conduct – that of identifying the article yet neither significantly discussing the unsupportive article nor providing a copy thereof to the patent examiner, ending with a misrepresentative conclusion on the prior art – was in breach of a duty of candour flowing from s. 73(1)(a) of the Act. In so holding, the Court referenced the only case considering the scope of 73(1)(a), G.D. Searle & Co. v. Novopharm Ltd., 2007 FC 81 (“Searle”). In Searle, the Federal Court held a patent to be invalid due to the applicant’s failure to bring to the attention of the examiner an article it had published that was inconsistent with its prosecution arguments. While Searle was overturned on appeal (2007 FCA 173), the Federal Court here, in Lundbeck, noted that no issue was taken with the original ruling’s “review of the law with respect to the duty of good faith in the prosecution of patent applications”. So, per Searle, “communications with the examiner must be made in good faith. It is to be expected that there will be full, frank and fair disclosure.”; an application for a patent was likened to an ex parte proceeding. The Federal Court in Lundbeck agreed with this analogy, elaborating:
330 [A] party seeking ex parte relief has the duty of ensuring that the Court is apprised of all of the relevant facts. As … noted in United States of America v. Friedland, [1996] O.J. No. 4399, (Ont. Ct. J. (Gen. Div.)), both the judge hearing an ex parte motion and the party against whom the order is sought are literally “at the mercy” of the party seeking the relief in issue.
331 [Per] … Friedland[:] … in an ex parte proceeding, “the ordinary checks and balances of the adversary system are not operative”. It is for this reason that the law requires that when a party goes before a court seeking ex parte relief, it must do more than simply present its own case in the best possible light, as would be the case if the other side were present. Rather, the applicant must state his or her own case fairly and must inform the Court of any points of fact or law known to it which favour the other side …
As was noted, Searle was “the only case considering the scope of paragraph 73(1)(a)”. Lundbeck then constitutes a formative addition to this scant, essentially fetal jurisprudence on the duty of good faith prosecution, “good faith” being a familiar, almost universal concept permeating throughout the law, almost inextricably in need of judicial investigation and interpretation due to its breadth and indefiniteness. Also worth remembering from Lundbeck is that a finding of a breach of the duty of good faith exists apart from whether or not the benefit derived from a breach ultimately proved determinative, that is, necessary: the Federal Court, reviewing in full the unsupportive article that the applicant had sought to omit from the examiner’s attention, found that the drug satisfied the requirement of obviousness anyway (on the basis of the synergistic aspect).
The following may then be said in conclusion. First, that the Court’s acceptance of and elaboration on the requirement of “full, frank and disclosure” and analogy to an ex parte proceeding is helpful and agreeable, especially in light of the sizable benefit that Canadian patent law confers – a 20-year monopoly on production and sale. Second, however, is that however lucid Searle and Lundbeck may be, due to the meagreness of the case law in this area, the extent of the good faith requirement in Canadian patent prosecution still remains by definition uncertain. Searle, and now Lundbeck, but await the testing of more assertions of bad faith prosecution.
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Another interesting aspect of the Lundbeck decision is the fact that the court did not engage in a discussion of the role of intent with regard to s. 73(1)(a) (This point is made by Mason, Nadoor, and Tanner, see http://www.mccarthy.ca/article_detail.aspx?id=4772). Rather the court was concerned only with the fact of Lundbeck’s failure to highlight the relevance of the Wenk article. In fact, Ratiopharm in its arguments specifically insisted that it was not alleging that Lundbeck had failed to disclose the nature of the Wenk article in bad faith. Rather, Ratiopharm’s argument was that Lundbeck’s failure had not fulfilled the requirement of good faith (Lundbeck, at para. 300). The court does not go on to assess whether or not there was any intention to deceive on the part of Lundbeck, nor does it go on to assess whether Lundbeck had engaged in bad faith. In concentrating purely on the fact of the failure and not the intentions, the federal court in Lundbeck essentially imposed absolute liability on a patent applicant’s failure to fully, frankly, and fairly disclose all relevant information. One of the effects of this strict interpretation of s. 73(1)(a) the court favoured in Lundbeck is that the duty of candour in Canada’s patent regime is arguably now stricter than that in the United States’ patent regime. As the United States Court of Appeals for the Federal Court Circuit held in Monsanto v. Bayer Bioscience N.V. (2007-1109), “To hold a patent unenforceable for inequitable conduct, a district court must find by clear and convincing evidence that a patent applicant breached its duty of candor and good faith to the United States Patent and Trademark Office (“PTO”) by failing to disclose material information, or submitting false material information, with an intent to deceive the PTO” (at pg. 6, emphasis mine). In the United States, in order to show a breach of the duty of good faith and candour both the fact of omission of information and the intention to omit the information must be proven.
It appears then that the court is taking a hard-line, “no excuses” stance on the matter. Such a high standard is perhaps justified. As Justice Hughes stated in Searle, “There is afforded during the prosecution ample opportunity to make further disclosure or to correct an earlier misstatement or shortcoming”(para. 73). Certainly in the case of sophisticated applicants such as Lundbeck, a major pharmaceutical company, it is reasonable to expect that the applicant will find, review, and frankly disclose any evidence of prior art. However it will be interesting to see if the court takes this same hard line stance if a future case emerges involving a less-sophisticated applicant where the applicant appears to have made an oversight.
As Ankur points out, we are still awaiting the establishment of a significant body of jurisprudence with respect to s. 73(1)(a) of the Patent Act. However what the Lundbeck decision appears to imply is that under s. 73(1)(a), courts will have little sympathy for patent applicants who have not been completely forthright in disclosing prior art. The bar has been set high for future applicants.