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Apotex Petitions Supreme Court to Review Therasense Standards

In Apotex, Inc. v. UCB, Inc., Appeal No. 2013-1674 (Fed. Cir. August 15, 2014) the court affirmed the district court’s ruling that one actor, Dr. Sherman, the chairman of Apotex had committed inequitable conduct by engaging in what the court found was a perfect storm of misrepresentations during the prosecution of U.S. Pat. No. 6,767,566 that claimed a method to make the magnesium (Mg) salt of Moexipril. The Fed. Cir. found that Dr. Sherman, the named inventor on the application withheld prior art, mischaracterized the cited art in arguments and via a Rule 132 Declaration, and included examples in the application that had not been performed. In fact, this was characterized as an attempt to patent a competitor’s drug.  The  competitor, UCB, had listed in the Orange Book, as the hydrochloride salt – although the court found that Dr. Sherman was aware that the process disclosed in the listed patent, U.S Patent No. 4,743,450, would yield the Mg salt of Moexipril, which imparted substantial stability. The Fed. Cir. agreed with Apotex that Dr. Sherman had no duty to disclose his own suspicions or beliefs regarding the prior art (that he suspected that the ‘450 process would in fact yield the stable Mg salt) but rested its holding on its opinion that Dr. Sherman “affirmatively and knowingly misrepresented material facts regarding the prior art.” Slip op. at 15.

The heart of Apotex’s argument that the Fed. Cir. erred in its affirmance is that it is perfectly permissible for a competitor to reverse-engineer a secret process used to make a pharmaceutical composition (in this case), and to obtain a valid patent claiming it. See Gore v. Garlock, 721 F.2d 1540 (Fed. Cir. 1983). In the context of inequitable conduct, the question is framed as to whether or not the secret process material prior art that must be disclosed to the PTO in the competitor’s application (I will assume that petitioners mean “during prosecution.”) Of course, if it is prior art, the competitor cannot patent it. As summarized by petitioners, “contrary to the decision below, the secret use of an invention is legally immaterial to a later inventor’s patent application.” Slip. op. at page 20.

In fact, this is “black letter patent law” but the competitor still has to obtain a patent on the secret process in view of information available to the public that is, in fact, prior art. And there was prior art for the district court and the Fed. Cir. to weigh, along with misrepresentations by Dr. Sherman regarding the teachings of that art. However, the Fed. Cir. did not treat Dr. Sherman’s suspicions or beliefs that UCB was marketing Moexipril magnesium made by simply neutralizing Moexipril with a magnesium salt as information that should have been disclosed to the PTO. Slip op. at 14. This undercuts UCB’s position in the petition for cert. that the Fed. Cir. treated the “secret process” as prior art. But the courts had other prior art to consider.

Primarily, the courts focused on a Warner-Lambert patent (U.S. Patent No. 4,743,450). The Fed. Cir. found that the commercial product was made by the process disclosed in that patent, and in the Gu article. This involves the wet granulation of Moexipril HCl with alkaline stabilizers to yield, i.e., Moexipril Mg. Dr. Sherman eventually got his ‘556 patent allowed by arguing (and presenting a Rule 132 declaration by Dr. Lipp) that very little, if any, of the Mg salt of the drug was formed during this wet granulation process. Later testing by Apotex showed that its product contained mainly the Mg salt. Even so, Dr. Sherman continued to argue the position set forth in the background section of his application – that the prior art did not yield any significant amount of the Mg salt. Eventually the Examiner gave in, when claim 1 was amended to recite that the claimed process contained greater than 80% of the Mg salt. Dr. Sherman had now successfully patented the “secret process” to make the Mg salt that UCB was using. [Interestingly, Dr. Sherman filed a later U.S. application that discloses that wet granulation of the HCl salt with magnesium carbonate yields Moexipril Mg.] (US 2003/0157165).

However, by the end of the Fed. Cir. opinion, the basis for the affirmance gets a bit cloudy. The court affirmed the district court’s finding of inequitable conduct based on Sherman’s knowing misrepresentations regarding the prior art, which it found met the but-for materiality of the Therasense decision. The Fed. Cir. also stated that it was not basing its affirmance on his failure to disclose an earlier PCT application filed by Dr. Sherman (which was barely discussed in the opinion) or the fact that he falsified examples in the ‘556 patent, or even the “expert declaration contained false statements instrumental to issuance of the patent.”

The second question posed in UCB’s petition is whether or not conduct that does not induce the PTO to issue the patent can render it unenforceable for IC. UCB argues that “the court found inequitable conduct because Dr. Sherman did not disclose a fact already known to the Examiner….misrepresentation to the PTO cannot establish [IC] unless in directly results in ‘the issuance of the patent.” [citing Therasense at 1291]. This sounds perilously close to an argument that it is OK to lie if you don’t get caught. Also the facts do not establish that the final “greater than 80%” conversion was not at least inherently obvious the prior art of which Dr. Sherman was aware, but did not cite to the Examiner. In short, which this post certainly was not, the Supreme Court should not grant cert. to review the Therasense standards for IC or for the prior art effect of mere knowledge of a competitor’s “secret process”, which, it seems, was not much of a secret after all.


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