Tuesday, February 7, 2006

Inequitable conduct and antitrust: The Eighth Circuit Reverses in Purdue Pharma

On February 1, 2006, a Federal Circuit panel reconsidered and then vacated its earlier decision in Purdue Pharma v. Endo Pharmaceuticals, which had affirmed the trial court’s finding of inequitable conduct against Purdue.  Purdue owns patents protecting its controlled release oxycodone product, Oxycontin®, a powerful pain reliever.  Endo sought to manufacture a generic bioequivalent of Oxycontin®. Upon rehearing, the Federal Circuit panel vacated the trial court’s original opinion on inequitable conduct and remanded consideration of that issue for further proceedings consistent with the new Federal Circuit opinion.  The Federal Circuit also affirmed the trial court’s finding of infringement, not particularly surprising when the allegedly infringing product is a bioequivalent of the patented product.

            The key issue on appeal is whether the patentee, Purdue, committed inequitable conduct before the PTO.  To establish inequitable conduct, a patent defendant must prove by clear and convincing evidence that the patentee intentionally made material misrepresentations to the PTO.  The court considers materiality and intent on a sliding scale.

            To overcome prior art before the PTO, Purdue had repeatedly implied and suggested, but did not directly state, that Purdue had clinical evidence proving that its patented product “controlled pain over a four-fold range of dosages for 90% of patients. . . .”  Purdue had no such clinical evidence.  Upon reconsideration, the panel found the materiality of Purdue’s indirect misrepresentations to be “not especially high . . . not as material as an affirmative misrepresentation would have been.”  When the level of materiality is low, however, then intent cannot simply be inferred in a sliding scale analysis.

            Direct evidence of intent is rarely available.  The trial court relied on internal documents in which Purdue personnel admitted that they could not prove to the FDA with clinical evidence that its “oxycondone formulations were effective over a four-fold dosage range, compared to an eight-fold dosage range for other opioids.”  But Purdue’s internal admissions that it lacked the quantum of proof necessary to obtain FDA approval are not sufficient to prove intent to deceive the PTO.  “[E]vidence that Purdue personnel believed it would be difficult to satisfy FDA requirements is at best marginally related to whether they intended to deceive the PTO.”

            Rather than reversing the trial court, the panel remanded the case, ordering the trial court to “rethink the relevance of the evidence relating to whether Purdue could prove that Oxycontin was the most easily titratable [capable of gradually adjusting the dosage to obtain the desired effect] analgesic.” Additionally, the trial court must reweigh its sliding scale analysis, “keep[ing] in mind that when the level of materiality is relatively low, the showing of intent must be proportionately higher.”  As a result, to find inequitable conduct on remand, the trial court must find direct evidence of intent, distinct from the evidence on which it relied in its original opinion.


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