Howmedica Osteonics v. Zimmer:Awards Of Attorneys’ Fees Based On

Misconduct At The Patent Office

Grant ShackelfordSughrue Mion, PLLC

©2018

1Sughrue Mion PLLC

Agenda

• Background on Howmedica v. Zimmer• Requirements for fee shifting under 35 U.S.C.

§ 285• Requirements for inequitable conduct• Application of facts from Howmedica• Options for curing certain inequitable conduct

2Sughrue Mion PLLC

Background• Howmedica accused Zimmer of infringing 4

Patents: 6,174,934; 6,372,814; 6,664308; 6,818,020

• The asserted patents disclose medical implants containing ultra-high-molecular-weight polyethylene prepared in an inert atmosphere using time and temperature combinations to maximize crosslinking and decrease oxidation and wear

3Sughrue Mion PLLC

Background

• The District Court granted summary judgment of invalidity with respect to the '934, '814, and '308 patents for indefiniteness

• The Federal Circuit in a reexamination appeal found all claims of the '020 patent unpatentable

• Defendant Zimmer moved for an award of fees and costs

• Court awarded Zimmer $13,296,559.90 in fees and $513,258.38 in costs

4Sughrue Mion PLLC

Statutory Attorney Fees

35 U.S.C. § 285:"The court in exceptional cases may award reasonable attorney fees to the prevailing party."

5Sughrue Mion PLLC

What makes a case "exceptional"

“[A]n ‘exceptional’ case is simply one that stands out from others with respect to the substantive strength of a party’s litigating positions (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.”

Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1758 (2014).

6Sughrue Mion PLLC

In re Rembrandt Technologies (Fed. Cir. 2018)

1. Rembrandt improperly compensated fact witnesses by giving them a stake in the outcome of the litigation; (litigation misconduct)

2. Rembrandt either engaged in or failed to prevent spoliation of documents over a number of years (litigation misconduct)

3. Rembrandt asserted revived patents that it should have known were unenforceable for inequitable (inequitable conduct)

7Sughrue Mion PLLC

Bayer Cropscience v. Dow AgrosciencesLLC (Fed. Cir. 2017)

• Maintaining unreasonable litigation positions:– “Bayer's own witnesses as well as key documents contradicted

Bayer's contorted reading of the contract"

– “Bayer's conduct in litigating this case in the face of evidence

that contradicted its contorted reading of the Agreement was

objectively unreasonable."

• Insufficient pre-suit investigation:– “[h]ad Bayer done any due diligence, it would have learned that

no witness supported Bayer's construction of the Agreement

and this case [ ] should never have been filed.”

• Frivolous motion practice:– Preliminary injunction filed 18 months into trial was frivolous

and unnecessarily increased the costs of litigation

8Sughrue Mion PLLC

Howmedica Background

Misconduct before the courts and the Patent Office:

1. Plaintiff engaged in inequitable conduct before the PTO during prosecution,

2. Plaintiff breached its disclosure duties before the PTO during reexamination.

3. Plaintiff engaged in litigation misconduct for shifting and frivolous litigation positions , and

9Sughrue Mion PLLC

Assessing behavior at the Patent Office

"The Court will use the inequitable conduct framework of materiality and intent as a guide in considering Plaintiff’s conduct before the PTO….”

10Sughrue Mion PLLC

Standard for proving inequitable

conduct for attorneys’ fees

“[T]he Court will consider [evidence of

inequitable conduct] as part of the ‘totality of

the circumstances’ inquiry required by Octane,

and the totality of the evidence ... will be

weighed using the preponderance of the

evidence standard.”

DietGoal Innovations LLC v. Chipotle Mexican Grill, Inc., No. 2:12–

cv–00764, 2015 WL 1284669, at *5 (E.D. Tex. Mar. 20, 2015)

(Bryson, J., sitting by designation)

11Sughrue Mion PLLC

HOWMEDICA CONDUCT DURING PROSECUTION

12Sughrue Mion PLLC

Conduct before the PTO during patent prosecution

• Withheld information:– contradictory test data produced by declarant– contrary publications authored by declarant– declarant's affiliation with patent owner

• Affirmative misrepresentation:– declaration submitted during the prosecution of

an earlier patent in the patent family constituted inequitable conduct as "affirmatively egregious misconduct."

13Sughrue Mion PLLC

Withheld information: '934 patent

5. The medical implant as set forth in claim 1 wherein the polyethylene material has a solubility of less than 74.7% in solvent.

11. The medical implant as set forth in claim 7 wherein the polyethylene material has a solubility of less than 74.7% in solvent.

14Sughrue Mion PLLC

Withheld test data

Streicher

Claimed invention

4.26

3.79

3.66

AverageControl

Direct measure of Solubility

Inversely proportional to crosslinking

15Sughrue Mion PLLC

Raw test data supports inherency

• All gel content measurements equate to a solubility less than 74.7%, as claimed

• Streicher's low swell ratio indicates higher crosslinking and lower solubility than the claimed invention

Streicher

Claimed invention

4.26

3.79

3.66

AverageControl

16Sughrue Mion PLLC

Testing data supported inherency

• Gel content results discarded• 3.11 swell ratio result discarded• Another swell test was ran.• Revised data sent to the Examiner without

disclosing the original data

Streicher

Claimed invention

4.26

3.79

3.66

Average

3.96 4.08

Control

17Sughrue Mion PLLC

Examiner's Response

The Examiner stated that it was not clear (1) "whether the difference in average swell ratio is a significant improvement (3.79 comparted to 4.08);" or (2) whether the "difference results from the [patented process] or from the difference in form of the material."

18Sughrue Mion PLLC

Supplemental Wang Declaration

• There was no difference in the form of the

materials (i.e., difference in solubility was a result

of different processes).

• Dr. Wang did not respond to the Examiner’s

question on the comparison between Streicher’s

swell ratio and the claimed invention.

• Rather, Dr. Wang averred that the Streicher swell

ratio (4.08) was "not statistically different" from

the average swell ratio of the nitrogen-irradiated

control sample (4.255)19Sughrue Mion PLLC

Parties' arguments

Plaintiff• Gel content test was

inaccurate and based on an inappropriate method of measurement

• 3.11 swell ratio data point was inaccurate and not reliable

Defendant• Gel content data conflicts

with representations to the PTO re. solubility

• 3.11 swell ratio data point shows that Streicher had better solubility than the claimed invention

20Sughrue Mion PLLC

Omission Of Test Data: Materiality

• Inequitable Conduct: Defendant did not establish the materiality prong, because the Court cannot determine whether (1) the gel content testing was incorrect and (2) the 3.11 swell data point was an outlier.

• Exceptional Case: the decision to only present the single favorable Streicher data point from the original testing appears disingenuous. It was also likely a violation of Plaintiff's broad disclosure requirements before the PTO.

21Sughrue Mion PLLC

• Dr. Wang's supplemental affidavit failed to answer the examiner's question whether the difference in swell ratio between Streicher and the patented material was statistically significant

• "Even if this did not constitute inequitable conduct, the Court finds that the selective disclosure of data and evasive responses provided to the Examiner are evidence of bad faith leading to a finding that this is an exceptional case."

22Sughrue Mion PLLC

Dr. Wang's employment

• Dr. Wang was employed by the patent applicant, Stryker.

• Dr. Wang identified Howmedica, a Stryker subsidiary, as his employer and never disclosed his affiliation with Stryker, the patent applicant.

23Sughrue Mion PLLC

• "A declarant's failure to disclose his or her relationship with the patent applicant can be the basis for a finding of inequitable conduct."

• Relevant factors for materiality:– the declarant’s role on the underlying issues; and– the relationship to the applicant

Ferring B. V. v. Ban Laboratories, Inc., 437 F.3d 1181, 1188 (Fed. Cir. 2006)

24Sughrue Mion PLLC

Court:

• Dr. Wang had a critical role in obtaining the patents at issue, and his status as a Stryker employee was critical and subject to the disclosure requirements

• No reasonable reading of Dr. Wang's declaration would create the impression that Dr. Wang was employed by Stryker

25Sughrue Mion PLLC

"The Court finds that the Plaintiff’s failure to notify the Examiner that Dr. Wang was an employee, rather than an independent expert, is an indication that this is an exceptional case, litigated in an unreasonable manner."

26Sughrue Mion PLLC

Witheld contradictory articles('020 patent)

The '020 patent claims "[a] medical implant comprising an irradiated ultra-high molecular weight polyethylene having ... a solubility of less than 80.9% in trichlorobenzene"

27Sughrue Mion PLLC

'020 patent prosecution

• Dr. Wang submitted an affidavit, stating that the prior art composition would have solubility comparable to material produced by a "Method B," which Dr. Wang declares has a solubility in trichlorobenzene of 98.2%

• Dr. Wang authored several papers, disclosing trichlorobenzene solubility from Method B to be 53.8%

28Sughrue Mion PLLC

Court:– Materiality: Dr. Wang's affidavit that presented

factual assertions contrary to the data reported in his earlier work was affirmative egregious misconduct

– Deceptive intent: “It is improbable that Dr. Wang forgot that he had written a series of papers just five years earlier on the exact same subject on which he submitted an affidavit. Because the material omission was a paper authored by very individual who failed to disclose it, the ‘single most reasonable inference’ is that the patentee intended to deceive the PTO.”

29Sughrue Mion PLLC

Misrepresentations in reexamination('020 patent)

• Plaintiff submitted a declaration from Dr. Streicher in the reexamination

• Dr. Streicher authored the primary reference cited in the reexamination

• Streicher prior art article: the Streicher material has enhanced crosslinking and negligible oxidation, and its method reduces post-oxidation effects significantly(40%).

• Streicher declaration: the Streicher material exhibited substantial oxidation, and a person of ordinary skill in the art would not have used or pursued annealing the material after irradiation because it failed to eliminate or appreciably reduce oxidation, wear or degradation.

30Sughrue Mion PLLC

Court:

"Dr. Streicher’s declaration facially contradicts the content of his previous reference. The thrust of the Streicher reference was that its method would increase crosslinking and decrease oxidation…This objectively unreasonable position supports a finding that this is an exceptional case."

31Sughrue Mion PLLC

Litigation Misconduct

When faced with the prior art that ultimately invalidated the patents in suit, Plaintiff proposed a new, facially indefinite claim construction that directly contradicted its earlier position and maintained the litigation for years.

32Sughrue Mion PLLC

Totality of the Circumstances• Failure to disclose the solubility testing or Streicher

swell test data demonstrated bad faith, and were more likely than not violations of Plaintiff’s duty of candor before the Examiner.

• Plaintiff submitted a series of affidavits by Dr. Wang containing representations directly contradicted by the Wang papers

• Wang failed to disclose his employment relationship with the patent applicant

33Sughrue Mion PLLC

Totality of the Circumstances• During reexamination, Plaintiff obtained a declaration

from the author of the Streicher reference attempting to contradict and discredit his own earlier work.

• When faced with the prior art that ultimately invalidated the patents in suit, Plaintiff proposed a new, facially indefinite claim construction that directly contradicted its earlier position.

34Sughrue Mion PLLC

Curing Inequitable Conduct: Supplemental Examination and

Reissue

35Sughrue Mion PLLC

Supplemental Examination(35 U.S.C. § 257)

A patent shall not be held unenforceable on the basis of conduct relating to information that had not been considered, was inadequately considered, or was incorrect in a prior examination of the patent if the information was considered, reconsidered, or corrected during a supplemental examination of the patent.

36Sughrue Mion PLLC

Supplemental Examination(35 U.S.C. 257)

• “A patent owner may request supplemental examination of a patent in the Office to consider, reconsider, or correct information believed to be relevant to the patent[.]”– A request is not an admission of materiality– Request can be based on any information

• Within 3 months, supplemental examination shall determine whether the request raises a substantial new question ("SNQ") of patentability.

• If SNQ found, modified ex parte reexam begins

Rules: 37 C.F.R. §§ 1.601, 1.605, 1.610, 1.615, 1.62037Sughrue Mion PLLC

Supplemental Examination(Timing)

Supplemental examination does not cure: • allegations already raised in district court or in

an ANDA Para. IV notice, before date of filing request, or

• defenses raised in ITC litigation/district court litigation, unless supplemental examination and any reexamination ordered therefrom finish before the date on which the action is brought.

38Sughrue Mion PLLC

Use of reissue

• Reissue allows a patent owner to correct a defective specification or claims, and to expand claim scope if the reissue request is filed within two years of the original patent issue date

• AIA amendment no longer precludes inequitable conduct charge

• A patent owner can terminate a reissue proceeding at will, restoring the patent to its original form

• Relatively inexpensive• 2-3 year pendency (same as SE + reexam)

39Sughrue Mion PLLC

Supplemental Examination vs. ReissueSupplemental Examination Considerations• Expensive and quick• Can be based on any

information• SE can be very fact (3

months) w/o reexamination • A request is not an

admission of a defect• Used to confirm that a

patent is in good order for enforcement

Reissue Considerations• Cheaper and slower than SE• Greater control of prosecution,

e.g., ability to file an RCE, amend the claims, terminate proceedings

• Can broaden claims within the scope of the original disclosure, if filed within two years of patent issuance

• Fix known deficiencies in a patent in preparation for enforcement

40Sughrue Mion PLLC

Thank you!

Questions?

41Sughrue Mion PLLC