Wyeth Holdings Corp. v. Sandoz, Inc.

Case Name: Wyeth Holdings Corp. v. Sandoz, Inc., Civ. No. 09-955-LPS-CJB, 2012 U.S. Dist. LEXIS 26912 (D. Del. February 3, 2012) (Burke, M.J.).  (Inequitable conduct - Distinguishing between the evidentiary standard of proving inequitable conduct and the pleading standard of raising a reasonable inference, Sandoz was able to allege that Wyeth misrepresented material information with the intent to deceive the PTO). 

Drug Product and Patent(s)-in-Suit: Tygacil^® (tigecycline injectable); U.S. Pat. Nos. RE40,183 ("the '183 patent") and 7,879,828 ("the '828 patent")

Nature of the Case and Issue(s) Presented: Two days after the close of fact discovery, Sandoz asserted that inequitable conduct should bar enforcement of the '828 patent.  Wyeth moved to dismiss and strike the inequitable conduct defense.  Tigecycline is a well-known antibiotic in the tetracycline family.  It is subject to two countervailing degradative pathways.  First, tigecycline is susceptible to rapid oxidation in solution form, which typically occurs at a slightly basic pH (about 7.8).  To avoid this oxidative degradation, the pH can be lowered by adding an acid or buffer.  But lowering the pH triggers a second degradative process, known as epimerization where the standard "cis" form of tigecycline is converted into the "trans" isomer.  This epimerized product is non-toxic, but also exhibits low antibacterial efficacy.  The '828 patent discloses that the addition of a carbohydrate (such as lactose) will result in a stable balance against the countervailing degradation pathways.

According to Sandoz, in response to the PTO Examiner's rejection of the '828 claims as obvious, Wyeth representatives misrepresented the teachings of the prior art, overstated the stabilizing effects of lactose, and omitted key information regarding experimental error rate and discrepancies in data.  The Magistrate Judge agreed and found that Sandoz "has provided a lengthy recitation of facts that give rise to a reasonable inference that Wyeth misrepresented material information with the intent to deceive the PTO" and recommended that the Court deny Wyeth's motion to dismiss. 

Why Sandoz Prevailed:  The Court began its discussion with an analysis of the applicable standard governing inequitable conduct pleadings in light of the Federal Circuit's opinion in Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011).  Wyeth claimed that Sandoz did not meet its burden under Therasense because it did not allege "factual allegations that make it plausible that but for the alleged omission, the Examiner would not have issued the patent."  Wyeth also argued Sandoz's inequitable conduct defense should be dismissed because "Sandoz did not plead any facts that would allow the Court to conclude that the single most reasonable inference from the applicants' alleged conduct is that the applicants had the specific intent to deceive the PTO."  The Court held that there were three reasons why in order to adequately plead the intent prong of an inequitable conduct defense, the claimant need only alleged facts from which the Court could reasonably infer that the patent applicant made a deliberate decision to deceive the PTO.  First, the "single most reasonable inference" requirement in Therasense is an evidentiary standard, not a pleading standard.  Second, in another decision, Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009), the Federal Circuit appeared to specifically indicate that the "single most reasonable inference" analysis was a separate inquiry from that used to examine whether inequitable conduct is well-pled.  Third, the Court found that its holding was corroborated by the Federal Circuit's own post-Therasense case law.

Having confirmed the appropriate pleading standard for intent-to-deceive, the Court moved to the materiality prong of Sandoz's inequitable conduct defense.  Sandoz properly and specifically identified the "who, what, where, when, and how" of the alleged material misrepresentation.  The "who" refers to a Wyeth declarant involved in the development of tigecycline and two Wyeth attorneys who prosecuted the '828 patent application.  The "what" is the alleged misrepresentations regarding the state of the prior art and the stabilization data submitted to the PTO.  The "when" implicates two dates on which misrepresentations were allegedly made: During an Examiner interview and the date a declaration was submitted on behalf of Wyeth.  The "where"-meaning where in the prior art and other documents is the allegedly material information found-is detailed in Sandoz's amended answer.  And the "how" element describes how the Examiner would have been able to maintain his obviousness rejections if he had been given the material information that Wyeth concealed; this, too, was in Sandoz's amended answer.  The Court found that Sandoz's allegation that the '828 patent would not have been issued but for Wyeth's deceptive and erroneous representations to the PTO, coupled with the fact that the Examiner repeatedly cited the data provided in the declaration as the primary reason for his allowance of the patent, lead to a reasonable inference of but-for materiality.

Sandoz alleged that Wyeth engaged in a strategy to deceive the PTO by convincing the Examiner that the claimed invention, which exposes tigecycline to acidic conditions in combination with lactose, results in a much more stable solution than the prior formulations of tigecycline.  For example, Wyeth's declarant offered numerous test results to the PTO that compared first generation tigecycline (without hydrochloric acid or lactose) to second generation tigecycline (containing both of those elements), and the declarant interpreted this data, which showed that the purity of tigecycline was reduced by more than 2% in first generation tigecycline as compared to second generation tigecycline.  But the Wyeth declarant did not tell the Examiner that the error rate in those measurements was about 2% nor that other data in the submitted materials contained results so anomalous as to render them effectively unreliable.  This, and other examples, allowed the Court to find that Sandoz pled sufficient facts, with sufficient particularity, to give rise to a reasonable inference that Wyeth's representatives deliberately acted to deceive the PTO during the prosecution of the '828 patent.

The Court acknowledged the Federal Circuit's desire to reign in the proliferation of inequitable conduct claims, but that effort must be balanced against the fact that "honesty at the PTO is essential, and thus inequitable conduct claims remain viable as a general matter, even when they are not based solely on affirmative acts of egregious misconduct."