Pre-Litigation Conduct of Patentee Toward Alleged Infringer Does Not Support Award of Attorney Fees.The U.S. Court of Appeals for the Federal Circuit, finding that conduct that gives rise to an equitable estoppel equitable estoppel n. where a court will not grant a judgment or other legal relief to a party who has not acted fairly; for example, by having made false representations or concealing material facts from the other party. defense is not an appropriate basis for awarding attorney fees, reversed a district court in finding that a case was "exceptional" under 35 U.S.C. s.285. Forest Laboratories, Inc. v. Abbott Laboratories, Case No. 03-1067 (Fed. Cir. August 7, 2003). The Abbott case concerned two patents directed to a lung surfactant Surfactant Definition Surfactant is a complex naturally occurring substance made of six lipids (fats) and four proteins that is produced in the lungs. It can also be manufactured synthetically. composition for treating respiratory distress syndrome respiratory distress syndrome or hyaline membrane disease Common complication in newborns, especially after premature birth. Symptoms include very laboured breathing, bluish skin tinge, and low blood oxygen levels. in premature babies that Abbott licensed (the Tanabe patents). Pursuant to its license, Abbott developed a commercial product known as Survanta[R]. ONY developed its own product, Calf Lung Surfactant Extract (CLSE CLSE Council of Learned Societies in Education ), which was further developed and marketed by Forest Laboratories under the trade name Infasurf[R]. Throughout the 1980s, Abbott and ONY discussed the development of CLSE. Abbot informed ONY that it had opted not to develop CLSE. In 1984, after conducting a patentability search, Abbott told ONY that CLSE was likely not patentable in light of two "pertinent references," but did not mention the Tanabe patents. Abbott and ONY discussed future collaboration and the possibility of joint development of CLSE. Abbott monitored the development of CLSE while internally expressing concern that ONY might receive U.S. Federal Drug Administration (FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. ) approval for its Intrasurf[R] product before Abbott could receive approval for Survanta[R]. In 1991, Abbott received FDA approval and orphan drug orphan drug, drug developed under the U.S. Orphan Drug Act (1983) to treat a disease that affects fewer than 200,000 people in the United States. The orphan drug law offers tax breaks and a seven-year monopoly on drug sales to induce companies to undertake the status for Survanta[R]. Abbott subsequently informed ONY and Forest that it had reason to believe that Infasurf[R] would infringe the Tanabe patents if it were marketed. When ONY filed a new drug application in 1995 for approval to market Infasurf[R], the FDA notified ONY that Infasurf[R] was the "same drug" as Survanta[R] under the Orphan Drug Act, and it, therefore, could not be approved for sale until Abbott's seven-year market exclusivity period expired. ONY and Forest sued Abbott seeking a declaratory judgment declaratory judgment In law, a judgment merely declaring a right or establishing the legal status or interpretation of a law or instrument. It is binding but is distinguished from other judgments or court opinions in that it includes no executive element (an order that of non-infringement and invalidity of the Tanabe patents. Abbott counterclaimed for infringement. After a jury found both patents infringed and were not invalid, the district court granted ONY and Forest a judgment of non-infringement as a matter of law (JMOL JMOL Judgment as a Matter of Law ). The district court found that Abbott failed to present any evidence to show CLSE infringed the Tanabe patents and further ruled that Abbott was equitably estopped from asserting infringement of the Tanabe patents against ONY and Forest. The district court based its equitable estoppel ruling on its finding that Abbott misled ONY and Forest to believe that it would not assert infringement by encouraging their development of Infasurf[R] and by "neglecting its duty to inform them of any possible infringement" upon which ONY and Forest reasonably relied. The district court also granted ONY and Forest's motion for attorney fees and expenses, finding the case to be "exceptional" under s.285. The district court found that Abbott, in bad faith, encouraged ONY to develop CLSE, disregarded its duty to advise ONY and Forest of possible infringement and pursued its infringement counterclaim with a "reckless disregard for the facts in an attempt to prevent Infasurf from reaching the market." The Federal Circuit reversed, finding that "exceptional" cases under s.285 are those cases involving "inequitable conduct before the [patent office]; litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement." Since none of those circumstances was present, it was error for the district court, in its "expansive reading of s.285," to find the case exceptional. The Federal Circuit noted, "[W]e have not ... upheld a finding of exceptionality based on a patentee's bad-faith business conduct toward an accused infringer prior to litigation, and we decline to expand the scope of the statutory term 'exceptional' in that manner." While equitable estoppel may be imposed when a patentee PATENTEE. He to whom a patent has been granted. The term is usually applied to one who has obtained letters-patent for a new invention. 2. His rights are, 1. induces another party to believe that it will not be sued for infringement, the consequence of that estoppel A legal principle that bars a party from denying or alleging a certain fact owing to that party's previous conduct, allegation, or denial. The rationale behind estoppel is to prevent injustice owing to inconsistency or Fraud. is the loss of the cause of action, not attorney fees "under the rubric of exceptional case." The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances. Mr Ronald Pabis McDermott, Will & Emery 600 Thirteenth Street NW Washington, DC 20005-3096 UNITED STATES Tel: 2027568000 Fax: 2027568087 E-mail: pdevinsky@mwe.com URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. : www.mwe.com (c) Mondaq Ltd, 2003 - Tel. +44 (0)20 7820 7733 - http://www.mondaq.com |
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