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How a 510(k) Submission Can Affect Your Patent


Posted by llloyd on June 1, 2010

Manufacturers should tread carefully when seeking both patent protection and FDA approval.


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Dual disclosures to FDA and the U.S. Patent and Trademark Office (USPTO) that are not properly coordinated can sometimes have disastrous consequences, including the evisceration of patent rights, which could put a company at risk. When it comes to protecting the intellectual property (IP) rights of medical device companies, patents can aptly be described as the Holy Grail of IP protection. If patent infringement litigation becomes necessary, however, a successful “inequitable conduct” defense asserted by an accused infringer can effectively destroy a patent. And depending on the importance of the patent to the company’s business model, this could spell doom for the business itself.

Obtaining a patent on emerging medical technology can often determine whether a medical device company survives, thrives, or fails. Although there are many variables that come into play when attempting to enforce a patent against a competitor, the potential interrelationship between disclosures to FDA and the USPTO shows that whether a patent is ultimately deemed enforceable can turn on assertions made a decade or more prior to a lawsuit being filed.

The U.S. Court of Appeals for the Federal Circuit has ruled that a substantial equivalence assertion made to FDA can be used to support an inequitable conduct finding under certain circumstances.1 Medical device companies seeking to achieve the seemingly unrelated objectives of patent protection and FDA approval to sell a medical device should therefore be aware of potential pitfalls associated with making related disclosures to these government entities.

Medical Device Patents

It is estimated that intangible assets represent 70% or more of the total value of U.S. companies.2 The medical device sector is one in which intangible assets generally represent a relatively large proportion of total company value when compared with such industries as automobile manufacturers or home builders. One important subgroup of a company’s intangible assets is IP, which can include trademarks, copyrights, trade secrets, and perhaps most importantly for medical device manufacturers, patents. 

When a patent application is filed with the USPTO, a patent examiner evaluates the application to determine whether the invention is patentable. This process often involves an exchange between the examiner and applicant in which the examiner offers reasons why the invention may not be patentable and the applicant will respond with reasons why the invention is patentable.3 From the applicant’s perspective, this process is generally referred to as patent prosecution.

The Duty of Disclosure

During patent prosecution, the inventor, the patent attorney, and any others associated with the patent application must disclose to the USPTO any information that is “material” to patentability.4 In many instances, inventors are employees of medical device companies and will have assigned their rights in the claimed invention to their company. In such cases, any company representative involved in writing or prosecuting the application will bear the same duty of disclosure as the inventors.

Material means that a reasonable patent examiner would consider the information to be important in determining whether the invention is entitled to a patent.5 Material information sometimes includes publications, called prior art, that indicate that the applicant’s invention may not be new.6 The patent examiner conducts an independent search to uncover relevant materials. However, it is important to keep in mind that it remains incumbent upon all those involved in the patent prosecution to disclose any relevant information.

Inequitable Conduct

If a patent owner makes a patent infringement claim, the defendant may respond with a defense of inequitable conduct, which is a judicially created doctrine that can prevent a patent owner from enforcing its patent.7 The inequitable conduct doctrine is one based in fairness and it is applied by courts against parties that engage in misconduct during patent prosecution or litigation. The underlying rationale is that a patent owner who engages in misconduct should not be allowed to enforce the patent against others.

An inequitable conduct finding may result in a court determining that the case is “exceptional,” which may entitle the accused infringer to its attorney fees spent defending the infringement suit.8 Considering that the litigation costs in a patent infringement suit can exceed $5 million for each party, an award of attorney fees could prove devastating to many medical device companies, particularly start-ups that may not have the capital to absorb such a considerable liability.

A common inequitable conduct claim is based on the accusation that the applicant failed to disclose material prior art to the USPTO during patent prosecution.9 To prove such a claim, the defendant must show by clear and convincing evidence that the applicant failed to disclose known material prior art to the USPTO and intended to deceive it in failing to make the disclosure. The legal analysis, therefore, focuses on whether the applicant knew about the prior art, whether the prior art was material, and whether the applicant withheld the prior art with an intent to deceive the USPTO. Because there is rarely direct evidence of intent to deceive, this finding can be inferred from particular facts and circumstances surrounding the situation.

Once threshold levels of materiality and intent have been proven, the court will “balance the equities” to determine whether inequitable conduct has occurred and whether the patent is unenforceable.10 If a patent is deemed unenforceable due to inequitable conduct, the patent owner cannot enforce its patent against the defendant and the defendant may be able to recover its attorney fees from the patent owner. The case of Bruno Independent Living Aids Inc. v. Acorn Mobility Services Ltd. illustrates how the convergence of FDA and USPTO disclosures can lead to a finding of inequitable conduct.

The Bruno Case

On January 11, 2005, the Federal Circuit decided the case of Bruno. The case involved a patent infringement suit by one medical device company against another that eventually resulted in the patent owner conceding that its patent was invalid and paying the defendant’s attorney fees. 

Bruno Independent Living Aids Inc. manufactures stairlifts, which are mechanical devices that allow people who suffer from mobility impairments to ascend and descend staircases on a chair that moves along a fixed rail. In November 1991, Bruno filed a patent application for a stairlift. In April 1992, Bruno submitted a 510(k) premarket notification to FDA stating the following:

Substantial Equivalence: This product is similar in design and function to those manufactured and marketed by Cheney Manufacturing Inc. and American Stair-Glide Company Inc. Copies of product information from these similar products are enclosed. Information supporting an equivalency determination will be made available upon request to any person.11

Although Bruno claimed that the Cheney and American Stair-Glide stairlifts were “substantially equivalent” to Bruno’s stairlift when it was seeking FDA approval to sell its device, Bruno did not provide the USPTO with any information relating to either the Cheney or the American Stair-Glide stairlifts. Bruno’s stairlift patent was issued in July 1993.

In July 2002, Bruno sued one of its competitors, Acorn Mobility Services Ltd., for infringing its stairlift patent. During litigation, Acorn produced prior art that had not been considered by the USPTO during prosecution of the Bruno patent. Acorn argued that this prior art established that the Bruno patent was invalid; Bruno ultimately agreed with this assessment and dismissed the remaining claims against Acorn.

Acorn then asked the district court to award Acorn its attorney fees on the grounds that Bruno had committed inequitable conduct by failing to disclose the Cheney stairlift to the USPTO while at the same time freely disclosing its existence to FDA in its 510(k) submission. The district court found that Bruno had failed to provide a credible, good faith explanation for why it told the agency that its stairlift was substantially equivalent to the Cheney stairlift, yet declined to submit any information regarding the Cheney stairlift to the USPTO. The court inferred that Bruno had the necessary intent to deceive the USPTO, held that Bruno had committed inequitable conduct, and awarded Acorn $400,000 in attorney fees. 

On appeal to the Federal Circuit, Bruno argued that its substantial equivalence claim was only relevant to securing FDA approval and did not prove that Bruno knew that the Cheney stairlift was material to patentability. The court found this argument to be disingenuous considering that Bruno’s director of engineering prepared the FDA submission and was also involved in the patent prosecution (i.e., if he knew enough about the Cheney stairlift to conclude substantial equivalence, he knew enough to recognize its materiality). The court also affirmed the district court’s finding that the Cheney stairlift was material because it employed an off-center swivel similar to the offset swivel that Bruno touted as a point of novelty of its stairlift.

In short, the appellate court found that Bruno had committed inequitable conduct by failing to disclose material prior art (i.e., the Cheney stairlift) to the USPTO during patent prosecution while simultaneously claiming that the Bruno stairlift was substantially equivalent to the Cheney device in Bruno’s 510(k) submission. 

Fact-Intensive Inquiry

As Bruno shows, an inequitable conduct analysis is a fact-intensive evaluation of the circumstances involved in a particular case. It should be noted that a 510(k) submission will not necessarily affect either the enforceability of a patent or the patentability of an invention. Lower courts after Bruno have confirmed that disclosure of a competing medical device to FDA, paired with the nondisclosure of the device to the USPTO, will not in and of itself establish inequitable conduct.12

Proving materiality of the reference from a patentability standpoint remains necessary, and although the disclosure of a similar medical device to FDA may be relevant to whether there is an intent to deceive the USPTO, it is not necessarily so.
In addition, it would be inappropriate to conclude that a claim of substantial equivalence is necessarily relevant to whether a medical device is patentable. Although the courts clearly recognize the potential relevancy between dual disclosures made to these government entities, the inequitable conduct analysis cannot be divorced from the specific facts of a particular case.

Publication Pitfalls

Disclosures to FDA may also be relevant outside of the inequitable conduct context. For example, once the agency has cleared a medical device for 510(k) purposes, a 510(k) summary is published on the FDA’s Web site and the entire 510(k) submission may be made available to the public pursuant to the Freedom of Information Act. Although trade secret and other confidential information may be protected from disclosure if certain conditions are met, various aspects of these disclosures may reveal patentable features or functions of the cleared medical device. 

Under U.S. patent law, an inventor is generally provided with a one-year grace period within which to file a patent application, and describing the invention in a publication is one way to trigger the one-year grace period. A medical device company that desires patent protection in one or more foreign countries, however, must comply with each country’s patent laws, which may differ in various respects from U.S. patent law. One very important difference is that any publication of the invention before filing a patent application will bar an inventor from obtaining patent protection in many foreign jurisdictions.13 Failing to file a patent application within the one-year grace period would similarly prevent an inventor from obtaining a U.S. patent.

Of course, the extent to which patentable subject matter has been disclosed in a publication will undoubtedly be relevant. From a risk assessment standpoint, however, it seems clear that any disclosure to FDA prior to the filing of foreign or domestic patent applications could be problematic depending on the circumstances. Because serious consequences can result from the publication of disclosures made to FDA, patent applications should ideally be filed before potentially relevant FDA disclosures are submitted.

Conclusion

In the competitive environment of the medical device industry, obtaining timely FDA approval to sell a medical device may indeed be the primary concern. However, it should be understood that FDA disclosures do not exist in a vacuum and statements made to FDA may have consequences. Once FDA approval is obtained, and assuming the device proves successful in the marketplace, the concern over whether a competitor is able to compete using the same technology can quickly become critical. A properly prepared and prosecuted patent can be a very big stick to discourage competitors from selling a company’s invention.

If patent infringement litigation becomes necessary, rest assured that the accused infringer will explore whether the applicant committed inequitable conduct by failing to disclose material prior art to the USPTO. A 510(k) premarket notification may be just the thing that a defendant needs to defeat a patent infringement claim. And depending on how fundamental a patent may be to the survival of the company, a finding that the patent cannot be enforced could itself prove fatal to the entity. 

Securing and maintaining enforceable patent rights in medical devices can be a complicated proposition. In addition to the dangers posed by the inequitable conduct doctrine, a disclosure to FDA can also adversely affect patent rights if patent applications have not been filed prior to FDA disclosure. The complexity of these issues strongly suggests that coordinated consultation with legal counsel familiar with FDA and USPTO procedures is critical.

References

1.    Bruno Independent Living Aids Inc. v. Acorn Mobility Services Ltd., 394 F. 3d 1348 (2005).
2.    Global Intangible Tracker 2007, Brand Finance; available from Internet at www.brandfinance.com/docs/global_brands_survey.asp.
3.    35 USC 132 (2006).
4.    37 CFR 1.56 (2009).
5.    Star Scientific Inc. v. R.J. Reynolds Tobacco Co., 537 F. 3d 1357 (Fed. Cir. 2008).
6.    35 USC 102–103 (2006).
7.    Digital Control Inc. v. Charles Mach. Works, 437 F. 3d 1309 (Fed. Cir. 2006).
8.    35 USC 285 (2006).
9.    Larson Mfg. Co. v. Aluminart Prods. Ltd., 559 F. 3d 1317 (Fed. Cir. 2009).
10.    Monsanto Co. v. Bayer BioScience NV, 363 F. 3d 1235 (Fed. Cir. 2004).
11.    Bruno Independent Living Aids Inc. v. Acorn Mobility Services Ltd., 277 F. Supp. 2d 965 (W.D. Wis. 2003).
12.    See, e.g., Medtronic Xomed Inc. v. Gyrus ENT LLC, 440 F. Supp. 2d 1300 (M.D. Fla. 2006).
13.    See, e.g., European Patent Convention, Art. 54.


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