IP and Equivalence

Under a recent court ruling, device manufacturers’ 510(k) submissions may be fodder for invalidation of U.S. patents.

Linda E. Alcorn

Can information about substantial equivalence provided to FDA in a premarket notification (510(k)) submission be used to invalidate a patent? In a recent decision by the United States Court of Appeals for the Federal Circuit, the answer was a resounding yes.

Alcorn: Medtech IP watch.

When applying to the U.S. Patent and Trademark Office (PTO) for a patent, applicants owe a “duty of candor and good faith.” A breach of this duty can arise from a failure to disclose information material to patentability, coupled with an intent to deceive or mislead the patent office. Intent can be inferred if the withheld information is highly material to patentability. A breach of the duty of candor, often referred to as inequitable conduct, can render a patent unenforceable and in some cases can subject the patent holder to a judgment requiring it to pay the accused party’s attorneys fees.

All of these elements came into play in the case of Bruno Independent Living Aids Inc. v. Acorn Mobility Services Ltd. and Acorn Stairlifts Inc., which was recently decided in the Federal Circuit.1 The court upheld an award of attorney’s fees to the accused infringer because the patent holder, during procurement of its patent, failed to disclose to the PTO information from an FDA submission regarding “substantially equivalent” devices.¹

Background

The patent holder, Bruno Independent Living Aids Inc., had a patent on a stairway chairlift device used to transport disabled individuals up and down a staircase. Because FDA regulates stairlifts as medical devices, Bruno had to seek FDA approval to sell its stairlift in the United States. As part of its 510(k) submission, Bruno sent a letter to FDA asserting that its stairlift was substantially equivalent to other products previously cleared by the agency. Bruno also included brochures for the Wecolator stairlift by Cheney Manufacturing Inc. (Milwaukee) and another stairlift device by American StairGlide Company Inc. (Kansas City, MO). Bruno’s submission stated, in part:

Not quite coincidentally, Bruno’s founder had been head of marketing and an owner of Cheney Manufacturing. Also, the inventor of the patent had spent 18 years building stairlifts for Cheney before going to work for Bruno. For these reasons, the court found that Bruno knew or should have known of the preexisting stairlifts and should have disclosed them to the PTO.

The Case in Point

The Bruno case was initiated when Bruno sued Acorn Mobility Services and Acorn Stairlifts for infringement of the patent on its stairlift device. In its defense, Acorn argued that the patent was invalid in view of the preexisting Cheney and StairGlide devices, which had been offered for sale more than a year before Bruno filed for its U.S. patent. The court agreed with Acorn, finding that Bruno had failed to disclose to the PTO information about several preexisting stairlifts that would have rendered Bruno’s invention unpatentable.

Evidence of Bruno’s failure to disclose information material to the patentability of its product was found in the company’s 510(k), which was submitted to FDA concurrently with its prosecution of the patent.

Attempting to explain its failure to disclose, Bruno argued that the claim of substantial equivalence between its stairlift product and the preexisting Cheney and StairGlide products was relevant only for the purpose of securing FDA clearance, and that it had no bearing on whether Bruno knew the earlier products were material to the issue of patentability. In particular, Bruno said that it had represented its stairlift as substantially equivalent to the preexisting products only because they all satisfied the same ANSI/ASME standards. In other words, Bruno argued that it had never actually compared its stairlift against earlier stairlifts to determine whether they were material to the company’s patent application.

The court held that Bruno’s argument was disingenuous, since the company’s 510(k) submission was prepared by a Bruno employee who was also involved in the prosecution of the patent. More important, the court held that Bruno’s argument was not persuasive because “an applicant who knew of the art or information cannot intentionally avoid learning of its materiality . . . it may be found that the applicant ‘should have known’ of that materiality.” In light of these observations, the court held that Bruno had failed to provide a credible, good-faith explanation for not disclosing the information to the patent office. The court further inferred that Bruno had withheld the information from the PTO with deceptive intent, and had thus engaged in inequitable conduct.

Finally, because Bruno knew about the preexisting stairlifts and withheld the information from the PTO while procuring its patent, Acorn requested that it be awarded its attorneys fees for defending against the patent infringement claim. The court agreed, and ordered Bruno to pay Acorn’s legal expenses.

Conclusion

The Bruno case offers strong lessons for medtech companies whose products rely on the maintenance of defensible intellectual property. To begin with, an applicant seeking a patent for a medical device should be sure to supply its patent attorney with all FDA submissions relevant to the product. Special attention should be paid to submissions that contain information about substantially equivalent predicate devices, and to submissions that might include data or statements inconsistent with statements being made by the patent attorney to procure the patent.

The Bruno case also demonstrates that it is good litigation strategy for defendants in a patent infringement case to request that the patent owner provide copies of all FDA submissions related to the device covered by the patent. In this way, the materials can be reviewed for information omitted from the patent record that might have been material to the issue of patentability.

Finally, for companies and investors who are conducting due diligence on the patent portfolio of a medical device company, it would be wise to have patent counsel review any FDA submissions made by the company. Such a review will enable counsel to discover any inconsistent statements or information about preexisting devices that was not submitted to the patent office.

Reference

1. Bruno Independent Living Aids Inc. v. Acorn Mobility Services Ltd., 394 F.3d 1348; 73 U.S.P.Q.2d 1593 (Fed. Cir., 2005).

Linda E. Alcorn, Esq., is a director at the law firm of Sterne, Kessler, Goldstein & Fox PLLC (Washington, DC) and is the head of the firm’s medical device patent practice.

© 2005 Canon Communications LLC

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