Ferring B.V. v. Allergan was decided on November 10, 2020 on appeal from the Southern District of New York. In September 2002, Ferring filed a PCT Application for its drug formulation, naming 6 inventors, including Fein, a consultant for Ferring. Fein “conceived the sublingual route of administration.” Two months later, Ferring terminated Fein’s consulting agreement. In subsequent correspondence with Fein’s attorney, Ferring noted that it would drop the feature “adapted for sublingual administration” because the feature was in the prior art. In May, 2003, Fein filed a PCT Application, naming himself as sole inventor. The next day, Ferring filed a modified PCT Application, which “does not list Fein as an inventor or contain claims directed to sublingual administration.” In March 2010, Fein’s pharmaceutical company entered into agreements with Allergan to develop and commercialize the drug formulation and assigned all the relevant IP rights to Allergan.
In April 2012, Ferring filed a complaint “asserting New York state law claims and claims for correction of inventorship of the Fein patents.” The defendants filed counterclaims to correct inventorship of Ferring’s patents which issued from Ferring’s modified PCT application, “claiming that Fein should be named as the sole inventor or as a joint inventor on those patents.” The district court granted Allergan summary judgment that Ferring’s inventorship claims were barred by equitable estoppel, finding that when Ferring was faced with Fein’s inventions during correspondences with Fein’s lawyer, Ferring’s response was not that the invention was Ferring’s intellectual property, “but that it was not patentable at all, and that Ferring would no longer be pursuing claims directed toward it.” Ferring appealed.
The Federal Circuit vacated the judgment of equitable estoppel and remanded.
“Equitable estoppel has three elements: (1) the patentee engages in misleading conduct that leads the accused infringer to reasonably infer that the patentee does not intend to assert its patent against the accused infringer; (2) the accused infringer relies on that conduct; and (3) as a result of that reliance, the accused infringer would be materially prejudiced if the patentee is allowed to proceed with its infringement action.”
Ferring argued that “because its written exchanges with Fein predated the issuance of the Fein patents, those exchanges should not have been factored into the court’s equitable estoppel analysis.” The Federal Circuit rejected this argument. Pre-issuance conduct may be relevant even “when the scope of the issued patents is different than what was before the parties that led to the alleged misleading conduct or inaction.”
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Ferring also argued that “in granting Defendants’ motion for summary judgment, the district court improperly resolved issues of fact in favor of Defendants” by “concluding that Ferring engaged in misleading conduct because that was not the only possible inference from the evidence.” The Federal Circuit agreed.
The correspondence between Ferring and Fein’s lawyer “is subject to interpretation and does not support the single inference that Ferring, by its statements in the letters and subsequent silence, acquiesced in Fein’s sole inventorship of the material in the Fein patents, particularly because the claims in those patents are not limited to, and do not even mention, the [relevant feature.]” “The district court abused its discretion by applying equitable estoppel to bar Ferring’s § 256 claims because it failed to address material differences in the scope of Fein’s issued patent claims as compared to the invention described in the [lawyer] correspondence and Fein’s application claims.” Contrary to representations to Ferring, “Fein did not pursue patent protection for claims limited to [sublingual] administration of [the drug]. Instead, Fein pursued claims untethered to sublingual administration.” “[A] reasonable factfinder could conclude that it would have been unreasonable for Fein to infer from Ferring’s pre-2004 communications that Ferring intended to relinquish inventorship rights in the issued claims of the Fein patents.”
The Federal Circuit vacated the summary judgment of equitable estoppel “because the district court’s interpretation of the [lawyer] correspondence is not the only reasonable one.”
Moreover, the district court “abused its discretion in granting summary judgment of equitable estoppel because the court failed to consider all relevant evidence regarding the equities of the parties.” “The trial court must, even where the three elements of equitable estoppel are established, take into consideration any other evidence and facts respecting the equities of the parties in exercising its discretion and deciding whether to allow the defense of equitable estoppel to bar the suit.” Here the district court failed to consider an unclean hands argument made by Ferring.