Is the Federal Circuit facing a Chronic Problem of Inequitable Conduct?

United Cannabis Corporation v. Pure Hemp Collective Inc., Docket No. 22-01363 (Fed. Cir. 2023)

This case is still pending before the Federal Circuit, but I found it interesting enough for a preview.

United Cannabis holds a broad marijuana patent – US9730911 – with claims directed to a liquid cannabinoid having 95% of either THC or CBD.

5. A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids is tetrahydrocannabinol (THC).

10. A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids is cannabidiol (CBD).

In 2018, United Cannabis sued Pure Hemp for patent infringement and Pure Hemp responded with a Walker-Process antitrust counterclaim for asserting a patent known to be invalid.  The defendant also argued the patent should be held unenforceable due to inequitable conduct during prosecution.

The inequitable conduct claim was based upon a failure to provide material references to the USPTO as required under 37 CFR 1.56.  In particular, the Cooley LLP prosecuting attorney admitted to copying material from prior art into both the Abstract and the Detailed Description of the patent specification; but did not cite the reference within the patent document or disclose that reference to the USPTO for consideration.  Although not identical, the reference (Whittle – U.S. Pat. Pub. No. 2004/0033280) apparently disclosed a liquid with 88.9% CBD or 95% CBD+THC. So, quite close to what was claimed.  In deposition, the prosecuting attorney apparently explained that the copying was done to speed the process and save time – and is a recommended common practice.  It also turns out that the same law firm –  Cooley – represents GW-Pharma (the owner of the Whittle prior art) in patent prosecution.  And, Cooley attorneys had argued to the USPTO that GW Pharma invented a liquid formulation with 95% purity CBD.  So, in the words of

The litigation ground to a halt in the midst of discovery when United Cannabis filed for bankruptcy.  But, the bankruptcy case was eventually dismissed based upon the illegal nature of the business venture (illegal at the Federal level).  At that point United Cannabis decided to drop its infringement case.  The parties jointly agreed that the patentee would dismiss its claims with prejudice, while the defendant dismissed its counterclaims without prejudice.

Although the merits had been resolved, the accused infringer was a bit upset for having to litigate the pointless lawsuit, and consequently filed a motion seeking attorney fees under 35 U.S.C. 285.  Section 285 allows the district court discretion to award reasonable attorney fees to the prevailing party in “exceptional cases.” In a terse opinion, the district court denied the fees motion: finding (1) the defendant was not the prevailing party because of the jointly-agreed dismissal and (2) the facts of the case were not shown to be “exceptional” since the dismissal occurred before the facts had been determined.

This case is now on appeal before the Federal Circuit. The patentee has admitted that the district court erred in its prevailing party analysis, but argued that the district court was correct to find that the case was not exceptional.  The appellant argues instead that the copying into the critical portions of the application: detailed description of the invention and abstract create an inference of both materiality and intent sufficient for an exceptional case finding.  For its part, the district court only provided a cursory analysis of these issues without delving into any of the evidence presented.  The briefing also argues that “Cooley attorneys also have a policy of withholding references until after the first office action, in direct contravention of patent office guidance.”  Still, in this case, the references were never submitted prior to issuance.  The brief goes-on to remark that “in academic circles, it is referred to as plagiarism.”  And, even without rising to the Therasense level of inequitable conduct, should be seen as creating an exceptional case.

James Gourley from Carstens & Cahoon argued on behalf of the defendant-appellant. (Brief).  Cooley’s Orion Armon argued on behalf of the Plaintiff-Appellee. (Brief).

What do you think: Do the facts as stated here create an exceptional case for the accused infringer?

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