Pfizer, Inc. v. International Rectifier Corp.

• Decision Date: 08 August 1980
• Docket Number: No. 73-58-PENCE.,73-58-PENCE.
• Citation: 207 USPQ 397,545 F. Supp. 486
• Court: U.S. District Court — Central District of California
• Parties: PFIZER, INC., Plaintiff, v. INTERNATIONAL RECTIFIER CORPORATION, et al., Defendants.

545 F. Supp. 486

207 USPQ 397

PFIZER, INC., Plaintiff, v. INTERNATIONAL RECTIFIER CORPORATION, et al., Defendants.

No. 73-58-PENCE.

United States District Court, C. D. California.

June 12, 1980.

As Corrected August 8, 1980.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Robert E. Cooper, James R. Martin, Gibson, Dunn & Crutcher, Los Angeles, Cal., Edgar H. Martin, Cushman, Darby & Cushman, Washington, D. C., for plaintiff.

Peter R. Cohen, Cohen & Ehrmann, Beverly Hills, Cal., Marc S. Gross, Hubbell, Cohen, Stiefel & Gross, New York City, for defendants.

("CORRECTED"^*) DECISION

PENCE, District Judge.

BACKGROUND

On May 5, 1961 Application Ser. No. 106,146 was filed in the United States Patent Office as a continuation in part (c.i.p.) of a prior co-pending Application Ser. No. 31,236 as filed May 23, 1960. The application listed Robert E. Blackwood, Hans H. Rennhard, John J. Beereboom, and Charles R. Stephens, Jr., inventors, as assignors to Charles R. Pfizer & Co., Inc. of New York, N. Y., a Delaware corporation.^A The application was for a patent on 6-deoxytetracycline derivatives and process. It was not until over five years later, on August 10, 1965, that Patent # 3,200,149 was issued on certain chemical processes and products, one of which was the chemical compound that came to be known as alpha-6-deoxy-5-oxytetracycline. The generic name for that compound is doxycycline, marketed by Pfizer under the trademarked name of Vibramycin.

Doxycycline, a synthetically produced chemical of the tetracycline family, proved to be a broad spectrum antibiotic exhibiting a high order of antibacterial action against a wide range of disease-causing microorganisms. It had essentially the same antibacterial properties of the fermentation-produced tetracyclines but had antibacterial action (microbiological activity against gram-positive and gram-negative microorganisms) superior to that of any other then known 6-deoxytetracyclines. As appeared in the file wrapper of the patent, it took a smaller amount of doxycycline to secure the antibacterial action expected from any of the then known tetracyclines. Because it took a smaller dosage to produce like antibiotic effects, a patient taking doxycycline did not have to take as many or as large dosages of a tetracycline drug as had been necessary before. Although it was not set forth in the patent application as one of the properties of the drug, doxycycline was found to have a lipophilicity much greater than any tetracycline and could be used much more freely by persons with renal diseases. Doxycycline became one of the most commercially successful of the tetracycline group of antibiotic drugs.

International Rectifier Corporation (IR), with head office in California,^B began making doxycycline in Italy using the process described in Pfizer's patent, and started selling and distributing it in the United States and elsewhere in 1973, at a price very much lower than that charged by Pfizer. Pfizer then brought the patent infringement suit now before the court, seeking damages and declaratory and injunctive relief, in the Central District of California, against IR, as well as U. S. V. Pharmaceutical Corporation, which had distributed IR's doxycycline^C in the United States.

As is standard procedure in almost every patent infringement action, IR and USV answered that Pfizer's patent was invalid and unenforceable for failure to meet statutory requirements of patentability and for fraud and misconduct before the Patent Office. Both defendants at first admitted infringement but thereafter moved to amend their answers, asserting unfair competition and antitrust counterclaims, as well as denying infringement. (This court subsequently refused to allow them to amend to deny infringement.) Upon defendants' motion, and because the so-called "Antibiotics Antitrust Litigation"^D was already pending there, the Judicial Panel on Multi-district Litigation, in March 1973, transferred the case to District Judge Miles W. Lord in the District of Minnesota.

During pretrial action before Judge Lord, defendants moved for partial summary judgment, claiming that Pfizer's conduct during the processing of the patent constituted fraud, inequitable conduct, and unclean hands, and, in addition, charged that Pfizer's conduct before Judge Lord between 1973 and 1975 was also fraudulent and inequitable and separately justified invalidation of the patent.

On July 16, 1975, Judge Lord granted partial summary judgment against Pfizer on both grounds and declared that its doxycycline patent was invalid and unenforceable.^E

Pfizer appealed, and on June 16, 1976, the Appellate Court reversed Judge Lord, 538 F.2d 180 (8th Cir. 1976), holding that the evidence presented as to alleged misconduct of Pfizer before the Patent Office showed the existence of such material issues of fact as to preclude summary judgment. The Appellate Court further held that Judge Lord's findings that Pfizer had practiced fraud and other inequitable conduct upon the court were clearly erroneous. The case was then remanded for completion of pretrial proceedings to be followed by a plenary trial.

This judge was requested by both plaintiff and defendants to try the case, jury-waived, and, with the consent of Judge Lord he took over the case. Upon motion, the Judicial Panel transferred it back to the Central District of California. Then followed further extensive pretrial proceedings, during which USV reached an agreement with Pfizer and withdrew from the case.^F Trial on the issue of validity and all issues relating to enforceability which involved claims of fraud or inequitable conduct in the Patent Office was started on October 15, 1978 before this judge, sitting in the Central District of California, and continued almost uninterruptedly until March 8, 1979. The trial produced over 6,000 pages of transcript, over 2,000 exhibits, and almost a "ten-foot shelf" of depositions. Post-trial Briefs and Answering Post-trial Briefs were also filed by both plaintiff and defendants.^G The mass of evidence produced at trial more than proved the soundness of the conclusion of the 8th Circuit that there were such material disputed issues of facts as to preclude summary judgment. Disputed issues of intent, good faith, credibility, and other subjective feelings, all of which are entwined in any claim of fraud or inequitable conduct before the Patent Office, demanded full examination through a plenary trial.

Although this case was tried in the 9th Circuit, nevertheless this court feels that the statements of the Court of Appeals for the 8th Circuit regarding the law of the case approach the level of stare decisis, if not res adjudicata. As pointed out by the 8th Circuit:

The principle that a defendant in a patent infringement action may interpose as a complete defense the patentee's failure to deal candidly with the Patent Office is a corollary of the equitable doctrine of unclean hands. The Supreme Court has set forth the duty of candor owed by a patent applicant as follows:

Those who have applications pending with the Patent Office or who are parties to Patent Office proceedings have an uncompromising duty to report to it all facts concerning possible fraud or inequitableness underlying the applications in issue. * * * Public interest demands that all facts relevant to such matters be submitted formally or informally to the Patent Office, which can then pass upon the sufficiency of the evidence. Only in this way can the agency act to safeguard the public in the first instance against fraudulent patent monopolies.

Precision Instrument Manufacturing Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806, 818 65 S.Ct. 993, 999, 89 L.Ed. 1381 (1945).

The equitable origins of this doctrine, combined with recognition of the growing administrative burden facing the Patent Office, have led to expansion of the defense in recent years to encompass also a wide variety of inequitable conduct short of common law fraud or deceit. (538 F.2d 180, 185)

* * * The standard of conduct is not one of strict liability for innocent or even negligent omissions or misstatements before the Patent Office. Rather, to result in refusal to enforce a patent, the misconduct must be accompanied by "some element of wrongfulness, willfulness, or bad faith" (a "willful act * * * which rightfully can be said to transgress equitable standards of conduct"). This requirement of proof has been uniformly applied in infringement actions by a majority of the circuits to claims of both fraud and lesser inequitable conduct. Moreover, proof of misconduct under either theory must be established by "clear, unequivocal and convincing" evidence. (185, 187, supra)

UNDISPUTED FACTS

Before turning to the disputed issues to be analyzed with this background, the court finds the following facts to be undisputed.

1. Doxycycline is one of a group of tetracycline compounds which have the following general structure in common:

2. The 4-, 5-, and 6-carbon atoms are asymmetric, each bonded to two substituents, one above and the other below the plane.^H

When the doxycycline application was filed on May 5, 1961, the absolute stereochemistry of the tetracyclines was unknown. It was not until Dobrynin, et al., of the USSR Academy of Science in Moscow, apparently first published their paper on "The Absolute Configuration of the Tetracyclines" in Russia on March 21, 1962, then published in Great Britain after July 2, 1962, that the chemical world was apprised of the absolute stereochemistry of the tetracyclines. It must thus be noted that those "skilled in the art" did not have knowledge of the absolute chemistry of the tetracyclines until, at the earliest, almost a year after Pfizer filed its application for the doxycycline patent. Before Dobrynin, even the most "skilled in the art" could only know and deal with the relative stereochemistry of the tetracyclines.

Before the discovery of doxycyclines, one of...