Abstract: Standard-setting organizations may require participants in the standard-setting process to disclose patents in which they have an interest. Failing to do so could prevent a participant from enforcing its patents under the doctrines of waiver and estoppel.
Two days after Amphastar received FDA approval to market a generic version of Momenta’s pharmaceutical Lovenox, Momenta sued Amphastar for infringing a patent directed to the manufacture of the pharmaceutical. A jury found the patent infringed but invalid and unenforceable because the patent owner was estopped from enforcing the patent.
Momenta participated on an advisory panel for the United States Pharmacopeia (USP), a scientific standard-setting organization, which began looking for test compounds with specific properties. Momenta did not disclose the patent at issue to USP, and during litigation, Amphastar argued that caused the patent to become unenforceable under the doctrines of waiver and estoppel.
The Momenta Decision
The court noted that a patent owner who breached a duty to disclose patent information to a standard-setting organization may have implied waiving its right to enforce the patent or may be estopped from enforcing the patent.
Duty to disclose patents
Determining whether a duty to disclose exists involves a two-step process: (1) evaluating whether the policies from the standard-setting organization unambiguously impose such a duty; and (2) if the policies are ambiguous, evaluating whether the participants in the standard-setting organization understood those policies to impose a duty.
USP’s policies (1) required participants to disclose all employment, professional organizations, and memberships, (2) barred individuals involved in expert committees from voting on matters in which they have a financial interest, and (3) required participants from disclosing “other professional or financial interest” that would result in the “appearance of a conflict of interest.”
The court found USP’s policies ambiguous and found that because Momenta’s employees had already disclosed Momenta as a place of employment, they did not have to also disclose it as “other professional or financial interest.” Nonetheless, the language regarding the “appearance of a conflict of interest” was broad enough to include disclosure of interests in intellectual property.
Turning to the participants’ understanding of USP’s policies, and, after evaluating the witnesses’ credibility who testified on this issue, the court accepted one witness’s testimony that the policy required disclosure. Momenta then argued that disclosure was not required because the test set forth in the patent was not mandatory under the standard. Relying in part on the jury infringement verdict, the court disagreed because use of the patented method might be necessary to comply with the standard.
Scope of the equitable remedy
In the standard-setting context, a remedy should apply to products that comply with the standard and have an obvious connection with the asserted patent. So Momenta could not enforce the patent against procedures that complied with the standard but was not necessarily prevented from enforcing the patent against procedures that did not comply with the standard.
If the accused infringer is prejudiced by reasonably inferring that the participant will not enforce its patents, the participant may be equitably estopped from enforcing its patents. In the standard-setting context, a participant who fails to comply with the standard setting organization’s duty to disclose patent information may be found to have indicated that it would not enforce such patents.
Here, the court found Momenta engaged in such misconduct. Determining Amphastar’s witnesses were more credible, the jury and court found that Amphastar relied on the standard to develop its processes and invest in new products, and it would be prejudiced if Momenta were permitted to enforce its patent claims against such new products. So Momenta was estopped from enforcing the patent against Amphastar’s procedures that complied with the standard.
Strategy and Conclusion
Patent holders who participate in standard-setting organizations and violate policies and procedures regarding disclosure of information about intellectual property may be prevented from enforcing such intellectual property under the doctrines of estoppel and waiver.
The Momenta opinion can be found here.
This article is for informational purposes and does not constitute legal advice. The views expressed do not necessarily reflect the views of LES (U.S.A. and Canada) or Finnegan, Henderson, Farabow, Garrett & Dunner, LLP.