United States v. Pfizer Inc.
Opinion of the Court
OPINION OF THE COURT
The United States appeals from a judgment in favor of defendants Pfizer, Inc. (Pfizer), American Cyanamid Co. (Cyanamid), Bristol-Myers Co. (Bristol), Olin Corporation (Olin), Squibb, Inc., E. R. Squibb & Sons, Inc. (collectively Squibb), and The Upjohn Company (Upjohn), in a multicount suit to cancel the Conover patent
Tetracycline is a broad spectrum antibiotic
Pfizer’s Dr. Conover, in June 1952, was able to produce tetracycline by dischlorinating Aureomycin — i.e. by substituting hydrogen for chlorine in chlortetracycline. On October 23, 1952 Pfizer applied for a patent on tetracycline and on the Conover process. On March 2, 1954, the Patent Office declared an “interference”
On November 29,1954, Pfizer’s representatives Werner H. Hutz and Dr. Francis X. Murphy met with Examiner Lidoff to discuss his decision.
Lidoff, on the basis of Pfizer’s representations, allowed the Conover patent application on December 9, 1954. The patent issued January 11, 1955 and Cyanamid was licensed thereunder. Shortly thereafter, Pfizer sued Bristol, Squibb and Upjohn for patent infringement. That litigation ended in a settlement whereby Pfizer licensed Bristol to make, use and sell tetracycline; Squibb and Upjohn each received a license to use and to sell tetracycline. These licensees, in turn, dropped their challenge to the validity of the Conover patent.
The present action
Count I was tried without a jury in the Eastern District of Pennsylvania. The District Court determined that Pfizer’s dealings with the Patent Office were not tainted by a fraudulent intent and refused to cancel the Conover patent.
Considering all the evidence, the court found that the Government had not discharged its burden of proving by clear and convincing evidence that Pfizer’s representatives — Hutz and Murphy — had a specific intent to defraud the Patent Office.
The Government does not contend that the District Court applied the wrong legal standard in determining what kind of evidence will support a charge of fraud. We only review, therefore, the court’s factual finding that Pfizer had no fraudulent intent and our task is restricted to a determination of whether those findings are clearly erroneous. See Jackson v. United States Steel Corp., 624 F.2d 436 (3d Cir. 1980); Krasnov v. Dinan, 465 F.2d 1298 (3d Cir. 1972). This standard of review does not permit an appellate court to substitute its findings for those of the trial court. It allows only an assessment of whether there is enough evidence on the record to support those findings. That a different set of inferences could be drawn from the record is not determinative. It is sufficient that the District Court findings of fact could be reasonably inferred from the entire trial record.
The findings of fact are not clearly erroneous. The trial judge credited the testimony of witnesses Hutz and Murphy. 498 F.Supp. at 34. These are credibility determinations well within the ambit of the court’s competence. Dr. Murphy testified for ten days and the court had ample opportunity to observe his demeanor. Hutz testified shortly after the 1955 patent issued in the Bristol infringement suit and in the FTC proceedings, when the relevant events viere fresh in his mind. Hutz stated:
Mr. Lidoff indicated that he was not fully satisfied because he wanted to know whether if one followed the disclosures of the two patents, Duggar and Niedercorn, one could get these substantial amounts or concentrations of tetracycline which would make it possible for the recovery of a therapeutic product. He indicated that even though it were unrecognized, if it were true that you get a large proportion of tetracycline along with the Aureomycin and the effect of those earlier patents were [sic] that the products were antibiotics and people used them that way, that whether they knew it or not they would have the benefits of the tetracycline and he felt that he certainly wanted to have information as to just what occurred.
(App. 10:3611)
He also testified:
The examiner [Lidoff] was interested in whatever practical, appreciable, substantial, useful quantities were in there, and he, for purposes of demonstration, said, “Well, let’s apply efficient present-day recovery procedures designed for the purpose of taking it out, not some elaborate detection device that would pick up a useless trace, but things that the art could apply to a broth and in a practical manner get tetracycline out of it.” That was his yardstick as to whether appreciable amounts were there, useful amounts.
(App. 10:3705)
Murphy in turn testified that Lidoff was interested in more than identifiable coproduction of tetracycline (App. 20:7445-50, 7451-52, 7486-87), and that Lidoff was “focusing on the possibility that Duggar and
These witnesses’ statements regarding Lidoff’s actions and Pfizer’s representatives’ own state of mind were supported by an internal company memorandum
The District Court also relied on the written record before the Patent Office concerning the Conover patent. In addition to the original application, this record contains written amendments and supporting affidavits (App. 2:368-69, 371-88; 392-95), as well as detailed summaries (the “Remarks”) of meetings that Pfizer’s representatives had with Examiner Lidoff. These amendments and additions, although submitted by Pfizer, became part of the record on which the Patent Office was required to rely exclusively in determining patentability. Examiner Lidoff was obligated to correct any misstatements or omissions, and since he took no such action, a presumption of accuracy attaches to the Remarks and amendments. The District Court properly held that the Remarks and amendments could not be contradicted by later testimony or by an attempted reconstruction of the earlier proceedings. 498 F.Supp. at 34; see generally, United States v. United States Gypsum Co., 333 U.S. 364, 395-96, 68 S.Ct. 525, 541, 92 L.Ed. 746 (1948). The Remarks indicate that Lidoff was interested in appreciable
The centerpiece of the Government’s case was the testimony of Examiner Lidoff that he had been troubled by the coproduction of any amount of tetracycline with Aureomycin and that he would not have granted the patent had he been aware that any tetracycline was produced by the Duggar and Niedercorn methods. The evidence consisted of Lidoff’s testimony given in 1966 before the FTC and of a 1972 deposition in this action. The passage of at least eleven years from the relevant facts in itself casts some doubt on the credibility of Lidoff’s uncredited testimony, but there is a more fatal flaw. Lidoff indicated that it was impossible for him to recollect the actual events that transpired in 1954, and he could only attempt, therefore, to recreate his frame of mind in that year. (App. 10:3442, 3502, 3518, 3456, 3481-82). Lidoff’s testimony is a post hoc reconstruction of what his position on the patentability of tetracycline would have been in 1954 based upon a
In light of the Hutz and Murphy testimony, of the written record before the Patent Office in 1954, and of the rejection of Examiner Lidoff’s testimony, the District Court’s finding that Pfizer had no specific intent to defraud the Patent Office is not clearly erroneous.
The Government contends that Pfizer, in checking for the tetracycline coproduction at the behest of Examiner Lidoff, performed tests which it knew could not yield tetracycline.
The judgment appealed from will be affirmed.
. U.S. Patent No. 2,699,054.
. The District Court decision on Count I appears at 498 F.Supp. 28 (E.D.Pa. 1980).
. The “broad spectrum” nomenclature is used to indicate a wide range of effectiveness against many types of microbes.
. An earlier interference was declared between the Pfizer and the Cyanamid (Boothe-Morton) applications. This interference proceeding was ended when, pursuant to an offer of proof between the two companies, Cyanamid conceded priority to Pfizer and obtained from it a license to produce tetracycline. See In re Coordinated Pretrial Proceedings in Antibiotic Antitrust Actions, 498 F.Supp. 28, 31 (E.D.Pa. 1980).
. The discussion at this meeting is summarized in “Remarks” prepared by the Pfizer representatives. (App. 2:369-75, 390-91).
. There is no claim that the Conover process for manufacturing tetracycline, as distinguished from that product, is not patentable.
. The Conover patent has also spawned an FTC unfair practice proceeding against Pfizer, Cyan-amid, Bristol, Squibb and Upjohn for providing false, misleading and incorrect information to the Patent Office, Charles Pfizer & Co. v. FTC, 401 F.2d 574 (6th Cir. 1968), cert. denied, 394 U.S. 920, 89 S.Ct. 1195, 22 L.Ed.2d 453 (1969), and a Justice Department criminal suit against Pfizer, Cyanamid and Bristol charging violation of the antitrust laws. United States v. Charles Pfizer & Co., 426 F.2d 32 (2d Cir. 1970), aff'd, 404 U.S. 548, 92 S.Ct. 731, 30 L.Ed.2d 721 (1972).
. This action was originally filed in the District of Columbia. It reached the Eastern District of Pennsylvania via a circuitous path not relevant to our purposes.
. United States v. Pfizer & Co., 560 F.2d 323, 326 (8th Cir. 1977).
. The District Court decided in the alternative that, even if fraudulent intent were shown, the result would be unchanged because the alleged misrepresentations and omissions were not material and would not warrant cancelling the patent. 498 F.Supp. at 35. We do not pass on this alternate holding since we affirm on the basis that Pfizer did not defraud the Patent Office.
. The trial judge indicated that his judgment on Count III in favor of all defendants other than Pfizer was based on his alternative holding of non-materiality in his August 18, 1980 opinion. We do not need to reach that alternate holding since we deem the Conover patent valid on the basis that no fraud was committed against the Patent Office. The resulting monopoly is therefore proper under the antitrust laws and defendants can not be held liable for any anticompetitive effects resulting from the Pfizer patent. The Government conceded, pri-
. “Note re Patentability of Tetracycline and its Hydrochloride Salt over Duggar and Niedercorn” (App. 4:1331).
. Although the term “appreciable” may be open to various interpretations and the Government wishes us to read “appreciable” to mean “identifiable by research techniques,” Hutz’ and Murphy’s testimony, credited by the court, suggest that “appreciable” was meant to be read as “substantial.” (App. 2:369-75; 20:74859-87).
. Some of the Government’s contentions are based on the alleged fact that Pfizer knew of the production of some tetracycline with Aureomycin (even in commercial batches) and that it was able to recover and identify that tetracycline using laboratory research techniques. The Government would have fraudulent intent bootstrapped on Pfizer’s not making such information available to the Patent Office. That position is without merit. The trial court decided that Pfizer believed that Examiner Li-doff was interested in the existence of substantial amounts of tetracycline — recoverable by the current commercial recovery techniques— by prior art processes. Information as to small tetracycline amounts recoverable by laboratory methods was not requested, and Pfizer cannot be held to have acted improperly in withholding unnecessary information from the Patent Office.
Reference
- Full Case Name
- In re COORDINATED PRETRIAL PROCEEDINGS IN ANTIBIOTIC ANTITRUST ACTIONS. Appeal of UNITED STATES of America. UNITED STATES of America v. PFIZER INC., American Cyanamid Company, Bristol-Myers Company, Olin Corporation, Squibb, Inc., E. R. Squibb & Sons, Inc., and The Upjohn Company
- Cited By
- 1 case
- Status
- Published