Can Daiichi Sankyo eviscerate Seagen’s patent verdict with prosecution laches?

Zachary Silbersher

Seagen’s patent lawsuit against Daiichi Sankyo is nearing resolution at the district court.  In April of this year, Seagen convinced a Texas jury that Daiichi Sankyo’s breast cancer drug, Enhertu®, is infrining Seagen’s U.S. Patent No. 10,808,039.  Daiichi Sankyo also failed to convince the jury that the ‘039 patent was invalid.  As a result, the federal court in the Eastern District of Texas is scheduled to conduct a bench trial on what appears to be Daiichi Sankyo’s last defense before the Court enters judgment.  On June 28, the court will conduct a bench trial (no jury) on the issue of prosecution laches.  The trial is scheduled to commence at 1:00 pm and will last only three hours.  Can Daiichi Sankyo avoid paying Seagen royalties?

Prosecution laches is an equitable defense.  If successful, the entire patent is deemed to be unenforceable.  In other words, if Daiichi Sankyo can convince the Judge that Seagen engaged in prosecution laches in the course of acquiring the ‘039 patent, then the patent is unenforceable, Seagen’s trial verdict will be tossed, and Daiichi Sankyo will prevail in this lawsuit.

There are many doctrines in law that say, essentially, you can’t sit on your rights, and if you do so to someone else’s detriment, then you lose that right.  Prosecution laches is another way of saying that the patentee wasted an unreasonable amount of time in the course of trying to get their patent, and as a result, that prejudiced the accused infringer.  Because it is an equitable doctrine, there are no bright line rules.  In fact, the crux of the defense is that, even if the patentee did not violate any precise rules regarding patent prosecution, it still acted unreasonably.  And because the issue will be tried in a bench trial, then the decision will hinge in large part based upon the discretion of the judge.  In this case, that is the Honorable Rodney Gilstrap. 

Prosecution laches can take many different forms.  Getting a patent can easily take two to five years even when both the patent applicant and the Patent Office are not acting unreasonably.  If a patent application has been pending before the Patent Office for more than 10 years, that may hint at—but not necessarily prove—that prosecution laches may have occurred.

To prove prosecution laches, Daiichi Sankyo will have to show two things: (1) Seagen’s delay in prosecuting the ‘039 patent was unreasonable; and (2) Daiichi Sankyo was prejudiced by that delay.

Here, the ‘039 patent was actually prosecuted fairly quickly.  The application was filed on July 10, 2019, and it issued just over a year later on October 20, 2020.  However, the ‘039 patent was a child in a long line of continuation applications stretching back to 2003.  In fact, the patent is the continuation of six earlier parent non-provisional applications and four additional provisional applications.  The earliest provisional was filed in November 2003 and the earliest parent non-provisional was filed in November 2004. 

This is likely the crux of Daiichi Sankyo’s prosecution laches defense.  (The trial briefs filed with the court this week were filed under seal.)  On the one hand, the patent application that resulted in the ‘039 patent was prosecuted rather quickly.  Yet, the “invention” that was claimed the ‘039 patent—the only patent that Seagen is currently asserting against Daiichi Sankyo in this case—was originally filed with the Patent Office in 2003.  In short, the time between when the patent application was first filed (2003) and the ‘039 patent’s invention first claimed (2019) is roughly sixteen years. 

Daiichi Sankyo’s argument will essentially be that Seagen’s delay in arriving at the invention claimed in the ‘039 patent was unreasonable given the totality of the circumstances.  Exactly what those circumstances include are likely to be fleshed out at trial.  Yet, they most likely relate to Seagen’s knowledge of Daiichi Sankyo’s Enhertu® drug and any pending clinical trials as well as internal discovery related to Seagen’s strategy and tactics for choosing which inventions to claim from the same patent application filed sixteen years earlier.   

Daiichi Sankyo will also have to prove that it was prejudiced by Seagen’s unreasonable delay.  Enhertu® was launched in the U.S. on January 6, 2020.  It was launched in Japan after that, in March 2020.  As of that time, it was not yet available anywhere but the U.S. and Japan. 

Given all of this, Daiichi Sankyo is likely to tell a story that Seagen sat on its patent rights for over sixteen years.  Meanwhile, even though Seagen had an open patent application that may have purportedly been related to its DS-8201 antibody drug-conjugate, Daiichi Sankyo relied upon the fact that Seagen did not pursue patent claims related to its drug for nearly sixteen years.  In reliance on that fact, Daiichi Sankyo commenced Phase 3 trials for DS-8201 in January 2019.  That was over six months before Seagen filed for the ‘039 patent.  After waiting sixteen years, only after Daiichi Sankyo had committed to Phase 3 trials, did Seagen file claims that might be directed to Daiichi Sankyo’s drug.  Daichii Sankyo is also likely to argue that, had it known that Seagen would pursue the invention embodied in the ‘039 patent earlier, then it might have pursued a different embodiment of its drug—namely, tried to design around the patent.

The story is compelling, but prevailing on a prosecution laches defense is rarely a slam-dunk.  Daiichi Sankyo must comply with the clear-and-convincing evidence standard, which is analogous to the “beyond a reasonable doubt” standard for non-criminal matters.  These defenses are generally hard to prove.  Daichii Sankyo must essentially prove that even though Seagen may not have violated any precise patent examination rules, Seagen still did something wrong. 

In fact, filing a series of continuation applications from the same original application is not technically improper.  One reason for that is, no matter how long the applicant delayed in getting the patent, its expiration date is still calculated offer the original application filing.  In other words, even though Seagen’s ‘039 patent was just granted in 2020, it’s still going to expire in 2023.

Judge Gilstrap recently upheld the prosecution laches defense in a non-pharma patent case filed against Apple.  That said, that case involved fairly egregious instances of manipulating the prior regime regarding calculating patent terms and gaming the transition from the old regime to the new regime.  Those types of facts are not at issue in this case. 

In addition, in the Apple case, Judge Gilstrap refused to find any presumptions of prejudice against the accused infringer based only upon the substantial length of the delay.  Thus, even if the court finds that Seagen delayed prosecuting the ‘039 patent for sixteen years—which is not a forgone conclusion—Daiichi Sankyo will most likely nevertheless still have to prove it was prejudiced by that delay.  Based upon the available public fact, that is also not a forgone conclusion.

In a unique last-minute wrinkle, Daiichi Sankyo’s testifying expert has become unexpectedly ill and will not be able to attend the trial.  Daiichi Sankyo attempted to continue the trial and replace its expert with another one, but the Court refused.  That likely means that Daichii Sankyo will likely have the opportunity to cross-examine Seagen’s expert, but the Court will not have the opportunity to assess the live credibility of Daichii Sankyo’s expert.  Regardless of what happens, expect the losing side to appeal.