Ariad Pharmaceuticals, Inc. v. Eli Lilly & Co. (529 F. Supp. 2d 106, 2007)

FINDINGS OF FACTS AND CONCLUSIONS OF LAW

ZOBEL, District Judge.

Table of Contents

I. Introduction.112

II. Background of the Case.112

A. Ariad’s Invention .112

B. Obtaining Allowance.113

C. Lilly’s Drugs.114

D. Commencement of Litigation.114

E. The Jury Trial.114

F. Post-Verdict Motions.115

G. The Bench Trial.115

III. Discussion.116

A. Validity of the Patent Under 35 U.S.C. § 101.116

1. Exceptions to Patentable Processes.116

2. The Autoregulatory Loop Theorizes a Reduction in NF-kB Activity.117

a. Support for the Existence of the Autoregulatory Loop.118

b. Testimony of Ariad’s Expert, Dr. Ravetch .119

c. Cross-Examination of Dr. Latchman.120

d. There Is Insufficient Evidence to Invalidate the Patent.120

B. Inequitable Conduct During Prosecution of the '516 Patent.120

1. The Legal Standard for Inequitable Conduct.121

a. Materiality.121

b. Intent.122

2. The Allegedly Withheld Information.122

a. Errors in Figure 43.122

b. References Showing Inherent Anticipation.123

3. The Materiality of the Errors and Omissions in Figure 43 .123

a. The Description of Figure 43 Is Incorrect.123

b. Figure 43 Is Incomplete.124

c. Figure 43 Is Material Despite Its Late Addition to the Application.125

d. Figure 43 Is Not Cumulative.125

e. The Errors in Figure 43 Are Material Under Both Standards.126

4. The Materiality of the Prior Art References.127

a. The Cited References Are Not Cumulative.128

b. Recognition Requirement for Inherent Anticipation.130

5. Evidence of Intent Concerning the Errors in Figure 43.131

a. The Prosecuting Firm and Attorney History of the '516 Patent.131

b. Evidence of Intent by Hausdorff.133

e.Evidence of Intent by Vincent.133

d. Evidence of Intent by Clauss.134

(1) Clauss’ Testimony on Materiality.134

(2) Clauss’ Response to Office Action.134

6. Evidence of Inventor Baldwin’s Intent to Conceal References.135

C. Lilly’s Prosecution Laches Defense.136

1. The Legal Standard for a Finding of Prosecution Laches.136

2. Analysis of Delays in the Prosecution of the '516 Patent.137

a. Requirement to File an Appeal.137

b. Six Month Response to Office Actions.138

c. The Pre-'898 Applications.138

d. Post Development Applications.138

(1) Prejudice to Public Rights.139

e. Use of Transitional Rules.139

IV. Conclusion.140

I. Introduction

Plaintiffs Ariad Pharmaceuticals, Inc., Massachusetts Institute of Technology, the Whitehead Institute for Biomedical Research, and the President and Fellows of Harvard College (collectively “Ariad”), owners and assignees of U.S. Patent No. 6,410,516 (“the '516 patent”), “Nuclear Factors Associated With Transcriptional Regulation,” complain that defendant Eli Lilly & Co. (“Lilly”) infringed it. Following a fourteen-day trial in April 2006, a jury found that the four asserted claims were valid against anticipation, enablement and written description defenses, and that use of Lilly’s Evista and Xigris products infringed the patent. The jury awarded plaintiffs damages in excess of $65 million.

The parties agreed that certain additional defenses were to be tried to the court. Lilly asserts that the '516 patent is invalid because it attempts to claim non-patentable subject matter under 35 U.S.C. § 101. Even if the patent is valid, Lilly argues (1) that it cannot be enforced because of inequitable conduct by plaintiffs during the prosecution of the patent, or in the alternative; (2) that plaintiffs are estopped from recovering for any infringement because they unreasonably delayed prosecution of the patent. Following a second trial focused on these issues, I find that: (1) the four claims asserted are patentable; (2) Lilly has not proven inequitable conduct during patent prosecution; and (3) Ariad did not unreasonably delay prosecution of the '516 patent. Accordingly, the jury award stands.

II. Background of the Case

A. Ariad’s Invention

In the mid-1980s, scientists at the Massachusetts Institute of Technology, the Whitehead Institute for Biomedical Research, and Harvard University (“plaintiff institutions”) identified a protein called Nuclear Factor Kappa B (“NF-kB”). Present in the cytoplasm of many different cell types, NF-kB is what is known as a transcription factor, a protein that affects gene expression. In the inactive state, NF-kB binds in the cytoplasm with another protein, Inhibitor Kappa B (“IkB”), to form a multi-protein complex. When NF-RB is activated by various stimuli external to the cell, the complex dissociates and free NF-kB is released. This free NF-kB then travels into the cell nucleus and binds there to specific DNA sequences, causing the cell to produce proteins that are associated with many diseases, including cancer, AIDS, sepsis, and atherosclerosis. Inhibiting this process has enormous and wide-ranging therapeutic effects.

The inventors filed a patent application on their invention. After a sixteen year trek through the United States Patent and Trademark Office (the “PTO”) littered with abandoned, divisional and continued applications, they were granted the '516 patent on June 25, 2002. Throughout much of the prosecution history of the '516 patent, questions concerning enablement under 35 U.S.C. § 112 delayed allowance, in many instances because the claims called for the use of an “agent” or “substance” to effect a reduction or alteration in the level of NF-kB activity in the cell. The PTO repeatedly rejected these claims because it said that the specification did not adequately describe all possible agents or substances encompassed by the claims.

B. Obtaining Allowance

On August 10, 2000, the primary examiner of the '516 application, Dr. Robert Schwartzman (“Schwartzman”), rejected all but one claim of the pending application as not adequately describing the agents used in claims drawn to methods requiring “an agent which has an effect on ... NF-RB and/or IkB.” (DTX 2 at ADL823-33, ADL825.) In response, Ariad sent the PTO a reply on September 12, 2001, canceling all previous claims. It replaced the canceled claims with a new set of claims, 158-87, that did not require the use of agents to practice the claimed methods, along with six new claims, 188-93, that did include a limitation for the “administration of an agent ...” to implement the method of claims 158-75. (Id. at ADL872-88, ADL876-78.) Two days later, in a telephone interview with Examiner David Guzo (“Guzo”), Ariad’s attorney authorized an examiner’s amendment to, inter alia, cancel claims 188-193, the claims requiring the use of an agent. (Id. at ADL923-53, ADL924.) The remaining claims were subsequently allowed as amended by Guzo on October 4, 2001. (Id. at ADL923.)

The allowed claims broadly cover a method of inhibiting the expression of a gene whose transcription is regulated by NF-kB in a eukaryotic cell. The only step required to practice the broadest patented method is to “reduc[e] NF-kB activity in the cell such that the expression of said gene is inhibited.” No particular agent or substance need be used, nor any particular step(s) performed, to reduce NF-kB activity in order to practice the invention.

C. Lilly’s Drugs

Prior to the initial discoveries by the research team at plaintiff institutions, defendant Lilly applied for patents on two compounds, raloxifene hydrochloride and recombinant human activated Protein C (“aPC”). As it happens, these two compounds inhibit NF-kB activity, although Lilly did not know this when it obtained its patents. Lilly began marketing raloxifene hydrochloride under the brand name Evis-ta to treat osteoporosis and has been selling aPC under the name Xigris to treat severe sepsis. At the molecular level, these drugs treat osteoporosis and severe sepsis, respectively, by inhibiting NF-kB activity.

D. Commencement of Litigation

On the same day that the '516 patent was granted, Ariad filed the instant suit against defendant Lilly, alleging that Lilly’s sales and marketing of Evista and Xigris constituted indirect infringement of twenty claims of the '516 patent. Lilly filed a Combined Motion to Dismiss and Motion for Summary Judgment of Invalidity, contending that the earlier patents on its compounds anticipated the '516 patent and that the methods necessary to practice the '516 patent were not enabled by the written description. I denied the motion but noted that the problem of enablement was troubling, given the broad claim language and the question whether the patent described actual methods for inhibiting NF-kB activity. Ariad Pharmaceuticals, Inc. v. Eli Lilly & Co., Civ. No. 02-11280, 2003 WL 21087115, at *1 (D.Mass. May 12, 2003) (Docket # 33).

Late in the discovery process, Lilly petitioned the PTO to reexamine the '516 patent pursuant to 35 U.S.C. § 302, arguing that a large number of the patent’s claims “encompassed numerous prior art methods employing compounds now known to necessarily modulate NF-kB activity.” Lilly Request for Reexamination, Case No. 05-280, April 4, 2005, at 1. Lilly moved to stay the litigation pending the outcome of the PTO’s reexamination, a motion I subsequently denied, as I was not persuaded that reexamination would simplify the issues for trial. Ariad Pharmaceuticals, Inc. v. Eli Lilly and Company, Civ. No. 02-11280, 2005 WL 1342721, at *1 (D.Mass. June 06, 2005) (Docket # 149). Lilly renewed its motion on January 17, 2006, after the PTO granted the reexamination request. I again denied the motion, and the case went to trial in April 2006.

E.The Jury Trial

After a fourteen-day trial, the jury determined that none of the four claims ultimately asserted were anticipated, either by prior art or public use, and it found all the asserted claims adequately enabled and the written description adequate. The jury further found that a user of Evista directly infringed claims 80 and 95 of the '516 patent and that a user of Xigris directly infringed claims 144 and 145 of the patent. It also found Lilly liable for inducing infringement and contributory infringement by selling the two drugs. The jury determined the effective filing date of the patent to be April 21,1989, and awarded Ariad a royalty of 2.3% on combined sales by Lilly of over $2.83 billion, or over $65 million in damages, as of May 4, 2006.

F. Post-Verdict Motions

Lilly contends that this award must be set aside because either the '516 patent is invalid, as it claims subject matter not allowed under 35 U.S.C. § 101, or because the patent cannot be enforced as plaintiffs committed a culpable breach of the duty of disclosure and unreasonably delayed prosecution. The parties agree that these issues raise questions of fact and law for the court. See Arrhythmia Research Technology v. Corazonix Corp., 958 F.2d 1053, 1055 (Fed.Cir.1992) (“Whether a claim is directed to statutory subject matter is a question of law.”); Symbol Techs., Inc. v. Lemelson Med., Educ. & Research Found., LP, 422 F.3d 1378, 1385 (Fed.Cir.2005) (“[Prosecution laches] is to be decided as a matter of equity, subject to the discretion of a district court before which the issue is raised.”).

G. The Bench Trial

A four-day bench trial addressing these issues began on August 7, 2006. Shortly before the commencement of that trial, the PTO, on August 2, 2006, issued a first Office Action in the merged ex parte reexamination proceeding that rejected 160 of the claims in the '516 patent, including the four at issue in this case. (Office Action in Ex Parte Reexamination, Patent 6410516, August 2, 2006 (DTX 973A).) The PTO based its rejections partially on a determination that the claims were inherently anticipated by certain prior art references listed in a review article co-authored by Dr. Albert Baldwin (“Baldwin”), one of the inventors of the '516 patent. In its claim of inequitable conduct, Lilly also charged Baldwin with intentionally withholding this information from the PTO.

I examine each of Lilly’s defenses below.

III. Discussion

A. Validity of the Patent Under 35 U.S.C. § 101

In Lilly’s view, the '516 patent claims subject matter not allowed under 35 U.S.C. § 101 and is therefore invalid. Specifically, it contends that the claims encompass the NF-kB-IkB autoregulatory loop (the “Autoregulatory Loop”), a natural process in cells that operates to reduce the activity of NF-kB. Because natural phenomena are excluded from patentable subject matter, it argues that any '516 claims encompassing the Autoregulatory Loop are invalid and cannot be enforced.

Ariad’s response is that the '516 patent does not claim a natural phenomenon because, inter alia, (1) the patent claims a process, subject matter specifically allowed by statute; and (2) the Autoregulatory Loop is only a theory and has not been proven to exist in human cells in vivo. (Docket # 398 ¶ 618.) While not all processes are patentable, I find that Lilly has failed to show that the proposed model of the Autoregulatory Loop actually exists in nature and thus that a natural phenomenon is encompassed by the '516 patent’s claims.

1. Exceptions to Patentable Processes

Ariad insists that an analysis of the scope of the patent’s claims is not relevant to a determination of whether the patent claims unpatentable subject matter. It argues that because the '516 patent claims describe the transformation of the activity state in cells, they meet the definition of a process, subject matter specifically allowed under 35 U.S.C. § 101, and the subject matter analysis ends. In its view, any consideration of the scope of the claims only affects whether the claims are anticipated or properly disclosed, issues already decided in its favor by the jury. {See Docket #398 ¶¶ 572-83, 597-602.) This position, however, oversimplifies the law.

Congress has broadly defined the subject matter that can be protected by patent. Title 35 U.S.C. § 101 states simply that “[wjhoever invents or discovers any new and useful process, machine, manufacture, or composition of matter ... may obtain a patent therefore.... ” The Committee Reports accompanying the Patent Act of 1952 emphasized the breadth of this statutory subject matter as “including] anything under the sun that is made by man.” Diamond v. Diehr, 450 U.S. 175, 182, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981) (quoting S.Rep. No.1979, 82d Cong., 2d Sess., 5 (1952); H.R.Rep. No.1923, 82d Cong., 2d Sess., 6 (1952)). “Process,” as used in the statute, is synonymous with “method” and means “a mode of treatment of certain materials to produce a given result.” Id. at 182, 101 S.Ct. 1048.

Three exceptions exist, however, to the general principle that any process is eligible for patent protection: “laws of nature, natural phenomena, and abstract ideas.” Id. “The rule that the discovery of a law of nature cannot be patented rests, not on the notion that natural phenomena are not processes, but rather on the more fundamental understanding that they are not the kind of ‘discoveries’ that the statute was enacted to protect.” Parker v. Flook, 437 U.S. 584, 593, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978). A process, however, is not unpatentable merely because it contains a law of nature; a process employing a law of nature or natural phenomena in a useful way may be protected by patent. Id. at 592, 98 S.Ct. 2522 (distinguishing Morse’s invalid claim, broadly covering the use of electromagnetism to print at a distance, from Neilson’s allowed claim for a machine applying the principle that heated air increases the intensity of the heat in a blast furnace). The court must examine what is sought to be patented in order to determine whether it falls within one of the statutory exceptions. This determination occurs before any consideration whether that discovery meets the requirements for patentability under 35 U.S.C. §§ 102, 103 and 112. Id. at 593, 98 S.Ct. 2522 (“The obligation to determine what type of discovery is sought to be patented must precede the determination of whether that discovery is, in fact, new or obvious.”).

Therefore, the asserted claims must be examined to see if they encompass any of these exceptions. If Ariad’s claims are drafted so broadly that they encompass a natural process, they are invalid for claiming unpatentable subject matter.

2. The Autoregulatory Loop Theorizes a Reduction in NF-kB Activity

As noted above, Lilly argues that Ariad’s asserted claims encompass a natural phenomenon, the Autoregulatory Loop. Lilly’s scientific expert, Dr. David Latch-man (“Latchman”) described the Aut-oregulatory Loop as a natural process by which the activity of NF-kB in a cell is controlled by IicB-a via negative feedback. (Trial Tr. Day 1, 48:23-52:1.) This process is triggered when an external stimulus causes NF-kB to disassociate from IkB in the cytoplasm of the cell. Free NF-kB then moves into the nucleus and binds to the cell’s DNA. The bound NF-kB stimulates the production of various proteins in the cytoplasm, including certain cyto-kines, but it also causes the production of new IkB. This newly produced IkB reenters the nucleus of the cell and removes the bound NF-kB from the DNA, deactivating it and terminating production of the gene for the induced proteins. The deactivated NF-kB/IkB complex then moves out into the cytoplasm completing the regulatory loop. The NF-kB that was activated by the external stimulus has been deactivated by the IkB that it caused to be generated, naturally terminating the externally induced response. (Id.; see also DTX 3037 (demonstrative video).)

a. Support for the Existence of the Autoregulatory Loop

The possibility of an NF-kB-IkB regulatory loop was unknown in 1991 when the '516 specification was initially submitted to the PTO and thus is not described in the issued patent. (See DTX 33, ADL14830-ADL15018 (specification filed Nov. 13, 1991 with application 07/791,898).) Latch-man testified that reports on the existence of the Autoregulatory Loop first appeared in three papers published in 1993. (Trial Tr. Day 1, 99:17-100:9.) He cited a number of more recent articles as also supporting his description of the Autoregulatory Loop, including a 1996 review paper by co-inventor Baldwin. (Id. at 54:22-589:19; DTX 24-S.) Latchman also discussed at length an article by Ting & Endy describing the operation of the Autoregulatory Loop. (Trial Tr. Day 1, 60:5-75:10; DTX 469A.) This paper was published as a “Perspective” article to comment on a longer article, published in the same issue of Science, authored by Dr. Alexander Hoffman (“Hoffman”) and, inter alia, co-inventor Dr. David Baltimore (“Baltimore”). (DTX 469.)

As explained by Latchman, Ting & Endy described the operation of the Aut-oregulatory Loop based on Hoffman’s experiments comparing cells from natural mice (“wild type”) with cells from genetically engineered “knockout” mice. These so-called “knockout cells” have copies of the gene for IkB inactivated, so that there is no functional IkB-k in the cells. (Trial Tr. Day 1, 58:2-10, 64:13-17.) In wild type cells, a temporary external stimulus of TFN results in only a short period in which NF-kB is present in the nucleus of the cell and in no production of RANTES, a gene activated only after prolonged exposure to NF-kB. The induced active NF-RB is quickly deactivated by new IkB-o¿ produced by the binding of the NF-kB to the DNA before the RANTES gene is expressed. In knockout cells without the ability to produce IkB-cí, a temporary external stimulus of TFN results in a prolonged period in which NF-kB is present in the nucleus of the cell and in the eventual production of the RANTES gene. (Id. at 64:11-69:24.) Unlike the wild type, the level of NF-kB bound in the nucleus of the knockout cell is not reduced by the production of IkB-cí, allowing time for the RANTES gene to be induced. In Latch-man’s opinion, this demonstrates the ability of the Autoregulatory Loop to inhibit induced gene expression. (Id. at 69:25-70:3.) Latchman described the results of additional experiments in which the external stimulus was sustained over a period of time. Even with a continuous stimulus, he asserted that the Autoregulatory Loop operates to reduce the level of NF-kB mediated gene expression in the wild cells, albeit in an oscillatory fashion. (Id. at 66:10-23, 73:15-74:10.)

b. Testimony of Ariad’s Expert, Dr. Ravetch

Ariad’s expert, Dr. Jeffrey Ravetch (“Ravetch”), objected to Latchman’s conclusion that the Autoregulatory Loop has been proven to exist in living cells. (Trial Tr. Day 3, 10:17-21.) He described the Autoregulatory Loop as a simplified model that poorly explains the experimental data. (Id. at 17:13-18:7.) In his opinion, there are multiple positive and negative regulatory loops operating in cells which, in the aggregate, create the results seen in experimental assays such as those conducted by Hoffman et al. Ravetch rejected the view that just one loop explains the activity of NF-kB in the cell. (Id. at 9:2-12.) The patent claims a reduction of NF-kB in cells, which Ravetch sees as encompassing the net effect of all events, both positive and negative, which occur when a stimulus influences the cell. (Trial Tr. Day 3, 16:2-21.)

In addition, Ravetch testified that experiments using cells from knockout mice are conceptually flawed because they assume all other processes in the cell operate the same in the absence of the missing feature, an assumption he believes to be untrue. (Id. at 13:4-14.) Therefore, conclusions from these simplified models cannot be extrapolated back to normal cells because they do not take into consideration effects of the other components operating out of their normal context. (Id. at 13:21 — 14:4; see also id. at 30:19-32.) His opinion was that the scientific community has “established a model for the Autoregulatory Loop” to account for certain observations, but “there is considerable dispute and ongoing study to define its role in the NF-kB signaling pathway.” (Id. at 42:9-21.) Ra-vetch also disputed that numerous scientific articles showed an acceptance by the scientific community of the existence and operation of the Autoregulatory Loop. (See Trial Tr. Day 4, 55:7-70:3.) The articles, in his view, attempt to explain observations of experiments conducted with knockout mice, but the results are inconclusive because of the difficulties in interpreting signal transduction systems where the system has multiple interacting components. (Id. at 73:9-12; see also Trial Tr. Day 3, 32:11-21 (describing a paper in which the authors note their experimental observations are not consistent with the model proposed for the Autoregulatory Loop); id. at 34:2-36:15 (discussing a paper suggesting that a more complex model is necessary to explain the processes occurring in living cells).) Ravetch noted that, far from there being a settled theory congruent with the experimental data, there is still significant ongoing research attempting to explain the complex phenomena taking place within the cell. (Trial Tr. Day 3, 23:4-7.)

Finally, Ravetch pointed out that the patent claims processes in living cells, while Latchman’s opinion relied on in vitro research, such as the Hoffman paper (as described by Ting & Endy) to reach his conclusions concerning the Autoregulatory Loop. {See id. at 36:21-37:3.)

c. Cross-Examination of Dr. Latch-man

On cross-examination, Latchman agreed that the experiments summarized by Ting & Endy were conducted in vitro on cell extractions, not in vivo. (Trial Tr. Day 1, 134:11-18, 140:2-7). He also acknowledged that at his deposition he described the results of their research as “a step along the road,” but not determinative of how IkB-g: works in the human body. (Id. at 148:8-23.) In addition, he admitted that there were discrepancies between the computer model of the Autoregulatory Loop proposed by Ting & Endy and the Hoffman empirical data. (Id. at 155:11-156:6.) Latchman also noted that the computer models of the Autoregulatory Loop are “continually being refined and [that] Hoffman [ ] published a paper as recently as two or three months ago in which he’s changed the model again.” (Id. at 156:6-10.)

d. There Is Insufficient Evidence to Invalidate the Patent

The '516 patent is “presumed valid.” 35 U.S.C. § 282. In the instant case, Lilly has the burden of proving facts by clear and convincing evidence showing that the patent is invalid. North Am. Vaccine v. American Cyanamid Co., 7 F.3d 1571, 1579 (Fed.Cir.1993). Lilly has not met this burden.

While the evidence shows that there has been significant scientific research over more than a decade into the operation of the NF-kB signaling pathway, it has not established that the simplified model of the Autoregulatory Loop proffered by Latch-man operates in vivo in normal cells. Latchman admits that, not only does the current model not fully explain the experimental data, but that the model is continually being refined, even to the present day. Scientists are conducting ongoing research to attempt to more fully explain what happens in cells when subjected to various external stimuli. Ravetch described a complex system of multiple feedback loops, all interacting, to effect the changes in gene expression claimed by the patent. In addition, the experimental data described in the literature has been collected using knockout cells in vitro that have not been shown to operate in all other respects as normal cells. The experimental data cannot be fully explained by the current model.

Therefore, I credit Dr. Ravetch’s testimony that the Autoregulatory Loop is “an incomplete model ... subject to a significant amount of ambiguity and inconsistency” (Trial Tr. Day 4, 50:2-6) and find that Lilly has failed to prove by clear and convincing evidence that the Autoregulatory Loop exists in living cells in a way that is encompassed by Ariad’s claims.

B. Inequitable Conduct During Prosecution of the '516 Patent

Lilly asserts that Ariad, the inventors, and/or their attorneys failed to disclose to the PTO material prior art that demonstrates inherent anticipation of the '516 patent and also failed to disclose material errors in a figure contained in the patent. Although I agree with Lilly that the information that was not disclosed is material, Lilly has failed to prove by clear and convincing evidence the requisite intent necessary to find inequitable conduct and render the patent unenforceable.

1. The Legal Standard for Inequitable Conduct

The patent application process is conducted ex parte by inventors and their representatives. Applicants have a duty to prosecute applications with candor, good faith, and honesty. Duro-Last, Inc. v. Custom Seal, Inc., 321 F.3d 1098, 1099 (Fed.Cir.2003); see also 37 C.F.R. § 1.56 (“Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the [Patent] Office.”). When coupled with an intent to deceive or mislead the PTO, a breach of this duty constitutes inequitable conduct, which renders the patent unenforceable. Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1233 (Fed.Cir.2003). An applicant breaches this duty by making affirmative misrepresentations of material facts, failing to disclose material information, or submitting false material information. Duro-Last, 321 F.3d at 1099.

The Federal Circuit requires that a party asserting inequitable conduct show by “clear and convincing evidence” the elements of materiality and intent to deceive. Burlington Industries, Inc. v. Dayco Corp., 849 F.2d 1418, 1422 (Fed.Cir.1988) (expressing concern about “the habit of charging inequitable conduct in almost every major patent case”). The analysis of inequitable conduct is a two-step process. First the court must determine, as a threshold matter, if both the materiality of the information and the intent to deceive have been established. Bristol-Myers, 326 F.3d at 1234. Once the court has determined that the factual basis for materiality and intent exist, it must “weigh them to determine whether the equities warrant a conclusion that inequitable conduct occurred.” Id. (quoting Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed.Cir.1995)). This balancing means that a greater showing of one factor can compensate for a lesser showing of the other. Id.

a. Materiality

Information is material “where there is a substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow an application to issue as a patent.” Digital Control, Inc. v. Charles Mach. Works, 437 F.3d 1309, 1315 (Fed.Cir.2006) (citing 37 C.F.R. § 1.56 (1977)); accord Bristol-Myers, 326 F.3d at 1234; Molins, 48 F.3d at 1179 n. 8. Under this standard, information can be material even though disclosure of it would not render the invention unpatentable. Digital Control, 437 F.3d at 1318. However, information that is merely cumulative or less pertinent than material considered by the examiner is not material in an inequitable conduct analysis. Molins, 48 F.3d at 1179.

b. Intent

That the withheld information is material, by itself, is inadequate to prove inequitable conduct. There must also be a showing that the information was withheld with an intent to deceive or mislead the PTO. Allen Organ Co. v. Kimball Int'l., Inc., 839 F.2d 1556 (Fed.Cir.1988) (“Materiality does not presume intent, which is a separate and essential component of inequitable conduct.”). “Intent to deceive can not be inferred solely from the fact that information was not disclosed; there must be a factual basis for a finding of deceptive intent.” Hebert v. Lisle Corp., 99 F.3d 1109, 1116 (Fed.Cir.1996). However, intent to deceive or mislead the PTO can rarely be shown by direct evidence, it is usually inferred from the facts. Bristol-Myers, 326 F.3d at 1239. “[T]he involved conduct, viewed in light of all the evidence, including evidence of good faith, must indicate sufficient culpability to require a finding of intent to deceive.” Digital Control, 437 F.3d at 1319 (internal quotations and citations deleted). Mere error, even conduct that amounts to gross negligence, is not adequate to establish an intent to deceive. Molins, 48 F.3d at 1181. Where the alleged conduct is the nondisclosure of information, there must be clear and convincing evidence that the applicant made a deliberate decision to withhold the information from the PTO. Id.

2. The Allegedly Withheld Information

According to Lilly, two errors made during prosecution of the '516 patent meet the threshold standard for materiality: (1) information that was incorrect was not provided to the PTO; and (2) references relevant to inherent anticipation of the claims were not disclosed.

a. Errors in Figure 43

First, Lilly points to figure 43, three pages depicting a lengthy nucleotide sequence consisting of the letters A, C, G and T. The central portion of the sequence has sequential groups of these letters identified by an additional single letter below each group of three representing the amino acid sequence. (’516 Patent fig.43.) The Brief Description of the Drawings describes this figure as “the nucleotide sequence and the amino acid sequence of IkB-cí.” (Id. col.10 11.16-17.) The only reference in the specification to figure 43 states: “The nucleotide sequence of the IkB-g: gene and the amino acid sequence of IkB-o: are shown in FIG. 43.” (Id. col.28 11.16-17.) Lilly argues that one skilled in the art reading the patent would expect figure 43 to describe the DNA and amino acid sequence for mammalian, specifically murine (mouse), IkB-ck. However, figure 43 actually shows the sequence of an avian (chicken) protein called pp40. In addition, Lilly claims that the figure is incomplete and only shows portions of the amino acid sequence of pp40. Ariad counters that pp40 is an IkB-c¿ protein, therefore there is no error in the identification of the figure, much less a material misrepresentation. As discussed below, I agree with Lilly that the fact that figure 43 does not represent mammalian DNA meets the threshold standard of materiality necessary to proceed with an evaluation of inequitable conduct. In addition, I find that the sequence in the figure is indeed incomplete as alleged by Lilly.

b. References Showing Inherent Anticipation

Second, Lilly avers that Ariad failed to disclose references relevant to inherent anticipation of the claims in the '516 patent. Specifically, Lilly argues that after the patent application was filed, at least one of the inventors published both a review article and a paper describing a number of prior art compounds as inhibitors of NF-RB activity. Lilly claims that Ariad had a duty to disclose this information to the PTO. It points to the results of the recent reexamination of the '516 patent, in which the PTO invalidated the claims at least partially on a determination that the claims were inherently anticipated by these references, as showing the materiality of the information withheld. Because I do not find the information withheld was merely cumulative, as Ariad suggests, I conclude it is material.

3. The Materiality of the Errors and Omissions in Figure 43

a. The Description of Figure 43 Is Incorrect

Ariad does not dispute that figure 43 represents the nucleotide sequence of avian pp40, not mammalian IkB-cc (See Docket # 398 ¶ 275.) However, it insists that describing pp40 in figure 43 as “the IidB-a gene” is neither incorrect nor misleading and therefore cannot support a claim of inequitable conduct. This conclusion is based on Ariad’s assertion that “the term IkB-ol refers to a family of proteins” capable of inhibiting NF-kB and that “the scientific community has reached a consensus that pp40 is an L