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January 12, 2016

Innovators Beware: Patent Applications Becoming Investigative Tools for Potential EPA Enforcement Actions

Arnold & Porter Advisory

EPA officials have made it known that they intend to review patent applications to determine whether the makers of pesticides, and perhaps other chemical-containing products, have violated the Agency’s requirement that information concerning potential adverse effects of certain chemicals and products be immediately submitted to EPA for review. The failure to timely provide such data to EPA violates the federal pesticides law, and might violate similar regulations that implement the nation’s chemical control law which applies to those chemical-containing products that are not pesticides.

Recently, in the context of attempting to defend its decision to register a pesticide in response to a lawsuit brought by environmental groups opposed to the registration (Natural Resources Defense Council v. EPA, 9th Cir., 14-73353), EPA officials came across information in patent office filings which purported to demonstrate that the key chemical components of a new product behaved synergistically, potentially enhancing the product’s effectiveness at controlling unwanted weeds. If the combination of active ingredients blended in a pesticide product that is intended to control weeds could have a greater effect on unwanted plants than is known to EPA when compared to the effect such components have individually, that information ordinarily would be taken into account by the Agency when establishing the instructions for use and applications rates approved for the product at the time of registration. Moreover, such information could imply to EPA reviewers that the pesticide product also might have an adverse effect on “non-target organisms” if inadvertently exposed. Thus, directions for use and label warnings intended to mitigate the opportunity for unintended exposures might be adjusted accordingly, if such synergies are known to EPA. Hence, in documents filed in federal court, EPA alleges that had its scientists known of data which support the claim of synergy that appear in the patent filing, the Agency might have altered the terms of the registration that EPA granted. On that basis, the Agency asked the court to vacate EPA’s original registration decision.1

Numerous statutes that govern commercial and consumer use products contain provisions requiring the makers and distributors of such products to submit to their regulators new information they receive which reflects that their products might present new or previously unknown risks to their users, especially when the users are consumers. Thus, the makers of consumer products must immediately inform the Consumer Product Safety Commission of information which “reasonably supports the conclusion” that products they distribute contain a defect which could create “a substantial product hazard,” or create “an unreasonable risk of serious injury or death.”2 Similarly, the makers and distributors of products that contain chemical substances (which are not pesticides) must advise EPA when they obtain information that reasonably supports the conclusion that a chemical substance or mixture “presents a substantial risk of injury to health or the environment.”3 Persons who hold a license to make and distribute pesticides are similarly obligated to send EPA “information regarding unreasonable adverse effects on the environment” or human health that might be caused by the product.4 EPA has broadly defined this statutory standard and interprets it to apply to any information that the “registrant knows, or reasonably should know, … EPA might regard … as raising concerns about the continued registration of a product or about the appropriate terms and conditions of registration of a product.”5

Violators of such information and data disclosure requirements often are portrayed by their regulators in a most unfavorable light and they can face severe penalties.6 Perhaps more important for the regulated community to know is that EPA interprets the failure to file such data to be a violation of a “continuing” nature for which penalties can be assessed per day indefinitely until such time as the violation is corrected or otherwise made known to EPA.7 The stakes are considerable, with potential federal penalties sometimes rising into the multimillion dollar range. Some states, including California, have requirements that mimic EPA’s risk-related data reporting regulations for pesticides.

Making things more complicated is the fact that it is possible such reportable information may come to a regulated entity’s attention, but not to the attention of in-house regulatory personnel who otherwise might spot the link to a regulatory reporting requirement. Examples of such occurrences have included demand letters submitted by plaintiffs’ counsel which might contain allegations and information that could trigger a reporting obligation under TSCA, FIFRA, or the CSPA. Product testing and environmental monitoring data can (using today’s technologies) be easily generated by third parties, such as environmental groups, and may provide multiple incentives for such groups to bring the information to a regulated entity’s attention (e.g., in the context of California Proposition 65 litigation), and perhaps directly to the attention of regulators.

That such information might be contained in, and could come to a regulatory agency’s attention through, patent filings has heretofore not been considered. Given the potentially damaging nature of such data, and the ways in which it can be negatively construed in not only a regulatory but also a litigation context, it is increasingly imperative that regulated entities, their in-house counsel, and their regulatory personnel form a cohesive team for the examination and review of all such data, whether generated internally through product testing, foisted upon them by third-party litigants, or cleverly included to justify the innovative nature of a new product, technology, or claim in patent applications. The team should carefully consider such information and its implication in light of data disclosure and risk information reporting requirements.
  1. See Respondent's Motion for Voluntary Vacatur And Remand.

  2. See Consumer Product Safety Act (CSPA) Section 15(b) and implementing regulations at 16 CFR 1117.6.

  3. See Toxic Substances Control Act (TSCA) Section 8(e).

  4. See the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Section 6(a)(2) and implementing regulations at 40 CFR Part 159.

  5. See 40 CFR 159.195.

  6. See EPA Press Release regarding US$1.8 M penalty to resolve alleged violations of pesticide reporting and distribution laws.

  7. See articles discussing landmark decision and reversal of alleged TSCA 8(e)violations: “Appeal Being Taken to ALJ Decision in TSCA Section 8(e) Case,” Pesticides, Chemical Regulation, and Right-to-Know Committee Newsletter, a publication of the ABA, Vol. 15, No. 2 (Feb. 2014); “Landmark Chemicals Case May Embolden EPA,”Environmental Law360 (Dec. 2013).