Federal Circuit No. 2016-1346
Author: Loren Tung
Regeneron creates an interesting, and highly controversial, intersection between prosecution inequitable conduct and litigation misconduct in U.S. patent law. In particular, Regeneron raises questions regarding the proper implementation of Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011).
Under Therasense, inequitable conduct is an equitable defense to patent infringement that, if proved, bars enforcement of a patent. Therasense established two requirements: 1) the inequitable conduct must be but-for material; and 2) the accused infringer must prove that the patentee acted with the specific intent to deceive the USPTO. A prior art reference is but-for material if the USPTO would not have allowed a claim had it been aware of the undisclosed prior art. The standard of proof for both the but-for materiality and the intent to deceive is clear and convincing evidence.
Plaintiff Regeneron appealed from the Southern District of New York judgement that U.S. Patent No. 8,502,018 is unenforceable because of Regeneron’s prosecution inequitable conduct. In detail, Regeneron's prosecutors withheld four references from the USPTO during prosecution, which were cited in a third-party submission in a related case and in European opposition briefs. The District Court held that under Therasense: 1) the withheld references were but-for material; and 2) Regeneron was sanctioned for litigation discovery misconduct by drawing an adverse inference of specific intent to deceive the USPTO. There was no trial for the intent to deceive.
The technology of the ‘018 Patent is directed to mouse DNA coding for antibodies that are modified using human DNA in different ways. As shown in the figure reproduced and annotated below, the mouse DNA coding includes a "variable" region toward the top of the "Y," and a "constant" region toward the bottom.
Independent claim 1 of the ‘018 Patent recites:
A genetically modified mouse, comprising in its germline human unrearranged variable region gene segments inserted at an endogenous mouse immunoglobulin locus.
As shown in the figure reproduced above, Regeneron argued that the broadest reasonable interpretation (BRI) of claim 1 includes only the “reverse chimeric” embodiment in which the human DNA is inserted in only the variable region. On the other hand, defendant Merus argued that the BRI of claim 1 additionally includes the “humanized” and “fully human” embodiments in which the human DNA is inserted in the variable and constant regions, mainly because of the claimed term “comprising.”
The Federal Circuit agreed with the District Court and held that the withheld references were but-for material. In particular, the Federal Circuit determined that the District Court correctly adopted Merus' BRI of claim 1, and that the withheld references taught modifying mouse regions with human regions and thus taught the humanized and fully human embodiments. The Federal Circuit further agreed that the withheld references were not cumulative over the cited prior art.
Moreover, the Federal Circuit agreed with sanctioning Regeneron for litigation discovery misconduct by drawing an adverse inference of specific intent to deceive the USPTO. The litigation discovery misconduct included the following examples:
improperly withholding and citing on privilege logs documents clearly not privileged (such as experimental data);
withholding as privileged information where the privilege had been waived; and
withholding evidence of prosecution counsels' reasoning and state of mind relevant to whether counsel had an intent to deceive.
Drawing an adverse inference to sanction litigation misconduct was based on the law of the Second Circuit, namely, Residential Funding Corp. v. DE George Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002). Notably, the Residential case is unrelated to U.S. patent law.
In her long and vigorous dissent, Judge Newman argued that the District Court inferred the intent to device without clear and convincing evidence, contrary to the standard provided in Therasense. For example, she argued, "there was no evidentiary record developed on intent to deceive, with no testimony and no opportunity for examination and cross-examination of witnesses."
Regeneron raises many questions regarding whether Therasense is hopelessly eroded. With respect to the but-for materiality, the federal Circuit and the District Court both chose to adopt Merus' BRI. However, one is left to wonder whether a district court should be bound by evidence of an Examiner's BRI instead of adopting its own BRI as in this case. With respect to the intent to device, Regeneron opens up the issues of whether prosecutors will be sanctioned for litigators' misconduct, whether U.S. patent law including Therasense controls over regional circuit law, and whether property rights would be taken without due process in similar cases.