[The author of this article, along with Patent Docs authors Andrew Williams and Donald Zuhn, and MBHB attorneys Jeff Armstrong, Aaron Gin, Jim Lovsin, and Jeremy Noe, filed an amicus curiae brief in support of Appellant Regeneron Pharmaceuticals, Inc. and vacatur. Ed.]
By Kevin E. Noonan --
In a decision that took an inordinately long time to arrive (oral argument was held in mid-January), the Federal Circuit in Regeneron Pharmaceuticals v. Merus today affirmed the District Court's decision that the claims of Regeneron's patent-in-suit were unenforceable due to inequitable conduct in the patent's procurement. However, the manner in which the District Court made its determination, and the Federal Circuit's affirmance in a divided opinion (by Chief Judge Prost joined by Judge Wallach, with a dissent by Judge Newman), raise questions regarding the proper implementation of the Court's en banc decision in Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc) that remain unresolved.
The case arose over Regeneron's infringement suit against Merus involving U.S. Patent No. 8,502,018, which is directed to transgenic mice expressing human variable domain immunoglobulin (Ig) genes. Claim 1 is representative:
A genetically modified mouse, comprising in its germline human unrearranged variable region gene segments inserted at an endogenous mouse immunoglobulin locus.
As explained in the Federal Circuit's opinion, the types of antibody molecules that can be produced in mice using modern immunological and molecular biological techniques ranges from completely murine to completely human, and also include chimeric antibodies (encoded by human constant region genes and mouse variable domain genes) and "reverse" chimeric antibodies (encoded by human variable region genes and mouse constant region genes). These possibilities are illustrated in the brief by a diagram (where green portions of the antibodies are encoded by mouse genes and yellow portions are encoded by human genes):
Relevant to the issues before the Court was construction of the proper scope and meaning of the term "comprising in its germline human unrearranged variable region gene segments." Regeneron argued that this term was limited to inserting only human unrearranged variable regions genes, and thus only reverse chimeric antibodies encoded in the recombinant mouse genome; Regeneron argued its construction was supported by the plain meaning of the term and the '018 patent specification. Merus, on the other hand, argued that the word "comprising" in the claim made the proper construction broader than just insertion of human unrearranged variable region gene segments, but also encompassed humanized, fully human, and reverse chimeric antibody embodiments. The District Court adopted Merus' construction.
It was undisputed that during prosecution of the '018 patent, four references were known to Regeneron and its counsel that were not cited to the U.S. Patent and Trademark Office. These references are:
1. Marianne Brüggemann & Michael S. Neuberger, "Strategies for Expressing Human Antibody Repertoires in Transgenic Mice," 17(8) Review Immunology Today 391 (1996) ("Brüggemann");
2. Shinsuke Taki et al., "Targeted Insertion of a Variable Region Gene into the Immunoglobulin Heavy Chain Locus," 262 Science 1268 (1993) ("Taki");
3. Yong–Rui Zou et al, "Cre-lox P-mediated Gene Replacement: A Mouse Strain Producing Humanized Antibodies," 4(12) Current Biology 1099 (1994) ("Zou"); and
4. WIPO Patent Publication No. WO 91/00906 entitled "Chimeric and Transgenic Animals Capable of Producing Human Antibodies," credited to Clive Wood et al. ("Wood").
These references were cited by a third party during prosecution of a related application after Regeneron received a Notice of Allowance for the '018 patent. Regeneron did not submit these references to the Office in the application that was granted as the '018 patent but did cite these references in all other pending related applications. Also noted was a purported irregularity in prosecution of the '018 patent, where Regeneron's counsel made representations that a transgenic mouse according to the claims had been produced and yielded surprising results when in fact no such mouse had been made at the time the application was filed.
The District Court applied the rubrics of the Federal Circuit's Therasense decision in arriving at its conclusion that the claims were unenforceable due to inequitable conduct. These rubrics are: 1) that prior art was not disclosed to the Examiner during prosecution that was "but-for" material, i.e., the patent would not have granted but for the non-disclosure because the undisclosed art rendered the granted claims unpatentable; 2) the uncited art was not cumulative to art considered by the Examiner; and 3) there was an intent to deceive the Examiner by not disclosing the uncited references. The materiality and intent prongs of the test must be established by clear and convincing evidence, but a court has discretion in deciding that claims are unenforceable.
The District Court made the following findings of fact regarding the uncited references:
• Brüggemann was a review article that suggested replacing mouse Ig genes with human Ig genes in the mouse Ig locus. This specific "swapping" of the mouse and human genes would be an improvement over random integration (this was an argument Regeneron had made in support of its own invention). Regeneron's basis for distinguishing this reference was that it does not teach reverse chimeric antibodies, but the District Court's claim construction vitiated whatever force that argument may have had (or the significance of that argument on the materiality of the reference).
• The Wood reference (according to the District Court) also disclosed Ig locus targeting, based on expert testimony. The materiality of this reference was also based on its teaching that the constant region can be exogenous or endogenous, and thus encompasses insertion into the mouse Ig locus.
• The Taki reference disclosed insertion of variable region genes from one mouse into another mouse, but the District Court found the relevant consideration to be targeting exogenous Ig genes into an endogenous mouse Ig locus, not the mouse-human distinction. However, neither the District Court nor the Federal Circuit addressed the distinction with the '018 patent claims that Taki discloses introduction of rearranged variable region genes and the '018 patent claims introduction of unrearranged human variable region genes.
• The Zou reference disclosed modifying mouse constant region not variable region genes; but here again, the District Court found the salient disclosure was targeting exogenous Ig genes into the mouse Ig locus.
Although neither the District Court nor the Federal Circuit found these references, alone or in combination, satisfied the requirements in the statute for invalidating the '018 patent claims (a fact noted in Judge Newman's dissent), the District Court found that these references were "but for" material and this satisfied the first prong of the Therasense test for finding inequitable conduct.
The District Court also found that these references were not cumulative over the cited prior art, in particular U.S. Patent No. 6,114,598 to Kucherlapati, and a reference to Lonberg that had been overcome during prosecution of the '018 patent. Regeneron argued that the Brüggemann reference was cumulative over Kucherlapati; the Wood reference was cumulative over Lonberg; and the Taki reference was cumulative over the combination of Kucherlapati and Lonberg. Specifically, Regeneron argued that Kucherlapati taught substitution of an exogenous ("xenogeneic") locus at an endogenous target locus in the mouse genome, and that Lonberg taught a "knockout plus transgene" model, where the human antibody-encoding sequences are randomly inserted and the endogenous mouse Ig genes are disabled. The District Court distinguished the Kucherlapati reference from the Brüggemann reference by finding that Kucherlapati taught wholesale replacement of exogenous Ig for the endogenous mouse Ig locus, and that such a replacement included mouse regulatory sequences whose removal could interfere with normal B-cell development and antibody production. With regard to the Lonberg reference, the District Court found that the Wood reference taught targeted insertion (as recited in the '018 patent claims) while Lonberg taught insertion at random sites in the mouse genome. And the District Court found that the combination of Kucherlapati and Lonberg was not cumulative to the Taki reference because Taki taught targeted insertion and neither Kucherlapati nor Lonberg have these teachings.
The Federal Circuit majority affirmed in an opinion that found the District Court's findings on these factual issues were not clearly erroneous and supported the District Court's inequitable conduct determination. Turning to the second prong of the Therasense test, intent to deceive, the opinion reviewed the litigation misconduct catalogued by the District Court in its opinion and found that the Court's decision to forego the second part of the bifurcated trial on inequitable conduct and draw an adverse inference that there was an intent to deceive was not an abuse of discretion. The Court was supported in its decision because Regeneron had not "meaningfully dispute[d] any of the factual findings underlying the district court's decision." These findings included 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 patent prosecution counsels' reasoning and state of mind relevant to whether counsel had an intent to deceive. The latter included, inter alia, the following cited in the Court's opinion:
• "I firmly believed—and still believe today— that Brüggemann, Taki, Zou and Wood were not material to patentability because they were substantially different from the mice claimed in the '176 application . . . and were cumulative of other information before the Patent Examiner."
• [Counsel's] description of his understanding of what a materiality analysis for inequitable conduct involves: "Regardless of whether I satisfied the minimum requirements of being an ordinary skilled artisan, I felt comfortable evaluating the art from that perspective during the prosecution of the '176 application. When I did have questions, however, I did not hesitate to reach out to those with more experience and knowledge."
• "I routinely made Regeneron inventors aware of the foregoing obligations when providing them with invention declarations."
• With regards to Brüggemann and Zou, "I was generally familiar with the subject matter of those two references . . . [a]t no time did I consider these references to be material to patentability to the claims pending in the '176 "
• "Because of this experience [prosecuting the '176 application as well as the '287 Patent], I was readily familiar with both prior art that was before the Examiner in the '176 application and the pending claims of the '176 application."
• "I viewed the analysis [relating to the Withheld References] as straightforward."
• "I concluded that [the Withheld References], alone or combined with other prior art of which I was aware, were cumulative of information already before the Examiner. Furthermore, it was my view that the skilled artisan would not have viewed them as teaching the reverse chimeric inventions that the Examiner had allowed in the '176 application
The panel found Regeneron's (or its counsel's) conduct regarding this third category of withheld documents to be "the most troubling." The panel majority rejected Regeneron's argument that the sanction of drawing an adverse inference was in fact a dismissal that was an abuse of discretion, stating:
Regeneron also argues that the district court's sanction was not an adverse inference but was, in fact, a dismissal which should have required a predicate finding of bad faith. . . . As explained above, however, the district court's sanction was not a dismissal but was a properly drawn adverse inference against Regeneron. Even Regeneron admits that bad faith is not required for such a sanction.
And regarding the relationship between litigation misconduct and intent to deceive during patent prosecution, the majority found a nexus that supported the District Court's decision to impose the sanction of raising an adverse inference to satisfy the intent to deceive prong of the Therasense test:
Regeneron's litigation misconduct, however, obfuscated its prosecution misconduct. In particular, Regeneron failed to disclose documents directly related to its prosecuting attorneys' mental impressions of the Withheld References during prosecution of the '018 patent. The district court drew an adverse inference to sanction this litigation misconduct. The district court did not punish Regeneron's litigation misconduct by holding the patent unenforceable. Only after Merus proved the remaining elements of inequitable conduct did the district court hold the patent unenforceable. In light of Appellant's widespread litigation misconduct, including Appellant's use of sword and shield tactics to protect [prosecution counsel's] thoughts regarding disclosure of the Withheld References to the PTO during prosecution of the '018 patent, we conclude that the district court did not abuse its discretion by drawing an adverse inference of specific intent to deceive the PTO.
Judge Newman penned a strong dissent, based on her conviction that "my colleagues apply incorrect law and add confusion to precedent."
Citing Therasense, Judge Newman correctly states that intent to deceive cannot be inferred but must be proven by clear and convincing evidence. Here, improperly, the "[district] court inferred intent to deceive during prosecution and invalidated the patent, as a sanction for purported attorney misconduct during this litigation." Also, "there was no evidentiary record developed on intent to deceive, with no testimony and no opportunity for examination and cross-examination of witnesses." In her view, "[t]he panel majority instead engages in innuendo based on its careful selections from documents not admitted into evidence. The panel majority thus convicts Regeneron, its counsel, and its scientists, with no trial, no evidence, and no opportunity to respond in their defense."
Judge Newman bases her dissent on the Court's prior decision in Aptix Corp. v. Quickturn Design Systems, Inc., 269 F.3d 1369 (Fed. Cir. 2001). Of that decision, she writes, "[e]ssentially, we held that courts may not punish a party's postprosecution misconduct by declaring the patent unenforceable" and cites multiple cases applying the principle that litigation misconduct can bar a litigant but does not render a patent unenforceable. Mere accusation is not enough: "[i]ntent to deceive is not established by accusation and innuendo. It is only established by evidence." And, she asserts, that evidence "must be sufficient to require a finding of deceitful intent in the light of all the circumstances," citing Therasense, 649 F.3d at 1290 (quoting Kingsdown Med. Consultants Ltd. v. Hollister Inc., 863 F.2d 867, 873 (Fed. Cir. 1988) (emphasis original)).
Judge Newman also disagrees with the majority on the materiality of the references, but here reasonable minds can differ and the District Court's factual determinations are entitled to clear error deference.
Both the District Court's decision and the Federal Circuit majority's affirmance raise issues about the proper implementation of both prongs of the Therasense test. With regard to "but-for" materiality, the conceit is that the standard of claim construction used by the Examiner, broadest reasonable interpretation, is the same claim construction used by the district court, and that is enough to ensure that the outcome is the same. Here, whether the withheld references were "but-for" material depends on whether the PTO interpreted the claims as the District Court did regarding the phrase "comprising [human variable chain immunoglobulin genes]." If, as Regeneron contended, the claim language precluded embodiments wherein all or part of the human constant region genes were included, then the materiality of the undisclosed references may not have been as apparent to Regeneron as it was to the District Court and the majority of this Federal Circuit panel. This raises a serious issue of whether a district court must (or at least should) be bound by evidence of the context of prosecution to determine whether the Examiner would have considered an uncited reference to satisfy the but-for materiality test (which reasonably should be the standard for whether an applicant or her counsel withheld material references during prosecution).
The more egregious error Regeneron asserted against the District Court's decision revolved around the Court drawing an adverse inference of deceptive intent against the attorneys who prosecuted the patents based on litigation misconduct by attorneys other than the two prosecutors. Because intent to deceive is personal (insofar as it applies only to those individuals who have a Rule 56 duty to disclose), it seems inequitable to draw such an inference against the attorneys who prosecuted the '018 patent based on the conduct (bad or just misunderstood) of litigation counsel who did not have a Rule 56 duty of candor and were not involved in prosecuting the '018 patent to allowance. Inequitable conduct based on a practitioner's intent to deceive is a serious allegation having deleterious consequences to a patent prosecutor's reputation and can also have as negative repercussions an ethics inquiry by the PTO's disciplinary officials. Accordingly, it is not unreasonable for patent prosecutors to be placed in such jeopardy solely due to their own mis- or malfeasance rather than to be at the whim of conduct by litigation counsel taken for strategic reasons at trial (as the District Court's decision and Federal Circuit opinion alleged here) that are found to be subject to sanction. The decision also perhaps raises questions of whether improperly rendering a patent unenforceable for inequitable conduct by a misapplication of the Therasense standard may amount to a 14th Amendment violation for taking property rights without due process.
Regeneron Pharmaceuticals, Inc. v. Merus N.V. (Fed. Cir. 2017)
Panel: Chief Judge Prost and Circuit Judges Newman and Wallach
Opinion by Chief Judge Prost; dissenting opinion by Circuit Judge Newman