Regeneron v. Merus was decided on July 27, 2017 on appeal from the Southern District of New York. There, the district court held the asserted patent invalid because of plaintiff Regeneron’s inequitable conduct during prosecution. The district court first found that Regeneron withheld four references from the USPTO that were material. (The withheld references were cited in a third-party submission in related US patent prosecution and in European opposition briefs.) Then the district court sanctioned Regeneron for its discovery misconduct during the litigation by drawing an adverse inference of specific intent to deceive the PTO. Regeneron appealed.
The Federal Circuit affirmed the district court’s holding of unenforceability due to inequitable conduct.
The district court did not clearly err in finding that the withheld references were material to the patentability of the asserted patent. In determining but-for materiality, the court first determines the broadest reasonable construction of the claims; and then based on this construction, the court determines whether a reasonable patent examiner would have allowed the claims had he or she known of the withheld references. The district court did not err in finding the withheld references but-for material and not cumulative in light of its claim construction.
The district court did not abuse its discretion by sanctioning Regeneron for its litigation misconduct by drawing an adverse inference of specific intent to deceive the PTO. “Regeneron’s behavior in district court was beset with troubling misconduct.” Regeneron did not comply with the district court’s local patent rules on infringement contentions (and chose not to correct its error when it had the chance); Regeneron withheld a key document in responding to defendant Merus’ motion to compel; Regeneron in an apparent tactic took the position that no terms required construction thereby “shifting the burden to Merus to propose constructions and then to take shots at those proposals;” Regeneron did not produce non-privileged documents that “resided throughout litigation on the privilege log;” and Regeneron did not produce previously privileged documents as to which Regeneron affirmatively waived the privilege. The district court did not clearly err in concluding that “it would be unfair to Merus to reopen discovery on the eve of trial and inject further delay in the case,” and in concluding that sanctions were warranted.
It was not improper for the district court to apply an adverse inference of specific intent to deceive the PTO based on Regeneron’s litigation misconduct. “Courts may not punish a party’s post-prosecution misconduct by declaring the patent unenforceable.” But here, “Regeneron is accused not only of post-prosecution misconduct but also of engaging in inequitable conduct during prosecution.” “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 [asserted] patent.” “The district court did not punish Regeneron’s litigation misconduct by holding the patent unenforceable.” Rather, the lower court “drew an adverse inference to sanction [Regeneron’s] litigation misconduct.”
Judge Newman dissented, arguing that “[i]ntent to deceive the examiner cannot be inferred from purported litigation misconduct several years later;” and that the withheld references were not but-for material to patentability because none of the withheld references provided teachings more material than those in the cited references.
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