Regeneron Pharm., Inc. v. Merus N.V.

• Decision Date: 27 July 2017
• Docket Number: 2016-1346
• Citation: 864 F.3d 1343
• Parties: REGENERON PHARMACEUTICALS, INC., Plaintiff-Appellant v. MERUS N.V., Defendant-Appellee
• Court: U.S. Court of Appeals — Federal Circuit

864 F.3d 1343

REGENERON PHARMACEUTICALS, INC., Plaintiff-Appellant

v.MERUS N.V., Defendant-Appellee

2016-1346

United States Court of Appeals, Federal Circuit.

Decided: July 27, 2017

Neal Kumar Katyal , Hogan Lovells US LLP, Washington, DC, argued for plaintiff-appellant. Also represented by Christopher P. Borello , Michael Enzo Furrow , Brendan M. O'Malley , Robert Seth Schwartz , Fitzpatrick, Cella, Harper & Scinto, New York, NY.

Patricia A. Carson , Kirkland & Ellis LLP, New York, NY, argued for defendant-appellee. Also represented by Saunak Desai, Aaron D. Resetarits ; John C. O'Quinn , Washington, DC; Peter B. Silverman , Merus US, Inc., Cambridge, MA.

Kevin Edward Noonan , McDonnell, Boehnen, Hulbert & Berghoff, LLP, Chicago, IL, for Amicus Curiae Seven Chicago Patent Lawyers. Also represented by Jeffrey Palmer Armstrong, Aaron Vincent Gin, James Lee Lovsin, Jeremy E. Noe, Andrew W. Williams, Donald Louis Zuhn, Jr .,

Before Prost, Chief Judge, Newman and Wallach, Circuit Judges.

Dissenting opinion filed by Circuit Judge Newman.

Prost, Chief Judge.

Regeneron Pharmaceuticals, Inc. ("Regeneron") appeals from a final judgment of the district court holding U.S. Patent No. 8,502,018 ("'018 patent") unenforceable because of Regeneron's inequitable conduct during prosecution. Regeneron also appeals the district court's construction of several claim terms and determination of indefiniteness. Because we conclude that Regeneron engaged in inequitable conduct during prosecution of the '018 patent, we affirm.

I

In March 2014, Regeneron filed suit in the Southern District of New York accusing Merus B.V. ("Merus") of infringing the '018 patent. The district court heard argument and expert testimony on claim construction and issued an opinion construing various terms. See Regeneron Pharm., Inc. v. Merus B.V. , No. 14-cv-1650, 2014 WL 6611510 (S.D.N.Y. Nov. 21, 2014). The court also declared one term indefinite. Id. at *23–24.

Merus asserted a counterclaim of unenforceability due to inequitable conduct. It argued that Regeneron's patent prosecutors withheld four references (the "Withheld References") from the U.S. Patent and Trademark Office ("PTO") during prosecution of the '018 patent. According to Merus, these references were cited in a third-party submission in related U.S. patent prosecution and in European opposition briefs, were but-for material, and were withheld by Regeneron with the specific intent to deceive the PTO. There was no dispute that Regeneron knew of the Withheld References during prosecution of the '018 patent. Regeneron argues, however, that the references were not but-for material, that they were cumulative of references the PTO actually relied on during prosecution, and that Regeneron did not have any specific intent to deceive the PTO.

The district court scheduled a bench trial on Regeneron's inequitable conduct, but bifurcated the trials based on the two elements of inequitable conduct: a first bench trial on the materiality of the Withheld References, and a second bench trial regarding the specific intent to deceive the PTO. See Therasense, Inc. v. Becton, Dickinson & Co. , 649 F.3d 1276, 1287 (Fed. Cir. 2011) (en banc).

Following the first trial, the district court issued a lengthy opinion detailing the materiality of the Withheld References.

Regeneron Pharm., Inc. v. Merus B.V. , 144 F.Supp.3d 530 (S.D.N.Y. 2015) (" Regeneron I ").¹ The district court, however, never held the scheduled second trial on Regeneron's specific intent to deceive the PTO. Instead, in its opinion following the first bench trial, the court exhaustively detailed Regeneron's discovery misconduct throughout litigation and sanctioned Regeneron by drawing an adverse inference of specific intent to deceive the PTO. In particular, the district court discussed Regeneron's repeated violations of the district court's discovery orders and improper secreting of relevant and non-privileged documents. Based on this misconduct, the district court drew an adverse inference that Regeneron's agents failed to disclose the Withheld References to the PTO with the specific intent to deceive the PTO. Having determined the but-for materiality of the Withheld References and drawn an adverse inference of Regeneron's specific intent to deceive the PTO, the district court concluded that Regeneron had committed inequitable conduct and held the '018 patent unenforceable.

Regeneron timely appealed the district court's claim construction order and final judgment of inequitable conduct. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

A

The '018 patent emerged from a family of applications that originated in December 2000. In February 2001, Regeneron filed a continuation-in-part from that original application, which ultimately issued as U.S. Patent No. 6,596,541 ("'541 patent"). Regeneron then filed a divisional of the '541 patent, and from that divisional filed several continuations including U.S. Application No. 13/164,176 ("'176 application") entitled "Method of Modifying Eukaryotic Cells." That continuation application issued as the '018 patent on August 6, 2013, to inventors Drs. Andrew J. Murphy and George D. Yancopoulos, who assigned it to Regeneron.

In general, the '018 patent relates to using large DNA vectors to target and modify endogenous genes and chromosomal loci in eukaryotic cells. '018 patent col. 1 ll. 17–33. One practical use of this technology is that users may target and modify specific genes in mice so that the mice develop antibodies that can be used by humans.

Antibodies are proteins that the body uses to counter-act specific pathogens such as bacteria, viruses, and other foreign substances in the blood. Antibodies are typically represented by a "Y" shape consisting of four chains of amino acids: two longer "heavy" chains, and two shorter "light" chains. Each of the chains, in turn, consists of two regions: a "variable" region toward the top of the "Y," and a "constant" region toward the bottom. One such antibody is illustrated below:

Appellant's Br. 5 (stripes added). In this antibody, the light chains are striped and the heavy chains are solid. Further, the constant regions are represented in lighter shades, and the variable regions in darker shades.

Mouse DNA coding for antibodies can be modified using human DNA in various different ways. For example, mouse DNA can be manipulated to create chimeric antibodies that have mouse variable region DNA and human constant region DNA. Similarly, mice can be used to create humanized antibodies that have some mouse variable region DNA, some human variable region DNA, and human constant region DNA. Further, genetically modified mice can be used to create antibodies that have fully human DNA. Finally, mice can also be modified to create reverse chimeric antibodies that have mouse constant region DNA and human variable region DNA. This spectrum of modified antibodies is illustrated below.

Claim 1 of the '018 patent, the only claim at issue here, recites, in its entirety, "[a] genetically modified mouse, comprising in its germline human unrearranged variable region gene segments inserted at an endogenous mouse immunoglobulin locus." '018 patent col. 29 ll. 24–26. As discussed in greater detail below, Regeneron contends that under the broadest reasonable construction, this claim is limited to mice that produce reverse chimeric antibodies. Merus, on the other hand, argues that under the broadest reasonable construction, claim 1 includes mice that can produce humanized, fully human, or reverse chimeric antibodies.²

B

As originally filed, claim 1 of the '176 application recited "[a] genetically modified mouse, comprising in its germline human unrearranged variable gene region segments inserted at a mouse immunoglobulin locus." J.A. 450. In January 2012, the PTO issued a Non-Final Office Action rejecting claims 1–19 of the '176 application as being anticipated by a U.S. Application No. 11/009,873 to Nils Lonberg and Robert Kay ("Lonberg"). J.A. 376–88.

In July 2012, Regeneron's Dr. Smeland, in-house counsel responsible for prosecuting the '176 application and others in the same family in the United States and Europe, replied to this Office Action. He argued that unlike the recited claims of the '176 application, Lonberg teaches random and not targeted insertion. In particular, Dr. Smeland argued that Lonberg did not teach inserting "human unrearranged variable region gene segments" in the mouse immunoglobulin ("Ig") locus. Instead, according to Dr. Smeland, Lonberg teaches genes that are "randomly inserted at (unknown) loci." J.A. 408–09.

In October 2012, the PTO mailed a Final Office Action, rejecting the pending claims of the '176 application, maintaining the rejection of claims 1–19 as anticipated by Lonberg.

In a January 2013 Reply to the Final Office Action, Regeneron amended claim 1 to include the additional limitation that the human unrearranged variable region gene segments would be inserted at "an endogenous" mouse immunoglobulin locus. Regeneron also sent a presentation to the PTO with the Reply. In that presentation, Regeneron asserted that it had developed a commercial embodiment of the claimed mouse with surprising results. It is undisputed that that assertion was false. J.A. 7563. Regeneron had not developed any such mouse at the time.

Following receipt of Dr. Smeland's Reply and presentation, the PTO issued an Advisory Action maintaining the rejection of claims 1–19 as anticipated by Lonberg, and claim 20 remained rejected in view of Lonberg and other references. Shortly thereafter, in February 2013, Regeneron retained Brendan Jones, Ph.D., to assist with prosecution. Drs. Jones and Smeland together planned an in-person meeting with the Examiner during which they relied on the misleading presentation asserting that Regeneron had developed a commercial embodiment of the claimed mouse. That meeting occurred in March 2013.

Following that meeting, in April 2013, the PTO issued a Notice of Allowance...