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

• Decision Date: 02 November 2015
• Docket Number: No. 14 Civ. 1650(KBF).,14 Civ. 1650(KBF).
• Citation: 144 F.Supp.3d 530
• Parties: REGENERON PHARMACEUTICALS, INC., Plaintiff, Counterclaim–Defendant, v. MERUS B.V., Defendant, Counterclaim–Plaintiff.
• Court: U.S. District Court — Southern District of New York

144 F.Supp.3d 530

REGENERON PHARMACEUTICALS, INC., Plaintiff, Counterclaim–Defendant,

v.MERUS B.V., Defendant, Counterclaim–Plaintiff.

No. 14 Civ. 1650(KBF).

United States District Court, S.D. New York.

Signed Nov. 2, 2015.

Brendan Mathew O'Malley, Christopher P. Borello, Donald Joseph Curry, Michael Enzo Furrow, Robert Louis Baechtold, Robert Seth Schwartz, Scott Kenneth Reed, Susanne Lynn Flanders, Fitzpatrick, Cella, Harper & Scinto, Charles Anthony Michael, Susan E. Brune, Brune & Richard LLP, New York, NY, Nathan Nobu Lowenstein, Goldberg, Lowenstein & Weatherwax LLP, Los Angeles, CA, for Plaintiff, Counterclaim–Defendant.

Patricia Ann Carson, Aaron Dennis Resetarits, David Nelson Draper, James Henry McConnell, Jeanna Marie Wacker, Leora Ben–Ami, Peter Brian Silverman, Saunak Kirti Desai, Kirkland & Ellis LLP, Charles Anthony Michael, Brune & Richard LLP, Thomas Francis Fleming, United States Attorney's Office, New York, NY, for Defendant, Counterclaim–Plaintiff.

OPINION & ORDER

KATHERINE B. FORREST

, District Judge:

On March 11, 2014, Regeneron filed twin patent infringement actions: one against Merus B.V. (“Merus”), a company based in the Netherlands, and another against Ablexis LLC (“Ablexis”). (See ECF No. 1.) In short complaints, each consisting of a few substantive paragraphs, Regeneron accused both companies of infringing U.S. Patent No. 8,502,018 (“'018 Patent”)

.¹ Merus answered and counterclaimed, arguing that the '018 Patent was unenforceable due to Regeneron's conduct during patent prosecution. (See ECF Nos. 72, 225.) This litigation ensued. Following issuance of this Court's opinion on claim construction, (ECF No. 210) Regeneron stipulated that its infringement claim as to Merus² must fail if the Court's constructions withstand challenge on appeal. (ECF No. 271.) Thereafter, Ablexis settled with Regeneron prior to claim construction. all that remained was Merus's counterclaim for inequitable conduct. On June 9–15, 2015 the Court held a bench trial on that claim. Set forth below are the Court's findings of fact and conclusions of law.

Based on substantial evidence adduced at trial—as well as certain instances of Regeneron's litigation conduct—it is clear that this litigation should never have been commenced. It is not unusual for one litigant to argue as much at the outset of a case, but it is much rarer for the evidence to prove it to be true. It is true here. Throughout the history of this case Regeneron has sought to discover how it needed to define its invention to have it fit a cognizable theory of infringement; it has had to contort science, the documentary record, and an alleged commercial embodiment to make them fit the framework of a specification that described a far broader, not as useful, and possibly altogether different invention; and it has demonstrated that the invention disclosed in the '018 Patent

is not the same as that Regeneron described during prosecution to the U.S. Patent & Trademark Office (“PTO”). As it turns out, the invention that Regeneron's technical expert, Marjorie A. Oettinger, Ph.D., described is interesting and might in fact lead to the discovery of therapeutically useful antibodies, but it is simply not the invention disclosed in the '018 Patent.

It is unfortunate that this case has been marked by troubling litigation tactics, and doubly so as the purpose of this final proceeding was to determine whether Regeneron had engaged in inequitable conduct or affirmative egregious misconduct during patent prosecution. Troubling litigation tactics were on display soon after this case was filed and continued into the trial. Based upon the Court's assessment of the evidence, it appears that the very birth of this patent was beset by misconduct as well. And so it has come full circle. That which was obtained by misconduct ends as a result of misconduct.

I. THE '018 PATENT

Regeneron's '018 Patent

is the subject of this proceeding. Entitled “Methods of Modifying Eukaryotic Cells,” it is one of a number of patents and/or related patent applications in the same family and sharing some or all of the same specification. (See '018 Patent,³ “Related U.S. Application Data.”) The original application to which the '018 Patent traces back was initially filed on February 16, 2001. (Id. ) As discussed in several parts of this Opinion, this date—February 16, 2001—plays an important role in defining the invention; that is, in determining what it is and what it simply cannot be.

Regeneron describes the invention disclosed in the Patent as a mouse with normal immune response useful for discovering therapeutic antibodies. According to Regeneron, mice described by prior art had deficient immune response. The invention involves, in part, the targeted insertion of unrearranged human variable region DNA segments into an endogenous mouse (murine⁴ ) immunoglobulin (“Ig”) locus. According to Regeneron, this would result in a mouse with human variable regions and mouse constant regions, that is, a “chimeric” or “reverse chimeric”⁵ mouse. Notably, and as described further below, Regeneron's view of the invention necessarily presumes a multi-step process. The process could unfold in two different ways. It could be achieved by making two targeted insertions into the same mouse Ig loci, one of human heavy chain variable regions and a subsequent and further targeted insertion of human light chain variable regions. Or, alternatively, it could be achieved by initial insertion of heavy and light chain variable regions into two separate mice and the subsequent breeding of the two mice, resulting in a mouse with both human heavy and light chain variable regions.

An aspect of this targeted insertion is, according to Regeneron, placement at a precise point: the human variable region gene segments must be adjacent to the mouse constant regions. Regeneron's technical expert, Dr. Oettinger, refers to this as “functional” linkage. In addition, Regeneron asserts that a necessary part of this invention includes retention of mouse regulatory regions, specifically the transmembrane and cytoplasmic tail. Regeneron asserts that the commercial embodiment of the invention is its VelocImmune mouse. These aspects of the invention are important to the issues here before the Court. A differently defined invention runs directly into the prior art Merus claims Regeneron failed to disclose during patent prosecution.

According to Merus, the invention (and claim 1 in particular) does not contain all of the limitations Regeneron now asserts. As an initial matter, it is not limited to mice with entirely human variable regions and entirely mouse constant regions, but may include those with combined human and mouse variable regions (that is, there is an insertion of human variable, but no deletion of the mouse, or insertion of human heavy chain leaving the mouse light chain, or vice versa). In addition, according to Merus, although claim 1 specifies that the insertion must occur into the Ig locus, it does not require insertion at the particular point within the locus (adjacent to, but neither overlapping with nor short of, the mouse constant region) as Regeneron now asserts; and this lack of specificity could lead to a mouse with an impaired immune response. Finally, according to Merus, the VelocImmune mouse, which Regeneron represented to the PTO was the commercial embodiment of the ' 018 Patent

, did not exist in February 2001; Regeneron only succeeded in making it several years later, after a number of failed attempts—and then by a process different from that disclosed in the '018 Patent.

II. DESCRIPTION OF THE TECHNOLOGY IN THE PATENT

According to the specification of the '018 Patent

, the method used to engineer this chimeric mouse involves “utilizing large DNA vectors to target, via homologous recombination, and modify, in any desirable fashion, endogenous genes and chromosomal loci in eukaryotic⁶ cells.” ('018 Patent, “Abstract.”) The large DNA vectors used in this process are defined in the specification as “LTVECs”—that is, large targeting vectors for eukaryotic cells. LTVECs are “derived from fragments of cloned genomic DNA larger than those typically used by other approaches intended to perform homologous targeting in eukaryotic cells.” (Id., 9:39–42.) A “targeting vector” is “a DNA construct that contains sequences ‘homologous' to endogenous chromosomal nucleic acid sequences flanking a desired genetic modification(s). The flanking homology sequences, referred to as the ‘homology arms', direct the targeting vector to a specific chromosomal location within the genome ...” (Id., 8:66–9:4.)

All of the figures in the specification show versions of homologous recombination

with LTVECs of various types and sizes, none smaller than 20 kilobases (“kb”). For instance, Figures 1 and 2 in the specification show a DNA “modification cassette” (or insert) being transferred by homologous recombination into a large targeting vector in a mouse's genome:

(Id., Fig. 1.)

(Id., Fig. 2.)

Figures 4A–4D of the '018 Patent

show a human insert in a LTVEC of 200–300 kbs:

The specification states that “use of LTVECs provides substantial advantages over current methods” of homologous recombination

. (Id., 1:37–38.) “LTVECs can be more rapidly and conveniently generated from available libraries of large genomic DNA fragments (such as BAC and PAC libraries⁷ ) than targeting vectors made using current technologies.” (Id., 1:40–43.) “The present invention” is described as providing for “a rapid, convenient, and streamlined method for systematically modifying virtually all the endogenous genes and chromosomal loci of a given organism.” (Id., 1:51–54.)

The specification also states that “[i]n accordance with the present invention, Applicants provide novel methods that enable the use of targeting vectors containing large regions of homology so as to modify endogenous genes or chromosomal loci in eukaryotic cells via homologous recombination

. Such methods overcome the ...