By Thomas Long, J.D
Regeneron Pharmaceuticals, Inc., a biopharmaceutical company based in Tarrytown, New York, cannot enforce a patent covering methods of genetically modifying a mouse to make human antibodies because the patent was obtained through inequitable conduct before the USPTO, the U.S. Court of Appeals for the Federal Circuit has held in a split decision. Because Regeneron withheld material prior art references and made materially misleading statements to the USPTO, Regeneron could not enforce the patent against a competitor. A November 2015 decision of the federal district court in Wilmington, Delaware, in which the court inferred that Regeneron acted with the specific intent to deceive the USPTO, based on Regeneron’s misconduct during patent prosecution and litigation, was affirmed (Regeneron Pharmaceuticals, Inc. v. Merus B.V., July 27, 2017, Prost, S.).
Patent-in-suit and infringement allegations. On March 11, 2014, Regeneron filed two patent infringement suits—one against Netherlands-based Merus B.V. ("Merus"), and one against Ablexis LLC ("Ablexis")—accusing both companies of infringing U.S. Patent No. 8,502,018 ("the ’018 patent"), entitled Methods of "Modifying Eukaryotic Cells." The patent describes a method for engineering and utilizing large DNA vectors to target and modify endogenous genes and chromosomal loci in eukaryotic cells. Regeneron allegedly commercialized the ’018 patent through its "Veloclmmune® humanized mouse," which produced hybrid antibodies useful in making human antibody therapeutics.
Inequitable conduct counterclaim. Merus answered Regeneron’s complaint and counterclaimed, asserting that the ’018 patent was unenforceable due to Regeneron’s inequitable conduct during patent prosecution. In December 2014, following claim construction, Regeneron stipulated that its infringement allegations against Merus failed based on the court’s construction, leaving only the inequitable conduct counterclaim for resolution. A bench trial was held on Merus’s counterclaim on June 9 to 15, 2015.
After examining a large amount of evidence presented at trial—and taking into account instances of litigation misconduct by Regeneron’s counsel—the court concluded that "it is clear that this litigation should never have been commenced." The district court added that, throughout the proceedings, Regeneron "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."
Patent claims. Regeneron described the invention disclosed in the ’018 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 involved, in part, the targeted insertion of unrearranged human variable region DNA segments into an endogenous mouse (murine) 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" mouse.
Regeneron’s view of the invention necessarily presumed a multi-step process, the court said. The process 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, the process could be achieved by initial insertion of heavy and light chain variable regions into two separate mice and the subsequent breeding of those mice, resulting in a mouse with both human heavy and light chain variable regions.
According to Regeneron, an aspect of this targeted insertion was placement at a precise point; the human variable region gene segments must be adjacent to the mouse constant regions. In addition, Regeneron asserted that a necessary part of the invention included retention of mouse regulatory regions, specifically the transmembrane and cytoplasmic tail. These aspects were important, the court said, because a differently defined invention "runs directly into" prior art that Merus claimed Regeneron failed to disclose during patent prosecution.
According to Merus, the asserted claims of the ’018 patent did not actually contain all of the limitations Regeneron asserted in this case. First, the invention was not limited to mice with entirely human variable regions and entirely mouse constant regions, but could include mice with combined human and mouse variable regions. In addition, Merus said, although claim 1 of the ’018 patent specified that the insertion must occur into the Ig locus, it did not require insertion at the particular point within the locus that Regeneron now asserted, and this lack of specificity could lead to a mouse with an impaired immune response. Finally, Merus asserted that the VelocImmune mouse, which Regeneron represented to the USPTO was the commercial embodiment of the ’018 patent, did not yet exist at the time of prosecution; Regeneron only succeeded in making it several years later, after a number of failed attempts—and even then by a process different from that disclosed in the ’018 patent.
Inequitable conduct standard. An inequitable conduct finding involves two parts. First, the accused infringer, who bears the burden of proof on this claim, must prove that a nondisclosed reference was material. Second, the accused infringer must show that the patent applicant acted with the requisite intent. Materiality is determined on a "but-for" basis. When an applicant fails to disclose prior art to the USPTO, that prior art is but-for material if the USPTO would not have allowed a claim had it been aware of the undisclosed prior art. In addition to proving the materiality of withheld references, the accused infringer must prove that the patent holder acted with the specific intent to deceive the USPTO.
Prior art references. Four references known to Regeneron’s Drs. Smeland and Murphy were not disclosed to the USPTO during patent prosecution: (1) DX 70 – Marianne Bruggemann & Michael S. Neuberger, "Strategies for Expressing Human Antibody Repertoires in Transgenic Mice", 17(8) Review Immunology Today 391 (1996) ("Bruggemann"); (2) DX 6 – WIPO Patent Publication No. WO 91/00906 entitled "Chimeric and Transgenic Animals Capable of Producing Human Antibodies" credited to Clive Wood et al. ("Wood"); (3) DX 78 – Shinsuke Taki et al., "Targeted Insertion of a Variable Region Gene into the Immunoglobulin Heavy Chain Locus", 262 Science 1268 (1993) ("Taki"); and (4) DX 72 – Yong-Rui Zou et al, "Cre–loxP-mediated Gene Replacement: A Mouse Strain Producing Humanized Antibodies", 4(12) Current Biology 1099 (1994) ("Zou").
Merus also asserted that during prosecution of the ‘018 patent, Regeneron failed to disclose Merus’s Statement of Facts and Arguments ("Merus’s Brief") or Kymab’s Statement of Facts and Arguments ("Kymab’s Brief," together the "European Opposition Briefs"), in opposition to European Patent No. 1,360,287.
Materiality. In the district court’s opinion, the cited prior art references met the "but-for" test for materiality. In other words, the court determined that the USPTO would not have allowed the relevant patent claims if it had been aware of the undisclosed prior art. Each of the withheld references had formed a part of the basis for either outright rejection or other action by the USPTO in connection with other applications in the same family of patents.
The Federal Circuit agreed with the district court. The Federal Circuit concluded that under the "broadest reasonable construction" standard, the district court correctly found that the claims were not limited to mice that solely comprised mouse constant region gene segments. In addition, the district court properly found that the withheld references were but-for material and were not cumulative, the appellate court said. Bruggemann was a review paper that taught the use of transgenic mice to express human antibodies. Even if Bruggemann did not disclose a reverse-chimeric mouse, as Regeneron argued, the patent claims encompassed humanized, fully human, and reverse-chimeric mice. Wood disclosed insertion of human variable region gene segments upstream of an endogenous mouse constant region, to produce a genetically modified mouse, and expert evidence showed that Wood taught the specific targeting of the Ig locus disclosed in the patent claims at issue. Taki taught insertion of exogenous (i.e., foreign) "rearranged mouse variable region [DNA] into the Ig locus" to produce a transgenic mouse with good B-cell development and antibodies. The Federal Circuit affirmed the finding that Taki provided the motivation to target human variable region DNA into the mouse Ig locus. Finally, Zou taught specifically inserting human Ig DNA into the mouse Ig locus, preserving part of the mouse constant region, and disclosed producing antibodies at the "same level and efficiency as wild-type mice." The district court properly found that Zou’s teaching of inserting portions of human constant, rather than variable, DNA did not detract from its motivation to insert human variable regions in the mouse Ig locus. The references both individually and in combination taught one of skill in the art to genetically modify mice by inserting exogenous, including human, variable region gene segments endogenously into a mouse immunoglobulin locus, the Federal Circuit determined.
Specific intent. The district court never held a second trial on the issue of specific intent. Instead the district court sanctioned Regeneron for its litigation misconduct by drawing an adverse inference of specific intent. The appellate court determined that the district court did not abuse its discretion by sanctioning Regeneron in this manner.
Regeneron’s misconduct during patent prosecution included: (1) statements in the specification disproven by Regeneron’s own subsequent patent applications; (2) the specification making inaccurate or incomplete statements with regard to the use of certain large DNA vectors; and (3) a presentation to the USPTO that contained statements that Regeneron knew at the time to be false. Regeneron also engaged in discovery and trial misconduct, the district court found. Regeneron failed to comply with local rules regarding disclosure of the details of its infringement contentions. Regeneron failed to produce requested documents. During claim construction, Regeneron’s counsel engaged in what the court called questionable tactics, first claiming that no construction was necessary and then attempting to "game" the system by shifting the burden to Merus to propose constructions of key claim terms. Regeneron also attempted to misuse attorney-client privilege to deprive Merus of access to a large amount of documentary evidence.
The Federal Circuit largely repeated and adopted the district court’s factual findings regarding Regeneron’s litigation misconduct. In the appellate court’s view, it was not improper for the district court to apply an adverse inference of Regeneron’s intent to deceive. When a party breaches discovery obligations by failing to produce evidence, a district court has broad discretion in fashioning an appropriate sanction, including the discretion to proceed with a trial and give an adverse inference instruction. Regeneron’s litigation misconduct obfuscated its prosecution misconduct, the Federal Circuit said. 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 acted within its discretion in drawing an adverse inference to sanction this litigation misconduct. Accordingly, the appellate court affirmed the district court’s conclusion that the ’018 patent was unenforceable.
Dissenting opinion. Circuit Judge Pauline Newman wrote in dissent. In Judge Newman’s view, the majority erred in affirming the district court’s finding of specific intent based on an adverse interest drawn from Regeneron’s misconduct. According to Judge Newman, intent to deceive cannot be inferred. Rather, a finding of intent had to be based on factual findings. Because there was no trial on the issue, there was no testimony and no opportunity for examination and cross-examination of witnesses, and no record for the appellate court to examine. Judge Newman opined that the majority engaged in "innuendo" by making 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 wrote. In addition, Judge Newman argued that the four prior art references were not but-for material to patentability.
The case is No. 2016-1346.
Attorneys: Neal Kumar Katyal (Hogan Lovells US LLP) for Regeneron Pharmaceuticals, Inc. Patricia A. Carson (Kirkland & Ellis LLP) for Merus N.V.
Companies: Regeneron Pharmaceuticals, Inc.; Merus N.V.
MainStory: TopStory Patent FedCirNews
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