Adverse Inference of Intent to Deceive can be based on Post-Prosecution Behavior

September 2017

 

Regeneron Pharmaceuticals, Inc. v. Merus N.V., No. 2016-1346 (Fed Cir. Jul. 7, 2017)

In Regeneron Pharmaceuticals, Inc., the Federal Circuit affirmed a district court’s finding of unenforceability due to inequitable conduct.

Regeneron was the owner of a patent directed that claimed a genetically modified mouse with human DNA segments.  Regeneron sued Merus for infringement in the federal district court for the Southern District of New York, and Merus asserted a counterclaim of unenforceability due to inequitable conduct during prosecution.  Merus argued that Regeneron withheld references from the Patent Office during prosecution that would have resulted in the rejection of the claims at issue.  The district court agreed with Merus, finding the patent unenforceable.

Inequitable conduct requires a clear and convincing evidence that a non-disclosure or misstatement was (1) “but-for” material, in that the Patent Office would not have allowed the claims had it been aware of the non-disclosure or misstatement, and (2) the patentee acted with a specific intent to deceive the Patent Office.

The Federal Circuit affirmed the district court’s finding that each of the references was “but-for” material.  The court also affirmed the district court’s decision to draw an adverse inference of a specific intent to deceive as a sanction for Regeneron’s litigation misconduct.  Regeneron had failed to serve infringement contentions containing an element-by-element analysis of the claims as required by the Court, it had failed to offer meaningful constructions of claim language during claim construction, failed to produce documents in response to a court order requiring it to disclose thoughts or concerns related to the disclosure of certain references to the Patent Office, and otherwise attempted to use the attorney-client privilege as a sword and shield, disclosing some attorney opinions and impressions while claiming privilege over others on the same topic.  These actions constituted a pattern of misconduct that justified an adverse inference.

Judge Newman dissented, arguing that a specific intent to deceive must be proven and cannot be substituted with an adverse inference.  While litigation misconduct could support dismissal of a case, invalidity or unenforceability must be established on the law of validity or unenforceability.

Key Takeaway:  A district court may impose the sanction of an adverse inference of a specific intent to deceive the patent office based on a pattern of litigation misconduct that includes misconduct related to a claim of unenforceability.