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

Adverse Inference of Specific Intent, Warranted by Litigation “Obfuscating” Prosecution Misconduct, Leads to Inequitable Conduct

Regeneron Pharmaceuticals, Inc. v. Merus N.V., (Fed. Cir. July 27, 2017) (PROST, Newman (dissenting), Wallach) (S.D.N.Y.: Forrest) (4 of 5 stars)

Fed Cir affirms judgment of patent unenforceability for inequitable conduct. The district court correctly established the broadest reasonable interpretation of Regeneron’s claims. Applying that interpretation, the district court correctly determined that certain references withheld during prosecution were non-cumulative and but-for material. In a fact-specific discussion, the opinion rejects each of Regeneron’s arguments for non-materiality and cumulativeness.

The district court did not abuse its discretion in entering an adverse inference of specific intent to deceive based on Regeneron’s litigation misconduct. The opinion describes a variety of acts by Regeneron that the district court found sanctionable, including Regeneron’s refusal to provide element-by-element infringement contentions, and its refusal to engage with the district court’s claim construction procedural rules (specifically, its refusal to propose constructions beyond “plain meaning”). The opinion also describes a record of bad conduct by Regeneron in connection with the district court’s inquiry into the scope of waiver of privilege in connection with certain key documents bearing on Regeneron’s conduct during prosecution. Applying Second Circuit law, the opinion concludes that the district court was entitled to draw an adverse inference generally, and not with respect to a single piece of problematic evidence. It rejects Regeneron’s argument that the adverse inference was actually a dismissal (which would have required a showing of bad faith). Aptix, 269 F.3d 1369 (Fed. Cir. 2001), is not contrary because the adverse inference was not a sanction only against litigation misconduct, but against litigation misconduct that “obfuscated [Regeneron’s] prosecution misconduct.” Op. at 37. Unlike Aptix, the unenforceability determination was not a sanction in its own right, but only the proper result once the adverse inference was combined with the materiality determinations discussed above.

Dissent: Judge Newman would have reversed, reasoning that an unenforceability declaration is not an available remedy for litigation misconduct.

KEYWORDS: INEQUITABLE CONDUCT (YES); ADVERSE INFERENCES; LITIGATION MISCONDUCT