Regeneron v. Merus: En Banc Chances Rise

by Dennis Crouch

Prof. Hricik and I have both previously written about the Regeneron inequitable conduct decision.  The following short summary comes from Hricik:

[The] district court … held that people substantively involved in prosecution of the ‘018 Patent knew of but-for material references, which were not disclosed.  Although the district court had intended to hold a separate trial on intent to deceive, instead it held that the patentee’s discovery abuses (and other apparent misconduct) warranted an adverse inference of intent to deceive.  The discovery abuses were related to the inequitable conduct issue.  Accordingly, it held the patent unenforceable for inequitable conduct.

The panel split (Judge Newman dissenting), but affirmed 2-1, holding that the withheld art was in fact but-for material and that the district court had not abused its discretion by, under regional circuit law, imposing an adverse inference (more on that, the key and troublesome issue, below).

In my prior essay, I wrote that “[t]he case may be a wake-up-call for some litigators who will read through the list of misconduct and see it as only business-as-usual.”

Inequitable Conduct and Regeneron Pharmaceuticals, Inc. v. Merus N.V.: Trouble Waiting to Happen

Important Inequitable Conduct Case: Hybrid Prosecution/Litigation Misconduct

En Banc Petition: The patentee has petitioned for en banc rehearing — directly challenging the holding:

Questions Presented: (1) whether a district court may find that the patentee had specific intent to deceive the Patent and Trademark Office (PTO) based on misconduct by trial counsel, without relying on any actual evidence of intent to deceive the PTO; and (2) whether a district court has authority to eliminate the patent right as a sanction for litigation misconduct.

The petitioner’s primary argument is based upon prior Federal Circuit precedent that expressly bar courts from holding a patent unenforceable due to litigation misconduct. Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369, 1375 (Fed. Cir. 2001).  Note here that the majority attempted to distinguish Aptix by explaining that the court’s remedy for litigation misconduct was simply to infer a particular factual finding (intent to deceive), which turned out to be critical since materiality was also proven.  The question is whether this thin distinguishing point should be allowed to undermine the bulwark against inequitable conduct findings created by Therasense.

In a procedural order today, the Federal Circuit has given the patent-challenger a few extra weeks to draft its responsive brief (Now Due Nov. 2).

A set of amicus briefs support the petition:

  • Chicago IPLAC: “Finding inequitable conduct by the patent prosecution lawyer as a penalty for the tactics of subsequent litigation counsel is a departure from past jurisprudence of such gravity that this Court should consider this issue en banc.”
  • Seven Chicago Attorneys: A group led by Kevin Noonan argue that the district court “violated procedural due process” by failing to provide an opportunity to be heard on the question of specific intent to deceive the USPTO — noting that due process concerns are raised when dealing with lawyer misconduct accusations.
  • Hrick & Mccabe: The two leading Patent-Law Professional Responsibility gurus argue, inter alia, that the decision particularly harms the reputation of the prosecuting attorneys and inventors and the irrebuttable conclusions prevents any defense by those individuals.
  • NYIPLA: This group points out a deficiency in the opinion – although the majority agreed with the inference-of-intent penalty, the court did not particularly spell out that the inference was “the single most reasonable inference able to be drawn from the evidence” as required by Therasense.
  • Washington Legal Foundation: “Inequitable conduct claims are likely to proliferate as a result of the panel decision.”
  • BIO: If the holding stands, court should make clear that there must be a strong nexus between the litigation-misconduct and the misconduct during patent prosecution.


14 thoughts on “Regeneron v. Merus: En Banc Chances Rise

  1. 5

    Does anybody think it is a bad idea for the same law firm who prosecuted a patent to also litigate the patent against an infringer?

    1. 5.1

      If client is informed about and counsel has planned for possibility of prosecuting attorney to be involved as a witness. Usually no problem.

    2. 5.2

      Patent leather, is not it possible to advise the client to hire independent counsel to defend any charge of inequitable conduct during prosecution?

  2. 4

    Question: When the patent owner next sues a different infringer with improved counsel, on what basis, if any, would the sanction in the prior court of declaring the patent unenforceable be binding on the patent owner in the subsequent trial? The critical finding of intent was not made by a trier of fact based on evidence. How can collateral estoppel possibly apply?

  3. 3

    There must be reams of Federal case law on “adverse inference drawing”. Presumably that’s how this will be settled?

    Or will that case law be “balkanized” to make a special exception for patentees? Because they’re so important, and they really need a helping hand.

  4. 2

    Questions Presented: (2) whether a district court has authority to eliminate the patent right as a sanction for litigation misconduct.

    The “patent right” could surely be constrained as it applies to the entity engaging in the misconduct. In other words, the entity engaging in the egregious behavior can simply be sidelined? How is that not an equitable response to egregious misconduct?

    If that’s somehow unfair, then it would seem to be equally out of bounds to make an adverse inference against an infringer that leads (but for the inference) to a finding of infringement.

    1. 2.1

      MM, there seems to be an assumption that the order is “in rem” such that the patent is somehow gone. But an equitable order only applies to parties, not to a res, and since the find on IC was a sanction, there is no collateral estoppel.

      So, the patent cannot be “gone” unless I am missing something.

  5. 1

    The bigger issue is not the inequitable conduct finding or the adverse inference but rather the result. Put another way, why not declare a patent unenforceable as a sanction for egregious abuse of the patent? That seems eminently fair and reasonable.

Comments are closed.