Regeneron Pharmaceuticals v. Merus N.V. , 864 F.3d 1343 ( 2017 )

United States Court of Appeals
for the Federal Circuit
______________________
REGENERON PHARMACEUTICALS, INC.,
Plaintiff-Appellant
v.
MERUS N.V.,
Defendant-Appellee
______________________
2016-1346
______________________
Appeal from the United States District Court for the
Southern District of New York in No. 1:14-cv-01650-KBF,
Judge Katherine B. Forrest.
______________________
Decided: July 27, 2017
______________________
NEAL KUMAR KATYAL, Hogan Lovells US LLP, Wash-
ington, DC, argued for plaintiff-appellant. Also represent-
ed by CHRISTOPHER P. BORELLO, MICHAEL ENZO FURROW,
BRENDAN M. O’MALLEY, ROBERT SETH SCHWARTZ, Fitzpat-
rick, Cella, Harper & Scinto, New York, NY.
PATRICIA A. CARSON, Kirkland & Ellis LLP, New York,
NY, argued for defendant-appellee. Also represented by
SAUNAK DESAI, AARON D. RESETARITS; JOHN C. O’QUINN,
Washington, DC; PETER B. SILVERMAN, Merus US, Inc.,
Cambridge, MA.
2 REGENERON PHARMACEUTICALS v. MERUS N.V.
KEVIN EDWARD NOONAN, McDonnell, Boehnen, Hul-
bert & Berghoff, LLP, Chicago, IL, for Amicus Curiae
Seven Chicago Patent Lawyers. Also represented by
JEFFREY PALMER ARMSTRONG, AARON VINCENT GIN, JAMES
LEE LOVSIN, JEREMY E. NOE, ANDREW W. WILLIAMS,
DONALD LOUIS ZUHN, JR.,
______________________
Before PROST, Chief Judge, NEWMAN and WALLACH,
Circuit Judges.
Opinion for the court filed by Chief Judge PROST.
Dissenting opinion filed by Circuit Judge NEWMAN.
PROST, Chief Judge.
Regeneron Pharmaceuticals, Inc. (“Regeneron”) ap-
peals from a final judgment of the district court holding
U.S. Patent No. 8,502,018 (“’018 patent”) unenforceable
because of Regeneron’s inequitable conduct during prose-
cution. Regeneron also appeals the district court’s con-
struction of several claim terms and determination of
indefiniteness. Because we conclude that Regeneron
engaged in inequitable conduct during prosecution of the
’018 patent, we affirm.
I
In March 2014, Regeneron filed suit in the Southern
District of New York accusing Merus B.V. (“Merus”) of
infringing the ’018 patent. The district court heard ar-
gument and expert testimony on claim construction and
issued an opinion construing various terms. See Regener-
on Pharm., Inc. v. Merus B.V., No. 14-cv-1650, 2014 WL
6611510 (S.D.N.Y. Nov. 21, 2014). The court also de-
clared one term indefinite. Id. at *23–24.
Merus asserted a counterclaim of unenforceability due
to inequitable conduct. It argued that Regeneron’s patent
REGENERON PHARMACEUTICALS v. MERUS N.V. 3
prosecutors withheld four references (the “Withheld
References”) from the U.S. Patent and Trademark Office
(“PTO”) during prosecution of the ’018 patent. According
to Merus, these references were cited in a third-party
submission in related U.S. patent prosecution and in
European opposition briefs, were but-for material, and
were withheld by Regeneron with the specific intent to
deceive the PTO. There was no dispute that Regeneron
knew of the Withheld References during prosecution of
the ’018 patent. Regeneron argues, however, that the
references were not but-for material, that they were
cumulative of references the PTO actually relied on
during prosecution, and that Regeneron did not have any
specific intent to deceive the PTO.
The district court scheduled a bench trial on Regener-
on’s inequitable conduct, but bifurcated the trials based
on the two elements of inequitable conduct: a first bench
trial on the materiality of the Withheld References, and a
second bench trial regarding the specific intent to deceive
the PTO. See Therasense, Inc. v. Becton, Dickinson & Co.,
649 F.3d 1276, 1287 (Fed. Cir. 2011) (en banc).
Following the first trial, the district court issued a
lengthy opinion detailing the materiality of the Withheld
References. Regeneron Pharm., Inc. v. Merus B.V., 144 F.
Supp. 3d 530 (S.D.N.Y. 2015) (“Regeneron I”). 1 The dis-
trict court, however, never held the scheduled second trial
on Regeneron’s specific intent to deceive the PTO. In-
1 The district court also found that Regeneron had
engaged in affirmative egregious misconduct—an alterna-
tive to but-for materiality—based on certain misleading
statements Regeneron made to the PTO during prosecu-
tion of ’018 patent. Id. at 582. Because we conclude that
the Withheld References are but-for material, we do not
discuss the district court’s affirmative egregious miscon-
duct determination.
4 REGENERON PHARMACEUTICALS v. MERUS N.V.
stead, in its opinion following the first bench trial, the
court exhaustively detailed Regeneron’s discovery mis-
conduct throughout litigation and sanctioned Regeneron
by drawing an adverse inference of specific intent to
deceive the PTO. In particular, the district court dis-
cussed Regeneron’s repeated violations of the district
court’s discovery orders and improper secreting of rele-
vant and non-privileged documents. Based on this mis-
conduct, the district court drew an adverse inference that
Regeneron’s agents failed to disclose the Withheld Refer-
ences to the PTO with the specific intent to deceive the
PTO. Having determined the but-for materiality of the
Withheld References and drawn an adverse inference of
Regeneron’s specific intent to deceive the PTO, the district
court concluded that Regeneron had committed inequita-
ble conduct and held the ’018 patent unenforceable.
Regeneron timely appealed the district court’s claim
construction order and final judgment of inequitable
conduct. We have jurisdiction under 28 U.S.C.
§ 1295(a)(1).
A
The ’018 patent emerged from a family of applications
that originated in December 2000. In February 2001,
Regeneron filed a continuation-in-part from that original
application, which ultimately issued as U.S. Patent No.
6,596,541 (“’541 patent”). Regeneron then filed a divi-
sional of the ’541 patent, and from that divisional filed
several continuations including U.S. Application No.
13/164,176 (“’176 application”) entitled “Method of Modi-
fying Eukaryotic Cells.” That continuation application
issued as the ’018 patent on August 6, 2013, to inventors
Drs. Andrew J. Murphy and George D. Yancopoulos, who
assigned it to Regeneron.
In general, the ’018 patent relates to using large DNA
vectors to target and modify endogenous genes and chro-
mosomal loci in eukaryotic cells. ’018 patent col. 1 ll. 17–
REGENERON PHARMACEUTICALS v. MERUS N.V. 5
33. One practical use of this technology is that users may
target and modify specific genes in mice so that the mice
develop antibodies that can be used by humans.
Antibodies are proteins that the body uses to counter-
act specific pathogens such as bacteria, viruses, and other
foreign substances in the blood. Antibodies are typically
represented by a “Y” shape consisting of four chains of
amino acids: two longer “heavy” chains, and two shorter
“light” chains. Each of the chains, in turn, consists of two
regions: a “variable” region toward the top of the “Y,” and
a “constant” region toward the bottom. One such anti-
body is illustrated below:
Appellant’s Br. 5 (stripes added). In this antibody, the
light chains are striped and the heavy chains are solid.
Further, the constant regions are represented in lighter
shades, and the variable regions in darker shades.
Mouse DNA coding for antibodies can be modified
using human DNA in various different ways. For exam-
ple, mouse DNA can be manipulated to create chimeric
antibodies that have mouse variable region DNA and
human constant region DNA. Similarly, mice can be used
to create humanized antibodies that have some mouse
variable region DNA, some human variable region DNA,
and human constant region DNA. Further, genetically
modified mice can be used to create antibodies that have
fully human DNA. Finally, mice can also be modified to
6 REGENERON PHARMACEUTICALS v. MERUS N.V.
create reverse chimeric antibodies that have mouse
constant region DNA and human variable region DNA.
This spectrum of modified antibodies is illustrated below.
Claim 1 of the ’018 patent, the only claim at issue
here, recites, in its entirety, “[a] genetically modified
mouse, comprising in its germline human unrearranged
variable region gene segments inserted at an endogenous
mouse immunoglobulin locus.” ’018 patent col. 29 ll. 24–
26. As discussed in greater detail below, Regeneron
contends that under the broadest reasonable construction,
this claim is limited to mice that produce reverse chimeric
antibodies. Merus, on the other hand, argues that under
the broadest reasonable construction, claim 1 includes
mice that can produce humanized, fully human, or reverse
chimeric antibodies. 2
B
As originally filed, claim 1 of the ’176 application re-
cited “[a] genetically modified mouse, comprising in its
germline human unrearranged variable gene region
segments inserted at a mouse immunoglobulin locus.”
2 Because this opinion primarily focuses on inequi-
table conduct, the court applies the broadest reasonable
construction to determine claim scope. See Therasense,
649 F.3d at 1291–92 (“[T]o establish inequitable con-
duct . . . the court should apply the preponderance of the
evidence standard and give claims their broadest reason-
able construction.”).
REGENERON PHARMACEUTICALS v. MERUS N.V. 7
J.A. 450. In January 2012, the PTO issued a Non-Final
Office Action rejecting claims 1–19 of the ’176 application
as being anticipated by a U.S. Application No. 11/009,873
to Nils Lonberg and Robert Kay (“Lonberg”). J.A. 376–88.
In July 2012, Regeneron’s Dr. Smeland, in-house
counsel responsible for prosecuting the ’176 application
and others in the same family in the United States and
Europe, replied to this Office Action. He argued that
unlike the recited claims of the ’176 application, Lonberg
teaches random and not targeted insertion. In particular,
Dr. Smeland argued that Lonberg did not teach inserting
“human unrearranged variable region gene segments” in
the mouse immunoglobulin (“Ig”) locus. Instead, accord-
ing to Dr. Smeland, Lonberg teaches genes that are
“randomly inserted at (unknown) loci.” J.A. 408–09.
In October 2012, the PTO mailed a Final Office Ac-
tion, rejecting the pending claims of the ’176 application,
maintaining the rejection of claims 1–19 as anticipated by
Lonberg.
In a January 2013 Reply to the Final Office Action,
Regeneron amended claim 1 to include the additional
limitation that the human unrearranged variable region
gene segments would be inserted at “an endogenous”
mouse immunoglobulin locus. Regeneron also sent a
presentation to the PTO with the Reply. In that presen-
tation, Regeneron asserted that it had developed a com-
mercial embodiment of the claimed mouse with surprising
results. It is undisputed that that assertion was false.
J.A. 7563. Regeneron had not developed any such mouse
at the time.
Following receipt of Dr. Smeland’s Reply and presen-
tation, the PTO issued an Advisory Action maintaining
the rejection of claims 1–19 as anticipated by Lonberg,
and claim 20 remained rejected in view of Lonberg and
other references. Shortly thereafter, in February 2013,
Regeneron retained Brendan Jones, Ph.D., to assist with
8 REGENERON PHARMACEUTICALS v. MERUS N.V.
prosecution. Drs. Jones and Smeland together planned
an in-person meeting with the Examiner during which
they relied on the misleading presentation asserting that
Regeneron had developed a commercial embodiment of
the claimed mouse. That meeting occurred in March
2013.
Following that meeting, in April 2013, the PTO issued
a Notice of Allowance for the ’176 application. In the
statement of reasons for allowance, the Examiner stated
that “[t]he prior art does not teach or suggest a genetical-
ly modified mouse comprising, in its germline cells, hu-
man unrearranged variable region gene segments
inserted at an endogenous mouse immunoglobulin locus.”
J.A. 531. The applicant transmitted the fee in June 2013,
and the ’018 patent issued on August 6, 2013.
C
Days before the PTO issued its notice of allowance for
the ’176 application, which would become the ’018 patent,
a third-party filed a submission in the parent application
of the ’018 patent, describing three references:
1. Marianne Brüggemann & Michael S. Neu-
berger, “Strategies for Expressing Human An-
tibody Repertoires in Transgenic Mice,” 17(8)
Review Immunology Today 391 (1996)
(“Brüggemann”);
2. Shinsuke Taki et al., “Targeted Insertion of a
Variable Region Gene into the Immunoglobu-
lin Heavy Chain Locus,” 262 Science 1268
(1993) (“Taki”); and
3. Yong–Rui Zou et al, “Cre-loxP-mediated Gene
Replacement: A Mouse Strain Producing Hu-
manized Antibodies,” 4(12) Current Biology
1099 (1994) (“Zou”).
Dr. Rajewsky co-authored both the Taki and Zou refer-
REGENERON PHARMACEUTICALS v. MERUS N.V. 9
ences. Further, Dr. Alt, another inventor, co-invented
WIPO Patent Publication No. WO 91/00906 entitled
“Chimeric and Transgenic Animals Capable of Producing
Human Antibodies,” credited to Clive Wood et al.
(“Wood”). Collectively, the Brüggemann, Taki, Zou, and
Wood references are the “Withheld References.” 3
Given their prior work, Regeneron recruited Drs. Alt
and Rajewsky to its scientific advisory board to work on
the claimed mouse before Regeneron filed the ’018 patent.
During prosecution, these individuals corresponded with
Dr. Murphy, an ’018 patent inventor, expressing concerns
about his characterizations of the prior art in related
publications.
Dr. Smeland knew of the third party submission as
well as all four Withheld References during prosecution,
yet withheld them from the ’018 patent’s examiner.
Although Regeneron did not disclose the Withheld Refer-
ences during prosecution of the ’018 patent, once the ’018
patent had been allowed, Regeneron disclosed the With-
held References to the PTO in every related application
having the same specification and similar claims. Merus
contends that Regeneron’s failure to disclose the Withheld
References constituted inequitable conduct. Regeneron
responds that Dr. Smeland was under no obligation to
disclose these references because they were not but-for
material.
3 The district court also found that certain withheld
litigation documents filed in European Opposition pro-
ceedings in 2013 were also but-for material. Regeneron
argues that legal documents prepared for litigation can-
not be but-for material. Appellant’s Br. 48–49. Because
we do not rely on these litigation documents for our
holding, we need not address this issue.
10 REGENERON PHARMACEUTICALS v. MERUS N.V.
II
“Inequitable conduct is an equitable defense to patent
infringement that, if proved, bars enforcement of a pa-
tent.” Therasense, 649 F.3d at 1285. Unlike validity
defenses, which are claim specific, inequitable conduct
regarding a single claim renders the entire patent unen-
forceable. Id. at 1288. Inequitable conduct has two
separate requirements: materiality and intent. Id. at
1290.
“[A]s a general matter, the materiality required to es-
tablish inequitable conduct is but-for materiality.” Id. at
1291. A prior art reference is “but-for material if the PTO
would not have allowed a claim had it been aware of the
undisclosed prior art.” Id. In determining the materiality
of a reference, the court applies the preponderance of the
evidence standard and gives claims their broadest rea-
sonable construction. Id. at 1291–92.
A reference is not but-for material, however, if it is
merely cumulative. See Dig. Control Inc. v. Charles
Mach. Works, 437 F.3d 1309, 1319 (Fed. Cir. 2006) (“How-
ever, a withheld otherwise material prior art reference is
not material for the purposes of inequitable conduct if it is
merely cumulative to that information considered by the
examiner.”). A reference is cumulative when it “teaches
no more than what a reasonable examiner would consider
to be taught by the prior art already before the PTO.”
Regents of the Univ. of Calif. v. Eli Lilly & Co., 119 F.3d
1559, 1575 (Fed. Cir. 1997).
In addition to proving the materiality of withheld ref-
erences, “the accused infringer must prove that the pa-
tentee acted with the specific intent to deceive the PTO.”
Therasense, 649 F.3d at 1290. “[A] court must weigh the
evidence of intent to deceive independent of its analysis of
materiality. Proving that the applicant knew of a refer-
ence, should have known of its materiality, and decided
not to submit it to the PTO does not prove specific intent
REGENERON PHARMACEUTICALS v. MERUS N.V. 11
to deceive.” Id. (citing Star Sci., Inc. v. R.J. Reynolds
Tobacco Co., 537 F.3d 1357, 1366 (Fed. Cir. 2008)). “In a
case involving nondisclosure of information, clear and
convincing evidence must show that the applicant made a
deliberate decision to withhold a known material refer-
ence.” Id. (quoting Molins PLC v. Textron, Inc., 48 F.3d
1172, 1181 (Fed. Cir. 1995)) (internal quotation marks
omitted).
Direct evidence of intent is not, however, required. A
court may infer intent from circumstantial evidence. Id.An inference of intent to deceive is appropriate where the
applicant engages in “a pattern of lack of candor,” includ-
ing where the applicant repeatedly makes factual repre-
sentations “contrary to the true information he had in his
possession.” Apotex Inc. v. UCB, Inc., 763 F.3d 1354, 1362
(Fed. Cir. 2014).
On appeal, Merus asserts that Drs. Smeland and
Murphy violated their duty of candor and engaged in
inequitable conduct. Regeneron does not contest that
both of these individuals had a duty of candor to the PTO.
Regeneron, however, argues that the duty was not violat-
ed because none of the Withheld References were but-for
material and because the district court improperly con-
cluded that the applicants possessed the necessary specif-
ic intent to deceive the PTO.
“[W]e review the district court’s findings of materiali-
ty and intent for clear error.” Am. Calcar, Inc. v. Am.
Honda Motor Co., 768 F.3d 1185, 1189 (Fed. Cir. 2014). A
finding of inequitable conduct based on those facts is
reviewed for an abuse of discretion. Id.Further, “[w]hen reviewing the imposition of sanc-
tions under a district court’s inherent powers, we apply
the law of the regional circuit in which the district court
sits,” here the Second Circuit. Monsanto Co. v. E.I. Du
Pont de Nemours & Co., 748 F.3d 1189, 1196 (Fed. Cir.
2014). The Second Circuit reviews a district court’s
12 REGENERON PHARMACEUTICALS v. MERUS N.V.
imposition of sanctions and an adverse inference for
litigation misconduct for abuse of discretion. Residential
Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107
(2d Cir. 2002).
A
The first step in an inequitable conduct inquiry is de-
termining whether the patentee failed to disclose but-for
material information to the PTO. Determining but-for
materiality requires that the court place itself in the
shoes of a patent examiner and determine whether, had
the reference(s) been before the examiner at the time, the
claims of the patent would have still issued. Therasense,
649 F.3d at 1291–92.
As with an invalidity analysis, the first step in deter-
mining but-for materiality of a reference is determining
the scope of the claims at issue. Thus, the court must
first determine the broadest reasonable construction of
the claims that the PTO would have applied during
prosecution. Next, based on the broadest reasonable
construction, the court must determine whether a reason-
able patent examiner would have allowed the claims had
she known of the Withheld References. See Am. Honda
Motor, 768 F.3d at 1189.
1
The broadest reasonable construction of a claim term
is one that is consistent with “the specification and the
record evidence” and is “consistent with the one that those
skilled in the art would reach.” Microsoft Corp. v. Proxy-
conn, Inc., 789 F.3d 1292, 1298 (Fed. Cir. 2015). But “[a]
construction that is unreasonably broad and which does
not reasonably reflect the plain language and disclosure
will not pass muster.” Id. (internal quotation marks
omitted).
Both Regeneron and Merus agree that the claimed
mouse has, as recited in claim 1, “human unrearranged
REGENERON PHARMACEUTICALS v. MERUS N.V. 13
variable region gene segments.” But Regeneron argues
that under the broadest reasonable construction of claim
1, the non-variable (constant) region of the claimed
mouse’s modified gene segments exclusively contains
mouse genes. In other words, Regeneron argues that
claim 1 is limited to a reverse chimeric mouse. Appel-
lant’s Br. 32–35. Merus, on the other hand, argues that
the constant region of the gene segments in the claimed
mouse may contain mouse genes or human genes, and
may, therefore, be reverse chimeric, humanized, or fully
human. Appellee’s Br. 51.
Regeneron first relies on the claim language to sup-
port its position. As noted above, claim 1 recites “[a]
genetically modified mouse, comprising in its germline
human unrearranged variable region gene segments
inserted at an endogenous mouse immunoglobulin locus.”
According to Regeneron, because claim 1 only recites
modifying the mouse by inserting “human unrearranged
variable region gene segments,” it implies leaving the
remainder of the mouse’s DNA unmodified. This, howev-
er, is inaccurate. Because “comprise” is inclusive or open-
ended, the use of the term does not exclude unrecited
elements. See Genentech, Inc. v. Chiron Corp., 112 F.3d
495, 501 (Fed. Cir. 1997) (“‘Comprising’ is a term of art
used in claim language which means that the named
elements are essential, but other elements may be added
and still form a construct within the scope of the claim.”);
accord MPEP § 2111.03 (“The transitional term ‘compris-
ing,’ which is synonymous with ‘including,’ ‘containing,’ or
‘characterized by,’ is inclusive or open-ended and does not
exclude additional, unrecited elements or method steps.”).
A germline that “comprises” human variable region gene
segments may very well also include human constant
gene segments. Thus, the “customary and ordinary”
meaning of the language in claim 1 is not limited to a
reverse chimeric mouse.
14 REGENERON PHARMACEUTICALS v. MERUS N.V.
Regeneron further argues that the specification pur-
portedly limits the claim to mice that produce “hybrid
antibodies containing human variable regions and mouse
constant regions.” Appellant’s Br. 33 (citing ’018 patent
col. 20 ll. 37–39). The patent, however, clearly teaches
producing antibodies that “compris[e] a human constant
region.” ’018 patent col. 7 ll. 19–23 (emphasis added).
Regeneron argues that this disclosure is limited to reverse
chimeric antibodies that are later modified to insert a
human constant region. But Regeneron points to no
portion of the specification to support its argument. In
context, it is clear that the endogenously produced anti-
bodies may comprise a human constant region. The
specification thus does not limit the claims to mice with
human variable regions and mouse constant regions.
Accordingly, we disagree with Regeneron and con-
clude that under the broadest reasonable construction,
the district court correctly found that the claims are not
limited to mice that solely comprise mouse constant
region gene segments.
2
Under this broadest reasonable construction, the
court next determines if the district court clearly erred in
finding the Withheld References but-for material and not
cumulative of prior art that the PTO considered during
prosecution. We conclude that the district court properly
found that the Withheld References were but-for material
and were not cumulative.
During prosecution, Drs. Smeland and Murphy knew
of the Withheld References and did not disclose them to
the PTO. Merus argues, and the district court found, that
each of these references was but-for material, i.e., the
“PTO would not have allowed [the] claim had it been
aware of” these references. Therasense, 649 F.3d at 1291.
Regeneron disagrees. As noted above, the four Withheld
References were Brüggemann, Wood, Taki, and Zou.
REGENERON PHARMACEUTICALS v. MERUS N.V. 15
First, Regeneron argues that the district court im-
properly found Brüggemann to be but-for material.
Brüggemann is a review paper that teaches the use of
transgenic mice to express human antibodies. In particu-
lar, Brüggemann teaches that “[a]n attractive alternative
[to the random integration of human genes into mouse
genes] would be to replace the mouse Ig loci with the
human Ig loci.” J.A. 3917. Brüggemann further expands
that in doing so, “much of the DNA of the mouse Ig loci”
might be replaced with human DNA. J.A. 3918. Regen-
eron only contests Brüggemann’s materiality because
Brüggemann purportedly does not disclose a reverse-
chimeric mouse. See Appellant’s Br. 37–38 (“[Brügge-
mann] does not specify that the mouse constant region
should be retained, or that any portion of the mouse locus
should be retained at all.”). As discussed above, however,
claim 1 is not limited to reverse-chimeric mice. Claim 1
encompasses humanized, fully human, and reverse chi-
meric mice as well. We therefore are not persuaded by
the distinction drawn by Regeneron and conclude that the
district court did not clearly err in finding Brüggemann
but-for material.
Second, Regeneron argues that the district court im-
properly found Wood to be but-for material. According to
Regeneron, Wood does not teach inserting a human
variable gene into a mouse by targeting the mouse Ig
locus. Instead, Regeneron contends that Wood teaches
“randomly integrating human transgenes” into a mouse
genome with no such targeting. Appellant’s Br. 40.
As Merus’s expert Dr. Geoff Davis explained, howev-
er, Wood does disclose specific targeting of the mouse’s Ig
locus. For example, Wood teaches that “[t]he present
invention relates generally to immunoglobulin rear-
rangement in chimeric and transgenic animals, and more
specifically to a mouse containing in its germline . . . the
ability to generate immunoglobulins . . . .” Wood at 1:4–9
(emphasis added); J.A. 2125–26. Wood further teaches
16 REGENERON PHARMACEUTICALS v. MERUS N.V.
that when human DNA is combined with mouse DNA, the
“constant region,” i.e., the constant region of the DNA in
the Ig locus, “is of exogenous or endogenous species origin”
and that this constant region may be “from the animal
itself.” Wood at 6:17–20, 10:3–5 (emphasis added); J.A.
2126–28. Skilled artisans are therefore taught to specifi-
cally target the endogenous Ig locus when inserting
human DNA into the mouse. The district court did not
err in finding Wood but-for material.
The dissent argues that Wood is not material because
it only teaches a “DNA fragment construct” but does not
describe “any targeted insertion method described else-
where in the prior art . . . .” Dissent at 17. As an initial
matter, neither party argues this position and the district
court did not make this factual finding. See 3M Co. v.
Avery Dennison Corp., 673 F.3d 1372, 1378 (Fed. Cir.
2012) (“[I]t is improper for us to determine factual issues
in the first instance on appeal . . . finding those facts in
the first instance would overstep our bounds as a review-
ing court and we cannot resolve the parties’ factual dis-
putes on appeal.”). Regardless, the dissent’s argument is
unavailing because the claim at issue does not recite a
particular method of inserting DNA into a mouse. The
claim simply recites a genetically modified mouse that
comprises “human unrearranged variable region gene
segments inserted at an endogenous mouse immunoglobu-
lin locus.” Wood teaches that “[t]he animals of this inven-
tion are designed by the integration into their germlines
of DNA carrying unrearranged or only partially rear-
ranged exogenous Ig gene segments.” J.A. 2127. Wood
thus teaches the elements of the claim at issue and is but-
for material.
Third, Regeneron argues that the district court im-
properly found Taki to be but-for material. According to
Regeneron, Taki only teaches inserting rearranged varia-
ble region DNA from one mouse into the genome of anoth-
er mouse. Claim 1, on the other hand, recites inserting
REGENERON PHARMACEUTICALS v. MERUS N.V. 17
unrearranged human variable region DNA into a mouse
genome.
As the district court correctly noted, Taki teaches in-
sertion 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. Regeneron I, 144 F. Supp. 3d at 573. The
development of a transgenic mouse with good B-cell
development and antibodies is also an intended goal of
the ’018 patent. ’018 patent col. 20 ll. 63–65 (“These
interactions are important for a strong and specific im-
mune response, for the proliferation and maturation of B
cells, and for the affinity maturation of antibodies.”). The
fact that Taki teaches using exogenous mouse DNA
instead of exogenous human DNA does not detract from
the motivation Taki provides to target the mouse Ig locus
with exogenous DNA, including human DNA. As the
district court correctly found,
Taki teaches targeting at the specific locus—the
Ig locus—with operable linkage . . . taking ad-
vantage of the mouse regulatory and constant re-
gions. Taki, in short, provides the motivation to
target human variable region DNA into the mouse
Ig locus.
Regeneron I, 144 F. Supp. 3d at 574. The district court
did not err by finding Taki’s disclosure of targeting inser-
tion of exogenous variable region DNA to be but-for
material.
Fourth, Regeneron argues that the district court im-
properly found Zou to be but-for material. Regeneron
contends that Zou only teaches modifying a mouse’s
constant region whereas the ’018 patent teaches modify-
ing a mouse’s variable region. According to Regeneron,
“the ’018 Patent discloses the insertion of human variable
regions; Zou does not. Zou discloses the insertion of
18 REGENERON PHARMACEUTICALS v. MERUS N.V.
human constant regions; the ’018 Patent does not.”
Appellant’s Br. 44.
As even Regeneron admits, Zou teaches specifically
inserting human Ig DNA into the mouse Ig locus, preserv-
ing part of the mouse constant region, and discloses
producing antibodies at the “same level and efficiency as
wild-type mice.” J.A. 2414–17. The district court proper-
ly found that Zou’s teaching of inserting portions of hu-
man constant, rather than variable, DNA did not detract
from its motivation to insert human variable regions in
the mouse Ig locus. In fact, as Merus’s expert Dr. Davis
noted, Brüggemann cited Zou for this precise disclosure a
few years later. J.A. 2123–24. Thus, the district court
properly concluded that Zou was also but-for material.
In addition to arguing that the Withheld References
are not but-for material individually, Regeneron also
argues that the Withheld References are not but-for
material in combination. We disagree. As noted above,
the references both individually and in combination teach
one of skill in the art to genetically modify mice by insert-
ing exogenous, including human, variable region gene
segments endogenously into a mouse immunoglobulin
locus. The references, in particular Taki and Zou, also
provide the motivation to combine these references to
develop the genetically modified mouse.
Regeneron also argues that Brüggemann, Wood, and
Taki are cumulative of references that the examiner
considered during prosecution of the ’018 patent. 4 In
4 While Regeneron’s opening brief states, in a head-
ing, that Zou is “cumulative of Kucherlapati and Lon-
berg,” Regeneron provides no further argument regarding
these references. Appellant’s Br. 44–46. We therefore do
not address this point. The dissent, however, argues that
Zou is cumulative of a different cited reference,
REGENERON PHARMACEUTICALS v. MERUS N.V. 19
particular, Regeneron contends that Brüggemann is
cumulative of U.S. Patent No. 6,114,598 issued to Raju
Kucherlapati et al. on June 5, 1995 (“Kucherlapati”),
Wood is cumulative of Lonberg, and Taki is cumulative of
Kucherlapati and Lonberg. There is no dispute that the
PTO considered both Lonberg and Kucherlapati during
prosecution.
Kucherlapati relates generally to “the production of
xenogeneic specific binding proteins in a viable mammali-
an host.” Kucherlapati col. 1 ll. 20–21. Kucherlapati
explains that in a modified mouse,
the target [or mouse] locus may be substituted
with the analogous xenogeneic [or human] locus.
In this way, the xenogeneic locus will be placed
substantially in the same region as the analogous
host locus, so that any regulation associated with
the position of the locus will be substantially the
same for the xenogeneic immunoglobulin locus.
Id. at col. 10 ll. 50–55. Regeneron contends that this
disclosure teaches targeted insertion of human DNA at
the mouse Ig locus, Appellant’s Br. 43, to achieve the
“benefit of preserving normal regulatory sequences,” id. at
39.
Jakobovits. Dissent at 15–16. Neither the parties nor the
district court argued or found that Zou is cumulative of
Jakobovits. The only relevant expert testimony suggests
that Jakobovits is not cumulative of Zou. See J.A. 2184
(Merus’s expert trial declaration) (Filed under seal).
Because we cannot weigh expert testimony and factual
assertions made by the dissent in the first instance, we
limit our review to facts established in the record and
arguments presented to us by the parties. See 3M Co.,
673 F.3d at 1378.
20 REGENERON PHARMACEUTICALS v. MERUS N.V.
Lonberg relates generally to “transgenic non-human
animals capable of producing heterologous antibod-
ies . . . .” Lonberg at ¶ 002. As Regeneron explains,
Lonberg teaches using a “‘knockout plus transgene’ meth-
od for genetically engineering mice. Under that method,
human variable and human constant region gene seg-
ments are randomly integrated into the mouse genome,
while the mouse’s own antibody genes are ‘knocked out’
by targeted deactivation of the mouse immunoglobulin
locus.” Appellant’s Br. 8.
Although Regeneron argues that Brüggemann is cu-
mulative of Kucherlapati, we disagree. Brüggemann
instructs to “retain and exploit any possible regulatory
sequences in the mouse loci that are located distal to
protein-coding regions,” and cites Zou’s method to accom-
plish this. J.A. 3917. In contrast, Regeneron represented
both during prosecution of a related application and in
litigation that Kucherlapati’s discussion of a “xenogeneic
locus” is not enabled and concerns wholesale replacement.
J.A. 2178–80 (Regeneron’s Non-Final Office Action Re-
sponse, U.S. Patent Application No. 13/719,819) (“[O]ne of
ordinary skill in the art would not have a reasonable
expectation of successfully using the YAC-based method
described in Kuncherlapati to generate the mice compris-
ing the targeted insertion of human unrearranged varia-
ble region gene segments into the endogenous mouse
immunoglobulin locus, as currently claimed.”); J.A. 2193
(Dr. Jones’s deposition transcript) (“Kucherlapati is
primarily focused on adding the fully human transgene
randomly in the genome and then inactivating the endog-
enous locus.”). Further, Regeneron’s technical expert
testified that Kucherlapati’s prophetic description would
disrupt “important aspects of lymphoid development” and
would prevent normal B cell development. J.A. 3188.
Because Brüggemann teaches targeted gene replacement
as compared to Kucherlapati’s non-enabled wholesale
REGENERON PHARMACEUTICALS v. MERUS N.V. 21
replacement, Brüggemann teaches a known technique to
target the Ig locus, nowhere found in Kucherlapati.
Regeneron also unpersuasively argues that Wood is
cumulative of Lonberg. As Dr. Smeland stated to the
PTO during prosecution, “Lonberg does not disclose a
mouse comprising in its germline human unrearranged
variable region gene segments inserted at a mouse immu-
noglobulin locus. Instead, Lonberg discloses transgenes
that are apparently randomly inserted at (unknown) loci.”
J.A. 408–09. Wood, as explained above, teaches skilled
artisans to specifically target the mouse Ig locus and
insert human variable DNA there. Thus, Wood is not
cumulative of Lonberg.
Finally, Regeneron argues that Taki is cumulative of
Kucherlapati and Lonberg. As noted above, even Regen-
eron’s technical expert testified that Kucherlapati’s
prophetic description would disrupt “important aspects of
lymphoid development” and would prevent normal B cell
development. Taki, which teaches inserting “rearranged
mouse variable region [DNA] into the Ig locus” to produce
a transgenic mouse with good B-cell development and
antibodies, would not. Regeneron I, 144 F. Supp. 3d at
573. Further, Lonberg teaches targeting a mouse Ig locus
with a marker gene to inactivate the locus whereas Taki
teaches targeting functional exogenous variable region
DNA to produce normal antibodies. J.A. 2187–88. Thus,
Taki is not cumulative of Kucherlapati and Lonberg.
In sum, we conclude that the district court did not
clearly err in finding each of the Withheld References but-
for material.
B
As noted earlier, the district court never held a second
trial to determine if Regeneron acted with the specific
intent to deceive the PTO during prosecution. Instead,
the court sanctioned Regeneron for its litigation miscon-
22 REGENERON PHARMACEUTICALS v. MERUS N.V.
duct by drawing an adverse inference of specific intent.
Contrary to Regeneron’s arguments, we determine that
the district court did not abuse its discretion by sanction-
ing Regeneron in this manner.
Regeneron’s behavior in district court was beset with
troubling misconduct. In its November 2015 opinion, the
district court extensively detailed Regeneron’s litigation
misconduct and exercised its discretion to sanction Re-
generon. See Regeneron I, 144 F. Supp. 3d at 585–96. On
appeal, Regeneron argues that the district court abused
its discretion by sanctioning Regeneron, but does not
meaningfully dispute any of the factual findings underly-
ing the district court’s decision. Accordingly, we largely
repeat, and adopt, the district court’s factual findings
regarding Regeneron’s litigation misconduct below.
1
According to the district court, Regeneron’s miscon-
duct began at a relatively early stage in litigation. The
district court’s local patent rules required Regeneron to
disclose its infringement contentions, broken down by
element, to Merus. Regeneron claimed that it could not
comply. Instead, Regeneron provided a chart with in-
fringement contentions that listed each claim as consist-
ing of a single limitation—that is, a single element.
Merus moved to compel—seeking developed infringement
contentions. In that same motion, Merus also moved to
compel production of documents as required by the dis-
trict court’s rules relating to the conception and reduction
to practice of the ’018 patent. Regeneron claimed to have
few such documents and did not include in its production
a key document written by Dr. Murphy, one of the inven-
tors of the ’018 patent, setting forth the ’018 patent’s
conception and reduction to practice.
The district court issued a written decision in re-
sponse to Merus’s motion to compel. Discovery Order #6,
Regeneron Pharm., Inc. v. Merus B.V., No. 14-cv-1650
REGENERON PHARMACEUTICALS v. MERUS N.V. 23
(S.D.N.Y. July 22, 2014), Dkt. No. 82. At a later confer-
ence, the district court discussed its concerns regarding
Regeneron’s conduct and gave Regeneron an opportunity
to correct its contentions. Regeneron chose not to do so.
In both its order and at that conference, the district court
noted that the infringement claim that Regeneron had
asserted—as with all infringement claims—required an
element-by-element identity between the accused product
and the ’018 patent. The district court stated explicitly,
both in its written decision on the issue and at a hearing
held soon thereafter, that it was troubled by Regeneron’s
refusal. At that time, experienced patent counsel (later
replaced by Regeneron’s trial and appellate counsel here)
asserted that he did not understand what the district
court was asking for or how to break a claim down into
elements. The district court determined that this obfus-
cation made no sense and was a tactical choice—seeking
to shift the plaintiff’s burden in an infringement case to
define the elements of a claim to the defendant.
During claim construction, Regeneron again chose
tactics over substance. Because Regeneron was the
plaintiff, the district court’s rules required that Regeneron
first propose its claim constructions, and that the defend-
ant then respond. Regeneron took the position that no
terms required construction. The district court issued an
order expressing its concern that Regeneron was attempt-
ing to “game” the system by shifting the burden to Merus
to propose constructions and then to take shots at those
proposals. Discovery Order #5, Regeneron Pharm., Inc. v.
Merus B.V., No. 14-cv-1650, 2014 WL 3865366, at *1
(S.D.N.Y. July 22, 2014), Dkt. No. 81. To avoid this
potential gamesmanship, the district court required
Regeneron to live by its plain language constructions. Id.
at *2.
The district court also detailed Regeneron’s litigation
misconduct relating to the “Jones Memo.” Although this
misconduct was not the primary basis for the district
24 REGENERON PHARMACEUTICALS v. MERUS N.V.
court’s decision to impose sanctions, the district court
explained that Regeneron’s behavior with respect to the
Jones Memo was relevant for multiple reasons. First,
Regeneron’s behavior followed the pattern of misconduct
described above. Second, Regeneron sought to use the
memo as a cloak for its later misconduct that was the
primary basis for the district court’s sanctions decision.
The Jones Memo was created during prosecution of
the ’018 patent. While he was prosecuting the patent,
Regeneron’s in-house counsel Dr. Smeland retained Dr.
Jones. Dr. Jones was an outside patent attorney, as noted
above, retained to help with Regeneron’s patent prosecu-
tion. During prosecution of the ’018 patent, Dr. Jones
drafted a chart and memo in connection with his review of
whether to disclose the Withheld References to the PTO.
During litigation in district court, Regeneron listed
the chart and memo on its privilege log based on attorney-
client privilege. On the eve of Dr. Jones’s deposition,
however, Regeneron disclosed both the chart and the
memo. Merus asserted that this disclosure resulted in a
broad privilege waiver and brought a motion to compel.
The evidence presented to the district court on that
motion demonstrated that on November 7, 2013, Dr.
Jones had attached the chart to an email to Dr. Smeland,
and wrote, “[w]hile we discussed this analysis in numer-
ous calls, I don’t know if I have ever sent you this docu-
ment. For your records, I have also attached a memo I
drafted regarding the third-party disclosures made in the
other U.S. case.” Regeneron I, 144 F. Supp. 3d at 586.
That email was forwarded to Regeneron’s then outside-
counsel on the same day. On November 11, 2014, Regen-
eron’s outside counsel wrote an email to Regeneron stat-
ing, “I believe Brendan [Jones] also discussed his analysis
with Tor [Smeland] around the time that Brendan pre-
pared these memos.” Id. That same e-mail notes that Dr.
Jones “was asked to analyze[] whether certain references
REGENERON PHARMACEUTICALS v. MERUS N.V. 25
that came up in the European Opposition and the Third
Party Submission should be disclosed to the PTO,” and
that “[t]here are several documents that he prepared on
this subject in late June 2013.” Id. (internal quotation
marks omitted).
The memo, written by Dr. Jones on June 28, 2013,
appeared in all respects to contain the formatting and
content of a legal memo to Regeneron—though it is desig-
nated as a memo to file. Printed on a law firm letterhead
and beginning with entry lines for “to”, “cc”, “from”, and
“regarding”, the memo read “Privileged and Confidential,”
began with a summary section, contained footnotes, and
was organized under formal headings. It described basic
standards for the duty to disclose prior art, and analyzed
the materiality of three publications. The memo amount-
ed to an elucidation of the rationale underlying the charts
and is inextricably connected to the charts. The district
court concluded that the document was plainly one creat-
ed in connection with Dr. Jones’s provision of legal advice
to Regeneron. Id. at 586–87.
The references to discussions of the chart and analysis
made clear that Dr. Jones analyzed the prior art and
arrived at a legal conclusion about disclosure obligations
as part of his advisory role to Regeneron. He contempo-
raneously communicated the substance of the very same
advice to his client.
Regeneron argued that by disclosing the memo and
the chart, Regeneron had not waived any privilege be-
cause the documents were not privileged. According to
Regeneron, Dr. Jones had merely used these documents to
assist himself in connection with his professional obliga-
tions unrelated to his advisory role. The district court
found that Regeneron’s argument was “seriously incor-
rect.” Id. at 587.
As part of its inquiry into this waiver, the district
court decided to conduct an in camera review of the doc-
26 REGENERON PHARMACEUTICALS v. MERUS N.V.
uments related to the memo and the chart. In particular,
the district court ordered that Regeneron provide it with
“[a]ll documents relating to groups or individuals who at
the time of creation or subsequently thereto received a
copy of the chart or memo” and “[a]ll documents and
communications . . . referring or relating in any way to
Dr. Jones’s chart and memo.” Id.
In response, Regeneron provided the district court a
single binder containing what it represented was the
universe of such materials. As it turned out, this was
false. Instead of providing the district court the docu-
ments that the court ordered, Regeneron applied its own
conditions and only provided documents that directly
related to the chart and memo. Regeneron did not inform
the district court of this self-imposed limitation. The
district court thus believed the binder provided insight
into all that was at issue and ruled on the motion.
Because Regeneron affirmatively produced the Jones
Memo and accompanying chart to Merus, the district
court found that Regeneron waived the attorney-client
privilege as to its subject matter. The district court
ordered that Regeneron produce all relevant documents
concerning the decision to not disclose prior art during the
patent prosecution to Merus (“Order”). Id. at 587–88.
Subsequently, disputes arose as to the scope of the
waiver. Regeneron represented that it had produced:
all documents and communications related to any
decision, analysis or advice by Dr. Jones or anyone
at Regeneron on whether or not to disclose refer-
ences from Dr. Jones’ charts and memo during
prosecution of the ’018 Patent. In searching for
this information, Regeneron: searched documents
from Messrs./ Drs. . . . Smeland . . . Murphy . . . .
Id. at 588. Regeneron also asserted that it had produced
all of its communications or attachments thereto from the
REGENERON PHARMACEUTICALS v. MERUS N.V. 27
time period of the prosecution of the ’018 patent “that
even mentioned the content of any of the references cited”
in the chart and memo. Id. Regeneron argued against
Merus’s request to impose sanctions for non-compliance
with the Order by stating that it had explained to Merus
that its production was tailored to the subject matter of
the Jones documents. Regeneron also argued that broad-
er disclosure could result in serious prejudice as it could
impact a pending European patent appeal.
The district court determined that Regeneron needed
to produce any documents which reflected additional
thoughts, concerns, and considerations given to whether
certain references should have been disclosed. The district
court’s broad Order included any other memos or commu-
nications related to whether such references should have
been disclosed to the PTO. Included within the Order
would have been drafts of Dr. Jones’s chart or memo,
which might have contained a different conclusion, mem-
os of others who questioned Dr. Jones’s conclusion, and
the like. To remove all ambiguity, the district court
required Regeneron to confirm to Merus that it had
produced or would produce:
1. All documents from anyone involved directly or
indirectly in prosecuting the ’018 Patent, relating
to whether prior art should be or should have been
disclosed as part of the prosecution of the ’018 Pa-
tent . . . .
2. To avoid any doubt, the following documents
are included within the scope of the above di-
rective:
a. All documents of any kind from the files of Dr.
Jones and others with whom he worked on the
prosecution of the ’018 Patent regarding whether
or not to disclose prior art to the PTO. All docu-
ments of any kind from the files of anyone else
who was involved (directly or indirectly) in the
28 REGENERON PHARMACEUTICALS v. MERUS N.V.
prosecution of the ’018 Patent and who may not be
captured in paragraph 1 above, who gave consid-
eration to the relevance or applicability of prior
art to the ’018 Patent.
Id. at 589. Regeneron confirmed it had produced what
was required.
3
These events lead up to trial. A bench trial on Mer-
us’s claim of inequitable conduct was scheduled to com-
mence on June 8, 2015. Under the local rules, the district
court required the parties’ witnesses to testify by declara-
tion/affidavit on direct examination. Regeneron submit-
ted trial affidavits from Drs. Smeland and Jones, both
attorneys acting as attorneys. At this time, Regeneron’s
privilege log indicated that it had withheld many docu-
ments from Dr. Smeland’s files that he had authored or
received on the basis of the attorney/client privilege
and/or work product doctrine. The same was true for Dr.
Jones except for the binder of documents that Regeneron
had earlier disclosed pursuant to the district court’s
Order.
Merus cried foul. Merus argued that Regeneron was
again engaging in a sword/shield use of the attorney client
privilege and moved to strike these affidavits based on,
inter alia, the assertion that Regeneron had shielded
privileged documents from disclosure that were now
directly implicated by the trial declarations. According to
Merus, Dr. Jones’s trial affidavit relied heavily on infor-
mation that Regeneron failed to disclose during fact
discovery and in response to the district court’s prior
Order. In particular, Merus cited Dr. Jones’s deposition
testimony that apart from a phone call that he had made
to the PTO to schedule a meeting, he could not recall a
single other communication with the Examiner during the
’018 patent prosecution. Late-produced billing records
REGENERON PHARMACEUTICALS v. MERUS N.V. 29
referenced in Dr. Jones’s trial affidavit, however, suggest-
ed otherwise.
Things were worse with respect to Dr. Smeland.
Merus argued that Dr. Smeland was proposing to testify
about his views on the meaning of claim language and his
subjective understanding of the Withheld References.
During discovery, however, Regeneron had withheld
numerous documents on precisely those topics on the
basis of privilege.
The district court reviewed each of the trial affidavits
and concluded that a comparison of these affidavits with
entries on Regeneron’s privilege logs raised a number of
concerns. In his affidavit, Dr. Smeland made dozens of
assertions regarding topics about which Regeneron had
not disclosed documents by placing those documents on
its privilege log. In particular, Dr. Smeland made state-
ments about his understanding of the scope of the inven-
tion in the ’176 application, his state of mind, and what he
knew and thought about each of the Withheld References
at the time of patent prosecution continuing up to the
present. The district court provided a lengthy list of Dr.
Smeland’s problematic assertions to emphasize the seri-
ousness of the issue. In particular, Dr. Smeland stated
that:
• “I firmly believed—and still believe today—
that Brüggemann, Taki, Zou and Wood were
not material to patentability because they
were substantially different from the mice
claimed in the ’176 application . . . and were
cumulative of other information before the Pa-
tent Examiner.”
• Dr. Smeland’s description of his understand-
ing of what a materiality analysis for inequi-
table conduct involves: “Regardless of whether
I satisfied the minimum requirements of being
an ordinary skilled artisan, I felt comfortable
30 REGENERON PHARMACEUTICALS v. MERUS N.V.
evaluating the art from that perspective dur-
ing the prosecution of the ’176 application.
When I did have questions, however, I did not
hesitate to reach out to those with more expe-
rience and knowledge.”
• “I routinely made Regeneron inventors aware
of the foregoing obligations when providing
them with invention declarations.”
• With regards to Brüggemann and Zou, “I was
generally familiar with the subject matter of
those two references . . . [a]t no time did I con-
sider these references to be material to pa-
tentability to the claims pending in the ’176
application.”
• “Because of this experience [prosecuting the
’176 application as well as the ’287 Patent], I
was readily familiar with both prior art that
was before the Examiner in the ’176 applica-
tion and the pending claims of the ’176 appli-
cation.”
• “I viewed the analysis [relating to the With-
held References] as straightforward.”
• “I concluded that [the Withheld References],
alone or combined with other prior art of
which I was aware, were cumulative of infor-
mation already before the Examiner. Fur-
thermore, it was my view that the skilled
artisan would not have viewed them as teach-
ing the reverse chimeric inventions that the
Examiner had allowed in the ’176 applica-
tion.”
REGENERON PHARMACEUTICALS v. MERUS N.V. 31
Id. at 590–93. 5
These statements and others implicated Dr.
Smeland’s knowledge and state of mind regarding the
Withheld References directly—both during prosecution
and continuing through to trial. During litigation, Regen-
eron made a choice to maintain the attorney-client privi-
lege as to Dr. Smeland’s knowledge and thoughts about
the Withheld References during prosecution of the ’176
application. In maintaining its assertion of privilege,
Regeneron shielded Dr. Smeland’s documents relating to
his knowledge and thoughts about the Withheld Refer-
ences during prosecution from disclosure. As with any
affirmative disclosure of information otherwise protected
by the attorney-client privilege, however, once the disclo-
sure of the trial affidavit was made, as it was not inad-
vertent, the waiver was complete. See In re von Bulow,
828 F.2d 94, 102–03 (2d Cir. 1987) (“‘[S]ubject matter
waiver’ . . . allows the attacking party to reach all privi-
leged conversations regarding a particular subject once
one privileged conversation on that topic has been dis-
closed.”); see also Fort James Corp. v. Solo Cup Co., 412
F.3d 1340, 1349 (Fed. Cir. 2005) (“The widely applied
standard for determining the scope of a waiver of attor-
ney-client privilege is that the waiver applies to all other
communications relating to the same subject matter.”).
Thus, on the day that Regeneron disclosed Dr.
Smeland’s trial affidavit, it waived the privilege as to the
subject matter of each of the topics the affidavit ad-
dressed. In particular, Regeneron waived privilege as to
Dr. Smeland’s views on the broadest reasonable construc-
tion of the claim language, understanding of the technolo-
5 The full list of problematic assertions the district
court highlighted can be found in Regeneron I, 144 F.
Supp. 3d at 590–93.
32 REGENERON PHARMACEUTICALS v. MERUS N.V.
gy, and materiality (including cumulativeness) of each of
the Withheld References.
Regeneron argued that it had fully complied with its
disclosure requirements throughout litigation. Merus, on
the other hand, pointed to entries on Regeneron’s privi-
lege log that seemed inconsistent with Regeneron’s repre-
sentations. To resolve this dispute, the district court
conducted an in camera review of a subset of the “many
thousands” of documents on Regeneron’s log. Regeneron I,
144 F. Supp. 3d at 594. According to the district court,
the log turned out to be a “Pandora’s Box.” Id. The
district court’s in camera review revealed that there were
dozens of “Smeland documents” that were not disclosed
during litigation but as to which privilege had now been
waived. The district court’s in camera review revealed
additional serious discovery issues including a number of
relevant non-privileged documents that had been with-
held on the basis of privilege and documents that should
have been produced pursuant to the Order regarding the
Jones Memo issue that had not been disclosed.
In all, the district court concluded that there were
three categories of documents that presented serious
concerns of discovery misconduct:
1. Non-privileged documents that were not pro-
duced and instead resided throughout litiga-
tion on the privilege log (e.g., numerous Excel
spreadsheets with scientific test results, third
party filings to the PTO, and fact statements
by non-lawyers not seeking legal advice).
2. Previously privileged documents as to which
Regeneron affirmatively waived the privilege
by disclosing the “Jones Memo” and that the
district court ordered be produced pursuant to
its Order.
REGENERON PHARMACEUTICALS v. MERUS N.V. 33
3. Documents on the privilege log relating to
precisely those topics waived by Regeneron
when Regeneron filed trial declarations of
Drs. Smeland and Jones.
The district court determined that Regeneron’s failure
to make full and adequate production of documents in the
first two categories during the period of fact discovery
independently of the trial misconduct warranted serious
sanction. But the third category was the most egregious.
According to the district court, the production failure was
undoubtedly larger than the few exemplars revealed by
the court’s in camera review. Given the thousands of
documents on Regeneron’s privilege log, the district court
concluded that it could not possibly learn the full extent of
the problem.
As to the first category, there were spreadsheets re-
lated to scientific tests, published articles, correspondence
with third parties—all of which were relevant to issues in
the case and should have been disclosed. Although the
ultimate value of the documents in this category was
unclear, it was clear that Merus should have received
them well before trial.
In the second category, the district court concluded
that there were a number of documents on the log involv-
ing Dr. Jones discussing his communication with the PTO
during prosecution of the ’018 patent. These should have
been produced as part of the “Jones Memo” waiver issue.
The third category was most troubling. In the third
category, the district court concluded that many docu-
ments on the log were directly relevant to the topics as to
which privilege has been waived. In particular, these
documents were directly relevant to Drs. Smeland and
Murphy’s mental impressions of the Withheld References
during prosecution of the ’018 patent. The documents
would therefore have been relevant to determining if
Regeneron specifically intended to deceive the PTO by
34 REGENERON PHARMACEUTICALS v. MERUS N.V.
failing to disclose the Withheld References during prose-
cution of the ’018 patent.
Based on its review of the privilege log and its in cam-
era review of some of the documents on the log, the dis-
trict court concluded that Regeneron’s behavior
warranted sanctioning. Before imposing its sanction, the
district court considered several alternate options includ-
ing allowing the trial declarations into evidence. To do so,
however, the district court would have had to wholesale
reopen discovery requiring “a top-to-bottom re-review of
the Regeneron privilege log,” “additional document pro-
duction, fact depositions, and revised expert reports and
depositions.” Regeneron I, 144 F. Supp. 3d at 594–95.
Additionally, the district court noted that given its “con-
cerns with Regeneron’s process to date, the [c]ourt would
require that any such process only occur with the direct
oversight of a special master.” Id. This would have
significantly increased the time and cost for both Merus
and the district court. As the district court noted, “[a]t
this point in the litigation, this is not a fair burden for
Merus or this [c]ourt.” Id.
The district court also considered whether striking
the trial affidavits and precluding Drs. Smeland and
Murphy from testifying at trial would be a sufficient
remedy. The court concluded that it would not because
doing so would not address the problems caused by the
first two categories of undisclosed documents and would
not address the delay and disruptions caused by Regener-
on’s behavior throughout litigation.
The district court ultimately concluded that it would
be unfair to Merus to reopen discovery on the eve of trial
and inject further delay in the case entirely due to Regen-
eron’s behavior. The court also concluded that doing so
would impose an unfair burden on the court and require
expending substantial additional judicial resources.
Further, because Regeneron’s behavior suggested “a
REGENERON PHARMACEUTICALS v. MERUS N.V. 35
pattern” of misconduct, simply reopening discovery,
striking the problematic affidavits, and/or shifting costs
would not ensure fairness. Id. at 595–96. Accordingly,
the district court sought an alternative remedy and
concluded that it was appropriate to draw an adverse
inference against Regeneron from the undisclosed docu-
ments. In particular, the district court concluded that
Regeneron failed to disclose the Withheld References to
the PTO during prosecution of the ’018 patent with the
specific intent to deceive the PTO.
4
Regeneron contends that it was improper for the dis-
trict court to apply an adverse inference here. According
to Regeneron, under Second Circuit law, a district court
may only apply an adverse inference when a particular
piece of evidence is missing, destroyed, or untimely pro-
duced. Appellant’s Br. 57–58 (citing Residential Funding,
306 F.3d at 106). 6 Because the district court did not apply
the adverse inference to any particular piece of evidence,
Regeneron argues that the district court abused its discre-
tion. We disagree.
Although Regeneron relies on Residential Funding for
its argument, that case does not support Regeneron’s
position. There, the Second Circuit explained that a
district court may properly draw an adverse inference
when a party engages in discovery abuses even when no
particular piece of evidence is missing, destroyed, or
untimely produced. Residential Funding, 306 F.3d at
107. In fact, the Second Circuit goes on to clarify that
when “the alleged breach of a discovery obligation is the
6 We apply the law of the relevant regional circuit
with respect to privilege disputes that do not implicate
substantive patent law. See GFI, Inc. v. Franklin Corp.,
265 F.3d 1268, 1272 (Fed. Cir. 2001).
36 REGENERON PHARMACEUTICALS v. MERUS N.V.
non-production of evidence, a district court has broad
discretion in fashioning an appropriate sanction, includ-
ing the discretion to . . . proceed with a trial and give an
adverse inference instruction.” Id. (emphasis added).
Residential Funding confirms the broad discretion of
district courts in sanctioning parties for violating discov-
ery obligations, and never limits the power of the district
court to only apply adverse inferences against specific
pieces of evidence that are missing, destroyed, or untime-
ly produced.
Regeneron also argues that the district court’s sanc-
tion was not an adverse inference but was, in fact, a
dismissal which should have required a predicate finding
of bad faith. Appellant’s Br. 57–63. As explained above,
however, the district court’s sanction was not a dismissal
but was a properly drawn adverse inference against
Regeneron. Even Regeneron admits that bad faith is not
required for such a sanction. See Reply Br. 27 (“That
matters because, although an ordinary adverse inference
does not require a finding of bad faith, more punitive
sanctions do.”); accord Residential Funding, 306 F.3d at
101 (“[D]iscovery sanctions, including an adverse infer-
ence instruction, may be imposed where a party has
breached a discovery obligation not only through bad faith
or gross negligence, but also through ordinary negli-
gence.”). 7
7 Although neither party addressed this issue, Res-
idential Funding may have been superseded in part by
the 2015 Amendment to the Federal Rule of Civil Proce-
dure Rule 37(e). As the Advisory Committee Notes to the
rule state, the new Rule 37(e) “rejects cases such as
Residential Funding . . . that authorize the giving of
adverse-inference instructions on a finding of negligence
or gross negligence.” Rule 37(e), however, only applies to
sanctions based on a party’s “failure to preserve electroni-
REGENERON PHARMACEUTICALS v. MERUS N.V. 37
The dissent relies heavily on Aptix Corp. v. Quickturn
Design Systems, Inc., 269 F.3d 1369 (Fed. Cir. 2001), for
the proposition that litigation misconduct cannot support
a finding of unenforceability of a patent for inequitable
conduct. Dissent at 3–6. Neither the parties nor the
district court relied on Aptix, and for good reason. Aptix is
inapposite.
In Aptix, the district court declared a patent unen-
forceable as a “penalty” because Aptix engaged in litiga-
tion misconduct under the doctrine of unclean hands. 269
F.3d at 1378. We reversed that decision holding that “the
doctrine of unclean hands [does not] provide a suitable
basis for the district court’s judgment, as this equitable
doctrine is not a source of power to punish.” Id. We did
so because “the relief for unclean hands targets specifical-
ly the misconduct, without reference to the property right
that is the subject of the litigation.” Id. at 1376. Essen-
tially, we held that courts may not punish a party’s post-
prosecution misconduct by declaring the patent unen-
forceable.
Here, Regeneron is accused not only of post-
prosecution misconduct but also of engaging in inequita-
ble conduct during prosecution. Cf. Dissent at 4 (“[I]n
order to invalidate the patent, the inequitable conduct
must have occurred in patent prosecution.”). Regeneron’s
litigation misconduct, however, obfuscated its prosecution
misconduct. 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 drew an
adverse inference to sanction this litigation misconduct.
The district court did not punish Regeneron’s litigation
cally stored information.” For sanctions based on other
discovery misconduct, Residential Funding remains good
law in the Second Circuit.
38 REGENERON PHARMACEUTICALS v. MERUS N.V.
misconduct by holding the patent unenforceable. Only
after Merus proved the remaining elements of inequitable
conduct did the district court hold the patent unenforcea-
ble. In light of Appellant’s widespread litigation miscon-
duct, including Appellant’s use of sword and shield tactics
to protect Drs. Smeland and Murphy’s thoughts regarding
disclosure of the Withheld References to the PTO during
prosecution of the ’018 patent, we conclude that the
district court did not abuse its discretion by drawing an
adverse inference of specific intent to deceive the PTO.
C
Substantial evidence supports the district court’s find-
ing of but-for materiality of the Withheld References.
Further, the district court did not abuse its discretion by
drawing an adverse inference of Regeneron’s specific
intent to deceive the PTO. Thus, the district court did not
abuse its discretion in holding the ’018 patent unenforce-
able due to Regeneron’s inequitable conduct. Because we
conclude that Regeneron’s inequitable conduct renders
the ’018 patent unenforceable, we do not address Regen-
eron’s remaining claim construction and indefiniteness
challenges.
AFFIRMED
United States Court of Appeals
for the Federal Circuit
______________________
REGENERON PHARMACEUTICALS, INC.,
Plaintiff-Appellant
v.
MERUS N.V.,
Defendant-Appellee
______________________
2016-1346
______________________
Appeal from the United States District Court for the
Southern District of New York in No. 1:14-cv-01650-KBF,
Judge Katherine B. Forrest.
______________________
NEWMAN, Circuit Judge, dissenting.
The only issue decided by the panel majority is the
district court’s ruling of inequitable conduct during patent
prosecution. 1 I respectfully dissent, for my colleagues
apply incorrect law and add confusion to precedent.
1 Regeneron Pharmaceuticals v. Merus B.V., 144 F.
Supp. 3d 530 (S.D.N.Y. 2015) (“Dist. Ct. Op.”).
2 REGENERON PHARMACEUTICALS v. MERUS N.V.
To establish “inequitable conduct” in patent
prosecution, both materiality and deceptive
intent must be proved
“Inequitable conduct” arises when material references
were intentionally withheld by the patent applicant in
order to deceive or mislead the examiner into granting the
patent. Both materiality and intent must be proved by
clear and convincing evidence. Therasense, Inc. v. Becton,
Dickinson & Co., 649 F.3d 1276, 1287 (Fed. Cir. 2011).
Intent to deceive cannot be inferred; yet here, the district
court inferred intent to deceive during prosecution and
invalidated the patent, as a sanction for purported attor-
ney misconduct during this litigation.
The district court found that certain uncited refer-
ences were “but-for material” to patentability—although
the court did not find the ’018 patent claims invalid on the
substantive content of these references. The district court
then declined to decide the question of specific intent to
deceive the patent examiner. Instead, the court cancelled
the scheduled trial on the question of intent, adopted an
“inference” of intent, and held the ’018 patent unenforcea-
ble on grounds of inequitable conduct as a sanction for
Regeneron’s “litigation misconduct” relating to discovery
and the privilege log during this litigation.
The panel majority acknowledges that “the district
court never held a second trial to determine if Regeneron
acted with the specific intent to deceive the PTO during
prosecution.” Maj. Op. at 21. This absence of trial and
trial findings on this critical issue cannot be substituted
by inference.
Nor is the appellate role to scour the Appendix to fill
the gap and make our own appellate finding of “intent to
deceive.” Here, no evidentiary record was developed on
intent to deceive, with no testimony and no opportunity
for examination and cross-examination of witnesses. The
panel majority instead engages in innuendo based on its
REGENERON PHARMACEUTICALS v. MERUS N.V. 3
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.
Materiality does not establish intent; deliberate with-
holding of but-for invalidating prior art, with the intent to
deceive the examiner, must be established by clear and
convincing evidence. The majority’s mechanism whereby
dispositive facts are found for the first time on appeal,
with no right of traverse by the affected party, is contrary
to fundamental fairness and judicial process. If the panel
majority indeed believes that the four “uncited” references
are but-for material to patentability, we should at least
require trial of the question of intent.
Whether or not counsel’s discovery and privi-
lege disputes were justifiable, invalidation of
the patent is not an available remedy for
such disputes
Instead of requiring proof of intent to deceive the ex-
aminer during patent prosecution, the panel majority
upholds the district court’s “adverse inference” in light of
“widespread litigation misconduct.” Maj. Op. at 38.
Misconduct during litigation—as the district court viewed
counsel’s actions concerning discovery and the privilege
log—cannot substitute for evidence of intent to deceive by
withholding but-for material prior art during patent
prosecution.
Precedent is long-standing, unambiguous, and bind-
ing. In Keystone Driller Co. v. General Excavator Co., 290
U.S. 240 (1933), the Court established that litigation
misconduct can support the dismissal of the suit, whereas
patent invalidity or unenforceability must be established
on the law of validity or enforceability. Applying Keystone
Driller, in Aptix Corp. v. Quickturn Design Systems, Inc.,
269 F.3d 1369 (Fed. Cir. 2001), this court held that:
4 REGENERON PHARMACEUTICALS v. MERUS N.V.
[T]he remedies for litigation misconduct bar the
malfeasant who committed the misconduct. The
property right itself remains independent of the
conduct of a litigant.
Id. at 1375. This court elaborated:
Leaving the patent right intact, the Supreme
Court repeatedly stressed that litigation miscon-
duct bars the litigant. Again in Hazel–Atlas Glass
Co. v. Hartford–Empire Co., 322 U.S. 238 (1944),
overruled on other grounds by Standard Oil Co. v.
United States, 429 U.S. 17, 18 (1976), another in-
stance of extreme litigation misconduct, the Su-
preme Court “require[d] that Hartford be denied
relief,” but left the patent right intact. Id. at 251.
Id. We continued to explain that in order to invalidate
the patent, the inequitable conduct must have occurred in
patent prosecution:
Litigation misconduct, while serving as a basis to
dismiss the wrongful litigant, does not infect, or
even affect, the original grant of the property
right.
Id. We concluded:
No case law from the Supreme Court or this court
provides a basis for nullifying property rights
granted by the United States when such property
rights did not themselves accrue through inequi-
table conduct.
Id. at 1377.
The Aptix holding has been applied in trial forums
across the nation. E.g., Kimberly-Clark Worldwide, Inc. v.
First Quality Baby Prod., LLC, 2011 WL 679337, at *6
(E.D. Wis. Feb. 16, 2011) (“[A]lleged litigation misconduct
is not sufficient to support a counterclaim of unenforcea-
blity of a patent.”); MedPointe Healthcare Inc. v. Hi-Tech
REGENERON PHARMACEUTICALS v. MERUS N.V. 5
Pharmacal Co., 380 F. Supp. 2d 457, 467 (D.N.J. 2005)
(“[B]ecause the alleged misconduct involved conduct
before the court and not before the patent office during
the procurement of the patent, it does not taint the prop-
erty right ab initio to render the patent unenforceable.”);
Honeywell Int’l, Inc. v. Universal Avionics Sys. Corp., 398
F. Supp. 2d 305, 311 (D. Del. 2005) (“If the wrongdoing
occurs during the prosecution of the patent, in the fur-
therance of obtaining a patent right, then it can render
the patent unenforceable. Alternatively, if unclean hands
occurs during litigation, it bars any recovery by the of-
fending party.”).
The panel majority dismisses Aptix as “inapposite,”
Maj. Op. at 37, because Regeneron was “accused . . . of
engaging in inequitable conduct during prosecution,” id.Our system of justice is bottomed upon proof, not upon
bare accusation. Intent to deceive is not established by
accusation and innuendo. It is only established by evi-
dence. That evidence “must be sufficient to require a
finding of deceitful intent in the light of all the circum-
stances.” Therasense, 649 F.3d at 1290 (quoting
Kingsdown Med. Consultants Ltd. v. Hollister Inc., 863
F.2d 867, 873 (Fed. Cir. 1988) (emphasis original)).
The panel majority also states that “the district court
did not punish Regeneron’s litigation misconduct by
holding the patent unenforceable.” Maj. Op. at 37–38.
However, the district court stated that it “impose[d] the
sanction of an adverse inference as to the intent of
Smeland and Murphy with regard to inequitable conduct
during patent prosecution.” Dist. Ct. Op. at 595. A
sanction, by definition, is punishment; here, in holding
the patent unenforceable. This is a further departure
from binding precedent, as equitable doctrines are not a
source of a power to punish. Feltner v. Columbia Pictures
Television, Inc., 523 U.S. 340, 352–53 (1998); Tull v.
United States, 481 U.S. 412, 422 (1987) (“Remedies in-
tended to punish culpable individuals, as opposed to those
6 REGENERON PHARMACEUTICALS v. MERUS N.V.
intended simply to extract compensation or restore the
status quo, were issued by courts of law, not courts of
equity.”).
In its attempt to the Supreme Court precedent or
principles of equity underlying the holding. Nor does the
panel majority cite a single case—at any level of the
federal system—in which litigation misconduct was part
of a finding of inequitable conduct. An unbroken line of
precedent strictly limits the inequitable conduct inquiry
to a patentee’s conduct before the examiner.
Aptix instructs that litigation misconduct in the in-
fringement suit “does not infect, or even affect” the patent
right. 269 F.3d at 1375. The panel majority errs in
“infecting” its analysis of inequitable conduct with coun-
sel’s purported litigation misconduct years later in the
infringement trial.
I also review the court’s treatment of the four pur-
portedly withheld references, for they do not impart
unpatentability to the claims, and thus are not but-for
material.
The references cited by the examiner were
fully explored during patent prosecution; the
additional references do not add invalidat-
ing information
The ’018 patent is one of a family of patents directed
to Regeneron’s VelociGene technology, which uses quanti-
tative assays to screen for DNA recombination events.
During prosecution the examiner cited seven references,
including U.S. Application 11/009,873 (“Lonberg”) and
U.S. Patent No. 6,114,598 (“Kucherlapati”), and consid-
ered U.S. Patent No. 6,130,364 (“Jakobovits”). The exam-
iner rejected all the claims of the ’018 application as
anticipated by Lonberg, and obvious over Lonberg in
combination with three other references, including a
REGENERON PHARMACEUTICALS v. MERUS N.V. 7
Brüggemann reference dated four years after the alleged-
ly withheld Brüggemann reference, discussed post.
Lonberg was the examiner’s primary reference, and
teaches the introduction of immunoglobulin transgenes
into mouse cells. Lonberg specifically discloses “con-
structing” a transgene composed of at least one variable
gene segment, one joining gene segment, and one constant
region gene segment, preferably of human origin. Lon-
berg, [0031] 2. These segments are “unrearranged” in that
they are not “rearranged as to encode a functional immu-
noglobulin light or heavy chain,” but are not in germline
configuration. Id. The Lonberg transgene constructs may
include regulatory sequences from either the host (i.e.,
murine) or a related animal, or from the exogenous (i.e.,
human) species. Id. at [0033]. These transgenes are
randomly integrated into the host (mouse) genome, id. at
[0292], and the resulting animals are then crossed with
“knockout” mice—i.e., mice with a disrupted immuno-
globulin locus, id. at [0296]. The result is that the cross-
bred mice produce heterologous (i.e., non-host) antibodies.
Kucherlapati teaches methods of producing transgenic
animals in which the host endogenous immunoglobulin
locus is “substituted by a portion of, or an entire, xenoge-
neic immunoglobulin locus, or may have a xenogeneic
immunoglobulin locus inserted into a chromosome of the
host cell and an inactivated endogenous immunoglobulin
region.” Kucherlapati, col. 3, ll. 51–55. Kucherlapati
teaches both random integration and targeted insertion of
the immunoglobulin locus. Such xenogeneic immuno-
globulin loci are described as “human, constant and/or
variable regions.” Id. at col. 5, ll. 51–54. Kucherlapati
teaches that the xenogeneic locus “will be placed in sub-
stantially the same position as the analogous host locus,
2 The bracketed paragraph citation format is re-
tained from the reference.
8 REGENERON PHARMACEUTICALS v. MERUS N.V.
so that any regulation associated with the position of the
locus will be substantially the same for the xenogeneic
locus.” Id. at col. 10, ll. 51–55. As an example, Kucher-
lapati teaches retaining promoter and regulatory regions
of the host DNA. Id. at col. 10, l. 64–col. 11, l. 2.
The district court referred to Regeneron’s arguments
before the European Patent Office about whether Kucher-
lapati was enabled. Dist. Ct. Op. at 577–78 (citing Mer-
us’s expert). The panel majority cites Regeneron’s
arguments about Kucherlapati’s enablement in the prose-
cution of a different patent application, U.S. Application
No. 13/719,819. 3 Maj. Op. at 20. However, argument of
Kucherlapati’s enablement does not appear in the prose-
cution record of the ’018 application. “United States
patents—even those only asserted as prior art in an
invalidity defense—are presumed enabled.” Amgen Inc. v.
Hoechst Marion Roussel, Inc., 314 F.3d 1313, 1354 (Fed.
Cir. 2003). Kucherlapati was thus presumed enabled
before the examiner.
The Jakobovits reference teaches the “use of Cre-
mediated site-specific recombination for modifying immu-
noglobulin loci, for instance, to replace all or a part of
either the constant region or variable region of an anti-
body molecule.” Jakobovits, col. 1, ll. 11–14. That is,
Jakobovits teaches a method for targeted insertion at an
immunoglobulin locus.
The examiner in the “reasons for allowance” stated
that “the prior art does not teach or suggest a genetically
modified mouse comprising, in its germline cells, human
unrearranged variable region gene segments inserted at
an endogenous mouse immunoglobulin locus.” J.A. 531.
No error has been ascribed to this finding.
3 I note that this application was recently allowed
over both Kucherlapati and Taki.
REGENERON PHARMACEUTICALS v. MERUS N.V. 9
The purportedly withheld references were not
more material than the cited references
None of the purportedly withheld references provides
teachings more material than in the cited references. No
purportedly withheld information was identified by the
district court or the panel majority to teach a missing
limitation or provide a motivation missing in the art.
Despite this failure, the district court held that the
following uncited references and information were mate-
rial to patentability:
1. Marianne Brüggeman & Michael S. Neu-
berger, “Strategies for Expressing Human An-
tibody Repertoires in Transgenic Mice,” 17(8)
Review Immunology Today 391 (1996)
(“Brüggeman”)
2. Shinsuke Taki et al., “Targeted Insertion of a
Variable Region Gene into the Immunoglobu-
lin Heavy Chain Locus,” 262 Science 1268
(1993) (“Taki”)
3. Yong-Rui Zou et al., “Cre-loxP-mediated Gene
Replacement: A Mouse Strain Producing Hu-
manized Antibodies,” 4(12) Current Biology
1099 (1994) (“Zou”)
4. WO 91/00906 (“Wood”)
5. Certain opposition briefs filed by third parties
in the European Patent Office contesting pa-
tentability of EP No. 1 360 287 (EP ’287)
The test for materiality is not whether references are
directed to similar subject matter; the test is whether “the
PTO would not have allowed a claim had it been aware of
the undisclosed prior art.” Therasense, 649 F.3d at 1291.
That standard is not met here.
10 REGENERON PHARMACEUTICALS v. MERUS N.V.
Neither the district court nor my colleagues find that
any uncited reference was closer to the claimed subject
matter than the cited references, or filled gaps in the cited
references, or related to additional limitations in the
claims. Nor did the district court find invalidity based on
the uncited references; invalidity was based on the court’s
finding of indefiniteness, not on obviousness over cited or
uncited prior art. 4
The uncited references do not provide additional in-
formation of but-for materiality with respect to the
claimed technology. My colleagues suggest that because
these four references were later cited by Regeneron in the
prosecution of related cases, this is an admission that the
references are material. Surely it was prudent for Regen-
eron to submit these citations to the examiner for consid-
eration in any still-pending applications, and Regeneron
states that it also submitted the district court’s opinion.
That action cannot be taken as an admission of but-for
materiality.
The parties debate several aspects of the broadest
reasonable interpretation of claim terms, but neither the
district court’s nor my colleagues’ analysis shows that any
“withheld reference” is more material than the cited
references. Under the district court’s “broadest reasona-
ble interpretation,” the ’018 claims require a genetically
modified mouse, the genes of which have been modified
using the particular large targeting vector method de-
scribed in the specification, by the insertion of human
4 The references, cited and uncited, all recognize
the goal of providing antibodies for utility in human
therapies—a goal not achieved. The district court recog-
nized that the references state the motivation for devel-
opment of the science, but it appears undisputed that the
problem was not solved until the Regeneron scientists
succeeded, as reported in the ’018 patent.
REGENERON PHARMACEUTICALS v. MERUS N.V. 11
variable region DNA in its germline configuration into or
next to the endogenous mouse immunoglobulin locus.
Dist. Ct. Op. at 564–67. The “withheld references” indeed
relate to genetic modification, but they are not but-for
material as compared with the references before the
examiner.
The district court does not establish that the allegedly
withheld references lead to unpatentability. Instead, the
district court states that the references disclose motiva-
tions, benefits, and cumulative teachings. That is correct;
but the references do not provide but-for materiality,
whether taken alone, or with the cited references.
The VelociGene project arose in a field of complex and
unpredictable science, with no consensus on how to pro-
duce therapeutically effective antibodies. The predictabil-
ity of the state of the science relates to the materiality
determination, as the court has explained:
The methodology of science and the advance of
technology are founded on the investigator’s edu-
cated application of what is known, to intelligent
exploration of what is not known. Each case must
be decided in its particular context, including the
characteristics of the science or technology, its
state of advance, the nature of the known choices,
the specificity or generality of the prior art, and
the predictability of results in the area of interest.
Abbott Labs. v. Sandoz, Inc., 544 F.3d 1341, 1352 (Fed.
Cir. 2008). Recognition of the value of providing a murine
source of antibodies with therapeutic effect in humans
does not render the achievement obvious when it is ulti-
mately successful. See Cardiac Pacemakers, Inc. v. St.
Jude Med., Inc., 381 F.3d 1371, 1377 (Fed. Cir. 2004)
(“Recognition of a need does not render obvious the
achievement that meets that need.”).
12 REGENERON PHARMACEUTICALS v. MERUS N.V.
Nonetheless, my colleagues find that these four cumu-
lative references are but-for material and were intention-
ally withheld in order to deceive the examiner. That is
insupportable, as review demonstrates:
i. Brüggemann
Brüggemann is a 1996 review paper that collects the
then-published methods of integrating immunoglobulin
transgenes into murine genomes. Brüggemann concludes
with a statement of hope for future achievement:
[A]n attractive alternative would be to replace the
mouse Ig loci with the human Ig loci; in this way
it might also be possible to retain and exploit any
possible regulatory sequences in the mouse loci
that are located distal to protein-coding regions.
While such ambitions have not yet been realized,
successful replacement of small portions of the
mouse genome have been described.
Brüggemann at 394. Brüggemann also states:
[I]t is far from clear whether this [Ig loci replace-
ment] will be the best way to create a mouse
strain giving rise to a wide-range of high-affinity
antibodies.
Id. at 397. The district court found that Brüggemann
taught (1) replacing “much of” the mouse Ig locus with
human DNA; (2) an “explicit motivation” to exploit endog-
enous regulatory sequences; and (3) retaining an entirely
human gene segment and an entirely murine gene seg-
ment. Dist. Ct. Op. at 572, 575. The district court ig-
nored Brüggemann’s statements that these results had
not been achieved, as well as that these elements are not
required by the claims. See SRI Int’l v. Matsushita Elec.
Corp., 775 F.2d 1107, 1121 (Fed. Cir. 1985) (en banc) (“It
is the claims that measure the invention.”).
REGENERON PHARMACEUTICALS v. MERUS N.V. 13
Brüggemann does not teach unrearranged variable
region gene segments in the germline configuration, nor
does it teach any method—much less the LTVEC method
required by the claims. Indeed, the district court’s finding
of materiality of Brüggemann is in conflict with the
district court’s rejection of Regeneron’s arguments that
the claims require retaining the murine constant region
and require functional murine regulatory elements.
Brüggemann’s statement of “unrealized ambitions” of
targeted replacement of the immunoglobulin locus does
not impart invalidating materiality when the ambitions
are accomplished by Regeneron.
The Jakobovits reference teaches “replac[ing] all or a
part of either the constant region or variable region of an
antibody molecule.” Jakobovits, col. 1, ll. 11–14. Kucher-
lapati, also cited by the examiner, teaches retaining
promoter and regulatory regions of the host DNA. Ku-
cherlapati, col. 10, l. 64–col. 11, l. 2. The district court
found that Kucherlapati and Brüggemann were not
cumulative, stating:
Brüggemann teaches the benefits of targeted in-
sertion as taking advantage of the regulatory re-
gions distal to the protein-coding regions and the
expectation that mouse regulatory sequences dis-
tal to the protein coding regions will remain in-
tact. In contrast, Kucherlapati states that “the
xenogeneic locus will be placed substantially in
the same region as the analogous host locus, so
that any regulation associated with the position of
the locus will be substantially the same for the
xenogeneic locus.”
Dist. Ct. Op. at 578 (internal citations omitted). The
district court does not explain how this distinction con-
verts Brüggemann into an invalidating reference.
The panel majority adopts different and flawed rea-
soning, finding that Brüggemann shows “targeted gene
14 REGENERON PHARMACEUTICALS v. MERUS N.V.
replacement” while Kucherlapati shows “wholesale re-
placement.” Maj. Op. at 20. These “unrealized ambi-
tions” are not teachings of this long-sought result, as the
references readily demonstrate. Moreover, Kucherlapati
states that the host endogenous immunoglobulin locus is
“substituted by a portion of, or an entire, xenogeneic
immunoglobulin locus,” Kucherlapati, col. 3, ll. 55, and
describes the inserted DNA as “human, constant and/or
variable regions,” id. at col. 5, ll. 51–54, as does Brügge-
mann.
The panel majority also incorrectly states that
Brüggemann suggests the method of Zou to accomplish
retaining and exploiting regulatory elements. The meth-
od of Zou is cited only as an example of the “successful
replacement of small portions of the mouse genome,” as
opposed to a method to accomplish the “possibility” of
inserting larger portions of the immunoglobulin loci.
Brüggemann at 394. The panel majority’s statement that
Zou is described as a method to retain and exploit regula-
tory sequences is a misreading of both Zou and Brügge-
mann.
ii. Taki
Taki is a 1993 article describing the then-knowledge
of targeted insertion of a rearranged murine variable
region construct at the immunoglobulin locus. The rear-
ranged gene inserted in the Taki reference, VH15, is
derived from a murine antibody to phosphorylcholine.
Taki at 1268. In that early work, the Taki transgenic
mouse produced fully murine antibodies to this particular
antigen. The goal of this research was “exploration of
immunoregulatory mechanisms,” id., not the development
of therapeutically useful human antibodies.
The district court found that Taki taught “the motiva-
tion to target human variable region DNA into the mouse
Ig locus.” Dist. Ct. Op. at 574. Taki indeed mentions this
long-sought ambition. The panel majority agrees, stating
REGENERON PHARMACEUTICALS v. MERUS N.V. 15
that the “fact that Taki teaches using exogenous mouse
DNA instead of exogenous human DNA does not detract
from the motivation Taki provides to target the mouse Ig
locus with exogenous DNA.” Maj. Op. at 17. However, a
“motivation” to solve a known scientific problem is not a
teaching of how to achieve that solution. “Knowledge of
the goal does not render its achievement obvious.” Abbott
Labs., 544 F.3d at 1352.
The claims of the ’018 patent require human DNA,
not mouse DNA or any exogenous DNA. Neither the
district court nor the panel majority addresses the enor-
mous difference between Taki’s use of a single rearranged
variable region gene and the unrearranged variable
region gene segment in the ’018 patent. Taki does not
teach a mouse with unrearranged variable region DNA
capable of recombination to create innumerable immune
responses. Taki does not teach the LTVEC method or
human unrearranged variable region gene segments in
their germline configuration. At most, Taki teaches
targeted insertion of a single gene of mouse DNA at the
immunoglobulin locus.
The district court recognized that Taki “provides dif-
ferent motivations” than Kucherlapati. Dist. Ct. Op. at
578. Taki reflects the early work in this field; it has been
superseded by the teachings of Kucherlapati and the
other cited references. The record does not support the
district court’s finding of materiality. The panel majority
errs in holding otherwise.
iii. Zou
Zou teaches the targeted insertion of a human con-
stant region gene segment, and uses the Cre-loxP system
to “replace the mouse gene, Cγ1, which encodes the con-
stant region of the heavy chain of IgG1 antibodies, with
its human counterpart.” Zou at 1099. The district court
found Zou to be but-for material because it “provides
significant motivation to target the mouse Ig locus with
16 REGENERON PHARMACEUTICALS v. MERUS N.V.
human Ig DNA.” Dist. Ct. Op. at 575. The district court’s
error was in equating the motivation to solve a known
problem with teaching the solution to the problem.
The district court found that Zou, along with Taki,
taught a “method” for inserting human unrearranged
variable region gene segments into an endogenous mouse
immunoglobulin locus. Dist. Ct. Op. at 575. Zou is cumu-
lative of at least Kucherlapati, as well as Jakobovits who
teaches the same Cre-loxP-mediated targeting of the
immunoglobulin locus as utilized by both Zou and the ’018
patent. 5 Jakobovits, col. 1, ll. 11–14. Kucherlapati teach-
es that the xenogeneic (human) locus is “substituted” in
“substantially the same region as the analogous host
locus.” Kucherlapati, col. 10, ll. 50–55. Zou does not add
but-for material information to these references. Zou and
Jakobovits use the same method of targeted insertion;
Zou is not alleged to teach a missing limitation, but only
to provide a “motivation” to target the immunoglobulin
locus. Again, “[k]nowledge of the goal does not render its
achievement obvious.” Abbott Labs., 544 F.3d at 1352.
The district court’s contrary ruling is incorrect, as is the
panel majority’s endorsement of that ruling. 6
5 Although the district court found that Jakobovits
taught targeting only for the insertion of lox sites, that is
incorrect, for Jakobovits refers to the “use of Cre-mediated
site-specific recombination for modifying immunoglobulin
loci, for instance, to replace all or a part of either the
constant region or variable region of an antibody mole-
cule.” Jakobovits, col. 1, ll. 11–14.
6 The district court referred in a footnote to Regen-
eron’s internal email discussion of citation to Zou in
preparing a scientific publication, and found these conver-
sations “relevant” to materiality. Dist. Ct. Op. at 557
n.21. This discussion has no bearing on the status of Zou
as but-for material prior art.
REGENERON PHARMACEUTICALS v. MERUS N.V. 17
iv. Wood
Wood describes a transgenic mouse having unrear-
ranged human DNA fragments incorporated into its
germline. Wood teaches the use of either constructed
unrearranged gene fragments or the use of contiguous
unrearranged human DNA. Wood, col. 16, ll. 14–22.
Wood does not describe how such gene fragments are
“introduced” or “integrated” into the germline of the
described mouse; Wood does not teach targeted insertion.
The district court found that Wood teaches the “inser-
tion of human variable region gene segments upstream of
an endogenous mouse constant region, to produce a genet-
ically modified mouse” and “motivates a person of ordi-
nary skill to use an endogenous mouse constant µ (mu)
region for purposes of allelic exclusion.” Dist. Ct. Op. at
572–73. Both the district court and the panel majority
misread Wood.
Wood teaches a “DNA fragment construct” with mu-
rine constant regions upstream from the human variable
region gene segments. Building a DNA construct in a
particular order to be later inserted is not the same as
describing the targeted insertion of that construct into
germline DNA. Wood does not describe any targeted
insertion method described elsewhere in the prior art,
such as Cre-loxP. The district court excuses this absence,
because Wood “is appropriately understood as including
but not limiting insertion at the Ig locus.” Dist. Ct. Op. at
573.
Wood’s teaching of a “DNA construct” was misread as
teaching the targeted insertion of that construct at a
particular portion of the endogenous locus. The Wood
teaching of “integration” into the genome is cumulative of
Lonberg and other references which broadly teach “inte-
gration” into the genome. Lonberg, [0292]. There is no
support in Wood for the leap from a broad, unspecified
disclosure of “integration” somewhere into the genome, to
18 REGENERON PHARMACEUTICALS v. MERUS N.V.
the district court’s finding of disclosure of targeted inser-
tion at the Ig locus.
Neither my colleagues nor the district court explains
how an examiner would have tied together the conflicting
approaches and unrealized ambitions of the four purport-
edly omitted references to render obvious the method
described and claimed in the ’018 patent.
v. European Opposition Briefs
The European Opposition Briefs were filed in the Eu-
ropean Patent Office, in an opposition proceeding associ-
ated with EP ’287, a counterpart of the Regeneron
technology. The Merus opposition brief cited the refer-
ences cited by the United States examiner, and additional
references in this busy field of science, including the same
Brüggeman, Taki, Zou, and Wood references. The district
court stated that the “faithful” “description” of the alleg-
edly withheld references in the European opposition
would “have led inexorably to an understanding of their
relevance and but-for materiality.” Dist. Ct. Op. at 577.
It is noteworthy that the European Technical Board of
Appeals ruled that EP ’287 was patentable over these
allegedly withheld references. See Decision in Appeal No.
T2220/14-3.3.08, at 67–68 (Taki); 71–72 (Brüggemann);
72–77 (Wood); and 77–78 (Zou), available at
http://www.epo.org/law-practice/case-law-appeals/pdf/t-
142220eu1.pdf. These determinations negate but-for
materiality, as well as the district court’s analysis. Per-
haps this is why the panel majority chose not to discuss
the European Opposition. Maj. Op. at 9 n.3.
There is no support—legally or factually—for the dis-
trict court’s reliance on the European opposition briefs to
find these four references material to patentability. The
European tribunal, with these references before it, did not
find the claims unpatentable. Nor did the district court.
The panel majority upholds a finding of but-for materiali-
REGENERON PHARMACEUTICALS v. MERUS N.V. 19
ty without finding the claims invalid based on these
purported but-for material references. It is not disputed
that the information in those references did not solve the
problem that was ultimately solved by the ’018 patent.
CONCLUSION
The controlling precedent of Aptix v. Quickturn, su-
pra, and Keystone Driller, supra, cannot be ignored by this
panel. Although my colleagues make much of the pur-
ported “litigation misconduct” relating to the privilege log
and discovery in this infringement litigation, this has no
relation to whether there was inequitable conduct in the
prosecution before the patent examiner. Intent to deceive
the examiner cannot be inferred from purported litigation
misconduct several years later.
The premises of the law of inequitable conduct have
not been established by clear and convincing evidence.
Intent to withhold material references in order to deceive
the examiner was not found by the district court, and
cannot be inferred. These four additional references were
not but-for material to patentability, and specific intent to
deceive was not shown. From my colleagues’ contrary
ruling, I respectfully dissent.