Federal Circuit Affirms that Litigation Misconduct May Serve as a Basis to Infer Specific Intent to Deceive the PTO

July 28, 2017

By Christopher D. Bayne

Regeneron Pharma., Inc. v. Merus N.V., (Fed. Cir., July 27, 2017) (before Prost, Newman and Wallach, J.) (opinion by Prost).

Under the Federal Circuit’s holding in Therasense, inequitable conduct has two separate requirements: “materiality” and “intent.”  The materiality required to establish inequitable conduct is “but-for” materiality—meaning that if the PTO would not have allowed a claim had it been aware of an undisclosed prior art reference, then that undisclosed reference is but-for material to the question of inequitable conduct.  To satisfy the intent requirement under Therasense, the accused infringer must prove that the patentee acted with “specific intent” to deceive the PTO.  In a case involving nondisclosure of information to the Office, clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference.

A central issued faced by the Court in Regeneron Pharma was whether the specific intent required to establish inequitable conduct can be inferred from the patentee’s litigation misconduct during infringement proceedings.  Under Apotex Inc. v. UCB, Inc., an inference of intent to deceive is appropriate where the applicant engages in a “pattern of lack of candor,” including where the applicant repeatedly makes factual representations “contrary to the true information he had in his possession.”  763 F.3d 1354, 1362 (Fed. Cir. 20014).

In Regeneron Pharma, the Court affirmed the lower court’s decision to sanction the patentee by drawing an adverse inference of specific intent to deceive the PTO—based in part on the Regeneron’s discovery misconduct throughout the litigation.  The lower court concluded that there were three categories of documents that presented serious concerns of discovery misconduct.

1.      Non-privileged documents that were not produced and instead resided throughout litigation 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 them, and that the district court ordered by produced pursuant to its Order; and

3.      Documents on the privilege log relating to precisely those topics waived by Regeneron when it filed trial declarations of certain witnesses.

The Federal Circuit agreed with the lower court’s finding that the failure of the patentee to adequately comply with discovery orders warranted an adverse inference of the specific intent needed to establish inequitable conduct.  The Court also agreed with the district court’s finding that alternative measures to address the patentee’s misconduct would have significantly increased the time and cost for both Merus and the district court—thereby imposing an unfair burden.