Regeneron Pharmaceuticals Inc. struck out in its patent infringement suit against Netherlands-based Merus BV last year and is now facing the fallout from a court ruling that it withheld material information from the Patent and Trademark Office during prosecution of patent No. 8,502,018, which concerns a method of making a genetically modified mouse capable of producing chimeric antibodies.

In an Aug. 6 order, Southern District of New York Judge Katherine Forrest found that the information Regeneron withheld relating to prior art references was material, but she did not decide whether the company intended to deceive the PTO. A full written opinion on materiality and inequitable conduct could come in September.

However, the judge indicated she is likely to find intent to deceive as well. She said it is “appropriate to make an adverse inference as to the intent” of Regeneron Executive Director of Intellectual Property Tor Smeland and Senior VP Andrew Murphy.

“The application of these inferences to the court’s prior finding of materiality appears to lead inexorably to one final determination: that Regeneron engaged in inequitable conduct in connection with the prosecution of the ‘018 patent,” Forrest stated. She advised the parties to submit filings by Aug. 25 if they disagree with this conclusion.

“Regeneron disagrees completely with the court’s ruling, will appeal it at the earliest possible opportunity, and is considering all other available options,” the company said in a statement.

Inequitable Conduct Claims After Therasense

The decision casts a light on the risk patent holders face when a defendant alleges inequitable conduct as a defense to infringement claims. A patent is unenforceable if the patent applicant is found to have withheld material information from the patent office with the intent to deceive.

Such allegations had been common practice in patent litigation, so much so that the U.S. Court of Appeals for the Federal Circuit set a new standard for finding intent and materiality in its 2011 en banc decision in TheraSense Inc. v. Becton Dickinson & Co. Also see "Inequitable Conduct "Plague" Cured By Federal Circuit's Therasense Decision" - Pink Sheet, 30 May, 2011..

Chad Landmon, a partner at Axinn, Veltrop & Harkrider, said Therasense has reduced the number of inequitable conduct claims. Findings of inequitable conduct “are really rare in pharmaceutical cases,” he noted.

Among such rare cases, UCB Inc. won an inequitable conduct ruling against Apotex Inc. regarding the company’s patent on the process for making a high blood pressure drug ([A#14130912003]). The Federal Circuit affirmed the decision last year.

Apotex won an inequitable conduct claim against Cephalon Inc. regarding a patent on compositions and methods of using Provigil (modifinal). The Federal Circuit affirmed a district court ruling and the Supreme Court declined Cephalon’s petition to review the case Also see "Pharma Strikes Out At Supreme Court As Three Recent Cert Petitions Fail" - Pink Sheet, 17 December, 2013..

By contrast, Pfizer Inc. defeated an inequitable conduct claim by Teva Pharmaceuticals USA Inc. in an infringement suit involving its Viagra (sildenafil) patent Also see "Viagra Patent Ruling Could Deter Appeal, Support Pfizer Position In Pending Cases" - Pink Sheet, 29 August, 2011..

A district court subsequently awarded Pfizer attorneys’ fees of $378,285 ([A#14141105005]).

Since Merus has already won a ruling that Regeneron’s patent is invalid it may be pursuing the inequitable conduct claim to win attorneys’ fees. Under the patent statute, courts can award attorneys’ fees in patent infringement cases that are deemed “exceptional.”

For Regeneron, the ruling of inequitable conduct reflects negatively on the company and could impact its appeal of Judge Forrest’s infringement ruling. In December, Judge Forrest issued an opinion on claim construction, which effectively found that Merus did not infringe the ‘018 patent and held that it was invalid.

Failure To Disclose Documents During Litigation ‘Warrants Serious Sanction’

In her Aug. 6 order, the judge also found that Regeneron had failed to produce materials during the litigation. She said they include non-privileged documents that Regeneron kept on the privilege log; previously privileged documents for which Regeneron had waived privilege and that the court ordered to be produced; and documents on the privilege log addressing topics waived by Regeneron when it filed trial declarations.

“Failure to make full and adequate production of documents within the first two categories alone warrants serious sanction,” she stated.

The judge had bifurcated the trial on inequitable conduct, first addressing the materiality of information not disclosed to the PTO during patent prosecution. She was then to determine whether Regeneron misrepresented or omitted material information with the specific intent to deceive the PTO.

However, citing the documents that Regeneron failed to produce, she said a further trial on intent would not be scheduled. She said that to allow declarations from witnesses relating to these documents would require re-opening discovery, which would not be a “fair burden” for Merus or the court.

Further, she said that striking the declarations and precluding certain witnesses “fails to recognize the pattern of conduct by Regeneron throughout this litigation” which has caused delay, inefficient use of resources, and diversion from the merits.

Conflict Over Antibody-Producing Mice

Regeneron stated in its infringement complaint that it had sought to design a rodent that could rapidly create a diversity of human antibodies and came up with the VelocImmune mouse, which produces part human and part mouse antibodies that can be used in making human therapeutics. The suit asserted that “Merus’s sole business purpose appears to be directed to a genetically modified mouse that infringes Regeneron’s intellectual property.”

But Merus said it has developed its own proprietary genetically modified mouse, the so-called MeMo mice, as a platform technology for therapeutic antibodies.

“Merus uses both its proprietary transgenic MeMo mice as well as state-of-the-art phage display libraries of human Fab fragments for the generation of large and diverse panels of common light chain human antibodies,” the company stated in response to questions about the litigation. “Lead therapeutic bispecific antibodies are selected based on their unique functional properties and can either be derived from the MeMo platform or from phage display.”

The company said the impact of the order is significant. “This case has imposed a substantial burden on Merus, which was clearly unjustified,” the firm stated. “Our company remains uniquely positioned to develop best-in-class bispecific antibody therapeutics for the treatment of cancer patients.”

Merus is financed by blue chip financial and strategic investors, including Novartis Venture Funds, Pfizer Venture Investments and Johnson & Johnson Innovation. The company has one compound in clinical development, MCLA-128 in Phase I/II for solid tumors, and several other compounds in discovery.

Regeneron has three products on the market, including the recently approved cholesterol therapy Praluent (alirocumab), which it is marketing with partner Sanofi ([A#14150804003]). It also has three candidates in Phase III testing and several others in earlier clinical development.

Regeneron is focusing on the hot field of immuno-oncology. Last month it entered a new alliance with Sanofi to collaborate on the discovery, development and commercialization of new antibody cancer treatments in immuno-oncology, including Regeneron’s PD-1 inhibitor in Phase I. The candidates will come from Regeneron’s labs ([A#00150810009]).

Regeneron's Patent Pratfall: First Inequitable Conduct, Now Possible Sanctions

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