15:47, July 28 814 0 law.com

2017-07-28 15:47:04
Misconduct Findings Against Irell, Pharma Client Upheld by Federal Circuit

David Gindler.


The U.S. Court of Appeals for the Federal Circuit handed out some black marks Thursday to Regeneron Pharmaceuticals Inc. and its litigation counsel at Irell & Manella.

The appellate court upheld a New York federal judge’s caustic 2015 ruling that tagged the New York-based biotech company with inequitable conduct at the U.S. Patent and Trademark Office. U.S. District Judge Katherine Forrest had ruled that Regeneron’s subsequent misconduct during patent infringement litigation supported the finding that the company deliberately deceived the PTO. “That which was obtained by misconduct ends as a result of misconduct,” Forrest had ruled.

An Irell team led by partners David Gindler and Jason Sheasby represented Regeneron during much of the district court proceedings. Fitzpatrick, Cella, Harper & Cella took over midway through, and Regeneron’s patent prosecution firm, Foley Hoag, also participated. An Irell spokeswoman did not immediately return a phone call seeking comment.

Federal Circuit Chief Judge Sharon Prost and Judge Evan Wallach endorsed Forrest’s reasoning Thursday. Forrest did not err by drawing an adverse inference from Regeneron’s “repeated violations of the district court’s discovery orders and improper secreting of relevant and non-privileged documents,” Prost wrote in Regeneron Pharmaceuticals v. Merus.

Judge Pauline Newman dissented, saying Regeneron is entitled to a full trial on the issue of its intent.

The decision means a 2013 Regeneron patent on a mouse genetically engineered with human DNA segments is invalid. It also opens the door for a substantial attorneys fee award for Dutch biotech company Merus B.V., one of the companies Regeneron and Irell sued for infringing the patent. Merus has already moved for fees and costs, but Forrest had set that issue aside pending the appellate outcome.

The Federal Circuit’s affirmance is also a black eye for Tor Smeland, the in-house attorney responsible for prosecuting Regeneron’s patent, and Regeneron senior VP Andrew Murphy, a co-inventor of the patent. But most of Forrest’s ire seemed directed at the Irell litigators. She clashed with them almost from the start of the case, accusing them of hiding the ball with infringement contentions and claim construction briefing.

“It just seemed like total gamesmanship to me,” she told Sheasby at an August 2014 hearing on whether Regeneron’s infringement contentions met local rules. “And I was shocked, frankly, that the firm of Irell & Manella would have done that.”

In retrospect, she wrote in her 2015 order, those “shenanigans” were designed to cover up the flaws in Regeneron’s patent.

Irell withdrew from the case a few months later, succeeded by Fitzpatrick, Cella. Around that time Regeneron produced a memo from a Foley Hoag attorney that prompted an in camera audit of Regeneron’s privilege log. “As it turned out the log was Pandora’s Box,” Forrest wrote, finding it contained numerous non-privileged documents that Regeneron had failed to produce, among other things.

Based on the misconduct, Forrest drew an adverse inference that Smeland and Murphy had known about invalidating prior art when they prosecuted the patent and elected to withhold it.

That was a reasonable conclusion, Prost wrote Thursday. “In light of appellant’s widespread litigation misconduct,” Prost wrote, “the district court did not abuse its discretion by drawing an adverse inference of specific intent to deceive the PTO.”

Newman argued in dissent that intent to deceive the PTO cannot be made by inference. She noted that Forrest had originally scheduled a bench trial on the issue of intent. “This absence of trial and trial findings on this critical issue cannot be substituted by inference,” Newman wrote.

Kirkland & Ellis represented Merus at trial and on appeal. Partner Patricia Carson argued the appeal.

Hogan Lovells partner Neal Katyal argued the appeal for Regeneron.