Published 03/16/2020 by CIONCA IP
On March 2, 2020, the United States Court of Appeals for the Federal Circuit made decision in GS CleanTech Corporation v. Adkins Energy, LLC. Starting in 2009 and continuing through 2014, CleanTech Corporation (“CleanTech”) filed lawsuits against Adkins Energy, LLC (“Adkins”) for infringement of U.S. Patent Nos. 7,601,858 (“the ‘858 patent”), 8,008,516 (“the ‘516 patent”), 8,283,484 (“the ‘484 patent”) (together, “the Patents-in-Suit”) in a number of actions that were later combined into a multidistrict litigation case. The Patents-in-Suit share a specification and relate to the recovery of oil from a dry mill ethanol plant’s byproduct, called thin stillage. Particularly, the Patents-in-Suit disclose a method of successful recovery of the valuable oil from the thin stillage byproduct by evaporating the thin stillage to form a concentrate, and then separating the oil from the concentrate using a centrifuge. In 2013, CleanTech moved for summary judgement. Upon review, the U.S. District Court for the Southern District of Indiana (“District Court”) found Appellant CleanTech’s Patents-in-Suit unenforceable due to inequitable conduct, and that therefore, the specified claims in the lawsuit were invalid.
The District Court determined that the on-sale bar applies and invalidates the Patents-in-Suit, supported by undisputed contemporaneous evidence of inequitable conduct. In 2000, David Cantrell founded Vortex Dehydration Technology (“VDT”) with the purpose of selling methods of processing factory waste. In 2002, David Winsness joined VDT as its Chief Technology Officer, and later, Cantrell and Winsness (collectively, “the Inventors”) began developing an oil recovery product, with the help of processing equipment sold by Greg Barlage. During this time, VDT maintained a business relationship with Agri-Energy LLC (“Agri-Energy”), which operated a dry-mill ethanol plant. Mr. Cantrell believed VDT’s oil recovery system might be applicable in an ethanol plant, and later directed Mr. Barlage to conduct tests using samples of Agri-Energy’s thin stillage samples. In his testing report (“June 2003 Report”), Mr. Barlage concluded that VDT’s oil recovery system was successful. On August 1, 2003 Mr. Cantrell emailed several Agri-Energy employees (“August 2003 Email”) and attached a proposal, dated July 31, 2003 (“July 2003 Proposal”). In the July 2003 Proposal, VDT offered Agri-Energy a No-Risk trial of the oil recovery system for 60 days to operate the unit and confirm its value, after which Agri-Energy could purchase the system or return it. Agri-Energy understood the July 2003 Proposal as an offer for sale. On August 18, 2003, Mr. Cantrell traveled to Agri-Energy and presented his proposal to the Agri-Energy Board of Directors, to which the Board of Directors rejected. In early 2004, VDT and Agri-Energy again communicated regarding the oil recovery system, and a centrifuge was installed in the Agri-Energy plant.
In February 2004, the Inventors engaged attorney Andrew Dorisio to prepare a patent application for their oil recovery method. Without being told about the July 2003 Proposal, Mr. Dorisio filed a provisional application with the USPTO on August 17, 2004. In May 2005, Mr. Dorisio filed a non-provisional application, and filed subsequent continuing applications. In 2006, the Inventors joined CleanTech, which acquired VDT’s patent applications. In March 2008, Mr. Winsness transferred the prosecution of the applications to the law firm Cantor Colburn LLP (“Cantor Colburn”). Throughout prosecution of the applications, Cantor Colburn filed two declarations signed by Mr. Cantrell. In the first declaration, Mr. Cantrell stated there was no offer for sale of the claimed invention and that the July 2003 Proposal was actually disclosed on August 18, 2003. In the second declaration, filed during prosecution of the ‘484 patent, Mr. Cantrell stated that he had forgotten about sending the August 2003 Email with the July 2003 Proposal attached. The applications all issued as patents.
Following its summary judgement determinations regarding the above, the District Court held an inequitable conduct bench trial. The District Court concluded that CleanTech committed inequitable conduct through a complete lack of regard for their duty to the USPTO. The District Court also determined that the Inventors took affirmative steps to hide the offer for sale from their lawyers, then, later from the USPTO. It was decided that the Inventors purposefully acted to deceive the USPTO so they could profit from obtaining patents. Lastly, the District Court concluded that Cantor Colburn participated in the inequitable conduct by choosing advocacy of their clients over candor. In light of such conclusions, the District Court held the Patents-in-Suit unenforceable. CleanTech appealed the District Court’s decision. The Federal Circuit affirms.
Naturally, the Federal Circuit performed an analysis of all the District Court’s final determinations, as described below:
1. Inequitable Conduct. In the appeal before the Federal Circuit, CleanTech argues that the District Court made clearly erroneous findings of fact and misapplied the law with respect to its on-sale bar determination, as well as its conclusions regarding the parties’ knowledge of materiality and their intent to deceive. To prevail on a claim of inequitable conduct in a patent case, the accused infringer must prove by clear and convincing evidence that the patentee knew of the prior commercial sale, knew that it was material to patentability and made a deliberate decision to withhold it. Thus, a patent is invalid under the on-sale bar if, before the critical date, the invention was the subject of a commercial sale or offer for sale and was “ready for patenting.” Whether the claimed invention was the subject of an offer for sale involves an assessment of whether the circumstances surrounding the transaction show that the transaction was not primarily for experimentation purposes. An invention is “ready for patenting” when, prior to the critical date, the invention is reduced to practice or is depicted in drawings and/or described in writings of sufficient nature.
CleanTech contends that the July 2003 Proposal was not an offer for sale as it “did not in fact perform the method for Agri-Energy, before the critical date, for a promise of future compensation.” The Federal Circuit finds this counterargument unavailing. As the District Court similarly concluded, the July 2003 Proposal provides an offer of “all items necessary to recover oil and the price” and the Inventors understood the offer to Agri-Energy was a “first sale” that would lead to future sales. In regard to the invention’s readiness for patenting, CleanTech argues that the Inventors had not prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person of ordinary skill in the art to practice it. The District Court determined, however, that while there was no “single reference that specifically delineated” the claimed method, Mr. Barlage’s lab tests and results and “communications from Mr. Cantrell to Agri-Energy would allow one of ordinary skill to practice the invention of the Patents-in-Suit.” The Federal Circuit concludes that the District Court did not abuse its discretion in its on-sale bar determination.
2. Duty of Disclosure. In the appeal before the Federal Circuit, CleanTech argues that the District Court erred in its materiality and intent to deceive findings. Second, CleanTech avers that the District Court’s materiality finding violated its right to a jury trial, and that the review of materiality “exceeded the scope of the bench trial, which was only on ‘inequitable conduct.’” The Federal Circuit finds all of these counterarguments unavailing. The Federal Circuit concludes that CleanTech and its attorneys were aware that the claimed invention was ready for patenting, as evidenced by documents belatedly or not given to the USPTO, and that they knew of those documents’ materiality. Second, given that inequitable conduct is based on equity, there is no right to a jury trial. Third, materiality is an element of the inequitable conduct claim, and was thus not outside the scope of the bench trial conducted by the District Court.
The District Court concluded that CleanTech knew the July 2003 Proposal to Agri-Energy threatened its chances of patenting its method and took affirmative steps to withhold the information from the USPTO. Second, the District Court found that the Inventors and their attorneys withheld evidence of successful testing in 2003 and made false representations by implying that the invention was not reduced to practice until 2004. Mr. Winsness informed Cantor Colburn that the testing done in June 2003 showed that a “sequence of evaporation followed by centrifugation allows for oil recovery.” The Inventors also informed Cantor Colburn that, based on this testing, the Inventors believed that the process would work on a commercial scale. Cantor Colburn was in possession of these test reports as well. Despite possessing this information, Cantor Colburn did not provide it to the USPTO during the prosecution of the Patents-in-Suit. Third, the District Court concluded that the Inventors and Cantor Colburn made “patentably false” statements in the two declarations filed during prosecution, which was “strong evidence of intentional deceit.”
For the reasons above, the Federal Circuit affirms the Federal Circuit’s findings of inequitable conduct and unenforceability of the Patents-in-Suit. More specifically, the Federal Circuit concludes that the District Court did not abuse its discretion in concluding that, by clear and convincing evidence, the single most reasonable inference to be drawn from the record was that the Inventors and Cantor Colburn intended to deceive the USPTO.
It is important to realize and understand the implications of the decision made in GS CleanTech Corporation v. Adkins Energy, LLC. As evidenced by the outcome, withholding vital information regarding patentability of an invention from the USPTO can have dire consequences on patents and patent applications. As discussed, CleanTech’s patents were ruled invalid and therefore unenforceable, thereby stripping CleanTech of any patent rights it previously possessed. As evidenced by this outcome, it is imperative to always disclose pertinent information to the USPTO, even if that information may result in a bar to patentability (e.g., on-sale bar). Additionally, it is imperative that registered patent practitioners respect and honor their duty to the USPTO when practicing before the USPTO. As evidenced by this decision, patent practitioners may be charged with inequitable conduct in relation to individuals they represent. As such, it is important for practitioners to always remember their duty of disclosure to the USPTO (e.g., disclosing knowledge of prior art or sale) and must practice candor to the USPTO over advocacy for their clients.
Full GS CleanTech Corporation v. Adkins Energy, LLC decision can be read here: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/16-2231.Opinion.3-2-2020_1543098.pdf
Disclaimer: The views and opinions expressed throughout this blog are the views and opinions of the individual author(s) and/or contributor(s) and do not necessarily reflect the views and opinions of our firm, CIONCA IP Law. P.C.
Marin11/18/2015 6:11:11 PM
PTAB Decisions Give Examples of Patent Eligible Subject Matter
Marin11/18/2015 6:15:40 PM
Covered Business Method Claims Are Not Required to Particularly Target Financial Industry
Marin11/18/2015 7:31:35 PM
When Is a Thesis Prior Art?
Marin11/19/2015 2:13:05 PM
An Innovator’s Dilemma: Design or Utility Patent?
Marin1/28/2016 9:10:56 PM
How Unpredictability Can Affect Obviousness Challenges
Marin1/28/2016 9:15:16 PM
The Patent Trial and Appeal Board Designates Two Decisions as Precedential
M. Cionca and I. Kim2/4/2016 5:55:16 PM
Software Inventions Are Still Patentable!
Marin Cionca2/16/2016 6:34:53 PM
In IPRs, patentees have to show that substitute patent claims are patentable
I. Kim PhD2/26/2016 8:47:51 PM
The U.S. Supreme Court Will Review Claim Construction Standards and Institution Decision Reviewability.
Iris Kim, PhD3/25/2016 8:34:14 PM
Challenging a Claim’s Validity with Different Standards of Claim Construction
Marin Cionca5/17/2016 8:57:23 PM
Patent Claims Rejection Based on Inherency
Iris Kim, PhD6/1/2016 7:04:50 PM
The Patent Trial and Appeal Board Designates Five More Decisions as Precedential
Marin Cionca9/6/2016 9:26:12 PM
Patent Case Law: New Example of Software as Patentable Subject Matter
Marin Cionca9/15/2016 9:47:39 PM
Patent Law Alert: Federal Circuit Opens Door for More Software Patents
Marin Cionca2/21/2017 12:30:52 AM
Software Patent Law Update: Federal Circuit Finds Graphical User Interface Patentable
Marin Cionca4/25/2017 9:48:49 PM
Monetization of Patents: How to Make Money with Patents
CIONCA - Staff6/15/2017 5:32:14 PM
Patent Law: Challenging the Patent Claim Definiteness Requirement
CIONCA - Staff6/28/2017 8:26:07 PM
Patent Law: Conditions Precedent May Expose Method Claim to Broad Interpretation During Prosecution
CIONCA - Staff8/9/2017 5:39:58 PM
Patent Case Study: The Novelty Of An “Invention” Is NOT Enough To Make It Patentable
CIONCA Staff8/20/2017 3:16:11 PM
CIONCA on Patents: Think Twice Before Suing for Patent Infringement and Fight Back when Unreasonably Sued
staff9/15/2017 9:33:30 PM
staff9/27/2017 5:00:12 PM
Claim Indefiniteness During Patent Pre-Issuance: Define Your Invention, Not Just Your Audience
staff9/27/2017 5:12:07 PM
CIONCA - Patent and Trademark Law Attorney
Staff9/28/2017 7:27:22 PM
Staff11/3/2017 4:20:04 PM
An Introduction to Provisional Patent Applications
11/10/2017 6:47:44 PM
An Introduction to Design Patent Applications
11/17/2017 1:24:20 PM
An Introduction to Patent Searches
12/1/2017 8:01:27 PM
An Introduction to Patent Cooperation Treaty Applications
12/26/2017 6:04:25 PM
CIONCA Sets Foot in San Francisco
1/2/2018 7:47:09 PM
The Lanham Act: Disparagement Provision Violates the First Amendment
CIONCA Team1/17/2018 8:12:06 PM
A Fork in the Road: Production or Protection?
CIONCA Team2/16/2018 4:07:48 PM
Fashion and Intellectual Property
3/8/2018 1:25:46 PM
Proceed with Caution: Consider Carefully when Narrowing Claims for Allowance
3/20/2018 12:50:05 PM
Andrei Iancu - New Director of the USPTO
CIONCA Staff4/13/2018 9:10:04 PM
It Take Two to Tango: Knowles v. Iancu, a Standing Dispute in a PTAB Decision
CIONCA Staff4/20/2018 5:25:25 PM
USPTO Changes Examination Procedure Pertaining to Subject Matter Eligibility in View of Berkheimer v. HP, Inc.
5/4/2018 7:37:51 PM
The Hague System for Protection of International Designs
CIONCA IP5/17/2018 9:54:58 PM
Marin Cionca Presents at OCIPLA May 2018 Luncheon
7/3/2018 7:44:33 PM
Impax Laboratories Inc. v Lannett Holdings Inc. on Claim Invalidation
Marin Cionca7/31/2018 6:50:05 PM
My patent expired? Can I still sue for patent infringement?
Staff8/16/2018 4:24:01 PM
Correcting or Changing a Patent After Issue Through the Central Reexamination Unit
Staff8/31/2018 7:26:58 PM
Patent Claim Interpretation By Federal Circuit's on Facebook's Contiguous Image Layout
CIONCA Team Member9/17/2018 4:33:20 PM
Trademarks and Likelihood of Confusion: Federal Circuit’s Decision in In re: Detroit Athletic Co.
Marin Cionca10/1/2018 7:42:12 PM
Can I Register a Color as a Trademark or Service Mark?
CIONCA Team Member10/16/2018 6:50:31 PM
A Double-Edged Sword: Benefit of Priority or Longer Patent Term
CIONCA Team Member11/19/2018 1:07:51 PM
The Appeals Process
Marin Cionca12/8/2018 8:35:06 PM
IP Assets - Procurement, Enforcement, Monetization
CIONCA Team Member12/18/2018 6:12:48 PM
Schlafly v. The Saint Louis Brewery: The Registration of Merely a Surname
CIONCA Team Member1/4/2019 4:12:21 PM
In re: Tropp: New Matter in a Continuation Can Be Relevant to Written Description Requirement
Marin Cionca1/23/2019 9:45:30 PM
Patent Law Alert: All Sales of the Invention, Including Secret Sales May Invalidate a Patent
CIONCA Team Member2/5/2019 7:22:27 PM
TiVo Puts Tivoli on Pause: TTAB’s Decision in TiVo Brands LLC v. Tivoli, LLC
CIONCA Team Member2/19/2019 7:12:46 PM
Revised Guidance by USPTO on Patent Subject Matter Eligibility and Examining Computer-Implemented Functional Claims
Marin Cionca3/1/2019 9:36:50 PM
USPTO Director Andrei Iancu Visits Orange County!
CIONCA Team Member3/21/2019 3:49:43 PM
Defining Inherency: A Decision in Personal Web Technologies, LLC v. Apple, Inc.
CIONCA Team Member4/3/2019 7:25:37 PM
The Patent Trial and Appeal Board (PTAB) Designates Three Decisions Precedential
Marin Cionca4/17/2019 3:48:33 PM
What Qualifies as Proper Use in Commerce Claim in a USPTO Trademark Application?
CIONCA Team Member5/7/2019 7:13:41 PM
The Federal Circuit Defines a Technological Invention
CIONCA Team Member5/20/2019 8:25:57 PM
PTAB Designates Cases as Precedential
Marin Cionca6/11/2019 8:43:17 PM
Can I Successfully License My Invention?
CIONCA Team Member6/27/2019 7:41:52 PM
Obviousness in a Single Prior Art Instance: Game and Technology Co., LTD., v. Activision Blizzard INC., Riot Games, INC.
CIONCA Team Member7/5/2019 2:22:42 PM
In re: Global IP Holdings LLC: Broadening Claims Through Reissue Applications
CIONCA Team Member8/5/2019 2:29:33 PM
Is Speculation Enough Evidence for an Appeal?: General Electric Company v. United Technologies Corporation
CIONCA Team Member8/19/2019 7:46:17 PM
In re Yarnell Ice Cream, LLC: Trademark Descriptiveness and Acquired Distinction
CIONCA Team Member9/4/2019 7:20:46 PM
Guangdong Alison Hi-Tech Co. v. International Trade Commission: Objective Boundaries
Marin Cionca9/27/2019 9:32:48 PM
Can an Online Patent Attorney File My Patent?
CIONCA IP10/7/2019 5:44:50 PM
A Decision in Henny Penny Corporation v. Frymaster LLC
CIONCA IP10/16/2019 1:28:13 PM
To Use or Not to Use: The Statutory Period of Trademark Nonuse Prior to Presumed Abandonment
11/15/2019 8:15:11 PM
Liqwd, Inc. v. L’Oreal USA, Inc.: Objective Indicia and Copying
Marin Cionca12/9/2019 8:07:20 PM
A “glove” approach to patent claim construction
CIONCA IP 12/31/2019 4:29:41 PM
The Chamberlain Group, INC. v. One World Technologies, INC.
CIONCA IP 1/9/2020 4:43:58 PM
The Bigger Picture: TTAB’s Decision in In re James Haden, M.D., P.A.
CIONCA IP 1/15/2020 4:47:19 PM
FOX Factory, Inc. v. SRAM, LLC: Presumption of Nexus
Marin Cionca2/9/2020 7:46:10 PM
Analogous Prior Art or Not? A critical patent obviousness question
CIONCA IP3/10/2020 7:45:30 PM
Koninklijke Philips N.V. v. Google LLC, Microsoft Corporation, Microsoft Mobile Inc.
CIONCA IP3/16/2020 8:43:10 PM
GS CleanTech Corporation v. Adkins Energy, LLC: Inequitable Conduct
CIONCA IP4/13/2020 9:33:36 PM
Two of a Kind: TTAB on Shannon DeVivo v. Celeste Ortiz
Marin Cionca4/15/2020 4:41:43 PM
The Day After COVID-19 Pandemic – Hope or Fear?
CIONCA IP 5/19/2020 7:36:30 PM
Uber Technologies, Inc. v. X One, Inc.: “Obvious to Try” Rationale
CIONCA IP Team7/14/2020 7:51:31 PM
CIONCA IP Launches New Online Trademark Website
CIONCA IP Team7/20/2020 7:40:21 PM
Fitbit Inc. v. Valencell Inc.: Joint Parties in IPR Proceeding
CIONCA IP Team8/11/2020 11:56:24 AM
Adidas AG v. Nike INC.
CIONCA IP Team8/31/2020 12:09:17 PM
Blackbird Tech LLC, DBA Blackbird Technologies, v. Fitbit, Inc., Wahoo Fitness LLC: Obviousness
CIONCA IP Team9/3/2020 4:30:41 PM
D2 Holdings v. House of Cards
CIONCA IP Team9/15/2020 5:11:49 PM
Comparing Apples to Apples: TTAB on In re Horizon Group USA, Inc.
CIONCA IP Team (SE)9/16/2020 4:21:45 PM
CIONCA IP Launches New Online Patent Website
Marin Cionca, Esq.
Registered Patent Attorney
USPTO Reg. No. 63899
About CIONCA® IP Law firm: We are an Orange County, CA based boutique intellectual property firm with a focus on patent and trademark application, prosecution, opinion, licensing and IP enforcement services, offering its IP services primarily at flat fee rates. We serve local OC clients, as well as clients throughout US and international clients.
We’d love to hear from you…we just need a little info
about your plans to take over the world!
P.S…Feel free to call us! (800)985-9198
Thank you for your message. We will respond within 24-72 hours. Thank you.