Failure to disclose pre-critical date offer for sale was inequitable conduct, DC decision affirmed

GS Cleantech, Cantor Colburn LLP v. Adkins Energy LLC, Big River Resources et al.

Docket No. 2016-2231, -1838, 2017-1832
March 2, 2020

Brief Summary: DC finding of inequitable conduct for failure to disclose pre-critical date offer for sale affirmed.

Summary: GS Cleantech (“Cleantech”) appealed DC finding the Patents-in-Suit (US 7,601,858; 8,008,516; 8,008,517; and 8,283,484 (shared specification)) directed to methods for recovering oil from a dry mill ethanol plant’s byproduct (“thin sillage”) unenforceable due to inequitable conduct. The inequitable conduct (IC) issue related “to whether the patentee failed to disclose information regarding the on-sale bar under 35 U.S.C. § 102(b)” which renders a patent invalid “if, before the critical date, the invention was: (1) the subject of a commercial sale or offer for sale; and (2) ‘ready for patenting’” (Pfaff, XXXX). The FC panel explained that “[t]o prevail on a claim of [IC]…the accused infringer must prove by clear and convincing evidence that the patentee: (1) ‘knew of the reference’ or prior commercial sale; (2) ‘knew of the reference’ or prior commercial sale; and (3) ‘made a deliberate decision to withhold it’” with a “specific intent to deceive” which “must be the single most reasonable inference able to be drawn from the evidence” (Therasense, FC 2011). Assessment of a commercial sale “involves an assessment of whether the circumstances surrounding the transaction show [it] was not primarily for purposes of experimentation” (Allen Eng’g, FC 2002 (“(1) the necessity for public testing…(3) the nature of the invention, [and]…(10) whether the invention reasonable requires evaluation under actual conditions of use”); Clock Spring, FC 2009 (“experimental only if it is designed to (1) test claimed features of the invention or (2)…determine whether an invention will work for its intended purpose”); Therasense, FC 2011 (“preponderance of the evidence standard”)). And “[a]n invention is ‘ready for patenting’ when prior to the critical date: (1) the invention is reduced to practice; or (2) the invention is depicted in drawings or described in writings of sufficient nature to enable a [PHOSITA] to practice the invention” (Hamilton Beach, FC 2013). The DC concluded that a “July 2003 Proposal” made by Cleantech to another company (Agri-Energy) was a pre-critical date offer for sale as it was a “sale on approval” under the UCC. The FC panel agreed with the DC’s analysis, and would not consider Cleantech’s Plumtree (FC 2006) argument that a patentee must have “either: (i) made a commercial offer to perform the patented method[]’[;] or (ii) in fact performed the patented method for a promise of future compensation” because it was not raised until this appeal. The FC panel also agreed with the DC that the claimed invention was ready for patenting before the critical date since “tests conducted…in the summer of 2003…support its determination” (i.e., “reduced to practice”), “the Inventors themselves made statements contemporaneously…that the claimed invention was reduced to practice”, the DC “considered the Allen factors and concluded that the offer…was an offer for sale and not for purposes of experimentation”, and “the claimed invention…had been depicted and described in such a way that a PHOSITA would be able to practice it.” The DC also also concluded that CleanTech and its lawyers made a deliberate decision to withhold material information with the specific intent to deceive the USPTO during prosecution, i.e., committed inequitable conduct, and the FC panel agreed (e.g., “evidenced by documents belatedly or not turned over to the USPTO”, letter filed with USPTO mentioned later testing “with no mention of the documents dated over a year earlier” (Molins, FC 1995 (“[P]atentees who are not ‘up front’ with the [US]PTO run the risk that, years later, a fact-finder might concluded they intended to deceive.”); “Cantor Colburn ‘threatened’ Argi-Energy to coerce its support regarding the critical date”; “the Inventors and Cantor Colburn made a ‘patently false’ statement” in a declaration “by claiming the July 2003 Proposal…was delivered after the critical date”, and CC failed to correct the false declaration). The DC decision was therefore affirmed.

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