By Kevin E. Noonan --
Even as the Senate may be preparing to vote on a patent "reform" bill that contains (for the first time) provisions codifying a standard for inequitable conduct, the Federal Circuit continues to develop its own inequitable conduct jurisprudence. The draft Senate report on the proposed bill, S. 1145, rejects the Federal Circuit's approach on determining materiality of a reference, but consideration of the circumstances under which the courts must apply current law (which approach is unlikely to change) at least suggests that such criticism misses many relevant issues.
The most recent case illustrating these principles is Monsanto Co. v. Bayer Bioscience N.V. In response to Monsanto's declaratory judgment action, Bayer asserted infringement of four patents (U.S. Patent Nos. 5,545,565 ("the '565 patent"), 5,767,372 ("the '372 patent"), 6,107,546 ("the '546 patent"), and 5,254,799 ("the '799 patent")) which were found on summary judgment to be invalid, not infringed (specifically, the asserted '565 patent claims), and unenforceable because Bayer was guilty of inequitable conduct during prosecution. The Federal Circuit reversed the original claim construction of the District Court and vacated the invalidity and inequitable conduct judgment, in part because there were genuine issues of material fact inappropriate for summary determination. On remand, Bayer dismissed its claims with regard to the '799, '372, and '546 patents, filing a Statement of Non-liability as to those patents, so the claims based on the '565 patent alone went to trial.
The claims at issue relate to genetically-engineered corn plants transformed with an expression construct that expressed a protein encompassing the amino terminal portion of an insecticidal toxin from Bacillus thuringiensis. Monsanto produces a genetically-modified corn product that expresses a Bt toxin having the same amino acid sequence as the claimed toxin. On remand, a jury found the asserted claims of the '565 patent to be not infringed and invalid for obviousness and anticipated by Monsanto's own prior invention. The District Court then found the '565 patent to be unenforceable due to inequitable conduct, a judgment affirmed by the Federal Circuit, which did not reach Bayer's appeal on the invalidity and non-infringement judgments.
The basis for the District Court's inequitable conduct decision was Bayer's failure during prosecution to disclose its full knowledge of the subject matter of an abstract ("the Barnes Abstract") from a poster presentation made at a scientific conference. The subject matter of the presentation was production of a chimeric gene comprising an amino terminal portion of Bt toxin fused to a selectable marker protein (conferring kanamycin resistance) that could be used to select recombinant cells. In prosecution of the '565 patent, the Examiner rejected Bayer's claims (directed to a genus of Bt toxin-encoding constructs) for obviousness over several prior art references including the Barnes Abstract. In particular, the Examiner asserted that Barnes provided motivation to produce genetically-engineered plant cells comprising a truncated Bt toxin gene, since the art recognized that this portion was sufficient for the insecticidal activity of the toxin. In response, Bayer argued that the Barnes reference failed to show that the fusion protein was biologically active, or that the amino terminal fragment of the protein was toxic. In addition, Bayer argued that the Barnes Abstract was not enabling, since while it asserted that the fusion gene "may" be inserted into a plant vector and that the resulting protein "should" express the insecticidal and kanamycin-resistant phenotype, "no concrete evidence [of function] was provided."
However, the Barnes Abstract was not the only information regarding Dr. Barnes' work known to Bayer. One of its employees, Dr. Celestina Mariani, attended the conference and took extensive notes. These notes reflected the poster contents, specifically that Barnes had in fact determined that his amino terminal fragment retained insecticidal activity and had produced a vector encoding the fusion protein. Moreover, the poster showed that the construct conferred kanamycin resistance in a bacterial system, and when the protein was applied to plants showed insecticidal activity. The poster also showed that Barnes had made a recombinant construct in an Agrobacterium T-DNA plant expression vector where expression of the fusion protein was controlled by a plant-specific promoter. At her deposition, Dr. Mariani testified that the Barnes laboratory "surely w[as] busy with introducing in plants this cassette" since there was no other reason to insert the fusion protein sequence into the Agrobacterium construct.
In addition to this testimony, the District Court heard undisputed evidence that these notes were "widely distributed" to the scientists working on the Bt project at Bayer. Most significantly, the notes were also known to Dr. Wouter Meulemanns, who was responsible for prosecuting the four Bayer patents in suit. Although Dr. Meulemanns testified that he spoke with Dr. Mariani about the Barnes poster, he asserted that she did not remember "anything" about the presentation. In view of the clear recollection of the notes and poster Dr. Mariani exhibited during her deposition testimony, the District Court did not find Dr. Meulemanns' testimony to be credible. The District Court found the notes to be material to patentability, both under the "reasonable examiner" test and because they would have established a "prima facie case of unpatentability." Coupled with the District Court's skepticism regarding Dr. Meulemanns' testimony, it found the requisite intent to deceive the Patent Office, and that Bayer had committed inequitable conduct in obtaining the '565 patent. In addition, the District Court found that the other three patents originally asserted were also unenforceable for inequitable conduct.
The Federal Circuit affirmed, in a unanimous decision written by Judge Gajarsa, based on finding no clear error in the District Court's analysis. The Federal Circuit held that the information on the Barnes Abstract was material because it "refutes, or is inconsistent with, a position the applicant takes in . . . an argument of unpatentability relied on by the Office" under 37 C.F.R. § 1.56(2)(i). Although the amino terminal fragment of the Bt toxin disclosed by Barnes was different from the fragment in Bayer's '565 patent claims, the scope of those claims pending when Bayer made its argument was broader and encompassed a genus of fragments that would include the one disclosed by Barnes. The Federal Circuit found that Bayer knew that Barnes' recombinant fusion protein showed insecticidal properties when applied to a plant leaf, and yet argued that the unpredictability of plant recombinant genetics precluded the skilled worker from having a reasonable expectation of success in producing a functional recombinant Bt toxin fragment. In addition, the Federal Circuit noted Bayer's argument that there was "no concrete evidence" that the Barnes construct had been made, when Dr. Mariani's notes clearly showed that the poster contained positive information that Barnes had made the construct. The CAFC was careful to circumscribe the rubric in enunciated in making its materiality finding:
We do not suggest that all internal documents of potential relevance must be submitted to the PTO as a matter of course. Rather, it is the particular circumstances that render the internal documents material in this case.
The Federal Circuit easily dismissed Bayer's challenges to the District Court's findings with regard to its intent to deceive, stating:
Intent is easily inferred when, as here, an applicant makes arguments to the PTO that it knows, or obviously should have known, are false in light of information not before the examiner, and the applicant knowingly withholds that additional information.
The Federal Circuit also affirmed the District Court's holding that the '799, '372, and '546 patents were also unenforceable due to inequitable conduct. Here, Bayer had asserted a jurisdictional challenge to the judgment, based on it having dismissed the infringement claims as to these patents. But the Federal Circuit held that Monsanto's motion for attorneys' fees under 35 U.S.C. § 285 was sufficient to bring these patents within the scope of the District Court's jurisdiction, and that the Statement of Non-liability was not sufficient to exempt these patents from the lower court's scrutiny. The CAFC noted that its decision in Nilssen v. Osram Sylvania, Inc. (Fed. Cir. 2007) would also support the District Court's jurisdiction on a theory of infectious unenforceability, but that here "the outcome is even clearer as there is no dispute that the court had an independent grant of jurisdiction under § 285 to consider inequitable conduct relating to the withdrawn patents."
Monsanto Co. v. Bayer Bioscience N.V. (Fed. Cir. 2008)
Panel: Circuit Judges Bryson, Gajarsa, and Dyk
Opinion by Circuit Judge GajarsaAdditional information regarding this case can be found at Patently-O.
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