Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in GS CleanTech Corp. v. Adkins Energy LLC et al., 2016-2231, 2017-1838 (Mar. 2, 2020), affirming a district court judgment finding CleanTech’s patents unenforceable due to inequitable conduct. The CleanTech patents are directed to methods of recovering oil from thin stillage. CleanTech filed infringement actions against several defendants. The suits were combined into a multidistrict litigation case. On cross motions for summary judgment, the district court ruled the patents were not infringed and were invalid under the on sale bar of pre-AIA 35 U.S.C. § 102(b). The district court thereafter held a bench trial and found the patents unenforceable due to inequitable conduct. CleanTech appealed.
Reviewing the inequitable conduct finding for an abuse of discretion, the Federal Circuit affirmed. Citing Therasense, the Court explained that to prove inequitable conduct, an accused infringer must demonstrate “by clear and convincing evidence that the patentee:” knew of the prior commercial sale; knew it was material; and deliberately decided to withhold it. The Court concluded the district court did not abuse its discretion in finding the claimed invention was the subject of a commercial offer for sale more than one year before the critical date, and that by that time it had been reduced to practice. Specifically, the offer for a “sale on approval” provided an offer of “all items necessary to recover oil and the price.” The Court next concluded the inventors knew of the offer for sale and of its materiality. Finally, the Court concluded the district court did not abuse its discretion in finding the inventors and their attorneys made a deliberate decision to withhold material information. Specifically, the district court was justified in finding that (1) the inventors had been advised of the on sale bar and its consequences, (2) the attorneys had made a deliberate decision to withhold evidence of successful pre-critical date testing (even while referencing post-critical date testing, implying that no earlier testing had occurred), (3) CleanTech and its attorneys “threatened” the target of the sale “to coerce its support regarding the critical date” for the patents in suit, (4) the inventors and counsel falsely stated the date on which the offer for sale was delivered, and (5) when the error in the delivery date was discovered, no steps were taken to correct it.