Federal Circuit Affirms Patents-in-Suit Unenforceable Due to Inequitable Conduct

Indianapolis, Indiana – Appellants, GS CleanTech Corporation and Greenshift Corporation (collectively “CleanTech”), appealed the U.S. District Court for the Southern District of Indiana’s finding that U.S. Patent Nos. 7,601,858 (the “‘858 patent”), 8,008,516 (the “‘516 patent”), 8,008,517 (the “‘517 patent”), and 8,283,484 (the “‘484 patent”) (together, the “Patents-in-Suit”) are unenforceable due to inequitable conduct. The U.S. Court of Appeals for the Federal Circuit affirmed.

Before joining CleanTech in 2006, David Cantrell founded Vortex Dehydration Technology (“VDT”). In June 2003, Mr. Cantrell sent an email to two Agri-Energy LLC (“Agri-Energy”) employees regarding how VDT’s oil recovery system may be applicable in an ethanol plant. He also included an operational cost spreadsheet and an image of the system. VDT representatives conducted tests with Agri-Energy’s ethanol syrup in early July 2003.

A proposal dated July 31, 2003 was emailed to multiple Agri-Energy employees on August 1, 2003 offering “Agri-Energy a No-Risk trial [of the] ‘Oil Recovery System.’” The proposal allowed Agri-Energy to use the unit for sixty days at which point it could purchase the system for $423,000 or return it to VDT. That proposal was not accepted, however, in early 2004 communications resumed and the system was installed in the Agri-Energy plant in May 2004.

The inventors filed U.S. Provisional Patent Application No. 60/602,050 on August 17, 2004, more than one year after the initial proposal to Agri-Energy, which was not disclosed to their attorney. After joining CleanTech, the prosecution of the applications was transferred to the law firm Cantor Colburn LLP (“Cantor Colburn”) in 2008.

The District Court found that the inventors (1) knew of the prior offer for commercial sale; (2) knew that it was material; and (3) deliberately withheld the information from their attorneys, and later, the PTO. Further, the District Court found that Cantor Colburn had either purposely evaded the information regarding the offer for sale or failed to seek out the relevant information. The Court of Appeals held that the District Court did not abuse its discretion in its findings that CleanTech took “affirmative steps to hide [the offer to sell the invention prior to the on-sale bar date] from their lawyers, then, later the PTO.”

The case was appealed to United States Court of Appeals Case Nos. 16-2231 and 17-1838 and the lower court’s judgment was affirmed.


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